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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
MOLECULAR DEVICES CORPORATION
a Delaware corporation;
MERCURY ACQUISITION SUB, INC.,
a Delaware corporation; and
LJL BIOSYSTEMS, INC.,
a Delaware corporation
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Dated as of June 7, 2000
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SECTION 1. DESCRIPTION OF TRANSACTION ...................................................1
1.1 Merger of Merger Sub into the Company.........................................1
1.2 Effect of the Merger..........................................................1
1.3 Closing; Effective Time.......................................................1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers...............2
1.5 Conversion of Shares..........................................................2
1.6 Closing of the Company's Transfer Books.......................................3
1.7 Exchange of Certificates......................................................3
1.8 Reserved......................................................................4
1.9 Dissenting Shares.............................................................5
1.10 Reserved......................................................................5
1.11 Tax Consequences..............................................................5
1.12 Accounting Consequences.......................................................5
1.13 Further Action................................................................5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................................5
2.1 Due Organization; Subsidiaries; Etc...........................................5
2.2 Certificate of Incorporation and Bylaws.......................................6
2.3 Capitalization, Etc...........................................................6
2.4 SEC Filings; Financial Statements.............................................7
2.5 Absence of Changes............................................................8
2.6 Title to Assets..............................................................10
2.7 Receivables; Customers.......................................................10
2.8 Real Property; Leasehold.....................................................11
2.9 Intellectual Property........................................................11
2.10 Contracts....................................................................12
2.11 Sale of Products; Performance of Services....................................15
2.12 Liabilities..................................................................15
2.13 Compliance with Legal Requirements...........................................16
2.14 Certain Business Practices...................................................16
2.15 Governmental Authorizations..................................................16
2.16 Tax Matters..................................................................16
2.17 Employee and Labor Matters; Benefit Plans....................................17
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2.18 Environmental Matters........................................................20
2.19 Insurance....................................................................20
2.20 Transactions with Affiliates.................................................20
2.21 Legal Proceedings; Orders....................................................21
2.22 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature of
Agreement....................................................................21
2.23 Section 203 of the DGCL Not Applicable.......................................21
2.24 Reserved.....................................................................22
2.25 Reserved.....................................................................22
2.26 Accounting Matters...........................................................22
2.27 Vote Required................................................................22
2.28 Non-Contravention; Consents..................................................22
2.29 Fairness Opinion.............................................................23
2.30 Financial Advisor............................................................23
2.31 Full Disclosure..............................................................23
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB .....................24
3.1 Organization, Standing and Power.............................................24
3.2 SEC Filings; Financial Statements............................................24
3.3 Full Disclosure..............................................................24
3.4 Authority; Binding Nature of Agreement.......................................25
3.5 Vote Required................................................................25
3.6 Non-Contravention; Consents..................................................25
3.7 Valid Issuance...............................................................26
3.8 Accounting Matters...........................................................26
3.9 Capitalization, Etc..........................................................26
3.10 Intellectual Property........................................................27
3.11 Employee and Labor Matters...................................................29
3.12 Legal Proceedings; Orders....................................................29
3.13 Fairness Opinion.............................................................29
3.14 Financial Advisor............................................................29
3.15 Absence of Changes...........................................................29
3.16 Liabilities..................................................................30
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3.17 Compliance with Legal Requirements...........................................30
SECTION 4. CERTAIN COVENANTS OF THE COMPANY ............................................30
4.1 Access and Investigation.....................................................30
4.2 Operation of the Company's Business..........................................31
4.3 No Solicitation..............................................................34
4.4 Operation of Parent's Business...............................................35
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES .........................................36
5.1 Registration Statement; Joint Prospectus/Proxy Statement.....................36
5.2 Company Stockholders' Meeting................................................37
5.3 Parent Stockholders' Meeting.................................................38
5.4 Regulatory Approvals.........................................................39
5.5 Stock Options and Warrants...................................................39
5.6 Employee Benefits............................................................41
5.7 Indemnification of Officers and Directors....................................41
5.8 Pooling of Interests.........................................................42
5.9 Additional Agreements........................................................42
5.10 Disclosure...................................................................43
5.11 Affiliate Agreements.........................................................43
5.12 Tax Matters..................................................................43
5.13 Letter of the Company's Independent Accountants..............................43
5.14 Listing......................................................................44
5.15 Resignation of Officers and Directors........................................44
5.16 Termination of 401(k) Plan...................................................44
5.17 Parent Board of Directors....................................................44
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB ................44
6.1 Accuracy of Representations..................................................44
6.2 Performance of Covenants.....................................................44
6.3 Effectiveness of Registration Statement......................................44
6.4 Stockholder Approval.........................................................44
6.5 Consents.....................................................................45
6.6 Agreements and Documents.....................................................45
6.7 HSR Act......................................................................46
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6.8 Reserved.....................................................................46
6.9 Reserved.....................................................................46
6.10 Listing......................................................................46
6.11 No Restraints................................................................46
6.12 No Governmental Litigation...................................................46
6.13 No Other Litigation..........................................................46
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY ...........................46
7.1 Accuracy of Representations..................................................47
7.2 Performance of Covenants.....................................................47
7.3 Effectiveness of Registration Statement......................................47
7.4 Stockholder Approval.........................................................47
7.5 Documents....................................................................47
7.6 HSR Act......................................................................47
7.7 Listing......................................................................47
7.8 No Restraints................................................................47
7.9 No Governmental Litigation...................................................47
7.10 No Other Litigation..........................................................48
7.11 Parent Board of Directors....................................................48
SECTION 8. TERMINATION .................................................................48
8.1 Termination..................................................................48
8.2 Effect of Termination........................................................49
8.3 Expenses; Termination Fees...................................................49
SECTION 9. MISCELLANEOUS PROVISIONS ....................................................51
9.1 Amendment....................................................................51
9.2 Waiver.......................................................................51
9.3 No Survival of Representations and Warranties................................51
9.4 Entire Agreement; Counterparts...............................................51
9.5 Applicable Law; Jurisdiction.................................................52
9.6 Disclosure Schedule..........................................................52
9.7 Attorneys' Fees..............................................................52
9.8 Assignability................................................................52
9.9 Notices......................................................................52
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9.10 Cooperation..................................................................53
9.11 Construction ................................................................53
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("AGREEMENT") is
made and entered into as of June 7, 2000, by and among: MOLECULAR DEVICES
CORPORATION, a Delaware corporation ("PARENT"); MERCURY ACQUISITION SUB, INC., a
Delaware corporation and a wholly owned subsidiary of Parent ("MERGER SUB"); and
LJL BIOSYSTEMS, INC., a Delaware corporation (the "COMPANY"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Delaware
General Corporation Law (the "MERGER"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE"). For financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests."
C. The respective boards of directors of Parent, Merger Sub and the
Company have approved this Agreement and approved the Merger.
D. In order to induce Parent to enter into this Agreement and to
consummate the Merger, certain stockholders of the Company are entering into
Voting Agreements pursuant to which they are agreeing to vote in favor of the
adoption and approval of this Agreement and the approval of the Merger. In order
to induce the Company to enter into this Agreement and to consummate the Merger,
certain stockholders of Parent are entering into Voting Agreements pursuant to
which they are agreeing to vote in favor of the issuance of Parent Common Stock
in connection with the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Merger Sub shall be merged with and into the Company,
and the separate existence of Merger Sub shall cease. The Company will continue
as the surviving corporation in the Merger (the "SURVIVING CORPORATION").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Cooley Godward LLP, located at Five Palo Alto Square, 3000 El Camino Real,
Palo Alto, California, at 10:00 a.m. on a date to be designated by Parent (the
"CLOSING DATE"), which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Sections 6 and 7.
Contemporaneously with or as promptly as practicable after the Closing, the
parties hereto shall cause a properly executed certificate of merger
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conforming to the requirements of the DGCL (the "CERTIFICATE OF MERGER") to be
filed with the Secretary of State of the State of Delaware. The Merger shall
take effect at the time the Certificate of Merger is filed with the Secretary of
State of the State of Delaware or at such later time as may be specified in the
Certificate of Merger (the "EFFECTIVE TIME").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving Corporation
shall be amended and restated as of the Effective Time to substantially
conform to the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to substantially conform to the Bylaws
of Merger Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals
who are directors and officers of Merger Sub immediately prior to the
Effective Time.
1.5 CONVERSION OF SHARES.
(a) Subject to the other subsections of this Section 1.5, at the
Effective Time, by virtue of the Merger and without any further action on the
part of Parent, Merger Sub, the Company or any stockholder of the Company:
(i) any shares of Company Common Stock then held by the
Company or any Subsidiary of the Company (or held in the Company's
treasury) shall be canceled and retired and shall cease to exist at the
Effective Time, and no consideration shall be delivered in exchange
therefor;
(ii) any shares of Company Common Stock then held by Parent,
Merger Sub or any other Subsidiary of Parent shall be canceled and
retired and shall cease to exist at the Effective Time, and no
consideration shall be delivered in exchange therefor;
(iii) each share of the common stock, $0.001 par value per
share, of Merger Sub then outstanding shall be converted into one share
of common stock of the Surviving Corporation; and
(iv) except as provided in clauses "(i)" and "(ii)" of this
sentence, each share of Company Common Stock then outstanding shall be
converted into the right to receive 0.30 of a share of Parent Common
Stock (the "EXCHANGE RATIO").
(b) If, between the date of this Agreement and the Effective
Time, the outstanding shares of Company Common Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction, then the Exchange Ratio shall be appropriately adjusted.
(c) If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition
2.
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under any applicable restricted stock purchase agreement or other agreement with
the Company or under which the Company has any rights, then the shares of Parent
Common Stock issued in exchange for such shares of Company Common Stock will
also be unvested and subject to the same repurchase option, risk of forfeiture
or other condition, and the certificates representing such shares of Parent
Common Stock may accordingly be marked with appropriate legends. The Surviving
Corporation shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(d) No fractional shares of Parent Common Stock shall be issued
in connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of Company Common Stock who would
otherwise be entitled to receive a fraction of a share of Parent Common Stock
(after aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, in lieu of such fraction of a share and, upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.6) be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing sales price of a share of
Parent Common Stock as reported on the Nasdaq National Market on the second day
preceding the Closing Date.
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time:
(a) all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as stockholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Common Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any shares of Company Common Stock (a
"COMPANY STOCK CERTIFICATE") is presented to the Exchange Agent (as defined in
Section 1.7) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) EquiServe, L.P. or such other reputable bank or trust
company selected by Parent prior to the Closing Date shall act as exchange agent
in the Merger (the "EXCHANGE AGENT"). As soon as practicable after the Effective
Time, Parent shall deposit with the Exchange Agent (i) certificates representing
the shares of Parent Common Stock issuable pursuant to this Section 1, and (ii)
cash sufficient to make payments in lieu of fractional shares in accordance with
Section 1.5(e). The shares of Parent Common Stock and cash amounts so deposited
with the Exchange Agent, together with any dividends or distributions received
by the Exchange Agent with respect to such shares, are referred to collectively
as the "EXCHANGE FUND."
(b) As soon as reasonably practicable after the Effective Time,
the Exchange Agent will mail to the record holders of Company Stock Certificates
(i) a letter of transmittal in customary form and containing such provisions as
Parent and the Company may reasonably specify (including a provision confirming
that delivery of Company Stock Certificates shall be effected, and risk of loss
and title to Company Stock Certificates shall pass, only upon delivery of such
Company Stock Certificates to the Exchange Agent), and (ii) instructions for use
in effecting the surrender of Company Stock Certificates in exchange for
certificates representing Parent Common Stock. Upon surrender of a Company Stock
Certificate to the Exchange Agent for exchange, together with a duly executed
letter of transmittal and such other documents as may be reasonably required by
the Exchange Agent or Parent, (1)
3.
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the holder of such Company Stock Certificate that does not perfect its
dissenters' rights, if any, shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of Parent Common Stock that
such holder has the right to receive pursuant to the provisions of Section 1.5
(and cash in lieu of any fractional share of Parent Common Stock), and (2) the
Company Stock Certificate so surrendered shall be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the Company Stock
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.7(b), each Company Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive shares of Parent Common Stock (and cash in lieu of any fractional share
of Parent Common Stock) as contemplated by Section 1. If any Company Stock
Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against the Exchange Agent, Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock which such holder has the right to
receive upon surrender thereof until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7 (at which time such holder shall
be entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends and distributions, without interest).
(d) Any portion of the Exchange Fund that remains undistributed
to holders of Company Stock Certificates as of the date 360 days after the date
on which the Merger becomes effective shall be delivered to Parent upon demand,
and any holders of Company Stock Certificates who have not theretofore
surrendered their Company Stock Certificates in accordance with this Section 1.7
shall thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock, cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state, local
or foreign tax law or under any other applicable Legal Requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable
to any holder or former holder of Company Common Stock or to any other Person
with respect to any shares of Parent Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar Legal
Requirement.
1.8 RESERVED.
4.
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1.9 DISSENTING SHARES. Notwithstanding anything to the contrary
contained in this Agreement, any shares of capital stock of the Company that, as
of the Effective Time, are or may become "dissenting shares" within the meaning
of Section 1300(b) of the California General Corporation Law, if applicable,
shall not be converted into or represent the right to receive Parent Common
Stock in accordance with Section 1.5 (or cash in lieu of fractional shares in
accordance with Section 1.5(d)), and the holder or holders of such shares shall
be entitled only to such rights as may be granted to such holder or holders in
the California General Corporation Law; provided, however, that if the status of
any such shares as "dissenting shares" shall not be perfected, or if any such
shares shall lose their status as "dissenting shares," then, as of the later of
the Effective Time or the time of the failure to perfect such status or the loss
of such status, such shares shall automatically be converted into and shall
represent only the right to receive (upon the surrender of the certificate or
certificates representing such shares) Parent Common Stock in accordance with
Section 1.5 (and cash in lieu of fractional shares in accordance with Section
1.5(d)).
1.10 RESERVED.
1.11 TAX CONSEQUENCES. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
1.12 ACCOUNTING CONSEQUENCES. For financial reporting purposes, the
Merger is intended to be accounted for as a "pooling of interests."
1.13 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to and for the benefit of Parent and
Merger as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the Entities
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the
Company nor any of the other Entities identified in Part 2.1(a)(i) of the
Company Disclosure Schedule owns any capital stock of, or any equity interest of
any nature in, any other Entity. (The Company and each of its Subsidiaries are
referred to collectively in this Agreement as the "ACQUIRED CORPORATIONS.") None
of the Acquired Corporations has agreed or is obligated to make, or is bound by
any Contract under which it may become obligated to make, any future investment
in or capital contribution to any other Entity. None of the Acquired
Corporations has, at any time, been a general partner of, or has otherwise been
liable for any of the debts or other obligations of, any general partnership,
limited partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
5.
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(c) Each of the Acquired Corporations is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
and where the failure to be so qualified would reasonably be expected to have a
Material Adverse Effect on such Acquired Corporation.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has
delivered to Parent accurate and complete copies of the certificate of
incorporation, bylaws and other charter and organizational documents of the
respective Acquired Corporations, including all amendments thereto.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of:
50,000,000 shares of Company Common Stock, of which 14,846,090 shares have been
issued and are outstanding as of June 6, 2000. The Company has not repurchased
any shares of its capital stock and does not hold any shares of its capital
stock in its treasury, except for the repurchase of Common Stock from employees
or consultants upon termination of their employment or consulting relationship
with the Company. All of the outstanding shares of Company Common Stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
As of the date of this Agreement, there are no shares of Company Common Stock
held by any of the other Acquired Corporations. Except as set forth in Part
2.3(a)(i) of the Company Disclosure Schedule: (i) none of the outstanding shares
of Company Common Stock is entitled or subject to any preemptive right, right of
first offer or any similar right created by the Company or imposed under
applicable law with respect to capital stock of the Company; (ii) none of the
outstanding shares of Company Common Stock is subject to any right of first
refusal in favor of the Company; and (iii) there is no Acquired Corporation
Contract relating to the voting or registration of, or restricting any Person
from purchasing, selling, pledging or otherwise disposing of (or granting any
option or similar right with respect to), any shares of Company Common Stock .
None of the Acquired Corporations is under any obligation, or is bound by any
Contract pursuant to which it may become obligated, to repurchase, redeem or
otherwise acquire any outstanding shares of Company Common Stock.
(b) As of June 6, 2000: (i) 2,190,456 shares of Company Common
Stock are subject to issuance pursuant to outstanding options to purchase shares
of Company Common Stock; (ii) 230,701 shares of Company Common Stock are
reserved for future issuance pursuant to the Company's Employee Stock Purchase
Plan (the "ESPP"); and (iii) 65,653 shares of Company Common Stock are reserved
for future issuance pursuant to the Company Warrants. Part 2.3(b) of the Company
Disclosure Schedule sets forth the following information with respect to each
Company Option outstanding as of the date of this Agreement: (i) the particular
plan (if any) pursuant to which such Company Option was granted; (ii) the name
of the optionee; (iii) the number of shares of Company Common Stock subject to
such Company Option; (iv) the exercise price of such Company Option; (v) the
date on which such Company Option was granted; and (vi) the applicable vesting
schedules (which applicable vesting schedule may be provided by means of a
general description of the vesting schedules applicable to outstanding Company
Options), and the extent to which such Company Option is vested and exercisable
as of the date of this Agreement. The Company has delivered to Parent accurate
and complete copies of all stock option plans pursuant to which the Company has
ever granted stock options, the forms of all stock option agreements evidencing
such options and the actual Change of Control Agreements with each employee of
the Acquired Corporations who is a party to a Change of Control Agreement with
the Acquired Corporations (the "Change of Control Agreements"). The Company has
delivered to Parent accurate and complete copies of the Company Warrants. The
exercise price of each Company Warrant and each Company Option is set forth in
Part 2.3(b) of the Company Disclosure Schedule.
(c) Except as set forth in Section 2.3(b), as of June 6, 2000,
there was no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire
6.
<PAGE> 13
any shares of the capital stock or other securities of the Company; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
the Company; (iii) stockholder rights plan (or similar plan commonly referred to
as a "poison pill") or Contract under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities; or (iv) to the Knowledge of the Company, condition or
circumstance that may give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock or other securities of the Company.
(d) All outstanding shares of Company Common Stock, all
outstanding Company Options, all outstanding Company Warrants and all
outstanding shares of capital stock of each Subsidiary of the Company have been
issued and granted in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all material requirements set
forth in applicable Contracts.
(e) All of the issued and outstanding shares of capital stock of
each Subsidiary identified in Part 2.1(a)(i) of the Company Disclosure Schedule
have been duly authorized, are validly issued, fully paid and nonassessable, and
are owned beneficially and of record by the Company, free and clear of any
Encumbrances, and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants with respect to any such
Subsidiary's capital stock, including any right obligating any such Subsidiary
to issue, deliver or sell additional shares of its capital stock.
(f) There has been no material charge to the Company's
capitalization between June 6, 2000 and the date hereof.
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has delivered or made available (including
through the SEC EDGAR system) to Parent accurate and complete copies of all
registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by the Company with the SEC since
January 1, 1999, and all amendments thereto (the "COMPANY SEC DOCUMENTS"). Since
January 1, 1999, all statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC have been so filed. As
of the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
of the Company SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as the case
may be); and (ii) none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including any related
notes) contained in the Company SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, and except that the
unaudited financial statements may not contain footnotes and are subject to
normal and recurring year-end adjustments), and (iii) fairly present the
consolidated financial position of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company and its subsidiaries for the periods covered thereby.
7.
<PAGE> 14
(c) The Company has delivered to Parent an unaudited
consolidated balance sheet of the Company and its subsidiaries as of March 31,
2000 (the "UNAUDITED INTERIM BALANCE SHEET" and the "UNAUDITED INTERIM BALANCE
SHEET DATE") as filed by the Company in its Quarterly Report on Form 10-Q filed
with the SEC, and the related unaudited consolidated statement of operations and
statement of cash flows of the Company and its subsidiaries for the three months
then ended. The financial statements referred to in this Section 2.4(c): (i)
were prepared in accordance with generally accepted accounting principles
applied on a basis consistent with the basis on which the financial statements
referred to in Section 2.4(b) were prepared (except that such financial
statements do not contain footnotes and are subject to normal and recurring
year-end adjustments), and (ii) fairly present the consolidated financial
position of the Company and its subsidiaries as of the Unaudited Interim Balance
Sheet Date and the consolidated results of operations and cash flows of the
Company and its subsidiaries for the periods covered thereby.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Company Disclosure Schedule, since March 31, 2000:
(a) there has not been any material adverse change in the
business, condition, assets, liabilities, operations or results of
operations of the Acquired Corporations taken as a whole, and no event
has occurred, in either case that would reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the assets of any
of the Acquired Corporations (whether or not covered by insurance) that
has had or would reasonably be expected to have a Material Adverse
Effect on the Acquired Corporations;
(c) none of the Acquired Corporations has (i) declared, accrued,
set aside or paid any dividend or made any other distribution in respect
of any shares of capital stock, or (ii) repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities
other than capital stock acquired from employees or consultants upon the
termination of their employment or consulting relationship with such
Acquired Corporation after the date hereof;
(d) none of the Acquired Corporations has sold, issued or
granted, or authorized the issuance of, (i) any capital stock or other
security (except for Company Common Stock issued upon the valid exercise
of outstanding Company Options in accordance with the terms of the
option agreement pursuant to which such Company Options are outstanding
and shares of Company Common Stock to be issued (A) upon the valid
exercise of Company Warrants, and (B) pursuant to the ESPP), (ii) any
option, warrant or right to acquire any capital stock or any other
security (except (A) for Company Options described in Part 2.3(b)(i) of
the Company Disclosure Schedule, (B) subject to Section 4.2(b)(ii), for
future grants of options under the Company's stock option plans, and (C)
pursuant to the ESPP), or (iii) any instrument convertible into or
exchangeable for any capital stock or other security;
(e) the Company has not amended or waived any of its rights
under, or permitted the acceleration of vesting under, (i) any provision
of any of the Company's stock option plans, (ii) any provision of any
agreement evidencing any outstanding Company Option, or (iii) any
restricted stock purchase agreement;
(f) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of
any of the Acquired Corporations, and none of the Acquired Corporations
has effected or been a party to any merger, consolidation, amalgamation,
8.
<PAGE> 15
share exchange, business combination, recapitalization, reclassification
of shares, stock split, division or subdivision of shares, reverse stock
split, consolidation of shares or similar transaction;
(g) none of the Acquired Corporations has formed any Subsidiary
or acquired any equity interest or other interest in any other Entity;
(h) none of the Acquired Corporations has made any capital
expenditure which, when added to all other capital expenditures made on
behalf of the Acquired Corporations since March 31, 2000, exceeds
$250,000 in the aggregate;
(i) except in the ordinary course of business and consistent with
past practices, none of the Acquired Corporations has (i) entered into
or permitted any of the assets owned or used by it to become bound by
any Material Contract (as defined in Section 2.10(a)), or (ii) amended
or terminated, or waived any material right or remedy under, any
Material Contract;
(j) except in the ordinary course of business and consistent with
past practices, none of the Acquired Corporations has (i) acquired,
leased or licensed any material right or other material asset from any
other Person, (ii) sold or otherwise disposed of, or leased or licensed,
any material right or other material asset to any other Person, or (iii)
waived or relinquished any right;
(k) none of the Acquired Corporations has made any pledge of any
of its assets or otherwise permitted any of its assets to become subject
to any Encumbrance, except (i) for pledges of immaterial assets made in
the ordinary course of business and consistent with past practices, (ii)
for liens for current taxes which are not yet due and payable, and (iii)
for easements, covenants, rights of way or other similar restrictions
and imperfections of title which have not adversely affected in any
material respect, and which are not reasonably expected to adversely
affect in any material respect, the business or operations of any of the
Acquired Corporations;
(l) none of the Acquired Corporations has (i) lent money to any
Person, except for advances to employees for business expenses or loans
for relocation expenses, in each case, in the ordinary course of
business and consistent with past practices, or (ii) incurred or
guaranteed any indebtedness for borrowed money;
(m) none of the Acquired Corporations has (i) established or
adopted any Plan (as defined in Section 2.17(a)),or (ii) caused or
permitted any Plan to be amended in any material respect;
(n) none of the Acquired Corporations has paid any bonus or made
any profit-sharing or similar payment to, or materially increased the
amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers
or employees, except (i) pursuant to existing bonus plans and other
Plans referred to in Part 2.17(a) of the Company Disclosure Schedule or
new bonus or commission plans substantially consistent with the terms of
existing bonus or commission plans; and (ii) for normal bonuses or
increases in wages, salaries or commissions to non-officer employees in
accordance with each Acquired Corporation's customary review process or
otherwise in a manner consistent with each Acquired Corporation's past
practices;
(o) none of the Acquired Corporations has changed any of its
methods of accounting or accounting practices;
9.
<PAGE> 16
(p) no event has occurred, and no circumstance or condition
exists, that has resulted in or that could reasonably be expected to
result in the impairment of the capitalized software asset reflected in
the Acquired Corporations' books and records;
(q) none of the Acquired Corporations has made any material Tax
election;
(r) none of the Acquired Corporations has settled any Legal
Proceeding involving payments by any of the Acquired Corporations in
excess of $50,000 or equitable relief against any of the Acquired
Corporations;
(s) none of the Acquired Corporations has entered into any
material transaction or taken any other material action that has had, or
would reasonably be expected to have, a Material Adverse Effect on the
Acquired Corporations;
(t) none of the Acquired Corporations has entered into any
material transaction or taken any other material action outside the
ordinary course of business or inconsistent with past practices; and
(u) none of the Acquired Corporations has agreed or committed to
take any of the actions referred to in the foregoing subsections of this
Section 2.5.
2.6 TITLE TO ASSETS. The Acquired Corporations own, and have good,
valid and marketable title to, all tangible personal property purported to be
owned by them, including: (i) all tangible personal property reflected on the
Unaudited Interim Balance Sheet (except for inventory sold or otherwise disposed
of in the ordinary course of business since the date of the Unaudited Interim
Balance Sheet); and (ii) all other assets reflected in the books and records of
the Acquired Corporations as being owned by the Acquired Corporations. Except as
set forth in Part 2.6 of the Company Disclosure Schedule, all of said items of
tangible personal property are owned by the Acquired Corporations free and clear
of any Encumbrances, except for (1) any lien for current taxes not yet due and
payable, (2) minor liens that have arisen in the ordinary course of business and
that do not (in any case or in the aggregate) materially detract from the value
of the tangible personal property subject thereto or materially impair the
operations of any of the Acquired Corporations, and (3) liens described in Part
2.6 of the Company Disclosure Schedule.
2.7 RECEIVABLES; CUSTOMERS. All existing accounts receivable of the
Acquired Corporations (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since March 31, 2000 and have not yet been
collected) represent valid obligations of customers of the Acquired Corporations
arising from bona fide transactions entered into in the ordinary course of
business. Between March 31, 2000 and the date of this Agreement, none of the
Acquired Corporations has written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness. The Company has not received any notice or other communication (in
writing or otherwise), and, to the Knowledge of the Company, has not received
any other information, indicating that (a) any customer is likely to cease
dealing with the Company, or (b) any customer is dissatisfied in any material
respect with the operation of any product, system or program currently
maintained, sold or licensed by any of the Acquired Corporations or with any
services performed by any of the Acquired Corporations since June 30, 1999.
2.8 REAL PROPERTY; LEASEHOLD. All material items of equipment and
other tangible assets owned by or leased to the Acquired Corporations are
adequate for the uses to which they are being put, are in good and safe
condition and repair (ordinary wear and tear excepted) and are adequate for the
conduct of the business of the Acquired Corporations in the manner in which such
business is currently
10.
<PAGE> 17
being conducted. None of the Acquired Corporations own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.8 of the Company Disclosure Schedule.
2.9 INTELLECTUAL PROPERTY.
(a) Part 2.9(a)(i) of the Company Disclosure Schedule sets
forth, with respect to each Proprietary Asset owned by the Acquired Corporations
and registered with any Governmental Body or for which an application has been
filed with any Governmental Body, (i) a brief description of such Proprietary
Asset, and (ii) the names of the jurisdictions covered by the applicable
registration or application. Part 2.9(a)(ii) of the Company Disclosure Schedule
identifies and provides a brief description of all other Proprietary Assets
owned by the Acquired Corporations that are material to the business of the
Acquired Corporations. Part 2.9(a)(iii) of the Company Disclosure Schedule
identifies any Acquired Company Contract containing any ongoing royalty or
payment obligations in excess of $10,000 with respect to, each Proprietary Asset
that is licensed or otherwise made available to the Acquired Corporations by any
Person and is material to the business of the Acquired Corporations (except for
any Proprietary Asset that is licensed to the Acquired Corporations under any
third party software license generally available to the public), and identifies
the Contract under which such Proprietary Asset is being licensed or otherwise
made available to such Acquired Corporation. The Acquired Corporations have
good, valid and marketable title to all of the Acquired Corporation Proprietary
Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii) of the Company Disclosure
Schedule, free and clear of all Encumbrances, except for (i) any lien for
current taxes not yet due and payable, and (ii) minor liens that have arisen in
the ordinary course of business and that do not (individually or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of either of the Acquired Corporations. The
Acquired Corporations have a valid right to use, license and otherwise exploit
all Proprietary Assets identified in Part 2.9(a)(iii) of the Company Disclosure
Schedule. None of the Acquired Corporations has developed jointly with any other
Person any Acquired Corporation Proprietary Asset that is material to the
business of the Acquired Corporations with respect to which such other Person
has any rights. Except as set forth in Part 2.9(a)(v) of the Company Disclosure
Schedule, there is no Acquired Corporation Contract (with the exception of end
user license agreements in the form previously delivered by the Company to
Parent) pursuant to which any Person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any Acquired Corporation
Proprietary Asset.
(b) The Acquired Corporations have taken reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value of
all material Acquired Corporation Proprietary Assets (except Acquired
Corporation Proprietary Assets whose value would be unimpaired by disclosure).
Without limiting the generality of the foregoing, (i) all current and former
employees of the Acquired Corporations who are or were involved in, or who have
contributed to, the creation or development of any material Acquired Corporation
Proprietary Asset have executed and delivered to the Acquired Corporations an
agreement that is substantially identical to the form of Confidential
Information and Invention Assignment Agreement previously delivered by the
Company to Parent, and (ii) all current and former consultants and independent
contractors to the Acquired Corporations who are or were involved in, or who
have contributed to, the creation or development of any material Acquired
Corporation Proprietary Asset have executed and delivered to the Company an
agreement that is substantially identical to the form of Consultant Confidential
Information and Invention Assignment Agreement previously delivered to Parent.
No current or former employee, officer, director, stockholder, consultant or
independent contractor has any right, claim or interest in or with respect to
any Acquired Corporation Proprietary Asset.
11.
<PAGE> 18
(c) To the Knowledge of the Company: (i) all patents,
trademarks, service marks and copyrights held by any of the Acquired
Corporations are valid, enforceable and subsisting; (ii) none of the Acquired
Corporation Proprietary Assets and no Proprietary Asset that has been
substantially developed by any of the Acquired Corporations (either by itself or
with any other Person) infringes, misappropriates or conflicts with any
Proprietary Asset owned or used by any other Person; (iii) none of the products
that are or have been designed, created, substantially developed, assembled,
manufactured or sold by any of the Acquired Corporations is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
none of the Acquired Corporations has received any notice or other communication
(in writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Acquired Corporation Proprietary Asset.
(d) The Acquired Corporation Proprietary Assets constitute all
the Proprietary Assets necessary to enable the Acquired Corporations to conduct
their business in the manner in which such business has been and is being
conducted. None of the Acquired Corporations has (i) licensed any of the
material Acquired Corporation Proprietary Assets to any Person on an exclusive
basis, or (ii) entered into any covenant not to compete or Contract limiting its
ability to exploit fully any material Acquired Corporation Proprietary Assets or
to transact business in any market or geographical area or with any Person.
(e) Except as set forth in Part 2.9(e)(i) of the Company
Disclosure Schedule, none of the Acquired Corporations has disclosed or
delivered to any Person, or permitted the disclosure or delivery to any escrow
agent or other Person, of any Acquired Corporation Source Code. No event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, result in the
disclosure or delivery to any Person of any Acquired Corporation Source Code.
There is no contract pursuant to which the Company has deposited or is required
to deposit with an escrowholder or any other Person any Acquired Corporation
Source Code, and the execution of this Agreement or the consummation of any of
the transactions contemplated hereby will not result in the release or
disclosure of any Acquired Corporation Source Code.
(f) Except with respect to demonstration or trial copies, no
product, system, program or software module (i) designed or developed or (ii) to
the Knowledge of Company, sold, licensed or otherwise made available by any of
the Acquired Corporations to any Person contains any "back door," "time bomb,"
"Trojan horse," "worm," "drop dead device," "virus" or other software routines
or hardware components designed to permit unauthorized access or to disable or
erase software, hardware or data without the consent of the user.
2.10 CONTRACTS.
(a) Part 2.10 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract that constitutes a "Material Contract" as of the
date of this Agreement. (For purposes of this Agreement, each of the following
Contracts (to the extent that any of the Acquired Corporations has (or may have)
any liability or obligation thereunder or with respect thereto after the date of
this Agreement) shall be deemed to constitute a "MATERIAL CONTRACT":
(i) any Contract relating to the employment of, or the
performance of services by, any employee or consultant (other than any
offer letter provided to any employee of any of the Acquired
Corporations which provides for "at will" employment); any Contract
12.
<PAGE> 19
pursuant to which any of the Acquired Corporations is or may become
obligated to make any severance, termination or similar payment to any
current or former employee or director; and any Contract pursuant to
which any of the Acquired Corporations is or may become obligated to
make any bonus or similar payment (other than payments in respect of
salary) in excess of $25,000 to any current or former employee or
director;
(ii) any Contract, with the exception of standard Contracts
which contain warranties with a term of less than eighteen months, (A)
with any customer of any of the Acquired Corporations for standard
purchase orders; or (B) with respect to the distribution or marketing of
any product of any of the Acquired Corporations;
(iii) any Contract pursuant to which any third party licenses
to any of the Acquired Corporations (or otherwise permits any of the
Acquired Corporations to use) any Intellectual Property that is
incorporated as a material component of any product of any of the
Acquired Corporations or is otherwise material to the business of any of
the Acquired Corporations (other than "off the shelf" or other software
which is widely available through regular commercial distribution
channels on standard terms and conditions, as modified for the Acquired
Corporations' operations);
(iv) any Contract which provides for indemnification of any
officer, director, employee or agent;
(v) any Contract imposing any restriction on the right or
ability of any Acquired Corporation (A) to compete with any other
Person, (B) to acquire any material product or other asset or any
services from any other Person, (C) to solicit, hire or retain any
Person as an employee, consultant or independent contractor, (D) to
develop, sell, supply, distribute, offer, support or service any product
or any technology or other asset to or for any other Person, (E) to
perform services for any other Person, or (F) to transact business or
deal in any other manner with any other Person;
(vi) any Contract (A) relating to the acquisition, issuance,
voting, registration, sale or transfer of any securities, other than
pursuant to Company Options or the ESPP, (B) providing any Person with
any preemptive right, right of participation, right of maintenance or
any similar right with respect to any securities, or (C) providing any
of the Acquired Corporations with any right of first refusal with
respect to, or right to purchase or otherwise acquire, any securities;
(vii) any Contract incorporating or relating to any guaranty,
any warranty or any indemnity or similar obligation, except for
Contracts entered into in the ordinary course of business;
(VIII) any Contract relating to any currency hedging;
(ix) any Contract imposing any material confidentiality
obligation on any of the Acquired Corporations other than nondisclosure
agreements or customer contracts entered into in the ordinary course of
business;
(x) any Contract to which any Governmental Body is a party;
and any other Contract directly or indirectly benefiting any
Governmental Body (including any subcontract or other Contract between
any Acquired Corporation and any contractor or
13.
<PAGE> 20
subcontractor to any Governmental Body), except for Contracts entered
into in the ordinary course of business for the license, maintenance or
service of products;
(xi) any Contract with obligations in excess of $50,000 that
has a term of more than 60 days and that may not be terminated by an
Acquired Corporation (without penalty) within 60 days after the delivery
of a termination notice by such Acquired Corporation;
(xii) any Contract that contemplates or involves the payment
or delivery of cash or other consideration in an amount or having a
value in excess of $50,000 in the aggregate, or contemplates or involves
the performance of services having a value in excess of $100,000 in the
aggregate;
(XIII) any Contract requiring that any of the Acquired
Corporations give any notice or provide any information to any Person
prior to considering or accepting any Acquisition Proposal or similar
proposal, or prior to entering into any discussions, agreement,
arrangement or understanding relating to any Acquisition Transaction or
similar transaction;
(xiv) any Contract that (A) contemplates or involves the
payment or delivery of cash or other consideration by any of the
Acquired Corporations in an amount or having a value in excess of
$100,000 in the aggregate, (B) contemplates or involves the payment or
delivery of cash or other consideration to any of the Acquired
Corporations in an amount or having a value in excess of $250,000 in the
aggregate, or (C) contemplates or involves the performance of services
by any of the Acquired Corporations having a value in excess of $250,000
in the aggregate; and
(xv) any Contract (not otherwise identified in clauses "(i)"
through "(xiv)" of this sentence), if a breach of such Contract could
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations.
(b) The Company has delivered or made available to Parent and to
Cooley Godward LLP an accurate and complete copy of (i) each Material Contract;
(ii) each Acquired Corporation Contract (to the extent that any of the Acquired
Corporations has (or may have) any liability or obligation thereunder or with
respect thereto after the date of this Agreement) of the type referred to in
Section 2.9; (iii) each Acquired Corporation Contract (to the extent that any of
the Acquired Corporations has (or may have) any liability or obligation
thereunder or with respect thereto after the date of this Agreement) with any
customer of any of the Acquired Corporations; and (v) each other Acquired
Corporation Contract (not otherwise identified in clauses "(i)" through "(iv)"
of this sentence) that is material to the business of any of the Acquired
Corporations.
(c) Each Acquired Corporation Contract is valid and in full
force and effect, and is enforceable in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) applicable rules of law governing specific
performance, injunctive relief and other equitable remedies.
(d) (i) none of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches and defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and, to the Knowledge of the Company, no other Person has violated
or breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches or defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; (ii) to the Knowledge of the Company, no event has occurred, and
no
14.
<PAGE> 21
circumstance or condition exists, that (with or without notice or lapse of time)
will, or would reasonably be expected to, (A) result in a violation or breach of
any of the provisions of any Acquired Corporation Contract, (B) give any Person
the right to declare a default or exercise any remedy under any Acquired
Corporation Contract, (C) give any Person the right to receive or require a
rebate, chargeback or penalty under any Acquired Corporation Contract, (D) give
any Person the right to accelerate the maturity or performance of any Acquired
Corporation Contract, or (E) give any Person the right to cancel, terminate or
modify any Acquired Corporation Contract, except in each such case for defaults,
acceleration rights, termination rights and other rights that have not had and
would not reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations; and (iii) since June 30, 1999, none of the Acquired
Corporations has received any notice or other communication regarding any actual
or possible violation or breach of, or default under, any Acquired Corporation
Contract, except in each such case for defaults, acceleration rights,
termination rights and other rights that have not had and would not reasonably
be expected to have a Material Adverse Effect on the Acquired Corporations.
2.11 SALE OF PRODUCTS; PERFORMANCE OF SERVICES
(a) Assuming the products, systems, programs and software
modules of the Acquired Corporations are used in the manner in which they are
intended to be used (including platform specifications and other product
literature) and were maintained in accordance with the Acquired Corporations'
regular maintenance program, none of the products, systems, programs or software
modules of any of the Acquired Corporations would reasonably be expected to (A)
disrupt, disable, harm or otherwise impede in any material respect the operation
of a computer program or a computer system or the equipment on which such code
resides, or (B) damage or destroy any data or files residing on a computer or
computer system without the consent of the user of such computer or computer
system.
(b) Except as set forth in Part 2.11(b) of the Company
Disclosure Schedule, all installation services, programming services, repair
services, maintenance services, support services, training services, upgrade
services and other services that have been performed by the Acquired
Corporations were performed properly and in substantial conformity with the
terms and requirements of all applicable warranties and other Contracts and with
all applicable Legal Requirements.
(c) Except as set forth in Part 2.11(c) of the Company
Disclosure Schedule, since June 30, 1999, no customer or other Person has
asserted or threatened to assert any claim against any of the Acquired
Corporations (i) under or based upon any warranty provided by or on behalf of
any of the Acquired Corporations, (ii) under or based upon any other warranty
relating to any product, system, program, Proprietary Asset or other asset
designed, developed, manufactured, assembled, sold, installed, repaired,
licensed or otherwise made available by any of the Acquired Corporations, or
(iii) based upon any services performed by any of the Acquired Corporations.
2.12 LIABILITIES. None of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured,
except for: (a) liabilities identified as such in the "liabilities" column of
the Unaudited Interim Balance Sheet; (b) normal and recurring current
liabilities that have been incurred by the Acquired Corporations since March 31,
2000 in the ordinary course of business and consistent with past practices; (c)
liabilities described in Part 2.12 of the Company Disclosure Schedule; and (d)
liabilities that have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Acquired Corporations.
2.13 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in Part
2.13 of the Company Disclosure Schedule, each of the Acquired Corporations is,
and has at all times since June 30, 1999 been, in compliance with all applicable
Legal Requirements, except where the failure to comply with such Legal
Requirements has not had and would not reasonably be expected to have a Material
15.
<PAGE> 22
Adverse Effect on the Acquired Corporations. Except as set forth in Part 2.13 of
the Company Disclosure Schedule, since June 30, 1999, none of the Acquired
Corporations has received any notice or other communication from any
Governmental Body or other Person regarding any actual or possible violation of,
or failure to comply with, any Legal Requirement.
2.14 CERTAIN BUSINESS PRACTICES. None of the Acquired Corporations
nor, to the Knowledge of the Company, any director, officer, agent or employee
of any of the Acquired Corporations has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
2.15 GOVERNMENTAL AUTHORIZATIONS. The Acquired Corporations hold all
Governmental Authorizations necessary to enable the Acquired Corporations to
conduct their respective businesses in the manner in which such businesses are
currently being conducted, except where the failure to hold such Governmental
Authorizations has not had and would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. Each Acquired Corporation
is, and at all times since June 30, 1999 has been, in substantial compliance
with the terms and requirements of such Governmental Authorizations, except
where the failure to be in compliance with the terms and requirements of such
Governmental Authorizations has not had and would not reasonably be expected to
have a Material Adverse Effect on the Acquired Corporations. Since June 30,
1999, none of the Acquired Corporations has received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any material
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
material Governmental Authorization.
2.16 TAX MATTERS.
(a) Each material Tax Return required to be filed by or on
behalf of the respective Acquired Corporations with any Governmental Body on or
before the Closing Date (the "ACQUIRED CORPORATION RETURNS") (i) has been or
will be filed on or before the applicable due date, as extended by such
Governmental Body, and (ii) has been, or will be when filed, prepared in all
material respects in compliance with all applicable Legal Requirements. All
amounts shown on the Acquired Corporation Returns to be due on or before the
Closing Date have been or will be paid on or before the Closing Date.
(b) The Unaudited Interim Balance Sheet fully accrues all actual
and contingent liabilities for Taxes with respect to all periods through March
31, 2000 in accordance with generally accepted accounting principles other than
amounts which in the aggregate would not have a Material Adverse Effect if
determined to be due. Each Acquired Corporation will establish, in the ordinary
course of business and consistent with its past practices, reserves adequate for
the payment of all Taxes for the period from Unaudited Interim Balance Sheet
Date through the Closing Date, and will disclose the amount of such reserves to
Parent no later than 10 business days prior to the Closing Date. Since December
31, 1998, none of the Acquired Corporations has incurred any liability for any
Tax other than in the ordinary course of its business.
(c) No Acquired Corporation Return has been examined or audited
by any Governmental Body. No extension or waiver of the limitation period
applicable to any of the Acquired Corporation Returns has been granted (by any
Acquired Corporation or any other Person) that has not expired, and no such
extension or waiver has been requested from any Acquired Corporation, other than
extensions or waivers that are no longer in effect.
16.
<PAGE> 23
(d) No claim or Legal Proceeding is pending or, to the Knowledge
of the Company, has been threatened against or with respect to any Acquired
Corporation in respect of any material Tax. There are no unsatisfied liabilities
for material Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by any Acquired Corporation with respect to any
material Tax (other than liabilities for Taxes asserted under any such notice of
deficiency or similar document which are being contested in good faith by the
Acquired Corporations and with respect to which adequate reserves for payment
have been established on the Unaudited Interim Balance Sheet). There are no
liens for material Taxes upon any of the assets of any of the Acquired
Corporations except liens for current Taxes not yet due and payable. None of the
Acquired Corporations has entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code (or any comparable provision of
state or foreign Tax laws). None of the Acquired Corporations has been, and none
of the Acquired Corporations will be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code (or any comparable provision under state or foreign Tax
laws) as a result of transactions or events occurring, or accounting methods
employed, prior to the Closing.
(e) Except as set forth in Part 2.16(e) of the Company
Disclosure Schedule, there is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162(m) of the Code (or any comparable provision under state or foreign Tax
laws). None of the Acquired Corporations is, or has ever been, a party to or
bound by any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar Contract. The Company has not entered into any Contract
pursuant to which it has agreed to reimburse or "gross-up" any individual with
respect to golden-parachute excise taxes.
2.17 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.17(a) of the Company Disclosure Schedule identifies
each salary, bonus, material deferred compensation, material incentive
compensation, stock purchase, stock option, severance pay, termination pay,
hospitalization, medical, insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or material agreement,
whether or not in writing, maintained, sponsored, contributed to or required to
be contributed to by any of the Acquired Corporations for the benefit of any
current or former employee of any of the Acquired Corporations or pursuant to
which any of the Parent, Merger Sub or any of the Acquired Corporations could
incur liability (including any such plan, program or material agreement
maintained, sponsored, contributed to or required to be contributed to by any of
the Acquired Corporations for the benefit of any current or former employee
located in the United States, United Kingdom, France or Germany). (All plans,
programs and material agreements of the type referred to in the prior sentence
are referred to in this Agreement as the "PLANS.")
(b) Except as set forth in Part 2.17(a) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to, and none of the Acquired Corporations has since January 1, 1999
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) or any similar pension benefit plan under the laws of any
foreign jurisdiction (including the United Kingdom, France and Germany), whether
or not excluded from coverage under specific Titles or Subtitles of ERISA), for
the benefit of any current or former employee or director of any of the Acquired
Corporations (a "PENSION PLAN").
17.
<PAGE> 24
(c) Except as set forth in Part 2.17(a) or Part 2.17(c) of the
Company Disclosure Schedule, none of the Acquired Corporations maintains,
sponsors or contributes to any: (i) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) or any similar welfare benefit plan under the laws of any
foreign jurisdiction (including the United Kingdom, France and Germany), whether
or not excluded from coverage under specific Titles or Merger Subtitles of
ERISA, for the benefit of any current or former employee or director of any of
the Acquired Corporations (a "WELFARE PLAN"), or (ii) self-funded medical,
dental or other similar Plan. None of the Plans identified in the Company
Disclosure Schedule is a multiemployer plan (within the meaning of Section 3(37)
of ERISA).
(d) With respect to each Plan, the Company has delivered to
Parent: (i) an accurate and complete copy of such Plan (including all amendments
thereto); (ii) an accurate and complete copy of the annual report, if required
under ERISA, with respect to such Plan for each of the last two years; (iii) an
accurate and complete copy of the most recent summary plan description, together
with each summary of material modifications, if required under ERISA, with
respect to such Plan, (iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and complete
copies the most recent financial statements thereof; (v) accurate and complete
copies of all Contracts relating to such Plan, including service provider
agreements, insurance contracts, minimum premium contracts, stop-loss
agreements, investment management agreements, subscription and participation
agreements and recordkeeping agreements; and (vi) an accurate and complete copy
of the most recent determination letter received from the Internal Revenue
Service with respect to such Plan (if such Plan is intended to be qualified
under Section 401(a) of the Code).
(e) None of the Acquired Corporations is or has ever been
required to be treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. None of the
Acquired Corporations has ever been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code. None of the Acquired
Corporations has ever made a complete or partial withdrawal from a multiemployer
plan, as such term is defined in Section 3(37) of ERISA, resulting in
"withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to any subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or commitment
to create any Plan or to modify or change any existing Plan (other than to
comply with applicable law) in a manner that would affect any current or former
employee or director of any of the Acquired Corporations.
(g) No Plan provides death, medical or health benefits (whether
or not insured) with respect to any current or former employee or director of
any of the Acquired Corporations after termination of service of such employee
or director (other than (i) benefit coverage mandated by applicable law,
including coverage provided pursuant to Section 4980B of the Code, (ii) deferred
compensation benefits accrued as liabilities on the Unaudited Interim Balance
Sheet, and (iii) benefits the full cost of which are borne by current or former
employees or directors of any of the Acquired Corporations (or their
beneficiaries)).
(h) With respect to any Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, to the Knowledge of the
Company, the provisions of Section 4980B of the Code ("COBRA") have been
complied with in all material respects.
(i) To the Knowledge of the Company, each of the Plans has been
operated and administered in all material respects in accordance with applicable
Legal Requirements, including without limitation ERISA and the Code, each Legal
Requirement pursuant to which any of the Acquired
18.
<PAGE> 25
Corporations is required to establish any reserve or make any contribution for
the benefit of any current or former employee located in the United States,
United Kingdom, France, Germany or any other foreign jurisdiction.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service or the deadline for applying to the Internal Revenue
Service for such a determination letter has yet to expire, and the Company is
not aware of any reason why any such determination letter could be revoked or
should not be issued.
(k) Except pursuant to the Change of Control Agreements or as
set forth in Part 2.17(k) of the Company Disclosure Schedule, neither the
execution, delivery or performance of this Agreement, nor the consummation of
the Merger or any of the other transactions contemplated by this Agreement, will
result in any bonus, golden parachute, severance or other payment or obligation
to any current or former employee or director of any of the Acquired
Corporations (whether or not under any Plan), materially increase the benefits
payable or provided under any Plan, or result in any acceleration of the time of
payment, provision or vesting of any such benefits. Without limiting the
generality of the foregoing (and except pursuant to the Change of Control
Agreements or as set forth in Part 2.17(k) of the Company Disclosure Schedule),
the consummation of the Merger will not result in the acceleration of vesting of
any unvested Company Options.
(l) Part 2.17(l) of the Company Disclosure Schedule identifies
each employee of each of the Acquired Corporations as of the date of this
Agreement, and correctly reflects, in all material respects, the current salary
and any other compensation payable to such employee (including compensation
payable pursuant to bonus, deferred compensation or commission arrangements),
such employee's employer, years employed and position. None of the Acquired
Corporations is a party to any collective bargaining contract or other Contract
with a labor union involving any of its employees. All of the employees of the
Acquired Corporations are "at will" employees.
(m) There is no employee of any of the Acquired Corporations who
is not fully available to perform work because of disability or other leave and
sets forth the basis of such disability (to the extent known by the Company) or
leave and the anticipated date of such employee's return to full service.
(n) To the Knowledge of the Company, each of the Acquired
Corporations is in compliance in all material respects with all applicable Legal
Requirements and Contracts relating to employment, employment practices, wages,
bonuses and terms and conditions of employment, including employee compensation
matters.
(o) Each of the Acquired Corporations has good labor relations,
and the Company has no Knowledge of any facts indicating that (i) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will have a material adverse effect on the labor relations of any of
the Acquired Corporations, or (ii) any of the employees of any of the Acquired
Corporations intends to terminate his or her employment with such Acquired
Corporation.
2.18 ENVIRONMENTAL MATTERS. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required of them under
applicable Environmental Laws, and compliance in all material respects with the
terms and conditions thereof. To the Knowledge of the Company, since June 30,
1999, none of the Acquired Corporations has received any notice or other
communication (in writing or otherwise), whether from a
19.
<PAGE> 26
Governmental Body, citizens group, employee or otherwise, that alleges that any
of the Acquired Corporations is not in compliance in all material respects with
any Environmental Law. To the Knowledge of the Company, no current or prior
owner of any property leased by any of the Acquired Corporations has received
any notice or other communication (in writing or otherwise), whether from a
Government Body, citizens group, employee or otherwise, that alleges that such
current or prior owner or any of the Acquired Corporations is not in compliance
in all material respects with any Environmental Law. To the Knowledge of the
Company (a) all property that is leased to or used by the Acquired Corporations,
and all surface water, groundwater and soil associated with such property is
free of any material environmental contamination of any nature, (b) none of the
property leased to or used by any of the Acquired Corporations presently
contains any underground storage tanks, asbestos, equipment using PCBs or
underground injection wells, and (c) none of the property leased to or used by
any of the Acquired Corporations presently contains any septic tanks in which
process wastewater or any Materials of Environmental Concern have been disposed.
To the Knowledge of the Company, no Acquired Corporation has sent or
transported, or arranged to send or transport, any Materials of Environmental
Concern to a site that, pursuant to any applicable Environmental Law (i) has
been placed on the "National Priorities List" of hazardous waste sites or any
similar state list, (ii) is otherwise designated or identified as a potential
site for remediation, cleanup, closure or other environmental remedial activity,
or (iii) is subject to a Legal Requirement to take "removal" or "remedial'
action as detailed in any applicable Environmental Law or to make payment for
the cost of cleaning up the site. (For purposes of this Section 2.18: (A)
"ENVIRONMENTAL LAW" means any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health from Materials of
Environmental Concern or protection of the environment (including ambient air,
surface water, ground water, land surface or subsurface strata), including any
law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (B) "MATERIALS
OF ENVIRONMENTAL CONCERN" means chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is regulated by any Governmental Body with respect to the environment.)
2.19 INSURANCE. The Company has delivered to Parent certificates of
insurance and summaries of all material insurance policies and all material self
insurance programs and arrangements relating to the business, assets and
operations of the Acquired Corporations. Each of such insurance policies is in
full force and effect. Since June 30, 1999, none of the Acquired Corporations
has received any notice or other communication regarding any actual or possible
(a) cancellation or invalidation of any insurance policy, (b) refusal of any
coverage or rejection of any material claim under any insurance policy, or (c)
material adjustment in the amount of the premiums payable with respect to any
insurance policy. There is no pending workers' compensation or other claim under
or based upon any insurance policy of any of the Acquired Corporations.
2.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Reports, since the date of the Company's last proxy statement filed
with the SEC, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part 2.20
of the Company Disclosure Schedule identifies each person who is (or who may be
deemed to be) an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of the Company as of the date of this Agreement.
20.
<PAGE> 27
2.21 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Legal Proceeding, and (to the Knowledge
of the Company) no Person has threatened to commence any Legal Proceeding: (i)
that involves any of the Acquired Corporations or any of the assets owned or
used by any of the Acquired Corporations and that, if adversely determined,
would reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement. To the
Knowledge of the Company, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that would reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b) There is no material order, writ, injunction, judgment or
decree to which any of the Acquired Corporations, or any of the assets owned or
used by any of the Acquired Corporations, is subject. To the Knowledge of the
Company, no officer or key employee of any of the Acquired Corporations is
subject to any order, writ, injunction, judgment or decree that prohibits such
officer or other key employee from engaging in or continuing any conduct,
activity or practice relating to the business of any of the Acquired
Corporations.
2.22 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING
NATURE OF AGREEMENT. The Company has the absolute and unrestricted right, power
and authority to enter into and to perform its obligations under this Agreement.
The board of directors of the Company (at a meeting duly called and held on June
7, 2000) has (a) determined (pursuant to a unanimous vote of all members of the
board of directors of the Company) that the Merger is advisable and fair and in
the best interests of the Company and its stockholders, (b) authorized and
approved (pursuant to a unanimous vote of all members of the board of directors
of the Company) the execution, delivery and performance of this Agreement by the
Company and approved (pursuant to a unanimous vote of all members of the board
of directors of the Company) the Merger, (c) recommended (pursuant to a
unanimous vote of all members of the board of directors of the Company) the
approval of this Agreement and the Merger by the holders of Company Common Stock
and directed that this Agreement and the Merger be submitted for consideration
by the Company's stockholders at the Company Stockholders' Meeting (as defined
in Section 5.2), and (d) adopted (pursuant to a unanimous vote of all members of
the board of directors of the Company) a resolution having the effect of causing
the Company not to be subject to any state takeover law or similar Legal
Requirement that might otherwise apply to the Merger or any of the other
transactions contemplated by this Agreement. This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.23 SECTION 203 OF THE DGCL NOT APPLICABLE. As of the date hereof
and at all times on or prior to the Effective Time, the restrictions applicable
to business combinations contained in Section 203 of the DGCL are, and will be,
inapplicable to the execution, delivery and performance of this Agreement and to
the consummation of the Merger and the other transactions contemplated by this
Agreement. Prior to the execution of those certain Voting Agreements of even
date herewith between Parent and each of the Persons identified in Part 2.23 of
the Company Disclosure Schedule, the Board of Directors of the Company approved
said Voting Agreements and the transactions contemplated thereby.
2.24 RESERVED.
2.25 RESERVED.
21.
<PAGE> 28
2.26 ACCOUNTING MATTERS. To the Knowledge of the Company, neither
any of the Acquired Corporations nor any affiliate (as that term is used in Rule
145 under the Securities Act) of any of the Acquired Corporations has taken or
agreed to take, or plans to take, any action that could prevent Parent from
accounting for the Merger as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the SEC. The Company
has received oral advice from PricewaterhouseCoopers LLP regarding
PricewaterhouseCoopers LLP's concurrence with the Company's management's
conclusion (subject to the qualifications contained in such oral advice) that
the Company is a "poolable entity" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC, such advice being based on
facts and circumstances known to the Company and PricewaterhouseCoopers LLP as
of the date of this Agreement.
2.27 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Company Common Stock outstanding on the record date
for the Company Stockholders' Meeting (the "REQUIRED COMPANY STOCKHOLDER VOTE")
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement, the Merger and the other transactions
contemplated by this Agreement.
2.28 NON-CONTRAVENTION; CONSENTS. Except as would not result in a
Material Adverse Effect on the Acquired Corporations, neither (1) the execution,
delivery or performance of this Agreement by the Company, nor (2) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement by the Company, will (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the certificate of incorporation, bylaws or other
charter or organizational documents of any of the Acquired Corporations,
or (ii) any resolution adopted by the stockholders, the board of
directors or any committee of the board of directors of any of the
Acquired Corporations;
(b) contravene, conflict with or result in a violation of any
Legal Requirement, or give any Governmental Body or other Person the
right to challenge the Merger or any of the other transactions
contemplated by this Agreement or to exercise any remedy or obtain any
relief under any order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets owned or used by
any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by any of the Acquired Corporations or that
otherwise relates to the business of any of the Acquired Corporations or
to any of the assets owned or used by any of the Acquired Corporations;
(d) contravene, conflict with or result in a material violation
or breach of, or result in a material default under, any provision of
any Material Contract, or give any Person the right to (i) declare a
default or exercise any remedy under any such Material Contract, (ii)
accelerate the maturity or performance of any such Material Contract, or
(iii) cancel, terminate or modify any term of such Material Contract; or
(e) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by any of the Acquired
Corporations (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of any of the Acquired
Corporations).
22.
<PAGE> 29
Except as may be required by the Exchange Act, the DGCL, the HSR Act, any
applicable competition laws outside the United States and the NASD Bylaws (as
they relate to the Form S-4 Registration Statement and the Joint
Prospectus/Proxy Statement) and except as set forth in Part 2.28 of the Company
Disclosure Schedule, none of the Acquired Corporations was, is or will be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement
or (y) the consummation of the Merger or any of the other transactions
contemplated by this Agreement.
2.29 FAIRNESS OPINION. The Company's board of directors has received
the written opinion of Gleacher & Co., financial advisor to the Company
("COMPANY FINANCIAL ADVISOR"), dated the date of this Agreement, to the effect
that the Exchange Ratio is fair to the stockholders of the Company from a
financial point of view.
2.30 FINANCIAL ADVISOR. Except for the Company Financial Advisor, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The Company has furnished to
Parent accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid to and all indemnification and other
agreements related to the engagement of the Company Financial Advisor.
2.31 FULL DISCLOSURE.
(a) This Agreement (including the Company Disclosure Schedule)
does not, and the certificate referred to in Section 6.(h) will not, (i) contain
any representation, warranty or information that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact necessary
in order to make the representations, warranties and information contained and
to be contained herein and therein (in the light of the circumstances under
which such representations, warranties and information were or will be made or
provided) not false or misleading.
(b) None of the information supplied or to be supplied by or on
behalf of the Company for inclusion or incorporation by reference in the Form
S-4 Registration Statement will, at the time the Form S-4 Registration Statement
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by or on behalf of the Company for inclusion or
incorporation by reference in the Joint Prospectus/Proxy Statement will, at the
time the Joint Prospectus/Proxy Statement is mailed to the stockholders of the
Company and Parent or at the time of the Company Stockholders' Meeting or Parent
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Joint Prospectus/Proxy Statement will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations promulgated by the SEC thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent for inclusion or incorporation by reference in the Joint Prospectus/Proxy
Statement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
23.
<PAGE> 30
3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary power and authority: (a) to
conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its obligations under all Contracts
by which it is bound. Each of Parent and Merger Sub is duly qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
and where the failure to be so qualified would have a Material Adverse Effect on
Parent or Merger Sub.
3.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered or made available to the Company
(including through the SEC EDGAR system) accurate and complete copies (excluding
copies of exhibits) of each report, registration statement and definitive proxy
statement filed by Parent with the SEC between January 1, 1999 and the date of
this Agreement (the "PARENT SEC DOCUMENTS"). Since January 1, 1999, all
statements, reports, schedules, forms and other documents required to have been
filed by Parent with the SEC have been so filed. As of the time it was filed
with the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements (including any related
notes) contained in the Parent SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to such financial statements and, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC, and except that
unaudited financial statements may not contain footnotes and are subject to
year-end audit adjustments); and (iii) fairly present the consolidated financial
position of Parent and its subsidiaries as of the respective dates thereof and
the consolidated results of operations of Parent and its subsidiaries for the
periods covered thereby.
3.3 FULL DISCLOSURE.
(a) This Agreement does not, and the certificate referred to in
Section 7.5(b) will not, (i) contain any representation, warranty or information
that is false or misleading with respect to any material fact, or (ii) omit to
state any material fact necessary in order to make the representations,
warranties and information contained and to be contained herein and therein (in
the light of the circumstances under which such representations, warranties and
information were or will be made or provided) not false or misleading.
(b) None of the information supplied or to be supplied by or on
behalf of Parent for inclusion in the Form S-4 Registration Statement will, at
the time the Form S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. None of the information supplied or to be supplied by or
on behalf of Parent for inclusion or incorporation by reference in the Joint
Prospectus/Proxy Statement will, at the time the Joint Prospectus/Proxy
Statement is mailed to the stockholders of the Company and Parent or at the time
of the Company Stockholders' Meeting or Parent Stockholders' Meeting, contain
any untrue statement of a material fact or omit to state any material fact
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required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Joint Prospectus/Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, except that no representation or
warranty is made by Parent with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference in the Joint Prospectus/Proxy Statement.
3.4 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub
have the absolute and unrestricted right, power and authority to enter into and
to perform their obligations under this Agreement. The board of directors of
Parent (at a meeting duly called and held on June 6, 2000) has (a) determined
(pursuant to a unanimous vote of all members of the board of directors of
Parent) that the Merger and the issuance of Parent Common Stock in the Merger
are advisable and fair and in the best interests of Parent and its stockholders,
(b) authorized and approved (pursuant to a unanimous vote of all members of the
board of directors of Parent) the execution, delivery and performance of this
Agreement by Parent and approved (pursuant to a unanimous vote of all members of
the board of directors of Parent) the Merger and the issuance of Parent Common
Stock in the Merger and (c) recommended (pursuant to a unanimous vote of all
members of the board of directors of Parent) the approval of the issuance of
Parent Common Stock in the Merger and the election of Lev J. Leytes to Parent's
Board of Directors by the holders of Parent Common Stock and directed that the
issuance of Parent Common Stock in the Merger and the election of Lev J. Leytes
to Parent's Board of Directors be submitted for consideration by Parent's
stockholders at the Parent Stockholders' Meeting (as defined in Section 5.3).
This Agreement constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against them in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.5 VOTE REQUIRED. The affirmative vote of the holders of a majority
of the shares of Parent Common Stock voting at a Parent Stockholders' Meeting at
which a quorum is present, cast in person or by proxy as prescribed by the rules
of the NASD (the "REQUIRED PARENT STOCKHOLDER VOTE"), is the only vote of the
holders of any class or series of the Parent's capital stock necessary to
approve this Agreement, the Merger and the other transactions contemplated by
this Agreement. Prior to the execution of those certain Voting Agreements of
even date herewith between the Company and each of the Persons identified in
Part 3.5 of the Parent Disclosure Schedule, the Board of Directors of Parent
approved said Voting Agreements and the transactions contemplated thereby.
3.6 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery
or performance of this Agreement by Parent or Merger Sub, nor (2) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement by Parent or Merger Sub, will (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the certificate of incorporation, bylaws or other
charter or organizational documents of Parent or Merger Sub, or (ii) any
resolution adopted by the stockholders, the board of directors or any
committee of the board of directors of Parent or Merger Sub;
(b) contravene, conflict with or result in a violation of any
Legal Requirement, or give any Governmental Body or other Person the
right to challenge the Merger or any of the other transactions
contemplated by this Agreement or to exercise any remedy or obtain any
relief under any order, writ, injunction, judgment or decree to which
Parent or Merger Sub, or any of the assets owned or used by Parent or
Merger Sub, is subject;
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(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Parent or Merger Sub or that otherwise
relates to the business of Parent or Merger Sub or to any of the assets
owned or used by Parent or Merger Sub;
(d) contravene, conflict with or result in a material violation
or breach of, or result in a material default under, any provision of
any Material Contract, or give any Person the right to (i) declare a
default or exercise any remedy under any such Material Contract, (ii)
accelerate the maturity or performance of any such Material Contract, or
(iii) cancel, terminate or modify any term of such Material Contract; or
(e) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by Parent or Merger Sub
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or
materially impair the operations of any of the Acquired Corporations).
Except as may be required by the Exchange Act, the DGCL, the HSR Act, any
applicable competition laws outside the United States and the NASD Bylaws (as
they relate to the Form S-4 Registration Statement and the Joint
Prospectus/Proxy Statement), neither Parent nor Merger Sub was, is or will be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement,
or (y) the consummation of the Merger or any of the other transactions
contemplated by this Agreement.
3.7 VALID ISSUANCE. The Parent Common Stock to be issued in the
Merger will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
3.8 ACCOUNTING MATTERS. To the knowledge of Parent, neither Parent
nor any of its affiliates has taken or agreed to, or plans to, take any action
that would prevent Parent from accounting for the Merger as a "pooling of
interests" in accordance with generally accepted accounting principles,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC. Parent has received oral advice from Ernst & Young LLP
regarding Ernst & Young LLP's concurrence with Parent's management's conclusion
that the Merger should be treated as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the SEC, such advice
being based on facts and circumstances known to Parent and Ernst & Young LLP,
and provided by the Company and PricewaterhouseCoopers LLP as of the date of
this Agreement.
3.9 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of:
30,000,000 shares of Parent Common Stock, of which 11,480,940 shares had been
issued and were outstanding as of June 5, 2000. Parent has not repurchased any
shares of its capital stock and does not hold any shares of its capital stock in
its treasury, except for the repurchase of Parent Common Stock from employees or
consultants upon termination of their employment or consulting relationship with
Parent. All of the outstanding shares of Parent Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. Except as
set forth in the Parent SEC Reports: (i) none of the outstanding shares of
Parent Common Stock is entitled or subject to any preemptive right, right of
first offer or any similar right created by Parent or imposed under applicable
law with respect to capital stock of Parent; (ii) none of the
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outstanding shares of Parent Common Stock is subject to any right of first
refusal in favor of Parent; and (iii) there is no Parent Contract relating to
the voting or registration of, or restricting any Person from purchasing,
selling, pledging or otherwise disposing of (or granting any option or similar
right with respect to), any shares of Parent Common Stock. Parent is not under
any obligation, or is bound by any Contract pursuant to which it may become
obligated, to repurchase, redeem or otherwise acquire any outstanding shares of
Parent Common Stock.
(b) As of June 5, 2000: (i) 1,782,041 shares of Parent Common
Stock were subject to issuance pursuant to outstanding options to purchase
shares of Parent Common Stock; and (ii) 93,886 shares of Parent Common Stock
were reserved for future issuance pursuant to Parent's Employee Stock Purchase
Plan (the "PARENT ESPP"). (Stock options granted by Parent pursuant to Parent's
stock option plans and otherwise are referred to in this Agreement as "PARENT
OPTIONS.") Parent has delivered or made available to Parent accurate and
complete copies of all stock option plans pursuant to which Parent has ever
granted stock options, the forms of all stock option agreements evidencing such
options.
(c) Except as set forth in Section 3.9(b), as of June 5, 2000
there was no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of Parent; (ii) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any shares
of the capital stock or other securities of Parent; (iii) stockholder rights
plan (or similar plan commonly referred to as a "poison pill") or Contract under
which Parent is or may become obligated to sell or otherwise issue any shares of
its capital stock or any other securities; or (iv) to the knowledge of Parent,
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of Parent.
(d) All outstanding shares of Parent Common Stock, all
outstanding Parent Options, and all outstanding shares of capital stock of each
Subsidiary of Parent have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
material requirements set forth in applicable Contracts.
(e) There has been no material change to Parent's capitalization
between June 5, 2000 and the date hereof.
3.10 INTELLECTUAL PROPERTY.
(a) Parent has good, valid and marketable title to all
Proprietary Assets owned by Parent that are material to the business of Parent,
free and clear of all Encumbrances, except for (i) any lien for current taxes
not yet due and payable, and (ii) minor liens that have arisen in the ordinary
course of business and that do not (individually or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of Parent. Parent has a valid right to use, license and otherwise
exploit all Proprietary Assets licensed or otherwise made available to Parent
that are material to Parent. Except as set forth in the Parent SEC Reports,
Parent has not developed jointly with any other Person any Proprietary Asset
that is material to the business of the Parent with respect to which such other
Person has any rights. Except as set forth in the Parent SEC Reports, there is
no Parent Contract (with the exception of end user license agreements in the
form previously delivered by Parent to the Company) pursuant to which any Person
has any right (whether or not currently exercisable) to use, license or
otherwise exploit any Parent Proprietary Asset.
(b) Parent has taken reasonable measures and precautions to
protect and maintain the confidentiality, secrecy and value of all material
Parent Proprietary Assets (except Parent Proprietary Assets whose value would be
unimpaired by disclosure). Without limiting the generality of
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the foregoing, except as would not result in a Material Adverse Effect on
Parent, (i) all current and former employees of Parent who are or were involved
in, or who have contributed to, the creation or development of any material
Parent Proprietary Asset have executed and delivered to Parent an agreement that
is substantially identical to the form of Confidential Information and Invention
Assignment Agreement previously delivered by Parent to the Company, and (ii) all
current and former consultants and independent contractors to Parent who are or
were involved in, or who have contributed to, the creation or development of any
material Parent Proprietary Asset have executed and delivered to Parent an
agreement that is substantially identical to the form of Consultant Confidential
Information and Invention Assignment Agreement previously delivered to the
Company. No current or former employee, officer, director, stockholder,
consultant or independent contractor has any right, claim or interest in or with
respect to any Parent Proprietary Asset.
(c) To the knowledge of Parent: (i) all patents, trademarks,
service marks and copyrights held by Parent are valid, enforceable and
subsisting; (ii) none of the Parent Proprietary Assets and no Proprietary Asset
that is currently being developed by Parent (either by itself or with any other
Person) infringes, misappropriates or conflicts with any Proprietary Asset owned
or used by any other Person; (iii) none of the products that are or have been
designed, created, developed, assembled, manufactured or sold by Parent is
infringing, misappropriating or making any unlawful or unauthorized use of any
Proprietary Asset owned or used by any other Person, and none of such products
has at any time infringed, misappropriated or made any unlawful or unauthorized
use of, and Parent has received no notice or other communication (in writing or
otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful or unauthorized use of, any Proprietary Asset owned
or used by any other Person; (iv) no other Person is infringing,
misappropriating or making any unlawful or unauthorized use of, and no
Proprietary Asset owned or used by any other Person infringes or conflicts with,
any material Parent Proprietary Asset.
(d) The Parent Proprietary Assets constitute all the Proprietary
Assets necessary to enable Parent to conduct its business in the manner in which
such business has been and is being conducted. Parent has not (i) licensed any
of the material Parent Proprietary Assets to any Person on an exclusive basis,
or (ii) entered into any covenant not to compete or Contract limiting its
ability to exploit fully any material Parent Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(e) Except as would not result in a Material Adverse Effect on
Parent, Parent has not disclosed or delivered to any Person, or permitted the
disclosure or delivery to any escrow agent or other Person, of any Parent Source
Code. No event has occurred, and no circumstance or condition exists, that (with
or without notice or lapse of time) will, or could reasonably be expected to,
result in the disclosure or delivery to any Person of any Parent Source Code.
(f) Except with respect to demonstration or trial copies, no
product, system, program or software module designed or developed, or, to the
Knowledge of Parent sold, licensed or otherwise made available by Parent to any
Person contains any "back door," "time bomb," "Trojan horse," "worm," "drop dead
device," "virus" or other software routines or hardware components designed to
permit unauthorized access or to disable or erase software, hardware or data
without the consent of the user.
3.11 EMPLOYEE AND LABOR MATTERS
(a) Parent is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
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(b) Parent has good labor relations and has no knowledge of any
facts indicating that (i) the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on its labor relations, or (ii) any of the employees of Parent intends to
terminate his or her employment with Parent.
3.12 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Legal Proceeding, and (to the knowledge
of Parent) no Person has threatened to commence any Legal Proceeding: (i) that
involves Parent or any of the assets owned or used by Parent and that, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect on Parent; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement. To the
knowledge of Parent, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that would reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b) There is no material order, writ, injunction, judgment or
decree to which Parent, or any of the assets owned or used by Parent, is
subject. To the knowledge of Parent, no officer or key employee of Parent is
subject to any order, writ, injunction, judgment or decree that prohibits such
officer or other key employee from engaging in or continuing any conduct,
activity or practice relating to the business of Parent.
3.13 FAIRNESS OPINION. Parent's board of directors has received the
written opinion of ING Barings LLC, financial advisor to Parent, dated the date
of this Agreement, to the effect that the Exchange Ratio is fair to the
stockholders of Parent from a financial point of view.
3.14 FINANCIAL ADVISOR. Except for ING Barings LLC ("PARENT
INVESTMENT BANKER"), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
any of the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent.
3.15 ABSENCE OF CHANGES. Except as set forth in the Prospectus filed
by Parent with the SEC on May 25, 2000 pursuant to Rule 424(b)(4) under the
Securities Act, since March 31, 2000:
(a) there has not been any material adverse change in the
business, condition, assets, liabilities, operations or results of
operations of Parent and its subsidiaries taken as a whole, and no event
has occurred, in either case that would reasonably be expected to have a
Material Adverse Effect on Parent;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the assets of any
of Parent and its subsidiaries taken as a whole (whether or not covered
by insurance) that has had or would reasonably be expected to have a
Material Adverse Effect on Parent;
(c) Parent has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of
capital stock or (ii) repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities;
(d) Parent has not sold, issued or granted, or authorized the
issuance of, (i) any capital stock or other security (except for Parent
Common Stock issued upon the valid exercise of outstanding Parent
Options in accordance with the terms of the option agreement pursuant to
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which such Parent Options are outstanding and shares of Parent Common
Stock to be issued pursuant to the Parent ESPP), (ii) any option,
warrant or right to acquire any capital stock or any other security
(except (A) for Parent Options issued in the ordinary course of business
consistent with past practice, (B) pursuant to the Parent ESPP and (C)
warrants as may be issued in the ordinary course of business) or (iii)
any instrument convertible into or exchangeable for any capital stock or
other security;
(e) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of
Parent, and neither Parent nor any of its subsidiaries has effected or
been a party to any merger, consolidation, amalgamation, share exchange,
business combination, recapitalization, reclassification of shares,
stock split, division or subdivision of shares, reverse stock split,
consolidation of shares or similar transaction;
(f) neither Parent nor any of its subsidiaries has entered into
any material transaction or taken any other material action that has
had, or would reasonably be expected to have, a Material Adverse Effect
on Parent;
(g) neither Parent nor any of its subsidiaries has entered into
any material transaction or taken any other material action outside the
ordinary course of business or inconsistent with past practices; and
(h) neither Parent nor any of its subsidiaries has agreed or
committed to take any of the actions referred to in the foregoing
subsections of this Section 3.15.
3.16 LIABILITIES. Parent has no accrued, contingent or other
liabilities of any nature, either matured or unmatured, except for: (a)
liabilities identified as such in the "liabilities" column of the Parent's
Unaudited Consolidated Balance Sheet as of March 31, 2000; (b) normal and
recurring current liabilities that have been incurred by Parent since March 31,
2000 in the ordinary course of business and consistent with past practices; and
(c) liabilities that have not had, and would not reasonably be expected to have,
a Material Adverse Effect on Parent.
3.17 COMPLIANCE WITH LEGAL REQUIREMENTS. Parent is, and has at all
times since January 1, 2000 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and would not reasonably be expected to have a Material Adverse
Effect on Parent. Since January 1, 2000, Parent has not received any notice or
other communication from any Governmental Body or other Person regarding any
actual or possible violation of, or failure to comply with, any Legal
Requirement.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION.
(a) During the period from the date of this Agreement through
the Effective Time (the "PRE-CLOSING PERIOD"), the Company shall, and shall
cause the respective Representatives of the Acquired Corporations to: (a)
provide Parent and Parent's Representatives with reasonable access to the
Acquired Corporations' Representatives, personnel and assets and to all existing
books, records, Tax Returns, work papers and other documents and information
relating to the Acquired Corporations; and (b) provide Parent and Parent's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to the Acquired
Corporations, and with such additional financial, operating and other data and
information regarding the Acquired Corporations, as
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Parent may reasonably request. Without limiting the generality of the foregoing,
during the Pre-Closing Period, the Company shall promptly provide Parent with
copies of:
(i) all material operating and financial reports prepared by
the Company and its Subsidiaries for the Company's senior management,
including (A) copies of the unaudited quarterly consolidated balance
sheets of the Acquired Corporations and the related unaudited quarterly
consolidated statements of operations and statements of cash flows and
(B) copies of any sales forecasts, development plans and hiring reports
prepared for the Company's senior management;
(ii) any written materials or communications sent by or on
behalf of the Company to its stockholders;
(iii) any material notice, document or other communication
sent by or on behalf of any of the Acquired Corporations to any party to
any Acquired Corporation Contract or sent to any of the Acquired
Corporations by any party to any Acquired Corporation Contract (other
than any communication that relates solely to routine commercial
transactions between any Acquired Corporation and the other party to any
such Acquired Corporation Contract and that is of the type sent in the
ordinary course of business and consistent with past practices);
(iv) any notice, report or other document (A) filed with or
sent to NIST, or (B) filed with or sent to any Governmental Body in
connection with the Merger or any of the other transactions contemplated
by this Agreement; and
(v) any material notice, report or other document received by
any of the Acquired Corporations from any Governmental Body.
(b) During the Pre-Closing Period, Parent shall, and shall cause
the respective Representatives of Parent to, provide the Company and the
Company's Representatives with reasonable access to Parent's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to Parent.
(c) The parties acknowledge that all investigations and
discussions conducted by each of them pursuant to this Section 4.1 shall be
subject to (i) the Confidentiality Agreement dated as of June 2, 2000 executed
by the Company with respect to materials provided by Parent to the Company and
(ii) the Confidentiality Agreement dated as of October 8, 1999 executed by
Parent with respect to materials provided by the Company to Parent.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall ensure
that each of the Acquired Corporations conducts its business and operations (A)
in the ordinary course and in accordance with past practices and (B) in
substantial compliance with all applicable Legal Requirements and the material
requirements of all Material Contracts; (ii) the Company shall use commercially
reasonable efforts to ensure that each of the Acquired Corporations preserves
intact its current business organization, keeps available the services of its
current officers and other employees and maintains its relations and goodwill
with all suppliers, customers, landlords, creditors, licensors, licensees,
employees and other Persons having business relationships with the respective
Acquired Corporations; and (iii) the Acquired Corporations shall keep in full
force or renew all insurance policies referred to in Section 2.19.
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(b) During the Pre-Closing Period, the Company shall not
(without the prior written consent of Parent), and shall not permit any of the
other Acquired Corporations to:
(i) declare, accrue, set aside or pay any or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities except for the repurchase of Common Stock from employees or
consultants upon termination of their employment or consulting
relationship with the Company;
(ii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock or other security, (B) any option, call, warrant
or right to acquire any capital stock or other security, or (C) any
instrument convertible into or exchangeable for any capital stock or
other security (except that (1) the Company may issue shares of Company
Common Stock (x) upon the valid exercise of Company Options or Company
Warrants outstanding as of the date of this Agreement, or (y) pursuant
to the ESPP, and (2) the Company may, in the ordinary course of business
and consistent with past practices, grant options under its stock option
plans to purchase no more than a total of 75,000 shares of Company
Common Stock to employees of the Acquired Corporations);
(iii) amend or waive any of its rights under, or accelerate
the vesting under, any provision of any of the Company's stock option
plans, any provision of any agreement evidencing any outstanding stock
option or any restricted stock purchase agreement, or otherwise modify
any of the terms of any outstanding option, warrant or other security or
any related Contract;
(iv) amend or permit the adoption of any amendment to its
certificate of incorporation or bylaws or other charter or
organizational documents, or effect or become a party to any merger,
consolidation, amalgamation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, division or
subdivision of shares, reverse stock split, consolidation of shares or
similar transaction;
(v) form any Subsidiary or acquire any equity interest or
other interest in any other Entity;
(vi) make any capital expenditure (except that the Acquired
Corporations may make capital expenditures in the ordinary course of
business and consistent with past practices that, when added to all
other capital expenditures made on behalf of the Acquired Corporations
during the Pre-Closing Period, do not exceed $100,000 in the aggregate);
(vii) enter into or become bound by, or permit any of the
assets owned or used by it to become bound by any Material Contract
(except that the Acquired Corporations may enter into or become bound by
Contracts and Material Contracts in the ordinary course of business and
consistent with past practices);
(viii) amend or terminate, or waive or exercise any material
right or remedy under, any Material Contract, other than in the ordinary
course of business consistent with past practices;
(ix) (A) acquire, lease or license any right or other asset
from any other Person or sell or otherwise dispose of, or lease or
license, any right or other asset to any
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other Person (except in the ordinary course of business and consistent
with past practices) or (B) waive or relinquish any material right;
(x) lend money to any Person, or incur or guarantee any
indebtedness (except that the Acquired Corporations may (A) make routine
borrowings in the ordinary course of business and consistent with past
practices under its current line of credit with GE Capital; and (B) (in
the ordinary course of business and consistent with past practices) make
advances to employees for valid business purposes);
(xi) establish, adopt or amend any employee benefit plan, pay
any bonus or make any profit-sharing or similar payment to, or increase
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers
or employees (except that the Acquired Corporations may in the ordinary
course of business and consistent with past practices (A) make routine,
reasonable salary increases in connection with the Acquired
Corporations' customary employee review process, (B) pay customary
bonuses in accordance with existing bonus plans referred to in Part
2.17(a) of the Company Disclosure Schedule or new bonus plans consistent
with existing bonus plans and (C) make profit sharing or similar
payments;
(xii) hire any employee at the level of vice president or
above, or with an annual base salary in excess of $100,000;
(xiii) change of its pricing policies, product return
policies, product maintenance polices, service policies, product
modification or upgrade policies, personnel policies or other business
policies, or any of its methods of accounting or accounting practices in
any respect;
(xiv) take or permit to be taken any action that could
preclude Parent from accounting for the merger as a "pooling of
interests" for accounting purposes;
(xv) make any Tax election inconsistent with past practices;
(xvi) initiate any material Legal Proceeding or settle any
Legal Proceeding involving payments by any of the Acquired Corporations
in excess of $100,000 or equitable relief against any of the Acquired
Corporations;
(xvii) enter into any material transaction or take any other
material action outside the ordinary course of business or inconsistent
with past practices; or
(xviii) agree or commit to take any of the actions described
in the foregoing subsections of this Section 4.2(b).
Without limiting any other provision of this Section 4.2(b), during the
Pre-Closing Period, the Company agrees to consult with Parent a reasonable
period of time prior to: (A) permitting any of the Acquired Corporations to
enter into any Contract of the type referred to in Section 2.10(a)(iii), and (B)
hiring any employee who would not be subject to the provision of Section
4.2(b)(xii) (it being understood that the actions referred to in this sentence
shall not require the prior written consent of Parent).
(c) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of: (i) the discovery by the Company of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a material inaccuracy in
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any representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if (A)
such representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of the Company; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 6 or Section 7 impossible or unlikely or that has had or
could reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations. Without limiting the generality of the foregoing, the Company
shall promptly advise Parent in writing of any Legal Proceeding or material
claim threatened, commenced or asserted against or with respect to any of the
Acquired Corporations. No notification given to Parent pursuant to this Section
4.2(c) shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this Agreement.
(d) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.2(c) requires any change in the
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Disclosure Schedule were dated as of the date
of the occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Disclosure Schedule specifying such change. No such update shall be deemed to
supplement or amend the Disclosure Schedule for the purpose of (i) determining
the accuracy of any of the representations and warranties made by the Company or
any of the Designated Shareholders in this Agreement, or (ii) determining
whether any of the conditions set forth in Section 6 has been satisfied.
4.3 NO SOLICITATION.
(a) The Company shall not directly or indirectly, and shall not
authorize or permit any of the other Acquired Corporations or any Representative
of any of the Acquired Corporations directly or indirectly to, (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal or take any action that could reasonably be expected to
lead to an Acquisition Proposal, (ii) furnish any information regarding any of
the Acquired Corporations to any Person in connection with or in response to an
Acquisition Proposal, (iii) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that prior to the adoption and
approval of this Agreement by the Required Company Stockholder Vote, the Company
shall not be prohibited by this Section 4.3(a) from furnishing nonpublic
information regarding the Acquired Corporations to, or entering into discussions
with, any Person in response to a Superior Offer that is submitted by such
Person (and not withdrawn) if (1) neither the Company nor any Representative of
any of the Acquired Corporations shall have violated any of the restrictions set
forth in this Section 4.3, (2) the board of directors of the Company concludes
in good faith, after consultation with its outside legal counsel, that the
failure to take such action would be inconsistent with the fiduciary obligations
of such board of directors to the Company's stockholders under applicable law,
(3) prior to furnishing any such nonpublic information to, or entering into
discussions with, such Person, the Company gives Parent written notice of the
identity of such Person and of the Company's intention to furnish nonpublic
information to, or enter into discussions with, such Person, and the Company
receives from such Person an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and
oral information furnished to such Person by or on behalf of the Company, and
(4) prior to furnishing any such nonpublic information to such Person, the
Company furnishes such nonpublic information to Parent (to the extent such
nonpublic information has not been previously furnished by the
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Company to Parent); and provided, further, that nothing herein shall prevent the
Board of Directors of the Company from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act. The parties agree that for purposes of the preceding sentence
(but for no other purpose), an offer which is conditioned on completion of due
diligence and other customary conditions (and regarding which the board of
directors of the Company determines, in good faith, based on the advice of its
financial advisor, that financing is likely to be obtained) shall be deemed to
constitute a "Superior Offer" if such offer otherwise meets the definition of
"Superior Offer" set forth in Exhibit A (other than the financing portion of
such definition). Without limiting the generality of the foregoing, the Company
acknowledges and agrees that any violation of any of the restrictions set forth
in the preceding sentence by any Representative of any of the Acquired
Corporations, whether or not such Representative is purporting to act on behalf
of any of the Acquired Corporations, shall be deemed to constitute a breach of
this Section 4.3 by the Company. The Company shall promptly notify Parent in
writing of any material inquiry, proposal or offer relating to a possible
Acquisition Transaction that is received by the Company during the Pre-Closing
Period.
(b) The Company shall promptly advise Parent orally and in
writing of any Acquisition Proposal (including the identity of the Person making
or submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent fully informed with respect to the status of any such Acquisition
Proposal and any modification or proposed modification thereto.
4.4 OPERATION OF PARENT'S BUSINESS.
(a) During the Pre-Closing Period: (i) Parent shall ensure that
it conducts its business and operations (A) in the ordinary course and in
accordance with past practices and (B) in substantial compliance with all
applicable Legal Requirements and the material requirements of all material
contracts; and (ii) Parent shall use commercially reasonable efforts to ensure
that it preserves intact its current business organization, keeps available the
services of its current officers and other employees and maintains its relations
and goodwill with all suppliers, customers, landlords, creditors, licensors,
licensees, employees and other Persons having business relationships with
Parent. By way of amplification and without limitation, neither Parent nor any
of its subsidiaries shall, between the date hereof and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Company:
(i) amend or otherwise change the Certificate of
Incorporation or Bylaws or equivalent organizational document of Parent or any
of its subsidiaries or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure of Parent;
(ii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its Subsidiaries; or propose to do
any of the foregoing;
(iii) (x) acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or (y) otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Parent or enter into any joint ventures,
strategic partnerships or alliances, in the case of both (x) and (y), where such
acquisition or agreement is reasonably likely to materially delay consummation
of the Merger or materially adversely affect Parent's ability to consummate the
Merger;
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(iv) adopt a plan of complete or partial liquidation or
dissolution of Parent;
(v) fail to make in a timely manner any material filings
with the SEC required under the Securities Act or the Exchange Act or the rules
or regulations promulgated thereunder; or
(vi) agree in writing or otherwise to take any of the
actions described in Section 4.4(a)(i) through (v) above.
(b) During the Pre-Closing Period, Parent shall promptly notify
the Company in writing of: (i) the discovery by Parent of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by Parent in this Agreement; (ii) any event,
condition, fact or circumstance that occurs, arises or exists after the date of
this Agreement and that would cause or constitute a material inaccuracy in any
representation or warranty made by Parent in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of Parent; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 6 or Section 7 impossible or unlikely or that has had or
could reasonably be expected to have a Material Adverse Effect on Parent.
Without limiting the generality of the foregoing, Parent shall promptly advise
the Company in writing of any Legal Proceeding or material claim overtly
threatened, commenced or asserted against or with respect to Parent. No
notification given to the Company pursuant to this Section 4.4(b) shall limit or
otherwise affect any of the representations, warranties, covenants or
obligations of Parent contained in this Agreement.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT; JOINT PROSPECTUS/PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement,
Parent and the Company shall prepare and cause to be filed with the SEC the
Joint Prospectus/Proxy Statement and Parent shall prepare and cause to be filed
with the SEC the Form S-4 Registration Statement, in which the Joint
Prospectus/Proxy Statement will be included as a prospectus. Each of Parent and
the Company shall use commercially reasonable efforts to cause the Form S-4
Registration Statement and the Joint Prospectus/Proxy Statement to comply with
the rules and regulations promulgated by the SEC, to respond promptly to any
comments of the SEC or its staff and to have the Form S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after it
is filed with the SEC. The Company and Parent will use commercially reasonable
efforts to cause the Joint Prospectus/Proxy Statement to be mailed to their
respective stockholders as promptly as practicable after the Form S-4
Registration Statement is declared effective under the Securities Act. Parent
and the Company shall promptly furnish to the other information concerning
Parent or the Company or their respective stockholders that may be required or
reasonably requested in connection with any action contemplated by this Section
5.1. If any event relating to any of the Acquired Corporations or Parent occurs,
or if either party becomes aware of any information that should be disclosed in
an amendment or supplement to the Form S-4 Registration Statement or the Joint
Prospectus/Proxy Statement, then such party shall promptly inform the other
party thereof and shall cooperate in filing such amendment or supplement with
the SEC and, if appropriate, in mailing such amendment or supplement to the
stockholders of the Company or Parent.
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(b) Prior to the Effective Time, Parent shall use commercially
reasonable efforts to obtain all regulatory approvals needed to ensure that the
Parent Common Stock to be issued in the Merger will be registered or qualified
under the securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the record
date for determining the stockholders entitled to notice of and to vote at the
Company Stockholders' Meeting; provided, however, that Parent shall not be
required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction.
5.2 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of their Common Stock to consider, act upon and vote upon
the adoption and approval of this Agreement and the approval of the Merger (the
"COMPANY STOCKHOLDERS' MEETING"). The Company Stockholders' Meeting will be held
as promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act; provided, however, that notwithstanding
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone the Company Stockholder's Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Joint Proxy
Statement/Prospectus is provided to the Company's stockholders in advance of a
vote on the Merger Agreement and the Merger or, if as of the time for which the
Company Stockholders' Meeting is originally scheduled (as set forth in the Joint
Proxy Statement/Prospectus) there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company Stockholders' Meeting. The
Company and Parent shall cooperate in attempting to cause the Company
Stockholders' Meeting to be scheduled and convened on the same date as the
Parent Stockholders' Meeting (as defined in Section 5.3 below) shall be
scheduled and convened. The Company shall ensure that the Company Stockholders'
Meeting is called, noticed, convened, held and conducted, and that all proxies
solicited in connection with such Company Stockholders' Meeting are solicited,
in compliance with all applicable Legal Requirements. The Company's obligation
to call, give notice of, convene and hold its respective Stockholders' Meeting
in accordance with this Section 5.2(a) shall not be limited or otherwise
affected by the commencement, disclosure, announcement or submission of any
Superior Offer or other Acquisition Proposal, or by any withdrawal, amendment or
modification of the recommendation of the board of directors of either Company
with respect to the Merger.
(b) Subject to Section 5.2(c): (i) the board of directors of the
Company shall unanimously recommend that the Company's stockholders vote in
favor of and adopt and approve this Agreement and approve the Merger at the
Company Stockholders' Meeting; (ii) the Joint Prospectus/Proxy Statement shall
include a statement to the effect that the board of directors of the Company has
unanimously recommended that the Company's stockholders vote in favor of and
adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; and (iii) neither the board of directors of the Company
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify, in a manner adverse to Parent, the unanimous
recommendation of the board of directors of the Company that the Company's
stockholders vote in favor of and adopt and approve this Agreement and approve
the Merger. For purposes of this Agreement, said recommendation of the board of
directors of the Company shall be deemed to have been modified in a manner
adverse to Parent if said recommendation shall no longer be unanimous.
(c) Nothing in Section 5.2(b) shall prevent the board of
directors of the Company from withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger at any time prior to the adoption and
approval of this Agreement by the Required Company Stockholder Vote if (i) a
Superior Offer is made to the Company and is not withdrawn, (ii) neither the
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Company nor any of its Representatives shall have violated any of the
restrictions set forth in Section 4.3, (iii) the board of directors of the
Company concludes in good faith, after consultation with its outside counsel,
that, in light of such Superior Offer, it would be inconsistent with the
fiduciary obligations of the board of directors of the Company to the Company's
stockholders under applicable law not to withdraw, amend or modify such
recommendation, (iv) the Company provides Parent with at least 24 hours prior
notice of any meeting of the Company's board of directors at which such board of
directors is expected to consider such Superior Offer, and (v) the Company's
board of directors does not withdraw, amend or modify its unanimous
recommendation in favor of the Merger for at least 48 hours after the Company
provides Parent with the name of the Person making such Superior Offer and a
copy of such Superior Offer. Nothing contained in this Section 5.2 shall limit
the Company's obligation to call, give notice of, convene and hold the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of the
board of directors of the Company shall have been withdrawn, amended or
modified).
5.3 PARENT STOCKHOLDERS' MEETING.
(a) Parent shall take all action necessary to call, give notice
of, convene and hold a meeting of the holders of Parent Common Stock to consider
and vote upon the issuance of Parent Common Stock in the Merger and, to the
extent required under Parent's certificate of incorporation and bylaws and
applicable law, the election of Lev J. Leytes to Parent's Board of Directors
(the "PARENT STOCKHOLDERS' MEETING"). The Parent Stockholders' Meeting will be
held as promptly as practicable after the S-4 Registration Statement is declared
effective under the Securities Act; provided, however, that notwithstanding
anything to the contrary contained in this Agreement, Parent may adjourn or
postpone the Parent Stockholders' Meeting to the extent necessary to ensure that
any necessary supplement or amendment to the Joint Proxy Statement/Prospectus is
provided to Parent's stockholders in advance of a vote on the issuance of Parent
Common Stock in the Merger or, if as of the time for which the Parent
Stockholders' Meeting is originally scheduled (as set forth in the Joint Proxy
Statement/Prospectus) there are insufficient shares of Parent Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Parent's Stockholders' Meeting. Parent shall ensure
that the Parent Stockholders' Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited in connection with such Parent
Stockholders' Meeting are solicited, in compliance with all applicable Legal
Requirements.
(b) (i) The board of directors of Parent shall unanimously
recommend that Parent's stockholders vote in favor of the issuance of Parent
Common Stock in the Merger and the election of Lev J. Leytes to Parent's Board
of Directors at the Parent Stockholders' Meeting; (ii) the Joint
Prospectus/Proxy Statement shall include a statement to the effect that the
board of directors of Parent has unanimously recommended that Parent's
stockholders vote in favor of the issuance of shares of Parent Common Stock in
the Merger and the election of Lev. J. Leytes to Parent's Board of Directors at
Parent's Stockholders' Meeting; and (iii) neither the board of directors of
Parent nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify, in a manner adverse the Company, the
unanimous recommendation of the board of directors of Parent that Parent's
stockholders vote in favor of the issuance of Parent Common Stock in the Merger
and the election of Lev J. Leytes to Parent's Board of Directors. For purposes
of this Agreement, said recommendation of the board of directors of Parent shall
be deemed to have been modified in a manner adverse to the Company if said
recommendation shall no longer be unanimous.
5.4 REGULATORY APPROVALS. Each party shall use commercially
reasonable efforts to file, as promptly as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed by such
party with any Governmental Body with respect to the Merger and the other
transactions contemplated by this Agreement, and to submit promptly any
additional information
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requested by any such Governmental Body. Without limiting the generality of the
foregoing, the Company and Parent shall, promptly after the date of this
Agreement, prepare and file the notifications required under the HSR Act, if
any, in connection with the Merger. The Company and Parent shall respond as
promptly as practicable to (i) any inquiries or requests received from the
Federal Trade Commission or the Department of Justice for additional information
or documentation and (ii) any inquiries or requests received from any state
attorney general or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Parent shall (1) give the other party
prompt notice of the commencement of any Legal Proceeding by or before any
Governmental Body with respect to the Merger or any of the other transactions
contemplated by this Agreement, (2) keep the other party informed as to the
status of any such Legal Proceeding, and (3) promptly inform the other party of
any communication to or from the Federal Trade Commission, the Department of
Justice or any other Governmental Body regarding the Merger. The Company and
Parent will consult and cooperate with one another, and will consider in good
faith the views of one another, in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or submitted
in connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law. In addition, except as may
be prohibited by any Governmental Body or by any Legal Requirement, in
connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent will permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.
5.5 STOCK OPTIONS AND WARRANTS.
(a) Subject to Section 5.5(b), at the Effective Time, all rights
with respect to Company Common Stock under each Company Option then outstanding
shall be converted into and become rights with respect to Parent Common Stock,
and Parent shall assume each such Company Option in accordance with the terms
(as in effect as of the date of this Agreement) of the stock option plan under
which it was issued, the stock option agreement by which it is evidenced and any
applicable Change of Control Agreement. At the Effective Time, all rights with
respect to Company Common Stock under each Company Warrant then outstanding
shall be converted into and become rights to Parent Common Stock, and Parent
shall assume each such Company Warrant in accordance with the terms (as in
effect as of the date of this Agreement) of the Company Warrant and any warrant
agreement by which it is evidenced. From and after the Effective Time, (i) each
Company Option and Company Warrant assumed by Parent may be exercised solely for
shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock
subject to each such Company Option and Company Warrant shall be equal to the
number of shares of Company Common Stock subject to such Company Option and
Company Warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounding down to the nearest whole share, (iii) the per share
exercise price under each such Company Option and Company Warrant shall be
adjusted by dividing the per share exercise price under such Company Option and
Company Warrant by the Exchange Ratio and rounding up to the nearest cent and
(iv) any restriction on the exercise of any such Company Option and Company
Warrant shall continue in full force and effect and the term, exercisability,
vesting schedule and other provisions of such Company Option and Company Warrant
shall otherwise remain unchanged; provided, however, that each Company Option
and Company Warrant assumed by Parent in accordance with this Section 5.5(a)
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, division or subdivision of shares, stock
dividend, reverse stock split, consolidation of shares, reclassification,
recapitalization or other similar transaction subsequent to the Effective Time.
It is the intention of the parties that the Company Options assumed by Parent
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent such Company Options qualified as
incentive stock options prior to the
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Effective Time. Parent shall file with the SEC, within 7 days after the date on
which the Merger becomes effective, a registration statement on Form S-8
relating to the shares of Parent Common Stock issuable with respect to the
Company Options assumed by Parent in accordance with this Section 5.5(a). Parent
shall use commercially reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus
contained in such registration statement) for so long as the Company Options
remain outstanding. As soon as practicable after the Effective Time (but in no
event later than 30 days thereafter), Parent shall deliver to each holder of a
Company Option or Company Warrant an appropriate notice setting forth such
holder's rights with respect to such Company Option or Company Warrant and
indicating that such Company Option or Company Warrant shall continue in effect
on the same terms and conditions as were in effect immediately prior to the
Effective Time (subject to the adjustments required pursuant to Section 5.5(a)).
(b) Notwithstanding anything to the contrary contained in this
Section 5.5, in lieu of assuming outstanding Company Options in accordance with
Section 5.5(a), Parent may, at its election, cause such outstanding Company
Options to be replaced by issuing reasonably equivalent replacement stock
options in substitution therefor ("REPLACEMENT OPTIONS"). The vesting schedule
of any Replacement Option shall be the same as that of the option being
replaced. The number of shares of Parent Common Stock subject to a Replacement
Option, as well as the per share exercise price of such Replacement Option,
shall be determined in the manner specified in Section 5.5(a). If Parent elects
to substitute Replacement Options in lieu of assuming outstanding Company
Options, Parent shall take all corporate action necessary to approve the
Replacement Options described in this Section 5.5(b) in a manner qualifying
under Section 424(a) of the Code and to grant options that qualify as incentive
stock options under Section 422 of the Code (to the extent such Company Options
qualified as incentive stock options prior to the Effective Time) and shall
deliver an agreement evidencing such Replacement Options to each applicable
holder of a Company Option within 30 days after the Effective Time. Shares of
Parent Common Stock issuable pursuant to the Replacement Options granted
pursuant to this Section 5.5(b) shall be registered on the Form S-8 Registration
Statement referred to in Section 5.5(a). Parent shall use commercially
reasonable efforts to maintain the effectiveness of such registration statement
(and maintain the current status of the prospectus contained in such
registration statement) for so long as the Replacement Options remain
outstanding.
(c) The Company shall take all action that may be necessary
(under the plans pursuant to which Company Options are outstanding and
otherwise) to effectuate the provisions of this Section 5.5 and to ensure that,
from and after the Effective Time, holders of Company Options have no rights
with respect thereto other than those specifically provided in this Section 5.5.
The parties intend that the assumption or replacement of Company options
provided for under this Section 5.5 shall comply with the provisions of Section
424(a) of the Code, and this Section 5.5 shall be interpreted consistent with
such intent.
(d) As of the Effective Time, the ESPP shall be terminated. The
rights of participants in the ESPP with respect to any offering period then
underway under the ESPP shall be determined by treating the last business day
prior to the Effective Time as the last day of such offering period and by
making such other pro-rata adjustments as may be required pursuant to the ESPP
to reflect the reduced offering period but otherwise treating such offering
period as a fully effective and completed offering period for all purposes of
such Plan. Prior to the Effective Time, the Company shall take all actions that
are necessary to give effect to the transactions contemplated by this Section
5.5(d); provided, however, that the change in the offering period referred to in
this Section 5.5(d) shall be conditioned upon the consummation of the Merger.
5.6 EMPLOYEE BENEFITS. Parent agrees that all employees of the
Company who continue employment with Parent or the Company after the Effective
Time shall be eligible to participate in
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Parent's health, vacation and other employee benefit plans, to the same extent
as employees of Parent in similar positions and at similar grade levels (it
being understood that such employees shall be eligible to begin to participate
(i) in Parent's employee stock purchase plan upon the commencement of the first
new offering period that commences following the Effective Time, and (ii) in
Parent's other employee benefit plans in accordance with the terms of such
plans; provided, however, that in the case of plans for which the Company
maintains a plan offering the same type of benefit, such eligibility need not be
offered by Parent until the corresponding plan of the Company ceases to be
available after the Effective Time). As soon as administratively feasible
following the Effective Time, Parent agrees to take whatever action is necessary
to transition Company employees into Parent's employee benefits plans as
contemplated by the first sentence of this Section 5.6. Further, until such time
that the continuing Company employees are covered under an employee benefit plan
of Parent, they shall continue to be covered under the corresponding Company
Plan that offers the same type of benefit. Parent also agrees to provide each
such continuing employee with full credit for service as an employee of the
Company or any affiliate thereof prior to the Effective Time for the following
purposes only: for purposes of eligibility, vesting and determination of the
level of benefits (without duplication) under any employee benefit plan or
arrangement maintained by Parent, including Parent's 401(k) plan, and for
Parent's vacation program. To the extent practicable and only if permitted by
the relevant insurance carrier, Parent shall administer its medical plan
("PARENT MEDICAL PLAN") so as to coordinate deductibles, "out-of-pocket"
maximums and maximum benefit restrictions so that: (A) Company employees receive
credit under the Parent Medical Plan toward any deductibles under the Parent
Medical Plan for deductibles paid under any of the medical, dental and
prescription drug plans included within the Company Plans ("Company Medical
Plan") on or prior to the Effective Time which, had the Company employees been
covered by the Parent Medical Plan, would have been taken into account by the
Parent Medical Plan, (B) Company employees receive credit for their eligible
out-of-pocket costs with respect to eligible claims incurred under the Company
Medical Plan which, had the Company employees been covered by the Parent Medical
Plan, would have been taken into account under the Parent Medical Plan toward
any "out-of-pocket" maximums under the Parent Medical Plan, and (C) Company
employees are credited with benefits received under the Company Medical Plan on
or prior to the Effective Time which, had the Company employees been covered by
the Parent Medical Plan, would have been taken into account by the Parent
Medical Plan for purposes of applying the maximum benefit restrictions under the
Parent Medical Plan. Notwithstanding the foregoing, to the extent permitted by
law, Parent reserves the right to enforce, on a nondiscriminatory basis, any
otherwise applicable pre-existing condition limitation under its medical plan
with respect to any Company employee who does not enroll in Parent's medical
plan at the time Parent's medical plan is first made available to such Company
employee.
5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of those
Persons who are directors and officers of the Company as of the date of this
Agreement (the "INDEMNIFIED PERSONS") for acts and omissions occurring prior to
the Effective Time, as provided in the Company's Bylaws (as in effect as of the
date of this Agreement) and as provided in the indemnification agreements
between the Company and said Indemnified Persons (as in effect as of the date of
this Agreement), shall survive the Merger and shall be observed by the Surviving
Corporation to the fullest extent available under Delaware law for a period of
five years from the Effective Time.
(b) From the Effective Time until the fifth anniversary of the
Effective Time, the Surviving Corporation shall maintain in effect, for the
benefit of the Indemnified Persons with respect to acts or omissions occurring
prior to the Effective Time, the existing policy of directors' and officers'
liability insurance maintained by the Company as of the date of this Agreement
(the "EXISTING POLICY"); provided, however, that (i) the Surviving Corporation
may substitute for the Existing Policy a policy or policies of comparable
coverage, and (ii) the Surviving Corporation shall not be required to pay an
annual
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premium for the Existing Policy (or for any substitute policies) in excess of
$75,000. In the event any future annual premium for the Existing Policy (or any
substitute policies) exceeds $75,000, the Surviving Corporation shall be
entitled to reduce the amount of coverage of the Existing Policy (or any
substitute policies) to the amount of coverage that can be obtained for a
premium equal to $75,000.
(c) If the Surviving Corporation does not have sufficient
capital to comply with its obligations under Section 5.6, Parent shall provide
the Surviving Corporation with such capital.
(d) This Section shall survive the consummation of the Merger,
is intended to benefit the indemnified parties, shall be binding upon all
successors and assigns of the Surviving Corporation and Parent and shall be
enforceable by the indemnified parties.
5.8 POOLING OF INTERESTS. Each of the Company and Parent agrees (and
the Company agrees to cause the Acquired Corporations) (a) not knowingly to take
any action during the Pre-Closing Period that would adversely affect the ability
of Parent to account for the Merger as a "pooling of interests," and (b) to use
commercially reasonable efforts to attempt to ensure that none of its
"affiliates" (as that term is used in Rule 145 under the Securities Act) takes
any action that could adversely affect the ability of Parent to account for the
Merger as a "pooling of interests." The Company and Parent each agrees to
provide to PricewaterhouseCoopers LLP and Ernst & Young LLP such letters as
shall be reasonably requested of either of them with respect to the letters
referred to in Sections 6.6(f) and 6.6(g).
5.9 ADDITIONAL AGREEMENTS.
(a) Subject to Section 5.9(b), Parent and the Company shall use
commercially reasonable efforts to take, or cause to be taken, all actions
necessary to effectuate the Merger and make effective the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, but subject to Section 5.9(b), each party to this Agreement (i) shall
make all filings (if any) and give all notices (if any) required to be made and
given by such party in connection with the Merger and the other transactions
contemplated by this Agreement, (ii) shall use commercially reasonable efforts
to obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by this
Agreement, and (iii) shall use commercially reasonable efforts to lift any
restraint, injunction or other legal bar to the Merger. The Company shall
promptly deliver to Parent a copy of each such filing made, each such notice
given and each such Consent obtained by the Company during the Pre-Closing
Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent shall not have any obligation under this Agreement: (i) to
dispose or transfer or cause any of its Subsidiaries to dispose of or transfer
any assets, or to commit to cause any of the Acquired Corporations to dispose of
any assets; (ii) to discontinue or cause any of its Subsidiaries to discontinue
offering any product or service, or to commit to cause any of the Acquired
Corporations to discontinue offering any product or service; (iii) to license or
otherwise make available, or cause any of its Subsidiaries to license or
otherwise make available, to any Person, any technology, software or other
Intellectual Property, or to commit to cause any of the Acquired Corporations to
license or otherwise make available to any Person any technology, software or
other Intellectual Property; (iv) to hold separate or cause any of its
Subsidiaries to hold separate any assets or operations (either before or after
the Closing Date), or to commit to cause any of the Acquired Corporations to
hold separate any assets or operations; or (v) to make or cause any of its
Subsidiaries to make any commitment (to any Governmental Body or otherwise)
regarding its future operations or the future operations of any of the Acquired
Corporations.
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5.10 DISCLOSURE. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger or any of the other transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, the Company shall
not, and shall not permit any of its Subsidiaries or any Representative of any
of the Acquired Corporations to, make any disclosure regarding the Merger or any
of the other transactions contemplated by this Agreement unless (a) Parent shall
have approved such disclosure or (b) the Company shall have been advised by its
outside legal counsel that such disclosure is required by applicable law.
5.11 AFFILIATE AGREEMENTS. The Company shall use commercially
reasonable efforts to cause each Person identified in Part 2.20 of the Company
Disclosure Schedule and each other Person who is or becomes (or may be deemed to
be) an "affiliate" (as that term is used in Rule 145 under the Securities Act)
of the Company to execute and deliver to Parent, prior to the date of the
mailing of the Joint Prospectus/Proxy Statement to the Company's stockholders,
an Affiliate Agreement in the form of Exhibit B. The Parent shall use
commercially reasonable efforts to cause each Person who is or becomes (or may
be deemed to be) an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of the Parent to execute and deliver to the Company, prior to
the date of mailing of the Joint Prospectus/Proxy Statement to Parent's
stockholders, an affiliate agreement of substantially the scope of Exhibit B
hereto, to the extent applicable to "affiliates" of Parent.
5.12 TAX MATTERS. At or prior to the filing of the Form S-4
Registration Statement, the Company, Merger Sub and Parent shall execute and
deliver to Cooley Godward llp and to Venture Law Group, A Professional
Corporation, tax representation letters in customary form to the extent the
matters addressed in such letters are factually accurate. Parent, Merger Sub and
the Company shall each confirm to Cooley Godward LLP and to Venture Law Group
the accuracy and completeness as of the Effective Time of the tax representation
letters delivered pursuant to the immediately preceding sentence. Parent and the
Company shall use commercially reasonable efforts prior to the Effective Time to
cause the Merger to qualify as a tax free reorganization under Section 368(a)(1)
of the Code. Following delivery of the tax representations letters pursuant to
the first sentence of this Section 5.12, each of Parent and the Company shall
use its commercially reasonable efforts to cause Cooley Godward LLP and Venture
Law Group, respectively, to deliver to it a tax opinion satisfying the
requirements of Item 601 of Regulation S-K promulgated under the Securities Act.
In rendering such opinions, each of such counsel shall be entitled to rely on
the tax representation letters referred to in this Section 5.12. The parties
hereto shall report the Merger as a reorganization within the meaning of Section
368(a) of the Code, and neither Parent, Merger Sub nor the Company shall take
any action or fail to take any action prior to or following the Closing that
would reasonably be expected to cause the Merger to fail to qualify as a
reorganization.
5.13 LETTER OF THE COMPANY'S INDEPENDENT ACCOUNTANTS. The Company
shall use commercially reasonable efforts to cause to be delivered to Parent and
the Company a "comfort" letter prepared by PricewaterhouseCoopers LLP in
accordance with Statement of Auditing Standards No. 72 "Letters For Underwriters
and Certain Other Requesting Parties," subject to receipt by
PricewaterhouseCoopers LLP of a customary representation letter from Parent,
dated no more than two business days before the date on which the Form S-4
Registration Statement becomes effective (and reasonably satisfactory in form
and substance to Parent and the Company), that is customary in scope and
substance for "comfort" letters delivered by independent accountants in
connection with registration statements similar to the Form S-4 Registration
Statement.
5.14 LISTING. Parent shall use commercially reasonable efforts to
cause the shares of Parent Common Stock being issued in the Merger to be
approved for listing as of the Effective Time (subject to notice of issuance) on
the Nasdaq National Market.
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5.15 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use
commercially reasonable efforts to obtain and deliver to Parent on or prior to
the Closing the resignation of each officer and director from positions as an
officer and director of each of the Acquired Corporations (it being understood
that such resignations by officers of the Company whose employment with the
Company or Parent following the Effective Time shall be continuing shall not
constitute a voluntary or an "Involuntary Termination" under the Change of
Control Agreements and shall not effect in any manner any rights of any officer
of the Company or any of the Company's obligations under the Change of Control
Agreements).
5.16 TERMINATION OF 401(k) PLAN. To the extent requested by Parent,
the Company shall ensure that its 401(k) Savings and Retirement Plan and ESPP
shall be terminated immediately prior to the Effective Time.
5.17 PARENT BOARD OF DIRECTORS. Parent shall use commercially
reasonable efforts to cause Lev J. Leytes to be elected to Parent's Board of
Directors as of the Effective Time.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
of the Company contained in this Agreement (i) shall have been accurate in all
material respects as of the date of this Agreement and (ii) shall be accurate in
all respects as of the Closing Date as if made on and as of the Closing Date
except in the case of clause (ii): (A) for such inaccuracies as do not
constitute a Material Adverse Effect on the Acquired Corporations, (B) for
changes contemplated by this Agreement, and (C) for those representations and
warranties that address matters only as of a particular date (which
representations and warranties shall have been accurate as of such date except
as does not constitute a Material Adverse Effect on the Acquired Corporations as
of such particular date) (it being understood that, for purposes of determining
the accuracy of such representations and warranties as of the date hereof and as
of the Closing Date, (i) all "Material Adverse Effect" qualifications and other
materiality qualifications contained in such representations and warranties
shall be disregarded and (ii) any update of or modification to the Company
Disclosure Schedule made or purported to have been made after the date of this
Agreement shall be disregarded).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
6.4 STOCKHOLDER APPROVAL. This Agreement shall have been duly
adopted and approved, and the Merger shall have been duly approved, by the
Required Company Stockholder Vote and the Required Parent Stockholder Vote. The
holders of not more than 5% of the shares of the Company's Common Stock shall
have exercised dissenters' rights pursuant to Chapter 13 of the California
Corporations Code.
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6.5 CONSENTS. All Consents required to be obtained in connection
with the Merger and the other transactions contemplated by this Agreement shall
have been obtained and shall be in full force and effect, except where the
failure to obtain such Consents would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
6.6 AGREEMENTS AND DOCUMENTS. Parent shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) Affiliate Agreements in the form of Exhibit B, executed by
each Person who could reasonably be deemed to be an "affiliate" of the
Company (as that term is used in Rule 145 under the Securities Act);
(b) Reserved;
(c) Release in the form of Exhibit C, executed by Lev J. Leytes;
(d) Noncompetition Agreement in the form of Exhibit D, executed
by Lev J. Leytes;
(e) a letter from PricewaterhouseCoopers LLP, dated as of the
Closing Date and addressed to Parent and the Company, reasonably
satisfactory in form and substance to Parent, updating the "comfort"
letter referred to in Section 5.13;
(f) a letter from PricewaterhouseCoopers LLP, dated as of the
Closing Date and addressed to the Company, reasonably satisfactory in
form and substance to Parent and Ernst & Young LLP, to the effect that,
after reasonable investigation, PricewaterhouseCoopers LLP is not aware
of any fact concerning the Acquired Corporations or any of the
stockholders or affiliates of the Acquired Corporations that could
preclude the Company from being a "poolable entity" in accordance with
generally accepted accounting principles, Accounting Principles Board
Opinion No. 16 and all published rules, regulations and policies of the
SEC;
(g) a letter from Ernst & Young LLP, dated as of the Closing Date
and addressed to Parent, reasonably satisfactory in form and substance
to Parent, to the effect that Ernst & Young LLP concurs with Parent's
management's conclusion that the Merger may be accounted for as a
"pooling of interests" in accordance with generally accepted accounting
principles, Accounting Principles Board Opinion No. 16 and all published
rules, regulations and policies of the SEC;
(h) a legal opinion of Cooley Godward LLP dated as of the Closing
Date and addressed to Parent, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the
Code (it being understood that, in rendering such opinion, Cooley
Godward LLP may rely upon the tax representation letters referred to in
Section 5.12);
(i) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections
6.1, 6.2, 6.4 (with respect to the Required Company Vote exercise of
dissenters' rights only) and 6.5 have been duly satisfied; and
(j) the written resignations of all officers and directors from
positions as an officer and director of each of the Acquired
Corporations effective as of the Effective Time (it being understood
that such resignations by officers of the Company whose employment with
the Company or Parent following the Effective Time shall be continuing
shall not constitute a
45.
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voluntary or an "Involuntary Termination" under the Change of Control
Agreements and shall not effect in any manner any rights of any officer
of the Company or any of the Company's obligations under the Change of
Control Agreements).
6.7 HSR ACT. All waiting periods, if any, under the HSR Act relating
to the transactions contemplated hereby will have expired or terminated early
and all material foreign antitrust approval required to be obtained prior to the
Merger in connection with the transactions contemplated hereby shall have been
obtained.
6.8 RESERVED.
6.9 RESERVED.
6.10 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
6.11 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.12 NO GOVERNMENTAL LITIGATION. There shall not be pending or
overtly threatened any Legal Proceeding in which a Governmental Body is or is
overtly threatened to become a party or is otherwise involved, and neither
Parent nor the Company shall have received any communication from any
Governmental Body in which such Governmental Body indicates the probability of
commencing any Legal Proceeding or taking any other action: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger; (b) relating to
the Merger and seeking to obtain from Parent or any of its Subsidiaries, or any
of the Acquired Corporations, any damages or other relief that would be material
to Parent; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the stock of any of the Acquired Corporations;
or (d) which would materially and adversely affect the right of Parent or any of
the Acquired Corporations to own the assets or operate the business of the
Acquired Corporations.
6.13 NO OTHER LITIGATION. There shall not be pending any Legal
Proceeding in which there is a reasonable likelihood of an outcome that would
have a Material Adverse Effect on the Acquired Corporations or a Material
Adverse Effect on Parent: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement; (b) relating to the Merger and seeking to obtain from Parent or any
of its Subsidiaries, or any of the Acquired Corporations, any damages or other
relief that would be material to Parent; or (c) seeking to prohibit or limit in
any material respect Parent's ability to vote, receive dividends with respect to
or otherwise exercise ownership rights with respect to the stock of any of the
Acquired Corporations.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
of Parent and Merger Sub contained in this Agreement (i) shall have been
accurate in all material respects as of the date of this Agreement and (ii)
shall be accurate in all respects as of the Closing Date as if made on and as of
46.
<PAGE> 53
the Closing Date except in the case of clause (ii): (A) for such inaccuracies as
do not constitute a Material Adverse Effect on Parent or Merger Sub, (B) for
changes contemplated by this Agreement, and (C) for those representations and
warranties that address matters only as of a particular date (which
representations and warranties shall have been accurate as of such date except
as does not constitute a Material Adverse Effect on Parent or Merger Sub as of
such particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties as of the date hereof and as of
the Closing Date, all "Material Adverse Effect" qualifications and other
materiality qualifications contained in such representations and warranties
shall be disregarded).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations
that Parent and Merger Sub are required to comply with or to perform at or prior
to the Closing shall have been complied with and performed in all material
respects.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
7.4 STOCKHOLDER APPROVAL. This Agreement shall have been duly
adopted and approved, and the Merger shall have been duly approved, by the
Required Company Stockholder Vote and the Required Parent Stockholder Vote.
7.5 DOCUMENTS. The Company shall have received the following
documents:
(a) a legal opinion of Venture Law Group, dated as of the Closing
Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code (it being understood that,
in rendering such opinion, Venture Law Group may rely upon the tax
representation letters referred to in Section 5.12); and
(b) a certificate executed on behalf of Parent by an executive
officer of Parent, confirming that conditions set forth in Sections 7.1,
7.2 and 7.4 (with respect to the Required Parent Stockholder Vote) have
been duly satisfied.
7.6 HSR ACT. All waiting periods, if any, under the HSR Act relating
to the transactions contemplated hereby will have expired or terminated early
and all material foreign antitrust approval required to be obtained prior to the
Merger in connection with the transactions contemplated hereby shall have been
obtained.
7.7 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
7.8 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger by
the Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by the Company
illegal.
7.9 NO GOVERNMENTAL LITIGATION. There shall not be pending or
overtly threatened any Legal Proceeding in which a Governmental Body is or is
overtly threatened to become a party or is otherwise involved, and neither
Parent nor the Company shall have received any communication from any
Governmental Body in which such Governmental Body indicates the probability of
commencing any Legal Proceeding or taking any other action: (a) challenging or
seeking to restrain or prohibit the
47.
<PAGE> 54
consummation of the Merger; (b) relating to the Merger and seeking to obtain
from Parent or any of its Subsidiaries, or any of the Acquired Corporations, any
damages or other relief that would be material to Parent; (c) seeking to
prohibit or limit in any material respect Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of any of the Acquired Corporations; or (d) which would materially and
adversely affect the right of Parent or any of the Acquired Corporations to own
the assets or operate the business of the Acquired Corporations.
7.10 NO OTHER LITIGATION. There shall not be pending any Legal
Proceeding in which there is a reasonable likelihood of an outcome that would
have a Material Adverse Effect on Parent: (a) challenging or seeking to restrain
or prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; or (b) relating to the Merger and seeking to
obtain from Parent or any of its Subsidiaries, any damages or other relief that
would be material to Parent.
7.11 PARENT BOARD OF DIRECTORS. Lev. J. Leytes shall have been duly
elected to Parent's Board of Directors.
SECTION 8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated prior to the
Effective Time (whether before or after approval of the Merger by the Required
Company Stockholder Vote):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated by December 31, 2000 (the "Termination Date") (unless
the failure to consummate the Merger is attributable to a failure on the
part of the party seeking to terminate this Agreement to perform any
material obligation required to be performed by such party at or prior
to the Effective Time); provided, however, that if at December 31, 2000
there shall exist a reasonable likelihood, determined in good faith by
the Company's board of directors, that all of the conditions to the
consummation of the Merger set forth in Sections 6 and 7 of this
Agreement would be satisfied with the passage of additional time, then
in such event the Company shall in its discretion have the right to
extend the Termination Date to a date not later than February 28, 2001;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger;
(d) by either Parent or the Company if (i) the Company
Stockholders' Meeting shall have been held and (ii) this Agreement and
the Merger shall not have been approved at such meeting by the Required
Company Stockholder Vote; provided, however, that the Company shall not
be permitted to terminate this Agreement pursuant to this Section 8.1(d)
unless the Company shall have paid to Parent any fee required to be paid
to Parent pursuant to Section 8.3(b);
(e) by Parent (at any time prior to the adoption and approval of
this Agreement and the Merger by the Required Company Stockholder Vote)
if a Triggering Event shall have occurred;
(f) by Parent if any of the Company's representations and
warranties contained in this Agreement shall have been materially
inaccurate as of the date of this Agreement or shall
48.
<PAGE> 55
have become materially inaccurate as of any subsequent date (as if made
on such subsequent date), or if any of the Company's covenants contained
in this Agreement shall have been breached in any material respect;
provided, however, that Parent may not terminate this Agreement under
this Section 8.1(f): (i) on account of an inaccuracy in the Company's
representations and warranties that is curable by the Company or on
account of a breach of a covenant by the Company that is curable by the
Company unless the Company fails to cure such inaccuracy or breach
within 30 days after receiving written notice from Parent of such
inaccuracy or breach; or (ii) if such inaccuracy or breach (considered
in the aggregate with all other inaccuracies or breaches) would not
result in a failure of the conditions set forth in Section 6.1 hereof);
(g) by the Company if any of Parent's representations and
warranties contained in this Agreement shall have been materially
inaccurate as of the date of this Agreement or shall have become
materially inaccurate as of any subsequent date (as if made on such
subsequent date), or if any of Parent's covenants contained in this
Agreement shall have been breached in any material respect; provided,
however, that the Company may not terminate this Agreement under this
Section 8.1(g): (i) on account of an inaccuracy in Parent's
representations and warranties that is curable by Parent or on account
of a breach of a covenant by Parent that is curable by Parent unless
Parent fails to cure such inaccuracy or breach within 30 days after
receiving written notice from the Company of such inaccuracy or breach;
or (ii) if such inaccuracy or breach (considered in the aggregate with
all other inaccuracies or breaches) would not result in a failure of the
conditions set forth in Section 7.1 hereof);
(h) by either Parent or the Company if (i) the Parent
Stockholders' Meeting shall have been held and (ii) the issuance of
shares of Parent Common Stock contemplated by this Agreement and the
Merger shall not have been approved at such meeting by the Required
Parent Stockholder Vote; provided, however, that Parent shall not be
permitted to terminate this Agreement pursuant to this Section 8.1(h)
unless Parent shall have paid to the Company any fee required to be paid
to the Company pursuant to Section 8.3(b); or
(i) by the Company if the board of directors of the Company
shall, subject to complying with the terms of this Agreement, including
Sections 4.3 and 5.2(c), have approved, endorsed or recommended a
Superior Offer; provided, however, that the Company shall not be
permitted to terminate this Agreement pursuant to this Section 8.1(i)
unless the Company shall have paid to Parent any fee required to be paid
to Parent pursuant to Section 8.3(b).
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect (and, except as provided in this Section 8.2, there shall be no
liability or obligation hereunder on the part of any of the parties hereto or
their respective officers, directors, stockholders or Affiliates); provided,
however, that (i) this Section 8.2, Section 8.3 and Section 9 shall survive the
termination of this Agreement and shall remain in full force and effect, and
(ii) the termination of this Agreement shall not relieve any party from any
liability for any willful breach of any representation, warranty or covenant
contained in this Agreement.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in connection with (i) the
filing, printing and mailing of the Form S-4 Registration
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Statement and the Joint Prospectus/Proxy Statement and any amendments or
supplements thereto and (ii) the filing of the premerger notification and report
forms relating to the Merger under the HSR Act, if any be required.
(b) (i)If (x) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(d) and at or prior to the time of such
termination an Acquisition Proposal shall have been disclosed, announced,
commenced, submitted or made (and shall not have been publicly, absolutely and
unconditionally withdrawn and abandoned), (y) this Agreement is terminated by
Parent pursuant to Section 8.1(e) or (z) this Agreement is terminated by the
Company pursuant to Section 8.1(i), then, in any such case, the Company shall
pay to Parent, in cash at the time specified in the next sentence, a
nonrefundable fee in the amount of $9,000,000. In the case of termination of
this Agreement by the Company pursuant to Section 8.1(d) in the circumstances
contemplated by clause (x) above or Section 8.1(i), the fee referred to in the
preceding sentence shall be paid by the Company prior to such termination; and
in the case of termination of this Agreement by Parent pursuant to Section
8.1(d) in the circumstances contemplated by clause (x) above or Section 8.1(e),
the fee referred to in the preceding sentence shall be paid by the Company
within two business days after such termination.
(ii) If (x) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(d) in circumstances in which no fee is due under
clause (x) of Section 8.3(b)(i) and no event has occurred since March 31, 2000
that has had, or would reasonably be expected to have, a Material Adverse Effect
on Parent, then, in any such case, the Company shall pay to Parent, in cash at
the time specified in the next sentence, a nonrefundable fee in the amount of
$5,000,000. In the case of termination of this Agreement by the Company pursuant
to Section 8.1(d) in the circumstances contemplated by this clause (ii), the fee
referred to in the preceding sentence shall be paid by the Company prior to such
termination; and in the case of termination of this Agreement by Parent pursuant
to Section 8.1(d) in the circumstances contemplated by this clause (ii), the fee
referred to in the preceding sentence shall be paid by the Company within two
business days after such termination.
(iii) If (x) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(h) and no event has occurred since March 31,
2000 that has had, or would reasonably be expected to have, a Material Adverse
Effect on the Acquired Corporations, then, in any such case, Parent shall pay to
the Company, in cash at the time specified in the next sentence, a nonrefundable
fee in the amount of $5,000,000. In the case of termination of this Agreement by
Parent pursuant to Section 8.1(h), the fee referred to in the preceding sentence
shall be paid by Parent prior to such termination; and in the case of
termination of this Agreement by the Company pursuant to Section 8.1(h), the fee
referred to in the preceding sentence shall be paid by Parent within two
business days after such termination.
(iv) If (x) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(b) and at the time of such termination the
condition set forth in Section 6.6(g) shall not have been satisfied and Parent
shall not have irrevocably waived compliance with such condition, (y) all other
conditions to the consummation of the Merger set forth in Section 6 shall have
been satisfied other than those conditions set forth in Sections 6.3, 6.4,
6.6(e), 6.6(f), 6.6(g), 6.6(h), 6.6(i) and 6.6(j) (it being the understanding of
the parties that in determining whether the conditions set forth in Section 6.1
and 6.2 shall have been satisfied for this purpose, the term "Termination Date"
shall be substituted for the terms "Closing Date" and "Closing") and (z) the
failure for the condition set forth in Section 6.6(g) to be satisfied is not
directly or indirectly related to any action taken, or failed to be taken, by
the Company or any of its affiliates (except for actions taken prior to the
execution of this Agreement or any fact related to the Company prior to the
execution of this Agreement, in each case the existence of which was disclosed
to Parent and its independent accountants prior to the execution of this
Agreement), then, in any such case, Parent shall pay to the Company, in cash at
the time specified in the last sentence
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of this clause (iv), a nonrefundable fee in the amount of $5,000,000. In the
case of termination of this Agreement by Parent pursuant to Section 8.1(b) in
the circumstances contemplated by this clause (iv), the fee referred to in this
clause (iv) shall be paid by Parent prior to such termination; and in the case
of termination of this Agreement by the Company pursuant to Section 8.1(b) in
the circumstances contemplated by this clause (iv), the fee referred to in this
clause (iv) shall be paid by Parent within two business days after such
termination.
(c) All payments required to be made pursuant to Section 8.3(b)
above shall be made in immediately available funds to an account designated by
the recipient thereof. Any payment that is not made when due pursuant to the
foregoing shall bear interest, commencing on the date that the payment became
due, at a rate equal to the rate of interest publicly announced by Citibank,
N.A., from time to time, in the City of New York, as such bank's Base Rate plus
3%.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may be amended with the approval of
the respective boards of directors of the Company and Parent at any time
(whether before or after the adoption and approval of this Agreement and the
approval of the Merger by the stockholders of the Company); provided, however,
that after any such adoption and approval of this Agreement and approval of the
Merger by the Company's stockholders, no amendment shall be made which by law
requires further approval of the stockholders of the Company without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.2 WAIVER.
(a) No failure on the part of either party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of either party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) Neither party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein (including in Section 4.1(c)) constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof. This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same instrument
9.5 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. In any action between the parties arising out of
or
51.
<PAGE> 58
relating to this Agreement or any of the transactions contemplated by this
Agreement: (a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in the State of California; (b) if any such action is commenced in a
state court, then, subject to applicable law, no party shall object to the
removal of such action to any federal court located in the Northern District of
California; (c) each of the parties irrevocably waives the right to trial by
jury; and (d) each of the parties irrevocably consents to service of process by
first class certified mail, return receipt requested, postage prepaid, to the
address at which such party is to receive notice in accordance with Section 9.9.
9.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered Sections
contained in Section 2, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify any other
representation or warranty to which the relevance of any representation or
warranty is reasonably apparent.
9.7 ATTORNEYS' FEES. In any action at law or suit in equity to
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a sum for
its reasonable attorneys' fees and all other reasonable costs and expenses
incurred in such action or suit.
9.8 ASSIGNABILITY. This Agreement shall be binding upon, and shall
be enforceable by and inure solely to the benefit of, the parties hereto and
their respective successors and assigns; provided, however, that neither this
Agreement nor any of the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
consent shall be void and of no effect. Except as otherwise contemplated in
Section 5.7(d), nothing in this Agreement, express or implied, is intended to or
shall confer upon any Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
9.9 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received (a) upon receipt when delivered
by hand, or (b) two business days after sent by registered mail or by courier or
express delivery service, or by facsimile, provided that in each case the notice
or other communication is sent to the address or facsimile telephone number set
forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
52.
<PAGE> 59
If to Parent or Merger Sub: Molecular Devices Corporation
1311 Orleans Drive
Sunnyvale, CA 94089
Attn: Chief Financial Officer
Facsimile: (408) 747-3699
Mercury Acquisition Sub, Inc.
c/o Molecular Devices Corporation
1311 Orleans Drive
Sunnyvale, CA 94089
Attn: Chief Financial Officer
Facsimile: (408) 747-3699
In each case with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attn: James C. Kitch and
Suzanne Sawochka Hooper
Facsimile: (650) 849-7400
If to the Company LJL BioSystems, Inc.
404 Tasman Drive
Sunnyvale, CA 94089
Attn: Chief Financial Officer
Facsimile: (408) 541-8786
With a copy to:
Venture Law Group
2800 Sand Hill Road
Menlo Park CA 94025
Attn: Mark B. Weeks and Steve
Tonsfeldt
Facsimile: (650) 233-8386
9.10 COOPERATION. The Company and Parent agree to cooperate fully
with each other and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by the other to evidence or reflect the transactions contemplated by
this Agreement and to carry out the intent and purposes of this Agreement.
9.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
53.
<PAGE> 60
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits or Schedules to this Agreement.
(e) The bold-faced headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
54.
<PAGE> 61
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
MOLECULAR DEVICES CORPORATION
By: ________________________________
Name:
Title:
MERCURY ACQUISITION SUB, INC.
By: ________________________________
Name:
Title:
LJL BIOSYSTEMS, INC.
By: ________________________________
Name:
Title:
55.
<PAGE> 62
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any Contract: (a) to which any of the Acquired Corporations is a party; (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation
Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to any
of the Acquired Corporations or otherwise used by any of the Acquired
Corporations.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal or inquiry (other than an offer or proposal by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, amalgamation, share exchange,
business combination, issuance of securities, acquisition of securities,
tender offer, exchange offer or other similar transaction (i) in which
any of the Acquired Corporations is a constituent company, (ii) in which
a Person or "group" (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons directly or indirectly acquires the
Company or more than 40% of the Company's business or directly or
indirectly acquires beneficial or record ownership of securities
representing, or exchangeable for or convertible into, more than 40% of
the outstanding securities of any class of voting securities of any of
the Acquired Corporations, or (iii) in which any of the Acquired
Corporations issues securities representing more than 40% of the
outstanding securities of any class of voting securities of the Company;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 40% of the assets of the Company; or
(c) any liquidation or dissolution of the Company.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common
Stock, $0.001 par value per share, of the Company.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the Company Disclosure Schedule that has been prepared by the Company in
accordance with the requirements of Section 9.6 of the Agreement and that has
been delivered by the Company to Parent on the date of the Agreement and signed
by the President of the Company.
COMPANY OPTIONS. "Company Options" shall mean the stock options granted
by the Company pursuant to the Company's stock option plans.
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COMPANY WARRANTS. "Company Warrants" shall mean, collectively, that
certain warrant dated as of June 6, 1997 and amended as of March 17, 1998 to
purchase 50,269 shares of Company Common Stock and that certain warrant dated as
of June 17, 1998 and amended as of March 17, 1997 to purchase 15,384 shares of
Company Common Stock.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FORM S-4 REGISTRATION STATEMENT. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended prior to the time it is declared effective
by the SEC.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, ministry, fund, foundation, center, organization,
unit, body or Entity and any court or other tribunal).
HSR ACT. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
JOINT PROSPECTUS/PROXY STATEMENT. "Joint Prospectus/Proxy Statement"
shall mean the proxy statement to be sent to the Company's stockholders and the
Parent's stockholders in connection with the Company Stockholders' Meeting and
the Parent's Stockholders' Meeting.
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KNOWLEDGE of the Company shall refer to actual knowledge of any director
or executive officer of the Company.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Market).
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy, circumstance
or other matter will be deemed to have a "Material Adverse Effect" on the
Acquired Corporations if such event, violation, inaccuracy, circumstance or
other matter would have a material adverse effect on (i) the business,
condition, capitalization, assets, liabilities, operations, or financial
performance of the Acquired Corporations taken as a whole, (ii) the ability of
the Company to consummate the Merger or any of the other transactions
contemplated by the Agreement or to perform any of its obligations under the
Agreement, or (iii) Parent's ability to vote, receive dividends with respect to
or otherwise exercise ownership rights with respect to the stock of the
Surviving Corporation; provided, however, that none of the following shall be
deemed, in and of itself, to have a Material Adverse Effect on the Acquired
Corporations: (A) a change in the market price or trading volume of the Company
Common Stock, (B) an event, violation, inaccuracy, circumstance or other matter
that results from conditions affecting the U.S. economy or the world economy,
(C) an event, violation, inaccuracy, circumstance or other matter that results
from conditions affecting the biotechnology industry so long as such conditions
do not affect the Company in a disproportionate manner as compared with
companies of a similar size, (D) a delay in customer orders arising primarily
out of or resulting primarily from the announcement of the transactions
contemplated by this Agreement, (E) an event, violation, inaccuracy,
circumstance or other matter that results from the taking of any action required
by this Agreement and (F) any failure by the Company to meet internal
projections or forecasts or published revenue or earnings predictions for any
period ending (or for which revenues or earnings are released) on or after the
date of this Agreement (provided that the Company complies with the conduct of
business requirements set forth in Section 4.2 of this Agreement). An event,
violation, inaccuracy, circumstance or other matter will be deemed to have a
"Material Adverse Effect" on Parent if such event, violation, inaccuracy,
circumstance or other matter would have a material adverse effect on (i) the
business, condition, capitalization, assets, liabilities, operations, or
financial performance of Parent or (ii) the ability of Parent to consummate the
Merger or any of the other transactions contemplated by the Agreement or to
perform any of its obligations under the Agreement; provided, however, that none
of the following shall be deemed, in and of itself, to have a Material Adverse
Effect on Parent: (A) a change in the market price or trading volume of Parent
Common Stock, (B) an event, violation, inaccuracy, circumstance or other matter
that results from conditions affecting the U.S. economy or the world economy,
(C) an event, violation, inaccuracy, circumstance or other matter that results
from conditions affecting the biotechnology industry so long as such conditions
do not affect Parent in a disproportionate manner as compared with companies of
a similar size, (D) a delay in customer orders arising primarily out of or
resulting primarily from the announcement of the transactions contemplated by
this Agreement, (E) an event, violation, inaccuracy, circumstance or other
matter that results from the taking of any action required by this Agreement;
and (F) any failure by Parent to meet internal projections or forecasts or
published revenue or earnings predictions for any period ending (or for which
revenues or earnings are released) on or after the date of this Agreement,
provided, that Parent has complied with Section 4.4 of this Agreement. The
parties acknowledge that the dollar thresholds set forth
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in the various representations and warranties and elsewhere in this Agreement
were established to permit a more efficient administration of this Agreement and
are not to be considered in determining whether an event, violation, inaccuracy,
circumstance or other matter will be deemed to constitute a "Material Adverse
Effect" with respect to the Acquired Corporations or Parent, as the case may be.
PARENT COMMON STOCK. "Parent Common Stock" shall mean the Common Stock,
$.01 par value per share, of Parent.
PARENT CONTRACT. "Parent Contract" shall mean any Contract: (a) to which
Parent is a party; (b) by which Parent or any asset of Parent is or may become
bound or under which Parent has, or may become subject to, any obligation; or
(c) under which Parent has or may acquire any right or interest.
PARENT PROPRIETARY ASSET. "Parent Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to Parent or otherwise used by Parent.
PARENT OPTIONS. "Parent Options" shall mean the stock options granted by
Parent pursuant to Parent's stock option plans.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
REQUIRED COMPANY STOCKHOLDER VOTE. "Required Company Stockholder Vote"
shall have the meaning set forth in Section 2.27.
REQUIRED PARENT STOCKHOLDER VOTE. "Required Parent Stockholder Vote"
shall have the meaning set forth in Section 6.4.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at leased a majority of the members of
such Entity's board of directors or other governing body, or (b) at least 50% of
the outstanding equity or financial interests or such Entity.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase (by means of a merger,
consolidation, amalgamation, share exchange, business combination, issuance of
securities, acquisition of securities, tender offer, exchange offer or other
similar transaction) more than 50% of the outstanding shares of Company Common
Stock, which the board of
A-4.
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directors of the Company determines, in good faith, after consultation with its
financial advisor, has terms more favorable to the Company's stockholders than
the terms of the Merger after taking into account all pertinent factors deemed
relevant by the board of directors of the Company under the laws of the State of
Delaware; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" unless any financing required to consummate the transaction
contemplated by such offer is either (i) in the possession of such third party
at the time such offer is made, or (ii) committed and likely, based upon a
reasonable determination of the board of directors of the Company, to be
obtained by such third party on a timely basis.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, estimated tax,
unemployment tax, national health insurance tax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
TRIGGERING EVENT. A "Triggering Event" shall be deemed to have occurred
if: (i) the board of directors of the Company shall have failed to recommend, or
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Parent its unanimous recommendation in favor of, the adoption
and approval of the Agreement or the approval of the Merger; (ii) the Company
shall have failed to include in the Joint Prospectus/Proxy Statement the
recommendation of the board of directors of the Company in favor of the adoption
and approval of the Agreement and the approval of the Merger; (iii) the board of
directors of the Company fails to reaffirm its recommendation in favor of the
adoption and approval of the Agreement and the approval of the Merger within ten
business days after an Acquisition Proposal shall have been publicly announced
and Parent requests in writing that such recommendation be reaffirmed; (iv) the
board of directors of the Company shall have approved, endorsed or recommended
any Acquisition Proposal; (v) the Company shall have entered into any letter of
intent or similar document or any Contract relating to any Acquisition Proposal;
(vi) a tender or exchange offer relating to securities of the Company shall have
been commenced and the Company shall not have sent to its securityholders,
within ten business days after the commencement of such tender or exchange
offer, a statement disclosing that the Company recommends rejection of such
tender or exchange offer; (vii) an Acquisition Proposal is publicly announced,
and the Company (A) fails to issue a press release announcing its opposition to
such Acquisition Proposal within ten business days after such Acquisition
Proposal is announced or (B) otherwise fails to oppose such Acquisition Proposal
within ten business days after such Acquisition Proposal is announced; or (ix)
the Company intentionally breaches any of its obligations under Section 4.3 of
the Agreement.
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EXHIBITS
--------
Exhibit A - Certain Definitions
Exhibit B - Form of Affiliate Agreement
Exhibit C - Form of Release Agreement
Exhibit D - Form of Noncompetition Agreement
