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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
TRAPPIST ACQUISITION CORP.
AND
KURZWEIL APPLIED INTELLIGENCE, INC.
DATED: APRIL 14, 1997
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TABLE OF CONTENTS
ARTICLE I THE MERGER..............................................................................................1
1.1 THE MERGER....................................................................................................1
1.2 THE CLOSING...................................................................................................1
1.3 ACTIONS AT THE CLOSING........................................................................................2
1.4 ADDITIONAL ACTIONS............................................................................................2
1.5 CONVERSION OF SHARES..........................................................................................2
1.6 APPRAISAL RIGHTS..............................................................................................4
1.7 EXCHANGE OF SHARES............................................................................................4
1.8 DIVIDENDS.....................................................................................................6
1.9 OPTIONS AND WARRANTS..........................................................................................6
1.10 CERTIFICATE OF INCORPORATION.................................................................................7
1.11 BYLAWS.......................................................................................................8
1.12 DIRECTORS AND OFFICERS.......................................................................................8
1.13 NO FURTHER RIGHTS............................................................................................8
1.14 CLOSING OF TRANSFER BOOKS....................................................................................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................8
2.1 ORGANIZATION AND QUALIFICATION OF THE COMPANY.................................................................8
2.2 CAPITALIZATION................................................................................................9
2.3 SUBSIDIARIES.................................................................................................10
2.4 AUTHORIZATION OF TRANSACTION.................................................................................10
2.5 PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS.................................................................10
2.6 NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS.........................................................10
2.7 REPORTS AND FINANCIAL STATEMENTS.............................................................................11
2.8 ABSENCE OF UNDISCLOSED LIABILITIES...........................................................................12
2.9 ABSENCE OF CERTAIN CHANGES...................................................................................12
2.10 PAYMENT OF TAXES............................................................................................14
2.11 TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.........................................................15
2.12 INVENTORIES; ACCOUNTS RECEIVABLE............................................................................15
2.13 INTELLECTUAL PROPERTY RIGHTS................................................................................16
2.14 CONTRACTS AND COMMITMENTS...................................................................................17
2.15 LABOR AND EMPLOYEE RELATIONS................................................................................18
2.16 EMPLOYEE BENEFITS AND ERISA.................................................................................19
2.17 ENVIRONMENTAL MATTERS.......................................................................................21
2.18 PERMITS.....................................................................................................21
2.19 WARRANTY OR OTHER CLAIMS....................................................................................21
2.20 CLAIMS AND LEGAL PROCEEDINGS................................................................................22
2.21 BORROWINGS AND GUARANTEES...................................................................................22
2.22 FINANCIAL SERVICE RELATIONS AND POWERS OF ATTORNEY..........................................................22
2.23 INSURANCE...................................................................................................22
2.24 GOVERNMENT CONTRACTS........................................................................................23
2.25 CORPORATE BOOKS AND RECORDS.................................................................................23
2.26 TRANSACTION FEE.............................................................................................23
2.27 TRANSACTIONS WITH INTERESTED PERSONS........................................................................23
2.28 ABSENCE OF SENSITIVE PAYMENTS...............................................................................23
2.29 DISCLOSURE OF MATERIAL INFORMATION..........................................................................24
2.30 REGULATORY CORRESPONDENCE...................................................................................24
2.31 STATE ANTITAKEOVER STATUTES.................................................................................24
2.32 COMPANY ACTION..............................................................................................24
2.33 HSR ACT.....................................................................................................25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE ACQUISITION SUBSIDIARY.........................25
3.1 ORGANIZATION OF PARENT AND ACQUISITION SUBSIDIARY............................................................25
3.2 CAPITALIZATION...............................................................................................26
3.3 AUTHORIZATION OF TRANSACTION.................................................................................26
3.4 NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS.........................................................26
3.5 REPORTS AND FINANCIAL STATEMENTS.............................................................................27
3.6 CLAIMS AND LEGAL PROCEEDINGS.................................................................................28
3.7 DISCLOSURE OF MATERIAL INFORMATION...........................................................................28
3.8 PARENT ACTION................................................................................................28
3.9 SHAREHOLDER VOTE NOT REQUIRED................................................................................29
3.10 TRANSACTION FEES............................................................................................29
3.11 FINANCING...................................................................................................29
3.12 PRIOR ACTIVITIES OF ACQUISITION SUBSIDIARY..................................................................29
3.13 PERMITS.....................................................................................................29
3.14 ABSENCE OF SENSITIVE PAYMENTS...............................................................................29
3.15 HSR ACT.....................................................................................................30
3.16 PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS................................................................30
ARTICLE IV COVENANTS.............................................................................................30
4.1 REASONABLE BEST EFFORTS.....................................................................................30
4.2 NOTICES AND CONSENTS.........................................................................................30
4.3 SPECIAL MEETING, PROSPECTUS/PROXY STATEMENT AND REGISTRATION STATEMENT; FAIRNESS OPINION.....................30
4.4 OPERATION OF BUSINESS.......................................................................................32
4.5 ACCESS.......................................................................................................34
4.6 NOTICE OF BREACHES...........................................................................................34
4.7 EXCLUSIVITY..................................................................................................35
4.8 LISTING OF MERGER SHARES.....................................................................................35
4.9 INDEMNIFICATION..............................................................................................36
4.10 FILING OF ANNUAL REPORTS....................................................................................36
4.11 HART-SCOTT-RODINO...........................................................................................37
4.12 EMPLOYEE WELFARE............................................................................................37
4.13 TAX RETURNS; GOOD STANDING..................................................................................37
4.14 LOAN TO COMPANY.............................................................................................37
ARTICLE V CONDITIONS TO CONSUMMATION OF MERGER...................................................................37
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.......................................................................37
5.2 CONDITIONS TO OBLIGATIONS OF THE PARENT AND THE ACQUISITION SUBSIDIARY.......................................38
5.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY.....................................................................39
ARTICLE VI TERMINATION AND ABANDONMENT...........................................................................40
6.1 TERMINATION..................................................................................................40
6.2 TERMINATION BY THE PARENT....................................................................................41
6.3 TERMINATION BY THE COMPANY...................................................................................41
6.4 PROCEDURE FOR TERMINATION....................................................................................42
6.5 EFFECT OF TERMINATION AND ABANDONMENT........................................................................42
ARTICLE VII MISCELLANEOUS........................................................................................43
7.1 FEES AND EXPENSES............................................................................................43
7.2 NOTICES......................................................................................................44
7.3 PUBLICITY AND DISCLOSURES....................................................................................45
7.4 ENTIRE AGREEMENT.............................................................................................45
7.5 SEVERABILITY.................................................................................................45
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7.6 ASSIGNABILITY................................................................................................45
7.7 AMENDMENTS AND WAIVERS.......................................................................................46
7.8 GOVERNING LAW; VENUE.........................................................................................46
7.9 REMEDIES.....................................................................................................46
7.10 COUNTERPARTS................................................................................................46
7.11 EFFECT OF TABLE OF CONTENTS AND HEADINGS....................................................................47
7.12 NO THIRD PARTY BENEFICIARIES................................................................................47
7.13 KNOWLEDGE...................................................................................................47
7.14 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................................................47
7.15 INTEGRATION OF EXHIBITS.....................................................................................47
ARTICLE VIII DEFINITIONS.........................................................................................47
SIGNATURES.......................................................................................................50
LIST OF SCHEDULES AND EXHIBITS...................................................................................51
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AGREEMENT AND PLAN OF MERGER
AGREEMENT entered into as of the 14th day of April, 1997, by and among
Lernout & Hauspie Speech Products N.V., a Belgian corporation, with its
principal place of business in Ieper, Belgium(the "Parent"), Trappist
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the
Parent, with its principal place of business in Burlington, Massachusetts (the
"Acquisition Subsidiary"), and Kurzweil Applied Intelligence, Inc., a Delaware
corporation, with its principal place of business in Waltham, Massachusetts
("the Company"). The Parent, the Acquisition Subsidiary and the Company are
referred to collectively herein as the "Parties."
WHEREAS, the Boards of Directors of each of the Parties have agreed that
it is in their best interests for the Acquisition Subsidiary to merge with and
into the Company upon the terms and conditions set forth herein. The Boards of
Directors of the Parent, Acquisition Subsidiary and the Company have approved
the merger.
WHEREAS, this Agreement contemplates a merger of the Acquisition
Subsidiary with and into the Company and in such merger, the stockholders of the
Company will receive a combination of cash and capital stock of the Parent in
exchange for their capital stock of the Company.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon and subject to the terms and conditions of this
Agreement and in accordance with the Delaware General Corporation Law ("DGCL"),
the Acquisition Subsidiary shall be merged with and into the Company (with such
merger referred to herein as the "Merger") at the Effective Time (as defined
below). From and after the Effective Time, the separate corporate existence of
the Acquisition Subsidiary shall cease and the Company shall continue as the
surviving corporation in the Merger (the "Surviving Corporation"). The
"Effective Time" shall be the time at which the Company and the Acquisition
Subsidiary file a certificate of merger in substantially the form attached
hereto as Exhibit A (the "Certificate of Merger") in accordance with the
relevant provisions of the DGCL, with the Secretary of State of the State of
Delaware. The Merger shall have the effects set forth in Sections 251 and 259 of
the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing") shall take place
at the offices of Brown, Rudnick, Freed & Gesmer in Boston, Massachusetts,
commencing at 9:00 a.m. local time on the first business day after the receipt
of Requisite Stockholder Approval (as defined in Section 2.4), provided that on
or prior thereto, all the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby as set forth in Article V have
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been satisfied or waived, or on such other mutually agreeable later date as soon
as practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date"); provided, however, that the Closing Date shall be no later
than August 15, 1997.
1.3 Actions at the Closing. At the Closing, subject to the satisfaction or
waiver of all of the conditions set forth in Article V not theretofore satisfied
or waived, (a) the Company and the Acquisition Subsidiary shall file with the
Secretary of State of the State of Delaware the Certificate of Merger and (b)
the Acquisition Subsidiary shall deliver the Merger Consideration (as defined
below) to ChaseMellon Shareholder Services or such other entity reasonably
satisfactory to the Company and the Parent to act as the exchange agent (the
"Exchange Agent") in accordance with Section 1.7.
1.4 Additional Actions. The Surviving Corporation may, at any time after
the Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or the Acquisition
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any Party or the holder of any of the
following securities:
(a) Each share of common stock, $.01 par value per share, of
the Company ("Company Shares") issued and outstanding immediately prior to the
Effective Time (other than (i) Company Shares owned by stockholders who,
pursuant to the DGCL, properly perfect their rights to appraisal in accordance
with Section 262 of the DGCL ("Dissenting Stockholders") and (ii) Company Shares
owned by the Parent or the Acquisition Subsidiary and (iii) Company Shares held
in the Company's treasury) and each O&W Company Share (as defined in Section
1.9) shall be converted into and represent the right to receive $4.20 in cash
(the "Cash Consideration"), and after conversion as provided in clauses (b) and
(c) below, such number of shares of common stock, no par value per share, of the
Parent ("Parent Common Stock") as is equal to the Conversion Ratio (the "Stock
Consideration").
The "Conversion Ratio" shall equal $1.05 divided by the Average Market
Value; provided, however, that if the Average Market Value is greater than
$22.08250 , then the Conversion Ratio shall equal 0.047549 ; and, provided,
further, that if the Average Market Value is less than $18.06750 , then the
Conversion Ratio shall equal 0.058115. For purposes hereof, the term "Average
Market Value" means the arithmetic average (rounded to the nearest five decimal
places) of the closing price per share of the Parent Common Stock as reported on
the Nasdaq National Market for the ten (10) consecutive trading days ending with
the last trading day prior to the date of the Special Meeting (as defined in
Section 4.3(a)). The number of shares of Parent Common Stock so issuable shall
be subject to equitable adjustment in the event that the Parent changes the
number of shares of Parent Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend or similar
recapitalization with respect to the Parent Common Stock.
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Stockholders of record of the Company together with persons deemed to
hold O&W Company Shares (determined pursuant to Section 1.9(a)), in each case as
of the Effective Time ("Company Stockholders") other than Dissenting
Stockholders, shall be entitled to receive all of the Cash Consideration and the
Stock Consideration into which their Company Shares and O&W Company Shares were
converted pursuant to this Section 1.5(a) (the "Merger Shares") upon tender of
their Company Shares or O&W Agreements (as defined in Section 1.7(a)) as set
forth in Section 1.7 below.
(b) In order to effectuate the Merger and the delivery of
Parent Common Stock in connection with the Merger, at the Closing Parent shall
deliver the Parent Common Stock to be issued hereunder by issuing a global
automatically convertible bond (the "ACO") in the original principal amount
equal to the Average Market Value per share (determined without regard to the
$22.08250 and $18.06750 limitation) multiplied by the aggregate number of shares
of Parent Common Stock to be issued in connection with the Merger pursuant to
this Section 1.5 (the "ACO Principal Amount") in form reasonably acceptable to
the parties hereto, to the Exchange Agent as agent for and for the benefit of
the Company Stockholders.
(c) At the Closing, the Exchange Agent, on behalf of the
Company Stockholders , shall convert the ACO to the capital of Parent in return
for that number of duly authorized, validly issued, fully paid and
non-assessable shares of Parent Common Stock determined by dividing the ACO
Principal Amount by the Average Market Value per share (determined without
regard to the $22.08250 and $18.06750 limitation) of Parent's Common Stock;
provided, however, that such number of shares shall be rounded to the nearest
whole number. To effectuate the foregoing at the Closing the Exchange Agent
shall present the ACO to a public notary to effect the conversion of the ACO to
the capital of Parent and the issuance of shares of Parent Common Stock on the
Closing Date as set forth in this Section 1.5 and Section 1.9(a).
(d) No certificates or scrip representing fractional Merger
Shares shall be issued to former Company Stockholders upon the surrender for
exchange of Certificates (as defined in Section 1.7(a)) or O&W Agreements, and
such former Company Stockholders shall not be entitled to any voting rights,
rights to receive any dividends or distributions or other rights as a
stockholder of the Parent with respect to any fractional Merger Shares that
would otherwise be issued to such former Company Stockholders. In lieu of any
fractional Merger Shares that would otherwise be issued, each former Company
Stockholder that would have been entitled to receive a fractional Merger Share
shall, upon proper surrender of such person's Certificates or O&W Agreements
representing such fractional Merger Shares, receive cash in an amount equal to
such fractional Merger Share multiplied by the Average Market Value (without
regard to the $22.08250 and $18.06750 limitation). The Cash Consideration, the
Merger Shares and the cash to be received in lieu of fractional Merger Shares
are collectively referred to herein as the "Merger Consideration."
(e) Each Company Share held in the Company's treasury
immediately prior to the Effective Time and each Company Share owned by the
Parent or the Acquisition
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Subsidiary shall, by virtue of the Merger and without any further action, be
canceled and retired without payment of any consideration therefor.
(f) Each share of common stock, $.01 par value per share, of
the Acquisition Subsidiary ("Acquisition Subsidiary Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into and
thereafter evidence one share of common stock, $.01 par value per share, of the
Surviving Corporation.
1.6 Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Company Shares held by a Dissenting Stockholder shall not be
converted into the right to receive Merger Consideration pursuant to Section
1.5(a), but such Dissenting Stockholder shall only be entitled to such payments
as are provided by the DGCL.
(b) Notwithstanding the provisions of Section 1.6(a), if any
Dissenting Stockholder shall effectively withdraw or lose (through failure to
perfect or otherwise) his right to appraisal, then, as of the later of the
Effective Time or the occurrence of such event, such Dissenting Stockholder's
Company Shares shall automatically be converted into the right to receive Merger
Consideration as provided in Section 1.5(a), without interest thereon.
(c) The Company shall give the Parent (i) prompt notice of
any written demands for appraisal of any Company Shares, withdrawals of such
demands, and any other instruments that relate to such demands received by the
Company, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, without the prior written consent of the Parent, make any payment
with respect to any demands for appraisal of Company Shares or offer to settle
or settle any such demands.
1.7 Exchange of Shares.
(a) Prior to the Effective Time, the Parent and the Company
shall mutually appoint the Exchange Agent (or such other Exchange Agent as the
parties shall mutually agree) to effect the exchange for the Merger
Consideration of certificates that, immediately prior to the Effective Time,
represented Company Shares ("Certificates"), and Options and Warrants that, at
the Effective Time, will be deemed to be converted into O&W Company Shares ("O&W
Agreements"). On or before the Closing Date, the Parent shall deliver to the
Exchange Agent or its nominee, in trust for the benefit of holders of
Certificates and O&W Agreements, the Cash Consideration and, a certificate
(issued in the name of the Exchange Agent or its nominee) representing the ACO ,
as described in Section 1.5(b) which on the Closing Date shall be converted into
shares of Parent Common Stock, in accordance with Section 1.5(c) such that on
such date at the Closing, a certificate or certificates representing the Merger
Shares shall be available for distribution by the Exchange Agent. As soon as
practicable after the Effective Time and no later than five (5) days thereafter,
the Parent shall cause the Exchange Agent to send a notice and a transmittal
form to each holder of a Certificate or O&W Agreement (other than
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those surrendered and paid for at the Closing) advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Exchange
Agent such Certificate or O&W Agreement in exchange for the Merger
Consideration. Each holder of a Certificate or O&W Agreement, upon proper
surrender thereof to the Exchange Agent in accordance with the instructions in
such notice, shall be entitled to receive in exchange therefor (subject to any
taxes required to be withheld) the Merger Consideration, without interest,
determined pursuant to Sections 1.5(a) and (b). Until properly surrendered, each
such Certificate or O&W Agreement shall be deemed for all purposes to evidence
only the right to receive the Merger Consideration determined pursuant to
Sections 1.5(a) and (b). Holders of Certificates shall not be entitled to
receive certificates for the Merger Shares or cash payments to which they would
otherwise be entitled until such Certificates or O&W Agreement are properly
surrendered, or an affidavit is delivered pursuant to Section 1.7(c).
(b) If any Merger Consideration is to be issued or paid in
the name of a person other than the person in whose name the Certificate or O&W
Agreement surrendered in exchange therefor is registered, it shall be a
condition to the issuance and payment of such Merger Consideration that (i) the
Certificate or O&W Agreement so surrendered shall be transferable, and shall be
properly assigned, endorsed or accompanied by appropriate stock powers, (ii)
such transfer shall otherwise be proper and (iii) the person requesting such
transfer shall pay to the Exchange Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid. Notwithstanding
the foregoing, neither the Exchange Agent nor any Party shall be liable to a
holder of Company Shares for any Merger Consideration issuable or payable to
such holder that is delivered to a public official in accordance with applicable
abandoned property, escheat or similar laws.
(c) In the event any Certificate or O&W Agreement shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate or O&W Agreement to be lost, stolen or
destroyed, the Parent shall direct the Exchange Agent to issue in exchange for
such lost, stolen or destroyed Certificate or O&W Agreement the Merger
Consideration issuable or payable in exchange therefor pursuant to Section 1.5.
The Board of Directors of the Parent may, in its discretion and as a condition
precedent to the issuance or payment thereof, require the owner of such lost,
stolen or destroyed Certificate or O&W Agreement to give the Parent a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against the Parent with respect to the Certificate or O&W Agreement alleged
to have been lost, stolen or destroyed.
(d) The Exchange Agent shall invest the cash portion of the
Merger Consideration as directed by the Parent; provided, however, that all risk
of loss related to such investments shall be borne by the Parent.
(e) Promptly following the date which is twelve (12) months
after the Closing Date, the Exchange Agent shall (i) return to the Parent all
Merger Consideration (including the proceeds of any investments thereof) in its
possession, other than shares of Parent Common Stock and (ii) return all shares
of Parent Common Stock included in the Merger
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Consideration to the Belgian Caisse des depots et Consignations or any similar
institution. Thereafter, the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate or O&W Agreement may surrender such
Certificate or O&W Agreement to the Parent and, subject to applicable abandoned
property, escheat and similar laws, receive in exchange therefor the Merger
Consideration (with the cash portion of such consideration to be provided by the
Parent and the Parent Common Stock portion of such consideration to be provided
by the Belgian Caisse des depots et Consignations or such other institution that
holds such shares of Parent Common Stock), without interest.
1.8 Dividends. No dividends or other distributions that are payable to the
holders of record of Parent Common Stock as of a date on or after the Effective
Time shall be paid to former Company Stockholders entitled by reason of the
Merger to receive Merger Shares until such holders surrender their Certificates
or O&W Agreements in accordance with Section 1.7. Upon such surrender, the
Parent shall pay or deliver to the persons in whose name the certificates
representing such Merger Shares are issued any dividends or other distributions
that are payable to the holders of record of Parent Common Stock as of a date on
or after the Effective Time and which were paid or delivered between the
Effective Time and the time of such surrender provided that no such person shall
be entitled to receive any interest on such dividends or other distributions.
1.9 Options and Warrants.
(a) At the Effective Time, all (i) options to purchase
Company Shares issued by the Company pursuant to its stock option plans or
otherwise ("Options"), and (ii) warrants to purchase Company Shares
("Warrants"), in each case to the extent vested or exercisable on or prior to
the Effective Date or as a result of the consummation of the Merger, shall be,
to the extent permitted by the terms thereof or agreed to by the holder thereof,
terminated and each holder of such Options and Warrants which have a per share
exercise price less than the aggregate per share dollar value of the Merger
Consideration (determined without regard to the $22.08250 and $18.06750
limitation) (such amount, the "Per Share Dollar Value"), shall receive therefor
Merger Consideration determined in accordance with Section 1.5(a), based upon a
number of Company Shares equal to the quotient of (i) the number of Company
Shares subject to each such Option or Warrant held by such holder multiplied by
the difference between the Per Share Dollar Value and the exercise price of each
such Option and Warrant , divided by (ii) the Per Share Dollar Value
(collectively, the "O&W Company Shares").
(b) At the Effective Time, the Parent shall substitute
substantially equivalent options and warrants to purchase Parent Common Stock
for all Options and Warrants to the extent unvested or unexerciseable on or
prior to the Effective Time or as a result of consummation of the Merger.
Immediately after the Effective Time, each unvested Option and Warrant
outstanding immediately prior to the Effective Time shall be deemed to
constitute an option or warrant to acquire, on the same terms and conditions as
were applicable under such Option or Warrant at the Effective Time (without
giving effect to the Merger), such number of shares of Parent Common Stock as is
equal to the number of Company Shares subject to the unexercised portion of such
Option or Warrant multiplied by the Option Conversion Ratio
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2
(except as otherwise provided in the applicable instrument, with any fraction
resulting from such multiplication to be paid in cash upon the exercise of such
substitute option or warrant based upon the closing price of Parent Common Stock
on the Nasdaq National Market on the date of exercise). The "Option Conversion
Ratio" shall equal a fraction, the numerator of which shall be $5.25 and the
denominator of which shall be the denominator used in clause 1.5(a) to determine
the Conversion Ratio, rounded to the nearest five decimal places. The exercise
price per share of each such substituted option and warrant shall be equal to
the exercise price of such Option or Warrant immediately prior to the Effective
Time, divided by the Option Conversion Ratio. The terms, exercisability and,
vesting schedule, and all of the other terms of the Options and Warrants shall,
to the extent permitted under Belgian law, otherwise remain substantially
unchanged. Without limiting the foregoing, for purposes of determining vesting
of the Options and otherwise, employees of the Company will be credited for
their full term during which they were employed by the Company.
(c) At or prior to the Effective Time, the Parent or the
Surviving Corporation shall deliver to the holders of the Options and Warrants
subject to Section 1.9(a) appropriate notices setting forth such holders' rights
pursuant to such Options or Warrants and instructions for surrendering to the
Exchange Agent such Option or Warrant in exchange for the Merger Consideration.
As soon as practicable after the Effective Time, the Parent or the Surviving
Corporation shall deliver to the holders of Options and Warrants subject to
substitution under Section 1.9(b) hereof appropriate notices setting forth such
holders' rights pursuant to such substituted options or warrants, together with
the agreements evidencing such substituted options or warrants.
(d) The Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of the substituted options and warrants granted in
accordance with this Section 1.9. As soon as practicable after the Effective
Time, and in any event within thirty (30) days thereafter, the Parent shall file
a Registration Statement on Form S-8 (or any successor form) under the
Securities Act of 1933, as amended (the "Securities Act") with respect to all
shares of Parent Common Stock subject to substituted options and warrants that
may be registered on Form S-8, and shall use commercially reasonable efforts to
maintain the effectiveness of such Registration Statement for so long as such
substituted options and warrants remain outstanding.
(e) The Company shall use commercially reasonable efforts to
obtain, prior to the Closing, the consent from each holder of an Option or
Warrant to the amendment of or substitution for such Option or Warrant pursuant
to this Section 1.9 (unless such consent is not required under the terms of the
applicable agreement, instrument or plan).
1.10 Certificate of Incorporation. The Certificate of Incorporation of the
Surviving Corporation shall be the Certificate of Incorporation of the Company
as amended and restated in the Certificate of Merger.
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1.11 Bylaws. The Bylaws of the Surviving Corporation shall be the Bylaws of
the Acquisition Subsidiary immediately prior to the Effective Time, except that
the name of the corporation set forth therein shall be changed to the name of
the Company.
1.12 Directors and Officers. The directors of the Acquisition Subsidiary
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation as of the Effective Time. The officers of the Acquisition
Subsidiary immediately prior to the Effective Time shall be the officers of the
Surviving Corporation after the Effective Time, retaining their respective
positions.
1.13 No Further Rights. From and after the Effective Time, no Company
Shares shall be deemed to be outstanding, and holders of Certificates shall
cease to have any rights with respect thereto, other than the right to receive
Merger Consideration or as otherwise provided herein or by law.
1.14 Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of Company Shares shall
thereafter be made. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, the Parent or the Exchange Agent, they shall be
canceled and exchanged for Merger Consideration in accordance with Sections
1.5(a) and (b), subject to applicable law in the case of Company Shares held by
Dissenting Stockholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent that the statements
contained in this Article II are true and correct, except as set forth in the
disclosure schedule attached hereto (the "Company Disclosure Schedule"). The
Company Disclosure Schedule shall be initialed by the Parties and shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article II; provided, however, that any matter disclosed in
any Section hereof or on any part of the Company Disclosure Schedule shall be
deemed disclosed for purposes of every Section hereof and every part of the
Company Disclosure Schedule; provided, further, that the Company shall make a
good faith effort to include any disclosure (by cross-reference or repeating the
disclosure) that is required by more than one representation and warranty in
each applicable portion of the Company Disclosure Schedule.
2.1 Organization and Qualification of the Company. Except as set forth on
Schedule 2.1(a) of the Company Disclosure Schedule, the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to own, lease and operate its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
copies of the Company's Certificate of Incorporation as amended to date
("Charter"), certified by the Delaware Secretary of State, and of the Company's
Bylaws as amended to date, certified by the Company's Secretary, copies of which
have previously been
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provided to the Parent, are, and will be at the Closing, complete and correct.
Except as set forth on Schedule 2.1(a) of the Company Disclosure Schedule, the
Company is duly qualified to do business and in good standing as a foreign
corporation in the jurisdictions identified in Schedule 2.1(a) and it is not
required to be licensed or qualified to conduct its business or own its property
in any other jurisdiction, except where the failure to be so licensed or
qualified would not, individually or in the aggregate, have a Company Material
Adverse Effect. A "Company Material Adverse Effect" is defined as any change,
event or other occurrence that has, or is reasonably likely to have,
individually or in the aggregate, a material adverse impact on the business,
properties, operations, prospects, assets, revenues or condition (financial or
otherwise) of the Company taken as a whole; provided, however, that "Company
Material Adverse Effect" shall be deemed to exclude the impact of any
continuation of any existing unfavorable business or financial trend (which has
been disclosed in Schedule 2.1(b) of the Company Disclosure Schedule) without a
material worsening thereof.
2.2 Capitalization. The authorized capital stock of the Company consists of
(i) 1,000,000 shares of preferred stock, $.01 par value, none of which is issued
and outstanding, and (ii) 15,000,000 shares of common stock, $.01 par value, of
which the number of issued and outstanding shares is set forth on Schedule
2.2(b) of the Company Disclosure Schedule and no shares are held in the treasury
of the Company. All issued and outstanding Company Shares are, and all Company
Shares that may be issued upon the exercise of Options and Warrants, upon
issuance in accordance with the terms and conditions specified in the
instruments pursuant to which they are issuable and upon payment therefor, will
be duly authorized and validly issued, fully paid, nonassessable, and free of
all preemptive rights. Except as set forth on Schedule 2.2(a) of the Company
Disclosure Schedule, the Company is subject to no material liability on account
of the issuance or sale of any securities, including, without limitation, all
outstanding Company Shares. Except as set forth on Schedule 2.2(b) of the
Company Disclosure (including as applicable, the number of Company Shares
subject to each instrument and the extent to which the rights granted under such
instrument are vested or may be exercised), there are no (i) outstanding or
authorized subscriptions, warrants, options or other rights granted by the
Company or binding upon the Company to purchase or acquire, or preemptive rights
with respect to the issuance or sale of, the capital stock of the Company or
which obligate the Company to issue any additional shares of its capital stock
or any securities convertible into or evidencing the right to subscribe for any
shares of its capital stock, (ii) other securities of the Company directly or
indirectly convertible into or exchangeable for shares of capital stock of the
Company, (iii) restrictions on the transfer of the Company's capital stock
imposed by or agreed to by the Company or of which the Company is otherwise
aware (other than restrictions under the Securities Act and state securities
laws), (iv) voting rights with respect to the capital stock of the Company other
than as set forth in the DGCL and the Company's Charter and Bylaws, or (v) stock
appreciation, phantom stock or similar rights granted by the Company. Schedule
2.2(c) of the Company Disclosure Schedule identifies each holder of Options and
Warrants and the number of Company Shares subject to such Option or Warrant,
which Options or Warrants (x) by their terms require the Parent to assume such
Options or Warrants, (y) contain terms and conditions that would result in
acceleration of the vesting schedule or exercise period set forth therein upon
the consummation of the Merger, or (z) contain terms and conditions that would
not allow the Company to terminate such Options or Warrants in accordance with
Section 1.9(a) above.
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2.3 Subsidiaries. There is no corporation with respect to which the
Company, directly or indirectly, has the power to vote or direct the voting of
sufficient securities to elect 50% or more of the directors (a "Subsidiary").
The Company does not control directly or indirectly or have any direct or
indirect equity or similar participation in any corporation, joint venture,
partnership, trust, or other business association.
2.4 Authorization of Transaction. Subject to the conditions precedent set
forth herein, the Company has all requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Merger and the transactions contemplated hereby. The execution and delivery
of this Agreement and, subject to the approval of the Merger and this Agreement
by a majority of the votes represented by the outstanding Company Shares
entitled to vote on this Agreement and the Merger (the "Requisite Stockholder
Approval"), the performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. Each of this Agreement and the Option Agreement (as defined in Section
2.32) has been duly and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles including the Chancery Court
of the State of Delaware.
2.5 Present Compliances with Obligations and Laws. Except as set forth on
Schedule 2.5 of the Company Disclosure Schedule, the Company is not: (a) in
violation of its Charter or Bylaws; (b) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with or without
the passage of time or the giving of notice) affords to any person the right to
accelerate any indebtedness or terminate any right; (c) in default of or breach
of (with or without the passage of time or the giving of notice) any other
contract to which it is a party or by which it or its assets are bound; or (d)
in violation of any law, regulation, administrative order or judicial order,
decree or judgment applicable to it or its business or assets, except where any
violation or default under items (b), (c), or (d) would not, individually or in
the aggregate, have a Company Material Adverse Effect.
2.6 No Conflict of Transaction With Obligations and Laws. Subject to
compliance with the applicable requirements of the Securities Act, any
applicable state securities laws, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the rules of the Nasdaq National Market, the
filing of the Certificate of Merger as required by the DGCL, and obtaining the
consents listed on Schedule 2.6(a) of the Company Disclosure Schedule, neither
the execution, delivery and performance of this Agreement by the Company, nor
the performance by the Company of the transactions contemplated hereby, will:
(i) constitute a breach or violation of the Charter or Bylaws of the Company;
(ii) require any consent, waiver, exemption, approval or authorization of,
declaration, filing or registration with, or giving of notice to any person,
court, arbitration tribunal, administrative agency or commission or other
governmental or regulatory agency or authority; (iii) constitute (with or
without the passage of time or the giving of notice) a breach of, or default
under, any debt instrument to which the Company is a party, or give any person
the right to accelerate any indebtedness or terminate, modify or cancel any
right with respect to any debt instrument; (iv) constitute (with or without the
passage of time or giving of notice) a
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breach of, or default under, any debt instrument to which the Company is a
party, or give any person the right to accelerate any indebtedness or terminate,
modify or cancel any right with respect to any debt instrument; (iv) constitute
(with or without the passage of time or giving of notice) a default under or
breach of any other agreement, instrument or obligation to which the Company is
a party or by which the Company or any of its assets are bound; (v) result in
the creation of any lien or encumbrance upon any of the assets of the Company;
(vi) result in a violation of any law or regulation applicable to the Company or
its business or assets, (vii) result in a violation of any administrative order
or judicial order, decree or judgment applicable to the Company, or its business
or assets; or (viii) invalidate or adversely affect any permit, license or
authorization used in the Company's business, excluding from clauses (ii) (iii),
(iv), (vi) and (viii), any consent, filing, conflict, default, violation or
other matter which would not, either individually or in the aggregate, either
have a Company Material Adverse Effect or materially impair or preclude the
Company's ability to consummate the Merger or the transactions contemplated
hereby. Except as set forth in Schedule 2.6(b) of the Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement nor
the performance of the transactions contemplated hereby will give rise to a
right of any party (other than the Company), under the terms thereof to
terminate, modify or cancel any material contract, agreement or other instrument
to which the Company is a party or by which the Company or its properties are
affected which contract, agreement or other instrument is required to be
disclosed in the Company Disclosure Schedule.
2.7 Reports and Financial Statements
(a) The Company has previously furnished to the Parent
complete and accurate copies, as amended or supplemented, of its (a) Annual
Report on Form 10-K or Form 10-KSB for the fiscal years ended January 31, 1995
and 1996, as filed with the Securities and Exchange Commission (the "SEC"), and
amendments thereto, (b) proxy statements relating to all meetings of its
stockholders (whether annual or special) since September 6, 1994, (c) all other
final reports or registration statements, other than Registration Statements on
Form S-8, filed by the Company with the SEC since September 6, 1994 and (d) the
draft Annual Report on form 10-KSB for the fiscal year ended January 31, 1997
(the "Draft Report") , (such annual reports, proxy statements, registration
statements, Draft Report and other filings, together with any amendments or
supplements thereto, are collectively referred to herein as the "Company
Reports"). The Company Reports constitute all of the documents filed or required
to be filed by the Company with the SEC since September 6, 1994, other than
Registration Statements on Form S-8. The Parties acknowledge and agree that the
Draft Report shall be substantially updated to include such information as the
Company deems necessary to disclose therein, which information has previously
been disclosed to Parent. As of their respective dates and subject to the
immediately preceding sentence with respect to the Draft Report as of the date
hereof (as supplemented by the information disclosed herein), the Company
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim financial
statements of the Company included in the Company Reports (together, the
"Financial Statements") (i) comply as to form in all material respects with
applicable accounting requirements and the published rules and
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regulations of the SEC with respect thereto, (ii) have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q or Form 10-QSB under the
Exchange Act and subject to normal recurring year-end adjustments), (iii) fairly
present the financial condition, results of operations and cash flows of the
Company as of the respective dates thereof and for the periods referred to
therein, and (iv) are consistent in all material respects with the books and
records of the Company. The Company has also previously furnished to the Parent
all documents prepared by the Company and used in connection with any offer or
sale of securities by the Company since September 6, 1994.
(b) The balance sheet contained in the Draft Report
including the footnotes thereto, is sometimes referred to hereinafter as the
"Base Balance Sheet."
(c) The books of account of the Company are complete and
correct in all material respects. The (i) current books of account and (ii) to
the extent the same are in the Company's possession, auditor's letters to
management of the Company for the past five (5) years and other significant
correspondence from or to such auditors during such period, if any, have been
made available to the Parent.
2.8 Absence of Undisclosed Liabilities. Except as disclosed in Schedule 2.8
of the Company Disclosure Schedule and except for liabilities and obligations
arising in connection with this Agreement, the Company has no material
liabilities or obligations of any nature, except (i) the liabilities recorded on
the Base Balance Sheet and the notes thereto, and (ii) the liabilities and
obligations incurred since the date of the Base Balance Sheet in the ordinary
course of business and consistent with past practice that would not, as the
Company reasonably foresees, individually or in the aggregate, have a Company
Material Adverse Effect.
2.9 Absence of Certain Changes. Except as disclosed in Schedule 2.9 of the
Company Disclosure Schedule or in the notes to the Financial Statements, since
the date of the Base Balance Sheet there has not been:
(a) any change in the financial condition, working capital,
earnings, reserves, properties, assets, liabilities, business or operations of
the Company which change by itself or in conjunction with all other such
changes, whether or not arising in the ordinary course of business has had a
Company Material Adverse Effect;
(b) any material contingent liability incurred by the
Company as guarantor or otherwise with respect to the obligations of others;
(c) any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof ;
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(d) any material obligation or material liability incurred
by the Company other than obligations and liabilities incurred in the ordinary
course of business and consistent with past practice;
(e) any material purchase, sale or other disposition, or
any agreement or other arrangement for the purchase, sale or other disposition,
of any material properties or assets of the Company, other than in the ordinary
course of business and consistent with past practice;
(f) any damage, destruction or loss, whether or not covered
by insurance, that have had or is reasonably likely to have a Company Material
Adverse Affect;
(g) any union organization attempts or claim of unfair
labor practices (other than routine internal employee grievances) involving the
Company, any change in the compensation payable or to become payable by the
Company to any of its officers, or, other than in the ordinary course of
business and consistent with past practices, its employees or agents, or any
change in any bonus, pension, or profit sharing payment, entitlement or
arrangement made to or with any of such officers, employees or agents;
(h) any change with respect to the management personnel of
the Company that has had or is reasonably likely to have a Company Material
Adverse Effect;
(i) any payment or discharge of a material lien, claim,
obligation or liability of the Company which was not shown on the Base Balance
Sheet or incurred in the ordinary course of business and consistent with past
practice thereafter;
(j) any obligation or liability incurred by the Company to
any of its employees, officers, directors or shareholders or any loans or
advances made by the Company to any of its officers, directors or shareholders
except normal compensation, benefits and expense allowances payable in the
ordinary course of business consistent with past practice;
(k) any write-down of the value of any inventory (including
write-downs by reason of shrinkage or mark-down), except for write-downs and
write-offs that are in the aggregate less than $15,000 incurred in the ordinary
course of business and consistent with past practice;
(l) any disposal or lapse of any rights to the use of any
trademark, tradename, patent or copyright, or disposal of or disclosure by the
Company to any person other than the Parent or employees of the Company of any
trade secret, formula, process or know-how not theretofore a matter of public
knowledge other than pursuant to confidentiality agreements;
(m) any change in any method of accounting or accounting
practice;
(n) any action taken to issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
or authorize the issuance, sale or delivery of, or
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redeem or repurchase, any stock of any class or any other securities or any
rights, warrants or options to acquire any such stock or other securities
(except pursuant to the redemption, conversion or exercise of the Options and
Warrants outstanding on the date hereof), or amend any of the terms of any such
convertible securities or Options or Warrants (except as contemplated in this
Agreement);
(o) any action taken to split, combine or reclassify any
shares of its capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock;
(p) any action taken to alter, modify, amend or issue any
option, warrant or other right to purchase Company Shares (other than to
Parent);
(q) any action taken to alter, modify or amend or enter
into any agreement with any management personnel of the Company; or
(r) any agreement, whether in writing or otherwise, to take
any action described in this Section 2.09.
2.10 Payment of Taxes. Except as set forth on Schedule 2.10 of the Company
Disclosure Schedule, the Company has duly and timely filed all Federal, state,
local, and foreign government income, excise, gross receipts or franchise tax
returns, real estate and personal property tax returns, sales and use tax
returns, employee tax and contribution returns, and all other tax returns,
reports and declarations, including valid extensions therefore, or estimated
taxes required to be filed by them, with respect to all applicable taxes ("Tax
Returns"), including without limitation, with respect to all income, profit,
franchise, sales, use, real property, personal property, ad valorem, excise,
employment, social security and wage withholding, severance, stamp, occupation,
and windfall profits taxes, of every kind, character or description, and imposed
by any government or quasi-governmental authority (domestic or foreign), and any
interest or fines, and any and all penalties or additions relating to such
taxes, charges, fees, levies or other assessments ("Taxes") except to the extent
that such failures to file, taken together do not, individually or in the
aggregate, have a Company Material Adverse Effect. All of the Tax Returns are
complete and correct in all material respects. All Taxes shown to be due on each
Tax Return have been paid, reserved against or are being contested in good faith
by the Company (which contest is being diligently pursued and is described on
Schedule 2.10 of the Company Disclosure Schedule). All Taxes and other
assessments and levies which the Company is required to withhold or collect have
been withheld or collected and paid over or will be paid over to proper
governmental authorities as required except for the collection of sales or use
taxes in such amounts as would not have a Company Material Adverse Effect.
Except as set forth on Schedule 2.10 of the Company Disclosure Schedule, to the
Company's knowledge the Tax Returns have never been examined by any government
entity, including the Internal Revenue Service and the Massachusetts Department
of Revenue. Except as set forth on Schedule 2.10 of the Company Disclosure
Schedule, the Company has no knowledge of any intention on the part of any
government entity to examine any of the Tax Returns. Except as set forth on
Schedule 2.10 of the Company Disclosure Schedule, no deficiencies have been
asserted or assessments
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made against the Company, nor is the Internal Revenue Service nor any other
taxing authority now asserting or, to the knowledge of the Company, threatening
to assert against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith. The Company has not
waived any statute of limitations for any year, which waiver is still in effect.
To the Company's knowledge, the provisions for taxes reflected in the
above-mentioned financial statements are adequate, in all material respects, to
cover any tax liabilities of the Company. The Company has not filed a consent
under Section 341(f) of the Code. The Company has not ever been part of an
affiliated group filing consolidated returns, or entered into any tax allocation
or tax sharing agreement.
2.11 Title to Properties; Liens; Condition of Properties.
(a) The Company does not own, directly or indirectly, any
real property. The Company has delivered or made available to Parent true,
correct and complete copies of all material leases, subleases, rental
agreements, contracts of sale, tenancies or licenses related to any of the real
or personal property currently used by the Company in its business.
(b) The Company owns outright all of its personal property
which is not leased and to the Company's knowledge, all of its leases are valid,
binding and enforceable in accordance with their terms against the parties
thereto and each such lease is subsisting and no material default exists under
any thereof. The Company has not received written notice that any party to any
such lease intends to cancel, terminate or refuse to renew the same.
(c) None of the personal property owned by the Company is
subject to any mortgage, pledge, deed of trust, lien (other than for taxes not
yet due and payable), conditional sale agreement or security title, except as
specifically disclosed in Schedule 2.11 of the Company Disclosure Schedule or in
the Base Balance Sheet.
(d) All machinery and equipment of the Company are in
reasonable working order and repair, in view of their age, are adequate for the
uses to which they are being put, have been reasonably maintained and conformed
in all material respects with all applicable ordinances, regulations and safety
or other laws.
2.12 Inventories; Accounts Receivable.
(a) All inventories of finished goods and raw materials of
the Company reflected on the Base Balance Sheet were as of the date thereof ,
and those existing at the Closing will to the Company's knowledge be, except as
reserved against in accordance with GAAP, of a quality and quantity salable in
the ordinary course of the business of the Company and are recorded on the
Company's books and records at the lower of cost or market price. Purchase
commitments for raw materials and parts are not in excess of anticipated
requirements, and none are at prices materially in excess of current market
prices. Except as set forth in Schedule 2.12 of the Company Disclosure Schedule,
since the date of the Base Balance Sheet, no inventory items have been sold or
disposed of except through sales in the ordinary course of business and
consistent with past practice.
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(b) All of the accounts receivable of the Company shown or
reflected on the Base Balance Sheet, less a reserve for bad debts in the amount
shown on the Base Balance Sheet, are, and those existing at the time of Closing,
less the reserve related thereto, will be, valid and to the Company's knowledge,
enforceable claims which arose out of transactions with unaffiliated parties.
Except as set forth in Schedule 2.12 of the Company Disclosure Schedule, no
customer has informed the Company of its intention to resist or delay paying any
receivable.
2.13 Intellectual Property Rights.
(a) The Company owns or possesses the adequate right to use
all Intellectual Property Rights (as defined below) necessary to the conduct of
its business as it is presently being conducted or as presently contemplated to
be conducted in 1997. Schedule 2.13(a) of the Company Disclosure Schedule
contains a list of all patents, trade names, registered copyrights, trademarks
and service marks, and applications for the same owned by the Company. Except as
set forth on Schedule 2.13(a), the Company has unencumbered title to the
Intellectual Property Rights set forth in Schedule 2.13(a) which are listed as
owned by the Company and to the Company's knowledge there are no pending
challenges to such title nor, to the knowledge of the Company, have others
threatened to challenge such title. No rights or licenses to use Intellectual
Property Rights have been granted or acquired by the Company except licenses
associated with sales of products to end user customers in the ordinary course
of business and consistent with past practice or those listed in Schedule
2.13(b) of the Company Disclosure Schedule. Schedule 2.13(c) of the Company
Disclosure Schedule lists all material licenses, agreements, obligations and
contracts relating to the Intellectual Property Rights to which the Company is a
party or by which, to the Company's knowledge, the Company is bound, except
licenses associated with sales of products to end user customers in the ordinary
course of business and consistent with past practice. Each of the licenses,
agreements, obligations and contracts listed in Schedule 2.13(c) (i) is in full
force and effect, (ii) the Company is not in default under any such instrument,
and (iii) there are no outstanding, or to the knowledge of the Company,
threatened, disputes or disagreements with respect to any such instrument.
Except as listed in Schedule 2.13(d) of the Company Disclosure Schedule, to the
knowledge of the Company, there have been (i) no claims or assertions made by
others that the Company has infringed any Intellectual Property Rights of others
by the sale of products or any other activity in the preceding five year period
and (ii) to the Company's knowledge no infringements by the Company during such
period. Except as set forth in Schedule 2.13(e) of the Company Disclosure
Schedule, the Company has no knowledge of any infringement of Intellectual
Property Rights of the Company by others. All such patents, registered
trademarks, service marks, and copyrights owned by the Company are in good
standing and are recorded on the public record in the name of the Company,
except for those failures to be in good standing and so recorded that would not,
individually or in the aggregate, have a Company Material Adverse Effect. True,
complete and correct copies of all material listed in Schedules 2.13(a),
2.13(b), 2.13(c), 2.13(d) and 2.13(e) of the Company Disclosure Schedule have
been delivered or made available to the Parent. For purposes of this Agreement,
"Intellectual Property Rights" shall mean all of the Company's rights relating
to patents, trademarks, service marks, tradenames, copyrights, mask works,
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inventions, processes, trade secrets, know-how, software and any documentation
relating to the manufacture, marketing and maintenance of products by the
Company.
(b) Except as listed on Schedule 2.13(f) of the Company
Disclosure Schedule, all current full-time employees of and technical
consultants to the Company have entered into proprietary information and
invention agreements with the Company and copies of such agreements have been
made available or provided to Parent. Except as set forth on Schedule 2.13(f) of
the Company Disclosure Schedule, to the Company's knowledge, no employee of the
Company has entered into any agreement that prohibits him from performing the
work in which the employee is presently engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone other
than the Company.
(c) The manner in which the Company has manufactured,
packaged, shipped, advertised, labeled and sold its products complies in all
material respects with all the material applicable laws and regulations
pertaining thereto. Except as set forth on Schedule 2.13(g) of the Company
Disclosure Schedule, the Company has not deposited, and is not obligated to
deposit, any source code regarding its products into any source code escrows or
similar arrangements and the Company is not under any contractual or other
obligation to disclose the source code or, other than to end-users or bundlers,
any other material proprietary information included in or relating to its
products.
2.14 Contracts and Commitments.
(a) Except for contracts, commitments, plans, agreements and
licenses described in Schedule 2.14(a), Schedule 2.13(b) or Schedule 2.15 of the
Company Disclosure Schedule (correct and complete copies of which, if written,
have been delivered or made available to the Parent), the Company is not a party
to or subject to:
(i) any contract or agreement for the purchase of
any commodity, material, equipment or asset, except purchase orders in the
ordinary course for less than $10,000 each, such orders not exceeding in the
aggregate $50,000;
(ii) any other contracts or agreements creating
any obligations of the Company after the date of the Base Balance Sheet of
$20,000 or more with respect to any such contract or agreement, other than sales
and purchase commitments in the ordinary course of business and consistent with
past practice;
(iii) any contract or agreement providing for the
purchase of all or substantially all of its requirements of a particular product
from a supplier;
(iv) any material contract or agreement which by
its terms does not terminate or is not terminable without penalty by the Company
(or its successor or assign) within 90 days after the date hereof;
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(v) any contract or agreement for the sale,
license or lease of its products not made in the ordinary course of business and
consistent with past practice;
(vi) any contract with any sales agent or
distributor of products of the Company;
(vii) any contract containing covenants limiting
the freedom of the Company to compete in any line of business or with any person
or entity;
(viii) any material license or franchise
agreement (as licensor or licensee or franchisor or franchisee);
(ix) any arrangement or obligation with respect
to the return of inventory or merchandise other than on account of a defective
condition, incorrect quantities or missed delivery dates; or
(x) any contract, subcontract or other agreement
with any agency of the United States government or other governmental entity .
(b) The Company is not in material default under any
contracts, commitments, plans, agreements or licenses described in Schedule
2.14(a) of the Company Disclosure Schedule nor does the Company have knowledge
of any termination, cancellation, limitation or modification or change in any
business relationship with any material supplier or customer contemplated by
such customer or supplier. For the purposes hereof, a supplier is material if it
accounted for more than $25,000 of the orders of the Company for purchases of
raw materials and other products essential to its manufacturing processes during
either of the last two completed fiscal years. A customer is material if it
accounted for more than $25,000 of the orders of the Company in either of the
last two completed fiscal years. Except as set forth on Schedule 2.14(b) of the
Company Disclosure Schedule, the Company has not had any customer who accounted,
directly or indirectly, for more than five percent (5%) of its sales during the
last two fiscal years and the Company has no supplier from whom it has purchased
more than five percent (5%) of the goods and services that it purchased during
the last two fiscal years.
2.15 Labor and Employee Relations.
(a) Except as shown on Schedule 2.15(a) of the Company
Disclosure Schedule, there are no currently effective material written
consulting or employment agreements or other material agreements with individual
consultants or employees to which the Company is a party. Complete and accurate
copies of all such written agreements have been delivered or made available to
Parent. Also shown on Schedule 2.15(a) of the Company Disclosure Schedule are
the name and rate of compensation (including all salary, bonus, benefit and
compensation) of each officer and employee of the Company, including all bonus
compensation.
(b) None of the employees of the Company is covered by any
collective bargaining agreement with any trade or labor union, employees'
association or similar
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association. The Company has complied in all material respects with applicable
laws, rules and regulations relating to the employment of labor, including
without limitation those relating to wages, hours, unfair labor practices,
discrimination, and payment of social security and similar taxes. There are no
representation elections, arbitration proceedings, labor strikes, slowdowns or
stoppages, material grievances or other labor troubles pending, or, to the
knowledge of the Company, overtly threatened, with respect to the employees of
the Company.
(c) Except as set forth on Schedule 2.15(c), there are no
complaints against the Company pending or, to the knowledge of the Company,
overtly threatened before the National Labor Relations Board or any similar
foreign, state or local labor agencies, or before the Equal Employment
Opportunity Commission or any similar foreign, state or local agency, by or on
behalf of any employee or former employee of the Company.
(d) There is no material contingent liability for severance
pay, accrued vacation pay for prior years or similar items as of the date of the
Base Balance Sheet not set forth on the Base Balance Sheet or on Schedule
2.15(d) of the Company Disclosure Schedule. Except as set forth on Schedule
2.15(d), the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not trigger any
severance pay obligation under any contract or to the Company's knowledge,
assuming the Surviving Corporation does not terminate employees, at law.
(e) The Company has provided or made available to Parent a
description of all written and other material employment policies under which
the Company operates.
(f) Except where the failure to so be in compliance,
individually or in the aggregate, would not have a Company Material Adverse
Effect, the Company is in compliance with all Federal, foreign (as applicable),
and state worker's safety laws and requirements.
(g) Except as disclosed on Schedule 2.15(g) of the Company
Disclosure Schedule, to the knowledge of the Company, no executive, key employee
or group of employees has any plans to terminate his or her employment with the
Company.
(h) No salaried or commissioned employee has left the
employment of the Company since the date of the Base Balance Sheet, except where
such departure would not be reasonably likely to have a Company Material Adverse
Effect.
2.16 Employee Benefits and ERISA.
(a) Schedule 2.16(a) of the Company Disclosure Schedule sets
forth a list of all employee compensation and benefit plans, agreements,
commitments or arrangements of any type for any current or former employee,
officer or director, or dependent thereof, of the Company which is:
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(i) an employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); or
(ii) a compensation, stock purchase, stock option,
stock bonus, stock appreciation, severance, health, welfare, life, disability or
other benefit plan, fund, program or arrangement which is not covered by clause
(i) above.
(Hereinafter, "ERISA Benefit Plan" refers to plans or arrangements under clause
(i) above and "Benefit Plan" refers to plans or arrangements under clauses (i)
and (ii) above.)
(b) There are no Benefit Plans of the Company with respect to
which the Company has any liability or contingent liability not listed on
Schedule 2.16(b) of the Company Disclosure Schedule. There have been no
multiemployer plans within the meaning of Section 3(37) or 4001(a)(3) of ERISA
or defined benefit plans within the meaning of Section 3(35) of ERISA covering
employees or former employees of the Company or ERISA Affiliate within the last
ten (10) years; for purposes of this sentence, "ERISA Affiliate" means any trade
or business, whether or not incorporated, that together with the Company, would
be deemed to be a controlled group, affiliated service group or "single
employer" within the meaning of section 4001 of ERISA or section
414(b),(c)(m),or (o) of the Code.
(c) With respect to each Benefit Plan described on Schedule
2.16 (c), the Company has furnished or made available to Parent complete and
accurate copies of each Benefit Plan, including all amendments thereto, the
three most recent Form 5500s (if required), the most recent Internal Revenue
Service determination letter (if any), all summary plan descriptions and any
summaries of material modifications (if any), summary annual reports (if any),
and all reports (if any) of the ERISA Benefit Plan required by ERISA and the
regulations thereunder. The Company has also furnished Parent copies of any
material insurance contracts or trust agreements through which any ERISA Benefit
Plan is funded, any custodial or investment contracts relating to assets or
benefits under the ERISA Benefit Plan, and any contracts relating to record
keeping or administration for the ERISA Benefit Plan. To the knowledge of the
Company, there has not been any material adverse change occurring with respect
to any ERISA Benefit Plan since the date of the most recently completed and
filed annual report.
(d) Each ERISA Benefit Plan which is a pension plan within the
meaning of Section 3(2) of ERISA which is intended to be qualified under Section
401(a) of the Code is so qualified, any trust through which it is funded is
exempt from tax under Section 501(a) of the Code. Any cash or deferred
arrangement of an ERISA Benefit Plan is a qualified cash or deferred arrangement
under Section 401(k) of the Code.
(e) With respect to each Benefit Plan:
(i) each Benefit Plan materially complies currently
and in all material respects complied in the past, as to form and operation,
with the provisions of all applicable Federal and state laws, such as ERISA and
the Code, including without limitation all requirements regarding
discrimination, disclosure, and continuation coverage (under Section
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4980B of the Code); and the Company has not, and to the knowledge of the Company
no other party has engaged in a nonexempt "prohibited transaction" (as defined
in Section 4975 of the Code or enumerated in Section 406(a) or (b) of ERISA)
with respect to an ERISA Benefit Plan or engaged in other activities which would
constitute a breach of fiduciary duty with respect to which the Company or any
Benefit Plan may be liable or otherwise damaged in any material respect;
(ii) to the Company's knowledge, no such Benefit
Plan is currently under audit or investigation by any governmental agency or
body, and there are no actions, suits or claims (other than routine claims for
benefits) pending or to the Company's knowledge threatened against any of the
Benefit Plans or against the assets of any Benefit Plan; and
(iii) all premiums due in connection with the
Benefit Plan and premiums for life and health insurance and annuity contracts,
have been paid in full when due or within any applicable grace period;
(iv) all reports and filings made pursuant to ERISA,
including without limitation all Form 5500s and attachments, summary annual
reports, and any other documents reasonably necessary to enable Parent to
perform its responsibilities with respect to any employee program subsequent to
the Closing, are and shall be available at the offices of the Company on and
immediately after the Closing.
(f) Except as required by COBRA or the Family Medical Leave
Act, the Company has not made any promises or incurred any obligation to provide
any health or other welfare benefits to any retirees, former employees, or their
dependents.
2.17 Environmental Matters. The Company has complied in all respects with
all applicable environmental laws, where the failure to so comply would result
in a Company Material Adverse Effect.
2.18 Permits. The Company holds all licenses, permits, registrations,
orders, authorizations, approvals and franchises which are required to permit it
to conduct its business as presently conducted, except where the failure to hold
such licenses, permits, registrations, orders, authorizations, approvals or
franchises would not, individually or in the aggregate, have a Company Material
Adverse Effect. All such licenses, permits, registrations, orders,
authorizations, approvals and franchises are listed on Schedule 2.18 of the
Company Disclosure Schedule and are now to the Company's knowledge, valid and in
full force and effect, and the Surviving Corporation, unless otherwise indicated
on Schedule 2.18 of the Company Disclosure Schedule, shall have full benefit of
the same. The Company has not received any notification of any asserted present
failure (or past and unremedied failure) by it to have obtained any such
license, permit, registration, order, authorization, approval or franchise.
2.19 Warranty or Other Claims. Except as disclosed on Schedule 2.19 of the
Company Disclosure Schedule, no product manufactured, sold, leased or licensed
by the
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Company is subject to any guaranty, warranty or right of return beyond
the applicable standard terms and conditions of sale, lease or license, which
have been made available to the Parent or which may be imposed by law. Schedule
2.19 of the Company Disclosure Schedule sets forth the aggregate expenses
incurred by the Company in fulfilling its obligations under its guaranty,
warranty and right of return provisions during each of the last two completed
fiscal years. Except as set forth in Schedule 2.19 of the Company Disclosure
Schedule, there are no existing or, to the knowledge of the Company threatened
claims against the Company for services or merchandise which are defective or
fail to meet any service or product warranties other than in the ordinary course
of business consistent with past experience. Except as set forth in Schedule
2.19 of the Company Disclosure Schedule, no claim has been asserted against the
Company since August 1, 1996 for renegotiation or price redetermination of any
completed business transaction. The Company's products are free from known
significant defects and to the knowledge of the Company, conform to the
specifications, documentation and sample demonstration furnished to the
Company's customers and made available to Parent.
2.20 Claims and Legal Proceedings. Except for matters described in Schedule
2.20 of the Company Disclosure Schedule, there are no claims, actions, suits,
arbitrations, proceedings or investigations pending (or, to the knowledge of the
Company, threatened) against the Company, and there are no outstanding court
orders, court decrees, or court stipulations to which the Company is a party or
by which any of its assets are bound, any of which (a) affect this Agreement or
the transactions contemplated hereby, or (b) materially restrict the present
business properties, operations, prospects, assets, revenues or condition
(financial or otherwise) of the Company, or (c) would, individually or in the
aggregate have a Company Material Adverse Effect or materially impair or
preclude the Company's ability to consummate the Merger or the other
transactions contemplated hereby.
2.21 Borrowing and Guarantees. Except as shown on Schedule 2.21 of the
Company Disclosure Schedule, there are no agreements and undertakings pursuant
to which the Company (a) is borrowing or is entitled to borrow any money, (b) is
lending or has committed itself to lend any money, or (c) is a guarantor or
surety with respect to the obligations of any person. Complete and accurate
copies of all such written agreements have been delivered or otherwise made
available to Parent.
2.22 Financial Service Relations and Powers of Attorney. All of the
arrangements which the Company has with any bank depository institution or other
financial services entity, whether or not in the Company's name, are described
on Schedule 2.22 hereto, indicating with respect to each of such arrangements
the type of arrangement maintained (such as checking account, borrowing
arrangement, safe deposit box, etc.), the banking institution and the person or
persons authorized in respect thereof. The Company does not have any outstanding
powers of attorney.
2.23 Insurance. Schedule 2.23 of the Company Disclosure Schedule lists all
insurance policies in force on the date hereof covering the businesses,
properties and assets of the Company and all outstanding claims against such
policies. All such policies are currently in
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effect. Except as set forth on Schedule 2.23 of the Company Disclosure Schedule,
the Company has not received notice of the cancellation of any such insurance in
effect on the date hereof.
2.24 Government Contracts. The Company has not ever had a contract or
subcontract terminated for default and has never been determined to be
"nonresponsible" by any agency of the United States government. The Company does
not have any outstanding agreements, contracts or commitments that require it to
obtain or maintain a government security clearance.
2.25 Corporate Books and Records. The minute books and stock ledgers of the
Company, copies of which have been made available for inspection by Parent,
accurately record all material action taken by the Company's stockholders, board
of directors and committees thereof.
2.26 Transaction Fee. Except for Montgomery Securities, which will receive
a fee of $375,000 plus out-of-pocket expenses up to $25,000, the Company has not
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who is entitled to a fee or any
commission the receipt of which is conditioned upon the consummation of the
Merger. The Company has provided the Parent with a true and complete copy of the
retainer letter for the services of Montgomery Securities, and the Company has
no other agreements, obligations or understandings in connection therewith.
2.27 Transactions with Interested Persons. Except as disclosed in Schedule
2.27 of the Company Disclosure Schedule, no director, executive officer, or to
the Company's knowledge, supervisory employee, or stockholder of the Company, or
their respective spouses or children, (i) owns, directly or indirectly, on an
individual or joint basis, any material interest in, or serves as an officer or
director of, any customer, competitor or supplier of the Company or any
organization which has a material contract or arrangement with the Company, or
(ii) has any material contract or agreement with the Company other than as
disclosed on a schedule hereto, and all such agreements are, except as noted on
such schedule, on arms-length terms.
2.28 Absence of Sensitive Payments. Neither the Company, nor to the
knowledge of the Company, any of the Company's directors, officers, agents,
stockholders or employees, on behalf of the Company:
(a) has made or has agreed to make any contributions,
payments or gifts of funds or property to any governmental official, employee or
agent where either the payment or the purpose of such contribution, payment or
gift was or is illegal under the laws of the United States, any state thereof,
or any other jurisdiction (foreign or domestic);
(b) has established or maintained any unrecorded fund or
asset for any purpose; or
(c) has made or has agreed to make any contribution or
expenditure, or has reimbursed any political gift or contribution or expenditure
made by any other person to
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candidates for public office, whether Federal, state or local (foreign or
domestic) where such contributions were a violation of applicable law.
2.29 Disclosure of Material Information. No representation or warranty by
the Company contained in this Agreement, and no statement contained in the
Company Disclosure Schedule, any exhibit to this Agreement or certificate issued
by or to be issued by the Company and furnished or to be furnished to Parent
pursuant to this Agreement contains or will contain any untrue statement of a
material fact or omits, or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
2.30 Regulatory Correspondence. The Company has made available to the
Parent true and correct copies of any and all material correspondence in the
Company's possession, from or to any governmental or regulatory agencies or
bodies since September 6, 1994 years, including, without limitation, all
significant correspondence with the Securities and Exchange Commission, the
National Association of Securities Dealers and the United States Justice
Department.
2.31 State Antitakeover Statutes. The Company has granted all approvals and
taken all other steps necessary to exempt the Merger and the other transactions
contemplated hereby from the requirements and provisions of Section 203 of the
DGCL.
2.32 Company Action.
(a) The Board of Directors of the Company, at a meeting duly
called and held, has by the unanimous vote of all directors present (i)
determined that the Merger is fair and in the best interests of the Company and
its stockholders, (ii) approved the Merger in accordance with the provisions of
the DGCL, (iii) approved this Agreement, the Certificate of Merger and the
Option Agreement, (iv) authorized the execution and delivery of this Agreement,
the Certificate of Merger and, the Option Agreement, and (v) directed that this
Agreement and the Merger be submitted to the Company Stockholders for their
approval and resolved to recommend that Company Stockholders vote in favor of
the approval of this Agreement and the Merger.
(b) The Board of Directors has received the opinion of
Montgomery Securities dated of recent date, satisfactory to the Company and its
Board of Directors to the effect that the terms of the Merger are fair to the
Company Stockholders from a financial point of view (the "Montgomery Opinion").
(c) On the date hereof, the Company has entered into an
option agreement (the "Option Agreement") with the Parent in substantially the
form attached hereto as Exhibit B pursuant to which the Company grants the
Parent an option, under certain circumstances whereby this Agreement is
terminated and the Merger does not take place as contemplated herein, to purchas
Company Shares from time to time at a price of $5.25 per share.
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(d) The Company shall use its reasonable efforts to obtain
and deliver to the Parent the written agreement of all executive officers and
directors, to the extent such persons own Company Shares (the "Company
Affiliates") substantially in the form attached hereto as Exhibit C (an
"Affiliate Agreement") pursuant to which each of the Company Affiliates shall
(i) acknowledge that the Merger Shares are subject to certain resale
restrictions under Rule 145 of the Securities Act, and (ii) with respect to the
Company Affiliates who are directors or executive officers of the Company, such
Company Affiliates shall agree to vote all Company Shares owned by them or over
which they have voting control, in favor of the Merger and this Agreement and
irrevocably grant a proxy, coupled with an interest, to the Parent or its
designee to vote such Company Shares in favor of this Agreement the Merger.
Schedule 2.32 of the Company Disclosure Schedule identifies all such persons who
are as of the date hereof Company Affiliates.
(e) The Board of Directors of the Company has authorized the
Company to enter into a license agreement (the "License Agreement") with the
Parent pursuant to which the Company grants the Parent a license, on
commercially reasonable terms and conditions no more favorable than the Company
would provide to any acceptable unaffiliated third party, to use any and all
intellectual property rights and proprietary technology of the Company, in the
event this Agreement is terminated for any reason and the Merger does not take
place as contemplated herein
2.33 HSR Act. The Company is not controlled by a $100,000,000 person within
the meaning of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE ACQUISITION SUBSIDIARY
Each of the Parent and the Acquisition Subsidiary hereby jointly and
severally represent and warrant to the Company as follows:
3.1 Organization of Parent and Acquisition Subsidiary. The Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Belgium with full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
Acquisition Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is conducted by it. The Parent owns all of the issued and outstanding
capital stock of the Acquisition Subsidiary. The Acquisition Subsidiary was
formed solely for the purpose of the Merger and engaging in the transactions
contemplated hereby. The copies of the Parent's Restated Articles of
Incorporation and the Acquisition Subsidiary's Certificate of Incorporation,
each as amended to date, certified in the case of the Acquisition Subsidiary by
the Delaware Secretary of State, and of the Acquisition
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Subsidiary's Bylaws, as amended to date, certified by the Secretary of the
Acquisition Subsidiary copies of which have been delivered to the Company, are,
and, subject to any and all amendments described in that certain proxy statement
dated April 9, 1997 (a copy of which has also been delivered to the Company),
will be at the Closing, complete and correct.
3.2 Capitalization. All of the Merger Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. There are no authorized or
outstanding options, warrants, calls, rights, commitments or other agreements of
any character to which the Acquisition Subsidiary is a party or by which it is
bound requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
shares of capital stock of Acquisition Subsidiary. The capitalization of the
Parent reflected in the Draft Audited Financial Statements (as defined in
Section 3.5) is correct and complete as of the date set forth therein.
3.3 Authorization of Transaction. Each of the Parent and the Acquisition
Subsidiary has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the Merger
and the transactions contemplated hereby. The execution and delivery of this
Agreement and the performance of this Agreement and a consummation by each of
the Parent and the Acquisition Subsidiary of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of each of the Parent and the Acquisition Subsidiary. This Agreement
has been duly and validly executed and delivered by each of the Parent and the
Acquisition Subsidiary and constitutes valid and binding obligations of the
Parent and the Acquisition Subsidiary, enforceable against them in accordance
with its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
3.4 No Conflict of Transaction With Obligations and Laws. Subject to
compliance with the applicable requirements of the Coordinated Laws on
Commercial Companies of Belgium (which have been described in a memorandum which
has been made available to the Company), the Securities Act, any applicable
state takeover or securities laws, the Exchange Act, the Nasdaq National Market
and the filing of the Certificate of Merger and any other documents as required
by the DGCL, neither the execution, delivery and performance of this Agreement,
nor the performance of the transactions contemplated hereby, will: (i)
constitute a breach or violation of the Charter or Bylaws of the Parent or the
Acquisition Subsidiary; (ii) require any consent, waiver, exemption, approval or
authorization of, declaration, filing or registration with, or giving of notice
to any person, court, arbitration tribunal, administrative agency or commission
or other governmental or regulatory agency or authority; (iii) except as set
forth on Schedule 3.4, conflict with or constitute (with or without the passage
of time or the giving of notice) a breach of, or default under, any debt
instrument to which the Parent (including any subsidiary of the Parent) or the
Acquisition Subsidiary is a party, or give any person the right to accelerate
any indebtedness or terminate, modify or cancel any right with respect to any
debt instrument; (iv) constitute (with or without the passage of time or giving
of notice) a default under or breach of any other agreement, instrument or
obligation to which the Parent (including any subsidiary of the Parent)
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or the Acquisition Subsidiary is a party or by which the Parent (including any
subsidiary of the Parent) or the Acquisition Subsidiary or any of their assets
are bound; (v) result in the creation of any lien or encumbrance upon any of the
assets of the Parent (including any subsidiary of the Parent) or the Acquisition
Subsidiary; (vi) result in a violation of any law, regulation, administrative
order or judicial order, decree or judgment applicable to the Parent (including
any subsidiary of the Parent) or the Acquisition Subsidiary, or their businesses
or assets; or (vii) invalidate or adversely affect any permit, license or
authorization used in the Parent's (including any subsidiary of the Parent) or
the Acquisition Subsidiary's business, excluding from clauses (ii) through (vii)
consents, waivers, exemptions, approvals or authorizations, declarations,
filings or registrations, notices, conflicts, breaches, defaults, liens or
encumbrances, or violations which would not, either individually or in the
aggregate, either have a Parent Material Adverse Effect or materially impair or
preclude the Parent's or the Acquisition Subsidiary's ability to consummate the
Merger or the transactions contemplated hereby. Except as set forth on Schedule
3.4 hereof, neither the execution, delivery and performance of this Agreement
nor the performance of the transactions contemplated hereby will give rise to a
right of any party (other than the Parent or the Acquisition Subsidiary) to
terminate, modify or cancel any material contract, agreement or other instrument
to which the Parent is a party or by which the Parent or its properties are
affected. A "Parent Material Adverse Effect" is defined as any fact, change,
event or any other occurrence or circumstance that has, or is reasonably likely
to have, individually or in the aggregate, a material adverse impact on the
business, properties, operations, prospects, assets, revenues or condition
(financial or otherwise) of the Parent and its subsidiaries taken as a whole;
provided, however, that "Parent Material Adverse Effect" shall be deemed to
exclude the impact of any continuation of any existing unfavorable business or
financial trend (which has been disclosed herein) without a material worsening
thereof.
3.5 Reports and Financial Statements
(a) The Parent has previously furnished to the Company
complete and accurate copies, as amended or supplemented, of its (a) Annual
Report on Form 20-F for the fiscal year 1995 as filed with the SEC, and any
amendments thereto, (b) proxy statements relating to all meetings of its
stockholders (whether annual or special) since December 6, 1995, (c) all other
reports or registration statements, other than Registration Statements on Form
S-8, filed by the Parent with the SEC since December 6, 1995 and (d) the draft
consolidated audited financial statements for the fiscal year ended December 31,
1996 (the "Draft Audited Financial Statements") together with a draft of
management's discussion and analysis of financial condition and operations (such
annual report, proxy statements, registration statements, Draft Audited
Financial Statements and other filings, together with any amendments or
supplements thereto, are collectively referred to herein as the "Parent
Reports"). The Parent Reports constitute all of the documents filed or required
to be filed by the Parent with the SEC since December 6, 1995, other than any
Registration Statement on Form S-8. As of their respective dates, the Parent
Reports and that certain Private Placement Memorandum dated April 4, 1997 ( a
copy of which has been provided to the Company) and the Parent Reports
incorporated therein by reference, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
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circumstances under which they were made, not misleading. The consolidated
audited financial statements of the Parent included in the Parent Reports
(together, the "Parent Financial Statements") (i) comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto),
(iii) fairly present the consolidated financial condition, results of operations
and cash flows of the Parent and each of its subsidiaries as of the respective
dates thereof and for the periods referred to therein, and (iv) are consistent
in all material respects with the books and records of the Parent. The Parent
has also previously made available to the Company all documents used in
connection with any offer or sale of securities, for purposes of raising
capital, by the Parent since December 6, 1995.
(b) The consolidated balance sheet contained in the Draft
Audited Financial Statements, including the footnotes thereto, is sometimes
referred to hereinafter as the "Parent Base Balance Sheet."
(c) The books of account of the Parent are complete and
correct in all material respects. The current books of account and auditor's
letters to management of the Parent since December 6, 1995 and other significant
correspondence from or to such auditors during such period, if any, have been
made available to the Company.
3.6 Claims and Legal Proceedings. There are no claims, actions, suits,
arbitrations, proceedings or investigations pending (or, to the best knowledge
of Parent, threatened) against Parent or any of its subsidiaries, and there are
no outstanding court orders, court decrees, or court stipulations to which
Parent or any of its subsidiaries is a party or by which any of their respective
assets are bound, any of which (a) affect this Agreement or the transactions
contemplated hereby, or (b) materially restrict the present business,
properties, operations, prospects, assets or condition, financial or otherwise,
of Parent or any of its subsidiaries, or (c) would, individually or in the
aggregate have a Parent Material Adverse Effect or materially impair or preclude
the Parent's or the Acquisition Subsidiary's ability to consummate the Merger or
the other transactions contemplated hereby.
3.7 Disclosure of Material Information. No representation or warranty by
the Parent or the Acquisition Subsidiary contained in this Agreement, and no
statement contained in the Parent's disclosure schedule or any exhibit to this
Agreement or certificate issued by or to be issued by the Parent or the
Acquisition Subsidiary and furnished or to be furnished to the Company pursuant
to this Agreement contains or will contain any untrue statement of a material
fact or omits, or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
3.8 Parent Action. The Parent has received the opinion of Hambrecht & Quist
satisfactory to the Parent to the effect that the terms of the Merger are fair
to the Parent from a financial point of view. A copy of such letter has been
previously furnished to the Company.
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3.9 Shareholder Vote Not Required. No vote of the holders of the
outstanding shares of Parent Common Stock is required to approve this Agreement,
the Merger or the transactions contemplated by this Agreement.
3.10 Transaction Fees. Except for Hambrecht & Quist, neither the Parent nor
the Acquisition Subsidiary has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or any commission the receipt of which is conditioned upon
the consummation of the Merger.
3.11 Financing. The Acquisition Subsidiary and the Parent have sufficient
funds and/or available financing to pay the Merger Consideration for all Company
Shares, the O&W Company Shares and all fees and expenses related to the Merger.
3.12 Prior Activities of Acquisition Subsidiary. The Acquisition
Subsidiary has not incurred any liabilities or obligations, except those
incurred in connection with its organization or with the negotiation of this
Agreement or the performance hereof, and the financing of the Merger and the
consummation of the transactions contemplated thereby. Except as contemplated by
the foregoing, Acquisition Subsidiary has not engaged in any business activities
of any type or kind whatsoever, nor entered into any agreements or arrangements
with any person, nor is it subject to or bound by any obligation or undertaking.
3.13 Permits. Each of the Parent and the Acquisition Subsidiary holds all
licenses, permits, registrations, orders, authorizations, approvals and
franchises which are required to permit it to conduct its business as presently
conducted, except where the failure to hold such licenses, permits,
registrations, orders, authorizations, approvals or franchises would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
3.14 Absence of Sensitive Payments. Neither the Parent, nor to the
knowledge of the Parent, any of the Parent's directors, officers, agents,
stockholders or employees, on behalf of the Parent:
(a) has made or agreed to make any contributions, payments
or gifts of funds or property to any governmental official, employee or agent
where either the payment or the purpose of such contribution, payment or gift
was or is illegal under the laws of the United States, any state thereof or any
other jurisdiction (foreign or domestic);
(b) has established or maintained any unrecorded fund or
asset for any purpose, or has made any false or artificial entries on any of its
books or records for any reason; or
(c) has made or has agreed to make any contribution or
expenditure, or has reimbursed any political gift or contribution or expenditure
made by any other person to candidates for public office, whether Federal, state
or local (foreign or domestic), where such contributions were in violation of
applicable law.
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3.15 HSR Act. The Parent is not controlled by a $100,000,000 person within
the meaning of the HSR Act.
3.16 Present Compliance with Obligations and Laws. The Parent is not: (a)
in violation of its Charter or Bylaws; (b) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with or without
the passage of time or the giving of notice) affords to any person the right to
accelerate any indebtedness or terminate any right; (c) in default of or breach
of (with or without the passage of time or the giving of notice) any other
contract to which it is party or by which it or its assets are bound; or (d) in
violation of any law, regulation, administrative order or juridical order,
decree, or judgment applicable to it or its business or assets, accept where any
violation or default under items (b), (c) or (d) would not, individually or in
the aggregate, have a Parent Material Adverse Effect.
ARTICLE IV
COVENANTS
4.1 Reasonable Best Efforts. Each of the Parties shall use, and the Parent
shall cause the Acquisition Subsidiary to use, reasonable best efforts to take
all actions and to do all things necessary, proper or advisable to consummate
the Merger and the transactions contemplated by this Agreement, including, but
not limited to the delivery of certificates reasonably requested in connection
with any opinions to be delivered hereunder.
4.2 Notices and Consents. Each of the Parties shall use reasonable best
efforts to obtain, at its reasonable expense, all such waivers, permits,
consents, approvals or other authorizations from third parties and governmental
entities or authorities, and to effect all such registrations, filings and
notices with or to third parties and governmental entities or authorities, as
may be necessary or desirable in connection with the transactions contemplated
by this Agreement.
4.3 Special Meeting, Prospectus/Proxy Statement and Registration Statement;
Fairness Opinion.
(a) The Parent and the Company shall jointly prepare, and
the Company shall file with the SEC under the Exchange Act, subject to the other
provisions of this Agreement, proxy materials for the purpose of soliciting
proxies from Company Stockholders to vote in favor of the adoption of this
Agreement and the approval of the Merger at a meeting of Company Stockholders to
be called and held for such purpose (and if so determined by the Company, for
the annual election of directors and the ratification and appointment of its
auditors) (the "Special Meeting"). Such proxy materials shall be in the form of
a prospectus/proxy statement to be used for the purpose of offering the Merger
Shares to Company Stockholders and soliciting such proxies from Company
Stockholders (such prospectus/proxy statement, together with any accompanying
letter to stockholders, notice of meeting and form of proxy, shall be referred
to herein as the "Prospectus/Proxy Statement"). The Parent and Acquisition
Subsidiary shall furnish to the Company all information concerning the Parent
and Acquisition Subsidiary as
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the Company may reasonably request in connection with the preparation of the
Prospectus/Proxy Statement. The Parent and its counsel shall be given an
opportunity to review and comment on the Prospectus/Proxy Statement prior to its
filing with the SEC. The Company, with the assistance of the Parent, shall
promptly respond to any SEC comments on the Prospectus/Proxy Statement and shall
otherwise use reasonable best efforts to resolve as promptly as practicable all
SEC comments thereon.
(b) A copy of the Montgomery Opinion shall be delivered by
the Company to the Parent no later than the day that the preliminary proxy
materials described in subparagraph (a) above are first filed with the SEC.
(c) The Parent shall prepare and file with the SEC under the
Securities Act and all other applicable regulatory bodies as soon as reasonably
practicable, a Registration Statement on Form F-4 with respect to shares of
Parent Common Stock to be issued in the Merger (the "Registration Statement"),
which shall include the Prospectus/ Proxy Statement as a part thereof. The
Company and its counsel shall be given an opportunity to review and comment on
the Registration Statement prior to its filing with the SEC. The Parent, with
the assistance of the Company, shall promptly respond to any SEC comments on the
Registration Statement and shall otherwise use reasonable best efforts to cause
the Registration Statement to be declared effective as promptly as practicable.
The Parent shall also take any and all such actions to satisfy the requirements
of the Securities Act, including Rule 145 thereunder, and the Exchange Act.
Prior to the Closing Date, the Parent shall use its reasonable, good faith
efforts to cause the shares of Parent Common Stock to be issued pursuant to the
Merger to be registered or qualified under all applicable securities or Blue Sky
laws of each of the states and territories of the United States, and to take any
other such actions which may be necessary to enable the Parent Common Stock to
be issued pursuant to the Merger in each such jurisdiction.
(d) Promptly following the resolution of all SEC comments on
the Prospectus/Proxy Statement and the declaration of effectiveness of the
Registration Statement, the Company shall distribute the Prospectus/Proxy
Statement to its stockholders and, pursuant thereto, shall call the Special
Meeting in accordance with the DGCL and subject to the other provisions of this
Agreement, solicit proxies from Company Stockholders to vote in favor of the
adoption of this Agreement and the approval of the Merger at the Special
Meeting.
(e) The Company shall comply with all applicable provisions
of and rules under the Exchange Act and all applicable provisions of the DGCL in
the preparation, filing and distribution of the Prospectus/Proxy Statement, the
solicitation of proxies thereunder, and the calling and holding of the Special
Meeting. Without limiting the foregoing, the Company shall ensure that the
Prospectus/Proxy Statement does not, as of the date on which it is distributed
to Company Stockholders, and as of the date of the Special Meeting, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading (provided that the Company shall not be
responsible for the accuracy or completeness of any information relating to the
Parent and the Acquisition Subsidiary or any other information furnished by the
Parent in writing for inclusion in the Prospectus/Proxy Statement). The
information supplied by the
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Company for inclusion in the Registration Statement will not as of the effective
date of the Registration Statement (or any amendment or supplement thereto) or
at the time of the Special Meeting, contain any statement which, at such time
and in light of the circumstances under which it is made, is false or misleading
with respect to any material fact, or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein not
false or misleading.
(f) The Parent shall comply with all applicable provisions
of and rules under the Securities Act and state securities laws in the
preparation, filing and distribution of the Registration Statement and the
offering and issuance of the Merger Shares. Without limiting the foregoing, the
Parent shall ensure that the Registration Statement does not, as of its
effective date, and as of the date of the Special Meeting, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
(provided that the Parent shall not be responsible for the accuracy or
completeness of any information relating to the Company or any other information
furnished by the Company in writing for inclusion in the Registration
Statement). The information supplied by the Parent for inclusion in the
Prospectus/Proxy Statement to be sent to the stockholders of the Company in
connection with the Special Meeting will not, on the date the Prospectus/Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company or at the time of the Special Meeting, contain any
statement which, at such time and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact, or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein not false or misleading.
(g) The Company, acting through its Board of Directors,
shall include in the Prospectus/Proxy Statement the recommendation of its Board
of Directors that the Company Stockholders vote in favor of the adoption of this
Agreement and the approval of the Merger, and shall otherwise use reasonable
best efforts to obtain the Requisite Stockholder Approval. Notwithstanding the
foregoing, the obligations set forth in this paragraph (g) shall not apply (and
the Board of Directors shall be permitted to modify or withdraw any such
recommendation previously made) if the Board of Directors of the Company, after
consultation with and based upon the written advice of independent legal counsel
(who may be the Company's regular legal counsel), determines in good faith that
to not withdraw such recommendation would constitute a breach of the fiduciary
duties of the Board of Directors under applicable law.
4.4 Operation of Business. Except as contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, the Company
shall (and shall cause each Subsidiary to) conduct its operations in the
ordinary course of business and consistent with past practice and in compliance
in all material respects with applicable laws and regulations and, to the extent
consistent therewith, use reasonable efforts to preserve intact its current
business organization, keep its physical assets in good working condition, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be impaired in
any material respect. Without limiting the generality of the foregoing, prior to
the Effective Time, the Company shall not, without the written consent of the
Parent:
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(a) issue, sell, deliver or agree or commit to issue, sell
or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorize the
issuance, sale or delivery of, or redeem or repurchase, any stock of any class
or any other securities or any rights, warrants or options to acquire any such
stock or other securities, or amend any of the terms of any such convertible
securities, Options or Warrants, other than the issuance of Company Shares upon
the exercise of outstanding Options and Warrants;
(b) split, combine or reclassify any shares of its capital
stock or declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock;
(c) except in the ordinary course of business and consistent
with past practice: create, incur or assume any debt not currently outstanding
(including obligations in respect of capital leases) other than loans incurred
to satisfy the working capital needs of the Company; assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person; or make any loans, advances
or capital contributions to, or investments in, any other person;
(d) enter into, adopt or amend any ERISA Benefit Plan or
Benefit Plan or any employment or severance agreement or arrangement or (except
for normal increases in the ordinary course of business and consistent with past
practice) increase in any manner the compensation or fringe benefits of, or
materially modify the employment terms of, its directors, officers or employees,
generally or individually, or pay any benefit not required by the terms in
effect on the date hereof of any existing ERISA Benefit Plan or Benefit Plan;
(e) acquire, sell, lease, encumber or dispose of any shares
or other equity interests in or securities of any corporation, partnership,
association or other business organization or division thereof or any assets,
other than purchases and sales of assets in the ordinary course of business and
consistent with past practice;
(f) amend its Charter or Bylaws;
(g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(h) discharge or satisfy any security interest, lien or
other encumbrance or pay any obligation or liability other than in the ordinary
course of business and consistent with past practice;
(i) mortgage or pledge any of its property or assets or
subject any such assets to any security interest, lien or other encumbrance,
except to fund the Company's working capital needs;
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(j) sell, assign, transfer or license any Intellectual
Property Assets, other than in the ordinary course of business and consistent
with past practice;
(k) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or waive any
material rights under, any material contract or agreement;
(1) make or commit to make any capital expenditure in excess
of $10,000 per item or $50,000 in the aggregate;
(m) take any action or fail to take any action permitted by
this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Company set
forth in this Agreement becoming untrue in any material respect or (ii) any of
the conditions to the Merger set forth in Article V not being satisfied; or
(n) agree in writing or otherwise to take any of the
foregoing actions.
In addition, the Company shall not without prior oral consultation with
the Parent hire any employees or retain any consultants other than nonmanagement
or nonsupervisory personnel in the ordinary course of business.
4.5 Access. Each party shall permit representatives of the other to have
access (at all reasonable times and in a manner so as not to interfere with the
normal business operations of the other party) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel of or pertaining to such party. Each Party (a) shall treat and hold as
confidential any Confidential Information (as defined below), (b) shall not use
any of the Confidential Information except in connection with this Agreement,
and (c) if this Agreement is terminated for any reason whatsoever, shall return
to the disclosing Party all tangible embodiments (and all copies) thereof which
are in its possession. For purposes of this Agreement, "Confidential
Information" means any information of the disclosing Party that is furnished to
another Party by the disclosing Party in connection with this Agreement:
provided, however, that it shall not include any information (i) which, at the
time of disclosure, is available publicly, (ii) which, after disclosure, becomes
available publicly through no fault of the receiving Party, (iii) which the
receiving Party demonstrates it knew or to which the receiving Party had legal
access prior to disclosure, or (iv) which is required by law to be disclosed.
4.6 Notice of Breaches. The Company shall promptly deliver to the Parent
written notice of any event or development that would (a) render any statement,
representation or warranty of the Company in this Agreement (including the
Company Disclosure Schedule) inaccurate or incomplete in any material respect,
or (b) constitute or result in a breach by the Company of, or a failure by the
Company to comply with, any agreement or covenant in this Agreement applicable
to such Party. The Parent or the Acquisition Subsidiary shall promptly deliver
to the Company written notice of any event or development that would (i) render
any statement, representation or warranty of the Parent or the Acquisition
Subsidiary in this
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Agreement inaccurate or incomplete in any material respect,
or (ii) constitute or result in a breach by the Parent or the Acquisition
Subsidiary of, or a failure by the Parent or the Acquisition Subsidiary to
comply with, any agreement or covenant in this Agreement applicable to such
Party. No such disclosure shall be deemed to avoid or cure any such
misrepresentation or breach.
4.7 Exclusivity.
(a) The Company shall not, and the Company shall use
reasonable best efforts to cause each of its officers, directors, employees,
representatives and agents not to, directly or indirectly, (i) encourage,
solicit, initiate, engage or participate in negotiations with any person or
entity (other than the Parent) concerning any merger, consolidation, sale of
material assets, tender offer, recapitalization, material accumulation of
Company Shares, proxy solicitation or other business combination involving the
Company, or any division of the Company (an "Acquisition Transaction") or (ii)
or take any other action intended or designed to facilitate the efforts of any
person or entity (other than Parent) relating to a possible Acquisition
Transaction.
(b) Notwithstanding anything herein to the contrary, in the
event that there is an unsolicited proposal for or an unsolicited indication of
a serious interest in entering into, an Acquisition Transaction from a bona fide
financially capable third party that contains no financing contingency, the
Company, at its discretion, shall be permitted to furnish to and communicate
with any such party all publicly available information requested by such party.
In the event that such party requests information in addition to that which is
publicly available, the Company may furnish to and communicate with such third
party non-public information and otherwise negotiate with such party, only if
(i) two (2) business days prior written notice shall have been given to the
Parent and (ii)(A) the Company's Board of Directors shall have been advised in
writing by its investment banker that it believes such third party is
financially capable, without any financing contingency, of consummating an
Acquisition Transaction, (B) the Company's Board of Directors shall have been
advised, by the written opinion of outside counsel to the Company, that any
failure to provide such non-public information to such party would constitute a
breach of the fiduciary responsibilities of the Board of Directors to the
Company Stockholders and (C) the Company's Board of Directors, after weighing
such advice, determines that failing to furnish such information would
constitute a breach of the Board's fiduciary duties. Notwithstanding anything
herein to the contrary, nothing shall prohibit the Board of Directors of the
Company from responding to a tender offer or complying with its obligations
under Sections 14d-9 or 14e-2 of the Exchange Act.
4.8 Listing of Merger Shares. On or before the Effective Time, the Parent
shall list the Merger Shares on the Nasdaq National Market.
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4.9 Indemnification.
(a) The Parent and the Acquisition Subsidiary agree that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time of the Merger now existing in favor of the current directors and officers
of the Company as provided in the Charter or Bylaws of the Company or in any
indemnification agreements shall survive the Merger and shall continue in full
force and effect in accordance with their terms.
(b) For a period of six (6) years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (or policies of at least the same coverage and amounts containing terms
and conditions which are no less advantageous) with respect to claims arising
from facts or events which occurred before the Effective Time; provided,
however, that the Surviving Corporation shall not be obligated to make annual
premium payments for such insurance to the extent that such premiums exceed an
amount equal to 200% of the annual premiums paid as of the date hereof by the
Company for such insurance and if such premiums exceed such amount the Surviving
Corporation shall purchase insurance policies in amounts and with coverage as
reasonably can be purchased for such amount.
(c) Parent agrees to be jointly and severally liable with
the Company and the Surviving Corporation for their indemnification obligations
to the Company's current directors and officers, in all capacities in which such
directors or officers served the Company prior to the Effective Time, as set
forth in the Company's Charter and Bylaws or in any indemnification agreements
by and between the Company and such current directors and officers and to the
extent such indemnification by the Company is permitted under DGCL.
(d) Parent further agrees to be jointly and severally liable
with the Surviving Corporation for any indemnification obligation it may have to
directors (in any capacity) of the Company who continue to serve as directors of
the Surviving Corporation after the Effective Time pursuant to any
indemnification agreements entered into by the Company with such directors, with
respect to acts or events (in any capacity) while serving as a director of the
Surviving Corporation on or after the Effective Time to the extent such
indemnification by the Surviving Corporation is permitted under DGCL.
(e) In the event the Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the Parent
assume the obligations set forth in this Section 4.9.
(f) The provisions of this Section 4.9 are intended to be
for the benefit of, and shall be enforceable by, each indemnified party and his
or her heirs and representatives.
4.10 Filing of Annual Reports. As soon as practicable following the
execution of this Agreement, Parent shall use its reasonable best efforts to
file its Annual Report on Form 20-F for
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the fiscal year ended December 31, 1996 with the SEC and the Company shall use
its reasonable best efforts to file its Annual Report on Form 10-KSB for the
fiscal year ended January 31, 1997 with the SEC.
4.11 Hart-Scott-Rodino To each party's knowledge, based upon the published
financial statements of each party and the representations set forth herein, no
filing pursuant to the HSR Act is required to be made with respect to the Merger
and the other transactions contemplated hereby. In the event that such filing
may be required at a later date as a result of either or both parties'
publication of further financial information, such additional governmental
approval requirement and the approvals required for the consummation of the
transactions contemplated hereby shall not constitute a breach of any covenants
or representations and warranties under this Agreement, and each party shall use
all commercially reasonable efforts to file as promptly as practicable such
Notification and Report Forms under the HSR Act with the Federal Trade
Commission and the Antitrust Division of the Department of Justice, and use all
commercially reasonable efforts to respond as promptly as practicable to all
inquiries received from such governmental agencies for additional information or
documentation in order to obtain as soon as practicable all necessary
governmental approvals, if any, for the transactions contemplated hereby under
the HSR Act. In the event that a filing is required under the HSR Act, the
outside Closing Date shall be extended for a period of 45 days.
4.12 Employee Welfare. Parent agrees to honor, and to cause the Surviving
Corporation to honor, in accordance with their terms, all arrangements described
in Schedule 4.12 of the Company Disclosure Schedule. The provisions of this
Section 4.12 are intended to be for the benefit of, and enforceable by, each of
the persons set forth in Schedule 4.12 of the Company Disclosure Schedule and
their heirs and representatives.
4.13 Tax Returns: Good Standing. As soon as practicable following the
execution of this Agreement, and in any event prior to the Closing Date, the
Company shall (i) file its 1995 Federal tax return, (ii) file tax returns in
Massachusetts covering the past three years, and (iii) take any and all action
necessary to bring itself into good standing in the State of Delaware.
4.14 Loan to Company. The Parent shall cause its subsidiary to make funds
available to the Company in accordance with that certain Loan Agreement by and
between the Company and Lernout & Hauspie Speech Products USA, Inc., a
wholly-owned subsidiary of the Parent ("L&H USA"), dated the date hereof (the
"Loan Agreement"). The Company shall, and the Parent shall cause L&H USA to,
comply in all material respects with their respective agreements, obligations
and covenants under the Loan Agreement.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction of or waiver
by each of the Parties of the following conditions:
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(a) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(b) the Registration Statement shall have become effective
in accordance with the provisions of the Securities Act and applicable state
securities laws, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC or any state and remain
in effect; and
(c) the Merger Shares shall have been authorized for listing
on the Nasdaq National Market.
5.2 Conditions to Obligations of the Parent and the Acquisition Subsidiary.
The obligation of each of the Parent and Acquisition Subsidiary to consummate
the Merger is subject to the satisfaction of or waiver by the Parent and the
Acquisition Subsidiary of the following additional conditions:
(a) the Company shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all
registrations, filings and notices the failure of which to obtain would result
in a Company Material Adverse Effect;
(b) the representations and warranties of the Company set
forth in Article II shall be true and correct in all material respects when made
on the date hereof and shall be true and correct in all material respects as of
the Effective Time as if made as of the Effective Time, except for
representations and warranties made as of a specific date, which shall be true
and correct in all material respects as of such date and except if such
inaccuracies individually or in the aggregate do not cause a Company Material
Adverse Effect;
(c) the Company shall have performed or complied in all
material respects with its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Effective Time;
(d) the Company shall have delivered to the Parent and the
Acquisition Subsidiary a certificate of its Chairman, President or Chief
Financial Officer to the effect that each of the conditions specified in clause
(a) of Section 5.1 and clauses (a) through (c) of this Section 5.2 is satisfied;
(e) the Parent and the Acquisition Subsidiary shall have
received from Mintz Levin Cohn Ferris Glovsky and Popeo, P.C., counsel to the
Company, an opinion with respect to the matters set forth in Exhibit D attached
hereto, addressed to the Parent and the Acquisition Subsidiary and dated as of
the Closing Date;
(f) no action, suit or proceeding shall be pending or
threatened before any governmental entity or authority which is reasonably
likely to (i) prevent consummation of any
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of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect materially and adversely the right of the Parent to
own, operate or control any of the assets and operations of the Surviving
Corporation following the Merger, and no such judgment, order, decree,
stipulation or injunction shall be in effect; provided, however, that the Parent
shall contest or cooperate with the Company in contesting, as applicable, the
action, suit or proceeding and if any injunction or order has been so issued
will use reasonable efforts to have it dismissed;
(g) the number of shares of Company Stock held by Dissenting
Stockholders shall not exceed 7% of the issued and outstanding Company Shares;
(h) all vested or exercisable Options and Warrants that have
an exercise price per share greater than the Per Share Dollar Value shall have
been amended, to the extent necessary, such that they may be terminated in
accordance with Section 1.9(a) hereof; and
(i) from the date of this Agreement to the Effective Time,
there shall not have been any event or development which results in a Company
Material Adverse Effect, nor shall there nave occurred any event or development
which is reasonably likely to result in a Company Material Adverse Effect.
5.3 Conditions to Obligations of the Company. The obligation of the Company
to consummate the Merger is subject to the satisfaction of or waiver by the
Company of the following additional conditions:
(a) the representations and warranties of the Parent and the
Acquisition Subsidiary set forth in Article III (other than Section 3.6(a))
shall be true and correct in all material respects when made on the date hereof
and shall be true and correct in all material respects as of the Effective Time
as if made as of the Effective Time, except for representations and warranties
made as of a specific date, which shall be true and correct in all material
respects as of such date;
(b) each of the Parent and the Acquisition Subsidiary shall
have performed or complied with in all material respects its agreements and
covenants required to be performed or complied with under this Agreement as of
or prior to the Effective Time;
(c) each of the Parent and the Acquisition Subsidiary shall
have delivered to the Company a certificate of its Chairman and Chief Financial
Officer to the effect that each of the conditions specified in clauses (b) and
(c) of Section 5.1 and clauses (a), (b) and (d) of this Section 5.3 is satisfied
in all respects;
(d) the Parent and the Acquisition Subsidiary shall have
obtained all waivers, permits, consents, approvals or other authorizations and
effected all registrations, filings and notices, the failure of which to obtain
would result in a Parent Material Adverse Effect;
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(e) no writ, order, decree or injunction of a court of
competent jurisdiction or governmental entity shall have been entered against
the Parent, the Acquisition Subsidiary or the Company which prohibits the
consummation of the Merger; provided, however, that the Company shall have
contested or cooperated with Parent or the Acquisition Subsidiary, as
applicable, in contesting, the action suit or proceeding giving rise to such
writ, order, decree or injunction and shall have used reasonable efforts to have
the same dismissed;
(f) if any court of competent jurisdiction in the United
States or other governmental body in the United States shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger which has not been dismissed or vacated;
provided, however, that the Company shall have contested or cooperated with the
Parent or the Acquisition Subsidiary in contesting, as applicable, the action,
suit or preceding pursuant to which such order was issued and shall have used
reasonable efforts to have such order dismissed;
(g) the Company shall have received from Brown, Rudnick,
Freed & Gesmer, United States counsel to the Parent and the Acquisition
Subsidiary an opinion with respect to the matters set forth in Exhibit E
attached hereto, addressed to the Company and dated as of the Closing Date; and
(h) the Company shall have received from Loeff Claeys
Verbeke, Belgian counsel to the Parent an opinion with respect to the matters
set forth in Exhibit F attached hereto, addressed to the Company and dated as of
the Closing Date.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1 Termination. In connection with the structure of the transactions
as described in this Agreement, the parties have agreed that this Agreement
shall not be terminated, nor the Merger abandoned, except in accordance with the
provisions of this Article VI, all strictly construed against the Party seeking
such termination. This Agreement may be terminated and the Merger may be
abandoned any time prior to the Effective Time, whether before or after approval
by the Company Stockholders:
(i) by mutual written consent of the Boards of Directors of
the Parent and the Company;
(ii) by either the Parent or the Company, if, without fault of
such terminating party, the Merger shall not have been consummated on or before
August 15, 1997;
(iii) by either the Parent or the Company, if any court of
competent jurisdiction in the United States or other governmental body in the
United States shall have issued an order (other than a temporary restraining
order), decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger, and such order, decree ruling or other action
shall
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have become final and nonappealable provided that the party seeking termination
shall have diligently contested such ruling;
(iv) by either the Parent or the Company, if this Agreement
and the Merger fail to receive the Requisite Stockholder Approval; or
(v) by either Parent or the Company if (i) the Board of
Directors of the Company shall withdraw, modify or change its recommendation so
that it is not in favor of this Agreement or the Merger or shall have resolved
to do any of the foregoing or (ii) the Board of Directors of the Company shall
have recommended or resolved to recommend to its stockholders an Acquisition
Transaction other than the Merger.
6.2 Termination by the Parent. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of the Parent, at
any time prior to the Effective Time, before or after the approval by the
Company Stockholders, if:
(i) the Company shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement such
that the Closing condition set forth in Section 5.2(c) would not be satisfied ;
provided, however, that if such failure or failures are capable of being cured
prior to the Effective Time, such failure, or failures shall not have been cured
within fifteen (15) days of delivery to the Company of written notice of such
failure or failures.
(ii) there exists a breach or breaches of any representation
or warranty of the Company contained in this Agreement in any material respect
such that the Closing condition set forth in Section 5.2(b) would not be
satisfied; provided, however, that if such failure, breach or breaches are
capable of being cured prior to the Effective Time, such failure, breach or
breaches shall not have been cured within fifteen (15) days (except that with
respect to Section 4.14 the period shall be seven (7) days) of delivery to the
Company of written notice of such failure, breach or breaches; or
(iii) the Company shall furnish or disclose non-public
information to a third party with respect to any Acquisition Transaction, or
shall have resolved to do the foregoing and publicly disclose such resolution.
6.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the Company Stockholders, by action of the Board of Directors of
the Company, if:
(i) the Parent or the Acquisition Subsidiary shall have failed
to comply in any material respect with any of the covenants or agreements
contained in this Agreement such that the closing condition set forth in Section
5.3(b) would not be satisfied ; provided, however, that if such failure or
failures are capable of being cured prior to the Effective Time, such failure,
or
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failures shall not have been cured within fifteen (15) days of delivery to
the Parent of written notice of such failure or failures; or
(ii) there exists a breach or breaches of any representation
or warranty of the Parent or the Acquisition Subsidiary contained in this
Agreement in any material respect such that the Closing condition set forth in
Section 5.3(a) would not be satisfied; provided, however that if such failure,
breach or breaches are capable of being cured prior to the Effective Time, such
failure, breach or breaches shall not be cured within fifteen (15) days (except
that with respect to Section 4.14 the period shall be seven (7) days) of
delivery to the Parent of written notice of such failure, breach or breaches.
6.4 Procedure for Termination. In the event of termination and abandonment
of the Merger by the Parent or the Company pursuant to this Article VI, written
notice thereof shall forthwith be given to the other.
6.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and
abandonment of the Merger pursuant to this Article VI, no Party hereto (or any
of its directors or officers) shall have any liability or further obligation to
any other Party to this Agreement, except as provided in Section 4.5 (regarding
confidentiality) and this Section 6.5 and except that nothing herein shall
relieve any Party from liability for any breach of this Agreement.
(b) In the event of: a termination of this Agreement pursuant
to Sections 6.1(iv) or (v), or any termination of this Agreement by the Parent
pursuant to Section 6.2, then the Company shall , within five (5) business days
thereafter, pay the Parent by wire transfer of immediately available funds to an
account specified by the Parent up to $1.5 million for all documented out of
pocket reasonable fees and expenses incurred by the Parent (including the
reasonable fees and expenses of counsel, accountants, consultants and advisors)
in connection with this Agreement and the transactions contemplated hereby
(subject to such $1.5 million limit, "Parent Documented Expenses").
(c) In the event of a termination of this Agreement pursuant
to Section 6.1(v) , the Company shall, within five (5) business days thereafter,
pay the Parent by wire transfer of immediately available funds to an account
specified by the Parent a fee of $2.2 million (the "Termination Fee"), less any
Parent Documented Expenses paid to Parent.
(d) To the extent that the Termination Fee has not already
become payable and been paid, and, if prior to any termination pursuant to
Sections 6.1 (iii) (if and only if the action arose out of or relates to a
competing Business Combination Transaction) or (iv), or Sections 6.2(i) or (iii)
any person shall have made or discussed with the Company a proposal concerning a
Business Combination Transaction and prior to or within twelve (12) months after
the termination of this Agreement the Company or any of its Subsidiaries, or any
Company Affiliate enters into a definitive agreement with a third party with
respect to a Business Combination Transaction or a Business Combination
Transaction is effected, then the Company,
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prior to entering into any such definitive agreement or any such Business
Combination Transaction being effected, shall, within five (5) business days
thereafter, pay the Parent by wire transfer of immediately available funds to an
account specified by the Parent the Termination Fee, less any Parent Documented
Expenses paid to Parent.
(e) As used in this Section 6.5, the term "Business
Combination Transaction" shall mean any of the following involving the Company
or any subsidiary of the Company, that is material to the business, results of
operation, prospects or financial condition of the Company : (1) any merger,
consolidation, share exchange, business combination or other similar transaction
(other than the Merger) in which the shareholders of the Company would own less
than 75% of the surviving entity following the consummation thereof; (2) any
sale, lease, exchange, transfer or other disposition of 50% or more of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions; or (3) the acquisition by a person or
entity, or any "group" (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of beneficial ownership
of 25% or more of the Company Shares, whether by tender offer, exchange offer or
otherwise.
(f) In the event of a termination of this Agreement by the
Company, pursuant to Section 6.3 (i) or (ii) then the Parent shall promptly pay
the Company by wire transfer of immediately available funds to an account
specified by the Company up to $1.5 million for all documented fees and expenses
incurred by the Company (including the reasonable fees and expenses of counsel,
accountants, consultants and advisors) in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense provided that the Parent and the Company shall
share equally all fees and expenses in connection with the filing of the
Registration Statement and the printing and mailing of the Prospectus/Proxy
Statement. The Parent acknowledges and agrees that the Company has disclosed
that it is obligated and will become further obligated for fees and expenses
(including fees and expenses of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. and Roger M. Barzun, Esquire, its counsel, Arthur Anderson & Co., LLP, its
independent accountants, and Montgomery Securities, its financial advisor)
incurred by it in connection with the Merger and the transactions contemplated
hereby. It is understood and agreed that certain of such fees and expenses may
be paid by the Company prior to the execution of this Agreement, and the Parent
agrees to refrain from taking any action which would prevent or delay the
payment of reasonable fees and expenses by the Company. Further, the Parent
agrees to take, and cause the Acquisition Subsidiary to take, all action
necessary to cause the Surviving Corporation to pay promptly any of the
foregoing reasonable fees and expenses incurred, but not paid, by the Company
prior to the Effective Time.
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7.2 Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
facsimile transmission, receipt telephonically confirmed) addressed as provided
below and if either (a) actually delivered electronically or physically at said
address, or (b) in the case of a letter, three (3) business days shall have
elapsed after the same shall have been sent by nationally recognized overnight
courier:
If to the Company to:
Kurzweil Applied Intelligence, Inc.
441 Waverly Oaks Road
Waltham, MA 02154
Attn: Chief Executive Officer
Tel: 617-893-5151
Fax: 617-893-6525
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Peter F. Demuth, Esq.
Tel: 617-542-6000
Fax: 617 542-2241
If to the Parent or the Acquisition Subsidiary, to:
Lernout & Hauspie Speech Products N.V.
Sint-Krispijnstraat 7
8900 Ieper, Belgium
Attn: President
Tel: 011 32 57 219500
Fax: 011 32 57 208489
and
Lernout & Hauspie Speech Products USA, Inc.
20 Burlington Mall Road
Burlington, MA 01803
Attn: President
Tel: 617-238-0960
Fax: 617-238-0986
with a copy to:
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Lernout & Hauspie Speech Products N.V.
Sint-Krispijnstraat 7
8900 Ieper, Belgium
Attn: Legal Department
Tel: 011 32 57 219500
Fax: 011 32 57 208489
Brown, Rudnick, Freed & Gesmer, P.C.
One Financial Center
Boston, MA 02111
Attn: Lawrence M. Levy, Esquire
Tel: 617-856-8200
Fax: 617-856-8201
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
7.3 Publicity and Disclosure. No Party shall issue or approve any press
releases or any public disclosure or announcement, either written or oral, of
the transactions contemplated by this Agreement without the prior knowledge and
written consent of the other parties; provided, however, that any Party may make
any public disclosure it believes in good faith is required by law or regulation
(in which case the disclosing Party shall advise the other Parties and provide
them with a copy of the proposed disclosure prior to making the disclosure).
7.4 Entire Agreement. This Agreement (including all exhibits or schedules
appended to this Agreement and all documents delivered pursuant to or referred
to in this Agreement, all of which are hereby incorporated herein by reference)
constitutes the entire agreement between the parties, and all promises,
representations, understandings, warranties and agreements with reference to the
subject matter hereof and inducements to the making of this Agreement relied
upon by any party hereto, have been expressed herein or in the documents
incorporated herein by reference.
7.5 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision hereof.
7.6 Assignability. This Agreement may not be assigned otherwise than by
operation of law (a) by the Parent or the Acquisition Subsidiary without the
prior written consent of the Company or (b) by the Company without the prior
written consent of the Parent. However, any or all rights of the Parent to
receive performance (but not the obligations of the Parent to Company hereunder)
of the Company hereunder, may be assigned by the Parent to any direct or
indirect subsidiary, parent or other affiliate of the Parent. This Agreement
shall inure to the benefit of and be binding upon the Parties hereto and their
respective successors and permitted assigns.
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7.7 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Effective Time with the prior
authorization of their respective Boards of Directors; provided, however, that
any amendment effected subsequent to the Requisite Stockholder Approval shall be
subject to the restrictions contained in the DGCL. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by all of the Parties. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
7.8 Governing Law; Venue
(a) Except as otherwise required under Belgian law, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware (other than the choice of law principles thereof), except that
any representations and warranties with respect to real and tangible property
shall be governed by and construed in accordance with the laws of the
jurisdiction where such property is situated if other than in the State of
Delaware.
(b) Any claim, action, suit or other proceeding initiated by
any Party, under or in connection with this Agreement may be asserted, brought,
prosecuted and maintained in any Federal or state court in the State of
Delaware, as the Party bringing such action, suit or proceeding shall elect,
having jurisdiction over the subject matter thereof, and the Parties hereby
waive any and all rights to object to the laying of venue in any such court and
to any right to claim that any such court may be an inconvenient forum. Each of
the Parties hereby submit themselves to the jurisdiction of each such court and
agree that service of process on them in any such action, suit or proceeding may
be effected by the means by which notices are to be given to it under this
Agreement.
7.9 Remedies. The Parties hereto acknowledge that the remedy at law for any
breach of the obligations undertaken by the Parties hereto is and will be
insufficient and inadequate and that the Parties hereto shall be entitled to
equitable relief, in addition to remedies at law. In the event of any action to
enforce the provisions of this Agreement, each of the Parties shall waive the
defense that there is an adequate remedy at law. Without limiting any remedies
the Parties may otherwise have hereunder or under applicable law, in the event
any Party refuses to perform its obligations under this Agreement, the other
Parties shall have, in addition to any other rights at law or equity, the right
to specific performance.
7.10 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
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7.11 Effect of Table of Contents and Headings. Any table of contents, title
of an article or section heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
7.12 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns; provided, however, that the provisions in
Article I concerning issuance of the Merger Shares are intended for the benefit
of the Company Stockholders and Sections 4.9 and 4.12 are intended for the
benefit of the individuals specified therein and their respective legal
representatives.
7.13 Knowledge. "To the knowledge," "to the best knowledge, information and
belief," or any similar phrase shall be deemed to refer to the knowledge of the
directors and executive officers of a party and to include the assurance that
such knowledge is based upon a reasonable investigation by such persons, unless
otherwise expressly provided.
7.14 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time.
7.15 Integration of Exhibits. All Exhibits and Schedules attached to this
Agreement are integral parts of this Agreement as if fully set forth herein, and
all statements appearing therein shall be deemed disclosed for all purposes and
not only in connection with the specific representation in which they are
explicitly referenced.
ARTICLE VIII
DEFINITIONS
The following capitalized terms used herein shall have the meanings
ascribed in the indicated sections.
ACO..................................................................................... 1.5(b)
ACO Principal Amount.................................................................... 1.5(b)
Acquisition Subsidiary.................................................................. First Paragraph
Acquisition Transaction................................................................. 4.7(a)
Affiliate Agreement..................................................................... 2.33(a)
Average Market Value.................................................................... 1.5(a)
Base Balance Sheet...................................................................... 2.7(b)
Benefit Plan............................................................................ 2.16(a)(iii)
Business Combination Transaction........................................................ 6.5(b)
Certificate of Merger................................................................... 1.1
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Certificates............................................................................ 1.7(a)
Charter................................................................................. 2.1
Closing................................................................................. 1.2
Closing Date............................................................................ 1.2
Code.................................................................................... 1.9(a)
Company................................................................................. First Paragraph
Company Affiliates...................................................................... 2.32(d)
Company Disclosure Schedule............................................................. First Paragraph of
Article II
Company Material Adverse Effect......................................................... 2.1
Company Reports......................................................................... 2.7(a)
Company Shares.......................................................................... 1.5(a)
Company Stockholders.................................................................... 1.5(a)
Confidential Information................................................................ 4.5
Conversion Ratio........................................................................ 1.5(a)
DGCL.................................................................................... 1.1
Effective Time.......................................................................... 1.1
ERISA................................................................................... 2.16(a)(i)
ERISA Affiliate......................................................................... 2.16(a)
ERISA Benefit Plan...................................................................... 2.16(a)(iii)
Escrow Agent............................................................................ 1.7(a)
Escrow Agreement........................................................................ 1.7(a)
Escrow Amount........................................................................... 1.7(a)
Exchange Act............................................................................ 2.6
Exchange Agent.......................................................................... 1.3
Financial Statements.................................................................... 2.7(a)
GAAP.................................................................................... 2.7(a)
HSR Act................................................................................. 2.33
Indemnification Representative.......................................................... 1.7(a)
Intellectual Property Rights............................................................ 2.13(a)
Merger.................................................................................. 1.1
Merger Consideration.................................................................... 1.5(b)
Merger Shares........................................................................... 1.5(a)
Options................................................................................. 1.9(a)
Option Conversion Ratio 1.9(b)
O&W Agreements.......................................................................... 1.7(a)
O&W Company Shares...................................................................... 1.9(a)
Parent.................................................................................. First Paragraph
Parent Base Balance Sheet............................................................... 3.5(b)
Parent Common Stock..................................................................... 1.5(a)
Parent Documented Expenses.............................................................. 6.5(b)
Parent Financial Statements............................................................. 3.5(a)
Parent Material Adverse Effect.......................................................... 3.4
Parent Reports.......................................................................... 3.5(a)
Parties................................................................................. First Paragraph
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PBGC.................................................................................... 2.16(g)(ii)
Prospectus/Proxy Statement.............................................................. 4.3(a)
Registration Statement.................................................................. 4.3(c)
Requisite Stockholder Approval.......................................................... 2.4
SEC..................................................................................... 2.7(a)
Securities Act.......................................................................... 1.9(c)
Site.................................................................................... 2.17(a)
Special Meeting......................................................................... 4.3(a)
Subsidiary.............................................................................. 2.3
Surviving Corporation................................................................... 1.1
Tax Returns............................................................................. 2.10
Taxes................................................................................... 2.10
Termination Fee......................................................................... 6.5(b)
Warrants................................................................................ 1.9(a)
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as an instrument under seal in multiple counterparts as of the date set
forth above by their duly authorized representatives.
0
LERNOUT & HAUSPIE SPEECH PRODUCTS, N.V.
BY: /s/ P. Haiispic
----------------------------------
Name: Pol haiispic
Title: Managing Director
TRAPPIST ACQUISITION CORP.
BY: /s/ A. Baction
-----------------------------------
Name: A. Baction
Title: President
KURZWEIL APPLIED INTELLIGENCE, INC.
BY: /s/ Thomas E. Brew Jr.
-----------------------------------
Name: Thomas E. Brew, Jr.
Title: President CEO
AGREEMENT AND PLAN OF MERGER
List of Schedules and Exhibits
Schedule 2.1- Organization and Qualification of the Company
Schedule 2.2(a) Capitalization
Schedule 2.2(b) - Capitalization
Schedule 2.2(c) - Capitalization
Schedule 2.5 - Present Compliance with Obligations and Laws
Schedule 2.6(a)- No Conflict of Transaction with Obligations and Laws
Schedule 2.6(b) - No Conflict of Transaction with Obligations and Laws
Schedule 2.8- Absence of Undisclosed Liabilities
Schedule 2.9- Absence of Certain Changes
Schedule 2.10- Payment of Taxes
Schedule 2.11 - Title to Properties; Liens; Condition of Properties
Schedule 2.12- Liabilities
Schedule 2.13(a) - Intellectual Property Rights
Schedule 2.13(b) - Intellectual Property Rights
Schedule 2.13(c) - Intellectual Property Rights
Schedule 2.13(d) - Intellectual Property Rights
Schedule 2.13(e) - Intellectual Property Rights
Schedule 2.13(f) - Intellectual Property Rights
Schedule 2.13(g) - Intellectual Property Rights
Schedule 2.14(a) - Contracts and Commitments
Schedule 2.14(b) - Contracts and Commitments
Schedule 2.15- Labor and Employee Relations
Schedule 2.15(a) - Labor and Employee Relations
Schedule 2.15(c) - Labor and Employee Relations
Schedule 2.15(d) - Labor and Employee Relations
Schedule 2.15(g) - Labor and Employee Relations
Schedule 2.16(a) - Employee Benefits and ERISA
Schedule 2.16(b) - Employee Benefits and ERISA
Schedule 2.16(c) - Employee Benefits and ERISA
Schedule 2.18 - Permits
Schedule 2.19 - Warranty or Other Claims
Schedule 2.20 - Claims and Legal Proceedings
Schedule 2.21 - Borrowings and Guarantees
Schedule 2.22 - Financial Service Relations and Powers of Attorney
Schedule 2.23 - Insurance
Schedule 2.27 - Transactions with Interested Persons
Schedule 2.32 - Company Affiliates
Schedule 3.4 - No Conflict of Transaction With Obligations and Laws
Schedule 4.12 - Employee Welfare
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Exhibit A - Certificate of Merger
Exhibit B - Option Agreement
Exhibit C - Affiliate Agreement
Exhibit D - Opinion of Counsel to the Company
Exhibit E - Opinion of US Counsel to the Parent and the
Acquisition Subsidiary
Exhibit F - Opinion of Belgian Counsel to the Parent
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