1
Exhibit 2.1
AGREEMENT OF MERGER
DATED AS OF JULY 28, 2000
AMONG
HARRIS CORPORATION,
WT ACQUISITION CORP.
WAVTRACE, INC.
AND
THOMAS T. VAN OVERBEEK
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................2
1.1. Definitions.......................................................2
ARTICLE II THE MERGER.......................................................8
2.1. Surviving Corporation.............................................8
2.2. Effects of the Merger.............................................8
2.3. Articles of Incorporation, Bylaws, Directors and Officers.........9
ARTICLE III CONVERSION OF SHARES; DETERMINATION OF PURCHASE PRICE...........9
3.1. Conversion Terms..................................................9
3.2. Determination of Purchase Price...................................9
3.3. Exchange Procedures..............................................12
ARTICLE IV CLOSING.........................................................14
4.1. Closing Date.....................................................14
4.2. Filing Articles of Merger and Effectiveness......................14
4.3. Parent's Deliveries..............................................15
4.4. Mergerco's Deliveries............................................15
4.5. The Company's Deliveries.........................................16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDER
REPRESENTATIVE...................................................16
5.1. Organization and Capital Structure...............................17
5.2. Subsidiaries and Investments.....................................18
5.3. Authority........................................................18
5.4. Financial Statements.............................................19
5.5. Operations Since Balance Sheet Date..............................19
5.6. No Undisclosed Liabilities.......................................22
5.7. Taxes............................................................22
5.8. Availability of Assets and Legality of Use.......................23
5.9. Governmental Permits.............................................23
5.10. Real Property...................................................24
5.11. Real Property Leases............................................24
5.12. Condemnation....................................................24
5.13. Personal Property...............................................25
5.14. Personal Property Leases........................................25
5.15. Intellectual Property; Software.................................25
5.16. Title to Property...............................................28
5.17. Employee Benefit Plans..........................................28
5.18. Employee Relations..............................................32
5.19. Contracts; Product Warranties...................................32
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5.20. Status of Contracts.............................................33
5.21. No Violation, Litigation or Regulatory Action...................34
5.22. Environmental Matters...........................................34
5.23. Insurance.......................................................36
5.24. Customers and Suppliers.........................................37
5.25. Budgets.........................................................37
5.26. Consent Materials...............................................37
5.27. Required Vote of Shareholders...................................38
5.28. No Finder.......................................................38
5.29. Ultimate Parent Entity..........................................38
5.30. Disclosure......................................................38
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO...........38
6.1. Organization and Capital Structure...............................38
6.2. Authority........................................................39
6.3. Information Supplied by Parent for Consent Materials.............40
6.4. No Finder........................................................40
ARTICLE VII ACTION PRIOR TO THE EFFECTIVE TIME.............................40
7.1. Action by the Company; Shareholder Meeting and Preparation of
the Consent Materials............................................40
7.2. Action by Parent.................................................41
7.3. Investigation of the Company by Parent...........................41
7.4. Preserve Accuracy of Representations and Warranties..............42
7.5. Consents of Third Parties; Governmental Approvals................42
7.6. Conduct of Business Prior to the Effective Time..................42
7.7. Notification by the Company of Certain Matters...................45
7.8. Mutual Cooperation; Reasonable Best Efforts......................46
7.9. Company Stock Options............................................46
7.10. State Takeover Laws.............................................48
7.11. Termination of Company 401(k) Plan..............................48
ARTICLE VIII ADDITIONAL AGREEMENTS.........................................48
8.1. Employee Benefits................................................48
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGERCO......48
9.1. No Misrepresentation or Breach of Covenants and Warranties.......48
9.2. No Changes or Destruction of Property............................49
9.3. No Restraint or Injunction.......................................49
9.4. Necessary Governmental Approvals.................................49
9.5. Necessary Consents...............................................49
9.6. Shareholder Approval and Conversion of Preferred Stock...........50
9.7. Dissenters' Rights...............................................50
9.8. Effective Agreements.............................................50
9.9. Other Convertible Securities.....................................50
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9.10. Agreement with Wideband.........................................50
9.11. Opinion of Intellectual Property Counsel........................50
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY...............51
10.1. No Misrepresentation or Breach of Covenants and Warranties......51
10.2. No Restraint or Injunction......................................51
10.3. Necessary Governmental Approvals................................51
10.4. Shareholder Approval............................................51
10.5. Effective Agreements. The Escrow Agreement shall be in full
force and effect................................................51
ARTICLE XI TERMINATION.....................................................51
11.1. Termination Rights..............................................51
11.2. Notice of Termination...........................................52
11.3. Effect of Termination...........................................52
ARTICLE XII GENERAL PROVISIONS.............................................52
12.1. Survival of Obligations.........................................52
12.2. Confidential Nature of Information..............................52
12.3. No Public Announcement..........................................53
12.4. Notices.........................................................53
12.5. Successors and Assigns; Shareholder Representative..............54
12.6. Entire Agreement; Amendments....................................56
12.7. Interpretation..................................................56
12.8. Waivers.........................................................56
12.9. Fees and Expenses...............................................56
12.10. Partial Invalidity.............................................57
12.11. Execution in Counterparts......................................57
12.12. Further Assurances.............................................57
12.13. Governing Law..................................................57
EXHIBITS
A Foster Employment Agreement
B Escrow Agreement
C Non-Competition Agreement
D Opinion of Company Counsel
E Release
F Foster Non-Competition Agreement
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SCHEDULES
A Significant Shareholders
B Employee to Execute Employment Agreement
C Persons to Execute Non-Competition Agreements
D Shareholders to Execute Releases
1.1 Exceptions to Agreed Accounting Principles
5.1 Organization and Capital Structure
5.3 Noncontravention
5.4 Financial Statements
5.5(A) Operations Since Balance Sheet Date
5.5(B) Conduct of Business Since Balance Sheet Date
5.7 Taxes
5.9 Governmental Permits
5.10 Owned Real Property
5.11 Leased Real Property
5.13 Owned Personal Property
5.14 Leased Personal Property
5.15 Intellectual Property; Software
5.16 Title to Property
5.17(A) ERISA Benefit Plans
5.17(B) Non-ERISA Commitments
5.17(C) Multiemployer Plans
5.17(E) Plan Administration
5.17(F) Liability Under Plans
5.17(I) List of Employees
5.17(K) Conflicts of Interest
5.18 Employee Relations
5.19 Contracts; Product Warranties
5.21 Violations, Litigation and Regulatory Actions
5.22 Environmental Matters
5.23 Insurance
5.24 Customers and Suppliers
5.25 Budgets
7.9 Company Options
9.5 Necessary Consents
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AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated as of July 28, 2000, among Harris Corporation, a
Delaware corporation ("PARENT"), WT Acquisition Corp., a Washington corporation
("MERGERCO"), Wavtrace, Inc., a Washington corporation (the "COMPANY"), and
Thomas T. van Overbeek, a natural person (the "SHAREHOLDER REPRESENTATIVE")
(Mergerco and the Company being hereinafter sometimes referred to as the
"CONSTITUENT CORPORATIONS").
W I T N E S S E T H:
WHEREAS, Mergerco is a Washington corporation having an authorized capital
of 1,000 shares of common stock, par value $ .01 per share, all of which are
issued and outstanding and owned of record and beneficially by Parent; and
WHEREAS, the Company is a Washington corporation having an authorized
capital of (i) 60,000,000 shares of common stock, par value $.001 per share (the
"COMPANY COMMON STOCK"), of which, as of the date hereof, 4,295,769 shares are
issued and outstanding, and (ii) 41,000,000 shares of preferred stock, par value
$.001 per share (the "PREFERRED STOCK"), of which (A) 4,986,142 shares have been
designated Series A Preferred Stock (of which, as of the date hereof, 4,686,666
shares are issued and outstanding and are convertible into 5,957,627 shares of
Company Common Stock), (B) 4,044,668 shares have been designated Series B
Preferred Stock (of which, as of the date hereof, 4,014,668 shares are issued
and outstanding), and are convertible into 8,961,313 shares of Company Common
Stock), and (C) 31,969,190 shares have been designated Series C Preferred Stock
(of which, as of the date hereof, 26,916,467 shares are issued and outstanding);
and are convertible into 26,916,467 shares of Company Common Stock); and
WHEREAS, the Company is engaged in the business of the design and
manufacturing of telecommunications equipment; and
WHEREAS, the respective Boards of Directors of the Constituent Corporations
and of Parent have adopted the merger (the "MERGER") of Mergerco into the
Company pursuant to the terms and conditions of this Agreement, and the Board
of Directors of the Company has directed that this Agreement be submitted to
the Company's shareholders for approval; and
WHEREAS, Parent and each of the individuals and entities identified on
SCHEDULE A (the "SIGNIFICANT SHAREHOLDERS") have entered into Voting Agreements
(the "VOTING AGREEMENTS") dated as of the date hereof; and
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WHEREAS, Parent, Mergerco, the Company and the Shareholder Representative
desire to make certain representations, warranties and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed among the parties as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, the following terms have the meanings
specified or referred to in this SECTION 1.1 and shall be equally applicable to
both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"AGREED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles consistently applied, PROVIDED that, with respect to any matter as to
which there is more than one generally accepted accounting principle, Agreed
Accounting Principles means the generally accepted accounting principles applied
in the preparation of the Audited Financial Statements included in SCHEDULE 5.4;
and, PROVIDED, FURTHER, that, notwithstanding the foregoing, Agreed Accounting
Principles shall include the accounting policies and be subject to the
exceptions described in SCHEDULE 1.1.
"BALANCE SHEET" means the audited balance sheet of the Company as of
December 31, 1999 included in SCHEDULE 5.4.
"BALANCE SHEET DATE" means December 31, 1999.
"BEST KNOWLEDGE" or "KNOWLEDGE" or any similar reference or derivation
thereof, means with reference to a party hereto the current conscious awareness
of any of the directors and officers of any such party, including any knowledge
or awareness of facts or circumstances that any such party should have
discovered after due inquiry.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss. 9601 ET SEQ., any amendments thereto, any
successor statutes, and any regulations promulgated thereunder.
"CLOSING" means the closing of the Merger of Mergerco with and into the
Company in accordance with ARTICLE IV.
"CLOSING CONSIDERATION" means a dollar amount equal to the Purchase Price
LESS the Escrow Amount.
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"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMPANY ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by the Company under this
Agreement or in connection herewith.
"COMPANY GROUP" means any "affiliated group" (as defined in SECTION
1504(a) of the Code without regard to the limitations contained in SECTION
1504(b) of the Code) that, at any time on or before the Effective Time,
includes or has included the Company or any predecessor of or successor to the
Company (or another such predecessor or successor), or any other group of
corporations which, at any time on or before the Effective Date, files or has
filed Tax Returns on a combined, consolidated or unitary basis with the
Company or any predecessor of or successor to the Company (or another such
predecessor or successor).
"COMPANY PROPERTY" means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by the Company (including any surface water thereon or
adjacent thereto and any soil or ground water thereunder), whether currently or
at any previous time.
"CONTAMINANT" means any waste, pollutant, hazardous or toxic substance or
waste, petroleum, petroleum-based substance or waste, special waste, or any
constituent of any such substance or waste.
"COURT ORDER" means any judgment, order, award or decree of any foreign,
federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"DISSENTERS' SHARES" means shares of Company Common Stock with respect to
which appraisal rights shall have been properly perfected in accordance with the
WBCA.
"EMPLOYMENT AGREEMENTS" means the Employment Agreements between the Company
and the individuals identified on SCHEDULE B, in a form mutually agreed to by
the parties thereto.
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title, covenant or other restriction of any kind.
"ENVIRONMENTAL ENCUMBRANCE" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law, or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
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"ENVIRONMENTAL LAW" means all Requirements of Laws derived from or relating
to all federal, state and local laws or regulations relating to or addressing
the environment, health or safety, including but not limited to CERCLA, OSHA and
RCRA and any state equivalent thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any regulations promulgated thereunder.
"ESCROW AGENT" means that Person who shall be mutually selected by Parent
and the Shareholder Representative to act as escrow agent pursuant to the Escrow
Agreement.
"ESCROW AGREEMENT" means the Indemnification and Escrow Agreement in the
form of EXHIBIT B, subject to any reasonable revisions requested by the Escrow
Agent and agreed to by Parent and the Shareholder Representative.
"ESCROW AMOUNT" means a dollar amount equal to the sum of 10% of the
Purchase Price.
"ESCROW PAYMENT" means any amount payable to the former shareholders of the
Company pursuant to the Escrow Agreement.
"FOSTER EMPLOYMENT AGREEMENT" means the Employment Agreement, in the form
of EXHIBIT A, between the Company and Robert Foster.
"FOSTER NON-COMPETITION AGREEMENT" means the Non-Competition Agreement, in
the form of EXHIBIT F, between the Company and Robert Foster.
"FULLY DILUTED PER SHARE PRICE" means $175 million divided by the number of
fully diluted shares of Company Common Stock assuming the cash conversion or
exercise of all outstanding convertible securities, warrants and options for
Company capital stock.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"IRS" means the Internal Revenue Service.
"LETTER AGREEMENT" means the Letter Agreement dated July 7, 2000 among
Parent, the Company and the shareholders of the Company that executed such
agreement.
"MATERIAL ADVERSE EFFECT" means any change or effect (or any development
that, insofar as can be reasonably foreseen, would result in any change or
effect) that is materially adverse to the assets, business, financial condition,
results of operations or prospects of the applicable person or persons.
"MERGER" has the meaning in the fourth recital of this Agreement.
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"MERGERCO" has the meaning specified in the first paragraph of this
Agreement.
"NON-COMPETITION AGREEMENTS" means the Non-Competition Agreements, in the
form of EXHIBIT C, to be dated the Effective Date among the Company, Parent and
each of the Persons identified on SCHEDULE C.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.ss. 651 ET
SEQ., any amendment thereto, any successor statute, and any regulations
promulgated thereunder.
"PARENT ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Parent under this Agreement
or in connection herewith.
"PARENT GROUP MEMBER" means Parent and its Affiliates and their respective
successors and assigns, including, after the Effective Time, the Surviving
Corporation.
"PER SHARE CLOSING PAYMENT" means the Closing Consideration DIVIDED BY the
number of shares of Company Common Stock (other than such shares held by Parent)
outstanding at the Effective Time.
"PER SHARE ESCROW PAYMENT" means, in respect of any Escrow Payment, the
amount of such payment DIVIDED BY the number of shares of Company Common Stock
(other than such shares held by Parent) outstanding at the Effective Time.
"PERMITTED ENCUMBRANCES" means (a) liens for taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the ordinary course of business for sums not yet due
and payable and (c) other liens or imperfections on property which are not
material in amount, do not interfere with, and are not violated by the
consummation of the transactions contemplated by, this Agreement and do not
materially detract from the value or marketability of, or materially impair the
existing use of, the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
Governmental Body.
"PREFERRED STOCK HOLDERS" means the holders of shares of Preferred Stock of
the Company.
"PURCHASE PRICE" means $ 175 million LESS (i) (x) the Fully Diluted Per
Share Price less the weighted average of the exercise prices of the unvested
options to acquire Company Common Stock multiplied by (y) the number of unvested
options to acquire Company Common Stock; (ii) the Fully Diluted Per Share Price
multiplied by 14,464,573 (the number of fully diluted shares of Company Common
Stock held by Parent); (iii) the aggregate dollar amount that shall be paid to
the holders of vested
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Company Stock Options that have not been exercised prior to the Effective Time
pursuant to SECTION 7.9(b); and (iv) 2.1 million in respect of the dollar amount
that the Company shall owe to Hambrecht & Quist LLC ("H & Q") upon consummation
of the Merger pursuant to the letter agreement between the Company and H & Q
dated January 24, 2000 PLUS the amount of cash, if any, received by the Company
upon exercise of any of the warrants held by parties other than Parent.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C.ss. 6901 ET SEQ., and any successor statute, and any regulations
promulgated thereunder.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Company Property,
including the movement of Contaminants through or in the air, soil, surface
water, groundwater or any Company Property.
"REMEDIAL ACTION" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threatened Release or minimize the further Release of
Contaminants or (iii) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Body (including, without limitation, those
pertaining to electrical, building, zoning, environmental and occupational
safety and health requirements) or common law.
"SHAREHOLDERS" mean the holders of shares of capital stock of the Company.
"SHAREHOLDER REPRESENTATIVE ANCILLARY AGREEMENTS" means all agreements,
instruments and documents being or to be executed and delivered by the
Shareholder Representative under this Agreement or in connection herewith.
"TARGET NET WORTH" means negative $9.3 million excluding (i) the amount
that the Company shall owe to Hambrecht & Quist LLC ("H & Q") upon consummation
of the Merger pursuant to the letter agreement between the Company and H & Q
dated January 24, 2000 and (ii) up to $200,000 of Acquisition Expenses of the
Shareholder Representative and the Company relating to the transactions
contemplated by this Agreement.
"TAX" (and with correlative meaning "Taxes" and "Taxable") means:
(i) any federal, state, local or foreign net income, alternative or
add-on minimum, gross income, gross receipts, property, ad valorem, sales,
use, transfer, gains, license, franchise, severance, excise, employment,
payroll, environmental, windfall profit, withholding, alternative or add on
minimum tax,
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stamp or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amount imposed by any
Governmental Body; and
(ii) any liability of the Company or any subsidiary for the payment of
amounts with respect to payments of a type described in clause (i) of this
definition as a result of being a member of an affiliated, consolidated,
combined or unitary group, or as a result of any obligation of the Company
or any subsidiary under any tax sharing arrangement or Tax indemnity
arrangement.
"TAX RETURN" means any return, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
"VALUATION DATE" means the close of business on the last business day prior
to the Effective Date.
"VALUATION DATE NET WORTH" means the excess of the total assets over the
total liabilities reflected in the Valuation Date Balance Sheet.
"WBCA" means the Washington Business Corporation Act, as amended.
Each of the following terms is defined on the page of this Agreement set
forth opposite such term:
ACCOUNTING FIRM.........................................................15
COMPANY COMMON STOCK.....................................................6
ACQUISITION EXPENSES....................................................61
ADDITIONAL ACCOUNTING REPORT............................................16
AGREED ADJUSTMENTS......................................................15
ASSOCIATE...............................................................36
AUDITED FINANCIAL STATEMENTS............................................24
CLOSING DATE............................................................19
COMPANY..................................................................6
COMPANY AGREEMENTS......................................................38
COMPANY CERTIFICATES....................................................16
CONSENT MATERIALS.......................................................42
CONSTITUENT CORPORATIONS.................................................6
COPYRIGHTS..............................................................30
EFFECTIVE DATE..........................................................19
EFFECTIVE TIME..........................................................19
ERISA AFFILIATE.........................................................36
EXCHANGE AGENT..........................................................16
EXCHANGE FUND...........................................................16
GOVERNMENTAL PERMITS....................................................28
INTELLECTUAL PROPERTY...................................................30
LEASED REAL PROPERTY....................................................29
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MERGER...................................................................6
MERGER CONSIDERATION....................................................14
MERGERCO.................................................................6
MULTIEMPLOYER PLANS.....................................................34
NET WORTH ADJUSTMENT AMOUNT.............................................16
NON-ERISA COMMITMENTS...................................................33
OWNED REAL PROPERTY.....................................................29
OWNED SOFTWARE..........................................................32
PARENT...................................................................6
PATENT RIGHTS...........................................................30
PENSION PLANS...........................................................33
PREFERRED STOCK..........................................................6
PRELIMINARY ACCOUNTING REPORT...........................................14
PRELIMINARY PURCHASE PRICE..............................................14
PRELIMINARY VALUATION DATE BALANCE SHEET................................14
PRIOR PENSION PLANS.....................................................33
SHAREHOLDER MEETING.....................................................42
SHAREHOLDER REPRESENTATIVE...............................................6
SIGNIFICANT SHAREHOLDERS.................................................6
SOFTWARE................................................................30
STATEMENTS OF OPERATIONS................................................24
SURVIVING CORPORATION...................................................13
TRADE SECRETS...........................................................30
TRADEMARKS..............................................................30
UNAUDITED FINANCIAL STATEMENTS..........................................24
VALUATION DATE BALANCE SHEET............................................15
VOTING AGREEMENTS........................................................6
WARN....................................................................35
WELFARE PLANS...........................................................33
ARTICLE II
THE MERGER
2.1. SURVIVING CORPORATION. Subject to the conditions contained herein and
in accordance with the provisions of this Agreement and the WBCA at the
Effective Time Mergerco shall be merged with and into the Company, which, as the
corporation surviving in the Merger (the "SURVIVING CORPORATION"), shall
continue unaffected and unimpaired by the Merger to exist under and be governed
by the laws of the State of Washington. Upon the effectiveness of the Merger,
the separate existence of Mergerco shall cease except to the extent provided by
law in the case of a corporation after its merger into another corporation.
2.2. EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Section 23B.11.060 of the WBCA.
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2.3. ARTICLES OF INCORPORATION, BYLAWS, DIRECTORS AND OFFICERS. The
Articles of Incorporation and Bylaws of Mergerco, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation. The directors and officers of the Mergerco immediately
prior to the Effective Time shall be the initial directors and officers of the
Surviving Corporation until their respective successors are duly elected and
qualified.
ARTICLE III
CONVERSION OF SHARES; DETERMINATION OF PURCHASE PRICE
3.1. CONVERSION TERMS. As of the Effective Time, by virtue of the Merger
and without any action on the part of any shareholder of the Company or
Mergerco:
(a) Each share of common stock of Mergerco issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock, par value $.001 per share,
of the Surviving Corporation.
(b) All shares of Company Common Stock that immediately prior to the
Effective Time are held by Parent shall be cancelled and revert to the status of
authorized but unissued shares and no capital stock of the Surviving
Corporation, cash or other consideration shall be paid or delivered in exchange
therefor.
(c) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (after taking into account the cancellation of
shares of Company Common Stock pursuant to this SECTION 3.1 and other than
Dissenters' Shares) shall be converted into and become the right to receive the
following (the "MERGER CONSIDERATION"):
(i) the Per Share Closing Payment; PLUS
(ii) the Per Share Escrow Payments, if any.
All such shares of Company Common Stock, when so converted, shall no longer
be outstanding and shall automatically be cancelled and retired.
(d) All unvested Company Stock Options outstanding immediately subsequent
to the Effective Time shall become options to purchase common stock of Parent
pursuant to SECTION 7.9.
3.2. DETERMINATION OF PURCHASE PRICE.
(a) As promptly as practicable following the Effective Date (but not later
than 60 days after the Effective Date), Parent shall cause the Company to:
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(i) prepare, in accordance with the Agreed Accounting Principles, a
balance sheet of the Company as of the Valuation Date (the "PRELIMINARY
VALUATION DATE BALANCE SHEET"),
(ii) determine the Purchase Price in accordance with the provisions of
this Agreement (such Purchase Price as determined by the Company being
called the "PRELIMINARY PURCHASE PRICE") and
(iii) deliver to the Shareholder Representative the Preliminary
Valuation Date Balance Sheet and a certificate setting forth the
Preliminary Purchase Price (the "PRELIMINARY ACCOUNTING REPORT").
(b) Promptly following receipt of the Preliminary Accounting Report, the
Shareholder Representative shall review the same and, within 30 days after the
date of such receipt, may deliver to Parent a certificate signed by it setting
forth its objections to the Preliminary Valuation Date Balance Sheet and the
Preliminary Purchase Price as set forth in the Preliminary Accounting Report,
together with a summary of the reasons therefor and calculations which, in its
view, are necessary to eliminate such objections. In the event the Shareholder
Representative does not so object within such 30-day period, the Preliminary
Valuation Date Balance Sheet and the Preliminary Purchase Price set forth in the
Preliminary Accounting Report shall be final and binding as the "VALUATION DATE
BALANCE SHEET" and the "PURCHASE PRICE," respectively, for purposes of this
Agreement, but shall not limit the representations, warranties, covenants and
agreements of the parties set forth elsewhere in this Agreement.
(c) In the event the Shareholder Representative so objects within such
30-day period, Parent and the Shareholder Representative shall use their
reasonable best efforts to resolve by written agreement (the "AGREED
ADJUSTMENTS") any differences as to the Preliminary Valuation Date Balance Sheet
and the Preliminary Purchase Price and, in the event Parent and the Shareholder
Representative so resolve any such differences, the Preliminary Valuation Date
Balance Sheet and the Preliminary Purchase Price set forth in the Preliminary
Accounting Report as adjusted by the Agreed Adjustments shall be final and
binding as the "VALUATION DATE BALANCE SHEET" and the "PURCHASE PRICE,"
respectively, for purposes of this Agreement, but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement. In the event any objections raised by the
Shareholder Representative are not resolved by Agreed Adjustments within the
30-day period next following such 30-day period, then Parent and the Shareholder
Representative shall jointly select a national accounting firm acceptable to
both Parent and the Shareholder Representative (or if they cannot agree on such
selection, a national accounting firm will be selected by lot after eliminating
the independent public accountants for Parent and the Company) and the firm so
selected (the "ACCOUNTING FIRM") shall be directed by Parent and the Shareholder
Representative to conduct a special audit of the Preliminary Valuation Date
Balance Sheet and the Preliminary Purchase Price as promptly as reasonably
practicable and, upon completion of such audit, to deliver written notice to
each of Parent and the Shareholder Representative setting forth:
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(i) a summary of all adjustments (including all adjustments for
immaterial misstatements which became known to the Accounting Firm during
the course of such audit) to the Preliminary Valuation Date Balance Sheet
and the Preliminary Purchase Price necessary to permit the Accounting Firm
to deliver the hereinafter described audit report; and
(ii) an audit report stating (without qualification) that in its
opinion (x) the Preliminary Valuation Date Balance Sheet (after giving
effect to such adjustments) as audited by such firm has been prepared in
accordance with the Agreed Accounting Principles, (y) the Preliminary
Purchase Price (after giving effect to such adjustments) has been
determined in accordance with the provisions of this Agreement, and (z) all
adjustments (which became known to the Accounting Firm during the course of
the above-described audit) for items or matters, regardless of the amount
thereof, were taken into account in the adjustments referred to in clause
(i) (such written notice and related summary and certificate being herein
called the "ADDITIONAL ACCOUNTING REPORT").
The Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price,
as so determined but after giving effect to the adjustments set forth in the
Additional Accounting Report shall be final and binding as the "VALUATION DATE
BALANCE SHEET" and the "PURCHASE PRICE," respectively, for purposes of this
Agreement, but shall not limit the representations, warranties, covenants and
agreements of the parties set forth elsewhere in this Agreement.
(d) The parties hereto shall make available to Parent, the Shareholder
Representative and, if applicable, the Accounting Firm, such books, records and
other information (including work papers) as they may reasonably request to
audit or review the Preliminary Accounting Report hereunder. One half of the
fees and expenses of the Accounting Firm related to any special audit of the
Preliminary Valuation Date Balance Sheet and the Preliminary Purchase Price
hereunder shall be paid by the former shareholders of the Company (in the form
of a payment pursuant to the Escrow Agreement) and the other half shall be paid
by Parent. In connection with any such special audit or determination or review
of the Preliminary Valuation Date Balance Sheet or the Preliminary Purchase
Price hereunder, Parent, the Shareholder Representative and, if applicable, the
Accounting Firm shall exchange work papers and other information related to such
audit or the determination of the Valuation Date Balance Sheet and the Closing
Consideration hereunder with a view towards resolving any potential differences
with respect thereto.
(e) Promptly after the determination of the Purchase Price pursuant to this
SECTION 3.2 that is final and binding, Parent shall be entitled to receive a
payment, pursuant to the terms and subject to the conditions of the Escrow
Agreement, in an amount, if any, by which the Target Net Worth exceeds the
Valuation Date Net Worth (the "NET WORTH ADJUSTMENT AMOUNT").
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3.3. EXCHANGE PROCEDURES.
(a) EXCHANGE AGENT. On the Closing Date, Parent shall deposit with an
exchange to be determined by Parent prior to the Closing (the "EXCHANGE AGENT"),
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this ARTICLE III, through the Exchange Agent, cash equal to
the Closing Consideration (such cash, together with any earnings with respect
thereto, and such certificates being hereinafter referred to as the "EXCHANGE
FUND").
(b) EXCHANGE PROCEDURES.
(i) Prior to the Effective Date, the counsel to the Company or the
Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding shares of Company Common Stock that were converted into the
right to receive the Merger Consideration (the "COMPANY CERTIFICATES")
pursuant to SECTION 3.1, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon delivery of the Company Certificates to
the Exchange Agent and shall be in such form and have such other provisions
as Parent and the Company may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Company Certificates in exchange for
the Per Share Closing Payment for each share of Company Common Stock
represented by such Company Certificates.
(ii) Upon surrender of a Company Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Company Certificate shall be entitled to receive,
in exchange for each share of Company Common Stock represented thereby, the
Per Share Closing Payment, and the Company Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a Person other than the Person in whose name the
Company Certificate so surrendered is registered, if such Company
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or
other taxes required by reason of such payment to a Person other than the
registered holder of such Company Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not applicable.
Subject to the applicable provisions of the WBCA, until surrendered as
contemplated by this SECTION 3.3, each Company Certificate shall be deemed
at any time after the Effective Time to represent only the right to receive
upon such surrender the Per Share Closing Payment for each share of Company
Common Stock represented by such Company Certificate as contemplated by
this SECTION 3.3. No interest shall be paid or accrue on
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any cash payable, whether in respect of the Per Share Closing Payments,
dividends or otherwise, upon surrender of any Company Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid in accordance with the terms of this ARTICLE III upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, subject, however, to the Surviving Corporation's obligations to
pay or provide for the rights of dissenters. If, after the Effective Time, any
certificates formerly representing shares of Company Common Stock are presented
to the Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this ARTICLE III.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for twelve months
after the Closing Date shall be delivered to the Surviving Corporation, upon
demand, and any holder of Company Common Stock who has not theretofore complied
with this ARTICLE III shall thereafter look only to the Surviving Corporation
for payment of its claim for Merger Consideration.
(e) NO LIABILITY. None of Parent, the Surviving Corporation or the Exchange
Agent shall be liable to any Person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Company Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which the Per Share Closing Payments payable in respect
of such Company Certificate would otherwise escheat to or become the property of
any Governmental Body), any such shares, cash dividends or distribution in
respect of such Company Certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any Person previously entitled thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by the Surviving Corporation, on a
daily basis. Any interest and other income resulting from such investments shall
be paid to the Surviving Corporation.
(g) WITHHOLDING RIGHTS. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
Company Common Stock pursuant to this Agreement such amounts as may be required
to be deducted and withheld with respect to the making of such payment under the
Code, or under any provision of state, local or foreign tax law. The Surviving
Corporation will pay such withheld amounts to the appropriate taxing authority.
(h) CERTAIN ADJUSTMENTS. If after the date hereof and on or prior to the
Closing Date, the outstanding shares of Company Common Stock shall be changed
into a different number of shares by reason of any reclassification,
recapitalization, split-up,
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combination or exchange of shares, or any dividend payable in stock or other
securities is declared thereon with a record date within such period, or any
similar event shall occur, the Per Share Closing Payment will be adjusted
accordingly to provide to the holders of Company Common Stock the same economic
effect as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend or similar event.
This provision is not intended to affect the need for either party to obtain the
other party's consent to take such an action under any other provision of this
Agreement.
(i) DISSENTER'S RIGHTS. Notwithstanding any provision of this Agreement to
the contrary, any Dissenters' Shares shall not be converted into or represent a
right to receive any of the Merger Consideration, but the holder shall only be
entitled to such rights as are granted by the WBCA. If a holder of shares of
Company Common Stock who demands appraisal of such shares under the WBCA shall
effectively withdraw or otherwise lose (through failure to perfect or otherwise)
the right to appraisal, then, as of the Effective Time or the occurrence of such
event, whichever last occurs, each such share of Company Common Stock shall be
converted into and represent only the right to receive the Per Share Closing
Payment, without interest, upon the surrender of the certificate or certificates
representing such share of Company Common Stock and the Per Share Escrow Payment
pursuant to the Escrow Agreement. The Company shall give Parent prompt notice of
any written demands for appraisal of any shares of Company Common Stock,
attempted withdrawals of such demands, and any other instruments served pursuant
to the WBCA received by the Company relating to shareholders' rights of
appraisal. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands for appraisals
of capital stock of the Company, offer to settle any demands or approve any
withdrawal of any such demands.
ARTICLE IV
CLOSING
4.1. CLOSING DATE. The Closing of the Merger shall take place at 10:00
A.M., local time, on the fifth business day following the day on which the last
of the conditions set forth in ARTICLES IX and X shall have been fulfilled or
waived (if permissible) or at such other time and place as Parent and the
Company shall agree at the offices of Venture Law Group, 4750 Carillon Point,
Kirkland, WA 98033. The date on which the Closing is actually held is
hereinafter sometimes referred to as the "CLOSING DATE."
4.2. FILING ARTICLES OF MERGER AND EFFECTIVENESS. Subject to the
fulfillment or waiver of the conditions to the respective obligations of each of
the parties set forth in ARTICLE IX or ARTICLE X, as the case may be, at the
Closing the parties shall cause the Merger to be consummated by filing a
Articles of Merger (which shall be in form and substance reasonably satisfactory
to the parties hereto), executed and acknowledged in accordance with the laws of
the State of Washington, in the office of the Secretary of State of the State of
Washington. The Merger shall become effective upon such filing
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as provided by the WBCA. The date and time on such date of effectiveness of the
Merger are herein called, respectively, the "EFFECTIVE DATE" and the "EFFECTIVE
TIME."
4.3. PARENT'S DELIVERIES. Subject to fulfillment or waiver of the
conditions set forth in ARTICLE IX, at the Effective Time Parent shall deliver
to the Shareholder Representative all of the following:
(a) a copy of the Certificate of Incorporation of Parent, certified as of a
recent date by the Secretary of State of the State of Delaware;
(b) a certificate of good standing of Parent, issued as of a recent date by
the Secretary of State of the State of Delaware;
(c) a certificate of the Secretary or an Assistant Secretary of Parent,
dated the Effective Date, in form and substance reasonably satisfactory to the
Shareholder Representative, as to (i) no amendments to the Certificate of
Incorporation of Parent since a specified date; (ii) the Bylaws of Parent; and
(iii) the incumbency and signatures of the officers of Parent executing this
Agreement and any Parent Ancillary Agreement; and
(d) the certificate contemplated by SECTION 10.1, duly executed by the
President or any Vice President of Parent.
4.4. MERGERCO'S DELIVERIES. Subject to fulfillment or waiver of the
conditions set forth in ARTICLE IX, at the Effective Time Mergerco shall deliver
to the Shareholder Representative all of the following:
(a) a copy of the Articles of Incorporation of Mergerco certified as of a
recent date by the Secretary of State of the State of Washington;
(b) a certificate of existence/due authorization of Mergerco, issued as of
a recent date by the Secretary of State of the State of Washington;
(c) a certificate of the Secretary or an Assistant Secretary of Mergerco,
dated the Effective Date, in form and substance reasonably satisfactory to the
Shareholder Representative, as to (i) no amendments to the Articles of
Incorporation of Mergerco since a specified date; (ii) the Bylaws of Mergerco;
(iii) the resolutions of the Board of Directors of Mergerco authorizing the
execution and performance of this Agreement and the transactions contemplated
herein and the written consent of Parent approving this Agreement in accordance
with Section 23B.11.030 of the WBCA; and (iv) the incumbency and signatures of
the officers of Mergerco executing this Agreement; and
(d) the certificate contemplated by SECTION 10.1, duly executed by the
President or any Vice President of Mergerco.
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4.5. THE COMPANY'S DELIVERIES. Subject to fulfillment or waiver of the
conditions set forth in ARTICLE X, at the Effective Time the Company shall
deliver to Parent all of the following:
(a) a copy of the Articles of Incorporation of the Company, certified as of
a recent date by the Secretary of State of the State of Washington;
(b) a certificate of existence/due authorization of the Company, issued as
of a recent date by the Secretary of State of the State of Washington;
(c) a certificate of the Secretary or an Assistant Secretary of the
Company, dated the Effective Date, in form and substance reasonably satisfactory
to Parent, as to (i) no amendments to the Articles of Incorporation of the
Company since a specified date; (ii) the Bylaws of the Company; (iii) the
resolutions of the Board of Directors of the Company authorizing the execution
and performance of this Agreement and the transactions contemplated herein and
of the Shareholders and the Preferred Stock Holders approving this Agreement in
accordance with the Articles of Incorporation and the Bylaws of the Company and
Section 23B.11.030 of the WBCA; (iv) the actions taken by the Preferred Stock
Holders necessary in order to effect the automatic conversion of all of the
shares of Preferred Stock into shares of Company Common Stock; and (v) the
incumbency and signatures of the officers of the Company executing this
Agreement and any Seller Ancillary Agreement;
(d) an opinion of Venture Law Group, a Professional Corporation, counsel to
the Company, dated the Effective Date and in form and substance reasonably
satisfactory to Parent, substantially in the form contained in EXHIBIT D;
(e) all consents, waivers or approvals obtained by the Company with respect
to the consummation of the transactions contemplated by this Agreement;
(f) resignations of each of the directors and each of the officers of the
Company, effective as of the Effective Time;
(g) the certificates contemplated by SECTIONS 9.1 and 9.2, duly executed by
the President or any Vice President of the Company; and
(h) releases executed by those Shareholders set forth on SCHEDULE D,
substantially in the form contained in EXHIBIT E.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDER REPRESENTATIVE
As an inducement to Parent and Mergerco to enter into this Agreement
and to consummate the transactions contemplated hereby, the Shareholder
Representative represents and warrants to Parent and Mergerco and agrees as to
those representations and warranties made by the Shareholder Representative in
SECTION 5.3,
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and the Company represents and warrants to Parent and Mergerco and agrees as
follows:
5.1. ORGANIZATION AND CAPITAL STRUCTURE. The Company is a corporation duly
organized, and validly existing under the laws of the State of Washington. The
Company is duly qualified to transact business as a foreign corporation and is
in good standing in each of the jurisdictions listed in SCHEDULE 5.1, which are
the only jurisdictions in which the ownership or leasing of the its assets or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not individually or in the aggregate have a
Material Adverse Effect on the Company, and no other jurisdiction has demanded,
requested or otherwise indicated that the Company is required so to qualify. The
Company has full power and authority to own or lease and to operate and use its
assets and to carry on its business as now conducted or proposed to be
conducted. True and complete copies of the Articles of Incorporation and all
amendments thereto and of the Bylaws, as amended, of the Company have been
delivered to Parent.
The authorized capital of the Company consists of (1) 60,000,000 shares of
common stock, $.001 par value per share, of which 4,295,769 have been issued and
are outstanding, none are held as treasury shares and, except as set forth in
SCHEDULE 5.1, none is reserved for any purpose, (2) 4,986,142 shares of Series A
Preferred Stock, $.001 par value share, of which 4,686,666 shares have been
issued and are outstanding, and are convertible into 5,957,627 shares of Common
Stock, (3) 4,044,668 shares of Series B Preferred Stock, $.001 par value per
share, of which 4,014,668 shares have been issued and are outstanding, and are
convertible into 8,961,313 shares of Common Stock, and (4) 31,969,190 shares of
Series C Preferred Stock, $.001 par value per share, of which 26,916,467 shares
have been issued and are outstanding and are convertible into 26,916,467 shares
of Common Stock. Except warrants to purchase an aggregate of (1) 112,632 shares
of Common Stock, (2) 299,476 shares of Series A Preferred Stock (convertible
into 380,691 shares of Common Stock), (3) 30,000 shares of Series B Preferred
Stock (convertible into 66,964 shares of Common Stock) and (4) 4,422,587 shares
of Series C Preferred Stock (convertible into 4,422,587 shares of Common Stock)
and 10,680,026 options granted and outstanding under the Company's 1995 and 1999
Stock Option Plans, there are no agreements, arrangements, options, warrants,
calls, rights or commitments of any character relating to the issuance, sale,
purchase or redemption of any shares of capital stock or other equity interest
of the Company, whether on conversion of other securities or otherwise. None of
the issued and outstanding shares of the Company's capital stock has been issued
in violation of, or is subject to, any preemptive or subscription rights. Except
as set forth in this Agreement and in SCHEDULE 5.1, the Company is not a party
to, or otherwise have any knowledge of the current existence of, any shareholder
agreement, voting trust agreement or any other similar contract, agreement,
arrangement, commitment, plan or understanding restricting or otherwise relating
to the voting, dividend, ownership or transfer rights of any shares of capital
stock of the Company. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable and owned of record and
beneficially by the Shareholder Representative, free from all Encumbrances.
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5.2. SUBSIDIARIES AND INVESTMENTS. The Company does not, directly or
indirectly, (i) own, of record or beneficially, any outstanding voting
securities or other equity interests in any corporation, partnership, joint
venture or other entity or (ii) control any corporation, partnership, joint
venture or other entity. The Company has never, directly or indirectly, (i)
owned, of record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, joint venture or other entity
or (ii) controlled any corporation, partnership, joint venture or other entity.
5.3. AUTHORITY. The Company has full power and authority to execute,
deliver and perform this Agreement and all of the Company Ancillary Agreements.
The execution, delivery and performance of this Agreement and the Company
Ancillary Agreements by the Company have been duly authorized, approved and
adopted by the Company's board of directors and, except for the approval of this
Agreement by the Shareholders in accordance with SECTION 7.1 and the filing
contemplated by SECTION 4.2, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and is the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, and each of the Company
Ancillary Agreements has been duly authorized by the Company and upon execution
and delivery by the Company will be a legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
The Shareholder Representative has full power and authority to execute,
deliver and perform this Agreement and all of the Shareholder Representative
Ancillary Agreements. This Agreement has been duly executed and delivered by the
Shareholder Representative and is the legal, valid and binding obligation of the
Shareholder Representative enforceable in accordance with its terms, and each of
the Shareholder Representative Ancillary Agreements, upon execution and delivery
by the Shareholder Representative, will be a legal, valid and binding obligation
of the Shareholder Representative enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
Except as set forth in SCHEDULE 5.3, neither the execution and delivery of
this Agreement, any of the Company Ancillary Agreements or any of the
Shareholder Representative Ancillary Agreements or the consummation of any of
the transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
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creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
upon, any of the Company's assets, under (1) the Articles of Incorporation
or Bylaws of the Company, (2) any Company Agreement, (3) any other material
note, instrument, agreement, mortgage, lease, license, franchise, permit or
other authorization, right, restriction or obligation to which either the
Company or the Shareholder Representative is a party or any of their
respective assets or business is subject or by which either the Company or
the Shareholder Representative is bound, (4) any Court Order to which
either the Company or the Shareholder Representative is a party or any of
their respective assets or business is subject or by which either the
Company or the Shareholder Representative is bound, or (5) any Requirements
of Laws affecting either the Company or the Shareholder Representative or
their respective assets or business; or
(ii) require the approval, consent, authorization or act of, or the
making by either the Company or the Shareholder Representative of any
declaration, filing or registration with, any Person, except as provided in
SECTION 4.2.
5.4. FINANCIAL STATEMENTS. SCHEDULE 5.4 contains (i) the audited balance
sheets of the Company as of December 31, 1999 and 1998 and the related
statements of operations (the "STATEMENTS OF OPERATIONS"), shareholders' equity
(deficit) and cash flows for each of the years then ended, together with the
appropriate notes to such financial statements, accompanied by the report
thereon of Ernst & Young, independent public accountants (the "AUDITED FINANCIAL
STATEMENTS"), and (ii) the unaudited balance sheet of the Company as of June 30,
2000 and the related unaudited statements of operations, shareholders' equity
(deficit) and cash flows operations for the six months then ended (the
"UNAUDITED FINANCIAL STATEMENTS"). Except as disclosed in the notes thereto, the
Audited Financial Statements and the Unaudited Financial Statements have been
prepared in conformity with generally accepted accounting principles
consistently applied and fairly present in all material respects the financial
position of the Company at the dates of such balance sheets and the results of
its operations and cash flows for the respective periods indicated, except that
the Unaudited Financial Statements are subject to normal year-end audit
adjustments. None of the financial statements referred to in this SECTION 5.4
contains any material items of special or nonrecurring income except as
expressly specified therein. Except as set forth on SCHEDULE 5.4 or in the
Unaudited Financial Statements, the Unaudited Financial Statements include all
adjustments, which consist only of normal recurring accruals, necessary for such
fair presentation, other than normal year-end audit adjustments. All costs and
expenses incurred in generating the revenues reflected in the Audited Financial
Statements during the respective periods covered thereby that are required by
generally accepted accounting principles to be reflected in the Audited
Statements of Income are so reflected.
5.5. OPERATIONS SINCE BALANCE SHEET DATE. (a) Except as set forth in
SCHEDULE 5.5(A), since the Balance Sheet Date, there has been:
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(i) no material adverse change in the assets, business, financial
condition, results of operations or prospects of the Company, and no fact
or condition exists or is contemplated or threatened which might reasonably
be expected to cause such a change in the future; and
(ii) no damage, destruction, loss or claim, whether or not covered by
insurance, or condemnation or other taking adversely affecting in any
material respect any of the Company's assets or its business.
(b) Except as set forth in SCHEDULE 5.5(B), since the Balance Sheet Date,
the Company has conducted its business only in the ordinary course and in
conformity with past practice. Without limiting the generality of the foregoing,
since the Balance Sheet Date, except as set forth in such Schedule, the Company
has not:
(i) issued, delivered or agreed (conditionally or unconditionally) to
issue or deliver, or granted any option, warrant or other right to
purchase, any of its capital stock or other equity interest or any security
convertible into its capital stock or other equity interest;
(ii) issued, delivered or agreed (conditionally or unconditionally) to
issue or deliver any of its bonds, notes or other debt securities, or
borrowed or agreed to borrow any funds, other than in the ordinary course
of business consistent with past practice;
(iii) paid any obligation or liability (absolute or contingent) other
than current liabilities reflected on the Balance Sheet and current
liabilities incurred since the Balance Sheet Date in the ordinary course of
business consistent with past practice;
(iv) declared or made, or agreed to declare or make, any payment of
dividends or distributions to its Shareholders or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock or other equity
interest, except in each case as provided herein;
(v) except in the ordinary course of business consistent with past
practice, made or permitted any material amendment or termination of any
Company Agreement;
(vi) except as set forth in the budgets included in Schedule 5.25,
undertaken or committed to undertake capital expenditures exceeding $50,000
for any single project or related series of projects;
(vii) made charitable donations in excess of $1,000 in the aggregate;
(viii) sold, leased (as lessor), transferred or otherwise disposed of,
or mortgaged or pledged, or imposed or suffered to be imposed any
Encumbrance on, any of the assets reflected on the Balance Sheet or any
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assets acquired by the Company after the Balance Sheet Date, except for
inventory and minor amounts of personal property sold or otherwise disposed
of for fair value in the ordinary course of its business consistent with
past practice and except for Permitted Encumbrances;
(ix) cancelled any debts owed to or claims held by the Company
(including the settlement of any claims or litigation) other than in the
ordinary course of its business consistent with past practice;
(x) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money or entered into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial
Accounting Standards No. 13);
(xi) accelerated or delayed collection of notes or accounts receivable
in advance of or beyond their regular due dates or the dates when the same
would have been collected in the ordinary course of its business consistent
with past practice;
(xii) delayed or accelerated payment of any account payable or other
liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of its business
consistent with past practice;
(xiii) entered into or become committed to enter into any other
material transaction except in the ordinary course of business;
(xiv) allowed the levels of raw materials, supplies, work-in-process
or other materials included in the inventory of the Company to vary in any
material respect from the levels customarily maintained in its business;
(xv) instituted any increase in any compensation payable to any
employee of the Company or in any profit-sharing, bonus, incentive,
deferred compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other benefits made available to employees of the
Company;
(xvi) prepared or filed any Tax Return inconsistent with past practice
or, on any such Tax Return, taken any position, made any election, or
adopted any method that is inconsistent with positions taken, elections
made or methods used in preparing or filing similar Tax Returns in prior
periods (including, without limitation, positions, elections or methods
which would have the effect of deferring income to periods after the
Closing Date or accelerating deductions to periods prior to the Closing
Date);
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(xvii) made any change in the accounting principles and practices used
by the Company from those applied in the preparation of the Balance Sheet
and the related statements of income, the shareholders' equity and cash
flow for the twelve months ended on the Balance Sheet Date; or
(xviii) entered into or become committed to enter into any other
material transactions except in the ordinary course of business consistent
with past practice.
5.6. NO UNDISCLOSED LIABILITIES. The Company is not subject to any material
liability (including, without limitation, unasserted claims, whether known or
unknown), whether absolute, contingent, accrued or otherwise, which is not shown
or which is in excess of amounts shown or reserved for in the Balance Sheet,
other than liabilities of the same nature as those set forth in the Balance
Sheet and the notes thereto and reasonably incurred in the ordinary course of
its business consistent with past practice after the Balance Sheet Date.
5.7. TAXES. (a) Except as set forth on SCHEDULE 5.7, (i) the Company has
filed all Tax Returns required to be filed; (ii) all such Tax Returns are
complete and accurate in all material respects and disclose all Taxes required
to be paid by the Company for the periods covered thereby and all Taxes shown to
be due on such Tax Returns have been timely paid; (iii) the Company is not
currently the beneficiary of any extension of time within which to file any Tax
Return; (iv) all Taxes (whether or not shown on any Tax Return) owed by the
Company have been timely paid; (v) the Company has not waived or been requested
to waive any statute of limitations in respect of Taxes which waiver is
currently in effect; (vi) the Tax Returns referred to in clause (i), to the
extent related to income Taxes, have been examined by the appropriate taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (vii) there is no action, suit,
investigation, audit, claim or assessment pending or proposed or threatened with
respect to Taxes of the Company and, to the best knowledge of the Company, no
basis exists therefor; (viii) all deficiencies asserted or assessments made as a
result of any examination of the Tax Returns referred to in clause (i) have been
paid in full, except to the extent that a reserve for such Taxes has been
reflected on the Unaudited Financial Statements; (ix) all Tax sharing
arrangements and Tax indemnity arrangements relating to the Company (other than
this Agreement) will terminate prior to the Closing Date and the Company will
not have any liability thereunder on or after the Closing Date; (x) there are no
liens for Taxes upon the assets of the Company, except liens relating to current
Taxes not yet due; (xi) all Taxes which the Company is required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid or accrued, reserved against and entered on the books of the
Company; (xii) the Company has not been a member of any Company Group and the
Company has not had any direct or indirect ownership in any corporation,
partnership, joint venture or other entity; (xiii) the Company qualified as, and
properly elected to be, at all times from the date of its incorporation through
November 18, 1996, an "S corporation" for purposes of Subchapter S of the Code,
and during such period also qualified for, and where necessary elected to have
applicable,
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similar tax treatment with respect to all relevant states which, for income or
franchise Tax purposes, allow a corporation to be treated as an "S corporation"
or similar entity; and (xiv) from the date of its incorporation through November
18, 1996, no entity level Tax was imposed on the Company, including any Tax
under section 1374 of the Code;
(b) The Company is not, nor has it ever been, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, and
neither Mergerco nor Parent is required to withhold tax from the Purchase Price
by reason of Section 1445 of the Code.
(c) No payment or other benefit, and no acceleration of the vesting of any
options, payments or other benefits, will be, as a direct or indirect result of
the transactions contemplated by this Agreement, an "excess parachute payment"
to a "disqualified individual" as those terms are defined in SECTION 280G of the
Code and the Treasury Regulations thereunder, except in the case of payments,
benefits or acceleration with respect to which shareholder approval meeting the
requirements of Section 280G(b)(5) of the Code is obtained.
(d) Following the Closing Date, the Company will not have any liability for
Taxes for any taxable year or period that ends on or before the Closing Date or,
with respect to any taxable year that begins before and ends after the Closing
Date, for the portion of such year that ends on and includes the Closing Date,
except to the extent reflected on the Valuation Date Balance Sheet.
5.8. AVAILABILITY OF ASSETS AND LEGALITY OF USE. The assets owned or leased
by the Company constitute all the assets used in its business (including, but
not limited to, all books, records, computers and computer programs and data
processing systems) and are in good condition (subject to normal wear and tear
and immaterial impairments of value and damage) and serviceable condition and
are generally suitable for the uses for which intended. SCHEDULE 5.8 also sets
forth a description of all material services provided by any Affiliate of the
Company to the Company utilizing either (i) assets not owned by the Company as
of the Effective Time or (ii) employees not listed in SCHEDULE 5.18(G) pursuant
to clause (i) of SECTION 5.18(g), and the manner in which the costs of providing
such services have been charged to the Company.
5.9. GOVERNMENTAL PERMITS. The Company owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from Governmental Bodies which are necessary to entitle it to own
or lease, operate and use its assets and to carry on and conduct its business
substantially as currently conducted (herein collectively called "GOVERNMENTAL
PERMITS"). SCHEDULE 5.9 sets forth a list and brief description of each
Governmental Permit, except for such incidental licenses, permits and other
authorizations which would be readily obtainable by any qualified applicant
without undue burden in the event of any lapse, termination, cancellation or
forfeiture thereof. Complete and correct copies of all of the Governmental
Permits have heretofore been delivered to Parent.
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Except as set forth in SCHEDULE 5.9, (i) the Company has fulfilled and
performed its obligations under each of the Governmental Permits, and no event
has occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default under any
such Governmental Permit or which permits or, after notice or lapse of time or
both, would permit revocation or termination of any such Governmental Permit, or
which might adversely affect in any material respect the rights of the Company
under any such Governmental Permit; (ii) no notice of cancellation, of default
or of any material dispute concerning any Governmental Permit, or of any event,
condition or state of facts described in the preceding clause, has been received
by, or is known to, the Company; and (iii) each of the Governmental Permits is
valid, subsisting and in full force and effect and will continue in full force
and effect after the Effective Date of the Merger, in each case without (x) the
occurrence of any breach, default or forfeiture of rights thereunder, or (y) the
consent, approval, or act of, or the making of any filing with, any Governmental
Body.
5.10. REAL PROPERTY. SCHEDULE 5.10 contains a brief description of each
parcel of real property owned by the Company (the "OWNED REAL PROPERTY")
(showing the record title holder, legal description, permanent index number,
location, improvements, the uses being made thereof and any indebtedness secured
by a mortgage or other Encumbrance thereon) and of each option held by the
Company to acquire any real property. Complete and correct copies of any
instruments evidencing Encumbrances, commitments for the issuance of title
insurance, title opinions, surveys and appraisals in the possession of the
Company or any policies of title insurance currently in force and in the
possession of the Company with respect to each such parcel have heretofore been
delivered to Parent.
5.11. REAL PROPERTY LEASES. SCHEDULE 5.11 sets forth a list of each lease
or similar agreement under which (i) the Company is lessee of, or holds or
operates, any real property owned by any third Person (the "LEASED REAL
PROPERTY") or (ii) the Company is lessor of any of the Owned Real Property.
Except as set forth in such Schedule, the Company has the right to quiet
enjoyment of all the real property described in such Schedule of which it is the
Lessee for the full term of each such lease or similar agreement (and any
related renewal option) relating thereto, and the leasehold or other interest of
the Company in such real property is not subject or subordinate to any
Encumbrance except for Permitted Encumbrances. Complete and correct copies of
any instruments evidencing Encumbrances, commitments for the issuance of title
insurance, title opinions, surveys and appraisals in the possession of the
Company or any policies of title insurance currently in force and in the
possession of the Company with respect to each such parcel of leased property
have heretofore been delivered to Parent.
5.12. CONDEMNATION. Neither the whole nor any part of the Owned Real
Property or any real property leased, used or occupied by the Company is subject
to any pending suit for condemnation or other taking by any public authority or
other Person, and, to the best knowledge of the Company, no such condemnation or
other taking is threatened or contemplated.
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5.13. PERSONAL PROPERTY. SCHEDULE 5.13 contains a detailed list of all
machinery, equipment, vehicles, furniture and other personal property owned by
the Company having an original cost of $1,000 or more.
5.14. PERSONAL PROPERTY LEASES. SCHEDULE 5.14 contains a brief description
of each lease or other agreement or right, whether written or oral (including in
each case the annual rental, the expiration date thereof and a brief description
of the property covered), under which the Company is lessee of, or holds or
operates, any machinery, equipment, vehicle or other tangible personal property
owned by a third Person, except for any such lease, agreement or right that is
terminable by the Company without penalty or payment on notice of 30 days or
less, or which involves the payment by the Company of rentals of less than
$1,000 per year.
5.15. INTELLECTUAL PROPERTY; SOFTWARE. (a) SCHEDULE 5.15 contains a list
and description (showing in each case any product, device, process, service,
business or publication covered thereby, the registered or other owner,
expiration date and number, if any) of all intellectual property owned by,
licensed to, or used by the Company in the conduct of the Company's business
("INTELLECTUAL PROPERTY"). The Intellectual Property includes:
(i) all United States and foreign patents, patent applications,
continuations, continuations-in-part, divisions, reissues, patent
disclosures, inventions (whether or not patentable) or improvements thereto
("PATENT RIGHTS");
(ii) all United States, state and foreign trademarks, service marks,
logos, trade dress and trade names (including all assumed or fictitious
names under which the Company is conducting its business or has within the
previous five years conducted its business), whether registered or
unregistered, and pending applications to register the foregoing
("TRADEMARKS");
(iii) all United States and foreign copyrights, whether registered or
unregistered and pending applications to register the same ("COPYRIGHTS");
and
(iv) all confidential ideas, trade secrets, know-how, concepts,
methods, processes, formulae, reports, data, customer lists, mailing lists,
business plans, or other proprietary information ("TRADE SECRETS").
(b) SCHEDULE 5.15 contains a list and description (showing in each case any
owner, licensor or licensee) of all computer software programs and software
systems owned by, licensed to, or used by the Company in the conduct of the
Company's business, including, without limitation, all databases, compilations,
tool sets, compilers, higher level or proprietary languages, related
documentation and materials, whether in source code, object code or human
readable form ("SOFTWARE"); PROVIDED, HOWEVER, that SCHEDULE 5.15 may omit
Software licensed to Licensee that is available in consumer
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retail stores and subject to license agreements that become effective when the
purchaser breaks the Software package.
(c) SCHEDULE 5.15 contains a list and description of all agreements,
commitments, contracts, understandings, licenses, sublicenses, assignments and
indemnities which relate or pertain to any Intellectual Property or Software
identified in SECTIONS 5.15(a) and 5.15(b) above or to disclosure or use of
ideas or information of the Company or third Persons to which the Company is a
party, showing in each case the parties thereto and the material terms thereof.
(d) Except as disclosed on SCHEDULE 5.15, the Company either: (i) owns the
entire right, title and interest in and to the Intellectual Property and
Software, free and clear of any Encumbrance; or (ii) has the perpetual,
royalty-free right to use the same.
(e) Except as disclosed on SCHEDULE 5.15, the Company is not in breach of
any material provision of any material agreement, commitment, contract,
understanding, license, sublicense, assignment or indemnity which relates to any
of the Intellectual Property or Software, and the Company has not taken any
action which would impair or otherwise adversely effect its rights in any of the
Intellectual Property or Software. The Company has all right, power and
authority with respect to the Intellectual Property, Software and materials
identified in SECTION 5.15(c), to execute and deliver this Agreement and the
Company Ancillary Agreements, to consummate the transactions contemplated hereby
and thereby and to comply with or fulfill the terms, conditions or provisions
hereof or thereof. The transactions contemplated by this Agreement and the
Company Ancillary Agreements shall have no adverse effect on the validity and
enforceability of any of the Intellectual Property, Software or materials
identified in SECTION 5.15(c), and the Company's right, title and interest
thereto immediately after the Effective Time shall be identical to that of the
Company immediately prior to the Effective Time.
(f) Except as disclosed on SCHEDULE 5.15: (i) all Patent Rights and
registrations for Intellectual Property identified as being owned by the Company
are valid and in force, and all applications to register any unregistered
Intellectual Property are pending and in good standing, all without challenge of
any kind; (ii) the Intellectual Property owned by the Company is valid and
enforceable; and (iii) the Company has the sole and exclusive right to bring
actions for infringement or unauthorized use of the Intellectual Property and
Software owned by the Company, and to the best knowledge of the Company, there
is no basis for any such action. Correct and complete copies of: (x)
registrations for all registered copyrights, trademarks, trade names, service
marks and patents identified as being owned by the Company; (y) all pending
applications to register unregistered Intellectual Property (together with any
subsequent correspondence or filings relating to the foregoing); and (z) all
items identified in SECTION 5.15(c), have heretofore been delivered by the
Company to Parent.
(g) Except as disclosed in SCHEDULE 5.15, no infringement of any copyright,
trademark, service mark, trade name, patent, patent right, trade secret or other
property right of any other Person has occurred or results in any way from the
operations of the
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Company's business. No claim of any infringement of any copyright, trademark,
service mark, trade name, patent, patent right, trade secret or other property
right of any other Person has been made or asserted in respect of the operations
of the Company's Business. The Company has not had notice of, or knowledge of
any basis for, a claim against the Company that its operations, activities,
products, software, equipment, machinery or processes of the Company's business
infringe any copyright, trademark, service mark, trade name, patent, patent
right, trade secret or other property right of any other Person.
(h) Except as disclosed on SCHEDULE 5.15: (i) the Software is not subject
to any transfer, assignment, site, equipment, or other operational limitations;
(ii) the Company has maintained and protected the Software it owns (the "OWNED
SOFTWARE") (including, without limitation, all source code and system
specifications) with appropriate proprietary notices (including, without
limitation, the notice of copyright in accordance with the requirements of 17
U.S.C. sec. 401), confidentiality and non-disclosure agreements and such other
measures as are necessary to protect the proprietary, trade secret or
confidential information contained therein; (iii) the Owned Software has been
registered or is eligible for protection and registration under applicable
copyright law and has not been forfeited to the public domain; (iv) the Company
has copies of all releases or separate versions of the Owned Software so that
the same may be subject to registration in the United States Copyright Office;
(v) the Company has complete and exclusive right, title and interest in and to
the Owned Software; (vi) the Company has developed the Owned Software through
its own efforts and for its own account without the aid or use of any
consultants, agents, independent contractors or Persons (other than Persons that
are employees of the Company); (vii) the Owned Software does not infringe any
copyright, trademark, service mark, trade name, patent, patent right, trade
secret or other property right of any other Person; (viii) any Owned Software
includes the source code, system documentation, statements of principles of
operation and schematics, as well as any pertinent commentary, explanation,
program (including compilers), workbenches, tools, and higher level or
proprietary language used for the development, maintenance, implementation and
use thereof, so that a trained computer programmer could develop, maintain,
support, compile and use all releases or separate versions of the same that are
currently subject to maintenance obligations by the Company; (ix) there are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Owned Software by any other Person;
(x) the Owned Software complies with all applicable Requirements of Laws
relating to the export or reexport of the same; and (xi) the Owned Software may
be exported or reexported to all countries without the necessity of any license,
other than to those countries specified as prohibited destinations pursuant to
applicable regulations of the U.S. Department of Commerce and/or the United
States State Department.
(i) Except as disclosed on SCHEDULE 5.15, all employees, agents,
consultants, or contractors who have contributed to or participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of the Company or any predecessor in interest thereto either:
(i) is a party to a "work-for-hire" agreement under which the Company is deemed
to be the original owner/author of all property rights therein; or (ii) has
executed an assignment or an agreement to assign in
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favor of the Company (or such predecessor in interest, as applicable) of all
right, title and interest in such material.
5.16. TITLE TO PROPERTY. The Company has good and marketable title in fee simple
absolute to all Owned Real Property and to all buildings, structures and other
improvements thereon, in each case free and clear of all Encumbrances, except
for Permitted Encumbrances and except as set forth in SCHEDULE 5.16. The Company
has good title to all of its other assets reflected on the Balance Sheet as
being owned by it and all of the assets thereafter acquired by it (except to the
extent that such assets have been disposed of after the Balance Sheet Date in
the ordinary course of business consistent with past practice), free and clear
of all Encumbrances, except for Permitted Encumbrances and except as set forth
in SCHEDULE 5.16. Except as set forth on SCHEDULE 5.16, the Company has
fulfilled and performed in all material respects all its obligations, and all
obligations binding upon any Owned Real Property, under each of the Encumbrances
to which any Owned Real Property is subject, and neither the Company nor any
Owned Real Property is in breach or default under, or in violation of or
noncompliance with, any such Encumbrances, and no event has occurred and no
condition or state of facts exists which, with the passage of time or the giving
of notice or both, would constitute such a breach, default, violation or
noncompliance. The consummation of the transactions contemplated by this
Agreement will not result in any breach, default, violation, noncompliance or
forfeiture or impairment of any rights under any Encumbrance to which any Owned
Real Property is subject, or require any consent, approval or act of, or the
making of any filing with, any other party to or benefited by or holding rights
under or with respect to any such Encumbrance.
5.17. EMPLOYEE BENEFIT PLANS.
(a) Set forth in SCHEDULE 5.17(A) is a true and complete list of each
"employee pension benefit plan" (as such term is defined in SECTION 3(2) of
ERISA) maintained by the Company or an ERISA Affiliate, or with respect to which
the Company or an ERISA Affiliate is or will be required to make any payment, or
which provides or will provide benefits to present or prior employees of the
Company or an ERISA Affiliate due to such employment (the "PENSION PLANS"). Set
forth in SCHEDULE 5.17(A) is a true and complete list of each "employee welfare
benefit plan" (as such term is defined in SECTION 3(1) of ERISA) maintained by
the Company, or with respect to which the Company is or will be required to make
any payment, or which provides or will provide benefits to present or prior
employees of the Company due to such employment (the "WELFARE PLANS") (the
Pension Plans and Welfare Plans being the "ERISA BENEFIT PLANS"). In addition,
set forth in SCHEDULE 5.17(A) is a true and complete list of each other
"employee pension benefit plan" (as such term is defined in SECTION 3(2) of
ERISA) that is or has ever been subject to SECTION 302 of ERISA and (i)
maintained by the Company or an ERISA Affiliate at any time during the six-year
period prior to the Effective Time, or (ii) with respect to which the Company or
an ERISA Affiliate was required to make any payment at any time during such
period (the "PRIOR PENSION PLANS").
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(b) Other than those listed in SCHEDULE 5.17(A), set forth in Schedule
5.17(B) is a true and complete list of each of the following to which the
Company is a party or with respect to which it is or will be required to make
any payment (the "NON-ERISA COMMITMENTS"):
(i) each retirement, savings, profit sharing, deferred compensation,
severance, stock ownership, stock purchase, stock option, performance,
bonus, incentive, vacation or holiday pay, hospitalization or other
medical, disability, life or other insurance, or other welfare, benefit or
fringe benefit plan, policy, trust, understanding or arrangement of any
kind, whether written or oral; and
(ii) each employee collective bargaining agreement and each agreement,
understanding or arrangement of any kind, whether written or oral, with or
for the benefit of any present or prior officer, director, employee, agent
or consultant (including, without limitation, each employment,
compensation, deferred compensation, severance or consulting agreement or
arrangement, confidentiality agreement, covenant not to compete and any
agreement or arrangement associated with a change in ownership or control
of the Company, but excluding employment agreements terminable by the
Company without premium or penalty on notice of thirty (30) days or less
under which the only monetary obligation of the Company is to make current
wage or salary payments and provide current fringe benefits).
The Company has delivered to Parent correct and complete copies of (i) all
written Non-ERISA Commitments and (ii) all insurance and annuity policies and
contracts and other documents relevant to any Non-ERISA Commitment. SCHEDULE
5.17(B) contains a complete and accurate description of all oral Non-ERISA
Commitments. Except as disclosed in SCHEDULE 5.17(A) or SCHEDULE 5.17(B), none
of the ERISA Benefit Plans or the Non-ERISA Commitments is subject to the law of
any jurisdiction outside of the United States of America.
(c) Except as set forth on SCHEDULE 5.17(C), neither the Company nor any
ERISA Affiliate is a party to or is bound by any "multiemployer plan" (as such
term is defined in SECTION 3(37) OF ERISA). The Company has delivered to Parent
with respect to each ERISA Benefit Plan and with respect to each Prior Pension
Plan, other than any ERISA Benefit Plan or Prior Pension Plan which is a
multiemployer plan (as such term is defined in SECTION 3(37) of ERISA), correct
and complete copies, where applicable, of (i) all plan documents and amendments
thereto, trust agreements and amendments thereto and insurance and annuity
contracts and policies, (ii) the current summary plan description, (iii) the
Annual Reports (Form 5500 series) and accompanying schedules, as filed, for the
most recently completed three plan years for which such reports have been filed,
(iv) the financial statements for the most recently completed three plan years
for which such statements have been prepared, (v) the actuarial reports for the
most recently begun three plan years for which such reports exist, (vi) the most
recent determination letter issued by the IRS and the application submitted with
respect to
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such letter, (vii) PBGC Form 1 for the most recently begun plan year and (H) all
correspondence with the IRS, Department of Labor and Pension Benefit Guaranty
Corporation concerning any controversy. Each report described in clause (v) of
the preceding sentence accurately describes the funded status of the plan to
which it relates and subsequent to the date of such report there has been no
adverse change in the funding status or financial condition of such plan. The
Company has no Pension Plans that are "multiemployer plans" (the "MULTIEMPLOYER
PLANS").
(d) The Company has no Pension Plans that are subject to SECTION 302 of
ERISA. Each Pension Plan which is intended to qualify under SECTION 401(a) of
the Code either (x) has been determined to be so qualified by the IRS, (y) may
rely on an opinion letter issued to a prototype plan sponsor with respect to a
standardized plan adopted by the Company in accordance with the requirements for
such reliance, or (z) has applied to the IRS for such a determination letter (or
has time remaining to apply for such a determination letter) prior to the
expiration of the remedial amendment period under SECTION 401(b) of the Code
under applicable Treasury Regulations or IRS pronouncements, and no circumstance
has occurred or exists which might cause such plan to cease being so qualified.
(e) There is no pending or, to the best knowledge of the Company,
threatened claim in respect of any of the ERISA Benefit Plans other than claims
for benefits in the ordinary course of business. Except as set forth in SCHEDULE
5.17(E), each of the ERISA Benefit Plans other than any Multiemployer Plans (i)
has been administered in all material respects in accordance with its terms and
(ii) complies in form, and has been administered in all material respects in
accordance, with the requirements of ERISA and, where applicable, the Code. The
Company and each ERISA Affiliate has complied all material respects with the
health care continuation requirements of Part 6 of Title I of ERISA and Sections
4980B through 4980D of the Code. Except as set forth in SCHEDULE 5.17(E), the
Company has no obligation under any ERISA Benefit Plans or otherwise to provide
health or other welfare benefits to any prior employees or any other person,
except as required by Part 6 of Title I of ERISA. The consummation of the
transaction contemplated by this Agreement will not result in an increase in the
amount of compensation or benefits or accelerate the vesting or timing of
payment of any compensation or benefits payable to or in respect of any
participant. The Company is in compliance with the requirements of the Workers
Adjustment and Retraining Notification Act ("WARN") and has no liabilities
pursuant to WARN.
(f) Except as to Multiemployer Plans (as to which this representation and
warranty is made only to the best knowledge of the Company), neither the Company
nor, to the best knowledge of the Company, any other "disqualified person"
(within the meaning of SECTION 4975 of the Code) or "party in interest" (within
the meaning of SECTION 3(14) of ERISA) has taken any action with respect to any
ERISA Benefit Plan which could subject any such plan (or its related trust) or
the Company or any officer, director or employee of any of the foregoing to the
penalty or tax under SECTION 502(i) or SECTION 502(l) of ERISA or SECTION 4975
of the Code.
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(g) The Company has no potential liability, whether direct or indirect,
contingent or otherwise, under SECTION 4063, 4064, 4069, 4204 or 4212(c) of
ERISA.
(h) SCHEDULE 5.17(l) contains: (i) a list of all employees or commission
salespersons of the Company as of June 30, 2000; (ii) the then current annual
compensation of, and a description of the fringe benefits (other than those
generally available to employees of the Company) provided by the Company to any
such employees or commission salespersons; and (iii) a list of all present or
former employees or commission salespersons of the Company who have terminated
or given notice of their intention to terminate their relationship with the
Company since January 1, 2000.
(i) For purposes of this Agreement, "ERISA AFFILIATE" means (i) any
corporation which at any time on or before the Effective Time is or was a member
of the same controlled group of corporations (within the meaning of SECTION
414(b) of the Code) as the Company; (ii) any partnership, trade or business
(whether or not incorporated) which at any time on or before the Effective Time
is or was under common control (within meaning of SECTION 414(c) of the Code)
with the Company; and (iii) any entity which at any time on or before the
Effective Time is or was a member of the same affiliated service group (within
the meaning of SECTION 414(m) of the Code) as either the Company, any
corporation described in clause (i) of this paragraph or any partnership, trade
or business described in clause (ii) of this paragraph. An "ASSOCIATE" of any
Person means (i) a corporation or organization of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities, (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity and (iii) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person or who is a director or officer of the Person or any of
its parents or subsidiaries.
(j) Except as set forth in SCHEDULE 5.17(K), (i) to the best knowledge of
the Company and each of the Stockholders, the Company is not involved in any
transaction or other situation with any employee, officer, director or Affiliate
of the Company which may be generally characterized as a "conflict of interest",
including, but not limited to, direct or indirect interests in the business of
competitors, suppliers or customers of the Company, and (ii) there are no
transactions with respect to the Company which involved or involves (A) the use
of any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity, (B) the making of any direct or
indirect unlawful payments to government officials or others from corporate
funds or the establishment or maintenance of any unlawful or unrecorded funds,
(C) the violation of any of the provisions of The Foreign Corrupt Practices Act
of 1977, or any rules or regulations promulgated thereunder, (D) the receipt of
any illegal discounts or rebates or any other violation of the antitrust laws or
(E) any investigation by the Securities and Exchange Commission or any other
federal, foreign, state or local government agency or authority.
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5.18. EMPLOYEE RELATIONS. The Company has complied in all material respects
with all applicable federal, state and local laws, rules and regulations which
relate to prices, wages, hours, employment and/or discrimination in employment
and collective bargaining and to the operation of its business and is not liable
for any arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing. The Company believes that the Company's relations with its
employees are satisfactory. Except as set forth in SCHEDULE 5.17(B), the Company
is not a party to any collective bargaining agreement, the Company has complied
in all material respects with all collective bargaining agreements listed in
such Schedule and the Company is not a party to, and it is not affected by or
threatened with, any dispute or controversy with a union or with respect to
unionization or collective bargaining involving its employees. The Company is
not materially affected by any dispute or controversy with a union or with
respect to unionization or collective bargaining involving any supplier or
customer of the Company. SCHEDULE 5.18 sets forth a description of any union
organizing or election activities involving any non-union employees of the
Company which have occurred since the Balance Sheet Date or, to the best
knowledge of the Company, are threatened as of the date hereof.
5.19. CONTRACTS; PRODUCT WARRANTIES. Except as set forth in SCHEDULE 5.19
or any other Schedule hereto, the Company is not a party to or bound by:
(i) any contract for the purchase, sale or lease of real property;
(ii) any contract for the purchase of raw materials which the Company
reasonably anticipates will involve the payment of more than $10,000 in
2000 or which extends beyond December 31, 2000;
(iii) any contract for the sale of goods or services which the Company
reasonably anticipates will involve the payment of more than $10,000 in
2000 or which extends beyond December 31, 2000;
(iv) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract which involved the payment of more than $10,000
in 1999, which the Company reasonably anticipates will involve the payment
of more than $10,000 in 2000 or which extends beyond December 31, 2000;
(v) any guarantee of the obligations or liabilities of customers,
suppliers, officers, directors, employees, Affiliates of the Company or
others;
(vi) any agreement which provides for, or relates to, the incurrence
by the Company of debt for borrowed money or the extension of credit (other
than in the ordinary course of business consistent with past practice) by
the Company to any other Person;
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(vii) any agreement or understanding with a third Person that
restricts the Company from carrying on its business anywhere in the world;
(viii) any contract which provides for, or relates to, any
non-competition or confidentiality arrangement with any Person, including
any current or former officer or employee of the Company;
(ix) except as set forth in the budgets included in SCHEDULE 5.25, any
contract or group of related contracts for capital expenditures in excess
of $50,000 for any single project or related series of projects;
(x) any partnership, joint venture or other similar arrangement or
agreement involving a sharing of profits or losses;
(xi) any contract which involves payments or receipts by the Company
of more than $50,000;
(xii) any contract not made in the ordinary course; or
(xiii) any contract for any purpose (whether or not made in the
ordinary course of the business or otherwise not required to be listed or
described in SCHEDULE 5.19) which is material to the Company or its
business.
SCHEDULE 5.19 also contains a list and description of each express warranty
given or offered by the Company prior to the date hereof covering any class or
group of products sold or distributed by the Company and other express
warranties covering any material product sold or distributed by the Company, in
each case which warranty is in effect on the date hereof or will be in effect on
the Effective Date. The reserve for liabilities with respect to warranty claims
contained in the Balance Sheet fairly reflects in all material respects the
amount required in accordance with generally accepted accounting principles to
be shown thereon as of the Balance Sheet Date and the reserve for such
liabilities to be contained in the books and records of the Company on the
Effective Date will fairly reflect in all material respects the amount required
in accordance with generally accepted accounting principles to be shown thereon
as of the Effective Date.
5.20. STATUS OF CONTRACTS. Except as set forth in the Schedules attached
hereto, each of the leases, contracts and other agreements listed in SCHEDULES
5.11, 5.14, 5.15, 5.17 and 5.19 (collectively, the "COMPANY AGREEMENTS")
constitutes a valid and binding obligation of the parties thereto and is in full
force and effect and (except as set forth in SCHEDULE 5.3 and except for those
Company Agreements which by their terms will expire prior to the Effective Time
or are otherwise terminated prior to the Effective Time in accordance with the
provisions hereof) will continue in full force and effect after the Effective
Time, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. The
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Company has fulfilled and performed in all material respects its obligations
under each of the Company Agreements, and the Company is not in, or alleged to
be in, breach or default under, nor is there or is there alleged to be any basis
for termination of, any of the Company Agreements and, to the best knowledge of
the Company, no other party to any of the Company Agreements has breached or
defaulted thereunder, and no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice or both,
would constitute such a default or breach by the Company or, to the best
knowledge of the Company, by any such other party. The Company is not currently
renegotiating any of the Company Agreements or paying liquidated damages in lieu
of performance thereunder. None of the Company Agreements contains terms unduly
burdensome to the Company or is harmful to its business. Complete and correct
copies of each of the Company Agreements have heretofore been delivered to
Parent.
5.21. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set forth in
SCHEDULE 5.21:
(i) the Company's assets and their uses comply with all applicable
Requirements of Laws and Court Orders;
(ii) the Company has complied with all Requirements of Laws and Court
Orders which are applicable to the Company's assets or its business;
(iii) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the best knowledge of the Company or the
Shareholder Representative, threatened against or affecting the Company or
its assets or business nor, to the best knowledge of the Company, is there
any basis for any of the same, and there are no lawsuits, suits or
proceedings pending in which the Company is the plaintiff or claimant;
(iv) there is no action, suit or proceeding pending or, to the best
knowledge of the Company, threatened which questions the legality or
propriety of the transactions contemplated by this Agreement; and
(v) to the best knowledge of the Company, no United States federal or
state legislative or regulatory proposal has been adopted or is pending
which could adversely affect the Company's business in any material
respect.
The Company and its officers and directors are fully insured for those matters
set forth on SCHEDULE 5.21.
5.22. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 5.22:
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(i) the Company's past and present operations of the Company's
business have complied and are in compliance with all applicable
Environmental Laws;
(ii) the Company obtained all environmental, health and safety
Governmental Permits necessary for the operation of its business, and all
such Governmental Permits are in good standing and the Company is in
compliance with all terms and conditions of such permits;
(iii) (A) none of the Company, nor any of the Company Properties or
its past or present operations, is subject to any on-going investigation
by, order from or agreement with any Person (including without limitation
any prior owner or operator of any Company Property) respecting (x) any
Environmental Law, (y) any Remedial Action or (z) any claim of Losses and
Expenses arising from the Release or threatened Release of a Contaminant
into the environment and (B) there is not any Release of any Contaminant
on, to, at or under any Company Property; (iv) the Company is not subject
to any judicial or administrative proceeding, order, judgment, decree or
settlement alleging or addressing a violation of or liability under any
Environmental Law;
(v) the Company has not:
1. reported a Release of a hazardous substance pursuant to
SECTION 103(a) of CERCLA, or any state equivalent;
2. filed a notice pursuant to SECTION 103(c) of CERCLA;
3. filed notice pursuant to SECTION 3010 of RCRA, indicating
the generation of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any state equivalent; or
4. filed any notice under any applicable Environmental Law
reporting a substantial violation of any applicable
Environmental Law;
(vi) there is not now, nor to the best knowledge of the Company has
there ever been, on or in any Company Property:
1. any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 CFR Part
261 or any state equivalent that requires or required a
Governmental Permit pursuant to SECTION 3005 of RCRA; or
2. any underground storage tank or surface impoundment or
landfill or waste pile.
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(vii) to the best knowledge of the Company, there is not now on or in
any Company Property any polychlorinated biphenyls (PCB) used in pigments,
hydraulic oils, electrical transformers or other equipment;
(viii) the Company has not received any notice or claim to the effect
that it is or may be liable to any Person as a result of the Release or
threatened Release of a Contaminant into the environment on any Company
Property or generated by the Company;
(ix) no Company Property has been listed or, to the best knowledge of
the Company, proposed for listing on the National Priorities List pursuant
to CERCLA, on the Comprehensive Environmental Response, Compensation and
Liability Information System List or any state list of sites requiring
Remedial Action;
(x) the Company has not sent or arranged for the transport of any
Contaminant to any site listed on the National Priorities List pursuant to
CERCLA or that otherwise could give rise to liability on the part of the
Company for Remedial Action, Losses or Expenses;
(xi) no Environmental Encumbrance has attached to any Company
Property;
(xii) to the best knowledge of the Company, any asbestos-containing
material which is on or part of any Company Property (excluding any raw
materials used in the manufacture of products or products themselves) is in
good repair according to the current standards and practices governing such
material, and its presence or condition does not violate any currently
applicable Environmental Law; and
(xiii) none of the products that the Company manufactures, distributes
or sells in connection with its business, now or in the past, contains
asbestos or asbestos-containing material.
5.23. INSURANCE. The Company maintains policies of fire and casualty,
liability (general, products and other liability), workers' compensation and
other forms of insurance and bonds in such amounts and against such risks and
losses as are insured against by companies engaged in the same or a similar
business. SCHEDULE 5.23 sets forth a list and brief description (including
nature of coverage, limits, deductibles, premiums and the loss experience for
the most recent five years with respect to each type of coverage) of all
policies of insurance maintained, owned or held by the Company during the period
from January 1, 1999 up to and including on the date hereof. The Company shall
keep or cause such insurance or comparable insurance in full force and effect
through the Effective Date. The Company has complied with each of such insurance
policies and has not failed to give any notice or present any claim thereunder
in a due and timely manner. Except as disclosed in SCHEDULE 5.23, the full
policy limits (subject to deductibles provided in such policies) are available
and
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unimpaired under each such policy and to the best knowledge of the Company, no
insurer under any of such policies has a basis to void such policy on grounds of
non-disclosure on the part of the policyholder or the insured thereunder. Each
of such policies is in full force and effect and will not in any way be affected
by or terminate or lapse by reason of the transactions contemplated by this
Agreement. The Company has delivered to Parent correct and complete copies of
the most recent inspection reports, if any, received from insurance underwriters
as to the condition of the Company's assets.
5.24. CUSTOMERS AND SUPPLIERS. Set forth in SCHEDULE 5.24 hereto is (i) a
list of names and addresses of the ten largest customers and the ten largest
suppliers (measured by dollar volume of purchases or sales in each case) of the
Company and the percentage of the Company's business which each such customer or
supplier represents or represented during 1999 and the period January 1, 2000
through June 30, 2000; and (ii) copies of the forms of purchase order for
inventory and other supplies and sales contracts for finished goods used by the
Company. Except as set forth in SCHEDULE 5.24, there exists no actual or, to the
best knowledge of the Company, threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship of
the Company with any customer or group of customers listed in SCHEDULE 5.24, or
whose purchases individually or in the aggregate are material to the operations
of the Company's business, or with any supplier or group of suppliers listed in
SCHEDULE 5.24, or whose sales individually or in the aggregate are material to
the operations of the Company's business, and there exists no present or future
condition or state of facts or circumstances involving customers, suppliers or
sales representatives which the Company can now reasonably foresee would
materially adversely affect the Company's business or prevent the conduct of
such business after the consummation of the transactions contemplated by this
Agreement in essentially the same manner in which it has heretofore been
conducted.
5.25. BUDGETS. SCHEDULE 5.25 sets forth (a) as of the date hereof the
budgets of capital, payroll and other expenditures of the Company prepared in
the ordinary course of its business for the fiscal year ending December 31, 2000
and (b) the total capital expenditures through June 30, 2000, if any, for each
capital expenditure project for which funds are proposed to be expended during
2000.
5.26. CONSENT MATERIALS. The materials (collectively, the "CONSENT MATERIALS")
to be prepared by the Company in accordance with SECTION 7.1 and used in
connection with obtaining approval by the Shareholders of the Merger, this
Agreement and the transaction contemplated hereby (the "SHAREHOLDER CONSENT")
will, when prepared by the Company and distributed to the Shareholders, comply
in all material respects with the provisions of the WBCA and will not, at the
time of the mailing of the Consent Materials, at the time the Company obtains
Shareholder Consent 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, in the light of the
circumstances under which they are made, not misleading; PROVIDED, that the
Company makes no representation with respect to information concerning Parent
supplied by Parent to the Company for inclusion in the Consent Materials.
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5.27. REQUIRED VOTE OF SHAREHOLDERS. The affirmative vote of the holders of
(i) a majority of the outstanding shares of Company Common Stock and (ii)
two-thirds (2/3) of the outstanding shares of Preferred Stock is required to
approve this Agreement. The affirmative vote of two-thirds (2/3) of the
outstanding shares of Preferred Stock is required to effect the automatic
conversion of all of the shares of Preferred Stock into Common Stock. No other
vote of the Shareholders is required by law, the Company's Articles of
Incorporation or Bylaws or otherwise in order for the Company to consummate the
Merger and the transactions contemplated by this Agreement.
5.28. NO FINDER. Neither the Company nor any Person acting on behalf of the
Company has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement, other than to H & Q, whose fees and expenses will be deducted
from the Purchase Price. Complete and correct copies of the engagement and
indemnification agreements entered into with H & Q have been furnished to
Parent.
5.29. ULTIMATE PARENT ENTITY. The Company is the only "ultimate parent
entity" (as defined in 16 C.F.R. Sec. 801.1(a)(3) (1999)) of the Company. The
"person" (as defined in 16 C.F.R. Sec. 801.1(a)(1) (1999)) of which the Company
is the "ultimate parent entity" does not have "annual net sales" (as defined in
16 C.F.R. Sec. 801.11 (1999)) or "total assets" (as defined in 16 C.F.R.
Sec. 801.11 (1999)) of $10 million or more.
5.30. DISCLOSURE. None of the representations or warranties of the Company
and the Shareholders Representative contained herein and none of the information
contained in the Schedules referred to in this ARTICLE V or in the opinion
referred to SECTION 9.11 is false or misleading in any material respect or omits
to state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO
As an inducement to the Company and the Shareholder Representative to
enter into this Agreement and to consummate the transactions contemplated
hereby, Parent and Mergerco hereby jointly and severally represent and warrant
to the Company and the Shareholder Representative and agree as follows:
6.1. ORGANIZATION AND CAPITAL STRUCTURE. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own or lease and to
operate and use its properties and assets and to carry on its business as now
conducted. Mergerco is a corporation duly organized and validly existing under
the laws of the State of Washington. Mergerco was organized solely for the
purpose of engaging in the transactions contemplated by this Agreement and has
not engaged in any business since it was incorporated which is not in connection
with this Agreement.
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The authorized capital of Mergerco consists of 1,000 share of Company
Common Stock, par value $.01 per share, of which 1,000 have been issued and are
outstanding and none are held as treasury shares. All of the outstanding shares
of capital stock of Mergerco are validly issued, fully paid and nonassessable
and owned of record and beneficially by Parent, free from all Encumbrances.
6.2. AUTHORITY. Parent has full corporate power and authority to execute,
deliver and perform this Agreement and all of the Parent Ancillary Agreements.
The execution, delivery and performance of this Agreement and the Parent
Ancillary Agreements by Parent have been duly authorized, approved and adopted
by Parent's board of directors and, except for the approval of this Agreement by
Parent as the sole shareholder of Mergerco in accordance with SECTION 7.2, no
other corporate proceedings on the part of Parent are necessary to authorize
this Agreement, the Parent Ancillary Agreements and the transactions
contemplated hereby and thereby. This Agreement has been duly authorized,
executed and delivered by Parent and is the legal, valid and binding obligation
of Parent enforceable in accordance with its terms and each of the Parent
Ancillary Agreements has been duly authorized by Parent and upon execution and
delivery by Parent will be a legal, valid and binding obligation of Parent
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
Mergerco has full corporate power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Mergerco have been duly authorized, approved and adopted by
Mergerco's board of directors and, except for the approval of this Agreement by
Parent in accordance with SECTION 7.2 and the filing contemplated by SECTION
4.2, no other corporate proceedings on the part of Mergerco are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by Mergerco and is
the legal, valid and binding agreement of Mergerco enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
Neither the execution and delivery of this Agreement or any of the Parent
Ancillary Agreements or the consummation of any of the transactions contemplated
hereby or thereby nor compliance with or fulfillment of the terms, conditions
and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
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upon any of Parent's or Mergerco's assets under, (1) the Certificate of
Incorporation of Parent, the Articles of Incorporation of Mergerco, or the
Bylaws of Parent or Mergerco, (2) any material note, instrument, agreement,
mortgage, lease, license, franchise, permit or other authorization, right,
restriction or obligation to which either Parent or Mergerco is a party or
any of their respective assets or business is subject or by which either
Parent or Mergerco is bound, (3) any Court Order to which either Parent or
Mergerco is a party or by which either Parent or Mergerco is bound or (4)
any Requirements of Laws affecting Parent or Mergerco, except for, in the
case of clauses (2) or (3) of this subparagraph (ii), any such conflicts,
breaches, defaults, rights or Encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent and its
subsidiaries, taken as a whole, materially impair the ability of Parent to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby; or
(ii) require the approval, consent, authorization or act of, or the
making by either Parent or Mergerco of any declaration, filing or
registration with, any Person, except for the filing contemplated by
SECTION 4.2.
6.3. INFORMATION SUPPLIED BY PARENT FOR CONSENT MATERIALS. None of the
information supplied by Parent in writing for inclusion in the Consent Materials
will, at the time of the mailing of the Consent Materials, at the time of the
Shareholder Meeting 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, in the light of the
circumstances under which they are made, not misleading.
6.4. NO FINDER. Neither Mergerco or Parent nor any Person acting on behalf
of Mergerco or Parent has paid or become obligated to pay any fee or commission
to any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE VII
ACTION PRIOR TO THE EFFECTIVE TIME
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Effective Time:
7.1. ACTION BY THE COMPANY; SHAREHOLDER MEETING AND PREPARATION OF THE
CONSENT MATERIALS.
(a) The Company shall prepare the Consent Materials as promptly as
possible after the date hereof and shall submit the proposed Consent Materials
to Parent and its counsel not less than five days prior to submitting the
Consent Materials
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to the Shareholders. Parent shall furnish the Company with such information
concerning Parent as shall be required to be included in the Consent Materials.
The Company shall use commercially reasonable best efforts to mail the Consent
Materials to Shareholders on or before August 4, 2000. If prior to the Effective
Time either (i) the Company determines that the Consent Materials need to be
amended or supplemented in order for the representation and warranty of the
Company in SECTION 5.26 to be correct or (ii) Parent determines that the Consent
Materials need to be amended or supplemented in order for the representation and
warranty of Parent and Mergerco in SECTION 6.3 to be correct, the Company or
Parent, as the case may be, shall notify the other of such determination and
shall deliver to the other such amendment or supplement as such party believes
is necessary to make such representation and warranty correct. The Company shall
consider all such amendments proposed by Parent, and shall cause all such
amendments or supplements that the parties reasonably believe are necessary to
be mailed to the Shareholders as soon as practicable after such delivery.
(b) The Company shall properly obtain from the Shareholders (1) approval
of the Merger and this Agreement and (2) in the case of the Preferred Stock
Holders, the necessary approval to effect the automatic conversion, immediately
prior to the consummation of the Merger, of all of the shares of Preferred Stock
into shares of Company Common Stock. The Company will, through its Board of
Directors, recommend to the Shareholders the approval of this Agreement as
required by (i) the Articles of Incorporation and Bylaws of the Company
(including the approval and adoption by the Preferred Stock Holders) and (ii)
the WBCA. The Company shall use commercially reasonable best efforts to obtain
such approvals on or before August 25, 2000.
7.2. ACTION BY PARENT. Parent, as the sole shareholder of Mergerco, shall
take such actions as may be necessary to approve the Merger and this Agreement
as required by the WBCA.
7.3. INVESTIGATION OF THE COMPANY BY PARENT. The Company shall afford to
the officers, employees and authorized representatives of Parent (including,
without limitation, its independent public accountants, attorneys, environmental
consultants and financial advisors) complete access during normal business hours
to the offices, properties, employees and business and financial records
(including, without limitation, computer files, retrieval programs and similar
documentation) of the Company to the extent Parent shall deem necessary or
desirable, and shall furnish to Parent or its authorized representatives such
additional information concerning the operations, properties and business of the
Company as may be reasonably requested to enable Parent or its representatives
to verify the accuracy of the representations and warranties contained in this
Agreement, to verify that the covenants of the Company and the Shareholder
Representative contained in this Agreement have been complied with and to
determine whether the conditions set forth in ARTICLE IX have been satisfied.
Parent agrees that such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operations of the Company. Without limiting
the foregoing, the Company shall permit Parent, or its representatives, to
conduct an
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environmental audit of any of the Owned Real Property or the Leased Real
Property with respect to any environmental health and safety issues deemed
material by Parent. No investigation made by Parent or its representatives
hereunder shall affect the representations and warranties of the Shareholder
Representative hereunder.
7.4. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
parties hereto shall refrain from taking any action which would render any
representation or warranty contained in ARTICLE V or VI of this Agreement
inaccurate as of the Effective Time. Each party shall promptly notify the other
parties of any action, suit or proceeding that shall be instituted or threatened
against such party to restrain, prohibit or otherwise challenge the legality of
any transaction contemplated by this Agreement. The Company shall promptly
notify Parent of any lawsuit, claim, proceeding or investigation that may be
instituted or threatened against the Company which would have been listed in
SCHEDULE 5.22 if such lawsuit, claim, proceeding or investigation had arisen
prior to the date hereof.
7.5. CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS.
(a) The Company will act diligently and reasonably to secure, before the
Effective Time, the consent, approval or waiver, in form and substance
reasonably satisfactory to Parent, from any party to any Company Agreement
required to satisfy the conditions set forth in SECTION 9.5; PROVIDED that no
party hereto shall have any obligation to offer or pay any consideration in
order to obtain any such consents or approvals; and PROVIDED, FURTHER, that the
Company shall not make any agreement or understanding affecting the Company or
its assets or business as a condition for obtaining any such consents or waivers
except with the prior written consent of Parent. During the period prior to the
Effective Time, Parent shall act diligently and reasonably to cooperate with the
Company to obtain the consents, approvals and waivers contemplated by this
SECTION 7.5(a).
(b) During the period prior to the Effective Time, the parties hereto
shall act diligently and reasonably, and shall cooperate with each other, to
secure any consents and approvals of any Governmental Body required to be
obtained by them in order to permit the consummation of the transactions
contemplated by this Agreement or to otherwise satisfy the conditions set forth
in SECTION 9.4; PROVIDED that the Company shall not make any agreement or
understanding affecting the Company or its assets or business as a condition for
obtaining any such consents or approvals except with the prior written consent
of Parent.
7.6. CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. (a) Except as
expressly contemplated by this Agreement, the Company shall carry on its
business in, and not enter into any material transaction other than in
accordance with, the ordinary course consistent with past practice and, to the
extent consistent therewith, use its reasonable best efforts to preserve intact
its current business organization, keep available the services of its current
officers and preserve its relationships with customers, suppliers and others
having business dealings with it (except, in each case,
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with the prior written consent of Parent). Without limiting the generality of
the foregoing, and except as expressly contemplated by this Agreement, the
Company shall not, without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to its Shareholders in their
capacity as such, (B) split, combine or reclassify any of its capital stock
or issue, sell or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock (other
than any issuances of its securities upon the exercise of any outstanding
options to purchase such securities or upon the conversion of any
outstanding convertible securities that are convertible into such
securities) or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof;
(ii) except as set forth in clause (i) above, issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of its capital stock or
other securities (including, without limitation, any rights, warrants or
options to acquire any shares of its capital stock or other securities);
(iii) amend its Articles of Incorporation or Bylaws;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(v) incur or assume any indebtedness for borrowed money, enter into
(as lessee) any capitalized lease obligation, guarantee any such
indebtedness or obligation, issue or sell any debt securities, guarantee
any debt securities of others or make any loans, advances or capital
contributions to, or investments in, any other Person, except the
incurrence and/or guarantee of indebtedness to fund working capital;
(vi) make or incur any new capital expenditure or expenditures which,
individually, is in excess of $50,000 or, in the aggregate, are in excess
of $200,000;
(vii) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction thereof in the ordinary course
of business consistent with past practice;
(viii) alter through merger, liquidation, reorganization,
restructuring or in any other fashion its corporate structure;
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(ix) enter into or adopt, or amend, any bonus, incentive, deferred
compensation, insurance, medical, hospital, disability or severance plan,
agreement or arrangement or enter into or amend any employee benefit plan
or employment, consulting or management agreement, other than any such
amendment to an employee benefit plan that is made to maintain the
qualified status of such plan or its continued compliance with applicable
law;
(x) make any change in accounting practices or policies applied in the
preparation of the financial statements referred to in SECTION 5.4, except
as required by generally accepted accounting principles;
(xi) modify any of the agreements, understandings, obligations,
commitments, indebtedness or other obligations set forth in any of the
Schedules to this Agreement, enter into any agreement, understanding,
obligation or commitment, or incur any indebtedness or obligation, of the
type that would have been required to be listed on SCHEDULE 5.19 if in
existence on the date hereof, or enter into any contract which requires any
approval or consent by any other Person to the transactions contemplated by
this Agreement;
(xii) pay or commit to pay any bonus to any officer or employee of the
Company or make any other material change in the compensation of its
employees;
(xiii) make any change in its business or operations or make any
expenditure which shall exceed the amount, as set forth in SCHEDULE 5.25,
budgeted therefor;
(xiv) make any capital expenditure or enter into any contract or
commitment therefor, other than capital expenditures or commitments for
capital expenditures referred to in the applicable budget contained in
SCHEDULE 5.25;
(xv) enter into any contract for the purchase of real property or for
the sale of any Owned Real Property or exercise any option to purchase real
property listed in SCHEDULE 5.10 or any option to extend a lease listed in
SCHEDULE 5.11;
(xvi) sell, lease (as lessor), transfer or otherwise dispose of, or
mortgage or pledge, or impose or suffer to be imposed any Encumbrance on,
any of the Company's assets, other than inventory and minor amounts of
personal property sold or otherwise disposed of for fair value in the
ordinary course of the Company's business consistent with past practice and
other than Permitted Encumbrances;
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(xvii) cancel any debts owed to or claims held by the Company
(including the settlement of any claims or litigation) other than in the
ordinary course of the Company's business consistent with past practice;
(xviii) accelerate or delay collection of any notes or accounts
receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of its
business consistent with past practice;
(xix) delay or accelerate payment of any account payable or other
liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of its business
consistent with past practice;
(xx) allow the levels of raw materials, supplies, work-in-process or
other materials included in its inventory to vary in any material respect
from the levels customarily maintained in its business;
(xxi) enter into any transaction with Affiliates, other than on an
arms' length basis;
(xxii) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt
any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods
(including, without limitation, positions, elections or methods which would
have the effect of deferring income to periods after the Closing Date or
accelerating deductions to periods prior to the Closing Date);
(xxiii) take any material action in respect of the intellectual
property rights of the Company, including in respect of patents or patent
applications, except in the ordinary course of business; or
(xxiv) enter into any other transaction affecting the business of the
Company, other than in the ordinary course of business consistent with past
practice or as expressly contemplated by this Agreement.
7.7. NOTIFICATION BY THE COMPANY OF CERTAIN MATTERS. During the period
prior to the Effective Time, the Company shall promptly advise Parent in writing
of (i) any change of event having a Material Adverse Effect on the Company, (ii)
any notice or other communication from any third Person alleging that the
consent of such third Person is or may be required in connection with the
transactions contemplated by this Agreement, and (iii) any material default
under any Company Agreement or event which, with notice or lapse of time or
both, would become such a default on or prior to the Effective Time and of which
the Company has knowledge.
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7.8. MUTUAL COOPERATION; REASONABLE BEST EFFORTS. The parties hereto shall
cooperate with each other, and shall use their respective reasonable best
efforts to cause as promptly as possible the fulfillment of the conditions to
each other party's obligations hereunder, including without limitation SECTIONS
9.3 and 10.2, and to obtain as promptly as possible all consents,
authorizations, orders or approvals from each and every third party, whether
private or governmental, required in connection with the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that the foregoing shall not
require Parent or the Company to make any divestiture or consent to any
divestiture in order to obtain any consent, authorization or fulfill any
condition or approval.
7.9. COMPANY STOCK OPTIONS. (a) Prior to the Effective Time, the Company
shall terminate the 1995 Stock Option Plan and the 1999 Stock Option Plan and
any other stock-based incentive plan or arrangement providing for compensation
or consideration wholly or partially in the form of shares of Company Common
Stock or any other capital stock of the Company (collectively, the "STOCK OPTION
PLANS"), and shall grant no additional options, awards or rights ("COMPANY STOCK
OPTIONS") under such Stock Option Plans on or after the date of this Agreement,
except such options, awards or rights that the Company has, prior to the date of
this Agreement agreed to grant or proposed to grant (subject to approval by the
Company's Board of Directors) in connection with the commencement of an
individual's employment with the Company or in connection with an employee's
promotion to a new position, all of which are set forth on SCHEDULE 7.9.
SCHEDULE 7.9 identifies each Company Stock Option as of the date of this
Agreement, the Stock Option Plan pursuant to which such Company Stock Option was
granted, the holder of such Company Stock Option, the number of shares subject
to such Company Stock Option, the current exercise price of such Company Stock
Option and whether such Company Stock Option is an incentive stock option under
Section 422 of the Code.
(b) The Company shall take all actions necessary or appropriate to cause
all Company Stock Options that are, or as a result of the transactions
contemplated by this Agreement become, outstanding, vested and exercisable
immediately prior to the Effective Time to be exercised, effective immediately
prior to the Effective Time and contingent on the Closing of the Merger, in
accordance with their terms and the individual agreements and plans governing
such Company Stock Options. The holder of any Company Stock Option (each an
"OPTION HOLDER") that is partially or fully vested and is not exercised as of
the Effective Time will be entitled to receive, in consideration thereof, for
each share of Company Common Stock subject to the vested portion of the Company
Stock Option, an amount in cash equal to the excess, if any, of the Merger
Consideration over the exercise price per share of Company Common Stock subject
thereto. The amounts payable pursuant to this SECTION 7.9(b) shall be paid as
soon as reasonably practicable following the Closing Date without interest
thereon and shall be subject to and made net of all applicable withholding
taxes. Upon receipt of such payment in respect of the vested portion of any
Company Stock Option, such vested portion of the Company Stock Option shall be
cancelled. The receipt by the Option Holder of the consideration contemplated by
this SECTION 7.9(b) shall be deemed a release of any and all rights the Option
Holder thereof had or may have had in respect
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of the applicable Company Stock Option with respect to the vested portion of
such Company Stock Option.
(c) At the Effective Time, the unvested portion of each Company Stock
Option that is outstanding immediately subsequent to the Effective Time shall
become and represent an option to purchase the number of shares of common stock
("PARENT COMMON STOCK") of Parent under Parent's stock option plan (a
"SUBSTITUTE OPTION") determined by dividing (i) the number of shares of Company
Common Stock subject to the unvested portion of such Company Stock Option
immediately prior to the Effective Time by (ii) the Exchange Ratio (as defined
in SECTION 7.9(e), at an exercise price per share of Parent Common Stock
(rounded up to the nearest cent), equal to the exercise price per share of
Company Common Stock immediately prior to the Effective Time multiplied by the
Exchange Ratio. Any fractional shares of Parent Common Stock resulting from the
formula described in the foregoing sentence shall be rounded down to the nearest
whole number. It is the intention of the parties that the above formula shall be
applied in a manner consistent with Section 424(a) of the Code. Parent will
grant incentive stock options to acquire Parent Common Stock as Substitute
Options for incentive stock options to acquire Company Common Stock and grant
nonqualified stock options to acquire Parent Common Stock as Substitute Options
for nonqualified stock options to acquire Company Common Stock. After the
Effective Time, each Substitute Option shall be subject to the terms and
conditions of the Parent's stock option plan and standard terms and conditions
of options granted thereunder, except that each Substitute Option shall provide
that: (i) upon the first anniversary of the Closing Date such option shall be
vested and exercisable for one-half (1/2) of the shares of Parent Common Stock
subject to such Substitute Option as of the Closing Date; (ii) upon the second
anniversary of the Closing Date such option shall be vested and exercisable for
three-fourths (3/4) of the shares of Parent Common Stock subject to such
Substitute Option as of the Closing Date; and (iii) upon the third anniversary
of the Closing Date such option shall be fully vested and exercisable for all of
the shares of Parent Common Stock subject to such Substitute Option as of the
Closing Date. Notwithstanding the foregoing, Parent may take any action or make
any amendment to the Substitute Options as Parent deems necessary or advisable
so that the Substitute Options comply with the requirements of Section 424(a) of
the Code.
(d) The Company (i) shall take all action necessary to implement the
provisions of this SECTION 7.9, including amending the agreements representing
the outstanding stock option awards under the 1999 Stock Option Plan pursuant to
resolution by the Company's Board of Directors in form and substance
satisfactory to Parent and obtaining the written consent of each Option Holder
of a 1999 Company Stock Option to such amendments in form and substance
satisfactory to Parent, and (ii) shall provide Parent with duly executed copies
of such amendments and consents prior to the Effective Time. Prior to the
Effective Time, the Company shall use its best efforts to obtain any other
necessary consents or releases from the Option Holders and to take any such
other lawful action as may be necessary or appropriate to give effect to this
SECTION 7.9.
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(e) For purposes of this SECTION 7.9, the "Exchange Ratio" shall be
determined by dividing the Per Share Parent Price by the Per Share Company
Price. The "Per Share Parent Price" shall be the average per share closing price
for Parent Common Stock as listed on the New York Stock Exchange for the 10
trading days immediately prior to the Closing Date and the "Per Share Company
Price" shall be the Fully Diluted Per Share Price.
7.10. STATE TAKEOVER LAWS. If any "fair price," "business combination" or
"control share acquisition" statute or other similar statute or regulation shall
become applicable to the transactions contemplated hereby, Parent, Mergerco and
the Company and the respective Boards of Directors of Mergerco and the Company
shall use their best efforts to grant such approvals and take such actions as
are necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
7.11. TERMINATION OF COMPANY 401(k) PLAN. The Company shall terminate the
Company's 401(k) Plan prior to the Effective Date and shall deliver to Parent a
written resolution, in form and substance acceptable to Parent, effecting such
termination on or before the Effective Date.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. EMPLOYEE BENEFITS. In the event that employees of the Company become
eligible to participate in any of Parent's employee benefit plans or programs in
accordance with the terms and conditions of the applicable Parent benefit plans
and programs and applicable law, such employees shall receive credit for their
length of service with the Company for purposes of eligibility and vesting under
Parent's employee benefit plans and programs, including, without limitation,
employee pension and welfare benefit plans
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGERCO
The obligations of Parent and Mergerco under this Agreement shall, at the
option of Parent and Mergerco, be subject to the satisfaction, on or prior to
the Effective Time, of the following conditions:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
(a) There shall have been no material breach by the Company or the
Shareholder Representative in the performance of any of their respective
covenants and agreements herein; none of the representations or warranties of
the Company or
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the Shareholder Representative contained or referred to herein shall be untrue
or incorrect in any respect at the Effective Time and such representations and
warranties shall be true and correct as though made at the Effective Time,
except for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by Parent and Mergerco or
any transaction permitted by SECTION 7.6; and there shall have been delivered to
Parent and Mergerco a certificate or certificates to such effect, dated the
Effective Date and signed on behalf of the Company by the President or any Vice
President of the Company and by the Shareholder Representative.
(b) There shall have been no material breach by any Significant
Shareholder in the performance of any of its covenants and agreements contained
in the applicable Voting Agreement; none of the representations or warranties of
such Significant Shareholder contained or referred to in the applicable Voting
Agreement shall be untrue or incorrect in any respect at the Effective Time and
such representations and warranties shall be true and correct as though made at
the Effective Time; and there shall have been delivered to Parent and Mergerco a
certificate or certificates to such effect, dated the Effective Date and signed
on by such Significant Shareholder.
9.2. NO CHANGES OR DESTRUCTION OF PROPERTY. Between the date hereof and the
Effective Time, there shall have been (a) no change or event having a Material
Adverse Effect on the Company; (b) no material adverse federal or state
legislative or regulatory change affecting the Company's business or its
products or services; and (c) no material damage to the Company's assets by
fire, flood, casualty, act of God or the public enemy or other cause, regardless
of insurance coverage for such damage; and there shall have been delivered to
Parent and Mergerco a certificate or certificates to such effect, dated the
Effective Date and signed on behalf of the Company by the President or any Vice
President of the Company and on behalf of the Shareholder Representative by the
President or any Vice President of the Shareholder Representative.
9.3. NO RESTRAINT OR INJUNCTION. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
9.4. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have received all
approvals and actions of or by all Governmental Bodies which are necessary to
consummate the transactions contemplated hereby, which are either specified in
SCHEDULE 5.3 or otherwise required to be obtained prior to the Closing by
applicable Requirements of Laws or which are necessary to prevent a Material
Adverse Effect on the Company.
9.5. NECESSARY CONSENTS. The Company or the Shareholder Representative
shall have received consents, in form and substance reasonably satisfactory to
Mergerco and Parent, to the transactions contemplated hereby from the other
parties to all contracts, leases, agreements and permits to which the Company is
a party or by
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which the Company or any of its assets is affected and which are specified in
SCHEDULE 9.5 or are otherwise necessary to prevent a Material Adverse Effect on
the Company.
9.6. SHAREHOLDER APPROVAL AND CONVERSION OF PREFERRED STOCK. (a) This
Agreement shall have been duly approved by the requisite votes of the
Shareholders in accordance with the WBCA and the Articles of Incorporation and
Bylaws of the Company, including the approval by the Preferred Stock Holders.
(b) The Preferred Stock Holders shall have taken such action as is necessary
under the Articles of Incorporation and Bylaws of the Company and the WBCA to
effect the automatic conversion, immediately prior to the consummation of the
Merger, of all shares of Preferred Stock into shares of Company Common Stock in
accordance with the terms and subject to the conditions of the Articles of
Incorporation of the Company.
9.7. DISSENTERS' RIGHTS. Holders of not more than 5% of the outstanding
shares of Company capital stock shall have properly exercised and not revoked
their rights to dissent to the Merger under Chapter 23B.13 of the WBCA.
9.8. EFFECTIVE AGREEMENTS. Each of the Foster Employment Agreement, the
Employment Agreements, the Non-Competition Agreements, the Foster
Non-Competition Agreement, the Escrow Agreement and the Voting Agreements shall
be in full force and effect.
9.9. OTHER CONVERTIBLE SECURITIES. In addition to the Preferred Stock, any
other outstanding securities, options, warrants or other rights to purchase that
are convertible into or exercisable for Company Common Stock or any other
capital stock of the Company shall have been fully converted or exercised for
Company Common Stock or cancelled, and thereafter no holder of any such
instrument shall any rights to acquire any equity security of the Company, the
Surviving Corporation or Parent.
9.10. AGREEMENT WITH WIDEBAND. The Company shall have entered into a
License Agreement with Wideband Semiconductor, Inc. on terms and conditions
reasonably satisfactory to Parent, and such agreement shall be in full force and
effect.
9.11. OPINION OF INTELLECTUAL PROPERTY COUNSEL. The Company shall have
received an opinion from Fulbright & Jaworski, its intellectual property
counsel, substantially in the form of the opinion issued to the Company by
Fulbright & Joworski dated June 16, 2000.
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ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY
The obligations of the Company under this Agreement shall, at the option of
the Company, be subject to the satisfaction, on or prior to the Effective Time,
of the following conditions:
10.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. There
shall have been no material breach by Parent or Mergerco in the performance of
any of their respective covenants and agreements herein; none of the
representations or warranties of Parent or Mergerco contained or referred to
herein shall be untrue or incorrect in any respect at the Effective Time and
such representations and warranties shall be true and correct at the Effective
Time as though made at the Effective Time, except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by the Company and the Shareholder
Representative; and there shall have been delivered to the Company and the
Shareholder Representative a certificate or certificates to such effect, dated
the Effective Date and signed on behalf of Parent by the President or any Vice
President of Parent and on behalf of Mergerco by the President or any Vice
President of Mergerco.
10.2. NO RESTRAINT OR INJUNCTION. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court of
competent jurisdiction of other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
10.3. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have received all
approvals and actions of or by all Governmental Bodies necessary to consummate
the transactions contemplated hereby, which are required to be obtained prior to
the Closing by applicable Requirements of Laws.
10.4. SHAREHOLDER APPROVAL. This Agreement shall have been duly approved by
the requisite vote of the Shareholders in accordance with the WBCA and the
Articles of Incorporation and Bylaws of the Company; PROVIDED, HOWEVER, that
this condition shall not be effective if its failure is primarily the result of
the Company's failure to perform its obligations under SECTION 7.1.
10.5. EFFECTIVE AGREEMENTS. The Escrow Agreement shall be in full force and
effect.
ARTICLE XI
TERMINATION
11.1. TERMINATION RIGHTS. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Effective Time:
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(a) by the mutual consent of all of the parties hereto;
(b) by any party if the Effective Time shall not have occurred on or
before September 30, 2000 (or such later date as may be mutually agreed to by
all of the parties hereto);
(c) by Parent in the event of any material breach by the Shareholder
Representative or the Company of any of their respective agreements,
representations or warranties contained herein and the failure of the
Shareholder Representative or the Company to cure, within seven days after
receipt of notice from Parent requesting that such breach be cured; or
(d) by the Company in the event of any material breach by Parent or
Mergerco of any of their respective agreements, representations or warranties
contained herein and the failure of Parent to cure such breach, or cause
Mergerco to cure such breach, within seven days after receipt of notice from the
Company requesting that such breach be cured.
11.2. NOTICE OF TERMINATION. Any party desiring to terminate this Agreement
pursuant to SECTION 11.1 shall give notice of such termination to each of the
other parties to this Agreement.
11.3. EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to this ARTICLE XI, all further obligations of the parties
under this Agreement (other than SECTIONS 12.2 and 12.9) shall be terminated
without further liability of any party to the others; PROVIDED, HOWEVER, that
nothing herein shall relieve any party from liability for its willful breach of
this Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1. SURVIVAL OF OBLIGATIONS. All representations, warranties, covenants
and obligations contained in this Agreement shall survive the consummation of
the transactions contemplated by this Agreement.
12.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it will
treat in confidence all documents, materials and other information which it
shall have obtained regarding the other parties during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other parties all copies of nonpublic
documents and materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of Parent and Mergerco, to their counsel,
accountants, financial advisors or lenders, and, in the case of the Company and
the Shareholder Representative, to their counsel, accountants or
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financial advisors). No other party shall use any confidential information in
any manner whatsoever except solely for the purpose of evaluating the proposed
Merger; PROVIDED, HOWEVER, that after the Effective Time, Parent and the
Surviving Corporation may use or disclose any confidential information included
in the assets of the Company as of the Effective Time or otherwise reasonably
related to the assets or business of the Company. The obligation of each party
to treat such documents, materials and other information in confidence shall not
apply to any information which (i) is or becomes available to such party from a
source other than such party, (ii) is or becomes available to the public other
than as a result of disclosure by such party or its agents, (iii) is required to
be disclosed under applicable law or judicial process, but only to the extent it
must be disclosed, or (iv) such party reasonably deems necessary to disclose to
obtain any of the consents or approvals contemplated hereby.
12.3. NO PUBLIC ANNOUNCEMENT. No party hereto shall, without the approval
of all of the other parties, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law or the rules of any
stock exchange, in which case such party shall so advise the other parties and
all parties shall use their reasonable best efforts to cause a mutually
agreeable release or announcement to be issued; PROVIDED that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this Agreement or to comply with accounting and Securities and
Exchange Commission disclosure obligations.
12.4. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally or four days after being mailed by registered or certified
mail, return receipt requested, or one day after being sent by private overnight
courier addressed as follows:
(a) If to the Company (after the Effective Time), Parent or Mergerco, to:
Harris Corporation
1025 West NASA Blvd.
Melbourne, FL 32919
Attention: Richard Ballantyne
with a copy to:
Harris Corporation
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330 Twin Dolphin Drive
Redwood Shores, CA 94065
Attention: Samuel Wyman
and:
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, IL 60603
Attention: David Zampa
(b) If to the Company (prior to the Effective Time) or the Shareholder
Representative, to:
Wavtrace, Inc.
1575 132nd Avenue NE
Bellevue, WA 98005
Attention: President and
Chief Financial Officer
with a copy to:
Venture Law Group
4750 Carillon Point
Kirkland, WA 98033
Attention: Craig Sherman
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
12.5. SUCCESSORS AND ASSIGNS; SHAREHOLDER REPRESENTATIVE.
(a) The rights of each party under this Agreement shall not be assignable
by such party prior to the Effective Time without the written consent of each of
the other parties, except that the rights of Parent hereunder may be assigned
prior to the Effective time, without the consent of any other party hereto, to
any corporation all of the outstanding capital stock of which is owned or
controlled by Parent or to any general or limited partnership in which Parent or
any such corporation is a general partner; PROVIDED that (i) the assignee shall
assume in writing all of Parent's obligations hereunder, (ii) Parent shall not
be released from any of its obligations hereunder by reason of such assignment
and (iii) the obligations of the Company and the Shareholder Representative
under this Agreement shall be subject to the delivery by such assignee, on or
prior to the Effective Time, of a certificate signed on its behalf containing
representations and warranties similar to those made by Parent in ARTICLE VI.
Following
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the Effective Time, any party may assign any of its rights hereunder, but no
such assignment shall relieve it of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. The successors and
permitted assigns hereunder shall include without limitation, in the case of
Parent, any permitted assignee as well as the successors in interest to such
permitted assignee (whether by merger, liquidation (including successive mergers
or liquidations) or otherwise). Nothing in this Agreement, expressed or implied,
is intended or shall be construed to confer upon any Person other than the
parties and successors and assigns permitted by this SECTION 12.5 any right,
remedy or claim under or by reason of this Agreement.
(c) Prior to the Effective Date, the Shareholder Representative may resign
at any time by giving 30 days' notice to Parent and the Company; PROVIDED,
HOWEVER, that such resignation shall not be effective unless and until a
successor Shareholder Representative has been appointed and accepts such
position and the terms hereof and of the Escrow Agreement. In such event, Parent
and the Company shall appoint a successor Shareholder Representative or, if
Parent and the Company are unable to agree upon a successor Shareholder
Representative within 30 days after such notice, the Shareholder Representative
shall be entitled to appoint its own successor; PROVIDED, HOWEVER, that such
successor shall be a Person that satisfies the requirements for a successor
Escrow Agent under the Escrow Agreement. Prior to the Effective Date, if the
Shareholder Representative dies or is otherwise unable to perform its
obligations under this Agreement and would be unable to perform its obligations
under the Escrow Agreement after the Effective Date or, in the case of a
successor Shareholder Representative that is not a natural Person, becomes
bankrupt, insolvent or ceases to exist, then Parent and the Company shall
appoint a successor Shareholder Representative or, if Parent and the Company are
unable to agree upon a successor Shareholder Representative within 30 days after
such event, the successor Shareholder Representative shall be selected by lot
from two Persons that satisfy the requirements for a successor Escrow Agent
under the Escrow Agreement, one selected by Parent and one selected by the
Shareholder Representative. After the Effective Date, the Shareholder
Representative may resign at any time by giving 30 days' notice to Parent and
the Company; PROVIDED, HOWEVER, that such resignation shall not be effective
unless and until a successor Shareholder Representative has been appointed and
accepts such position and the terms hereof and of the Escrow Agreement. In such
event, Parent and the Shareholder Representative shall appoint a successor
Shareholder Representative or, if Parent and the Shareholder Representative are
unable to agree upon a successor Shareholder Representative within 30 days after
such notice, the successor Shareholder Representative shall be selected by lot
from two Persons that satisfy the requirements for a successor Escrow Agent
under the Escrow Agreement, one selected by Parent and one selected by the
Shareholder Representative. After the Effective Date, if the Shareholder
Representative dies or is otherwise unable to perform its obligations under this
Agreement or the Escrow Agreement or, in the case of a successor Shareholder
Representative that is not a natural Person, becomes bankrupt,
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insolvent or ceases to exist, then the successor Shareholder Representative
shall be selected by lot from three Persons that satisfy the requirements for a
successor Escrow Agent under the Escrow Agreement.
12.6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Exhibits and
Schedules referred to herein, the Voting Agreements and the documents delivered
pursuant hereto or thereto contain the entire understanding of the parties
hereto and thereto with regard to the subject matter contained herein or
therein, and supersede all prior agreements, understandings or letters of intent
between or among any of the parties hereto; PROVIDED, that notwithstanding
anything herein to the contrary, the parties acknowledge and agree that Section
14 of the Letter Agreement shall remain in full force and effect and shall
remain binding upon the parties thereto. This Agreement shall not be amended,
modified or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
12.7. INTERPRETATION. Titles to articles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.
Except as expressly stated to the contrary herein, all dollar amounts in this
Agreement refer to lawful money of the United States of America.
12.8. WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
12.9. FEES AND EXPENSES. Except as otherwise provided in this SECTION 12.9,
each of the parties hereto shall bear its own costs and expenses (including,
without limitation, fees and disbursements of its counsel, accountants and other
financial, legal, accounting or other advisors), incurred by it or its
Affiliates in connection with the preparation, negotiation, execution, delivery
and performance of this Agreement and each of the other documents and
instruments executed in connection with or contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby
(collectively, the "ACQUISITION EXPENSES"); PROVIDED, HOWEVER, that, except for
up to $200,000 of Acquisition Expenses of the Shareholder Representative and the
Company relating to the transactions contemplated by this Agreement, which
$200,000 of Acquisition Expenses are attributable to and shall be borne by the
Company, the Acquisition Expenses of the Shareholder Representative and the
Company shall be paid out of the Escrow Amount (as defined in the Escrow
Agreement) pursuant to the Escrow Agreement.
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12.10. PARTIAL INVALIDITY. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
12.11. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of the other parties.
12.12. FURTHER ASSURANCES. From time to time after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of Mergerco, the Company or
otherwise, such deeds and other instruments and to take or cause to be taken
such further or other action as shall be necessary or desirable in order to vest
or perfect in or to confirm, of record or otherwise, in the Surviving
Corporation title to, and possession of, all of the property, rights,
privileges, powers, immunities and franchises of Mergerco and the Company and
otherwise carry out the purposes of this Agreement.
12.13. GOVERNING LAW. Except to the extent that Washington law is
mandatorily applicable to the Merger and the rights and obligations of the
shareholders of the Company and Mergerco, this Agreement shall be governed by
and construed in accordance with the internal laws (as opposed to the conflicts
of law provisions) of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
HARRIS CORPORATION
By: /s/ Phillip W. Farmer
--------------------------------------
Name: Phillip W. Farmer
Title: Chairman of the Board, President
and Chief Executive Officer
WT ACQUISITION CORP.
By: /s/ Phillip W. Farmer
--------------------------------------
Name: Phillip W. Farmer
Title: President
WAVTRACE, INC.
By: /s/ Thomas T. van Overbeek
--------------------------------------
Name: Thomas T. van Overbeek
Title: President and Chief Executive
Officer
/s/ Thomas T. van Overbeek
-----------------------------------------
THOMAS T. VAN OVERBEEK,
AS THE SHAREHOLDER REPRESENTATIVE
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Exhibit 2.1
FIRST AMENDMENT TO AGREEMENT OF MERGER
FIRST AMENDMENT TO AGREEMENT OF MERGER, dated as of August 22, 2000 (this
"First Amendment"), among HARRIS CORPORATION, a Delaware corporation ("Parent"),
WT ACQUISITION CORP., a Washington corporation and wholly owned subsidiary of
Parent ("Mergerco"), WAVTRACE, INC., a Washington corporation (the "Company"),
and THOMAS T. VAN OVERBEEK, a natural person (the "Shareholder Representative").
W I T N E S S E T H:
WHEREAS, Parent, Mergerco, the Company and the Shareholder Representative
have entered into the Agreement of Merger, dated as of July 28, 2000 (the
"Merger Agreement"), providing for the merger of Mergerco and the Company upon
the terms and subject to the conditions contained therein; and
WHEREAS, Parent, Mergerco, the Company and the Shareholder Representative
desire to amend the Merger Agreement in certain respects in accordance with
SECTION 12.6 thereof.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, the parties hereto agree as follows:
1. The definition of "Escrow Payment" in SECTION 1.1 of the Merger
Agreement is hereby amended and restated to read in its entirety as follows:
"ESCROW PAYMENT" means any amount payable to the former shareholders of the
Company and the holders of Unexercised Vested Options pursuant to the Escrow
Agreement.
2. The definition of "Per Share Closing Payment" in SECTION 1.1 of the
Merger Agreement is hereby amended and restated to read in its entirety as
follows:
"PER SHARE CLOSING PAYMENT" means the Closing Consideration DIVIDED BY (i)
the number of shares of Company Common Stock (other than such shares held by
Parent) outstanding immediately prior to the Effective Time plus (ii) the number
of shares of Company Common Stock subject to Unexercised Vested Options.
3. The definition of "Per Share Escrow Payment" in SECTION 1.1 of the
Merger Agreement is hereby amended and restated to read in its entirety as
follows:
"PER SHARE ESCROW PAYMENT" means, in respect of any Escrow Payment, the
amount of such payment DIVIDED BY (i) the number of shares of Company Common
Stock (other than such shares held by Parent) outstanding immediately prior to
the Effective Time plus (ii) the number of shares of Company Common Stock
subject to Unexercised Vested Options.
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4. The definition of "Purchase Price" in SECTION 1.1 of the Merger
Agreement is hereby amended and restated to read in its entirety as follows:
"PURCHASE PRICE" means $ 175 million LESS (i) (x) the Fully Diluted Per
Share Price less the weighted average of the exercise prices of the unvested
options to acquire Company Common Stock multiplied by (y) the number of unvested
options to acquire Company Common Stock; (ii) the Fully Diluted Per Share Price
multiplied by 14,464,573 (the number of fully diluted shares of Company Common
Stock held by Parent); and (iii) the dollar amount that the Company shall owe to
Hambrecht & Quist LLC ("H & Q") upon consummation of the Merger pursuant to the
letter agreement between the Company and H & Q dated January 24, 2000 PLUS the
amount of cash, if any, received by the Company upon exercise of any of the
warrants held by parties other than Parent, all as determined immediately prior
to the Effective Time.
5. The following definition of "Unexercised Vested Options" is hereby added
to SECTION 1.1 of the Merger Agreement:
"UNEXERCISED VESTED OPTION" means a Company Stock Option that has vested
(or that portion of any Company Stock Option that has vested) but has not been
exercised by the Effective Time.
6. SECTION 3.3(a) of the Merger Agreement is hereby amended and restated to
read in its entirety as follows:
(a) EXCHANGE AGENT. On the Closing Date, Parent shall deposit with an
exchange agent to be determined by Parent prior to the Closing (the "EXCHANGE
AGENT"), for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this ARTICLE III, through the Exchange Agent, cash
equal to the Closing Consideration less that portion of the Closing
Consideration payable to the holders of Unexercised Vested Options pursuant to
SECTION 7.9 (such cash, together with any earnings with respect thereto, and
such certificates being hereinafter referred to as the "EXCHANGE FUND").
7. The following provision is hereby added as SECTION 3.3(j) of the Merger
Agreement:
(j) UNEXERCISED VESTED OPTIONS. Unexercised Vested Options shall be treated
in accordance with the procedures set forth in SECTION 7.9.
8. SECTION 7.9(b) of the Merger Agreement is hereby amended and restated to
read in its entirety as follows:
(b) The Company shall take all actions necessary or appropriate to cause
all Company Stock Options that are, or as a result of the transactions
contemplated by this Agreement become, outstanding, vested and exercisable
immediately prior to the Effective Time to be exercised, effective immediately
prior to the Effective Time and contingent on the Closing of the Merger, in
accordance with their terms and the individual agreements and plans governing
such Company Stock
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Options. The holder of any Unexercised Vested Option (each an "OPTION HOLDER")
will be entitled to receive, in consideration thereof, for each share of Company
Common Stock subject to such Unexercised Vested Option, an amount equal to the
Merger Consideration; PROVIDED, however that the Per Share Closing Payment
payable to each such Option Holder (the "VESTED OPTION CLOSING PAYMENT") shall
be reduced by the exercise price per share of such Company Common Stock subject
to the Unexercised Vested Option held thereby. The Vested Option Closing Payment
shall be paid as soon as reasonably practicable following the Closing Date
without interest thereon and shall be subject to and made net of all applicable
withholding taxes. Upon receipt of such payment in respect of the vested portion
of any Company Stock Option, such vested portion of the Company Stock Option
shall be cancelled. The receipt by the Option Holder of the consideration
contemplated by this SECTION 7.9(b) shall be deemed a release of any and all
rights the Option Holder thereof had or may have had in respect of the
applicable Company Stock Option with respect to the vested portion of such
Company Stock Option.
9. EXHIBIT B to the Merger Agreement is hereby amended and restated to read
in its entirety as attached hereto as ANNEX A.
10. Capitalized terms used but not defined herein shall have the meanings
set forth in the Merger Agreement.
11. The Merger Agreement, as amended by this First Amendment, shall remain
in full force and effect in accordance with its terms. This First Amendment may
be executed in one or more counterparts.
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed as of the date first written above.
HARRIS CORPORATION
By: /s/ Bryan R. Roub
--------------------------------------
Name: Bryan R. Roub
Title: Senior Vice President and
Chief Financial Officer
WT ACQUISITION CORP.
By: /s/ Bryan R. Roub
--------------------------------------
Name: Bryan R. Roub
Title: Senior Vice President and
Chief Financial Officer
WAVTRACE, INC.
By: /s/ Thomas T. van Overbeek
--------------------------------------
Name: Thomas T. van Overbeek
Title: President and Chief
Executive Officer
/s/ Thomas T. van Overbeek
-----------------------------------------
THOMAS T. VAN OVERBEEK,
as the Shareholder Representative
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