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EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
AURORA BIOSCIENCES CORPORATION,
a Delaware corporation;
AURORA ACQUISITION CORP.,
a Wisconsin corporation;
and
PanVERA CORPORATION, a Wisconsin
corporation.
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Dated as of November 16, 2000
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EXHIBITS
EXHIBIT A - Certain definitions
EXHIBIT B - Escrow Agreement
EXHIBIT C - Plan of Merger
EXHIBIT D - Tax Representation Letters
EXHIBIT E-1 - Form of Affiliate Agreement
EXHIBIT E-2 - Persons to execute Affiliate Agreements
EXHIBIT F - Form of Voting Agreement
EXHIBIT G-1 - Company Stockholders to execute a Release
EXHIBIT G-2 - Form of Stockholder Release
EXHIBIT G-3 - Form of Company Release
EXHIBIT H - Form of Employment Agreement
EXHIBIT I - Form of legal opinion of Godfrey & Kahn, S.C.
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TABLE OF CONTENTS
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1. DESCRIPTION OF TRANSACTION...........................................................2
1.1 Merger of Merger Sub into the Company.........................................2
1.2 Effect of the Merger..........................................................2
1.3 Closing; Effective Time.......................................................2
1.4 Articles of Incorporation and Bylaws; Directors and Officers..................2
1.5 Conversion of Shares..........................................................2
1.6 Employee Stock Options........................................................4
1.7 Closing of the Company's Transfer Books.......................................4
1.8 Exchange of Certificates......................................................5
1.9 Dissenters' Rights............................................................6
1.10 Escrow of Parent Common Stock.................................................6
1.11 Tax Consequences..............................................................7
1.12 Accounting Treatment..........................................................7
1.13 Further Action................................................................7
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................7
2.1 Due Organization; No Subsidiaries; Etc........................................7
2.2 Articles of Incorporation and Bylaws; Records.................................8
2.3 Capitalization, Etc...........................................................8
2.4 Financial Statements.........................................................10
2.5 Absence of Changes...........................................................10
2.6 Title to Assets..............................................................12
2.7 Bank Accounts; Receivables...................................................12
2.8 Equipment; Leasehold.........................................................12
2.9 Proprietary Assets...........................................................13
2.10 Contracts....................................................................14
2.11 Liabilities; Fees, Costs and Expenses........................................17
2.12 Compliance with Legal Requirements...........................................17
2.13 Governmental Authorizations..................................................17
2.14 Tax Matters..................................................................18
2.15 Employee and Labor Matters; Benefit Plans....................................19
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2.16 Environmental Matters........................................................22
2.17 Insurance....................................................................23
2.18 Related Party Transactions...................................................23
2.19 Legal Proceedings; Orders....................................................23
2.20 Authority; Binding Nature of Agreement.......................................24
2.21 Non-Contravention; Consents..................................................24
2.22 Product Development..........................................................25
2.23 Full Disclosure..............................................................25
2.24 Company Action...............................................................25
2.25 Anti-Takeover Law............................................................26
2.26 Finder's Fee.................................................................26
2.27 Reorganization; Pooling of Interests.........................................26
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.............................26
3.1 Corporate Existence and Power................................................26
3.2 Authority; Binding Nature of Agreement.......................................26
3.3 SEC Filings; Financial Statements............................................27
3.4 No Conflict..................................................................27
3.5 Valid Issuance...............................................................28
3.6 Reorganization...............................................................28
4. CERTAIN COVENANTS OF THE COMPANY....................................................28
4.1 Access and Investigation.....................................................28
4.2 Operation of the Company's Business..........................................28
4.3 Notification; Updates to Disclosure Schedule.................................30
4.4 No Negotiation...............................................................31
4.5 Company Stockholders' Meeting................................................32
5. ADDITIONAL COVENANTS OF THE PARTIES.................................................32
5.1 Additional Agreements........................................................32
5.2 Regulatory Approvals.........................................................33
5.3 Registration Statement.......................................................34
5.4 Public Announcements.........................................................34
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5.5 Affiliate Agreements.........................................................35
5.6 Pooling of Interest..........................................................35
5.7 Tax Matters..................................................................35
5.8 Employee Retention...........................................................35
5.9 Release......................................................................35
5.10 FIRPTA Matters...............................................................36
5.11 Anti-Takeover Laws...........................................................36
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB........................36
6.1 Accuracy of Representations..................................................36
6.2 Performance of Covenants.....................................................36
6.3 Stockholder Approval.........................................................36
6.4 Consents.....................................................................36
6.5 Agreements and Documents.....................................................36
6.6 Listing......................................................................37
6.7 Employment Agreements........................................................37
6.8 No Restraints................................................................37
6.9 No Governmental Litigation...................................................37
6.10 No Other Litigation..........................................................38
6.11 Effectiveness of Registration Statement......................................38
6.12 FIRPTA Compliance............................................................38
6.13 HSR Act......................................................................38
6.14 Dissenter's Rights...........................................................38
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY..................................38
7.1 Accuracy of Representations..................................................38
7.2 Performance of Covenants.....................................................39
7.3 Documents....................................................................39
7.4 Stockholder Approval.........................................................39
7.5 Listing......................................................................39
7.6 No Restraints................................................................39
7.7 HSR Act......................................................................39
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7.8 Effectiveness of Registration Statement......................................39
7.9 No Governmental Litigation...................................................40
8. TERMINATION.........................................................................40
8.1 Termination Events...........................................................40
8.2 Termination Procedures.......................................................41
8.3 Effect of Termination........................................................41
9. INDEMNIFICATION, ETC................................................................41
9.1 Survival of Representations, Etc.............................................41
9.2 Indemnification..............................................................42
9.3 Threshold....................................................................42
9.4 Offset Against Escrow Shares; Sole Remedy....................................43
9.5 No Contribution..............................................................43
(a) Defense of Third Party Claims.........................................43
9.6 Exercise of Remedies by Indemnitees Other Than Parent........................44
10. MISCELLANEOUS PROVISIONS............................................................44
10.1 Company Stockholders' Representative.........................................44
10.2 Further Assurances...........................................................45
10.3 Fees and Expenses............................................................45
10.4 Attorneys' Fees..............................................................46
10.5 Notices......................................................................46
10.6 Time of the Essence..........................................................47
10.7 Headings.....................................................................47
10.8 Counterparts.................................................................47
10.9 Governing Law; Jurisdiction and Venue........................................47
10.10 Successors and Assigns.......................................................48
10.11 Remedies Cumulative; Specific Performance....................................48
10.12 Waiver.......................................................................48
10.13 Amendments...................................................................48
10.14 Severability.................................................................48
10.15 Parties in Interest..........................................................49
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10.16 Entire Agreement.............................................................49
10.17 Construction.................................................................49
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v.
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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 November 16, 2000, by and among: AURORA BIOSCIENCES
CORPORATION, a Delaware corporation ("Parent"); AURORA ACQUISITION CORP., a
Wisconsin corporation and a wholly owned subsidiary of Parent ("Merger Sub");
and PanVERA CORPORATION, a Wisconsin corporation (the "Company"). Certain other
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 with the Company (the "Merger") in accordance with this Agreement and
the Wisconsin Business Corporation Law (the "WBCL"). 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 reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). For accounting purposes, it is intended that the Merger be treated as a
"pooling of interests."
C. This Agreement has been approved by the respective boards of
directors of Parent, Merger Sub and the Company and has been adopted by Parent,
as the sole stockholder of Merger Sub.
D. Simultaneously with the execution of this Agreement, and as an
inducement to Parent to enter into this Agreement, each of Ralph Kauten, Thomas
Burke, Terry Sivesind and the Kauten Family, LLC (collectively, the "Majority
Stockholders") is entering into a Voting Agreement with Parent in the form of
EXHIBIT F (the "Voting Agreement") pursuant to which each Major Stockholder has,
among other things, agreed, upon the terms and subject to the conditions
thereof, to vote his or her Company Common Stock (as defined below) in favor of
the Merger.
E. Simultaneously with the execution and delivery of this Agreement,
each of Ralph Kauten, Thomas Burke, Randall Bolger, William Checovich, Robert
Lowery and Alex Vodenlich (the "Key Executives"), and the Company are executing
an Employment and Non-Competition Agreement in the form of EXHIBIT H (the
"Employment and Non-Competition Agreement") to be effective upon Closing,
whereby each of the Key Executives agrees, among other things, to remain
employed by the Company for a certain number of years immediately following the
Closing and not to compete with or solicit employees from Parent during the term
of the employment and for one (1) year after the expiration of such term of
employment.
1.
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AGREEMENT
The parties to this Agreement agree as follows:
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 WBCL.
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, 4365 Executive Drive, Suite 1100, San Diego, California
92121 at 10:00 a.m. on a date to be designated by Parent which shall not be more
than 10 business days after the date on which the last of the conditions set
forth in Section 6 and Section 7 has been satisfied. The date on which the
Closing actually takes place is referred to in this Agreement as the "Closing
Date." Contemporaneously with or as promptly as practicable after the Closing, a
properly executed articles of merger, with a Plan of Merger in the Form of
EXHIBIT C attached thereto, conforming to the requirements of the WBCL shall be
filed with the Department of Financial Institutions of the State of Wisconsin.
The Merger shall become effective at the time specified in such articles of
merger or, if no time is specified, at the time such articles of merger is filed
with the Department of Financial Institutions of the State of Wisconsin (the
"Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation of the Company immediately
prior to the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation;
(b) the Bylaws of the Company immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation after the Effective Time;
and
(c) the directors and officers of Merger Sub immediately prior to
the Effective Time shall be the directors and officers of the Surviving
Corporation immediately after the Effective Time.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.8(a), 1.9 and 1.10, 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:
2.
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(i) each share of Company Common Stock outstanding
immediately prior to the Effective Time, other than Excluded Shares and
Dissenting Shares shall be converted into the right to receive that fraction of
a share of the common stock of Parent, $0.001 par value per share ("Parent
Common Stock") equal to the "Applicable Fraction" (as defined in Section
1.5(b)(i)), it being understood that certain of the shares of Parent Common
Stock issuable pursuant to this Section 1.5(a)(i) shall be held in escrow in
accordance with Section 1.10;
(ii) each share of the common stock of Merger Sub
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock of the Surviving Corporation; and
(iii) all Excluded Shares shall be cancelled and retired
and shall cease to exist and no consideration shall be delivered or be
deliverable therefor.
(b) For purposes of this Agreement:
(i) The "Applicable Fraction" shall be the fraction: (A)
having a numerator equal to 1,900,000, and (B) having a denominator equal to the
Fully Diluted Company Share Amount (as defined in Section 1.5(b)(ii)). If,
between the date of this Agreement and the Effective Time, the outstanding
shares of Parent Common Stock shall have been changed into a different number of
shares or a different class by reason of any reclassification, stock split,
reverse stock split, stock dividend, recapitalization or other similar
transaction, then the Applicable Fraction shall be correspondingly adjusted.
(ii) The "Fully Diluted Company Share Amount" shall be the
sum of (A) the aggregate number of shares of Company Common Stock outstanding
immediately prior to the Effective Time (including any such shares that are
subject to a repurchase option or risk of forfeiture under any restricted stock
purchase agreement or other agreement, but excluding any Excluded Shares), (B)
the aggregate number of shares of Company Common Stock issuable pursuant to all
Company Options outstanding immediately prior to the Effective Time, and (C) the
aggregate number of shares of Company Common Stock issuable pursuant to
warrants, options (other than Company Options), convertible securities and any
other rights to acquire shares of Company Common Stock outstanding immediately
prior to the Effective Time.
(iii) The "Merger Consideration" receivable by a holder of
capital stock of the Company shall consist of (i) the shares of Parent Common
Stock (other than Escrow Shares (as defined in Section 1.10)) issuable to such
holder in accordance with Section 1.5(a) upon the surrender of the certificate
or certificates representing capital stock of the Company held by such holder,
(ii) the rights of such holder with respect to the Escrow Shares held by the
Escrow Agent on behalf of such holder, and (iii) the right of such holder to
receive cash in lieu of fractional shares of Parent Common Stock in accordance
with Section 1.8(a).
(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 under any applicable restricted stock
purchase agreement or other agreement
3.
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with the Company, 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 shall accordingly
be marked with appropriate legends. The Company 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.
1.6 EMPLOYEE STOCK OPTIONS. At the Effective Time, each then outstanding
Company Option and each other outstanding option to purchase Common Stock of the
Company issued in accordance with the terms of this Agreement, whether vested or
unvested, shall be assumed by Parent in accordance with the terms (as in effect
as of the date of this Agreement or, for options issued to new employees after
the date of this Agreement, as in effect on the date of issuance) of such
Company Stock Option Plan under which such Company Option was issued and the
stock option agreement by which such Company Option is evidenced. All rights
with respect to Company Common Stock under outstanding Company Options shall
thereupon be converted into rights with respect to Parent Common Stock.
Accordingly, from and after the Effective Time, (a) each Company Option assumed
by Parent may be exercised solely for shares of Parent Common Stock, (b) the
number of shares of Parent Common Stock subject to each such assumed Company
Option shall be equal to the number of shares of Company Common Stock that were
subject to such Company Option immediately prior to the Effective Time
multiplied by the Applicable Fraction, rounded down to the nearest whole number
of shares of Parent Common Stock, and (c) the per share exercise price for the
Parent Common Stock issuable upon exercise of each such assumed Company Option
shall be determined by dividing the exercise price per share of Company Common
Stock subject to such Company Option, as in effect immediately prior to the
Effective Time, by the Applicable Fraction, and rounding the resulting exercise
price up to the nearest whole cent, and all restrictions on the exercise of each
such assumed Company Option shall continue in full force and effect, and the
term, exercisability, vesting schedule and other provisions of such Company
Option shall otherwise remain unchanged; provided however, that each such
assumed Company Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction effected by
Parent after the Effective Time. The Company and Parent shall take all action
that may be necessary (under the Company Stock Option Plan and otherwise) to
effectuate the provisions of this Section 1.6.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of capital stock of the Company that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock of the
Company outstanding immediately prior to the Effective Time. No further transfer
of any such shares of capital stock of the Company 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 capital stock of the Company
(a "Company Stock Certificate") is presented to the Surviving Corporation or
Parent, such Company Stock Certificate shall be canceled and shall be exchanged
as provided in Section 1.8.
4.
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1.8 EXCHANGE OF CERTIFICATES.
(a) As soon as practicable after the Effective Time, Parent will
send to each of the registered holders of Company Stock Certificates a letter of
transmittal in customary form and containing such customary provisions as Parent
may reasonably specify and instructions for use in effecting the surrender of
Company Stock Certificates in exchange for the Merger Consideration. Upon
surrender of a Company Stock Certificate to Parent for exchange, together with a
duly executed letter of transmittal and such other customary documents as may be
reasonably required by Parent, Parent shall (i) deliver to the holder of such
Company Stock Certificate a certificate representing 92.5% of that number of
shares of Parent Common Stock that such holder has the right to receive pursuant
to Section 1.5, and (ii) deliver to the Escrow Agent under the Escrow Agreement
(as defined below) on behalf of such holder a certificate in the name of the
Escrow Agent representing 7.5% of that number of shares of Parent Common Stock
that such holder has the right to receive pursuant to Section 1.5, provided that
the certificates representing Parent Common Stock to be delivered to the holder
of a Company Stock Certificate under clause (i) above and to the Escrow Agent
under clause (ii) above shall, in each case, represent only whole shares of
Parent Common Stock. In lieu of any fractional shares to which such holder would
otherwise be entitled, after combining any fractional interests of such holder
into as many whole shares as is possible, the holder of such Company Stock
Certificate shall be paid in cash an amount equal to the sum of (1) the dollar
amount (rounded to the nearest whole cent) determined by multiplying the Closing
Sales Price (as defined below) by the fraction of a share of Parent Common Stock
that would otherwise be deliverable to such holder under clause (i) above and
(2) the dollar amount (rounded to the nearest whole cent) determined by
multiplying the Closing Sales Price by the fraction of a share of Parent Common
Stock that would otherwise be deliverable to the Escrow Agent under clause (ii)
above. Notwithstanding the foregoing, Parent may deliver to the Escrow Agent one
certificate representing the total number of shares of Parent Common Stock to be
held in escrow pursuant to this Section 1.8(a) in lieu of issuing separate
certificates representing such holder's Escrow Shares. As used in this
Agreement, the "Closing Sales Price" shall mean the closing sales price of one
share of Parent Common Stock as quoted on the Nasdaq on the last trading day
immediately preceding the Closing Date. All Company Stock Certificates so
surrendered shall be canceled. Until surrendered as contemplated by this Section
1.8, each Company Stock Certificate shall be deemed, from and after the
Effective Time, to represent only the right to receive the Merger Consideration
in accordance with this Agreement. 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 or
the payment of cash in lieu of fractional shares, 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 Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
(b) 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 represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such holder, until
such holder surrenders such Company Stock Certificate in accordance with
5.
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this Section 1.8 (at which time such holder shall be entitled to receive all
such dividends and distributions and such cash payment).
(c) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of the Company pursuant to this
Agreement such amounts as Parent or the Surviving Corporation may be required to
deduct or withhold therefrom under the Code or under any provision of state,
local or foreign tax law, provided that Parent or the Surviving Corporation pays
to the applicable government authority in accordance with applicable Legal
Requirements, the amount so withheld. 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.
(d) Neither Parent nor the Surviving Corporation shall be liable
to any holder or former holder of capital stock of the Company for 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, escheat or similar law.
1.9 DISSENTERS' RIGHTS.
(a) Notwithstanding anything in this Agreement to the contrary,
shares of capital stock of the Company held by a holder who, pursuant to
Subchapter XIII of the WBCL or any successor provision, has the right to dissent
to the Merger and demand payment for such shares and properly dissents and
demands payment for the fair value of such shares of capital stock of the
Company ("Dissenting Shares") in accordance with the WBCL, shall not be
converted into the right to receive Parent Common Stock as set forth in Section
1.5, unless such holder withdraws, fails to perfect or otherwise loses such
holder's right to such payment, if any. If, after the Effective Time, such
holder withdraws, fails to perfect or loses any such right to payment, such
holder's Dissenting Shares shall be treated as having been converted as of the
Effective Time into the right to receive the Merger Consideration. At the
Effective Time, any holder of Dissenting Shares shall cease to have any rights
with respect thereto, except the rights provided in Subchapter XIII of the WBCL
or any successor provision and as provided in the immediately preceding
sentence. The Company shall give prompt notice to Parent of any demands received
by the Company for appraisal of shares of capital stock of the Company and the
opportunity to participate in all negotiations and proceedings with respect to
any such demand. Except to the extent otherwise required by the WBCL, the
Company shall not make any payment or settlement offer prior to the Effective
Time with respect to any such demand unless Parent shall have consented in
writing to such payment or settlement offer.
1.10 ESCROW OF PARENT COMMON STOCK. Upon the Closing, Parent shall
withhold the shares of Parent Common Stock to be delivered to the Escrow Agent
pursuant to Section 1.8(a)(ii) (the "Escrow Shares") and deliver such shares to
La Salle Bank National Association as escrow agent (the "Escrow Agent"), to be
held by the Escrow Agent as collateral to secure the rights of the Indemnitees
under Section 9 hereof. The Escrow Shares shall be held pursuant to the
provisions of an escrow agreement substantially in the form of EXHIBIT B (the
"Escrow Agreement"). The Escrow Shares will be represented by a certificate or
certificates
6.
<PAGE> 14
issued in the name of the Escrow Agent and will be held by the Escrow Agent for
a period to end on the earlier of (i) one year from the Closing Date and (ii)
the completion of the first audit of the combined financial statements of Parent
and the Company covering periods following the Closing (the earlier of (i) and
(ii), "Escrow Period"); provided however that in the event any Indemnitee has
made a claim under Section 9 prior to the end of the Escrow Period, then the
Escrow Period shall continue (and the Escrow Agent will continue to hold, in
accordance with Section 3(a) of the Escrow Agreement, a certain number of shares
in escrow) until such claim is fully and finally resolved. In the event that
this Agreement is adopted by the Company's stockholders, then all such
stockholders shall, without any further act of any Company stockholder, be
deemed to have consented to and approved (i) the use of the Escrow Shares as
collateral to secure the rights of the Indemnitees under Section 9 in the manner
set forth herein and in the Escrow Agreement, and (ii) the appointment of the
Company Stockholders' Representative (as defined in Section 10.1) as the
representative under the Escrow Agreement of the Persons receiving Merger
Consideration under this Agreement and as the attorney-in-fact and agent for and
on behalf of each such Person (other than holders of Dissenting Shares).
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 TREATMENT. For accounting purposes, the Merger is
intended to be treated 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 and any Related Agreement or to vest the
Surviving Corporation or Parent 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.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants, to and for the benefit of the
Indemnitees, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Company is a corporation duly organized, validly existing
and is active status under the laws of the State of Wisconsin 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 Company Contracts.
(b) Except as set forth in Part 2.1(b) of the Company Disclosure
Schedule, the Company has not conducted any business under or otherwise used,
for any purpose or in any
7.
<PAGE> 15
jurisdiction, any fictitious name, assumed name, trade name or other name, other
than the name PanVera Corporation.
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1(c)(i) of
the Company Disclosure Schedule except where the failure to do so would not have
a Company Material Adverse Effect. The Company is not qualified as a foreign
corporation in any jurisdictions.
(d) Part 2.1(d) of the Company Disclosure Schedule accurately
sets forth (i) the names of the members of the Company's board of directors,
(ii) the names of the members of each committee of the Company's board of
directors, and (iii) the names and titles of the Company's officers.
(e) The Company has no Subsidiaries except for the Entities
identified in Part 2.1(e) of the Company Disclosure Schedule. The Company does
not own any controlling interest in any Entity and, except for the financial
interests identified in Part 2.1(e) of the Company Disclosure Schedule, the
Company has never owned, beneficially or otherwise, any shares or other
securities of, or any direct or indirect equity or other financial interest in,
any Entity. The Company has not agreed and is not obligated to make any future
investment in or capital contribution to any Entity. The Company has not
guaranteed and is not responsible or liable for any obligation of any of the
Entities in which it owns or has owned any equity or other financial interest.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's articles
of incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) the minutes and other records of the meetings
and other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the stockholders of the Company, the board of
directors of the Company and all committees of the board of directors of the
Company (the items described in (1), (2) and (3) above, collectively, the
"Company Constituent Documents"). There have been no formal meetings or other
proceedings of the stockholders of the Company, the board of directors of the
Company or any committee of the board of directors of the Company that are not
fully reflected in the Company Constituent Documents. There has not been any
violation of the Company Constituent Documents, and the Company has not taken
any action that is inconsistent in any material respect with the Company
Constituent Documents. The books of account, stock records, minute books and
other records of the Company are accurate, up-to-date and complete in all
material respects, and have been maintained in all material respects in
accordance with Legal Requirements and prudent business practices.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
2,500,000 shares of Common Stock, of which 1,221,652 shares have been issued and
are outstanding as of the date of this Agreement. As of the date hereof, 200,000
shares of Common Stock are held by the Company as treasury shares as a result of
the redemption of such shares by the Company
8.
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from Mr. Terry Sivesind. All of the outstanding shares of Company Common Stock
have been duly authorized and validly issued, and are fully paid and
non-assessable, except as otherwise provided in Section 180.0622(2)(b) of the
WBCL and the cases decided thereunder. All outstanding shares of Company Common
Stock and all outstanding Company Options, have been issued and granted in
compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts. Part
2.3(a) of the Company Disclosure Schedule provides an accurate and complete
description of the terms of each repurchase option which is held by the Company
and to which any shares of capital stock of the Company is subject.
(b) The Company has reserved 280,000 shares of Company Common
Stock for issuance under the Company Stock Option Plans, of which options to
purchase 194,399 shares are outstanding as of the date of this Agreement. Part
2.3(b) of the Company Disclosure Schedule accurately sets forth, with respect to
each option to purchase Common Stock of the Company outstanding as of the date
hereof (whether vested or unvested) (the "Company Options"): (i) the name of the
holder of such Company Option; (ii) the total number of shares of Company Common
Stock that are subject to such Company Option and the number of shares of
Company Common Stock with respect to which such Company Option is immediately
exercisable; (iii) the date on which such Company Option was granted and the
term of such Company Option; (iv) the vesting schedule for such Company Option;
(v) the exercise price per share of Company Common Stock purchasable under such
Company Option; and (vi) whether such Company Option has been designated an
"incentive stock option" as defined in Section 422 of the Code. Except for
Company Options granted pursuant to the Company Stock Option Plans, there is no:
(i) outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of 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 capital
stock or other securities of the Company; (iii) 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 of the Company; or (iv) 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 (clauses (i) through
(iv) above, collectively "Company Rights"). The Company does not currently have
outstanding any debt securities which grant the holder thereof any right to vote
on, or veto, any actions by the Company ("Voting Debt").
(c) All of the outstanding shares of capital stock of the
Subsidiaries of the Company have been duly authorized and are validly issued,
are fully paid and nonassessable, except as otherwise provided in Section
180.0622(2)(b) of the WBCL and the cases decided thereunder and are owned
beneficially and of record by the Company, free and clear of any Encumbrances.
(d) Except as set forth in Part 2.3(d) of the Company Disclosure
Schedule, the Company has never repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities of the Company. All securities
so reacquired by the Company were reacquired in compliance with (i) the
applicable provisions of the WBCL and all other applicable Legal
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<PAGE> 17
Requirements, and (ii) all requirements set forth in applicable restricted stock
purchase agreements and other applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"):
(i) The audited balance sheets of the Company as of
September 30, 2000, September 30, 1999 and September 30, 1998, and the related
audited income statements, statements of stockholders' equity and statements of
cash flows of the Company for the periods then ended together with the notes
thereto and the unqualified reports and opinions of Arthur Andersen LLP relating
thereto.
(b) The Company Financial Statements present fairly the financial
position of the Company as of the respective dates thereof and the results of
operations (and, in the case of the financial statements referred to in Section
2.4(a)(i), cash flows of the Company) for the periods covered thereby. The
Company Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered (except that the financial statements referred to in Section
2.4(a)(ii) do not contain footnotes and are subject to normal and recurring
year-end audit adjustments, which will not, individually or in the aggregate, be
material in magnitude).
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the Company
Disclosure Schedule, since September 30, 2000:
(a) The Company has not suffered a Company Material Adverse
Effect and no event has occurred that will, or could reasonably be expected to,
have a Company Material Adverse Effect;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the Company's assets
(whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock of the Company, and has not repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities of the Company;
(d) the Company has not sold, issued or authorized the issuance
of (i) any capital stock or other securities of the Company (except for Company
Common Stock issued upon the exercise of outstanding Company Options) or, (ii)
any Company Rights (except for Company Options described in Part 2.3 of the
Company Disclosure Schedule);
(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
Company Stock Option
10.
<PAGE> 18
Plan, (ii) any provision of any Company Contract evidencing any outstanding
Company Option, or (iii) any restricted stock purchase agreement;
(f) there has been no amendment to the Company's articles of
incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction (except as provided in this Agreement),
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction,;
(g) the Company has not formed any Subsidiary or acquired any
equity interest or other interest in any other Entity;
(h) the Company has not made any capital expenditure which, when
added to all other capital expenditures made on behalf of the Company since
September 30, 2000, exceeds $50,000, other than capital expenditures made in
connection with the construction of the new building at Research Park Drive in
Madison, Wisconsin (the "New Facility");
(i) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract that is or would
constitute a Material Contract (as defined in Section 2.10(a)), or (ii) amended
or prematurely terminated, or waived any right or remedy under, any such
Contract;
(j) the Company has not (i) acquired, leased or licensed any
right or other asset from any other Person, (ii) sold or otherwise disposed of,
or leased or licensed, any right or other asset to any other Person, or (iii)
waived or relinquished any right, except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Company's past practices;
(k) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable or
other indebtedness;
(l) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(m) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business and consistent with the Company's past practice), or (ii) incurred or
guaranteed any indebtedness for borrowed money;
(n) the Company has not (i) established or adopted any Employee
Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
11.
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(o) the Company has not changed any of its methods of accounting
or accounting practices in any respect;
(p) the Company has not made any Tax election;
(q) the Company has not threatened, commenced or settled any
Legal Proceeding;
(r) the Company has not entered into any transaction or taken any
other action outside the ordinary course of business or inconsistent with its
past practices, other than entering into this Agreement and the agreements and
transactions contemplated hereby; and
(s) the Company has not agreed to take, or committed to take, any
of the actions referred to in clauses "(c)" through "(r)" above.
2.6 TITLE TO ASSETS.
(a) The Company owns, and has good, valid and marketable title
to, all assets purported to be owned by it, including: (i) all assets reflected
on the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts
2.1, 2.7 and 2.9 of the Company Disclosure Schedule and all of the Company's
rights under the Material Contracts; and (iii) all other assets reflected in the
Company's books and records as being owned by the Company. Except as set forth
in Part 2.6(a) of the Company Disclosure Schedule, all of such assets are owned
by the Company free and clear of any Encumbrances, except for (x) any lien for
current taxes not yet due and payable, and (y) 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 the Company.
(b) Part 2.6(b) of the Company Disclosure Schedule identifies all
assets of the Company that are being leased or licensed to or by the Company.
All such leases and licenses are valid and enforceable against the Company, and
to the knowledge of the Company, the other parties thereto.
2.7 BANK ACCOUNTS; RECEIVABLES.
(a) Part 2.7(a) of the Company Disclosure Schedule provides
accurate information with respect to each account maintained by or for the
benefit of the Company at any bank or other financial institution including the
name of the bank or financial institution, the account number and the balance as
of the date hereof.
2.8 EQUIPMENT; LEASEHOLD.
(a) All material items of equipment and other tangible assets
owned by or leased to the Company are adequate for the uses to which they are
being put, are in good condition and repair (ordinary wear and tear excepted)
and are adequate for the conduct of the Company's business in the manner in
which such business is currently being conducted.
12.
<PAGE> 20
(b) The Company does not own any real property or any interest in
real property, except for the leasehold interest created under the real property
leases identified in Part 2.6(b) of the Company Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Company Disclosure Schedule sets forth,
with respect to each Proprietary Asset owned by the Company 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
Company that are material to the business of the Company. Part 2.9(a)(iii) of
the Company Disclosure Schedule identifies and provides a brief description of,
and identifies 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 Company by any Person (the "Licensed Assets") and is material
to the business of the Company, and identifies the Contract under which such
Proprietary Asset is being licensed or otherwise made available to the Company.
The Company has good, valid and marketable title to all of the Company
Proprietary Assets other than Licensed Assets, 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 the
Company. The Company has a valid right to use, license and otherwise exploit all
Licensed Assets and any rights thereunder will not be affected by the Company
entering into this Agreement and the agreements and transactions contemplated
hereby. Except as set forth in Part 2.9(a)(iv) of the Company Disclosure
Schedule, the Company has not developed jointly with any other Person any
Company Proprietary Asset that is material to the business of the Company 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 Company 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 Company
Proprietary Asset.
(b) The Company has taken reasonable measures and precautions to
protect and maintain the confidentiality, secrecy and value of all material
Company Proprietary Assets (except Company Proprietary Assets whose value would
be unimpaired by disclosure). Without limiting the generality of the foregoing,
except as set forth in Part 2.9(b) of the Company Disclosure Schedule, (i) all
current and former employees of the Company who are or were involved in, or who
have contributed to, the creation or development of any material Company
Proprietary Asset have executed and delivered to the Company an agreement
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially identical to the form of Employee Agreement Relating to
Intellectual Property and Confidential Information previously delivered by the
Company to Parent, and (ii) all current and former consultants and independent
contractors to the Company who are or were involved in, or who have contributed
to, the creation or development of any material Company Proprietary Asset have
executed and delivered to the Company an agreement (containing no exceptions to
or exclusions from the
13.
<PAGE> 21
scope of its coverage) that is substantially identical to the form of Employee
Agreement Relating to Intellectual Property and Confidential Information
previously delivered to Parent. No current or former employee, officer,
director, stockholder, consultant or independent contractor of or to the Company
has any right, claim or interest in or with respect to any Company Proprietary
Asset.
(c) Except as set forth in Part 2.9(c) of the Company Disclosure
Schedule, (i) all patents, trademarks, service marks and copyrights held by the
Company are valid, enforceable and subsisting; (ii) none of the Company
Proprietary Assets and no Proprietary Asset that is currently being developed by
the Company (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 the Company is
infringing, misappropriating or making any unlawful or unauthorized use of any
Proprietary Asset owned or used by any other Person, the Company has all rights
and licenses reasonably necessary in order to make, have made, use or sell these
products to an unlimited number of parties, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of,
(iv) the Company has not 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 and (v) 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 Company Proprietary Asset.
(d) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. Except as set forth in Part
2.9(d) of the Company Disclosure Schedule, the Company has not (i) licensed any
of the material Company 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 Company 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, the Company has not disclosed or delivered to any Person,
or permitted the disclosure or delivery to any escrow agent or other Person, of
any Company 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
Company Source Code. Part 2.9(e)(ii) of the Company Disclosure Schedule
identifies each Contract pursuant to which the Company has deposited or is
required to deposit with an escrowholder or any other Person any Company Source
Code, and further describes whether the execution of this Agreement or the
consummation of any of the transactions contemplated hereby could reasonably be
expected to result in the release or disclosure of any Company Source Code.
2.10 CONTRACTS.
14.
<PAGE> 22
(a) Part 2.10(a) of the Company Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of,
or the performance of services by, any Person, including any employee,
consultant or independent contractor;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) each Company Contract imposing any restriction on
the Company's right or ability (A) to compete with any other Person, (B) to
acquire any product or other asset or any services from any other Person, to
sell any product or other asset to, or perform any services for, any other
Person or to transact business or deal in any other manner with any other
Person, or (C) develop or distribute any technology;
(iv) each Company Contract creating or involving any
agency relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or
sale of any product or other asset by or to, or the performance of any services
by or for, any Related Party (as defined in Section 2.18);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid;
(xi) any other Company Contract that was entered into
outside the ordinary course of business or was inconsistent with the Company's
past practices;
(xii) any other Company Contract that has a term of more
than 60 days and that may not be terminated by the Company (without penalty)
within 60 days after the delivery of a termination notice by the Company; and
(xiii) any other Company Contract that contemplates or
involves (A) the payment or delivery of cash or other consideration in an amount
or having a value in excess of
15.
<PAGE> 23
$10,000 in the aggregate, or (B) the purchase or sale of any product, or
performance of services by or to the Company having a value in excess of $10,000
in the aggregate.
(Company Contracts in the respective categories described in clauses "(i)"
through "(xiii)" above are referred to in this Agreement as "Material
Contracts.")
(b) The Company has delivered to Parent accurate and complete
copies of all written Material Contracts. Part 2.10(b) of the Company Disclosure
Schedule provides an accurate description of the terms of each Material Contract
that is not in written form. Each Contract identified in Part 2.10(a) and Part
2.10(b) of the Company Disclosure Schedule is valid and in full force and effect
is enforceable by the Company in accordance with its terms.
(c) Except as set forth in Part 2.10(c) of the Company Disclosure
Schedule:
(i) the Company has not violated or breached, or committed
any default under, any Company Contract, and, to the knowledge of the Company,
no other Person has violated or breached, or committed any default under, any
Company Contract, which violation or breach would give any party the right to
terminate such Contract or which would increase the liabilities or obligations
of the Company under such Contract or which would otherwise reasonably be
expected to result in a Company Material Adverse Effect;
(ii) to the knowledge of the Company, 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, (A) result in a
violation or breach of any of the provisions of any Company Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Company Contract, (C) give any Person the right to accelerate the maturity or
performance of any Company Contract, or (D) give any Person the right to cancel,
terminate or modify any Company Contract;
(iii) since January 1, 1997, the Company has not received
any notice or other communication regarding any actual or possible violation or
breach of, or default under, any Company Contract; and
(iv) the Company has not knowingly waived any of its
rights under any Material Contract.
(d) Except as set forth in Part 2.10(d) of the Company Disclosure
Schedule, no Person is renegotiating, or has a right pursuant to the terms of
any Company Contract to renegotiate, any amount paid or payable to the Company
under any Material Contract or any other material term or provision of any
Material Contract.
(e) The Material Contracts collectively constitute all of the
Contracts necessary to enable the Company to conduct its business in the manner
in which its business is currently being conducted.
(f) Part 2.10(f) of the Company Disclosure Schedule identifies
and provides a brief description of each proposed Contract as to which any bid,
offer, award, written proposal,
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<PAGE> 24
term sheet or similar document has been submitted or received by the Company,
which, if such bid, offer, award, proposal or term sheet was accepted and became
effective, would constitute a Material Contract hereunder.
(g) Part 2.10(g) of the Company Disclosure Schedule provides an
accurate description and breakdown of the Company's backlog under Company
Contracts.
2.11 LIABILITIES; FEES, COSTS AND EXPENSES.
(a) The Company has no accrued, contingent or other liabilities
of any nature, either matured or unmatured (whether or not required to be
reflected in financial statements in accordance with GAAP, and whether due or to
become due), except for: (i) liabilities identified as such in the "liabilities"
column of the Audited Balance Sheet; (ii) accounts payable or accrued salaries
that have been incurred by the Company since September 30, 2000 in the ordinary
course of business and consistent with the Company's past practices; (iii)
liabilities under the Material Contracts, to the extent the nature and magnitude
of such liabilities can be specifically ascertained by reference to the text of
such Company Contracts; (iv) the liabilities identified in Part 2.11(a) of the
Company Disclosure Schedule; and (v) liabilities incurred in the ordinary course
of business not exceeding $150,000 in the aggregate and not required to be
otherwise disclosed in the Company Disclosure Schedule. Part 2.11(a) of the
Company Disclosure Schedule lists the amount and details of all outstanding
Liabilities for borrowed money of the Company as of the date of this agreement.
(b) The total amount of all fees, costs and expenses (including
any attorney's, accountant's, financial advisor's or finder's fees) incurred by
or for the benefit of the Company in connection with (i) the due diligence
conducted by the Company with respect to the Merger, (ii) the negotiation,
preparation and review of this Agreement (including the Company Disclosure
Schedule) and all agreements, certificates, opinions and other instruments and
documents delivered or to be delivered in connection with the transactions
contemplated by this Agreement, (iii) the preparation and submission of any
filing or notice required to be made or given in connection with any of the
transactions contemplated by this Agreement and the obtaining of any Consent
required to be obtained in connection with any transactions contemplated hereby,
do not in the aggregate exceed one million dollars ($1,000,000).
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at all
times since its inception been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and could not be reasonably likely to have a Company Material
Adverse Effect. Except as set forth in Part 2.12 of the Company Disclosure
Schedule, since its inception the Company has not received any written notice or
other written communication, and no executive officer of the Company has
received any oral notice or other oral communication, from any Governmental Body
regarding any actual or possible violation of, or failure to comply with, any
Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Company Disclosure
Schedule identifies each Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified
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<PAGE> 25
in Part 2.13 of the Company Disclosure Schedule. The Governmental Authorizations
identified in Part 2.13 of the Company Disclosure Schedule are valid and in full
force and effect, and collectively constitute all Governmental Authorizations
necessary to enable the Company to conduct its business in the manner in which
its business is currently being conducted. The Company is, and at all times
since its inception has been, in substantial compliance with the terms and
requirements of the respective Governmental Authorizations identified in Part
2.13 of the Company Disclosure Schedule. Since the date of its inception, the
Company has not 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 Governmental Authorization, or (b) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. The
Company has delivered to Parent accurate and complete copies of all Company
Returns filed which have been requested by Parent.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for unpaid Taxes with respect to all periods through the
dates thereof in accordance with generally accepted accounting principles. The
Company will establish, in the ordinary course of business and consistent with
its past practices, reserves adequate for the payment of all unpaid Taxes for
the period from September 30, 2000 through the Closing Date, and the Company
will disclose the dollar amount of such reserves to Parent on or prior to the
Closing Date.
(c) No Company Return relating to income Taxes has ever been
examined or audited by any Governmental Body. Except as set forth in Part
2.14(c) of the Company Disclosure Schedule, there have been no examinations or
audits of any Company Return. The Company has delivered to Parent accurate and
complete copies of all audit reports and similar documents (to which the Company
has access) relating to the Company Returns. Except as set forth in Part 2.14(c)
of the Company Disclosure Schedule, no extension or waiver of the limitation
period applicable to any of the Company Returns has been granted (by the Company
or any other Person), and no such extension or waiver has been requested from
the Company.
(d) Except as set forth in Part 2.14(d) of the Company Disclosure
Schedule, no claim or Proceeding is pending or, to the knowledge of the Company
has been threatened against or with respect to the Company in respect of any
Tax. There are no unsatisfied liabilities for 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 the Company
18.
<PAGE> 26
with respect to any 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 Company and with respect to which adequate reserves for payment
have been established). There are no liens for Taxes upon any of the assets of
the Company except liens for current Taxes not yet due and payable. The Company
has not entered into or become bound by any agreement or consent pursuant to
Section 341(f) of the Code. The Company has not been, and the Company will not
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) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, plan or other
arrangement, 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. The Company is not a party to any
Contract to compensate any individual for excise taxes paid pursuant to Section
4999 of the Code. The Company is not, and has never been, a party to or bound by
any tax indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract, including any obligation arising by reason of Treasury
Regulations Section 1.1502-6, and the Company has not, and by reason of the
consummation of the transactions contemplated under this Agreement, will not
have any liability or obligation under any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar Contract. The Company is not and
has never been a "distributing corporation" within the meaning of Section
355(a)(1) of the Code, or a member of an affiliated group filing a consolidated
federal income Tax Return.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Company Disclosure Schedule identifies
with respect to the Company and any trade or business (whether or not
incorporated) which is treated as a single employer with the Company (an "ERISA
Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of the Code
(if any), all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended, each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, phantom stock, stock appreciation right, severance pay, termination pay,
hospitalization, medical (including retiree medical), dental, vision, life,
disability or other insurance, cafeteria benefit (Code Section 125) or dependent
care (Code Section 129), supplemental unemployment benefits, profit-sharing,
pension or retirement plan, program, agreement or arrangement whether written or
oral (collectively, the "Employee Plans") sponsored, maintained, contributed to
or required to be contributed to by the Company and/or any ERISA Affiliate for
the benefit of any employee, consultant or director, or former employee,
consultant, or director, of the Company and/or any ERISA Affiliate, except for
Employee Plans which would not require the Company to make payments or provide
benefits having a value in excess of $10,000 in the aggregate per annum. Part
2.15(a) of the Company Disclosure Schedule sets forth the citizenship status of
every employee of the Company (whether such employee is a United States citizen
or otherwise) and,
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with respect to non-United States citizens, identifies the visa or other similar
permit under which such employee is working for the Company and the dates of
issuance and expiration of such visa or other similar permit.
(b) With respect to each Employee Plan, the Company has delivered
to Parent:
(i) an accurate and complete copy of such Employee Plan
(including all amendments thereto) and related Plan documents (including copies
of trust documents or other funding vehicles, insurance policies or contracts,
and any other authorizing documents);
(ii) an accurate and complete copy of the Form 5500, if
required under ERISA, including all schedules attached thereto and actuarial
reports, if any, filed for the past three 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 Employee Plan, and all material
written employee communications relating to such Employee Plan;
(iv) accurate and complete copies of all Contracts
relating to such Employee Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and
(v) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Employee Plan (if such Employee Plan is intended to be qualified under
Section 401(a) or 501(c)(9) of the Code).
(c) Each of the Employee Plans intended to be qualified under
Section 401(a) or 501(c)(9) of the Code has received a favorable determination
letter from the Internal Revenue Service (the "IRS:) as to its qualified status
under the Tax Reform Act of 1986 and subsequent legislation, or has applied to
the Internal Revenue Service for such a determination letter prior to the
expiration of the requisite period under applicable Treasury Regulations or
Internal Revenue Service pronouncements in which to apply for such a
determination letter and to make any amendments necessary to obtain a favorable
determination, and nothing has occurred since the issuance of each such letter
which could reasonably be expected to cause the loss of the tax-qualified status
of any Employee Plan.
(d) Neither the Company nor any of its ERISA Affiliates has ever
maintained, adopted, established, contributed or been required to contribute to,
or otherwise participated in or been required to participate in, any Employee
Plan subject to Title IV of ERISA including, without limitation, a
"multiemployer plan" as defined in Section 3(37) of ERISA and a defined benefit
plan as defined in Section 3(35) of ERISA, or any plan otherwise subject to the
minimum funding standards of ERISA Section 302 of Code Section 412.
20.
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(e) Each Employee Plan has been administered in accordance with
its terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code) and the Company
and any other ERISA Affiliate have each performed all obligations required to be
performed by each under, are not in any respect in default under or violation
of, and have no knowledge of any default or violation by any other party to, any
of the Employee Plans;
(f) There has been no "prohibited transaction" as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, and neither
Company nor any other ERISA Affiliate is subject to any liability or penalty
under Sections 4976 through 4980 of the Code or Title I of ERISA with respect to
any of the Employee Plans. All contributions required to be made by the Company
and/or any other ERISA Affiliate to any Employee Plan have been made on or
before their due dates and a reasonable amount has been accrued for
contributions to each Employee Plan for the current plan year. No "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations under Section 4043 of ERISA) nor any event described in Sections
4041, 4062 or 4063 of ERISA has occurred with respect to any Employee Plan. No
suit, administrative proceeding, action or other claim has been brought or is
threatened against or with respect to any Employee Plan, including any audit or
inquiry by the IRS or United States Department of Labor.
(g) The Company does not have any plan or commitment to create
any additional Employee Plan, or to modify or change any existing Employee Plan
(other than to comply with applicable law) in a manner that would affect any
current or former employee, consultant or director of the Company or any other
ERISA Affiliate, and there has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any other ERISA
Affiliate relating to, or change in participation or coverage, under any
Employee Plan which would materially increase the expense of maintaining such
Employee Plan above the level of expense incurred with respect to that Employee
Plan for the most recent fiscal year.
(h) None of the Employee Plans promises or provides death,
medical or health benefits (whether or not insured) with respect to any current
or former Employee, consultant or director of the Company or any other ERISA
Affiliate after any such Employee's, consultant's or director's termination of
service other than (i) benefit coverage mandated by applicable law, including
coverage provided pursuant to Section 4980B of the Code, and (ii) deferred
compensation benefits accrued as liabilities on the Audited Balance Sheet.
(i) With respect to each Employee Plan constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") and Sections 601-609 of ERISA
have been complied with in all material respects.
(j) Except as set forth in Part 2.15(j) of the Company Disclosure
Schedule, neither the execution, delivery or performance of this Agreement and
the Related Agreements, nor the consummation of the Merger or any of the other
transactions contemplated by this
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Agreement and the Related Agreements, will result in any liability to the
Company or any other ERISA Affiliate or payment (including any bonus, golden
parachute or severance payment) to any current or former employee, consultant or
director of the Company (whether or not under any Employee Plan), or increase
the benefits payable under any Employee Plan, or result in any acceleration of
the time of payment or vesting of any such benefits.
(k) Part 2.15(k) of the Company Disclosure Schedule contains a
list of all salaried employees of the Company as of the date of this Agreement,
and correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(l) Part 2.15(l) of the Company Disclosure Schedule identifies
each Employee who is not fully available to perform work because of disability
or other leave and sets forth the basis of such leave and the anticipated date
of return to full service.
(m) The Company 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.
(n) Except as set forth in Part 2.15(n) of the Company Disclosure
Schedule, the Company has no reason to believe 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 Company's labor relations, or (ii) any of the
Company's employees intends to terminate his or her employment with the Company.
2.16 ENVIRONMENTAL MATTERS. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by the Company of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. The Company has not received any notice or other
communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the knowledge of the Company,
there are no circumstances that may prevent or interfere with the Company's
compliance with any Environmental Law in the future. To the knowledge of the
Company, no current or prior owner of any property leased or controlled by the
Company has received any notice or other communication (in writing or
otherwise), whether from a Governmental Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or the Company is not
in compliance with any Environmental Law. All Governmental Authorizations
currently held by the Company pursuant to Environmental Laws are identified in
Part 2.16 of the Company Disclosure Schedule. (For purposes of this Section
2.16: (i) "Environmental Law" means any applicable federal, state, local or
foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges,
22.
<PAGE> 30
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 (ii) "Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other substance that is now or hereafter regulated by any Environmental Law or
that is otherwise a danger to health, reproduction or the environment.)
2.17 INSURANCE. Part 2.17 of the Company Disclosure Schedule identifies
all insurance policies maintained by, at the expense of or for the benefit of
the Company and identifies any material claims made thereunder, and the Company
has delivered to Parent accurate and complete copies of the insurance policies
identified on Part 2.17 of the Company Disclosure Schedule. Each of the
insurance policies identified in Part 2.17 of the Company Disclosure Schedule is
in full force and effect. Since January 1, 1997, the Company has not 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 claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any insurance
policy.
2.18 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.18 of the
Company Disclosure Schedule: (a) no Related Party has, and no Related Party has
at any time since January 1, 1997 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of the Company; (b)
no Related Party is, or has at any time since January 1, 1997 been, indebted to
the Company; (c) since January 1, 1997, no Related Party has entered into, or
has had any direct or indirect financial interest in, any material Contract,
transaction or business dealing involving the Company; (d) no Related Party is
competing, or has at any time since January 1, 1997 competed, directly or
indirectly, with the Company; and (e) no Related Party has any claim or right
against the Company (other than rights under Company Options and rights to
receive compensation for services performed as an employee of the Company). (For
purposes of this Section 2.18 each of the following shall be deemed to be a
"Related Party": (i) each individual who is, or who has at any time since the
Company's inception been, an officer or director of the Company; (ii) each
member of the immediate family of each of the individuals referred to in clause
"(i)" above; and (iii) any trust or other Entity (other than the Company) in
which any one of the individuals referred to in clauses "(i)" and "(ii)" above
holds (or in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary, equity or other
financial interest.)
2.19 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.19(a) of the Company Disclosure
Schedule, 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 the Company or any of the assets owned, used or controlled by the
Company or any Person whose liability the Company has or may have retained or
assumed, either contractually or by operation of law; 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 or any of the Related Agreements. To the knowledge of the
Company, except as set forth in
23.
<PAGE> 31
Part 2.19(a) of the Company Disclosure Schedule, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19(b) of the Company Disclosure
Schedule, no Legal Proceeding has ever been commenced by or has ever been
pending against the Company.
(c) There is no order, writ, injunction, judgment or decree to
which the Company, or any of the assets owned or used by the Company, is
subject. To the knowledge of the Company, no officer or other employee of the
Company is subject to any order, writ, injunction, judgment or decree that
prohibits such officer or other employee from engaging in or continuing any
conduct, activity or practice relating to the Company's business.
2.20 AUTHORITY; 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 and any Related Agreement to which
it is a party; and the execution, delivery and performance by the Company of
this Agreement and any Related Agreement to which it is a party have been duly
authorized by all necessary action on the part of the Company. This Agreement
and each Related Agreement to which the Company is a party 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.
2.21 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.21 of
the Company Disclosure Schedule, neither (1) the execution, delivery or
performance of this Agreement or any of the Related Agreements, nor (2) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or any of the Related Agreements, will directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of
the provisions of the Company's Constituent Documents;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or any of the Related Agreements or
to exercise any remedy or obtain any relief under, any Legal Requirement or any
order, writ, injunction, judgment or decree to which the Company, or any of the
assets owned, used or controlled by the Company, 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 the Company or that otherwise relates to the Company's business
or to any of the assets owned, used or controlled by the Company;
24.
<PAGE> 32
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Company Contract that is
or would constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Company Contract, (ii)
accelerate the maturity or performance of any such Company Contract, or (iii)
cancel, terminate or modify any such Company Contract; or
(e) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by the Company (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
the Company).
Except as set forth in Part 2.21 of the Company Disclosure Schedule and except
for filings pursuant to the HSR Act (as hereinafter defined), no filing with,
notice to or consent from any Person is required in connection with (x) the
execution, delivery or performance of this Agreement or any of the Related
Agreements, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement or any of the Related Agreements.
2.22 PRODUCT DEVELOPMENT. Part 2.22 of the Company Disclosure Schedule
sets forth for each product or service being developed by or on behalf of the
Company a true and correct development status, including the dates on which the
development of each such product or service will be completed. No fact,
condition or circumstance exists that would materially impair or delay the
development of any such products or services. Except as set forth in Part 2.22
of the Company Disclosure Schedule, the Company has not entered into any
agreement which restricts its right to make, have made, use or sell to an
unlimited number of third parties any products currently contemplated by,
designed by or designed on behalf of the Company.
2.23 FULL DISCLOSURE.
(a) This Agreement (including the Company Disclosure Schedule)
does 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 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) The information supplied by the Company for inclusion in the
Company Proxy Statement or the S-4 Registration Statement (including any Company
financial statements) will not, as of the date of the Company Proxy Statement or
the S-4 Registration Statement or as of the date of the Company Stockholders'
Meeting, and in each case, as of the date such information is prepared or
presented, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make any
statement therein, in light of the circumstances under which it is made, not
misleading.
2.24 COMPANY ACTION.
25.
<PAGE> 33
(a) The Board of Directors of the Company (at a meeting duly
called and held in accordance with the Company Constituent Documents) has (i)
unanimously determined that the Merger and the Plan of Merger is advisable and
in the best interests of the Company and its stockholders, (ii) unanimously
recommended the adoption and approval of the Merger, the Plan of Merger and this
Agreement by the stockholders of the Company and (iii) directed that this
Agreement, the Merger and the Plan of Merger be submitted for a vote at the
Company Stockholders' Meeting.
(b) The affirmative vote of a majority of the shares of Company
Common Stock outstanding on the date of such vote is the only vote of the
stockholders of the Company needed to approve and adopt this Agreement and
approve the Merger, the Plan of Merger and the transactions contemplated hereby
(the "Required Company Stockholder Vote").
2.25 ANTI-TAKEOVER LAW. The Board of Directors and the Company have
taken all action necessary or required to render inapplicable to the Merger,
this Agreement or any Related Agreement and the transactions contemplated herein
or therein (i) any takeover law of the State of Wisconsin that may purport to be
applicable to the Merger and the transactions contemplated by this Agreement and
the Related Agreements, (ii) any takeover provision in the Company Constituent
Documents, and (iii) any takeover provision in any Contract to which the Company
is a party or by which it or its properties may be bound. To the knowledge of
the Company, there are no takeover laws of any state, other than the State of
Wisconsin, which are applicable to the Merger, this Agreement and the Related
Agreements.
2.26 FINDER'S FEE. Except as set forth in Part 2.26 of the Company
Disclosure Schedule, 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 thereby based upon arrangements made
by or on behalf of the Company.
2.27 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, the Company has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
3.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware in the case of Parent, and in active status under
the laws of Wisconsin in the case of Merger Sub, and has all corporate power
required to conduct its business as now conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the conduct of
its business or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on Parent's business, financial condition or results of
operations.
26.
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3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement and under each Related Agreement to which
either of them is a party; and the execution, delivery and performance by Parent
and Merger Sub of this Agreement and each Related Agreement to which either of
them is a party (including the contemplated issuance of Parent Common Stock in
the Merger in accordance with this Agreement) have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. No vote of Parent's stockholders is needed to adopt this
Agreement or approve the Merger. This Agreement and each Related Agreement to
which either of them is a party constitutes the legal, valid and binding
obligation of Parent or Merger Sub, as applicable, enforceable against Parent or
Merger Sub, as applicable, 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.
3.3 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company accurate and
complete copies (excluding copies of exhibits) of each report, registration
statement (on a form other than Form S-8) and definitive proxy statement filed
by Parent with the SEC between January 1, 2000 and the date of this Agreement
(the "Parent SEC Documents"). 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 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 consolidated 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 as of the respective dates thereof and the consolidated
results of operations of Parent for the periods covered thereby.
3.4 NO CONFLICT. The execution and delivery by Parent and Merger Sub of
this Agreement and of each Related Agreement to which either of them is a party
and the consummation of the transactions contemplated hereby and thereby by
Parent and Merger Sub (i) are not prohibited by, and will not violate or
conflict with, any provision of the certificate of incorporation or bylaws of
Parent or Merger Sub, and (ii) will not directly or indirectly, contravene,
conflict with, or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the transactions contemplated by this
Agreement or any of the Related Agreements or to exercise any remedy or obtain
any relief under, any Legal
27.
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Requirement or any order, writ, injunction, judgment or decree to which Parent,
or any of the assets owned, used or controlled by Parent is subject.
3.5 VALID ISSUANCE. Subject to Section 1.5(c), the shares of Parent
Common Stock to be issued pursuant to Section 1.5(a) will, when issued in
accordance with the provisions of this Agreement, be validly issued, fully paid
and nonassessable.
3.6 REORGANIZATION. As of the date of this Agreement, the Company has no
reason to believe that the Merger will not qualify as a "reorganization" within
the meaning of Section 368(a) of the Code.
4. CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (i) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (ii)
provide Parent and Parent's Representatives with copies of such existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Parent may reasonably request.
4.2 OPERATION OF THE COMPANY'S BUSINESS
(a) During the Pre-Closing Period, the Company shall: (i) ensure
that the Company conducts its business and operations (A) in the ordinary course
and in accordance with past practices, and (B) in compliance with all applicable
Legal Requirements and the requirements of all Material Contracts; (ii) use best
efforts to ensure that the Company preserves intact its current business
organization, keeps available the services of its current officers and employees
and maintains its relations and goodwill with all suppliers, customers,
landlords, creditors, licensors, licensees, employees and other Persons having
business relationships with the Company; (iii) provide all notices, assurances
and support required by any Contract relating to any Proprietary Asset in order
to ensure that no condition under such Contract occurs which could result in, or
could increase the likelihood of any transfer or disclosure by the Company's of
any Company Proprietary Asset; (iv) keep in full force and effect (with the same
scope and limits of coverage) all insurance policies in effect as of the date of
this Agreement covering all material assets of the Company; and (v) to the
extent requested by Parent, cause its officers to report regularly to Parent
concerning the status of the Company's businesses.
(b) During the Pre-Closing Period, the Company shall not (without
the prior written consent of Parent which consent, or refusal to consent, will
not be unreasonably delayed):
(i) declare, accrue, set aside or pay any dividend or make
any other distribution in respect of any shares of capital stock or repurchase,
redeem or otherwise reacquire
28.
<PAGE> 36
any shares of capital stock or other securities, except repurchases of unvested
shares at cost in connection with the termination of the employment or
consulting relationship with any employee or consultant pursuant to stock option
or purchase agreements.
(ii) sell, issue, grant or authorize the issuance or grant
of (i) any capital stock or other security, (ii) any Company Rights, or (iii)
any instrument convertible into or exchangeable for any capital stock or other
security, except that (A) the Company may issue Company Common Stock upon the
valid exercise of Company Options outstanding as of the date of this Agreement
and set forth in the Company Disclosure Schedule and (B) the Company may issue
to new employees options to purchase shares of Company Common Stock,
commensurate with options granted to similarly situated employees in the past,
under, and on the terms of, the Company Stock Option Plans; provided, however,
that each such option shall be issued with an exercise price equal to the
current market price of Company Common Stock based on the Applicable Fraction
and the market price of Parent Common Stock as reported on NASDAQ.
(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 Contract related to any outstanding stock option or
any restricted stock purchase agreement, or otherwise modify any of the terms of
any outstanding option or any related Contract;
(iv) amend or permit the adoption of any amendment to the
Company Constituent Documents, or effect, become a party to or authorize any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction (except for the Merger);
(v) recognize any labor union or enter into any collective
bargaining agreement;
(vi) adopt a plan of complete or partial liquidation or
dissolution or resolutions providing for or authorizing such a liquidation or a
dissolution;
(vii) form any Subsidiary or acquire any equity interest
or other interest in any other Entity;
(viii) make any capital expenditure outside the ordinary
course of business or make any single capital expenditure in excess of $25,000;
provided however, that the maximum amount of all capital expenditures made on
behalf of the Company during the Pre-Closing Period shall not exceed $150,000 in
the aggregate except for expenditures made in connection with the New Facility
and set forth on in Part 4.2(b) of the Company Disclosure Schedule;
(ix) except in the ordinary course of business and
consistent with past practice, enter into or become bound by, or permit any of
the assets owned or used by it to become bound by, any material Contract, or
amend or terminate, or waive or exercise any material right or remedy under, any
material Contract;
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(x) 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 other Person (except in each case for assets
acquired, leased, licensed or disposed of by the Company in the ordinary course
of business and not having a value, or not requiring payments to be made or
received, in excess of $25,000 individually, or $150,000 in the aggregate), or
waive or relinquish any material right;
(xi) lend money to any Person, or incur or guarantee any
indebtedness (except that the Company may make routine borrowings in the
ordinary course of business and in accordance with past practices under the
Company's credit facilities outstanding as of the date hereof and set forth on
the Company Disclosure Schedule (without any amendment or modification thereto)
which in the aggregate does not exceed $250,000);
(xii) establish, adopt or amend any Company Employee Plan
or collective bargaining agreement, 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 or officers.
(xiii) dismiss any employee or hire any new employee
having an annual salary in excess of 75,000;
(xiv) change any of its methods of accounting or
accounting practices in any respect except as required by generally accepted
accounting principles;
(xv) make any material Tax election;
(xvi) commence or settle any Legal Proceeding;
(xvii) enter into any material transaction or take any
other material action outside the ordinary course of business and inconsistent
with past practices;
(xviii) take or omit to take any action that could, or is
or reasonably likely to, (A) result in any of its representations and warranties
set forth in this Agreement or any certificate delivered in connection with the
Closing being or becoming untrue in any material respect at any time at or prior
to the Effective Time, (B) result in any of the conditions to the consummation
of the Merger set forth in Section 6 and Section 7 hereof not being satisfied or
(C) breach any provisions of this Agreement; or
(xix) authorize, agree, commit or enter into any Contract
to take any of the actions described in clauses "(i)" through "(xviii)" of this
Section 4.2(b).
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4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) 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 an inaccuracy in or breach of 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 an inaccuracy in or breach of 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 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 condition set forth in Section 6 or Section
7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Company Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the Company 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 Company Disclosure Schedule specifying such
change. No such update shall be deemed to supplement or amend the Company
Disclosure Schedule for the purpose of (i) determining the accuracy of any of
the representations and warranties made by the Company in this Agreement, or
(ii) determining whether any condition set forth in Section 6 has been
satisfied.
4.4 NO NEGOTIATION.
(a) The Company acknowledges and agrees that the Company will
not, and will not permit any of its Representatives and Associates to, directly
or indirectly:
(i) solicit, initiate, encourage or facilitate the
initiation or submission of any expression of interest, inquiry, proposal or
offer from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(ii) participate in any discussions or negotiations or
enter into any agreement with, or provide any information (other than
information which would otherwise be required to be disclosed by the Company in
a report filed pursuant to the Exchange Act, if the Company were subject to the
reporting requirements of the Exchange Act) to, any Person (other than Parent)
relating to or in connection with a possible Acquisition Transaction; or
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(iii) entertain, consider or accept any proposal or offer
from any Person (other than Parent) relating to a possible Acquisition
Transaction; it being understood that if any Person (other than Parent or its
Affiliates) makes any such proposal or offer, the Company shall respond only
that the Company is a party to an acquisition agreement (without naming or
otherwise identifying Parent) and that the Company may not engage in any actions
prohibited by this Section 4.4.
(b) The Company shall, and shall cause each of its Associates and
Representatives to, immediately discontinue any ongoing discussions or
negotiations (other than any ongoing discussions with Parent) relating to a
possible Acquisition Transaction, and shall promptly provide Parent with an oral
and a written description of any expression of interest, inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by the
Company or by any of the Company's Associates or Representatives (to the extent
known by the Company) from any Person (other than Parent) during the Pre-Closing
Period.
4.5 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under the Company
Constituent Documents and all applicable Legal Requirements to call, give notice
of, convene and duly hold a meeting of the holders of Company Common Stock (the
"Company Stockholders' Meeting") to consider, act upon and vote upon the
adoption and approval of this Agreement and approval of the Merger and the Plan
of Merger. The Company Stockholders' Meeting will be held as promptly as
practicable and within 40 days after the S-4 Registration Statement (as defined
below) is declared effective under the Securities Act (which 40-day period shall
be extended on a day-for-day basis if and for so long as any stop order or other
similar action is in place, pending or threatened by the SEC).
(b) The Company will prepare and distribute to the Company
stockholders in connection with the Company Stockholders' Meeting a proxy
statement (the "Company Proxy Statement") in compliance with all applicable
Legal Requirements and the Company Constituent Documents. The Company shall use
its best efforts to solicit from stockholders of the Company proxies in favor of
the approval and adoption of this Agreement, the Merger and the Plan of Merger
and to take all other actions reasonably necessary or in Parent's reasonable
judgment advisable to secure such vote as promptly as practicable prior to the
Termination Date.
(c) 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 and the Plan of Merger at the Company
Stockholders' Meeting. The Company 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, the Escrow Agreement and approve the Merger at the
Company Stockholders' Meeting. 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 the adoption and approval of this Agreement, the
Escrow Agreement and the approval of the Merger. For
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purposes of this Agreement, the recommendation of the Board of Directors shall
be deemed to have been modified in a manner adverse to Parent if such
recommendation shall no longer be unanimous.
5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 ADDITIONAL AGREEMENTS.
(a) Subject to Section 5.1(b), Parent and the Company shall use
all reasonable efforts (i) to cause the conditions set forth in Section 6, in
the case of the Company, and in Section 7, in the case of Parent, to be
satisfied as soon as practicable prior to the Termination Date, and (ii) to
take, or cause to be taken, all actions necessary to consummate the Merger and
make effective the other transactions contemplated by this Agreement and each
Related Agreement as soon as practicable prior to the Termination Date. Without
limiting the generality of the foregoing, but subject to Section 5.1(b), each
party to this Agreement shall use all reasonable efforts to lift any restraint,
injunction or other legal bar to the Merger. Each party shall promptly deliver
to the other a copy of each filing made, each notice given and each Consent
obtained by such party in connection with the Merger during the Pre-Closing
Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Company shall have any obligation under this
Agreement to do any of the following (or cause the other to do any of the
following): (i) to dispose or cause any of its Subsidiaries to dispose of any
assets; (ii) to discontinue or cause any of its Subsidiaries to discontinue
offering any product; (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 Proprietary Asset; (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 (v) to make or cause any of its Subsidiaries to
make any commitment (to any Governmental Body or otherwise) regarding its future
operations.
5.2 REGULATORY APPROVALS. The Company and Parent shall use all
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement and each Related Agreement, and to submit
promptly any additional information 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,
if any, required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), 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 (i) 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, (ii) keep the other
party informed as to the status of any Legal Proceeding, and (iii) subject to
their obligations to comply with applicable
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Legal Requirements, 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 of any other federal or state
antitrust or fair trade law. In addition, except as may be prohibited by the HSR
Act or any Governmental Body or by any Legal Requirement, in connection with any
Legal Proceeding under or relating to any other federal or state antitrust or
fair trade law or any other similar Legal Proceeding, each of the Company and
Parent agrees to permit authorized Representatives of the other party to be
present at each meeting or conference with government representatives 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.
5.3 REGISTRATION STATEMENT.
(a) As soon as practicable after the date hereof, Parent shall
prepare and cause to be filed with the SEC a registration statement on Form S-4
concerning the Parent Common Stock to be issued in connection with the Merger
(together with any amendment or supplement thereto, the "S-4 Registration
Statement"). The S-4 Registration Statement shall contain the Company Proxy
Statement as part of the prospectus, and any other documents required by the
Securities Act or the Exchange Act in connection with the Merger. The parties
acknowledge and agree that the foregoing arrangements may be altered by Parent
as reasonably necessary to respond to any comments or requests received from the
SEC. Parent and the Company shall use all reasonable efforts to cause the S-4
Registration Statement (including the Company 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 S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after it
is filed with the SEC. The Company will use all reasonable efforts to cause the
Company Proxy Statement to be mailed to the Company stockholders, as promptly as
practicable after the S-4 Registration Statement is declared effective under the
Securities Act. The Company shall promptly furnish to Parent all information
concerning the Company and the Company's stockholders that may be required or
reasonably requested in connection with any action contemplated by this Section
5.3(a) (including, without limitation, Company financial statements complying
with the requirements of Form S-4, the Securities Act and the Exchange Act). In
addition, the Company shall promptly furnish to Parent all information
concerning the Company and the Company stockholders that may be required or
reasonably requested in connection with any pre- or post-effective amendment to
the S-4 Registration Statement. If the Company becomes aware of any information
that should be set forth in an amendment or supplement to the S-4 Registration
Statement or the Company Proxy Statement, then the Company shall promptly inform
Parent thereof and shall cooperate with Parent in filing such amendment or
supplement with the SEC and, if appropriate, in mailing such amendment or
supplement to the stockholders of the Company.
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(b) Prior to the Effective Time, Parent shall make all required
filings with state regulatory authorities and the NASD, and shall ensure that
the Parent Common Stock to be issued in the Merger will be qualified under the
securities or "blue sky" law of every jurisdiction of the United States in which
any registered stockholder of the Company has an address of record on the record
date for determining the stockholders entitled to notice of and to vote on the
Merger (other than qualifying to do business in a State in which it is not now
qualified).
5.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) the Company
shall not (and the Company shall not permit any of its Representatives to) issue
any press release or make any public statement regarding this Agreement or the
Merger, or regarding any of the other transactions contemplated by this
Agreement, without Parent's prior written consent, and (b) Parent will use
reasonable efforts to consult with the Company prior to issuing any press
release or making any public statement regarding the Merger; provided that
nothing herein shall be deemed to prohibit Parent from making any public
disclosure Parent deems necessary or appropriate under applicable Legal
Requirements.
5.5 AFFILIATE AGREEMENTS. The Company shall use its best efforts to
cause each Person listed on EXHIBIT E-2 and each other Person who becomes an
"affiliate" (as that term is used in Rule 145 under the Securities Act) of the
Company, to execute and deliver to Parent, as promptly as practicable after the
execution of this Agreement, an Affiliate Agreement in the form of EXHIBIT E-1.
5.6 POOLING OF INTEREST. During the Pre-Closing Period and following the
consummation of the Merger, neither party shall, and each party shall cause its
respective Associates and Representatives not to take any action that could, or
fail to take any action which failure to take such action could, reasonably be
expected to have an adverse effect on the ability of Parent to account for the
Merger as a "pooling of interests".
5.7 TAX MATTERS. At or prior to the filing of the Form S-4 Registration
Statement, the Company and Parent shall execute and deliver to Cooley Godward
LLP and to Godfrey & Kahn, S.C. tax representation letters in substantially the
form attached hereto as Exhibit D. Parent, Merger Sub and the Company shall each
confirm to Cooley Godward LLP and to Godfrey & Kahn, S.C., 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 all reasonable efforts to cause the Merger to qualify as a
reorganization under Section 368(a) of the Code. Following delivery of the tax
representations letters pursuant to the first sentence of this Section 5.7, each
of Parent and the Company shall use its reasonable efforts to cause Cooley
Godward LLP and Godfrey & Kahn, S.C., respectively, to deliver to it a tax
opinion satisfying the requirements of Item 601 of Regulation S-K promulgated
under the Securities Act which tax opinion will be included as an exhibit to the
Form S-4 Registration Statement. In rendering such opinions, each of such
counsel shall be entitled to rely on the tax representation letters referred to
in this Section 5.7.
5.8 EMPLOYEE RETENTION. Unless Parent receives any contrary
recommendations from existing management of the Company, Parent expects that the
current employees of the Company will continue to be employees of the Company
immediately after the Effective Time.
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Accordingly, Parent and the Company shall consult with each other with respect
to the disclosure of the Merger to the employees of the Company.
5.9 RELEASE. The Company shall use its best efforts to cause each of the
Company stockholders identified on EXHIBIT G-1 to execute and deliver to Parent
a Release in the form of EXHIBIT G-2, and the Company shall execute and deliver
a Release in the form of EXHIBIT G-3 to each Person who has executed and
delivered a Release to the Company in the form of EXHIBIT G-2.
5.10 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897 - 2(h)(2)
of the United States Treasury Regulations.
5.11 ANTI-TAKEOVER LAWS. The Company shall, and shall cause its
Associates and Representatives to, take all actions necessary or desirable to
render inapplicable to the Merger, this Agreement and any Related Agreement, any
state anti-takeover or similar law purporting to be applicable to the Merger,
this Agreement or any of the Related Agreements.
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 and the
Related Agreements are subject to the satisfaction or written waiver, at or
prior to the Closing, of each of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Company in this Agreement and in each of the other
agreements and instruments delivered to Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
materiality qualifications, or any similar qualifications, contained or
incorporated directly or indirectly in such representations and warranties), and
shall be accurate in all material respects as of the Closing Date as if made on
the Closing Date (without giving effect to any materiality qualifications, or
any similar qualifications, contained or incorporated directly or indirectly in
such representations and warranties).
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations 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 STOCKHOLDER APPROVAL. This Agreement shall have been duly adopted by
the Required Company Stockholder Vote.
6.4 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
the Consents identified in
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Part 2.21 of the Company Disclosure Schedule) shall have been obtained and shall
be in full force and effect.
6.5 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 E-1, executed by
the Persons identified on EXHIBIT E-2 and by any other Person who Parent
reasonably determines to be an "affiliate" of the Company for purposes of the
Securities Act;
(b) a Release in the form of EXHIBIT G-2, executed by the Company
stockholders identified on EXHIBIT G-1;
(c) a legal opinion of Cooley Godward llp, 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, such counsel may rely upon the tax representation
letters referred to in Section 5.7);
(d) a letter from each of Arthur Andersen LLP, independent
accountants to the Company, and Ernst & Young LLP, independent accounts to
Parent, regarding the appropriateness of "pooling of interests" accounting for
the Merger under APB 16 if closed and consummated in accordance with this
Agreement;
(e) written resignations of all directors of the Company,
effective as of the Effective Time;
(f) an Escrow Agreement in the form of EXHIBIT B, executed by the
Company Stockholders' Representative and the Escrow Agent;
(g) a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company representing
and warranting after reasonable investigation that the conditions set forth in
Section 6.1 and Section 6.2 have been duly satisfied (the "Company Compliance
Certificate");
(h) A legal opinion of Godfrey & Kahn, S.C. in the form of
EXHIBIT I; and
(i) Either Stock Option Assumption Agreements from each holder of
Company Options or evidence satisfactory to Parent that the Board of Directors
of the Company has taken all actions required pursuant to each of the Company
Stock Option Plans in order to give effect to the transactions contemplated in
this Agreement, including the assumption of Company Options pursuant to Section
1.6.
6.6 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for quotation (subject to notice of issuance) on
the Nasdaq.
6.7 EMPLOYMENT AGREEMENTS. The Employment and Noncompetition Agreements
executed by each of the Key Executives shall be in full force and effect.
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6.8 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 Governmental Body, and there shall not be any
Legal Requirement enacted or deemed applicable to the Merger that makes
consummation of the Merger illegal or requires Parent to take any of the actions
set forth in Section 5.1(b).
6.9 NO GOVERNMENTAL LITIGATION. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Body is or is 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 possibility of commencing any Legal Proceeding or taking any
other action: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or the Related Agreements; (b) relating to the Merger and seeking to
obtain from Parent or any of its Subsidiaries, or the Company or any of its
Subsidiaries, any damages or other relief that may 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 the Company or any of its Subsidiaries; or (d) which
would materially and adversely affect the right of Parent or the Company or any
Subsidiary of Parent to own the assets or operate the business of the Company or
any of its Subsidiaries.
6.10 NO OTHER LITIGATION. There shall not be pending any Legal
Proceeding in which, in the reasonable judgment of Parent, there is a reasonable
possibility of an outcome that could have a Company Material Adverse Effect 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 Company or any of its
Subsidiaries, any damages or other relief that may 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 the Company or any of its Subsidiaries; or (d) which
would affect adversely the right of Parent or the Company, Parent or any
Subsidiary of Parent to own the assets or operate the business of the Company or
any of its Subsidiaries.
6.11 EFFECTIVENESS OF REGISTRATION STATEMENT. The 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 and be pending with
respect to the S-4 Registration Statement.
6.12 FIRPTA COMPLIANCE. Parent shall have received the statement
referred to in Section 5.10(a) and the Company shall have filed with the
Internal Revenue Service the notification referred to in Section 5.10(b).
6.13 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
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6.14 DISSENTER'S RIGHTS. Holders of no more than 5% of the Company
Common Stock shall have exercised, and not withdrawn or otherwise lost, their
dissenter's rights pursuant to Subchapter XIII of the WBCL.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement and the Related
Agreements are subject to the satisfaction or written waiver, at or prior to the
Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all material respects as of the date of this Agreement (without
giving effect to any materiality qualifications or similar qualifications
contained or incorporated directly or indirectly in such representations and
warranties), and shall be accurate in all material respects as of the Closing
Date as if made on the Closing Date (without giving effect to any materiality
qualifications or similar qualifications contained or incorporated directly or
indirectly in such representations and warranties).
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 DOCUMENTS. The Company shall have received the following documents:
(a) a legal opinion of Godfrey & Kahn, S.C., 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, such counsel may rely upon the tax representation
letters referred to in Section 5.7);
(b) an Escrow Agreement in the form of EXHIBIT B, executed by
Parent and the Escrow Agent;
(c) a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent representing and
warranting that the conditions set forth in Section 7.1 and Section 7.2 have
been duly satisfied; and
(d) a Release in the form of EXHIBIT G-3, executed by the Company
and delivered to each Person who has executed and delivered to the Company a
Release in the form of EXHIBIT G-2.
7.4 STOCKHOLDER APPROVAL. This Agreement and the Escrow Agreement shall
have been duly adopted and approved and the Merger shall have been duly approved
by the Required Company Stockholder Vote.
7.5 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for quotation (subject to notice of issuance) on
the Nasdaq.
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7.6 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 Governmental Body 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.
7.7 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.8 EFFECTIVENESS OF REGISTRATION STATEMENT. The 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 and be pending with
respect to the S-4 Registration Statement.
7.9 NO GOVERNMENTAL LITIGATION. There shall not be pending any Legal
Proceeding in which a Governmental Body is a party or is otherwise involved: (a)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement or the Related
Agreements; (b) relating to the Merger and seeking to obtain from Parent or any
of its Subsidiaries, or the Company or any of its Subsidiaries, any damages or
other relief that may 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 the Company
or any of its Subsidiaries; or (d) which would materially and adversely affect
the right of Parent or the Company or any Subsidiary of Parent to own the assets
or operate the business of the Company or any of its Subsidiaries.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if any Order by any
Governmental Body of competent jurisdiction preventing or prohibiting
consummation of the Merger shall have become final and nonappealable; provided,
however, that the party seeking to terminate this Agreement pursuant to this
Section 8.1(b) must have used all reasonable efforts to remove any such Order;
(c) by either Parent or the Company if (i) the Company
Stockholders Meeting (including any adjournment or postponement thereof) shall
have been duly held and completed and the Company stockholders shall have taken
a final vote on a proposal to approve and adopt the Merger, this Agreement and
the Escrow Agreement and (ii) the Merger, this Agreement and the Escrow
Agreement shall not have been adopted and approved 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(c) if the failure of the
Company stockholders to adopt and approve the Merger, this Agreement and the
Escrow Agreement is attributable to a failure on the part of the Company to
perform its obligations under this Agreement;
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(d) 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 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(d) on account of an inaccuracy in the Company's
representations and warranties or on account of a breach of a covenant by the
Company if such inaccuracy or breach is curable by the Company unless the
Company fails to cure such inaccuracy or breach within 15 days after receiving
written notice from Parent of such inaccuracy or breach;
(e) 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(e) on account of an inaccuracy in Parent's
representations and warranties or on account of a breach of a covenant by Parent
if such inaccuracy or breach is curable unless Parent fails to cure such
inaccuracy or breach within 15 days after receiving written notice from the
Company of such inaccuracy or breach; or
(f) by Parent or the Company if the Closing has not taken place
on or before May 10, 2001 (the "Termination Date") (other than as a result of
any failure on the part of the terminating party to comply with or perform any
of its covenants or obligations set forth in this Agreement).
8.2 TERMINATION PROCEDURES. If either party wishes to terminate this
Agreement pursuant to Section 8.1, it shall deliver to the other party a written
notice stating that it is terminating this Agreement and (except for termination
under Section 8.1(f) which will not require such certification) setting forth a
brief description of the basis on which it is terminating this Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Parent shall be
relieved of any obligation or liability arising from any inaccuracy or prior
breach by such party of any representation, warranty, covenant or other
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 10; (c) the
parties shall, in all events, remain bound by and continue to be subject to
Section 5.4; and (d) no party shall be liable for any consequential or punitive
damages.
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9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the Company
(including the representations and warranties set forth in Section 2 and the
representations set forth in the Company Compliance Certificate) shall survive
the Closing and shall expire at the end of the Escrow Period; provided, however,
that if, at any time prior to the end of the Escrow Period, any Indemnitee
delivers to the Company Stockholders' Representative a written notice alleging
the existence of an inaccuracy in or a breach of any of the representations and
warranties made by the Company (and setting forth in reasonable detail the basis
for such Indemnitee's belief that such an inaccuracy or breach may exist) and
asserting a claim for recovery under Section 9.2 based on such alleged
inaccuracy or breach, then the representation or warranty underlying the claim
asserted in such notice shall survive the end of the Escrow Period until such
time as such claim is fully and finally resolved. All representations and
warranties made by Parent and Merger Sub shall terminate and expire as of the
Effective Time, and any liability of Parent or Merger Sub with respect to such
representations and warranties shall thereupon cease.
(b) The representations, warranties, covenants and obligations of
the Company, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Indemnitees or any of their Representatives; provided, however, that Parent
shall be deemed to have knowledge of the information specifically included in
the Company Disclosure Schedule on the date of this Agreement, excluding any
information included in any updates to the Company Disclosure Schedules after
the date of this Agreement.
(c) For purposes of this Section 9, each statement or other item
of information set forth in the Company Disclosure Schedule or in any update to
the Company Disclosure Schedule shall be deemed to be a representation and
warranty made by the Company in this Agreement.
9.2 INDEMNIFICATION.
(a) From and after the Closing Date (but subject to Section
9.1(a)), each Indemnitee shall be held harmless and shall be indemnified from
and against, and shall be compensated, reimbursed and paid for, any Damages
which are suffered or incurred by any Indemnitee or to which any Indemnitee may
otherwise become subject (regardless of whether or not such Damages relate to
any third-party claim) and which arise from or as a result of, or are directly
or indirectly connected with: (i) any inaccuracy in or breach of any
representation or warranty of the Company set forth in this Agreement or in the
Company Compliance Certificate (in each case, without giving effect to any
update to the Company Disclosure Schedule delivered by the Company to Parent
prior to the Closing); (ii) any breach of any covenant or obligation of the
Company (including the covenants set forth in Sections 4 and 5); or (iii) any
Legal Proceeding relating to any inaccuracy or breach of the type referred to in
clauses "(i)" or "(ii)"
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above (including any Legal Proceeding commenced by any Indemnitee for the
purpose of enforcing any of its rights under this Section 9).
(b) In the event the Surviving Corporation suffers, incurs or
otherwise becomes subject to any Damages as a result of or in connection with
any inaccuracy in or breach of any representation, warranty, covenant or
obligation, then (without limiting any of the rights of the Surviving
Corporation as an Indemnitee) Parent shall also be deemed, by virtue of its
ownership of the stock of the Surviving Corporation, to have incurred Damages as
a result of and in connection with such inaccuracy or breach.
9.3 THRESHOLD. No Indemnitee shall be entitled to indemnification
pursuant to Section 9.2(a) for any inaccuracy in or breach of any of the
Company's representations and warranties set forth in this Agreement or the
Company Compliance Certificate until such time as the total amount of all
Damages (including the Damages arising from such inaccuracy or breach and all
other Damages arising from any other inaccuracies in or breaches of any
representations or warranties) that have been directly or indirectly suffered or
incurred by any one or more of the Indemnitees, or to which any one or more of
the Indemnitees has or have otherwise become subject, exceeds $750,000 in the
aggregate, provided that if the total amount of such Damages exceeds $750,000,
then any Indemnitee that has suffered or incurred any Damages shall be entitled
to be held harmless, indemnified against and compensated, reimbursed and paid
only for such Damages exceeding $750,000.
9.4 OFFSET AGAINST ESCROW SHARES; SOLE REMEDY. Subject to Section 9.3,
in the event any Indemnitee shall suffer any Damages for which such Indemnitee
is entitled to indemnification under this Section 9, such Indemnitee shall be
entitled to recover such Damages solely by obtaining that number of Escrow
Shares equal in value (as determined in accordance with the terms and conditions
of the Escrow Agreement) to the aggregate amount of such Damages, and such
recovery shall be made from the Escrow Shares on a basis proportional to the
Escrow Shares contributed under the Escrow Agreement by or on behalf of each
Company stockholder. The Company stockholders shall have no liability for
Damages in excess of the number of Escrow Shares held under the Escrow Agreement
except for Damages directly or indirectly related to fraud, intentional
misrepresentation or any willful breach of this Agreement.
9.5 NO CONTRIBUTION. The Company stockholders shall not have and shall
not exercise or assert (or attempt to exercise or assert), any right of
contribution, right of indemnity or other right or remedy against the Surviving
Corporation in connection with any indemnification obligation or any other
liability to which such stockholders may become subject under or in connection
with this Agreement or the Escrow Agreement.
(a) DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion
or commencement by any Person of any claim or Legal Proceeding (whether against
the Surviving Corporation, against Parent or against any other Person) with
respect to which any of the Indemnitees may be entitled to indemnification or
any other remedy pursuant to this Section 9, Parent shall promptly give the
Company Stockholders' Representative and the Escrow Agent written notice of such
claim or Legal Proceeding (a "Claim") provided, however, that any failure on the
part of Parent to so notify the Company Stockholders' Representative shall not
limit
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any of the Indemnitees' rights to indemnification under this Section 9 (except
to the extent such failure materially prejudices the defense of such Legal
Proceeding).
(b) Within ten days of delivery of such written notice, the
Company Stockholders' Representative may elect (by written notice delivered to
Parent) to take all necessary steps properly to contest any Claim involving
third parties or to prosecute such Claim to conclusion or settlement. If the
Company Stockholders' Representative makes the foregoing election, an Indemnitee
will have the right to participate at its own expense in all proceedings. If the
Company Stockholders' Representative does not make such election within such
period or fails to diligently contest such Claim after such election, then the
Indemnitee shall be free to handle the prosecution or defense of any such Claim,
and will take all necessary steps to contest the Claim involving third parties
or to prosecute such Claim to conclusion or settlement, and will notify the
Company Stockholders' Representative of the progress of any such Claim, will
permit the Company Stockholders' Representative, at the sole cost of the Company
Stockholders' Representative, to participate in such prosecution or defense and
will provide the Company Stockholders' Representative with reasonable access to
all relevant information and documentation relating to the Claim and the
prosecution or defense thereof.
(c) Notwithstanding the foregoing, if a Claim includes Damages
equal to an amount in excess of the value of the Escrow Shares on the date of
the Claim, or relates to any Proprietary Assets or other intellectual property
issues, Parent shall have the right, at its election, to proceed with the
defense of such claim or Legal Proceeding on its own. In any case, the party not
in control of the Claim will cooperate with the other party in the conduct of
the prosecution or defense of such Claim.
(d) Neither party will compromise or settle any such Claim
without the written consent of either Parent (if the Company Stockholders'
Representative defends the Claim) or the Company Stockholders' Representative
(if Parent or other Indemnitees defend the Claim), such consent not to be
unreasonably withheld. Parent shall have the right, at its election, to proceed
with the defense of such claim or Legal Proceeding on its own. If Parent
proceeds with the defense of any such claim or Legal Proceeding all reasonable
expenses relating to the defense of such claim or Legal Proceeding shall be
satisfied first out of the Escrow Shares in the manner set forth in the Escrow
Agreement and then from the Company stockholders.
9.6 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement or under the Escrow Agreement unless Parent (or any successor
thereto or assign thereof) shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
10. MISCELLANEOUS PROVISIONS
10.1 COMPANY STOCKHOLDERS' REPRESENTATIVE.
(a) The stockholders of the Company, by adopting this Agreement
and the Escrow Agreement and the transactions contemplated hereby and thereby,
hereby irrevocably appoint Ralph Kauten as their agent and attorney-in-fact for
purposes of Section 9 and the
44.
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Escrow Agreement (the "Company Stockholders' Representative"), and consent to
the taking by the Company Stockholders' Representative of any and all actions
and the making of any decisions required or permitted to be taken by him under
Section 9 hereof or the Escrow Agreement (including, without limitation, the
exercise of the power to authorize delivery to Parent of the Escrow Shares in
satisfaction of claims by Parent, agree to, negotiate, enter into settlements
and compromises of and demand arbitration, and comply with orders of courts and
awards of arbitrators with respect to such claims, resolve any claim made
pursuant to Section 9; and take all actions necessary in the judgment of the
Company Stockholders' Representative for the accomplishment of the foregoing).
By his execution below, Ralph Kauten hereby accepts his appointment as the
Company Stockholders' Representative for purposes of Section 9 and the Escrow
Agreement. Parent shall be entitled to deal exclusively with the Company
Stockholders' Representative on all matters relating to Section 9 and the Escrow
Agreement, and shall be entitled to rely conclusively (without further evidence
of any kind whatsoever) on any document executed or purported to be executed on
behalf of any Company stockholder by the Company Stockholders' Representative,
and on any other action taken or purported to be taken on behalf of any Company
stockholder by the Company Stockholders' Representative, as fully binding upon
such Company stockholder.
(b) If the Company Stockholders' Representative shall die, become
disabled or otherwise be unable to fulfill his responsibilities as agent of the
Company stockholders, then 780 Partners shall, within ten days after such death
or disability, appoint a successor representative reasonably satisfactory to
Parent. Any such successor shall become the "Company Stockholders'
Representative" for purposes of Section 9, the Escrow Agreement and this Section
10.1. If for any reason there is no Company Stockholders' Representative at any
time, all references herein to the Company Stockholders' Representative shall be
deemed to refer to 780 Partners. The parties acknowledge that 780 Partners is an
investment partnership comprised of attorneys with the law firm of Godrey &
Kahn, S.C., which has acted as counsel to the Company in connection with this
Merger Agreement. The parties hereby understand that there may be a potential
conflict of interest in the event that 780 Partners is appointed as the Company
Stockholders' Representative and the parties hereby waive any such conflict.
(c) A Company Stockholders' Representative shall not be liable
for any act done or omitted hereunder as Company Stockholders' Representative
while acting in good faith and in the exercise of reasonable judgment. Company
stockholders on whose behalf Escrow Shares were contributed to the escrow shall
severally indemnify each Company Stockholders' Representative and hold each
Company Stockholders' Representative harmless against any loss, liability or
expense incurred without gross negligence, bad faith or willful misconduct on
the part of such Company Stockholders' Representative and arising out of or in
connection with the acceptance or administration of such Company Stockholders'
Representative's duties hereunder, including the reasonable fees and expenses of
any legal counsel retained by such Company Stockholders' Representative.
(d) The Company Stockholders' Representative shall be entitled to
rely upon any order, judgment, certificate, demand, notice, instrument or other
writing delivered to it hereunder without being required to investigate the
validity, accuracy or content thereof nor shall the Company Stockholders'
Representative be responsible for the validity or sufficiency of this
45.
<PAGE> 53
Agreement. In all questions arising under this Agreement, the Company
Stockholders' Representative may rely on the advice of counsel, and for anything
done, omitted or suffered in good faith by the Company Stockholders'
Representative based on such advice, the Company Stockholders' Representative
shall not be liable to anyone.
10.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
10.3 FEES AND EXPENSES. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to the Company's business (and the furnishing of information to Parent
and its Representatives in connection with such investigation and review), (b)
the negotiation, preparation and review of this Agreement (including the Company
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, (c) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated by this Agreement, and the obtaining of any
Consent required to be obtained in connection with any of such transactions, and
(d) the consummation of the Merger; provided however, that, to the extent the
total amount of all such fees, costs and expenses incurred by or for the benefit
of the Company (including all such fees, costs and expenses incurred prior to
the date of this Agreement and including the amount of all special bonuses and
other amounts that may become payable to any officers of the Company or other
Persons in connection with the consummation of the transactions contemplated by
this Agreement) exceeds one million dollars ($1,000,000) in the aggregate, such
fees, costs and expenses shall be paid and satisfied by the cancellation of that
number of Escrow Shares in accordance with the terms of the Escrow Agreement
equal in value to the total of such fees, costs and expenses in excess of one
million dollars ($1,000,000).
10.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 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 when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) 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):
46.
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IF TO PARENT:
AURORA BIOSCIENCES CORPORATION
11010 Torreyana Road
San Diego, CA 92121
Attn: Chris Krueger, Esq.
WITH A COPY TO (WHICH COPY SHALL NOT CONSTITUTE NOTICE):
COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Attn: Thomas A. Coll, Esq.
Fax: (858) 453-3555
IF TO THE COMPANY:
PanVERA CORPORATION
545 Science Drive
Madison, WI 53711
Attn: Ralph Kauten
WITH A COPY TO (WHICH COPY SHALL NOT CONSTITUTE NOTICE):
GODFREY & KAHN S.C.
780 North Water Street
Milwaukee, WI 53202
Attn: John A. Dickens, Esq.
Fax: (414) 273-5198
10.6 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
10.7 HEADINGS. The underlined 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.
10.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.9 GOVERNING LAW; JURISDICTION AND VENUE.
(a) Except as required by mandatory provisions of the WBCL, this
Agreement shall be construed in accordance with, and governed in all respects
by, the internal laws of the State of California (without giving effect to
principles of conflicts of laws).
47.
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(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement shall be brought
or otherwise commenced exclusively in any state or federal court located in the
County of San Diego, State of California. The Company and Parent each:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of San Diego,
State of California (and each appellate court located in the State of
California), in connection with any legal proceeding;
(ii) agrees that service of any process, summons, notice
or document by U.S. mail addressed to him at the address set forth in Section
10.5 shall constitute effective service of such process, summons, notice or
document for purposes of any such legal proceeding;
(iii) agrees that each state and federal court located in
the County of San Diego, State of California, shall be deemed to be a convenient
forum; and
(iv) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or federal
court located in the County of San Diego, State of California, any claim by
either the Company or Parent that it is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.
10.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns (if
any). The Company shall not, and prior to the Effective Time Parent shall not,
assign this Agreement or any rights or obligations hereunder to any Person; it
being understood that nothing in this Section 10.10 shall prohibit Parent or any
of its Affiliates from consummating any merger, acquisition or similar
transaction with any Person. After the Effective Time, Parent may freely assign
any or all of its rights under this Agreement (including its rights under
Section 9), in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.11 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
10.12 WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such
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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. No Person 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 Person; and any such
waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
10.13 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.14 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.15 PARTIES IN INTEREST. Except for the provisions of Sections 1.5,
1.6, 9 and 10.1, none of the provisions of this Agreement is intended to provide
any rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.16 ENTIRE AGREEMENT. This Agreement and the Related Agreements set
forth the entire understanding of the parties hereto relating to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject matter hereof and
thereof.
10.17 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 the masculine and feminine genders.
(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" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
49.
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IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
executed and delivered as of the date first set forth above.
AURORA BIOSCIENCES CORPORATION
a Delaware corporation
By: /s/ STUART J. M. COLLINSON
--------------------------------
Name: Stuart J.M. Collinson
Title: Chairman of the Board, Chief
Executive Officer and President
PanVERA CORPORATION
a Wisconsin corporation
By: /s/ RALPH KAUTEN
--------------------------------
Name: Ralph Kauten
Title:
AURORA ACQUISITION CORP.
a Wisconsin corporation
By: /s/ STUART J. M. COLLINSON
--------------------------------
Name: Stuart J.M. Collinson
Title: President and Treasurer
By his execution below, Ralph Kauten hereby accepts appointment as the
Company Stockholders' Representative hereunder.
/s/ RALPH KAUTEN
-----------------------------------
Ralph Kauten
50.
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this EXHIBIT A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) Except for the Merger contemplated herein, any merger,
consolidation, share exchange, business combination, issuance of securities,
direct or indirect acquisition of securities, recapitalization, tender offer,
exchange offer or other similar transaction in which (i) the Company is a
constituent corporation or is otherwise involved, (ii) a Person or "group" (as
defined in the Exchange Act and the rules promulgated thereunder) of Persons
directly or indirectly acquires beneficial or record ownership of securities
representing more than 5% of the outstanding securities of any class of voting
securities of the Company, or (iii) the Company issues securities representing
more than 5% of the outstanding securities of any class of voting securities of
the Company;
(b) any direct or indirect sale, lease, exchange, transfer,
license, acquisition or disposition of any business or businesses or of assets
or rights that constitute or account for 10% or more of the consolidated net
revenues, net income or assets of the Company; or
(c) any liquidation or dissolution of the Company.
AFFILIATE. "Affiliate" shall mean, with respect to any Person, any other
Person, directly or indirectly, controlling, controlled by or under common
control with such Person.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this EXHIBIT A is attached (including the Company
Disclosure Schedule), as it may be amended from time to time.
ASSOCIATE. "Associate" shall mean any Person's Subsidiary or other
Affiliate and the respective Representatives of such Subsidiary or other
Affiliate.
AUDITED BALANCE SHEET. "Audited Balance Sheet" shall mean the audited
balance sheet of the Company, dated September 30, 2000.
COMPANY CONTRACT. "Company Contract" shall mean any Contract, including
any amendment or supplement thereto: (a) to which the Company is a party; (b) by
which the Company or any of its assets is or may become bound or under which the
Company has, or may become subject to, any obligation; or (c) under which the
Company has or may acquire any right or interest.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the schedule (dated as of the date of the Agreement) delivered to Parent on
behalf of the Company on the date of this Agreement and signed by the President
of the Company.
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<PAGE> 59
COMPANY MATERIAL ADVERSE EFFECT. A violation or other matter will be
deemed to have a "Company Material Adverse Effect" if such violation or other
matter (considered individually or in the aggregate with all other matters that
would constitute exceptions to the representations and warranties set forth in
the Agreement or in the Company Compliance Certificate but for the presence of a
"Company Material Adverse Effect" or other materiality qualifications, or any
similar qualifications, in such representations and warranties) (i) has had or
could reasonably be expected to have a material adverse effect on the Company's
business, condition, assets, liabilities, operations, financial performance or
customer relationships, or (2) materially impairs the ability of the Company to
consummate the Merger or enables any Person to prevent the consummation of the
Merger by the Company.
COMPANY OPTIONS. "Company Options" shall mean all options to purchase
shares of Company capital stock.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
COMPANY SOURCE CODE. "Company Source Code" shall mean any source code
owned by the Company.
COMPANY STOCK OPTION PLANS. "Company Stock Option Plans" shall mean,
collectively, the Company's 1993 Stock Option Plan, the Company's 1998 Stock
Option Plan and each stock option agreement entered into thereunder.
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, warranty,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, whether express or implied.
DAMAGES. "Damages" shall include any loss, damage, injury, liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation) or
expense of any nature; provided, however, that any of the foregoing shall be
computed by taking into account any insurance proceeds actually received and any
prospective increases in insurance premiums or other premium adjustments and,
provided further, that any of the foregoing shall be computed without taking
into account any multiplication factor based upon earnings or revenues.
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 affecting property, real or
personal, tangible or intangible, 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, any restriction on the possession, exercise or transfer
of any other attribute of ownership of any asset,
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any lease in the nature thereof and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute of
any jurisdiction).
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 limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and, the rules and regulations promulgated thereunder.
EXCLUDED SHARES. "Excluded Shares" shall mean all shares of Company
Common Stock held as of the Effective Time (i) by the Company as treasury shares
or (ii) by Parent or any Subsidiary of Parent.
GAAP. "GAAP" shall mean United States generally accepted accounting
principles consistently applied over the relevant time periods.
GOVERNMENT BID. "Government Bid" shall mean any quotation, bid or
proposal submitted to any Governmental Body or any proposed prime contractor or
higher-tier subcontractor of any Governmental Body.
GOVERNMENT CONTRACT. "Government Contract" shall mean any prime
contract, subcontract, letter contract, purchase order or delivery order
executed or submitted to or on behalf of any Governmental Body or any prime
contractor or higher-tier subcontractor, or under which any Governmental Body or
any such prime contractor or subcontractor otherwise has or may acquire any
right or interest.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) approval, permit, license, certificate, franchise, permission, clearance,
registration, qualification or other 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, self-regulatory or quasi-governmental
authority of any nature (including any governmental division, department,
agency, commission, instrumentality, official, 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.
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) Parent's current and future Affiliates (including the Surviving
Corporation); (c) the respective officers, directors, employees, agents,
attorneys, accountants and advisors of the Persons referred to in
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clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)", "(b)" and "(c)" above.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any ongoing or
threatened 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 international, multinational 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.
NASDAQ. "Nasdaq" shall mean the Nasdaq National Stock Market.
NASD. "NASD" shall mean the National Association of Securities Dealers,
or any successor organization.
ORDER. "Order" shall mean any decree, permanent injunction, order or
similar action.
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, domain 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, 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.
RELATED AGREEMENTS. Related Agreements shall mean the Voting Agreement,
the Affiliate Agreements, the Escrow Agreement and the General Release.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
SUBSIDIARY. Any Entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly (a) has the power to direct the
management or policies of such Entity or (b) owns, beneficially or of record,
(i) an amount of voting securities or other interests
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in such Entity that is sufficient to enable such Person to elect at least a
majority of the members of such Entity's board of directors or other governing
body, or (ii) at least 50% of the outstanding equity or financial interests of
such Entity.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, 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.
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