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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DIVINE, INC.,
DES ACQUISITION COMPANY
AND
ESHARE COMMUNICATIONS, INC.
JULY 8, 2001
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TABLE OF CONTENTS
ARTICLE I The Merger; Effective Time; Closing.............................1
1.1 The Merger......................................................1
1.2 Effective Time..................................................2
1.3 Closing.........................................................2
1.4 Effect of the Merger............................................2
ARTICLE II Certificate of Incorporation and Bylaws of
the Surviving Corporation..................................2
2.1 Certificate of Incorporation; Name..............................2
2.2 Bylaws .........................................................2
ARTICLE III Directors and Officers of the Surviving Corporation.............2
3.1 Directors.......................................................2
3.2 Officers........................................................3
ARTICLE IV Merger Consideration; Conversion or Cancellation of Shares
in the Merger..............................................3
4.1 Share Consideration for the Merger; Conversion or Cancellation
of Shares in the Merger....................................3
4.2 Payment for Shares in the Merger................................5
4.3 Cash For Fractional Parent Shares...............................6
4.4 Transfer of Shares after the Effective Time.....................6
4.5 Lost, Stolen or Destroyed Certificates..........................7
ARTICLE V Representations and Warranties..................................7
5.1 Representations and Warranties of Parent and Merger Sub.........7
5.2 Representations and Warranties of the Company..................17
ARTICLE VI Additional Covenants and Agreements............................35
6.1 Conduct of Business of the Company.............................35
6.2 No Solicitation................................................38
6.3 Meeting of Shareholders........................................40
6.4 Registration Statement.........................................40
6.5 Reasonable Efforts.............................................41
6.6 Access to Information..........................................41
6.7 Publicity......................................................42
6.8 Affiliates of the Company and Parent...........................42
6.9 Maintenance of Insurance.......................................42
6.10 Representations and Warranties.................................42
6.11 Filings; Other Action..........................................42
6.12 Tax-Free Reorganization Treatment..............................43
6.13 Company Employee Stock Purchase Plan...........................43
6.14 Nasdaq Listing.................................................43
6.15 Indemnification................................................43
6.16 Auditors' Letters..............................................44
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6.17 Sale of Company Software Products..............................44
6.18 Issuance of Option Grants......................................44
6.19 Self Tender Offer Prohibition..................................44
ARTICLE VII Conditions.....................................................44
7.1 Conditions to Each Party's Obligations.........................44
7.2 Conditions to the Obligations of the Company...................45
7.3 Conditions to the Obligations of Parent........................46
ARTICLE VIII Termination....................................................47
8.1 Termination by Mutual Consent..................................47
8.2 Termination by either the Company or Parent....................47
8.3 Termination by the Company.....................................47
8.4 Termination by Parent..........................................48
8.5 Effect of Termination; Termination Fee.........................49
ARTICLE IX Miscellaneous and General......................................50
9.1 Payment of Expenses............................................50
9.2 Non-Survival of Representations and Warranties.................50
9.3 Modification or Amendment......................................50
9.4 Waiver of Conditions...........................................50
9.5 Counterparts...................................................51
9.6 Governing Law; Jurisdiction....................................51
9.7 Notices........................................................51
9.8 Entire Agreement; Assignment...................................52
9.9 Parties in Interest............................................52
9.10 Certain Definitions............................................52
9.11 Severability...................................................54
9.12 Specific Performance...........................................54
9.13 Recovery of Attorney's Fees....................................54
9.14 Captions.......................................................54
9.15 No Strict Construction.........................................54
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TABLE OF DEFINED TERMS
Agreement..........................................................Introduction
Authorized Representatives..........................................Section 6.7
Average Market Value............................................Section 9.10(a)
Cash Adjustment Payment..........................................Section 4.1(e)
Certificates of Merger..............................................Section 1.2
Certificates.....................................................Section 4.2(b)
Closing.............................................................Section 1.3
Closing Date........................................................Section 1.3
Code...................................................................Recitals
Commercial Software..............................................Section 5.2(o)
Company............................................................Introduction
Company Acquisition Proposal.....................................Section 6.3(a)
Company Affiliate...................................................Section 6.8
Company Affiliate Letter............................................Section 6.8
Company Contract.................................................Section 5.2(p)
Company Disclosure Schedule.........................................Section 5.2
Company Embedded Products........................................Section 5.2(o)
Company Financial Statements.................................Section 5.2(h)(ii)
Company Insurance Policies.......................................Section 5.2(u)
Company Intellectual Property Rights.............................Section 5.2(o)
Company International Employee Plans.............................Section 5.2(n)
Company Key Employees............................................Section 5.2(p)
Company Option...................................................Section 4.1(c)
Company Option Plans.............................................Section 5.2(b)
Company Plan Affiliate........................................Section 5.2(n)(i)
Company Proprietary Rights.......................................Section 5.2(o)
Company Scheduled Plans.......................................Section 5.2(n)(i)
Company SEC Reports...........................................Section 5.2(h)(i)
Company Shares...................................................Section 4.1(a)
Company Software.................................................Section 5.2(o)
Company Software Authors.........................................Section 5.2(o)
Company Shareholders Meeting........................................Section 6.3
Company Superior Proposal........................................Section 6.3(a)
Confidentiality Agreement...........................................Section 6.7
DGCL................................................................Section 1.1
Effective Time......................................................Section 1.2
Encumbrance.....................................................Section 9.10(b)
Environmental Costs and Liabilities..............................Section 5.2(s)
Environmental Laws...............................................Section 5.2(s)
ERISA...........................................................Section 9.10(c)
ESPP.............................................................Section 5.2(b)
Exchange Act.....................................................Section 5.1(g)
Exchange Agent...................................................Section 4.2(a)
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Exchange Ratio...................................................Section 4.1(a)
Fractional Securities Fund..........................................Section 4.3
GBCC................................................................Section 1.1
Governmental Entity.............................................Section 9.10(d)
Hazardous Material...............................................Section 5.2(s)
HSR Act..........................................................Section 5.1(g)
Indemnified Personnel..............................................Section 6.16
Knowledge.......................................................Section 9.10(e)
Material Adverse Effect.........................................Section 9.10(f)
Merger.................................................................Recitals
Merger Sub.........................................................Introduction
NNM.................................................................Section 4.3
Parent.............................................................Introduction
Parent Contract..................................................Section 5.1(p)
Parent Common Stock..............................................Section 5.1(c)
Parent Disclosure Schedule..........................................Section 5.1
Parent Embedded Products.........................................Section 5.1(o)
Parent Financial Statements..................................Section 5.1(i)(ii)
Parent Insurance Policies........................................Section 5.2(t)
Parent Plan Affiliate.........................................Section 5.1(n)(i)
Parent Proprietary Rights........................................Section 5.1(o)
Parent Scheduled Plans........................................Section 5.1(n)(i)
Parent SEC Reports............................................Section 5.1(i)(i)
Parent Shares....................................................Section 4.1(a)
Parent Stockholders Meeting......................................Section 5.1(l)
Parties............................................................Introduction
Person..........................................................Section 9.10(h)
Post-Merger Exercise Price.......................................Section 4.1(c)
Proxy Statement.....................................................Section 6.5
Restraints.......................................................Section 7.1(c)
Returns.........................................................Section 9.10(i)
S-4 Registration Statement..........................................Section 6.5
SEC...........................................................Section 5.1(i)(i)
Securities Act...................................................Section 5.1(g)
Share Consideration..............................................Section 4.2(a)
Significant Tax Agreement.......................................Section 9.10(j)
Stock Merger Exchange Fund.......................................Section 4.2(a)
Software Distribution Agreement....................................Section 6.17
Subsidiary......................................................Section 9.10(k)
Substitute Option................................................Section 4.1(c)
Surviving Corporation...............................................Section 1.1
Szlam..................................................................Recitals
Tax.............................................................Section 9.10(l)
Taxes...........................................................Section 9.10(l)
Termination Fee..................................................Section 8.5(c)
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Transaction Expenses................................................Section 9.1
Voting Agreement.......................................................Recitals
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EXHIBITS
Form of Voting Agreement..............................................Exhibit A
Form of Company Affiliate Letter......................................Exhibit B
Form of Software Distribution Agreement...............................Exhibit C
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of July 8, 2001, by and among divine, inc., a Delaware
corporation ("Parent"), DES Acquisition Company, a Delaware corporation and a
direct wholly-owned Subsidiary of Parent ("Merger Sub"), and eshare
communications, Inc., a Georgia corporation (the "Company"). Parent, Merger Sub
and the Company are referred to collectively herein as the "Parties."
Capitalized terms used herein are defined as referenced in the Table of Defined
Terms contained herein.
RECITALS
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
Company have determined that it is in the best interests of each corporation and
their respective stockholders and shareholders, as the case may be, that the
Company and Parent enter into a business combination through the merger of the
Company with and into the Merger Sub (the "Merger") and, in furtherance thereof,
have approved the Merger and declared the Merger advisable to its respective
stockholders or shareholders, as applicable;
WHEREAS, pursuant to the Merger, the outstanding shares of common stock
of the Company shall be converted into shares of common stock of Parent at the
rate set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, concurrently with the execution hereof, Szlam Partners, L.P.
("Szlam") is entering into a voting agreement in the form attached as EXHIBIT A
hereto (the "Voting Agreement");
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, the Parties hereby agree
as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL") and the Georgia Business Corporation Code (the "GBCC"), at the
Effective Time, the Company shall be merged with and into Merger Sub, the
separate corporate existence of the Company shall thereupon cease, and Merger
Sub shall be the successor or surviving corporation and shall continue its
existence under the laws of the State of Delaware. Merger Sub, as the surviving
corporation after the consummation of the Merger, is sometimes hereinafter
referred to as the "Surviving Corporation."
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1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement,
the Parties shall cause the Merger to be consummated by filing duly executed
certificates of merger of Merger Sub and the Company (the "Certificates of
Merger") with the Office of the Secretary of State of the States of Delaware and
Georgia, as the case may be, in such form as required by, and executed in
accordance with, the relevant provisions of the DGCL and the GBCC as applicable,
as soon as practicable on the Closing Date, and shall take all other action
required by law to effect the Merger. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificates of
Merger (the "Effective Time").
1.3 CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Article VIII, the closing of the Merger (the "Closing") shall take place at
10:00 a.m., local time, at the offices of counsel for Parent, on the second
business day after all of the conditions to the obligations of the Parties to
consummate the Merger as set forth in Article VII have been satisfied or waived,
or such other date, time or place as is agreed to in writing by the Parties (the
"Closing Date").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL and the GBCC. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all property, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION; NAME. At the Effective Time, the
Certificate of Incorporation of Merger Sub immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended as provided therein and by applicable law, and the name
of the Surviving Corporation shall be the Company's name.
2.2 BYLAWS. At the Effective Time, the by-laws of Merger Sub in
effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation, until thereafter amended as provided therein and by
applicable law.
ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1 DIRECTORS. The directors of Merger Sub shall be the initial
directors of the Surviving Corporation, until their respective successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and by-laws.
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3.2 OFFICERS. The officers of Merger Sub shall be the initial
officers of the Surviving Corporation, until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and by-laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION
OF SHARES IN THE MERGER. At the Effective Time, the manner of converting or
canceling shares of the Company and Parent shall be as follows:
(a) CONVERSION OF COMPANY STOCK. Subject to adjustment,
if applicable, pursuant to Sections 4.1(e) and 4.1(f) hereof, and
subject to the provisions of Section 4.3 hereof, each share of common
stock, no par value ("Company Shares"), of the Company issued and
outstanding immediately prior to the Effective Time (excluding any
Company Shares described in Section 4.1(d)), shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted automatically into the right to receive 1.30 shares of Class
A common stock, $0.001 par value, of Parent ("Parent Shares"). All
Company Shares to be converted into Parent Shares pursuant to this
Section 4.1(a) shall, by virtue of the Merger and without any action on
the part of the holders thereof, cease to be outstanding, be canceled
and cease to exist, and each holder of a certificate representing any
such Company Shares shall thereafter cease to have any rights with
respect to such Company Shares, except the right to receive for each of
the Company Shares, upon the surrender of such certificate in
accordance with Section 4.2, the number of Parent Shares specified
above and cash in lieu of fractional shares. The ratio of Company
Shares per share of Parent Shares, as adjusted from time to time
pursuant to Sections 4.1(e) and 4.1(f) hereof, is sometimes hereinafter
referred to as the "Exchange Ratio."
(b) STOCK OF MERGER SUB. Each stock certificate
representing shares of Merger Sub issued and outstanding immediately
prior to the Effective Time shall continue to represent ownership of
such shares of capital stock of the Surviving Corporation.
(c) OUTSTANDING OPTIONS. Prior to the Effective Time,
each option to purchase Company Shares (each, a "Company Option") that
is outstanding and unexercised pursuant to the Company Option Plans in
effect on the date hereof shall (i) be terminated if the result of
dividing (A) the exercise price of such Company Option by (B) the
Exchange Ratio and rounding the result to the nearest tenth of one cent
(hereinafter, the "Post-Merger Exercise Price"), is greater than the
closing sale price of the Parent Shares on the trading day immediately
preceding the Effective Time, and (ii) if the Post-Merger Exercise
Price of such Company Option is less than or equal to the closing sale
price of the Parent Shares on the trading day immediately preceding the
Effective Time, become and represent an option to purchase (a
"Substitute Option") the number of Parent Shares (rounded to the
nearest full share) determined by multiplying (X) the number of Company
Shares subject to such Company Option immediately prior to the
Effective
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Time by (Y) the Exchange Ratio, at an exercise price per share of
Parent Shares equal to the Post-Merger Exercise Price. It is the intent
of the Parties that the Substitute Options shall qualify following the
Effective Time as "incentive stock options" as defined in Section 422
of the Code to the extent that the related Company Options qualified as
incentive stock options immediately prior to the Effective Time, and
the provisions of this Section 4.1(c) shall be applied consistent with
such intent. Parent shall pay cash to holders of Company Options in
lieu of issuing fractional Parent Shares upon the exercise of
Substitute Options for Parent Shares. After the Effective Time, except
as provided above in this Section 4.1(c), each Substitute Option shall
be exercisable upon the same terms and conditions as were applicable
under the related Company Option immediately prior to the Effective
Time after giving effect to any provision contained in such Company
Option providing for accelerated vesting as a result of this Agreement.
The Company agrees that, after the date of this Agreement, it will not
grant any stock appreciation rights or limited stock appreciation
rights and will not permit cash payments to holders of Company Options
in lieu of the substitution therefor of Substitute Options, as
described in this Section 4.1(c). Parent will reserve a sufficient
number of Parent Shares (i) for issuance under this Section 4.1(c) and
(ii) for issuance under Section 6.18.
(d) CANCELLATION OF PARENT OWNED AND TREASURY STOCK. All
of the Company Shares that are owned by Parent, any direct or indirect
wholly-owned Subsidiary of Parent or by the Company as treasury stock
shall automatically cease to be outstanding, shall be canceled and
shall cease to exist and no Parent Shares shall be delivered in
exchange therefor.
(e) ADJUSTMENT TO EXCHANGE RATIO. If the Average Market
Value of Parent Shares is $2.82 or greater, then the Exchange Ratio
(prior to any adjustment pursuant to Section 4.1(f), if applicable)
shall be adjusted to an amount equal to $3.653 divided by the Average
Market Value of Parent Shares. If the Average Market Value of Parent
Shares is $2.39 or less, then the Exchange Ratio (prior to any
adjustment pursuant to Section 4.1(f), if applicable) shall be adjusted
to an amount equal to $3.12 divided by the greater of (x) the Average
Market Value of Parent Shares or (y) $1.00. If the number of Parent
Shares to be issued in the Merger pursuant to the adjustment set forth
in the foregoing sentence exceeds 28,546,506 Parent Shares (prior to
any adjustment pursuant to Section 4.1(f), if applicable), then Parent
may elect to pay cash in lieu of all or any portion of the Parent
Shares otherwise issuable to Company shareholders in the Merger in
excess of 28,546,506 Parent Shares (as adjusted pursuant to Section
4.1(f), if applicable), in an amount per share equal to the Average
Market Value of Parent Shares (the "Cash Adjustment Payment"), provided
that such election is made prior to the date on which the Proxy
Statement with respect to the Company Shareholders Meeting is first
mailed to the Company's shareholders, or on a later date so long as the
timing of such election shall not cause the Closing Date contemplated
in the Proxy Statement with respect to the Company Shareholders Meeting
to be delayed.
(f) ADJUSTMENT FOR ORGANIC CHANGES. In the event of any
reclassification, stock split or stock dividend with respect to Parent
Shares, any change or conversion of Parent
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Shares into other securities or any other dividend or distribution in
Parent Shares with respect to outstanding Parent Shares (or if a record
date with respect to any of the foregoing should occur) prior to the
Effective Time, appropriate and proportionate adjustments, if any,
shall be made to the Exchange Ratio, and all references to the Exchange
Ratio in this Agreement shall be deemed to be to the Exchange Ratio as
so adjusted.
4.2 PAYMENT FOR SHARES IN THE MERGER. The manner of making payment
for Shares in the Merger shall be as follows:
(a) EXCHANGE AGENT. On or prior to the Closing Date,
Parent shall make available to Computershare Investor Services, LLC, or
other entity mutually agreed upon by the Parties (the "Exchange
Agent"), for the benefit of the holders of Company Shares, a sufficient
number of certificates representing the Parent Shares required to
effect the delivery of the aggregate consideration in Parent Shares,
cash for the Fractional Securities Fund and the Cash Adjustment
Payment, if any, required to be issued pursuant to Section 4.1
(collectively, the "Share Consideration" and the certificates
representing the Parent Shares comprising such aggregate Share
Consideration being referred to hereinafter as the "Stock Merger
Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Share Consideration out of the Stock Merger
Exchange Fund and the Fractional Securities Fund. The Stock Merger
Exchange Fund and the Fractional Securities Fund shall not be used for
any purpose other than as set forth in this Agreement.
(b) EXCHANGE PROCEDURES. Promptly after the Effective
Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective
Time represented outstanding Company Shares (the "Certificates") (i) a
form of letter of transmittal, in a form reasonably satisfactory to the
Parties (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates for
payment therefor. Subject to Section 4.5, upon surrender of
Certificates for cancellation to the Exchange Agent, together with such
letter of transmittal duly executed and any other required documents,
the holder of such Certificates shall be entitled to receive for each
of the Company Shares represented by such Certificates the Share
Consideration, without interest, allocable to such Certificates and the
Certificates so surrendered shall forthwith be canceled. Until so
surrendered, such Certificates shall represent solely the right to
receive the Share Consideration allocable to such Certificates.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions that are declared
after the Effective Time on Parent Shares and payable to the holders of
record thereof after the Effective Time will be paid to Persons
entitled by reason of the Merger to receive Parent Shares until such
Persons surrender their Certificates as provided in Section 4.2(b)
above. Upon such surrender, there shall be paid to the Person in whose
name the Parent Shares are issued any dividends or other
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distributions having a record date after the Effective Time and payable
with respect to such Parent Shares between the Effective Time and the
time of such surrender. After such surrender there shall be paid to the
Person in whose name the Parent Shares are issued any dividends or
other distributions on such Parent Shares which shall have a record
date after the date of such surrender. In no event shall the Persons
entitled to receive such dividends or other distributions be entitled
to receive interest on such dividends or other distributions.
(d) TRANSFERS OF OWNERSHIP. If any certificate
representing Parent Shares is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer and that the Person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the
issuance of certificates for such Parent Shares in a name other than
that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable.
(e) NO LIABILITY. Neither the Exchange Agent nor any of
the Parties shall be liable to a holder of Company Shares for any
Parent Shares, Cash Adjustment Payment, if any, cash in lieu of
fractional Parent Shares or any dividend to which the holders thereof
are entitled, that are delivered to a public official pursuant to
applicable escheat law. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to the Parent
Shares held by it from time to time hereunder, except that it shall
receive and hold all dividends or other distributions paid or
distributed with respect to such Parent Shares for the account of the
Persons entitled thereto.
(f) TERMINATION OF FUNDS. Subject to applicable law, any
portion of the Stock Merger Exchange Fund, the Cash Adjustment Payment,
if any, and the Fractional Securities Fund that remains unclaimed by
the former shareholders of the Company for one (1) year after the
Effective Time shall be delivered to Parent, upon demand of Parent, and
any former shareholder of the Company shall thereafter look only to
Parent for payment of their applicable claim for the Share
Consideration for their Company Shares.
4.3 CASH FOR FRACTIONAL PARENT SHARES. No fractional Parent Shares
shall be issued in the Merger. Each holder of Parent Shares shall be entitled to
receive in lieu of any fractional Parent Shares to which such holder otherwise
would have been entitled pursuant to Section 4.2 (after taking into account all
Parent Shares then held of record by such holder) a cash payment in an amount
equal to the product of (i) the fractional interest of a Parent Share to which
such holder otherwise would have been entitled and (ii) the closing sale price
of a Parent Share on the Nasdaq National Market ("NNM") on the trading day
immediately prior to the Effective Time (the cash comprising such aggregate
payments in lieu of fractional Parent Shares being hereinafter referred to as
the "Fractional Securities Fund").
4.4 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. All Share
Consideration issued upon the surrender for exchange of Company Shares in
accordance with the terms hereof (including any cash paid in respect thereof)
shall be deemed to have been issued in full satisfaction of all
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rights pertaining to such Company Shares, and no further registration of
transfers shall be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article IV.
4.5 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing Company Shares shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such Parent Shares, cash for fractional shares, if any, and any
dividends or other distributions to which the holders thereof are entitled;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to deliver a customary bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub hereby represent and warrant to the Company that the
statements contained in this Section 5.1 are true and correct, except to the
extent specifically set forth on the disclosure schedule delivered
contemporaneously with this Agreement by Parent to the Company (the "Parent
Disclosure Schedule"). The Parent Disclosure Schedule shall be arranged in
sections and paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 5.1, and the disclosure in any paragraph shall qualify
only the corresponding paragraph in this Section 5.1 or other paragraphs or
sections to which it is clearly apparent (from a plain reading of the
disclosure) that such disclosure relates.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Except as
set forth in Section 5.1(a) of the Parent Disclosure Schedule, each of
Parent and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified and in good standing as
a foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it require such
qualification, except where failure to be so could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. Each of Parent and its Subsidiaries has all requisite
power and authority (corporate or otherwise) to own its properties and
to carry on its business as it is now being conducted.
(b) OPERATIONS OF MERGER SUB. Merger Sub is a direct,
wholly-owned Subsidiary of Parent, was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
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(c) CAPITALIZATION. The authorized capital stock of
Parent consists of (i) 2,500,000,000 shares of Class A common stock,
$0.001 par value per share ("Parent Common Stock"), of which
138,973,759 shares were issued and outstanding on May 31, 2001, (ii)
100,000,000 shares of Class C common stock, $0.001 par value per share,
of which 6,777,777 were issued and outstanding on the date hereof,
50,000,000 shares of preferred stock, $0.001 par value per share,
500,000 shares of which have been designated Series A Junior
Participating Preferred Stock. No shares of Series A Junior
Participating Preferred Stock are issued and outstanding as of the date
hereof. All of the outstanding shares of capital stock of Parent have
been duly authorized and validly issued and are fully paid and
nonassessable. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, $0.001 par value, 1,000 shares of which
are issued and outstanding and held by Parent. Schedule 5.1(c) of the
Parent Disclosure Schedule sets forth all rights with respect to
registration of Parent Common Stock under the Securities Act,
including, but not limited to, demand rights or piggy-back registration
rights, granted by Parent since July 11, 2000 through the date hereof.
(d) LISTINGS. Parent's securities are not listed, or
quoted, for trading on any U.S. domestic or foreign securities
exchange, other than the NNM.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of
Directors of Merger Sub has declared the Merger advisable, and Merger
Sub has the requisite corporate power and authority to approve,
authorize, execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of Parent has
declared the Merger and the related issuance of Parent Shares
advisable, has duly and validly authorized this Agreement and the
consummation by Parent of the transactions contemplated hereby and
Parent has the requisite corporate power and authority to approve,
authorize, execute and deliver this Agreement and to consummate the
transactions contemplated hereby. No other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby, other than the
approval of this Agreement and the Merger by the stockholders of Parent
in accordance with the DGCL, if necessary. This Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated
hereby have been duly and validly authorized by the Boards of Directors
of Parent and Merger Sub and by Parent as the sole Stockholder of
Merger Sub. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes
the valid and binding agreement of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with its terms, subject, as
to enforceability, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(f) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither
Parent nor any of its Subsidiaries is: (i) in violation of its
Certificate of Incorporation, by-laws or similar documents; (ii) in
default in the performance of any obligation, agreement or condition of
any debt instrument which (with or without the passage of time or the
giving of notice, or
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both) affords to any Person the right to accelerate any indebtedness or
terminate any right; (iii) in default under or breach of (with or
without the passage of time or the giving of notice) any other contract
to which it is a party or by which it or its assets are bound; or (iv)
in violation of any law, regulation, administrative order or judicial
order, decree or judgment (domestic or foreign) applicable to it or its
business or assets, except where any violation, default or breach under
items (ii), (iii), or (iv) could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on
Parent.
(g) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement nor the consummation by Parent
of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation (or other similar documents) or by-laws (or other similar
documents) of Parent or any of its Subsidiaries; (ii) require any
consent, approval, authorization or permit of, or registration or
filing with or notification to, any governmental or regulatory
authority, in each case, by or on behalf of Parent or any of its
Subsidiaries, except (A) in connection with the applicable
requirements, if any, of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (B) pursuant to the applicable
requirements of the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act") and the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), and the NNM,
(C) the filing of the Certificates of Merger pursuant to the DGCL and
the GBCC and appropriate documents with the relevant authorities of
other states in which Parent is authorized to do business, (D) as may
be required by any applicable state securities laws, (E) the consents,
approvals, orders, authorizations, registrations, declarations and
filings required under the antitrust or competition laws of foreign
countries, or (F) where the failure to obtain such consent, approval,
authorization or permit, or to make such registration, filing or
notification, could not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect on Parent or adversely
affect the ability of Parent to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration
or lien or other charge or encumbrance) under any of the terms,
conditions or provisions of any indenture, note, license, lease,
agreement or other instrument or obligation to which Parent or any of
its Subsidiaries is a party or by which any of their assets may be
bound, except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration or lien or other charge or
encumbrance) as to which requisite waivers or consents have been
obtained or which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Parent or
adversely affect the ability of Parent to consummate the transactions
contemplated hereby; (iv) cause the suspension or revocation of any
authorizations, consents, approvals or licenses currently in effect
which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on Parent; or (v) assuming the
consents, approvals, authorizations or permits and registrations,
filings or notifications referred to in this Section 5.1(g) are duly
and timely obtained or made, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent or any of its
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Subsidiaries or to any of their respective assets, except for
violations which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Parent or
adversely affect the ability of Parent to consummate the transactions
contemplated hereby.
(h) LITIGATION. Except as set forth in the Parent SEC
Reports filed prior to the date hereof or in Schedule 5.1(h) of the
Parent Disclosure Schedule, there are no actions, suits, claims,
investigations or proceedings pending or, to the Knowledge of Parent,
threatened against Parent or any of its Subsidiaries that, individually
or in the aggregate, could reasonably be expected to result in
obligations or liabilities of Parent or any of its Subsidiaries that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect on Parent or a Material Adverse Effect on the
Parties' ability to consummate the transactions contemplated by this
Agreement. Neither Parent nor any of its Subsidiaries is subject to any
outstanding judgment, order, writ, injunction or decree which (i) has
or may have the effect of prohibiting or impairing any business
practice of Parent or any of its Subsidiaries, any acquisition of
property (tangible or intangible) by Parent or any of its Subsidiaries,
the conduct of the business by Parent or any of its Subsidiaries, or
Parent's ability to perform its obligations under this Agreement or
(ii), insofar as can be reasonably foreseen, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect on Parent.
(i) SEC REPORTS; FINANCIAL STATEMENTS.
(i) Parent has filed all forms, reports and
documents with the Securities and Exchange Commission (the
"SEC") required or deemed advisable to be filed by it pursuant
to the federal securities laws and the SEC rules and
regulations thereunder, all of which complied in all material
respects with all applicable requirements of the Securities
Act and the Exchange Act (collectively, the "Parent SEC
Reports"). None of the Parent SEC Reports, including, without
limitation, any financial statements or schedules included
therein, at the time filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date
of such filing) 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. None of Parent's Subsidiaries is required to file
any forms, reports or other documents with the SEC.
(ii) The consolidated balance sheets and the
related consolidated statements of income, stockholders'
equity (deficit) and cash flows (including the related notes
thereto) of Parent included in the Parent SEC Reports
(collectively, "Parent Financial Statements") comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a
basis consistent throughout the periods involved (except as
otherwise noted therein or, in the case of unaudited
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interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act), and present fairly the
consolidated financial position of Parent and its consolidated
Subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows
for the periods presented therein, except that the unaudited
interim financial statements do not include footnote
disclosure of the type associated with audited financial
statements and were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be
material in amount.
(iii) Since December 31, 2000, there has not been
any material change, by Parent or any of its Subsidiaries, in
accounting principles, methods or policies for financial
accounting purposes, except as required by concurrent changes
in generally accepted accounting principles, or as disclosed
in the Company SEC Reports. There are no material amendments
or modifications to agreements, documents or other instruments
which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act, which have
not yet been filed with the SEC but which are required to be
filed.
(j) NO LIABILITIES. Neither Parent nor any of its
Subsidiaries has any material indebtedness, obligations or liabilities
of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted), and, to the
Knowledge of Parent, there is no reasonable basis for the assertion of
any claim with respect to any indebtedness, obligation or liability of
any nature against Parent or any of its Subsidiaries, except for
indebtedness, obligations and liabilities (i) which are fully reflected
in, reserved against or otherwise described in the most recent Parent
Financial Statements, (ii) which have been incurred after the date of
the most recent Parent Financial Statements in the ordinary course of
business, consistent with past practice, (iii) which are obligations to
perform under executory contracts in the ordinary course of business
(none of which is a liability resulting from a breach of contract or
warranty, tort, infringement or legal action), or (iv) which could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
(k) ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as
described in the Parent SEC Reports or in Section 5.1(k) of the Parent
Disclosure Schedule, since December 31, 2000, except with respect to
the actions contemplated by this Agreement, there has not been (i) any
Material Adverse Effect on Parent as of the date hereof; (ii) any
damage, destruction or loss of any assets of Parent or any of its
Subsidiaries (whether or not covered by insurance) that has had or
could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Parent; (iii) any material change by
Parent in its accounting methods, principles or practices; (iv) any
material revaluation by Parent or any of its Subsidiaries of any of its
assets, including, without limitation, writing down the value of
capitalized software or inventory or deferred tax assets or writing off
notes or accounts receivable other than in the ordinary course of
business; (v) any labor dispute or charge of unfair labor practice
(other than routine individual grievances), which, individually or in
the aggregate, has had or could reasonably be expected to have
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a Material Adverse Effect on Parent, any activity or proceeding by a labor
union or representative thereof to organize any employee of Parent or any
of its Subsidiaries or any campaign being conducted to solicit
authorization from employees to be represented by such labor union in each
case which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect on Parent; or (vi) any waiver
by Parent or any of its Subsidiaries of any rights of material value.
(l) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
None of the information supplied or to be supplied by Parent for inclusion
or incorporation by reference in the S-4 Registration Statement or the
Proxy Statement will (i) in the case of the S-4 Registration Statement, at
the time it becomes effective or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement and at the time of the Company Shareholders
Meeting and Parent Stockholders Meeting (if necessary) and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event
with respect to Parent, Merger Sub or any of their respective affiliates,
officers and directors or any of its Subsidiaries should occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the S-4 Registration Statement, Parent shall promptly inform
the Company, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company. The S-4 Registration
Statement will (with respect to Parent and Merger Sub) comply as to form in
all material respects with the requirements of the Securities Act. The
Proxy Statement will (with respect to Parent and Merger Sub) comply as to
form in all material respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, Parent and Merger Sub make no representation
or warranty with respect to any information supplied by, or related to, the
Company or any of its affiliates or advisors which is contained in any of
the foregoing documents.
(m) TAXES.
(i) Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, Parent and each of its Subsidiaries has timely
filed (after taking into account any extensions to file) all federal,
state, local and foreign Returns required by applicable Tax law to be
filed by Parent and each of its Subsidiaries. All Taxes owed by Parent
or any of its Subsidiaries to a taxing authority, or for which Parent
or any of its Subsidiaries is liable, whether to a taxing authority or
to other Persons or entities under a Significant Tax Agreement, as of
the date hereof, have been paid and, as of the Effective Time, will
have been paid. All Returns were true and correct in all material
respects when filed. Other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
treatment, Parent has made accruals for Taxes on the Parent Financial
Statements
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which are adequate to cover any Tax liability of Parent and each of
its Subsidiaries determined in accordance with generally accepted
accounting principles through the date of the Parent Financial
Statements.
(ii) Parent and each of its Subsidiaries have withheld
with respect to its employees, creditors, independent contractors,
shareholders or other parties all federal and state income taxes, FICA,
FUTA and other Taxes required to be withheld.
(iii) Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, there is no Tax deficiency outstanding, assessed,
or to Parent's Knowledge, proposed against Parent or any of its
Subsidiaries. Neither Parent nor any of its Subsidiaries have executed
or requested any waiver of any statute of limitations on or extending
the period for the assessment or collection of any federal or material
state Tax that is still in effect. There are no liens for Taxes on the
assets of Parent or of any of its Subsidiaries other than with respect
to Taxes not yet due and payable.
(iv) Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, to Parent's Knowledge, no federal or state Tax
audit or other examination of Parent or any of its Subsidiaries is
presently in progress, nor has Parent or any of its Subsidiaries been
notified either in writing or orally of any request for such federal
or state Tax audit or other examination.
(v) Neither Parent nor any of its Subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the Code)
owned by Parent.
(n) EMPLOYEE BENEFITS.
(i) For purposes hereof, the term "Parent Scheduled
Plans" means each "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), "employee welfare benefit plan" (as
such term is defined in Section 3(1) of ERISA), material personnel or
payroll policy (including vacation time, holiday pay, service awards,
moving expense reimbursement programs and sick leave) or material
fringe benefit, severance agreement or plan or any medical, hospital,
dental, life or disability plan, pension benefit plan, excess benefit
plan, bonus, stock option, stock purchase or other incentive plan
(including any equity or equity-based plan), tuition reimbursement,
automobile use, club membership, parental or family leave, top hat plan
or deferred compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, or collective bargaining agreement, indemnification
agreement, retainer agreement, or any other material benefit plan,
policy, program, arrangement, agreement or contract, whether or not
written or terminated, with respect to any employee, former employee,
director, independent
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contractor, or any beneficiary or dependent thereof maintained,
sponsored, adopted or administered by Parent or any current or former
Parent Plan Affiliate or to which Parent or any current or former
Parent Plan Affiliate has made contributions to, obligated itself or
had any liability (whether accrued, absolute, contingent or otherwise,
and whether due or to become due or asserted or unasserted) with
respect thereto. A "Parent Plan Affiliate" is each entity which is, or
has even been, treated as a single employer with Parent pursuant to
Section 4001 of ERISA or Section 414 of the Code.
(ii) Each Parent Scheduled Plan (1) has been in compliance
and currently complies in form and in operation with all applicable
requirements of ERISA and the Code, and any other legal requirements;
(2) has been and is operated and administered in compliance with its
terms (except as otherwise required by law); (3) has been and is
operated in compliance with applicable legal requirements in such a
manner as to qualify, where appropriate, for both Federal and state
purposes, for income tax exclusions to its participants, tax-exempt
income for its funding vehicle, and the allowance of deductions and
credits with respect to contributions thereto.
(iii) With respect to each Parent Scheduled Plan, there are
no claims or other proceedings pending or, to the Knowledge of Parent,
threatened with respect to the assets thereof (other than routine
claims for benefits).
(iv) With respect to each Parent Scheduled Plan, no
Person: (1) has entered into any "prohibited transaction," as such term
is defined in ERISA or the Code and the regulations, administrative
rulings and case law thereunder that is not otherwise exempt under Code
Section 4975 or ERISA Section 408 (or any administrative class
exemption issued thereunder); (2) has breached a fiduciary obligation
or violated Sections 402, 403, 405, 503, 510 or 511 of ERISA; (3) has
any liability for any failure to act or comply in connection with the
administration or investment of the assets of such plans; or (4)
engaged in any transaction or otherwise acted with respect to such
plans in such a manner which could subject Parent, or any fiduciary or
plan administrator or any other Person dealing with any such plan, to
liability under Section 409 or 502 of ERISA or Sections 4972 or 4976
through 4980B of the Code.
(v) With respect to any Parent Scheduled Plan which is a
welfare plan as defined in Section 3(1) of ERISA; (1) each such welfare
plan which is intended to meet the requirements for tax-favored
treatment under Subchapter B of Chapter 1 of the Code materially meets
such requirements; and (2) there is no disqualified benefit (as such
term is defined in Code Section 4976(b)) which would subject Parent or
any Parent Plan Affiliate to a tax under Code Section 4976(a).
(vi) Neither Parent nor any current or former Parent Plan
Affiliate has, or has ever had, any liability (including, but not
limited to, any contingent
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liability) with respect to any plan subject to Title IV of ERISA or
Section 412 of the Code or any plan maintained by any former Parent
Plan Affiliate.
(o) PARENT INTANGIBLE PROPERTY.
(i) Parent owns, or is licensed, or otherwise possesses
legally enforceable rights, to use, sell or license, as applicable, all
Proprietary Rights (excluding in each case Commercial Software) used,
sold, distributed or licensed in or as a part of the business of Parent
and its Subsidiaries as currently conducted ("Parent Proprietary
Rights").
(ii) Except as set forth in Section 5.1(o) of the Parent
Disclosure Schedule, or except for Commercial Software and Parent
Embedded Products for which Parent has valid non-exclusive licenses
that are adequate for the conduct of Parent's business, Parent is the
sole and exclusive owner of the Parent Proprietary Rights (free and
clear of any Encumbrances), and has sole and exclusive rights to the
use and distribution therefor or the material covered thereby in
connection with the services or products in respect of which such
Parent Proprietary Rights are currently being used, sold, licensed or
distributed.
(iii) Except as disclosed in Section 5.1(o) of the Parent
Disclosure Schedule, (A) Parent has not materially infringed on any
intellectual property rights of any third Persons and (B) none of the
Parent Proprietary Rights materially infringes on any intellectual
property rights of any third Persons.
(iv) Except as disclosed in Section 5.1(o) of the Parent
Disclosure Schedule, no actions, suits, claims, investigations or
proceedings with respect to the Parent Proprietary Rights are pending
or, to the Knowledge of Parent, threatened by any Person, (A) alleging
that the manufacture, sale, licensing, distributing or use of any
Parent Proprietary Rights as now manufactured, sold, licensed,
distributed or used by Parent or any third party infringes on any
intellectual property rights of any third party or Parent, (B) against
the use or distribution by Parent or any third party of any technology,
know-how or computer software used in the business of Parent and its
Subsidiaries as currently conducted or (iii) challenging the ownership
by Parent, validity or effectiveness of any such Parent Proprietary
Rights.
(v) For the purpose of this Section 5.1(o), the following
terms have the following definitions: (A) the term "Commercial
Software" means packaged commercially available software programs
generally available to the public which have been licensed to Parent
pursuant to end-user licenses that permit the use of such programs
without a right to modify, distribute or sublicense the same; (B) the
term "Parent Embedded Products" means all software that are
incorporated in any existing product or service of Parent; and (C) the
term "Proprietary Rights" means (1) patents, patent applications,
patent disclosures and inventions, (2) trademarks, service marks, trade
dress, trade names, Internet domain names and
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corporate names (in their respective state of incorporation) and
registrations and applications for registration thereof, (3) copyrights
and registrations and applications for registration thereof, (4) mask
works and registrations and applications for registration thereof, (5)
computer software, data and documentation (in both source code and
object code form), (6) trade secrets and other confidential and
proprietary information (including, but not limited to, inventions
(whether patentable or unpatentable), know-how and copyrightable works,
(7) other confidential and proprietary intellectual property rights,
(8) copies and tangible embodiments thereof (in whatever form or
medium) and (9) all renewals, extensions, revivals and resuscitations
thereof.
(p) AGREEMENTS, CONTRACTS AND COMMITMENTS; MATERIAL
CONTRACTS. Except as set forth in Section 5.1(m) of the Parent
Disclosure Schedule, (i) each material agreement, contract, obligation,
promise or undertaking (whether written or oral and whether express or
implied) to which Parent is a party or by which Parent or its assets is
or may become bound (a "Parent Contract") is in full force and effect;
and (ii) no condition exists or event has occurred that to the
Knowledge of Parent, (whether with or without notice or lapse of time
or both, or the happening or occurrence of any other event) would
constitute a default by Parent or a Subsidiary of Parent or, to the
Knowledge of Parent, any other party thereto under, or result in a
right in termination of, any Parent Contract, except as could not,
individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect on Parent.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge
of Parent, neither Parent, any Subsidiary of Parent nor any of their
respective directors, officers, employees or agents has, with respect
to the businesses of Parent or its Subsidiaries, (i) used any funds for
any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any Person or entity.
(r) INSURANCE. The insurance policies (including
"self-insurance" programs) now maintained by Parent (the "Parent
Insurance Policies") are in full force and effect, Parent is not in
material default under any of the Parent Insurance Policies and no
claim for coverage under any of the Parent Insurance Policies has been
denied. Parent has not received any notice of cancellation or intent to
cancel or increase or intent to increase premiums with respect to such
insurance policies nor, to the Knowledge of Parent, is there any basis
for any such action.
(s) LABOR AND EMPLOYEE RELATIONS. None of the employees
of Parent or any of its Subsidiaries is represented in his or her
capacity as an employee of such company by any labor organization.
Neither Parent nor any of its Subsidiaries has recognized any labor
organization nor has any labor organization been elected as the
collective bargaining
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agent of any of their employees, nor has Parent or any of its
Subsidiaries signed any collective bargaining agreement or union
contract recognizing any labor organization as the bargaining agent of
any of their employees. To the Knowledge of Parent, there is no active
or current union organization activity involving the employees of
Parent or any of its Subsidiaries, nor has there ever been union
representation involving employees of Parent or any of its
Subsidiaries. To the Knowledge of Parent, Parent and each of its
Subsidiaries is in compliance with all Federal, foreign (as
applicable), and state laws regarding employment practices, including
laws relating to workers' safety, sexual harassment or discrimination,
except where the failure to so be in compliance, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. To the
Knowledge of Parent, none of the Parent Key Employees has any plans to
terminate his or her employment with Parent or any of its Subsidiaries.
(t) PERMITS. Parent and each of its Subsidiaries hold all
licenses, permits, registrations, orders, authorizations, approvals and
franchises that are required to permit it to conduct its businesses as
presently conducted, except where the failure to hold such licenses,
permits, registrations, orders, authorizations, approvals or franchises
could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on Parent. All such licenses, permits,
registrations, orders, authorizations, approvals and franchises are
now, and will be after the Closing, valid and in full force and effect,
except where the failure to be valid and in full force and effect or to
have the benefit of any such license, permit, registration, order,
authorization, approval or franchise could not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on
Parent. Neither Parent nor any of its Subsidiaries has received any
notification of any asserted present failure (or past and unremedied
failure) by it to have obtained any such license, permit, registration,
order, authorization, approval or franchise, except where such failure
could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on Parent.
5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent and Merger Sub that the statements
contained in this Section 5.2 are true and correct, except to the extent
specifically set forth on the disclosure schedule delivered contemporaneously
with this Agreement by the Company to Parent and Merger Sub (the "Company
Disclosure Schedule"). The Company Disclosure Schedule shall be arranged in
sections and paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 5.2, and the disclosure in any paragraph shall qualify
only the corresponding paragraph in this Section 5.2 or other paragraphs or
sections to which it is clearly apparent (from a plain reading of the
disclosure) that such disclosure relates.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification,
except where failure to be so could not, individually or in the
aggregate, reasonably be expected to have a Material
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Adverse Effect on the Company. Each of the Company and its Subsidiaries
has all requisite power and authority (corporate or otherwise) to own
its properties and to carry on its business as it is now being
conducted. All of the Subsidiaries of the Company are set forth in
Section 5.2(a) of the Company Disclosure Schedule. The Company has
heretofore made available to Parent complete and correct copies of its
Articles of Incorporation and by-laws and the charter documents of its
Subsidiaries, each as amended.
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of (i) 100,000,000 shares of common stock, no par
value per share, of which 21,930,551 shares were issued and outstanding
on the date hereof, and (ii) 20,000,000 shares of preferred stock, no
par value per share, none of which are issued or outstanding. All of
the outstanding shares of capital stock of the Company and its
Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable. The Company has no outstanding stock
appreciation rights, phantom stock or similar rights. All outstanding
shares of capital stock or other equity interests of the Subsidiaries
of the Company are owned by the Company or a direct or indirect
wholly-owned Subsidiary of the Company, free and clear of all liens,
pledges, charges, encumbrances, claims and options of any nature.
Except for options to purchase 3,690,719 Company Shares issued pursuant
to the Melita International Corporation 1992 Stock Option Plan, as
amended, the Melita International Corporation 1997 Stock Option Plan,
as amended, and the eshare Technologies, Inc. Stock Option and
Restricted Stock Purchase Plan, as amended (collectively, the "Company
Option Plans"), there are no outstanding or authorized options,
warrants, calls, rights (including preemptive rights), commitments or
any other agreements of any character which the Company or any of its
Subsidiaries is a party to, or may be bound by, requiring it to issue,
transfer, grant, sell, purchase, redeem or acquire any shares of
capital stock or any of its securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares
of capital stock of the Company or any of its Subsidiaries. As of the
date hereof, no Company Shares have been made available for issuance
pursuant to the Melita International Corporation Employee Stock
Purchase Plan (the "ESPP"). There are no shareholder agreements, voting
trusts or other agreements or understandings to which the Company is a
party or to which it is bound relating to the voting of any shares of
the capital stock of the Company. No existing rights with respect to
the registration of Company Shares under the Securities Act, including,
but not limited to, demand rights or piggy-back registration rights,
shall apply with respect to any Parent Shares issuable in connection
with the Merger or upon exercise of Substitute Options. The Company has
provided to Parent a list, as of the date hereof of the outstanding
options and warrants to acquire Company Shares, the name of the holder
of such option or warrant, the exercise price of such option or
warrant, the number of shares as to which such option or warrant will
have vested at such date and whether the exercisability of such option
or warrant will be accelerated in any way by the transactions
contemplated by this Agreement and the extent of acceleration, if any,
and any adjustments to such options or warrants resulting from the
consummation of the transactions contemplated by this Agreement. Since
May 29, 2001, no Company Options or other options or warrants
convertible or exchangeable for Company Shares have been
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issued or accelerated or had their terms modified. Szlam has executed
and delivered the Voting Agreement.
(c) FAIRNESS OPINION. The Board of Directors of the
Company has received an opinion in writing from Broadview International
LLC, to the effect that, as of the date hereof and based upon and
subject to the matters stated therein, the consideration to be received
by the holders of Company Shares in the Merger is fair to such holders
from a financial point of view and a copy of such opinion has been
provided to Parent, and such opinion has not been withdrawn, revoked or
modified.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of
Directors of the Company has declared the Merger advisable, and the
Company has the requisite corporate power and authority to approve,
authorize, execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby (other than the approval of this Agreement and the Merger by the
shareholders of the Company in accordance with the GBCC). This
Agreement has been duly and validly executed and delivered by the
Company and, assuming this Agreement constitutes the valid and binding
agreement of Parent and Merger Sub, constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity.
(e) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither
the Company nor any of its Subsidiaries is: (i) in violation of its
Articles of Incorporation or by-laws or similar documents; (ii) in
default in the performance of any obligation, agreement or condition of
any debt instrument which (with or without the passage of time or the
giving of notice, or both) affords to any Person the right to
accelerate any indebtedness or terminate any right; (iii) in default
under or breach of (with or without the passage of time or the giving
of notice) any other contract to which it is a party or by which it or
its assets are bound; or (iv) in violation of any law, regulation,
administrative order or judicial order, decree or judgment (domestic or
foreign) applicable to it or its business or assets, except where any
violation, default or breach under items (ii), (iii), or (iv) could not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of its
Certificate of Incorporation or by-laws; (ii) require any consent,
approval, authorization or permit of, or registration or filing with or
notification to, any governmental or regulatory authority, in each
case, by or on behalf of the Company or
27
any of its Subsidiaries, except (A) in connection with the applicable
requirements, if any, of the HSR Act, (B) pursuant to the applicable
requirements of the Securities Act and the Exchange Act and the NNM,
(C) the filing of the Certificates of Merger pursuant to the DGCL and
the GBCC and appropriate documents with the relevant authorities of
other states in which the Company is authorized to do business, (D) as
may be required by any applicable state securities laws, (E) such
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the antitrust or
competition laws of any foreign country or (F) where the failure to
obtain such consent, approval, authorization or permit, or to make such
registration, filing or notification, could not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on
the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby; (iii) result in a
violation or breach of, or constitute (with or without notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance)
under any of the terms, conditions or provisions of any indenture,
note, license, lease, agreement or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which any
of their assets may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation, or acceleration or
lien or other charge or encumbrance) as to which requisite waivers or
consents have been obtained or which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on
the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby; (iv) cause the
suspension or revocation of any authorizations, consents, approvals or
licenses currently in effect which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the
Company; or (v) assuming the consents, approvals, authorizations or
permits and registrations, filings or notifications referred to in this
Section 5.2(f) are duly and timely obtained or made, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its Subsidiaries or to any of their respective
assets, except for violations which could not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on
the Company or adversely affect the ability of the Company to
consummate the transactions contemplated hereby.
(g) LITIGATION. Except as disclosed in Company SEC
Reports filed prior to the date hereof, or as set forth in Section
5.2(g) of the Company Disclosure Schedule, there are no actions, suits,
claims, investigations or proceedings pending or, to the Knowledge of
the Company, threatened against the Company or any of its Subsidiaries
that, individually or in the aggregate, could reasonably be expected to
result in obligations or liabilities of the Company or any of its
Subsidiaries that would have, or that would otherwise have,
individually or in the aggregate, a Material Adverse Effect on the
Company or a Material Adverse Effect on the Parties' ability to
consummate the transactions contemplated by this Agreement. Neither the
Company nor any of its Subsidiaries is subject to any outstanding
judgment, order, writ, injunction or decree which (i) has or may have
the effect of prohibiting or impairing any business practice of the
Company or any of its Subsidiaries, any acquisition of property
(tangible or
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intangible) by the Company or any of its Subsidiaries, the conduct of
the business by the Company or any of its Subsidiaries, or Company's
ability to perform its obligations under this Agreement or (ii),
insofar as can be reasonably foreseen, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect on the Company.
(h) SEC REPORTS; FINANCIAL STATEMENTS.
(i) The Company has filed all forms, reports and
documents with the SEC required or deemed advisable to be
filed by it pursuant to the federal securities laws and the
SEC rules and regulations thereunder, all of which complied in
all material respects with all applicable requirements of the
Securities Act and the Exchange Act (the "Company SEC
Reports"). None of the Company SEC Reports, including, without
limitation, any financial statements or schedules included
therein, at the time filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date
of such filing) 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. None of the Company's Subsidiaries is required to
file any forms, reports or other documents with the SEC.
(ii) The consolidated balance sheets and the
related statements of income, shareholders' equity or deficit
and cash flow (including the related notes thereto) of the
Company included in the Company SEC Reports (collectively, the
"Company Financial Statements") comply as to form in all
material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent
throughout the periods involved (except as otherwise noted
therein or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under
the Exchange Act), and present fairly the consolidated
financial position of the Company and its consolidated
Subsidiaries as of their respective dates, and the results of
its operations and its cash flow for the periods presented
therein, except that the unaudited interim financial
statements do not include footnote disclosure of the type
associated with audited financial statements and were or are
subject to normal and recurring year-end adjustments which
were not or are not expected to be material in amount.
(iii) Since December 31, 2000, there has not been
any material change, by the Company or any of its Subsidiaries
in accounting principles, methods or policies for financial
accounting purposes, except as required by concurrent changes
in generally accepted accounting principles, or as disclosed
in the Company SEC Reports. There are no material amendments
or modifications to agreements, documents or other instruments
which previously had been filed by
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the Company with the SEC pursuant to the Securities Act or the
Exchange Act, which have not been filed with the SEC but which
are required to be filed.
(i) NO LIABILITIES. Neither the Company nor any of its
Subsidiaries has any material indebtedness, obligations or liabilities
of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted), and, to the
Knowledge of the Company, there is no reasonable basis for the
assertion of any claim with respect to any indebtedness, obligation or
liability of any nature against the Company or any of its Subsidiaries,
except for indebtedness, obligations and liabilities (i) which are
fully reflected in, reserved against or otherwise described in the most
recent Company Financial Statements, (ii) which have been incurred
after the most recent company Financial Statements in the ordinary
course of business, consistent with past practice, (iii) which are
obligations to perform under executory contracts in the ordinary course
of business (none of which is a liability resulting from a breach of
contract or warranty, tort, infringement or legal action) or (iv)
which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company.
(j) ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as
described in the Company SEC Reports, since December 31, 2000, except
with respect to the actions contemplated by this Agreement, the Company
has conducted its business only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been
(i) any Material Adverse Effect on the Company, (ii) any damage,
destruction or loss of assets of the Company or any of its Subsidiaries
(whether or not covered by insurance) that has had or could reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, (iii) any material change by the Company
in its accounting methods, principles or practices; (iv) any material
revaluation by the Company or any of its Subsidiaries of any of its
assets, including, without limitation, writing down the value of
capitalized software or inventory or deferred tax assets or writing off
notes or accounts receivable other than in the ordinary course of
business; (v) any labor dispute or charge of unfair labor practice
(other than routine individual grievances), which, individually or in
the aggregate, has had or could reasonably be expected to have a
Material Adverse Effect on the Company, any activity or proceeding by a
labor union or representative thereof to organize any employee of the
Company or any of its Subsidiaries or any campaign being conducted to
solicit authorization from employees to be represented by such labor
union in each case which, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect on the
Company; (vi) any waiver by the Company or any of its Subsidiaries of
any rights of material value or (vii) any other action or event that
would have required the consent of Parent pursuant to Section 6.1 had
such action or event occurred after the date of this Agreement.
(k) BROKERS AND FINDERS. Except for the fees and expenses
payable to Broadview International LLC, which fees and expenses are
determined pursuant to its agreement with the Company, a true and
complete copy of which (including all amendments) has
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been furnished to Parent, neither the Company nor any of its
Subsidiaries has employed any investment banker, broker, finder,
consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
(l) S-4 REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
the S-4 Registration Statement or the Proxy Statement will (i) in the
case of the S-4 Registration Statement, at the time it becomes
effective or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or (ii) in the case of the Proxy Statement, at the time of
the mailing of the Proxy Statement, at the time of the Company
Shareholders Meeting and Parent Stockholders Meeting (if necessary),
and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries should occur which is
required to be described in an amendment of, or a supplement to, the
Proxy Statement or the S-4 Registration Statement, the Company shall
promptly inform Parent so that such event may be so described and such
amendment or supplement promptly filed with the SEC and, as required by
law, disseminated to the shareholders of the Company. The S-4
Registration Statement will (with respect to the Company) comply as to
form in all material respects with the requirements of the Securities
Act. The Proxy Statement will (with respect to the Company) comply as
to form in all material respects with the requirements of the Exchange
Act. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by, or related to,
Parent or Merger Sub or any of their affiliates or advisors which is
contained in any of the foregoing documents.
(m) TAXES.
(i) Except as set forth in Section 5.2 (m) of
the Company Disclosure Schedule, the Company and each of its
Subsidiaries has timely filed (after taking into account any
extensions to file) all federal, state, local and foreign
Returns required by applicable Tax law to be filed by the
Company and each of its Subsidiaries. All Taxes owed by the
Company or any of its Subsidiaries to a taxing authority, or
for which the Company or any of its Subsidiaries is liable,
whether to a taxing authority or to other Persons or entities
under a Significant Tax Agreement, as of the date hereof, have
been paid and, as of the Effective Time, will have been paid.
All Returns were true and correct in all material respects
when filed. Other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
treatment, the Company has made accruals for Taxes on the
Company Financial Statements which are
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adequate to cover any Tax liability of the Company and each of
its Subsidiaries determined in accordance with generally
accepted accounting principles through the date of the Company
Financial Statements.
(ii) The Company and each of its Subsidiaries
have withheld with respect to its employees, creditors,
independent contractors, shareholders or other parties all
federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(iii) There is no Tax deficiency outstanding,
assessed, or to the Company's Knowledge, proposed against the
Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries have executed or requested any waiver
of any statute of limitations on or extending the period for
the assessment or collection of any federal or material state
Tax that is still in effect. There are no liens for Taxes on
the assets of Company or of any of its Subsidiaries other than
with respect to Taxes not yet due and payable.
(iv) No federal or state Tax audit or other
examination of the Company or any of its Subsidiaries is
presently in progress, nor has the Company or any of its
Subsidiaries been notified either in writing or orally of any
request for such federal or state Tax audit or other
examination.
(v) Neither the Company nor any of its
Subsidiaries has filed any consent agreement under Section
341(f) of the Code or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by the
Company.
(vi) Neither the Company nor any of its
Subsidiaries is a party to (A) any agreement with a party
other than the Company or any of its Subsidiaries providing
for the allocation or payment of Tax liabilities or payment
for Tax benefits with respect to a consolidated, combined or
unitary Return which Return includes or included the Company
or any Subsidiary or (B) any Significant Tax Agreement other
than any Significant Tax Agreement described in (A).
(vii) Except for the group of which the Company
and its Subsidiaries are now presently members, neither the
Company nor any of its Subsidiaries has ever been a member of
an affiliated group of corporations within the meaning of
Section 1504 of the Code. There is no excess loss account,
deferred intercompany gain or loss, or intercompany items as
such terms are defined in the regulations promulgated under
the Code, that exist with respect to the Company or any of its
Subsidiaries.
(viii) Neither the Company nor any of its
Subsidiaries is a party to any joint venture, partnership or
other arrangement or contract which could be treated as a
partnership for federal income tax purposes.
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(ix) Neither the Company nor any of its
Subsidiaries has agreed to make nor is it required to make any
adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise which have not yet
been taken into account.
(x) There is no contract, agreement, plan or
arrangement covering any individual or entity treated as an
individual included in the business or assets of the Company
or its Subsidiaries that, individually or collectively, could
give rise to the payment by the Company, a Subsidiary, Merger
Sub or Parent of an amount that would not be deductible by
reason of Sections 280G or 162(m) of the Code or similar
provisions of Tax law.
(xi) The Company is not, and has not at any time
been, a "United States real property holding corporation"
within the meaning of Section 897 (c)(2) of the Code.
(n) EMPLOYEE BENEFITS.
(i) For purposes hereof, the term "Company Scheduled
Plans" means each "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), "employee welfare benefit plan" (as
such term is defined in Section 3(1) of ERISA), material personnel or
payroll policy (including vacation time, holiday pay, service awards,
moving expense reimbursement programs and sick leave) or material
fringe benefit, severance agreement or plan or any medical, hospital,
dental, life or disability plan, pension benefit plan, excess benefit
plan, bonus, stock option, stock purchase or other incentive plan
(including any equity or equity-based plan), tuition reimbursement,
automobile use, club membership, parental or family leave, top hat plan
or deferred compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, or collective bargaining agreement, indemnification
agreement, retainer agreement, or any other material benefit plan,
policy, program, arrangement, agreement or contract, whether or not
written or terminated, with respect to any employee, former employee,
director, independent contractor, or any beneficiary or dependent
thereof maintained, sponsored, adopted or administered by the Company
or any current or former Company Plan Affiliate or to which the Company
or any current or former Company Plan Affiliate has made contributions
to, obligated itself or had any liability (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted
or unasserted) with respect thereto. A "Company Plan Affiliate" is each
entity which is, or has even been, treated as a single employer with
the Company pursuant to Section 4001 of ERISA or Section 414 of the
Code. The Company has provided Parent with copies of all employee
manuals of the Company and its Subsidiaries that include personnel
policies applicable to any of their respective employees.
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(ii) The Company has made available to Parent a complete
and accurate copy of each written Company Scheduled Plan, together
with, if applicable, a copy of audited financial statements, actuarial
reports and Form 5500 Annual Reports (including required schedules), if
any, for the three (3) most recent plan years, the most recent IRS
determination letter or IRS recognition of exemption; each other
material letter, ruling or notice issued by a governmental body with
respect to each such plan, a copy of each trust agreement, insurance
contract or other funding vehicle, if any, with respect to each such
plan, the current summary plan description and summary of material
modifications thereto with respect to each such plan and Form 5310.
Section 5.2(n) of the Company Disclosure Schedule contains a
description of the material terms of any unwritten Company Scheduled
Plan as comprehended to the Closing Date. There are no negotiations,
demands or proposals which are pending or threatened which concern
matters now covered, or that would be covered, by the foregoing types
of unwritten Company Scheduled Plans.
(iii) Each Company Scheduled Plan (1) has been in
compliance and currently complies in form and in operation with all
applicable requirements of ERISA and the Code, and any other legal
requirements; (2) has been and is operated and administered in
compliance with its terms (except as otherwise required by law); (3)
has been and is operated in compliance with applicable legal
requirements in such a manner as to qualify, where appropriate, for
both Federal and state purposes, for income tax exclusions to its
participants, tax-exempt income for its funding vehicle, and the
allowance of deductions and credits with respect to contributions
thereto. Each Company Scheduled Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter or recognition of exemption from the Internal Revenue Service on
which the Company can rely.
(iv) With respect to each Company Scheduled Plan, there
are no claims or other proceedings pending or, to the Knowledge of the
Company, threatened with respect to the assets thereof (other than
routine claims for benefits).
(v) With respect to each Company Scheduled Plan, no
Person: (1) has entered into any "prohibited transaction," as such term
is defined in ERISA or the Code and the regulations, administrative
rulings and case law thereunder that is not otherwise exempt under Code
Section 4975 or ERISA Section 408 (or any administrative class
exemption issued thereunder); (2) has breached a fiduciary obligation
or violated Sections 402, 403, 405, 503, 510 or 511 of ERISA; (3) has
any liability for any failure to act or comply in connection with the
administration or investment of the assets of such plans; or (4)
engaged in any transaction or otherwise acted with respect to such
plans in such a manner which could subject Parent, or any fiduciary or
plan administrator or any other Person dealing with any such plan, to
liability under Section 409 or 502 of ERISA or Sections 4972 or 4976
through 4980B of the Code.
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(vi) Each Company Scheduled Plan (other than any stock
option plan) may be amended, terminated, modified or otherwise revised
by the Company or Parent, on and after the Closing, without further
liability to the Company or Parent (other than ordinary administrative
expenses or routine claims for benefit plans).
(vii) None of the Company or any current or former Company
Plan Affiliate has at any time participated in, made contributions to
or had any other liability with respect to any Company Scheduled Plan
which is a "multi-employer plan" as defined in Section 4001 of ERISA, a
"multi-employer plan" within the meaning of Section 3(37) of ERISA, a
"multiple employer plan" within the meaning of Section 413(c) of the
Code, a "multiple employer welfare arrangement" within the meaning of
Section 3(40) of ERISA or a plan that is subject to Title IV of ERISA.
(viii) No Company Scheduled Plan provides, or reflects or
represents any liability to provide retiree health coverage to any
person for any reason, except as may be required by COBRA or applicable
state insurance laws, and neither the Company nor any Company Plan
Affiliate has any liability (whether accrued, absolute, contingent or
otherwise, and whether due or to become due to asserted or unasserted)
to any current or former employee, consultant or director (either
individually or as a group) to provide retiree health coverage, except
to the extent required by applicable continuation coverage statutes.
(ix) Neither the Company nor a Company Plan Affiliate has
any liability for any excise tax imposed by Code Sections 4971, 4972,
4977, or 4979.
(x) With respect to any Company Scheduled Plan which is a
welfare plan as defined in Section 3(1) of ERISA; (1) each such welfare
plan which is intended to meet the requirements for tax-favored
treatment under Subchapter B of Chapter 1 of the Code materially meets
such requirements; and (2) there is no disqualified benefit (as such
term is defined in Code Section 4976(b)) which would subject the
Company or any Company Plan Affiliate to a tax under Code Section
4976(a).
(xi) Each Company Scheduled Plan that has been adopted or
maintained by the Company or any Company Plan Affiliate, whether
informally or formally, or with respect to which the Company or any
Company Plan Affiliate will or may have any liability, for the benefit
of the Company Employees who perform services outside the United States
(the "Company International Employee Plans") has been established,
maintained and administered in compliance with its terms and conditions
and with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such Company International
Employee Plan. Furthermore, no Company International Employee Plan has
unfunded liabilities, that, as of the Effective Time, will not be
offset by insurance or fully accrued. Except as required by law, no
condition exists that would
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prevent the Company or any Company Plan Affiliate from terminating or
amending any Company International Employee Plan at any time for any
reason without liability to the Company or any Company Plan Affiliate
(other than ordinary administration expenses or routine claims for
benefits).
(xii) Neither the Company nor any current or former Company
Plan Affiliate has, or has ever had, any liability (including, but not
limited to, any contingent liability) with respect to any plan subject
to Title IV of ERISA or Section 412 of the Code or any plan maintained
by any former Company Plan Affiliate.
(xiii) Other than by reason of actions taken following the
Closing, neither the execution of this Agreement nor the consummation
of the transactions contemplated by this Agreement will (1) entitle any
current or former employee of the Company to severance pay,
unemployment compensation or any other payment, (2) accelerate the time
of payment or vesting of any payment (other than for a terminated or
frozen tax-qualified plan, pursuant to a requirement herein to freeze
or terminate such plan), cause the forgiveness of any indebtedness, or
increase the amount of any compensation due to any such employee or
former employee, (3) result in any prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code for which an exemption
is not available, or (4) give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the
Code.
(xiv) The Company has not entered into any contract,
agreement or arrangement covering any employee that gives rise to the
payment of any amount that would not be deductible pursuant to the
terms of Section 162(m) of the Code.
(xv) The Company Option Plans and the ESPP are
"broadly-based plans" as defined under the rules and regulations of the
NNM and have been approved by Company shareholders at duly convened
shareholders meetings with respect to which the Company solicited
proxies in favor of each of the Company Option Plans and the ESPP.
(o) COMPANY INTANGIBLE PROPERTY.
(i) Except as set forth in Section 5.2(o) of the Company
Disclosure Schedule, the Company owns, or is licensed, or otherwise
possesses legally enforceable rights, to use, sell or license, as
applicable, all Proprietary Rights (excluding in each case Commercial
Software) used, sold, distributed or licensed in or as a part of the
business of the Company and its Subsidiaries as currently conducted
(the "Company Proprietary Rights"). Except as disclosed in Section
5.2(o) of the Company Disclosure Schedule, the Company has licenses for
all copies of Commercial Software used in its business and the Company
does not have any obligation to pay fees, royalties and other amounts
at any time pursuant to any such license.
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(ii) Except for Commercial Software and Company Embedded
Products for which the Company has valid non-exclusive licenses that
are adequate for the conduct of the Company's business, the Company is
the sole and exclusive owner of the Company Proprietary Rights (free
and clear of any Encumbrances), and has sole and exclusive rights to
the use and distribution therefor or the material covered thereby in
connection with the services or products in respect of which such
Company Proprietary Rights are currently being used, sold, licensed or
distributed. The Company is not contractually obligated to pay
compensation to any third party with respect to the use or distribution
of any Company Proprietary Rights, except pursuant to the Contracts set
forth in Section 5.2(o) of the Company Disclosure Schedule.
(iii) Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, (A) the Company has not materially infringed on
any intellectual property rights of any third Persons and (B) none of
the Company Proprietary Rights materially infringes on any intellectual
property rights of any third Persons.
(iv) Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, no actions, suits, claims, investigations or
proceedings with respect to the Company Proprietary Rights are pending
or, to the Knowledge of the Company, threatened by any Person, (A)
alleging that the manufacture, sale, licensing, distributing or use of
any Company Proprietary Rights as now manufactured, sold, licensed,
distributed or used by the Company or any third party infringes on any
intellectual property rights of any third party or the Company, (B)
against the use or distribution by the Company or any third party of
any technology, know-how or computer software used in the business of
the Company and its Subsidiaries as currently conducted or (iii)
challenging the ownership by the Company, validity or effectiveness of
any such Company Proprietary Rights.
(v) Except as disclosed in Section 5.2(o) of the Company
Disclosure Schedule, the Company has not entered into any agreement,
contract or commitment under which the Company is restricted, and the
Company is not otherwise restricted, from (A) selling, licensing or
otherwise distributing any products to any class or type of customers
or directly or through any type of channel in any geographic area or
during any period of time, or (B) combining, incorporating, embedding
or bundling or allowing others to combine, incorporate, embed or bundle
any of its products with those of another party, as each such
restriction may effect any product currently being developed, marketed
or sold by the Company or that otherwise would have a Material Adverse
Effect on the Company.
(vi) The Company has taken reasonable security measures to
safeguard and maintain its rights in all of the Company Proprietary
Rights. To the
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Company's Knowledge, except as set forth in Section 5.2(o) of the
Company Disclosure Schedule, all copies of the source code to Company
Software and Company trade secrets are physically in the control of
the Company at the Company's facilities. All officers, employees and
consultants of the Company who have access to proprietary information
have executed and delivered to the Company an agreement regarding the
protection of proprietary information, and the assignment to or
ownership by the Company of all Company Proprietary Rights arising
from the services performed for the Company by such Persons. To the
Knowledge of the Company, no current or prior officers, employees or
consultants of the Company claim, and the Company is not aware of any
grounds to assert a claim to, any ownership interest in any Company
Proprietary Right as a result of having been involved in the
development of such property while employed by or consulting to the
Company or otherwise.
(vii) All authors of the software included in the Company
Proprietary Rights (the "Company Software") or any other Person who
participated in the development of the Company Software or any portion
thereof or performed any work related to the Company Software (such
authors and other persons or entities are collectively referred to as
the "Company Software Authors") made his or her contribution to the
Company Software within the scope of employment with the Company, as a
"work made for hire," and was directed by the Company to work on the
Company Software, or as a consultant who assigned all rights to such
products to the Company. Except as set forth in Section 5.2(o) of the
Company Disclosure Schedule, the Company Software and every portion
thereof are an original creation of the Company Software Authors and do
not contain any source code or portions of source code (including any
"canned program") created by any persons other than the Company
Software Authors. The Company has not, by any of its acts or omissions,
or by acts or omissions of its affiliates, directors, officers,
employees, agents, or representatives caused any of its proprietary
rights in the Company Software, including copyrights, trademarks, and
trade secrets to be transferred, diminished, or adversely affected to
any material extent.
(viii) There are no material defects in the Company's
software products, and such products shall perform in substantial
accordance with related documentation and promotional material supplied
by Company, and there are no material errors in any documentation,
specifications, manuals, user guides, promotional material, internal
notes and memos, technical documentation, drawings, flow charts,
diagrams, source language statements, demo disks, benchmark test
results, and other written materials related to, associated with or
used or produced in the development of the Company's software products.
Except as disclosed in Section 5.2(o) of the Company Disclosure
Schedule, computer software included in the Company Proprietary Rights
does not contain any "back door," "time bomb," "Trojan horse," "worm,"
"drop dead device," "virus" (as these terms are commonly used in the
computer software industry), or
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other software routines designed to permit unauthorized access, to
disable or erase software or data, or to perform any other similar
type of functions.
(ix) No government funding or university or college
facilities were used in the development of the computer software
programs or applications owned by the Company.
(x) For the purpose of this Section 5.2(o), the following
terms have the following definitions: (A) the term "Commercial
Software" means packaged commercially available software programs
generally available to the public which have been licensed to the
Company pursuant to end-user licenses that permit the use of such
programs without a right to modify, distribute or sublicense the same;
(B) the term "Company Embedded Products" means software that are
incorporated in any existing product or service of the Company; and (C)
the term "Proprietary Rights" means (1) patents, patent applications,
patent disclosures and inventions, (2) trademarks, service marks, trade
dress, trade names, Internet domain names and the Company's corporate
name (in its state of incorporation) and registrations and applications
for registration thereof, (3) copyrights and registrations and
applications for registration thereof, (4) mask works and registrations
and applications for registration thereof, (5) computer software, data
and documentation (in both source code and object code form), (6) trade
secrets and other confidential and proprietary information (including,
but not limited to, inventions (whether patentable or unpatentable),
know-how and copyrightable works, (7) other confidential and
proprietary intellectual property rights, (8) copies and tangible
embodiments thereof (in whatever form or medium) and (9) all renewals,
extensions, revivals and resuscitations thereof.
(p) AGREEMENTS, CONTRACTS AND COMMITMENTS; MATERIAL CONTRACTS.
Except as set forth in Section 5.2(p) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to or is bound by:
(i) any contract relating to the borrowing of money, the
guaranty of another Person's borrowing of money, or the creation of an
encumbrance or lien on the assets of the Company or any of its
Subsidiaries and with outstanding obligations in excess of $500,000;
(ii) any employment or consulting agreement, contract or
commitment with any officer or director level employee or member of the
Company's Board of Directors or any other employee who is one of the
fifty (50) most highly compensated employees, including base salary and
bonuses (the "Company Key Employees"), other than those that are
terminable by the Company or any of its Subsidiaries on no more than
thirty (30) days notice without liability or financial obligation or
benefits generally available to employees of the Company, except to the
extent general principles of wrongful termination law may limit the
Company's or any of its Subsidiaries' ability to terminate employees at
will;
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(iii) any agreement of indemnification or guaranty by the
Company or any of its Subsidiaries not entered into in the ordinary
course of business other than indemnification agreements between the
Company or any of its Subsidiaries and any of its officers or directors
in standard forms as filed by the Company with the SEC;
(iv) any agreement, contract or commitment containing any
covenant limiting the freedom of the Company or any of its Subsidiaries
to engage in any line of business or conduct business in any
geographical area, compete with any person or granting any exclusive
distribution rights or limits the use or exploitation of the Company
Intellectual Property Rights;
(v) any contract for capital expenditures in excess of
$1,000,000;
(vi) any agreement, contract or commitment currently in
force relating to the disposition or acquisition of assets not in the
ordinary course of business; or
(vii) any agreement, contract or commitment for the
purchase of any ownership interest in any corporation, partnership,
joint venture or other business enterprise for consideration in excess
of $500,000, in any case, which includes all escrow and earn-out
agreements with outstanding obligations.
A true and complete copy (including all material amendments)
of each agreement, contract, obligation, promise or undertaking
(whether written or oral and whether express or implied) to which the
Company is a party or by which the Company or its assets is or may
become bound (a "Company Contract"), or a summary of each oral
contract, has been made available to Parent. Each Company Contract is
in full force and effect. No condition exists or event has occurred
that, (whether with or without notice or lapse of time or both, or the
happening or occurrence of any other event) would constitute a default
by the Company or a Subsidiary of the Company or, to the Knowledge of
the Company, any other party thereto under, or result in a right in
termination of, any Company Contract, except as could not, individually
or in the aggregate, be reasonably expected to result in a Material
Adverse Effect on the Company.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the Knowledge
of the Company, neither the Company, any Subsidiary of the Company nor
any of their respective directors, officers, employees or agents has,
with respect to the businesses of the Company or its Subsidiaries, (i)
used any funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any Person or entity.
(r) LISTINGS. The Company's securities are not listed, or
quoted, for trading on any U.S. domestic or foreign securities
exchange, other than the NNM.
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(s) ENVIRONMENTAL MATTERS. Except as disclosed in the
Company SEC Reports filed prior to the date hereof, the Company and its
Subsidiaries and the operations, assets and properties thereof are in
material compliance with all Environmental Laws; (ii) there are no
judicial or administrative actions, suits, proceedings or
investigations pending or, to the Knowledge of the Company, threatened
against the Company or any Subsidiary of the Company alleging the
violation of any Environmental Law and neither the Company nor any
Subsidiary of the Company has received notice from any governmental
body or Person alleging any violation of or liability under any
Environmental Laws, in either case which could reasonably be expected
to result in material Environmental Costs and Liabilities; (iii) to the
Knowledge of the Company, there are no facts, circumstances or
conditions relating to, arising from, associated with or attributable
to the Company or its Subsidiaries or any real property currently or
previously owned, operated or leased by the Company or its Subsidiaries
that could reasonably be expected to result in material Environmental
Costs and Liabilities; and (iv) to the Knowledge of the Company,
neither the Company nor any of its Subsidiaries has ever generated,
transported, treated, stored, handled or disposed of any Hazardous
Material at any site, location or facility in a manner that could
create any material Environmental Costs and Liabilities under any
Environmental Law, and no such Hazardous Material has been or is
currently present on, in, at or under any real property owned or used
by the Company or any of its Subsidiaries in a manner that could create
any material Environmental Costs and Liabilities (including without
limitation, containment by means of any underground or aboveground
storage tank). For the purpose of this Section 5.2(s), the following
terms have the following definitions: (X) "Environmental Costs and
Liabilities" means any losses, liabilities, obligations, damages,
fines, penalties, judgments, actions, claims, costs and expenses
(including, without limitation, fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies, remedial or removal actions and
cleanup activities) arising from or under any Environmental Law; (Y)
"Environmental Laws" means any applicable federal, state, local or
foreign law (including common law), statute, code, ordinance, rule,
regulation or other requirement relating to the environment, natural
resources, or public or employee health and safety; and (Z) "Hazardous
Material" means any substance, material or waste regulated by federal,
state or local government, including, without limitation, any
substance, material or waste which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "toxic waste" or "toxic
substance" under any provision of Environmental Law and including but
not limited to petroleum and petroleum products.
(t) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
The Company and its Subsidiaries have good and marketable title to, or
a valid leasehold interest in, the real and personal property, shown on
the most recent Company Financial Statement or acquired after the date
thereof. None of the property owned or used by the Company or any of
its Subsidiaries is subject to any mortgage, pledge, deed of trust,
lien (other than for taxes not yet due and payable), conditional sale
agreement, security title, encumbrance, or other adverse claim or
interest of any kind. Since December 31, 2000, there has not been any
sale, lease, or any other disposition or distribution by the Company or
any of its Subsidiaries of any of its assets or properties material to
the
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Company and its Subsidiaries, taken as a whole, except transactions in
the ordinary course of business, consistent with past practices.
(u) INSURANCE. All insurance policies (including
"self-insurance" programs) now maintained by the Company (the "Company
Insurance Policies") are in full force and effect, the Company is not
in default under any of the Company Insurance Policies, and no claim
for coverage under any of the Company Insurance Policies has been
denied. The Company has not received any notice of cancellation or
intent to cancel or increase or intent to increase premiums with
respect to such insurance policies nor, to the Knowledge of the
Company, is there any basis for any such action.
(v) LABOR AND EMPLOYEE RELATIONS.
(i) Except as set forth in Section 5.2(v) of the
Company Disclosure Schedule, (A) None of the employees of the
Company or any of its Subsidiaries is represented in his or
her capacity as an employee of such company by any labor
organization; (B) neither the Company nor any of its
Subsidiaries has recognized any labor organization nor has any
labor organization been elected as the collective bargaining
agent of any of their employees, nor has the Company or any of
its Subsidiaries signed any collective bargaining agreement or
union contract recognizing any labor organization as the
bargaining agent of any of their employees; and (C) to the
Knowledge of the Company, there is no active or current union
organization activity involving the employees of the Company
or any of its Subsidiaries, nor has there ever been union
representation involving employees of the Company or any of
its Subsidiaries.
(ii) The Company has made available to Parent a
description of all written employment policies under which the
Company and each of its Subsidiaries is operating.
(iii) The Company and each of its Subsidiaries is
in compliance with all Federal, foreign (as applicable), and
state laws regarding employment practices, including laws
relating to workers' safety, sexual harassment or
discrimination, except where the failure to so be in
compliance, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
(iv) To the Knowledge of the Company, none of the
Company Key Employees has any plans to terminate his or her
employment with the Company or any of its Subsidiaries.
(w) PERMITS. The Company and each of its Subsidiaries
hold all licenses, permits, registrations, orders, authorizations,
approvals and franchises that are required to permit it to conduct its
businesses as presently conducted, except where the failure to hold
such licenses, permits, registrations, orders, authorizations,
approvals or franchises could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on the
Company. All such licenses, permits, registrations, orders,
authorizations,
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approvals and franchises are now, and will be after the Closing, valid
and in full force and effect, and Surviving Corporation shall have full
benefit of the same, except where the failure to be valid and in full
force and effect or to have the benefit of any such license, permit,
registration, order, authorization, approval or franchise could not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company or Surviving Corporation.
Neither the Company nor any of its Subsidiaries has received any
notification of any asserted present failure (or past and unremedied
failure) by it to have obtained any such license, permit, registration,
order, authorization, approval or franchise, except where such failure
could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on the Company or Surviving Corporation.
(x) TRANSACTIONS WITH AFFILIATES. Except as set forth in
the Company SEC Reports filed prior to the date of this Agreement,
since the date of Company's last proxy statement to its shareholders,
no event has occurred that would be required to be reported by Company
as a Certain Relationship or Related Transaction, pursuant to Item 404
of Regulation S-K promulgated by the SEC.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms and the Effective Time, the Company (which
for the purposes of this Section 6.1 shall include the Company and each of its
Subsidiaries) agrees, except to the extent that Parent shall otherwise consent
in writing (which consent shall not be unreasonably withheld or delayed), to
carry on its business and to cause each of its Subsidiaries to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and to use and cause each of its Subsidiaries to
use all commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organizations, keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with the Company or any such Subsidiaries, to
the end that the goodwill and ongoing businesses of Company and each of its
Subsidiaries be unimpaired at the Effective Time. Except as expressly provided
for by this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, prior to the Effective Time or earlier termination of this
Agreement pursuant to its terms, without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed):
(a) Except as provided in this Agreement, accelerate,
amend or change the period of exercisability of options or restricted
stock, or reprice options granted under the Company Option Plans or
authorize cash payments in exchange for any options granted under any
of such plans;
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(b) Enter into any material partnership arrangements,
joint development agreements or strategic alliances;
(c) Except as provided in the benefit plans and
agreements of the Company or any of its Subsidiaries listed in Section
5.2(n)(i) of the Company Disclosure Letter, or as required by law,
grant any severance or termination pay (i) to any executive officer or
(ii) to any other employee except payments made in connection with the
termination of employees who are not executive officers in amounts
consistent with Parent's policies and past practices or pursuant to
written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing to Parent or pursuant to
written agreements consistent with the past agreements of the Company
or any of its Subsidiaries under similar circumstances;
(d) Transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Company
Intellectual Property Rights (including rights to resell or relicense
the Company Intellectual Property Rights) or enter into grants to
future patent rights, other than on standard forms of the Company or
any of its Subsidiaries entered into in the ordinary course of business
consistent with past practices; PROVIDED, HOWEVER, that such standard
forms shall provide for a non-exclusive license of Company Intellectual
Property Rights terminable at will by the Company on no more than
thirty days' notice.
(e) Commence any material litigation other than (i) for
the routine collection of bills, (ii) for software piracy, or (iii) in
such cases where the Company in good faith determines that failure to
commence suit would result in the material impairment of a valuable
aspect of the business of the Company or any of its Subsidiaries,
provided that the Company consults with the Parent prior to the filing
of such a suit and keeps Parent advised of the status and details of
such litigation (except that the Company shall not require the approval
of, and shall not be required to consult with, Parent with respect to
any claim, suit or proceeding by the Company against Parent or any of
its affiliates);
(f) Declare 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 split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock
of the Company;
(g) Repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former
employees, directors and consultants in accordance with agreements
existing as of the date hereof and listed in Section 5.2(n)(i) of the
Company Disclosure Letter requiring the repurchase of shares in
connection with any termination of service to the Company or any of its
Subsidiaries;
(h) Issue, deliver, sell or authorize or propose the
issuance, delivery, grant or sale of, any shares of its capital stock
of any class or securities convertible into, or any subscriptions,
rights, warrants or options to acquire, or enter into other agreements
or commitments of any character obligating it to issue any such shares
or other convertible
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securities, other than (i) the issuance of Company Shares pursuant to
the exercise of Company stock options or warrants therefor outstanding
as of the date of this Agreement, and (ii) Company Shares issuable to
participants in the ESPP consistent with the terms of that Plan;
(i) Cause, permit or propose any amendments to the
Company's Certificate of Incorporation or Bylaws;
(j) Sell, lease, license, encumber or otherwise dispose
of any of the properties or assets of the Company or any of its
Subsidiaries, except in the ordinary course of business consistent with
past practice;
(k) Incur any material indebtedness for borrowed money
(other than ordinary course trade payables or pursuant to existing
credit facilities in the ordinary course of business) or guarantee any
such prohibited indebtedness or issue or sell any debt securities or
warrants or rights to acquire debt securities of the Company or any of
its Subsidiaries or guarantee any debt securities of others;
(l) Except as required by law, adopt or amend any Company
Scheduled Plan or increase the salaries or wage rates of any of its
employees (except for wage increases in the ordinary course of business
and consistent with past practices), including but not limited to (but
without limiting the generality of the foregoing), the adoption or
amendment of any stock purchase or option plan, the entering into of
any employment contract or the payment of any special bonus or special
remuneration to any director or employee;
(m) Revalue any of the assets of the Company or any of
its Subsidiaries, including without limitation writing down the value
of inventory, writing off notes or accounts receivable, other than in
the ordinary course of business consistent with past practice;
(n) Except as set forth in the Company Disclosure
Schedule, pay, discharge or satisfy in an amount in excess of $100,000
(in any one case) or $250,000 (in the aggregate), any claim, liability
or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), including, without limitation, under any employment
contract or with respect to any bonus or special remuneration, other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities of the type reflected or reserved against in
the Company Financial Statements (or reflected in the notes thereto);
(o) Except as required by applicable Tax law, make or
change any material election in respect of Taxes, adopt or change in
any material respect any accounting method in respect of Taxes, file
any material Return or any amendment to a material Return, enter into
any closing agreement, settle any claim or assessment in respect of
Taxes (except settlements effected solely through payment of immaterial
sums of money), or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes; or
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(p) Take, or agree in writing or otherwise to take, any
of the actions described in Section 6.1(a) through (o) above, or any
action which would cause or would be reasonably likely to cause any of
the conditions to the Merger set forth in Sections 7.1 or 7.3, not to
be satisfied.
6.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the
Effective Time or the earlier termination of this Agreement in
accordance with its terms, the Company will not, and will not permit
any of its Subsidiaries or its or their respective directors, officers,
investment bankers, affiliates, representatives and agents to, (i)
solicit, initiate, or encourage (including by way of furnishing
unsolicited information), or take any other action to facilitate, any
inquiries or proposals that constitute, or could reasonably be expected
to lead to, any Company Acquisition Proposal, or (ii) engage in, or
enter into, any negotiations or discussions concerning any Company
Acquisition Proposal. Notwithstanding the foregoing, in the event that,
notwithstanding compliance with the preceding sentence, the Company
receives a Company Acquisition Proposal that is or may reasonably be
expected to lead to a Company Superior Proposal, the Company may, to
the extent that the Board of Directors of the Company determines in
good faith (in reliance on the opinion of its outside counsel) that
such action would, in the absence of the foregoing proscriptions, be
required by its fiduciary duties, participate in discussions regarding
any Company Acquisition Proposal in order to be informed and make a
determination with respect thereto. In such event, the Company shall,
(i) promptly inform Parent of the material terms and conditions of such
Company Acquisition Proposal, including the identity of the Person
making such Company Acquisition Proposal and (ii) promptly keep Parent
informed of the status including any material change to the terms of
any such Company Acquisition Proposal. As used herein, the term
"Company Acquisition Proposal" shall mean any bona fide inquiry,
proposal or offer relating to any (i) merger, consolidation, business
combination, or similar transaction involving the Company or any
Subsidiary of the Company, (ii) sale, lease or other disposition,
directly or indirectly, by merger, consolidation, share exchange or
otherwise, of any assets of the Company or any Subsidiary of the
Company in one or more transactions, (iii) issuance, sale, or other
disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or
warrants to purchase such securities, or securities convertible into
such securities) of the Company or any Subsidiary of the Company, (iv)
liquidation, dissolution, recapitalization or other similar type of
transaction with respect to the Company or any Subsidiary of the
Company, (v) tender offer or exchange offer for Company securities; in
the case of (i), (ii), (iii), (iv) or (v) above, which transaction
would result in a third party (or its shareholders) acquiring more than
fifty percent (50%) of the voting power of the Company or the assets
representing more than fifty percent (50%) of the net income, net
revenue or assets of the Company on a consolidated basis, (vi)
transaction which is similar in form, substance or purpose to any of
the foregoing transactions, or (vii) public announcement of an
agreement, proposal, plan or intention to do any of the foregoing,
PROVIDED, HOWEVER, that the term "Company Acquisition Proposal" shall
not include the
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Merger and the transactions contemplated thereby. For purposes of this
Agreement, "Company Superior Proposal" means any offer not solicited
after the date of this Agreement by the Company, or by other persons in
violation of the first sentence of this Section 6.2(a), and made by a
third party to consummate a tender offer, exchange offer, merger,
consolidation or similar transaction which would result in such third
party (or its shareholders) owning, directly or indirectly, more than
fifty percent (50%) of the Company Shares then outstanding (or of the
surviving entity in a merger) or all or substantially all of the assets
of Company and its Subsidiaries, taken together, and otherwise on terms
which the Board of Directors of the Company determines in good faith
(based on its consultation with a financial advisor of nationally
recognized reputation and considering such other matters that it deems
relevant) would, if consummated, result in a transaction more favorable
to the Company's shareholders from a financial point of view than the
Merger and, taking into account, in the reasonable good faith judgment
of the Board of Directors of the Company after consultation with its
financial advisor, the availability to the person or entity making such
Company Superior Proposal of the financial means to conclude such
transaction. The Company will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall, except as required by their fiduciary duties
as determined in good faith (in reliance on the opinion of its outside
counsel), (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent or Merger Sub, the approval or
recommendation by the Board of Directors of the Company or such
committee of this Agreement or the Merger, (ii) approve, recommend, or
otherwise support or endorse any Company Acquisition Proposal, or (iii)
cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or similar agreement with respect to
any Company Acquisition Proposal. Nothing contained in this Section 6.2
shall prohibit the Company from taking and disclosing to its
shareholders a position contemplated by Rule 14d-9 or 14e-2 promulgated
under the Exchange Act or from making any disclosure to the Company's
shareholders if, in the good faith judgment of the Board of Directors
of the Company (in reliance upon the opinion of its outside counsel),
such disclosure is necessary for the Board of Directors to comply with
its fiduciary duties under applicable law; PROVIDED, HOWEVER, that,
except as required by their fiduciary duties as determined in good
faith and in reliance upon the opinion of its outside counsel, neither
the Company nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or the Merger or approve or
recommend or propose publicly to approve or recommend, a Company
Acquisition Proposal.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 6.2, the Company will
promptly (and in any event within twenty-four (24) hours) advise
Parent, orally and in writing, if any Company Acquisition Proposal is
made or, to its Knowledge, proposed to be made or any information or
access to properties, books or records of the Company is requested in
connection with a Company
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Acquisition Proposal, the principal terms and conditions of any such
Company Acquisition Proposal or potential Company Acquisition Proposal
or inquiry (and will disclose any written materials received by the
Company in connection with such Company Acquisition Proposal, potential
Company Acquisition Proposal or inquiry) and the identity of the party
making such Company Acquisition Proposal, potential Company Acquisition
Proposal or inquiry. The Company will keep Parent advised of the status
and details (including amendments and proposed amendments) of any such
request or Company Acquisition Proposal.
6.3 MEETING OF SHAREHOLDERS.
(a) Promptly after the date hereof, the Company shall
take all action necessary in accordance with the GBCC and its Articles
of Incorporation and by-laws to convene a meeting of shareholders
("Company Shareholders Meeting") to be held as promptly as practicable
after the S-4 Registration Statement is declared effective by the SEC
for the purposes of voting upon this Agreement and the Merger. Neither
the Board of Directors of the Company nor any committee thereof shall,
except as required by their fiduciary duties as determined in good
faith (in reliance on the opinion of its outside counsel), withdraw or
modify, or propose to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by the Board of Directors of the
Company or such committee of this Agreement or the Merger. Nothing
contained in this Section 6.3(a) shall prohibit the Company from making
any disclosure to the Company's shareholders if, in the good faith
judgment of the Board of Directors of the Company (in reliance upon the
opinion of its outside counsel), such disclosure is necessary for the
Board of Directors to comply with its fiduciary duties under applicable
law. The Company shall deliver to Parent, concurrent with the execution
and delivery of this Agreement, the Voting Agreement executed by Szlam.
(b) If necessary, Parent shall take all action necessary
in accordance with the DGCL and its Certificate of Incorporation and
by-laws to convene a meeting of stockholders (the "Parent Stockholders
Meeting") to be held as promptly as practicable after the S-4
Registration Statement is declared effective by the SEC for the
purposes of voting upon this Agreement and the Merger. Neither the
Board of Directors of Parent nor any committee thereof shall, except as
required by their fiduciary duties as determined in good faith (in
reliance on the opinion of its outside counsel), withdraw or modify, or
propose to withdraw or modify, in a manner adverse to the Company, the
approval or recommendation by the Board of Directors of Parent or such
committee of this Agreement or the Merger. Nothing contained in this
Section 6.3(b) shall prohibit Parent from making any disclosure to
Parent's stockholders if, in the good faith judgment of the Board of
Directors of Parent (in reliance upon the opinion of its outside
counsel), such disclosure is necessary for the Board of Directors to
comply with its fiduciary duties under applicable law.
6.4 REGISTRATION STATEMENT. Parent will, as promptly as
practicable, prepare and file with the SEC a registration statement on Form S-4
(the "S-4 Registration Statement"), containing
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a proxy statement/prospectus and a form of proxy, in connection with the
registration under the Securities Act of the Parent Shares issuable upon
conversion of the Company Shares and the other transactions contemplated hereby.
The Company and Parent will, as promptly as practicable, prepare and file with
the SEC a proxy statement that will be the same proxy statement/prospectus
contained in the S-4 Registration Statement and a form of proxy, in connection
with the vote of the Company's (and Parent's, if necessary) shareholders, or
stockholders, as applicable, with respect to the Merger (such proxy
statement/prospectus, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's (and
Parent's, if necessary) shareholders, or stockholders, as applicable, is herein
called the "Proxy Statement"). The Company and Parent will, and will cause their
accountants and lawyers to, use their reasonable efforts to have or cause the
S-4 Registration Statement declared effective as promptly as practicable
thereafter, including, without limitation, causing their accountants to deliver
necessary or required instruments such as opinions, consents and certificates,
and will take any other action required or necessary to be taken under federal
or state securities laws or otherwise in connection with the registration
process, it being understood and agreed that Morris, Manning & Martin, LLP,
counsel to the Company, will render the tax opinion referred to in Section 6.12
below on the date the preliminary Proxy Statement is first filed with the SEC.
The Company and Parent (if necessary) will use its reasonable efforts to cause
the Proxy Statement to be mailed to its shareholders, or stockholders, as
applicable, at the earliest practicable date and the Company and Parent (if
necessary) shall each use its commercially reasonable efforts to hold the
Company Shareholders Meeting and the Parent Stockholders Meeting, as the case
may be, as soon as practicable after the S-4 Registration Statement is declared
effective by the SEC. Parent shall also take any action required to be taken
under state blue sky or other securities laws in connection with the issuance of
Parent Shares in the Merger.
6.5 REASONABLE EFFORTS. The Parties shall: (a) promptly make their
respective filings and thereafter make any other required submissions under all
applicable laws with respect to the Merger and the other transactions
contemplated hereby; and (b) use their reasonable efforts to promptly take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
6.6 ACCESS TO INFORMATION. Upon reasonable notice, Parent, on the
one hand, and the Company, on the other, shall (and shall cause each of their
Subsidiaries to) afford to officers, employees, counsel, accountants and other
authorized representatives of the other such party (the "Authorized
Representatives") reasonable access, during normal business hours throughout the
period prior to the Effective Time, to their properties, assets, books and
records and, during such period, shall (and shall cause each of their
Subsidiaries to) furnish promptly to such Authorized Representatives all
information concerning their business, properties, assets and personnel as may
reasonably be requested for purposes of appropriate and necessary due diligence,
provided that no investigation pursuant to this Section 6.6 shall affect or be
deemed to modify any of the representations or warranties made by the Parties.
The Parties each agree to treat (and cause their Authorized Representatives to
treat) any and all information provided pursuant to this Section 6.6 in strict
compliance with the terms of that certain Confidentiality Agreement, entered
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by and between the Company and Parent, dated March 30, 2001 (the
"Confidentiality Agreement").
6.7 PUBLICITY. The Parties agree that they will consult with each
other concerning any proposed press release or public announcement pertaining to
the Merger in order to agree upon the text of any such press release or the
making of such public announcement, which agreement shall not be unreasonably
withheld, except as may be required by applicable law or by obligations pursuant
to any listing agreement with a national securities exchange or national
automated quotation system, in which case the party proposing to issue such
press release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press release
or making any such public announcement.
6.8 AFFILIATES OF THE COMPANY AND PARENT. The Company has
identified the Persons listed on Section 6.8 of the Company Disclosure Schedule
as "affiliates" of the Company for purposes of Rule 145 promulgated under the
Securities Act (each, a "Company Affiliate") and the Company will use its
reasonable efforts to obtain as promptly as practicable from each Company
Affiliate written agreements in the form attached hereto as EXHIBIT B (the
"Company Affiliate Letter") that such Company Affiliate will not sell, pledge,
transfer or otherwise dispose of any Parent Shares issued to such Company
Affiliate pursuant to the Merger, except in compliance with Rule 145 promulgated
under the Securities Act or an exemption from the registration requirements of
the Securities Act.
6.9 MAINTENANCE OF INSURANCE. Between the date hereof and through
the Effective Time, the Company will maintain in full force and effect all of
its and its Subsidiaries presently existing policies of insurance or insurance
comparable to the coverage afforded by such policies.
6.10 REPRESENTATIONS AND WARRANTIES. Each of the Company and Parent
shall give prompt notice to the other of any circumstances that would cause any
of its representations and warranties set forth in Section 5.1 or 5.2, as the
case may be, that are qualified as to materiality or Material Adverse Effect not
to be true and correct, and those that are not so qualified not to be true and
correct in all material respects, in each case at and as of the Effective Time.
6.11 FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, the Parties shall: (a) promptly make their respective filings
and thereafter make any other required submissions under the HSR Act, the
Securities Act and the Exchange Act, and comparable foreign laws, rules and
regulations, with respect to the Merger; (b) cooperate in the preparation of
such filings or submissions under the HSR Act and comparable foreign laws, rules
and regulations; and (c) use reasonable efforts promptly to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable. Notwithstanding anything to the contrary contained herein,
nothing in this Agreement will require Parent, whether pursuant to an order of
the Federal Trade Commission or the United States Department of Justice or
otherwise, to dispose of any assets, lines of business or equity interests in
order to obtain the consent of the Federal Trade Commission or the United States
Department of Justice to the transactions contemplated by this Agreement.
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6.12 TAX-FREE REORGANIZATION TREATMENT. Prior to the Effective
Time, the Parties shall use their commercially reasonable efforts to cause the
Merger to be treated as a reorganization within the meaning of Section 368(a) of
the Code and shall not knowingly take or fail to take any action which action or
failure to act would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. So long as the
Merger qualifies as a reorganization described in Section 368(a) of the Code,
each of Parent, Merger Sub, and the Company (i) shall not file any Return or
take any position inconsistent with the treatment of the Merger as a
reorganization described in Section 368(a) of the Code, and (ii) shall comply
with the recordkeeping and information-reporting requirements set forth in
Treas. Reg. Section 1.368-3. Furthermore, prior to the Effective Time, the
Parties shall use their commercially reasonable efforts to obtain the tax
opinions specified in Section 7.1(f) of the Agreement.
6.13 COMPANY EMPLOYEE STOCK PURCHASE PLAN. The Company shall not
commence any "purchase periods" under the ESPP after April 1, 2001, and shall
apply all amounts deducted and withheld thereunder to purchase Company Shares in
accordance with the provisions thereof.
6.14 NASDAQ LISTING. Parent agrees to authorize for listing on the
NNM the shares of Parent Common Stock issuable in connection with the Merger,
upon official notice of issuance.
6.15 INDEMNIFICATION.
(a) From and after the Effective Time, the Surviving
Corporation will fulfill and honor in all respects the obligations of
the Company to indemnify and hold harmless the Company's and its
Subsidiaries' present and former directors, officers, employees, and
agents and their heirs, executors and assigns (collectively, the
"Indemnified Personnel"). The Certificate of Incorporation and by-laws
of the Surviving Corporation will contain provisions with respect to
indemnification and elimination of liability for monetary damages at
least as favorable to the Indemnified Personnel as those set forth in
the current Articles of Incorporation and by-laws of the Company, and
for a period of six years from the Effective Time, those provisions
will not be repealed or amended or otherwise modified in any manner
that would adversely affect the rights thereunder of the Indemnified
Personnel, except to the extent, if any, that such modification is
required by applicable law.
(b) For a period of six years after the Effective Time,
the Surviving Corporation will either (i) maintain in effect, if
available, directors' and officers' liability insurance covering those
persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms comparable to those
applicable to the current directors and officers of the Company;
PROVIDED, HOWEVER, that in no event will the Surviving Corporation be
required to expend in excess of 150% of the annual premium currently
paid by the Company for such coverage (or such coverage as is available
for such 150% of such annual premium), or (ii) if mutually agreed
between the Company and the Surviving Corporation, purchase a
directors' and officers' liability insurance policy on terms comparable
to those applicable to the current directors and officers of the
Company covering all periods prior to the Effective Time.
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6.16 AUDITORS' LETTERS. The Company shall use its best efforts to
cause to be delivered to Parent a letter of Arthur Andersen LLP, independent
auditors to the Company, dated a date within two business days before the date
on which the Registration Statement becomes effective, and addressed to the
Company, in form and substance reasonably satisfactory to Parent and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement. The Parent shall use its best efforts to cause to be delivered to the
Company a letter of KPMG, LLP, independent auditors to Parent, dated a date
within two business days before the date on which the Registration Statement
becomes effective, and addressed to Parent, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
6.17 SALE OF COMPANY SOFTWARE PRODUCTS. Concurrently with the
execution and delivery of this Agreement, Parent and the Company have entered
into a Software Distribution Agreement in the form attached as EXHIBIT C hereto
(the "Software Distribution Agreement") pursuant to which the Company will grant
Parent a license to market, sell, distribute, license and sublicense certain
software products sold by the Company on the terms specified in the Software
Distribution Agreement.
6.18 ISSUANCE OF OPTION GRANTS. Promptly after the Effective Time,
Parent shall grant options to purchase shares of Parent Common Stock
representing 13% of the aggregate amount of Parent Shares issued pursuant to the
conversion rights contained in Section 4.1(a) to persons serving as employees of
the Company immediately prior to the Effective Time. These options will have an
exercise price per share equal to the closing sale price per share of the Parent
Common Stock as reported on the NNM on the trading day immediately prior to the
date of grant of the options, shall vest in three equal installments with the
first installment vesting on the date of grant and the second and third
installments vesting on the second and third annual anniversaries of the date of
grant, and shall otherwise be subject to such terms and conditions commonly
provided under Parent's 2001 Stock Incentive Plan.
6.19 SELF TENDER OFFER PROHIBITION. Parent shall not commence or
otherwise engage in a "self tender offer" pursuant to Section 13e-4 of the
Exchange Act prior to the Closing Date.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each Party to consummate the Merger are subject to the
satisfaction or waiver by each of the Parties of the following conditions:
(a) this Agreement and the Merger shall have been
approved and adopted by the requisite vote under applicable law of the
shareholders of the Company and stockholders of Parent (if necessary);
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(b) the SEC shall have declared the S-4 Registration
Statement effective; no stop order suspending the effectiveness of the
S-4 Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose, and no similar proceeding in
respect of the Proxy Statement, shall have been initiated or threatened
in writing by the SEC; and all requests for additional information on
the part of the SEC shall have been complied with to the reasonable
satisfaction of the Parties;
(c) no judgment, order, decree, statute, law, ordinance,
rule or regulation, entered, enacted, promulgated, enforced or issued
by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger or making the Merger illegal (collectively, "Restraints") shall
be in effect, and there shall not be pending any suit, action or
proceeding by any Governmental Entity preventing the consummation of
the Merger; PROVIDED, HOWEVER, that each of the Parties shall have used
reasonable efforts to prevent the entry of such Restraints and to
appeal as promptly as possible any such Restraints that may be entered;
(d) the waiting period(s) under the HSR Act and all
applicable material foreign antitrust, competition and merger laws, if
any, shall have expired or been terminated;
(e) the Parent Shares issuable to shareholders and other
securityholders of the Company pursuant to this Agreement shall have
been authorized for listing on the NNM upon official notice of
issuance; and
(f) Parent and the Company shall each have received
written opinions from their respective tax counsel (Katten Muchin Zavis
and Morris, Manning & Martin, LLP, respectively), in form and substance
reasonably satisfactory to them, to the effect that for federal income
tax purposes the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and such opinions shall not have
been withdrawn; provided, however, that if the counsel to either Parent
or Company does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to such Party if
counsel to the other Party renders such opinion to such Party. The
Parties to this Agreement agree to make such reasonable representations
as requested by such counsel for the purpose of rendering such
opinions.
7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to consummate the Merger are subject to the fulfillment at or
prior to the Effective Time of the following conditions, any or all of which may
be waived in whole or in part by the Company to the extent permitted by
applicable law:
(a) the representations and warranties of Parent set
forth in Section 5.1 that are qualified as to materiality or Material
Adverse Effect shall be true and correct and those 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 Effective Time
with the same force and effect as if made on and as of the Effective
Time (except to the extent expressly made as of an earlier date, in
which case as of such date), in each case except as permitted or
contemplated by this Agreement (it being understood that for purposes
of determining the
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accuracy of such representations and warranties any update or
modification to the Parent's Disclosure Schedule made or purported to
have been made without the Company's written consent thereto shall be
disregarded);
(b) Parent shall have performed or complied in all
material respects with its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time; and
(c) Parent shall have delivered to the Company a
certificate to the effect that each of the conditions specified in
Section 7.1 (as it relates to Parent) and clauses (a) and (b) of this
Section 7.2 has been satisfied in all respects.
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligation of
Parent to consummate the Merger is subject to the fulfillment at or prior to the
Effective Time of the following conditions, any or all of which may be waived in
whole or in part by Parent to the extent permitted by applicable law:
(a) the representations and warranties of the Company set
forth in Section 5.2 that are qualified as to materiality or Material
Adverse Effect, or in Sections 5.2(a), (b) or (d) shall be true and
correct and those 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 Effective Time with the same force and effect
as if made on and as of the Effective Time (except to the extent
expressly made as of an earlier date, in which case as of such date),
in each case except as permitted or contemplated by this Agreement (it
being understood that for purposes of determining the accuracy of such
representations or warranties any update or modifications to the
Company's Disclosure Schedule made or purported to have been made
without Parent's written consent thereto shall be disregarded);
(b) the Company shall have performed or complied with in
all material respects its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time;
(c) the Company shall have delivered to Parent a
certificate of its Chief Executive Officer and Chief Financial Officer
to the effect that each of the conditions specified in Section 7.1 (as
it relates to the Company) and clauses (a) and (b) of this Section 7.3
has been satisfied in all respects;
(d) to the extent the option agreement or option plan
governing any Company Option does not currently permit the Company to
take any of the actions contemplated by Section 4.1(c) hereof, the
Company shall have entered into agreements with the holders of such
Company Options which allow the Company to take the actions
contemplated by Section 4.1(c) hereof, which agreements shall be in
form and substance reasonably acceptable to Parent; and
(e) the Company shall have received all written consents,
assignments, waivers, authorizations or other certificates necessary to
provide for the continuation in full force
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and effect of any and all material contracts and leases of the Company
and for the Company to consummate the transactions contemplated hereby.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after gaining the requisite approval of the shareholders of the
Company and the stockholders of Parent (if necessary), by the mutual written
consent of the Company and Parent.
8.2 TERMINATION BY EITHER THE COMPANY OR PARENT. This Agreement
may be terminated and the Merger may be abandoned by action of the Board of
Directors of either the Company or Parent if:
(a) the Merger shall not have been consummated by
December 31, 2001; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 8.2(a) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been
the principal cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure to act
constitutes a material breach of this Agreement;
(b) if any Restraint shall be in effect and shall have
become final and nonappealable;
(c) at the duly held Company Shareholders Meeting
(including any adjournments thereof), the requisite approval of the
Company's shareholders shall not have been obtained; PROVIDED, HOWEVER,
that the Company's right to terminate this Agreement under this Section
8.2(c) shall not be available to the Company if the Company has not
complied with its obligations under Sections 6.2 and 6.3(a); or
(d) if necessary, at the duly held Parent Stockholders
Meeting (including any adjournments thereof) the requisite approval of
Parent's stockholders shall not have been obtained; PROVIDED, HOWEVER,
that Parent's right to terminate this Agreement under this Section
8.2(d) shall not be available to Parent if Parent has not complied with
its obligations under Section 6.3(b).
8.3 TERMINATION BY THE COMPANY. This Agreement may be terminated
by the Company upon written notice to Parent and the Merger may be abandoned at
any time prior to the Effective Time, before or after the approval by holders of
the Company Shares, by action of the Board of Directors of the Company, if:
(a) Parent shall have breached or failed to perform any
of the representations, warranties, covenants or other agreements
contained in this Agreement, or if any representation or warranty shall
have become untrue, in either case such that (i) the
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conditions set forth in Section 7.2(a) or (b) would not be satisfied as
of the time of such breach or as of such time as such representation or
warranty shall have become untrue and (ii) such breach or failure to be
true has not been or is incapable of being cured within twenty (20)
business days following receipt by Parent of notice of such failure to
comply;
(b) the Parent Stockholders Meeting is necessary, the
Board of Directors of Parent or any committee thereof, shall have
withdrawn or modified in a manner adverse to the Company its approval
or recommendation of the Merger or this Agreement, or Parent shall have
failed to include in the Proxy Statement the recommendation of the
Board of Directors of Parent in favor of approval of the Merger and
this Agreement; or
(c) on any date after the date the S-4 Registration
Statement is declared effective by the SEC, but prior to the date of
the Company Shareholders Meeting, if as of the date on which notice of
termination pursuant to this Section 8.3(c) is given, the Parent Share
Rolling Average shall be less than $1.00.
8.4 TERMINATION BY PARENT. This Agreement may be terminated by
Parent upon written notice to the Company and the Merger may be abandoned at any
time prior to the Effective Time, before or after any action of the Board of
Directors of Parent, if:
(a) the Company shall have breached or failed to perform
any of the representations, warranties, covenants or other agreements
contained in this Agreement, or if any representation or warranty shall
have become untrue, in either case such that (i) the conditions set
forth in Section 7.3(a) or (b) would not be satisfied as of the time of
such breach or as of such time as such representation or warranty shall
have become untrue and (ii) such breach or failure to be true has not
been or is incapable of being cured within twenty (20) business days
following receipt by the breaching party of notice of such failure to
comply;
(b)(i) the Board of Directors of the Company or any
committee thereof, shall have withdrawn or modified in a manner adverse
to Parent its approval or recommendation of the Merger or this
Agreement, (ii) the Company shall have failed to include in the Proxy
Statement the recommendation of the Board of Directors of the Company
in favor of approval of the Merger and this Agreement, (iii) in
connection with a Rule 14d-9 disclosure, the Board of Directors of the
Company shall have taken any action other than a rejection of a Rule
14d-9 proposal, (iv) the Board of Directors of the Company or any
committee thereof shall have recommended any Company Acquisition
Proposal, (v) the Company or any of its officers or directors shall
have entered into discussions or negotiations in violation of Section
6.2, (vi) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing or (vii) any
Company Acquisition Proposal is consummated or an agreement with
respect to any Company Acquisition Proposal is signed; or
(c) if Szlam has breached the Voting Agreement in any
material respect, or if the Voting Agreement has been determined to be
unenforceable.
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8.5 EFFECT OF TERMINATION; TERMINATION FEE.
(a) Except as set forth in this Section 8.5, in the event
of termination of this Agreement by either Parent or the Company as
provided in this Article VIII, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of the
Parties or their respective affiliates, officers, directors or
shareholders except (x) with respect to the treatment of confidential
information pursuant to Section 6.6, the payment of expenses pursuant
to Section 9.1, and Article IX generally, (y) to the extent that such
termination results from the willful breach of a Party of any of its
representations or warranties, or any of its covenants or agreements or
(z) with respect to any intentional or knowing misrepresentations in
connection with or pursuant to this Agreement or the transactions
contemplated hereby.
(b) In the event that (i) this Agreement is terminated by
either the Company or Parent (x) pursuant to Section 8.2(a) due to the
Company Shareholders Meeting not occurring as a result of a Company
Acquisition Proposal or (y) pursuant to Section 8.2(c), or (ii) this
Agreement is terminated by Parent pursuant to Sections 8.4(a), 8.4(b)
or 8.4(c), then the Company shall promptly, but in no event later than
the date of such termination, pay Parent a fee equal to $2,000,000 (the
"Termination Fee"), payable by wire transfer of same day funds. The
Company acknowledges that the agreements contained in this Section
8.5(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter
into this Agreement, and accordingly, if the Company fails promptly to
pay the amount due pursuant to this Section 8.5(b), and, in order to
obtain such payment, Parent commences a suit which results in a
judgment against the Company for the fee set forth in this Section
8.5(b), the Company shall pay to Parent its costs and expenses
(including reasonable attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the fee at the prime
rate of Citibank, N.A. in effect on the date such payment was required
to be made.
(c) In the event that this Agreement is terminated by the
Company pursuant to Sections 8.3(a) or 8.3(b), then Parent shall
promptly, but in no event later than the date of such termination, pay
the Company a fee equal to the Termination Fee, payable by wire
transfer of same day funds. Parent acknowledges that the agreements
contained in this Section 8.5(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, the Company would not enter into this Agreement, and
accordingly, if Parent fails promptly to pay the amount due pursuant to
this Section 8.5(c), and, in order to obtain such payment, the Company
commences a suit which results in a judgment against Parent for the fee
set forth in this Section 8.5(b), Parent shall pay to the Company its
costs and expenses (including reasonable attorneys' fees and expenses)
in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
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(d) In the event both Parent and the Company would
otherwise be entitled to receive the Termination Fee under this Section
8.5 in connection with the termination of this Agreement, neither party
shall be required to make any payment under this Section 8.5.
(e) If this Agreement is terminated under circumstances
in which Parent or the Company is entitled to receive the Termination
Fee, (i) the obligation to pay the Termination Fee shall survive the
termination of this Agreement and (ii) the payment of the Termination
Fee shall be the sole and exclusive remedy available to Parent or the
Company, as applicable, except in the event of (A) a willful breach by
the defaulting party of any provision of this Agreement or (B) an
intentional or knowing misrepresentation in connection with this
Agreement or the transactions contemplated hereby, in which event the
party entitled to the Termination Fee shall have all rights, powers and
remedies against the other party that may be available at law or in
equity. All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any such right,
power or remedy by any Party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such Party.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 PAYMENT OF EXPENSES. Whether or not the Merger shall be
consummated, each Party shall pay its own expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby (the "Transaction Expenses").
9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in Sections 5.1 and 5.2 hereof shall not
survive beyond the Effective Time or a termination of this Agreement, except to
the extent a willful breach of such representation or intentional or knowing
misrepresentation formed the basis for such termination. This Section 9.2 shall
not limit any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Time or after termination of this
Agreement pursuant to Article VIII, including the payment of any Termination
Fee.
9.3 MODIFICATION OR AMENDMENT. Subject to the applicable
provisions of the DGCL and GBCC, at any time prior to the Effective Time, the
Parties, by resolution of their respective Board of Directors, may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective Parties; provided, however, that after
approval of the Merger by the shareholders of the Company is obtained, no
amendment which requires further shareholder approval shall be made without such
approval of shareholders.
9.4 WAIVER OF CONDITIONS. The conditions to each of the Parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
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9.5 COUNTERPARTS. For the convenience of the Parties, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
9.6 GOVERNING LAW; JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(b) Each of Parent, Merger Sub and the Company hereby
irrevocably submits in any suit, action or proceeding arising out of or
related to this Agreement or any other instrument, document or
agreement executed or delivered in connection herewith and the
transactions contemplated hereby and thereby, whether arising in
contract, tort, equity or otherwise, to the exclusive jurisdiction of
any state or federal court located in the State of Delaware and waives
any and all objections to jurisdiction that it may have under the laws
of the United States or of any state.
(c) Each of Parent, Merger Sub and the Company waives any
objection that it may have (including, without limitation, any
objection of the laying of venue or based on FORUM NON CONVENIENS) to
the location of the court in any proceeding commenced in accordance
with this Section 9.6.
9.7 NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party to the other Parties shall be deemed delivered
upon actual receipt and shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, reputable overnight courier, or
by facsimile transmission (with a confirming copy sent by reputable overnight
courier), as follows:
(a) if to Parent or Merger Sub, to:
divine, inc.
1301 North Elston Avenue
Chicago, Illinois 60622
Attention: Jude Sullivan, Esq.
Facsimile: (773) 394-6603
with a copy to:
Katten Muchin Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Jeffrey R. Patt, Esq.
Facsimile: (312) 577-8864
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(b) if to the Company, to:
eshare communications, Inc.
5051 Peachtree Corners Circle
Norcross, Georgia 30092
Attention: Glen Shipley
Facsimile: (770) 239-4445
with a copy to:
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road
Atlanta, Georgia 30326
Attention: Larry W. Shackelford, Esq.
Facsimile: (404) 365-9532
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice.
9.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the
Exhibits and Disclosure Schedules, together with the Confidentiality Agreement,
(i) constitutes the entire agreement among the Parties with respect to the
subject matter hereof and supersedes all other prior or contemporaneous
agreements and understandings, both written and oral, among the Parties or any
of them with respect to the subject matter hereof, and (ii) shall not be
assigned by operation of law or otherwise (and any attempt to do so shall be
void).
9.9 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns. Nothing in this Agreement, express or implied, other than the right
to receive the consideration payable in the Merger pursuant to Article IV
hereof, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
9.10 Certain Definitions. As used herein:
(a) "Average Market Value" means the arithmetic average
(rounded to the nearest five decimal places) of the closing sale price
per share of the Parent Shares as reported on the NNM for the ten (10)
consecutive trading days ending two trading days prior to the Closing
Date.
(b) "Encumbrance" means any claim, lien, pledge, charge,
security interest, equitable interest, option, right of first refusal
or preemptive right, condition, or other restriction of any kind,
including any restriction on use, voting (in the case of any security),
transfer, receipt of income, or exercise of any other attribute of
ownership.
(c) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
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(d) "Governmental Entity" means the United States or any
state, local or foreign government, or instrumentality, division,
subdivision, agency, department or authority of any thereof.
(e) "Knowledge" with respect to a party hereto shall mean
the actual knowledge of any of the executive officers of such party.
(f) "Material Adverse Effect" shall mean any adverse
change in the business, operations, liabilities (contingent or
otherwise), results of operations or financial performance, condition
or prospects of Parent or any of its Subsidiaries or the Company or any
of its Subsidiaries, as the case may be, which is material to Parent
and its Subsidiaries, taken as a whole, or the Company and its
Subsidiaries, taken as a whole, as the case may be; provided, however,
that in no event shall any of the following, in and of themselves,
constitute a Material Adverse Effect: (i) any change in or effect on
the business of Parent or any of its Subsidiaries or the Company or any
of its Subsidiaries, as applicable, caused by, relating to or resulting
from, directly or indirectly, the transactions contemplated by this
Agreement or the announcement thereof; (ii) any change in the market
price or trading volume of the Company Shares or Parent Shares, as
applicable, on or after the date of this Agreement; or (iii) any
adverse change, effect or occurrence attributable to the United States
economy as a whole, the industries in which Parent or the Company, as
applicable, compete or the foreign economies in any non-United States
locations where Parent or the Company, as applicable, have material
operations or sales.
(g) "Parent Share Rolling Average" means the arithmetic
average (rounded to the nearest five decimal places) of the closing
sale price per share of the Parent Shares as reported on the NNM for
the ten (10) consecutive trading days ending on the trading day
immediately prior to the date on which such value is being calculated.
(h) "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated association,
corporation, entity or Governmental Entity.
(i) "Returns" means all returns, declarations, reports,
statements and other documents required to be filed in respect of
Taxes, and any claims for refund for Taxes, including any amendments or
supplements to any of the foregoing.
(j) "Significant Tax Agreement" is any agreement to which
the Company or any Subsidiary of the Company is a party under which the
Company or any Subsidiary could reasonably be expected to be liable to
another party under such agreement in an amount in excess of $25,000 in
respect of Taxes payable by such other party to any taxing authority.
(k) "Subsidiary" shall mean, when used with reference to
any entity, (i) any entity of which fifty percent (50%) or more of the
outstanding voting securities or interests or (ii) any entity of which
50% of the economic interests, in the case of partnerships or limited
liability companies, are owned directly or indirectly by such former
entity.
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(l) "Tax" or "Taxes" refers to any and all federal,
state, local and foreign, taxes, assessments and other governmental
charges, duties, impositions and liabilities relating to taxes,
including without limitation taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, net worth, capital stock, withholding,
payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such
amounts and including any liability for taxes of a predecessor entity;
provided, however, that the term "Tax" or "Taxes" shall not be deemed
to include claims by any governmental authority under an escheat,
unclaimed property, or similar provision of applicable law.
9.11 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or unenforceable, all other provisions of this Agreement
shall remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
9.12 SPECIFIC PERFORMANCE. The Parties acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the Parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
9.13 RECOVERY OF ATTORNEY'S FEES. In the event of any litigation
between the Parties relating to this Agreement, the prevailing party shall be
entitled to recover its reasonable attorney's fees and costs (including court
costs) from the non-prevailing party, provided that if both Parties prevail in
part, the reasonable attorney's fees and costs shall be awarded by the court in
such manner as it deems equitable to reflect the relative amounts and merits of
the Parties' claims.
9.14 CAPTIONS. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
9.15 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be used against any party
hereto.
[END OF DOCUMENT;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the Parties hereto and shall be effective as
of the date first hereinabove written.
DIVINE, INC.
By: /s/ Jude Sullivan
------------------------------------
Name: Jude Sullivan
------------------------------------
Its: Senior Vice-President
------------------------------------
DES ACQUISITION COMPANY
By: /s/ Jude Sullivan
------------------------------------
Name: Jude Sullivan
------------------------------------
Its: President
------------------------------------
ESHARE COMMUNICATIONS, INC.
By: /s/ George W. Landgrebe
------------------------------------
Name: George W. Landgrebe
------------------------------------
Its: Chief Operating Officer
------------------------------------
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