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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
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Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 16, 1999
(Date of earliest event reported): September 1, 1999
MELITA INTERNATIONAL CORPORATION
(Exact name of Company specified in its charter)
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GEORGIA 0-22317 58-1378534
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation or organization)
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5051 PEACHTREE CORNERS CIRCLE, NORCROSS, GEORGIA 30092
(Address of principal executive offices) (Zip Code)
(770) 239-4000
(Company's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On September 1, 1999, Melita International Corporation, a Georgia
corporation ("Melita"), completed the acquisition of eShare Technologies, Inc.,
a Delaware corporation ("eShare"), through the merger (the "Merger") of MICA
Corporation I, a Delaware corporation and subsidiary of Melita ("MICA") with and
into eShare, pursuant to the terms of an Agreement and Plan Merger, dated June
14, 1999, by and among Melita, MICA and eShare, as amended by Amendment No. 1 to
Agreement and Plan Merger, dated September 1, 1999, by and among Melita, MICA
and eShare (the "Merger Agreement"). In the Merger, each outstanding share of
eShare capital stock is being converted into 0.461654905 shares (the "Conversion
Ratio") of Melita common stock, no par value per share ("Melita Common Stock").
Outstanding eShare options and warrants are being exchanged for Melita options
and warrants in accordance with the Conversion Ratio. eShare survived the Merger
as a wholly owned subsidiary of Melita.
Pursuant to the Merger, 10,844,891 shares of eShare capital stock
outstanding on the closing date were converted into the right to receive an
aggregate of approximately 5,006,597 shares of Melita Common Stock. eShare
options and warrants to purchase 2,260,136 shares of eShare common stock were
converted into Melita options and warrants to purchase an aggregate of
approximately 1,043,403 shares of Melita Common Stock. The total consideration
in the Merger was determined through arms' length negotiations between
representatives of Melita and eShare. Neither Melita nor any of its affiliates
had, nor to the knowledge of Melita, did any director or officer or any
associate of any such director or officer of Melita have, any material
relationship with eShare prior to the Merger.
In connection with the Merger, which was accounted for under the
pooling-of-interests method of accounting, Melita expects to record a charge in
the third quarter of 1999 for merger-related expenses and certain associated
costs and charges in an amount of $3.5 to $4.5 million. A complete description
of the transaction is contained in the Merger Agreement filed as Exhibits 2.1
and 2.2 to this report. Melita issued the press release filed as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(a) The following financial statements of eShare, together with the
independent auditors' reports thereon, are incorporated herein by reference to
Melita's Proxy Statement dated August 4, 1999 (File No. 0-22317), under the
caption "Financial Statements - Financial Statements of eShare Technologies,
Inc. at December 31, 1997 and 1998 and at March 31, 1999 (Unaudited)":
(i) consolidated balance sheets as of December 31, 1998
and 1997 and March 31, 1999 (unaudited);
(ii) consolidated statements of operations for the years
ended December 31, 1998 and 1997 and March 31, 1999
(unaudited);
(iii) consolidated statements of stockholders' equity for
the years ended December 31, 1998 and 1997 and March
31, 1999 (unaudited);
(iv) consolidated statements of cash flows for the years
ended December 31, 1998 and 1997 and March 31, 1999
(unaudited); and
(v) notes to consolidated financial statements.
(b) Pro Forma Financial Information
The required pro forma financial information relating to the business
acquired is hereby incorporated by reference to Melita's Proxy Statement dated
August 4, 1999 (File No. 0-22317), under the caption "Financial Statements--
Unaudited Pro Forma Combined Condensed Financial Statements."
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(c) Exhibits:
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2.1 Agreement and Plan of Merger, dated as of June 14, 1999, by and among
Melita International Corporation, MICA Corporation I, and eShare
Technologies, Inc.
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of September
1, 1999, by and among Melita International Corporation, MICA
Corporation I, and eShare Technologies, Inc.
2.3 Delaware Certificate of Merger dated September 1, 1999.
99.1 Text of Press Release of Melita International Corporation, dated
September 1, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MELITA INTERNATIONAL CORPORATION
By: /s/ Dan K. Lowring
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Dan K. Lowring
Vice President, Administration, Chief
Financial Officer and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
Date: September 16, 1999
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EXHIBIT INDEX
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Exhibit No. Exhibit
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2.1 Agreement and Plan of Merger, dated as of June 14, 1999, by and
among Melita International Corporation, MICA Corporation I, and
eShare Technologies, Inc.
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
September 1, 1999, by and among Melita International Corporation,
MICA Corporation I, and eShare Technologies, Inc.
2.3 Delaware Certificate of Merger dated September 1, 1999.
99.1 Text of Press Release of Melita International Corporation, dated
September 1, 1999.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MELITA INTERNATIONAL CORPORATION
MICA CORPORATION I
AND
ESHARE TECHNOLOGIES, INC.
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TABLE OF CONTENTS
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Page
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ARTICLE 1 DEFINITIONS...........................................................1
ARTICLE 2 THE MERGER............................................................7
2.1. The Merger...........................................................7
2.2. Effective Time of the Merger.........................................7
2.3. Surviving Corporation................................................7
ARTICLE 3 MERGER CONSIDERATION; STATUS AND CONVERSION OF SHARES.................8
3.1. Conversion of Shares in the Merger...................................8
3.2. Status of Treasury Shares............................................8
3.4. Status of Options....................................................8
3.5. Deposit of Shares in Escrow; Payment for Shares in the Merger........8
3.6. Fractional Shares...................................................10
3.7. Transfer of Shares after the Effective Time.........................10
3.8. Closing.............................................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ESHARE.............................11
4.1. Organization of eShare..............................................11
4.2. Authorization.......................................................11
4.3. Subsidiaries. eShare has no Subsidiaries...........................11
4.4. Capital Stock.......................................................12
4.5. Government Approvals; Compliance with Laws and Orders...............12
4.6. Absence of Certain Changes or Events................................13
4.7. Compliance with Contracts and Commitments...........................15
4.8. Non-Contravention; Approvals and Consents...........................16
4.10. Labor Matters.......................................................17
4.11. Absence of Undisclosed Liabilities..................................17
4.12. No Brokers..........................................................17
4.13. No Other Agreements to Sell the Assets, Merge, Etc..................17
4.14. Employee Benefit Plans..............................................17
4.15. Environmental Matters...............................................19
4.16. Company Computer Software and Hardware..............................20
4.17. Customers...........................................................22
4.18. Transactions with Affiliates........................................22
4.19. Management Letters..................................................23
4.20. Proxy Statement.....................................................23
4.21. Tax Matters.........................................................23
4.22. Reports and Financial Statements....................................24
4.23. Payments............................................................24
4.24. Information Supplied................................................24
4.25. Other Reports.......................................................25
4.26. Vote Required.......................................................25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MELITA.............................25
5.1. Organization of Melita..............................................25
5.2. Authorization.......................................................26
5.3. Subsidiaries........................................................26
5.4. Capital Stock.......................................................26
5.5. Government Approvals; Compliance with Laws and Orders...............27
5.6. Absence of Certain Changes or Events................................28
5.7. Compliance with Contracts and Commitments...........................30
5.8. Non-Contravention; Approvals and Consents...........................31
5.9. Litigation..........................................................32
5.10. Labor Matters.......................................................32
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5.11. Absence of Undisclosed Liabilities...................................32
5.12. No Brokers...........................................................32
5.13. No Other Agreements to Sell the Assets, Merge, Etc...................32
5.14. Employee Benefit Plans...............................................32
5.15. Environmental Matters................................................35
5.16. Melita Computer Software and Hardware................................36
5.19. Proxy Statement......................................................38
5.20. Tax Matters..........................................................39
5.21. Reports and Financial Statements.....................................40
5.22. Payments.............................................................40
5.23. Information Supplied.................................................40
5.24. Other Reports........................................................41
5.25. Vote Required........................................................41
5.26. Fairness Opinion.....................................................41
ARTICLE 6 ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES...................41
6.1. Conduct of the Business of eShare...................................41
6.2. Conduct of the Business of Melita...................................44
6.3. No Solicitation; Transaction Moratorium.............................47
6.4. Meetings of Shareholders............................................48
6.7. Access to Information...............................................49
6.8. Supplements or Amendments...........................................50
6.9. Registration and Listing of Share Consideration.....................51
6.10. Affiliates of Melita and eShare.....................................51
6.12. Consents............................................................51
6.13. Filings and Authorizations..........................................52
6.14. Further Assurances; Notice of Breach; Cure..........................52
6.15. Cooperation on Litigation...........................................53
ARTICLE 7 CONDITIONS TO CLOSING................................................53
7.1. Conditions to Obligations of the Parties............................53
7.2. Conditions to Obligations of Melita.................................54
7.3. Conditions to Obligations of eShare.................................55
ARTICLE 8 TERMINATION AND ABANDONMENT; BREAK-UP FEE AND EXPENSE REIMBURSEMENT..56
8.1. Termination Rights..................................................56
8.2. Termination Expenses and Liability..................................56
ARTICLE 9 SURVIVAL OF REPRESENTATIONS AND......................................57
WARRANTIES AND INDEMNIFICATION..................................................57
Section 9.1 Survival of Representations and Warranties.......................57
Section 9.2 Indemnification by eShare........................................58
Section 9.3 Indemnification by Melita........................................60
Section 9.4 Liability Limits; Waiver of Consequential Damages................63
ARTICLE 10 MISCELLANEOUS.......................................................63
10.1. Expenses............................................................63
10.2. Non-Solicitation....................................................64
10.3. Public Disclosure...................................................64
10.4. Governing Law; Consent to Jurisdiction..............................64
10.5. Notices.............................................................64
10.6. Headings; Singular/Plural...........................................65
10.7. Counterparts........................................................66
10.8. Assignment..........................................................66
10.9. Severability........................................................66
10.10. Waivers and Amendments..............................................66
10.11. No Third Party Beneficiaries........................................66
10.12. Entire Agreement....................................................66
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EXHIBITS
Exhibit A Shareholders of eShare
Exhibit B-1 Employment Agreement of James Tito
Exhibit B-2 Employment Agreement of Bradley Birnbaum
Exhibit C Registration Rights Agreement
Exhibit D Escrow Agreement
Exhibit E Opinion of Counsel for eShare
Exhibit F Opinion of Counsel for Melita
Exhibit G Affiliate Agreement
SCHEDULES
eShare Disclosure Schedule
Melita Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of June 14, 1999, by and between Melita International
Corporation, a Georgia corporation ("Melita"), MICA Corporation I, a Delaware
corporation and wholly-owned subsidiary of Melita ("MICCI") and eShare
Technologies, Inc., a Delaware corporation ("eShare).
W I T N E S S E T H:
WHEREAS, the respective boards of directors of Melita, MICA and eShare
have approved the Merger of MICA with and into eShare (the "Merger") upon the
terms and subject to the conditions set forth herein;
WHEREAS, Melita, MICA and eShare desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to, and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Acquisition Transaction" has the meaning given to such term in Section
6.3(a).
"Affiliate" has the meaning given to such term in Rule 12b-2
promulgated under the Exchange Act.
"Antitrust Division" has the meaning given to such term in Section
6.13.
"Assets" means the assets of the relevant Person and its Subsidiaries
reflected on the Balance Sheet or acquired in the ordinary course of business
since the Balance Sheet Date.
"Authorization" means any consent, approval or authorization of,
expiration or termination of any waiting period requirement (including pursuant
to the HSR Act) by, or filing, registration, qualification, declaration or
designation with, any Governmental Body.
"Balance Sheet" means the unaudited consolidated balance sheet of
eShare or Melita, as the case may be, as of March 31, 1999, together with the
notes thereon, previously delivered to Melita or eShare, respectively.
"Balance Sheet Date" means March 31, 1999.
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"Business Day" means any day other than Saturday or Sunday and any
other day on which commercial banks in Commack, New York or Atlanta, Georgia are
required or permitted to be closed.
"Certificate of Merger" means the Certificate of Merger with respect to
the merger of MICA with and into eShare, containing the provisions required by,
and executed in accordance with, Section 251(c) of the DGCL.
"Certificates" means one or more certificates which immediately prior
to the Effective Time represented outstanding Shares.
"Closing" means the closing of the Merger contemplated hereby.
"Closing Date" has the meaning given to such term in Section 3.8.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
"Constituent Corporations" means each of MICA and eShare.
"Contract" means any note, bond, mortgage, security agreement,
indenture, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind.
"Counterparty" has the meaning given to such term in Section 6.3(a).
"DGCL" means the Delaware General Corporation Law, as amended.
"Effective Time" means the date and time of the effectiveness of the
Merger pursuant to Section 2.2 and in accordance with the DGCL.
"Employees" means the officers, employees, agents, directors or
independent contractors of a Person or any of its Subsidiaries, whether current
or former.
"Employment Agreements" means the Employment Agreements attached hereto
as Exhibits B-1 through B-2, to be executed by the respective proposed executive
officers of the Surviving Corporation named therein immediately prior to the
Effective Time.
"Environmental Claim" Any claim, cause of action or notice (written or
oral) alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup or remediation costs, governmental
response costs, natural resources damage, property damages, personal injuries,
penalties and fines, and similar costs of third parties for which the relevant
Person is alleged to be responsible or potentially responsible) arising out of,
based on or resulting from (a) the presence, or release into the environment, of
any Material of Environmental Concern at any location, whether or not owned by
the Person or any of its Subsidiaries or (b) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
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"Environmental Laws" All federal, state, local and foreign laws, rules
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws,
rules and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in effect from time to
time.
"ERISA Affiliates" means any trade or business, whether or not
incorporated, that is now or has at any time in the past been treated as a
single employer with Melita or eShare or any of their respective Subsidiaries
under Section 414(b) or (c) of the Code and the Treasury Regulations thereunder.
"eShare" means eShare Technologies, Inc., a Delaware corporation.
"eShare Benefit Arrangement" has the meaning given to such term in
Section 4.14(a).
"eShare Common Stock" means the common stock, $.01 par value per share,
of eShare.
"eShare Disclosure Schedule" means the Disclosure Schedule of eShare
dated the date of this Agreement and delivered concurrently with the execution
and delivery of this Agreement by eShare to Melita.
"eShare Employee Plan" has the meaning given to such term in Section
4.14(a).
"eShare Financial Statements" has the meaning given to such term in
Section 4.17.
"eShare Junior Preferred" means eShare's Convertible Junior Preferred
Stock.
"eShare Material Adverse Effect" means a material adverse effect on (i)
the business, assets, liabilities, results of operations, condition (financial
or otherwise) or prospects of eShare, or (ii) the validity or enforceability of,
or the ability of eShare to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement or any other agreement or
instrument contemplated hereby or to be entered into in connection herewith.
"eShare Option" means an Option issued or issuable pursuant to the
eShare Plan.
"eShare Permits" has the meaning given to such term in Section 4.5(a).
"eShare Plan" means eShare's 1996 Stock Option Plan and Restricted
Stock Purchase Plan.
"eShare Series A Preferred" means eShare's Series A Redeemable
Convertible Preferred Stock, $1.25 liquidation preference.
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"eShare Series B Preferred" means eShare's Series B Redeemable
Convertible Preferred Stock, $1.37 liquidation preference.
"eShare Series C Preferred" means eShare's Series C Redeemable
Convertible Preferred Stock, $2.256 liquidation preference.
"eShare Stockholders' Meeting" has the meaning given to such term in
Section 6.4(a).
"eShare Stockholders' Approval" has the meaning given to such term in
Section 6.4(a).
"eShare Warrants" means one of 589,367 warrants to purchase shares of
the eShare Common Stock outstanding as of the date of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Agent" means the exchange agent selected by Melita and
reasonably acceptable to eShare, to effectuate the payment for and conversion of
the Shares in the Merger.
"Final Termination Date" means September 30, 1999; provided, however,
that (i) Melita and eShare may, by mutual written consent, extend such date, and
(ii) such date may be extended pursuant to Section 6.3(b), in either of which
case the "Final Termination Date" shall mean the date as so extended.
"Fractional Securities Fund" has the meaning given to such term in
Section 3.6.
"FTC" has the meaning given to such term in Section 6.13.
"Governmental Body" means any Federal, state, municipal, political
subdivision or other governmental court, tribunal, arbitrator, authority,
official, department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Liabilities" has the meaning given to such term in Section
6.9(a).
"Indemnified Parties" has the meaning given to such term in Section
6.9(a).
"Indemnifying Party" has the meaning given to such term in Section
6.9(a).
"Laws" means any statute, law, rule, regulation or ordinance of any
Governmental Body.
"Lien" means any lien, claim, mortgage, encumbrance, pledge, security
interest, equity and charge of any kind.
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"Materials of Environmental Concern" includes (a) any hazardous waste
as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
ss.6901 et seq.), as amended from time to time, and regulations promulgated
thereunder from time to time; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.9601 et seq.), as amended from time to time, and regulations
promulgated thereunder from time to time; (c) asbestos; (d) polychlorinated
biphenyls; (e) petroleum and petroleum by-products; (f) any substance prohibited
from being present on the property of the relevant Person or any of its
Subsidiaries by any applicable law, rule, ordinance, or regulation of any
federal, state, or local government or agency thereof (each, a "Governmental
Requirement"); and (g) any other substance that requires special handling in
connection with its collection, storage, treatment or disposal pursuant to any
Governmental Requirement.
"Melita" means Melita International Corporation, a Georgia corporation.
"Melita Benefit Arrangement" has the meaning given to such term in
Section 5.14(a).
"Melita Common Stock" means the shares of common stock, no par value
per share, of Melita.
"Melita Disclosure Schedule" means the Disclosure Schedule of Melita
dated the date of this Agreement and delivered concurrently with the execution
and delivery of this Agreement by Melita to eShare.
"Melita Employee Plan" has the meaning given to such term in Section
5.14(a).
"Melita Financial Statements" has the meaning given to such term in
Section 5.17.
"Melita Material Adverse Effect" means a material adverse effect on (i)
the business, assets, liabilities, results of operations, condition (financial
or otherwise) or prospects of Melita and its Subsidiaries, taken as a whole, or
(ii) the validity of enforceability of, or the ability of Melita to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement or any other agreement or instrument contemplated hereby or to be
entered into in connection herewith.
"Melita Permits" has the meaning given to such term in Section 5.5(a).
"Melita SEC Reports" means all reports (including, without limitation,
definitive proxy statements), forms, schedules, registration statements and
other documents together with all amendments and supplements thereto which
Melita has been required to file with the SEC since June 4, 1997.
"Melita Shareholders' Approval" has the meaning given to such term in
Section 6.4(b).
"Melita Shareholders' Meeting" has the meaning given to such term in
Section 6.4(b).
"Merger" means the merger of MICA with and into eShare as contemplated
by Section 2.1.
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"Merger Consideration" means the shares of Melita Common Stock issuable
upon conversion of the Shares in the Merger pursuant to the terms of this
Agreement.
"MICA" means MICA Corporation I, a Delaware corporation and
wholly-owned subsidiary of Melita.
"NASDAQ" means that tier of The Nasdaq Stock Market known as the Nasdaq
National Market.
"Options" means any subscriptions, options, warrants, rights (including
"phantom" stock rights), preemptive rights or other contracts, commitments,
understandings or arrangements, including any right of conversion or exchange
under any outstanding security, instrument or agreement to issue or sell any
shares of capital stock of a corporation.
"Order" means any judgment, decree, order, writ, permit or license of
any Governmental Body.
"Person" means any individual or corporation, company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity
of any kind.
"Potential Acquiror" has the meaning given to such term in Section
6.3(a).
"Proxy Statement" has the meaning given to such term in Section 6.5.
"Registration Rights Agreement" means that certain Registration Rights
Agreement to be entered into between Melita and the eShare stockholders at
Closing.
"Representative" has the meaning given to such term in Section 6.3(a).
"Respective Representatives" has the meaning given to such term in
Section 6.7.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" means the shares of eShare Common Stock issued and outstanding
immediately prior to the Effective Time.
"Significant Response" has the meaning given to such term in Section
6.3(b).
"Significant Subsidiary" has the meaning given to such term in Rule
1-02(w) of Regulation S-X promulgated by the SEC.
"Solicited Party" has the meaning given to such term in Section 6.3(a).
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"Subsidiary" means as to any Person, any other Person of which at least
50% of the equity or voting interests are owned, directly or indirectly, by such
first Person.
"Surviving Corporation" has the meaning given to such term in Section
2.1.
"Surviving Corporation Common Stock" means the common stock, $.01 par
value per share, of the Surviving Corporation.
"Taxpayers" means as to any Person, such Person, any predecessor of
such Person and all members for income tax purposes of any affiliated group of
corporations of which such Person or any such predecessor corporation is or has
been a member.
"Transaction Moratorium Period" has the meaning given to such term in
Section 6.3(b).
"Wholly-Owned Subsidiary" means a Subsidiary of which 100% of the
issued and outstanding common stock is owned directly or indirectly by the
relevant company.
ARTICLE 2
THE MERGER
2.1. The Merger. Subject to the terms and conditions hereof, at the
Effective Time and in accordance with the provisions of this Agreement and the
applicable provisions of the DGCL, MICA shall be merged with and into eShare
which shall continue as the surviving corporation (the "Surviving Corporation").
Thereupon the separate corporate existence of MICA shall cease, and the
Surviving Corporation shall continue existence under the laws of the State of
Delaware.
2.2. Effective Time of the Merger. On or prior to the Closing Date,
the parties hereto will cause the Certificate of Merger, satisfactory to the
parties hereto; to be duly prepared, executed and verified on behalf of each
Constituent Corporation and to be filed with the Secretary of State of the State
of Delaware, as provided in Section 251(c) of the DGCL, and the Merger shall
become effective on the Closing Date.
2.3. Surviving Corporation.
(a) Certificate of Incorporation and Bylaws. The
Certificate of Incorporation and Bylaws of eShare, each as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation and
Bylaws of the Surviving Corporation and thereafter shall continue to be its
Certificate of Incorporation and Bylaws until amended as provided therein and
under the provisions of the DGCL.
(b) Effect of the Merger. Subject to the foregoing, the
effects of the Merger shall be as provided in the applicable provisions of the
DGCL.
(c) Name of Surviving Corporation. The name of the
Surviving Corporation shall be "eShare Technologies, Inc."
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ARTICLE 3
MERGER CONSIDERATION;
STATUS AND CONVERSION OF SHARES
3.1. Conversion of Shares in the Merger. Subject to the provisions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, the shares of the Constituent
Corporations shall be converted in the following manner:
(a) eShare Common Stock. Each Share other than shares of
eShare Common Stock held in treasury or by Melita, MICA or any other Subsidiary
of Melita other than in a fiduciary capacity shall be converted into a right to
receive 0.419968638 shares of Melita Common Stock.
(b) MICA Common Stock. Each share of MICA Common Stock
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of Surviving Corporation Common Stock.
3.2. Status of Treasury Shares. At the Effective Time, each share
of eShare Common Stock, if any, held in treasury or by Melita, MICA or any other
Subsidiary of Melita (other than in a fiduciary capacity) immediately prior to
the Effective Time shall be canceled and retired and no payment shall be made
with respect thereto.
3.3 Status of Preferred Stock. Each share of eShare Preferred
Stock shall be deemed converted by the Stockholder thereof into the correct
number of shares of eShare Common Stock specified in the preferred stock
designation for such eShare Preferred Stock immediately prior to the Effective
Time, and each Stockholder hereby consents to and authorizes such conversion.
3.4. Status of Options. Each eShare Option and eShare Warrant
(whether vested or unvested) outstanding on the Closing Date for the purchase of
shares of eShare Common Stock, whether or not granted under the eShare Plan,
shall be exchanged as of the Effective Time for an Option to purchase, in lieu
of each share of eShare Common Stock purchasable thereunder, 0.419968638 of
Melita Common Stock.
3.5. Deposit of Shares in Escrow; Payment for Shares in the Merger.
The manner of making payment for and conversion of Shares in the Merger shall be
as follows:
(a) At the Effective Time, Melita shall make available to
the Exchange Agent for the benefit of those Persons who immediately prior to the
Effective Time were the holders of Shares, the aggregate Merger Consideration
and such additional funds as may be payable in lieu of fractional Shares
pursuant to Section 3.6. The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the shares of Melita Common Stock to be issued as Merger
Consideration pursuant to the terms of Section 3.1 and this Section 3.5. The
Merger Consideration shall not be used for any other purpose.
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<PAGE> 13
(b) The Exchange Agent shall deliver into escrow stock
certificates representing 10% of the total number of Melita Shares issued to the
eShare stockholders pursuant to the terms of an Escrow Agreement in the form
Exhibit D hereto. The Escrow Agreement sets forth the conditions under which the
Escrow Shares shall be delivered to the Stockholders or Melita.
(c) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate or Certificates (i) a form
of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and (ii) instructions for
use in effecting the surrender of the Certificates for payment therefor. Upon
surrender of Certificates for cancellation to the Exchange Agent, together with
such letter of transmittal duly executed and any other required documents, the
holder of such Certificates shall be entitled to receive for each of the Shares
represented by such Certificates the Merger Consideration issuable therefor
pursuant to this Article 3 (subject to the escrow provisions of Section 3.5(b)),
and the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, the Certificates shall represent solely the right to receive the
portion of the Merger Consideration payable pursuant to this Article 3 and any
cash in lieu of fractional shares of Melita Common Stock as contemplated by
Section 3.6, with respect to each of the Shares represented thereby. No
dividends or other distributions that are declared after the Effective Time on
securities issued pursuant to this Article 3 and payable to the holders of
record thereof after the Effective Time will be paid to Persons entitled by
reason of the Merger to receive such securities until such Persons surrender
their Certificates. Upon such surrender, there shall be paid to the Person in
whose name the Melita Common Stock is issued pursuant to this Article 3 any
dividends or other distributions having a record date after the Effective Time
and payable with respect to such securities between the Effective Time and the
time of such surrender. After such surrender there shall be paid to the Person
in whose name the Melita Common Stock is issued pursuant to this Article 3 any
dividends or other distributions on such securities which shall have a record
date after the Effective Time and prior to such surrender and a payment date
after such surrender, with such payment being made on such payment date. In no
event shall the Persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions. If any certificate representing Melita Common Stock issued
pursuant to this Article 3 is to be paid to or issued in a name other than that
in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such Melita
Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Shares for any Melita Common Stock issued pursuant to this Article 3
or dividends thereon or, in accordance with Section 3.6, proceeds of the sale of
fractional interests, delivered to a public official pursuant to applicable
escheat law. The Exchange Agent shall not be entitled to vote or exercise any
rights of ownership with respect to the Melita Common Stock issued pursuant to
this Article 3 and held by it from time to time hereunder, except that it shall
receive
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<PAGE> 14
and hold all dividends or other distributions paid or distributed with respect
to such securities for the account of the Persons entitled thereto.
(c) Certificates surrendered for exchange by any
Affiliate of eShare shall not be exchanged for certificates representing Melita
Common Stock until Melita has received a written agreement from such Person as
provided in Section 6.11.
(d) Any portion of the Merger Consideration and the
Fractional Securities Fund which remains unclaimed by the former stockholders of
eShare for two years after the Effective Time shall be delivered to Melita, upon
demand of Melita, and any former shareholders of eShare shall thereafter look
only to Melita for payment of their claim for the Merger Consideration for their
Shares or for any cash in lieu of fractional shares included in the Merger
Consideration.
3.6. Fractional Shares. No fractional shares of Melita Common Stock
shall be issued in the Merger. In lieu of any such fractional securities, each
holder of Shares who would otherwise have been entitled to a fraction of a share
of Melita Common Stock upon surrender of Certificates for exchange pursuant to
this Article 3 will be paid an amount in cash (without interest) equal to such
holder's proportionate interest in the net proceeds from the sale or sales in
the open market by the Exchange Agent, on behalf of all such holders, of the
Excess Shares representing the aggregation of all fractional interests created
pursuant to this Article 3. As soon as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (i) the number of full shares
of Melita Common Stock delivered to the Exchange Agent by Melita over (ii) the
aggregate number of full shares to be distributed to holders of Shares (such
excess being herein called the "Excess Shares"), and the Exchange Agent, as
agent for the former holders of Shares, shall sell the Excess Shares at the
prevailing prices on NASDAQ. The sale of the Excess Shares by the Exchange Agent
shall be executed on NASDAQ through one or more participating firms of NASDAQ
and shall be executed in round lots to the extent practicable. Melita shall pay
all commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of Excess Shares. Until the net proceeds of such sale
have been distributed to the former stockholders of eShare, the Exchange Agent
will hold such proceeds in trust for such former stockholders (the "Fractional
Securities Fund"). As soon as practicable after the determination of the amount
of cash to be paid to former stockholders of eShare in lieu of any fractional
interests, the Exchange Agent shall pay such amounts to such former stockholders
in accordance with the terms of this Agreement.
3.7. Transfer of Shares after the Effective Time. No transfers of
Shares shall be made on the stock transfer books of eShare after the close of
business on the day prior to the date of the Effective Time.
3.8. Closing. The Closing shall, subject to the terms and
conditions set forth herein, including, without limitation, the satisfaction or
waiver of the conditions set forth in Article 7, take place at the offices of
Morris, Manning & Martin, L.L.P. in Atlanta, Georgia at the Effective Time,
which shall occur as soon as practicable after all of the conditions to closing
specified in
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<PAGE> 15
this Agreement have been satisfied or waived by the party or parties permitted
to do so, and in any event no later than September 30, 1999. The date of the
Closing is sometimes referred to herein as the "Closing Date."
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ESHARE
eShare hereby represents and warrants to Melita as follows:
4.1. Organization of eShare. eShare is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has full corporate power and authority to conduct its business as and
to the extent it is presently being conducted and to own, lease and operate its
properties and assets. eShare is duly qualified, licensed or admitted to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification, licensing or admission
necessary and where the failure to be so qualified, licensed or admitted has or
could reasonably be expected (so far as can be foreseen at the time) to have an
eShare Material Adverse Effect. Each jurisdiction in which eShare is qualified
to do business as a foreign corporation is listed in Section 4.1 of the eShare
Disclosure Schedule. eShare does not directly or indirectly own any material
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any material equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity other than
portfolio securities acquired by eShare in the ordinary course of business.
4.2. Authorization. eShare has all necessary corporate power and
authority to enter into this Agreement, has taken all corporate action necessary
to consummate the transactions contemplated hereby and, subject to obtaining the
eShare Stockholders' Approval, to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by eShare and the
consummation by eShare of the transactions contemplated hereby have been duly
and validly approved by the Board of Directors of eShare. Subject to Section
6.3, the Board of Directors of eShare has recommended adoption of this Agreement
by the stockholders of eShare and directed that this Agreement be submitted to
the stockholders of eShare for their consideration, and no other corporate
proceedings on the part of eShare or its stockholders are necessary to authorize
the execution, delivery and performance of this Agreement by eShare and the
consummation by eShare of the transactions contemplated hereby, other than
obtaining the eShare Stockholders' Approval. This Agreement has been duly and
validly executed and delivered by eShare and constitutes a legal, valid and
binding obligation of eShare enforceable against eShare in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.3. Subsidiaries. eShare has no Subsidiaries.
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<PAGE> 16
4.4. Capital Stock.
(a) As of the date hereof, the authorized capital stock
of eShare consists solely of (i) 20,000,000 shares of eShare Common Stock, of
which (A) 2,840,464 shares are issued and outstanding, no shares are held in the
treasury of eShare, (B) 2,224,750 shares are reserved for issuance pursuant to
the eShare Plan (including 1,670,769 shares issuable pursuant to outstanding
eShare Options), (C) 589,367 shares are reserved for issuance pursuant to
outstanding eShare Warrants, (D) 2,149,999 shares are reserved for issuance
pursuant to outstanding shares of the eShare Series A Preferred, (E) 2,919,708
shares are reserved for issuance pursuant to outstanding shares of the eShare
Series B Preferred, (F) 2,933,720 shares are reserved for issuance pursuant to
outstanding shares of the eShare Series C Preferred and (G) 1,000 shares are
reserved for issuance pursuant to outstanding shares of the eShare Junior
Preferred, (ii) 2,149,999 shares of the eShare Series A Preferred, (iii)
2,919,708 shares of the eShare Series B Preferred, (iv) 2,933,720 shares of the
eShare Series C Preferred and (v) 1,000 shares of the eShare Junior Preferred.
Except for shares of eShare Common Stock issued or issuable upon exercise of
outstanding eShare Options granted pursuant to the eShare Plan or eShare
Warrants, and except as contemplated by Section 6.1(a), since the Balance Sheet
Date, there has not been, and as of the Closing Date there will not have been,
any change in the number of issued and outstanding shares of eShare Common Stock
or shares of eShare Common Stock held in treasury or reserved for issuance since
such date. All of the issued and outstanding shares of eShare Capital Stock are,
and all shares reserved for issuance will be, upon issuance in accordance with
the terms specified in the instruments or agreements pursuant to which they are
issuable, duly authorized, validly issued, fully paid and nonassessable. Except
as described in this Section 4.4 and Section 4.4 of the eShare Disclosure
Schedule, there are no outstanding Options obligating eShare to issue or sell
any shares of capital stock of eShare or to grant, extend or enter into any
Option with respect thereto.
(b) There are no outstanding contractual obligations of
eShare to repurchase, redeem or otherwise acquire any shares of eShare Common
Stock or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Person.
4.5. Government Approvals; Compliance with Laws and Orders.
(a) eShare has obtained from the appropriate Governmental
Bodies or self-regulatory organizations which are charged with regulating or
supervising any business conducted by eShare all permits, variances, exemptions,
orders, approvals and licenses necessary for the conduct of its business and
operations as and to the extent currently conducted (the "eShare Permits"),
which eShare Permits are valid and remain in full force and effect, except where
the failure to have obtained such eShare Permits or the failure of such eShare
Permits to be valid and in full force and effect, individually or in the
aggregate, does not have and could not reasonably be expected (so far as can be
foreseen at the time) to have an eShare Material Adverse Effect. eShare is in
compliance with the terms of the eShare Permits, except failures so to comply
which, individually or in the aggregate, do not have and could not reasonably be
expected (so far as can be foreseen at the time) to have an eShare Material
Adverse Effect.
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<PAGE> 17
(b) eShare has not received notice of any Order or any
complaint, proceeding or investigation of any Governmental Body or
self-regulatory organization which is charged with regulating or supervising any
business conducted by eShare pending or, to the knowledge of eShare, threatened,
which affects or could reasonably be expected (so far as can be foreseen at the
time) to affect the validity of any such eShare Permit or impair the renewal
thereof, except where the invalidity of any such eShare Permit or the
non-renewal thereof does not have and could not reasonably be expected (so far
as can be foreseen at the time) to have an eShare Material Adverse Effect. As of
the date hereof, eShare is not a party or subject to, any agreement, consent
decree or Order, or other understanding or arrangement with, or any directive
of, any Governmental Body or self-regulatory organization which is charged with
regulating or supervising any business conducted by eShare which imposes any
material restrictions on or otherwise affects in any material way, the conduct
of the business of eShare.
(c) eShare is not and has not been in violation of or
default under any Laws or Order of any Governmental Body or self-regulatory
organization which is charged with regulating or supervising any business
conducted by eShare, except for violations which, individually or in the
aggregate, have not had and could not reasonably be expected (so far as can be
foreseen at the time) to have an eShare Material Adverse Effect.
4.6. Absence of Certain Changes or Events. Since the Balance Sheet
Date (i) there has not been any change, event or development (or threat thereof)
which has had, or that could reasonably be expected (so far as can be foreseen)
to have, individually or in the aggregate, an eShare Material Adverse Effect,
(ii) eShare has conducted its business only in the ordinary course of business
consistent with past practice and (iii) eShare has not taken any action which,
if taken after the date hereof, would constitute a breach of any provision of
Section 6.1. Without limiting the generality of the foregoing, since the Balance
Sheet Date, except as described in the eShare Disclosure Schedule, there has not
been any:
(a) change in the condition (financial or otherwise),
assets, liabilities, working capital, reserves, earnings, business or prospects
of eShare, except for changes contemplated hereby or changes which have not,
individually or in the aggregate, had an eShare Material Adverse Effect;
(b) (i) except for normal periodic increases in the
ordinary course of business consistent with past practice, increase in the
compensation payable or to become payable to any eShare Employee whose total
cash compensation for services rendered to eShare is currently at an annual rate
of more than $150,000, (ii) except in the ordinary course of business consistent
with past practice, bonus, incentive compensation, service award or other like
benefit granted, made or accrued, contingently or otherwise, for or to the
credit of any eShare Employees, (iii) except in the ordinary course of business
consistent with past practice or as required by law, employee welfare, pension,
retirement, profit-sharing or similar payment or arrangement made or agreed to
by eShare for any eShare Employee, provided, however, that any employee welfare,
pension, retirement, profit-sharing or similar payment or arrangement made or
agreed to by eShare for any eShare Employee pursuant to the existing plans and
arrangements described in
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<PAGE> 18
Section 4.14 of the eShare Disclosure Schedule shall be permitted, or (iv) new
employment agreement to which eShare is a party;
(c) except in the ordinary course of business consistent
with past practice or as required by law, addition to or modification of the
employee benefit plans, arrangements or practices described in Section 4.14 of
the eShare Disclosure Schedule affecting eShare Employees other than (i)
contributions made for 1999 in accordance with the normal practices of eShare or
(ii) the extension of coverage to other eShare Employees who became eligible
after the Balance Sheet Date;
(d) sale, assignment or transfer of any of the assets of
eShare, which are material, singly or in the aggregate, to eShare, other than in
the ordinary course;
(e) cancellation of any indebtedness or waiver of any
rights of substantial value to eShare, whether or not in the ordinary course of
business;
(f) amendment, cancellation or termination of any
Contract, license or other instrument material to eShare;
(g) capital expenditure or the execution of any lease or
any incurring of liability therefor by eShare involving payments in excess of
$50,000 in any 12 month period or $250,000 in the aggregate;
(h) failure to repay when due any material obligation of
eShare, except in the ordinary course of business or where such failure could
not have an eShare Material Adverse Effect;
(i) material change in accounting methods or practices by
eShare affecting its assets, liabilities or business;
(j) material revaluation by eShare of any of its assets,
including without limitation, writing-off notes or accounts receivable which
are, individually or in the aggregate, material to eShare;
(k) damage, destruction or loss (whether or not covered
by insurance) having an eShare Material Adverse Effect;
(l) mortgage, pledge or other encumbrance of any assets
of eShare, which are material, singly or in the aggregate, to eShare, except
purchase money mortgages arising in the ordinary course of business;
(m) declaration, setting aside or payment of dividends or
distributions in respect of any capital stock or eShare or any redemption,
purchase or other acquisition of any of eShare's equity securities;
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<PAGE> 19
(n) issuance by eShare of, or commitment of eShare or to
issue, any shares of capital stock or other equity securities or Options of
eShare, other than in the ordinary course of business consistent with past
practice;
(o) indebtedness incurred by eShare for borrowed money or
any commitment to borrow money entered into by eShare, or any loans made or
agreed to be made by eShare;
(p) liabilities incurred involving $150,000 or more,
except in the ordinary course of business and consistent with past practice, or
any increase or change in any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves other than in the ordinary course of
business consistent with past practices;
(q) payment, discharge or satisfaction of any liabilities
other than the payment, discharge or satisfaction (i) in the ordinary course of
business and consistent with past practice of liabilities reflected or reserved
against in the Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the Balance Sheet Date and (ii) of other
liabilities involving not more than $150,000 singly and not more than $500,000
in the aggregate; or
(r) agreement or commitment by eShare to do any of the
foregoing.
4.7. Compliance with Contracts and Commitments.
(a) Section 4.7 of the eShare Disclosure Schedule
contains an accurate and complete listing of each material Contract, whether
written or oral, of eShare. Each of such Contracts (other than Contracts which
have expired or terminated in accordance with the terms thereof) is in full
force and effect and (i) to the best of eShare's knowledge, neither eShare nor,
to the best of eShare's knowledge, any other party thereto has breached or is in
default thereunder, (ii) to the best of eShare's knowledge, no event has
occurred which, with the passage of time or the giving of notice or both would
constitute such a breach or default, (iii) to the best of eShare's knowledge, no
claim of material default thereunder has been asserted or threatened and (iv)
neither eShare nor, to the knowledge of eShare, any other party thereto is
seeking the renegotiation thereof or substitute performance thereunder, except
where such breach or default, or attempted renegotiation or substitute
performance, individually or in the aggregate, does not have and could not
reasonably be expected (so far as can be foreseen at the time) to have an eShare
Material Adverse Effect.
(b) eShare is not in violation of any term of (i) its
Certificate of Incorporation, By-laws or other organizational documents, (ii)
any agreement or instrument related to indebtedness for borrowed money or any
other Contract to which it is a party or by which it is bound, (iii) any
applicable law, ordinance, rule or regulation of any Governmental Body, or (iv)
any applicable Order of any Governmental Body, or self-regulatory organization
which is charged with regulating or supervising any business conducted by
eShare, the consequences of which violation, whether individually or in the
aggregate, have or could reasonably be expected (so far as can be foreseen at
the time) to have an eShare Material Adverse Effect.
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<PAGE> 20
4.8. Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by
eShare do not, and the performance by eShare of its obligations hereunder and
the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any Person any
right of payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of eShare under, any of the terms, conditions or
provisions of (i) the Certificate of Incorporation or By-laws (or other
comparable charter document) of eShare or any of its Subsidiaries, or (ii)
subject to the obtaining of the eShare Stockholders' Approval and the taking of
the actions described in paragraph (b) of this Section, (x) Laws or Orders of
any Governmental Body or self-regulatory organization which is charged with
regulating or supervising any business conducted by eShare applicable to eShare
or any of its assets or properties, or (y) any Contract to which eShare is a
party or by which eShare or any of its assets or properties is bound, excluding
from the foregoing clauses (x) and (y) conflicts, violations, breaches,
defaults, terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not
reasonably be expected (so far as can be foreseen at the time) to have an eShare
Material Adverse Effect.
(b) Except for the filing of the Certificate of Merger
and other appropriate merger documents required by the DGCL with the Secretary
of State of the State of Delaware, and appropriate documents with the relevant
authorities of other states in which the Constituent Corporations are qualified
to do business, no consent, approval or action of, filing with or notice to any
Governmental Body or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any Law or Order of
any Governmental Body or self-regulatory organization which is charged with
regulating or supervising any business conducted by eShare, or any Contract to
which eShare is a party or by which eShare or any of its assets or properties is
bound for the execution and delivery of this Agreement by eShare, the
performance by eShare of its obligations hereunder or the consummation of the
transactions contemplated hereby, other than such consents, approvals, actions,
filings and notices which the failure to make or obtain, as the case may be,
individually or in the aggregate, could not reasonably be expected (so far as
can be foreseen at the time) to have an eShare Material Adverse Effect.
4.9. Litigation. Except as disclosed in Section 4.9 of the eShare
Disclosure Schedule, there are no actions, suits, arbitrations, investigations
or proceedings (adjudicatory, rulemaking or otherwise) pending or, to the
knowledge of eShare, threatened against eShare (or any eShare Employee Plan or
eShare Benefit Arrangement), or any property of eShare (including Proprietary
Rights), in any court or before any arbitrator of any kind or before or by any
Governmental Body, except actions, suits, arbitrations, investigations or
proceedings which, individually or in the aggregate, have not had and if
adversely determined or resolved, could not reasonably be expected (so far as
can be foreseen at the time) to have an eShare Material Adverse Effect.
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<PAGE> 21
4.10. Labor Matters. eShare is in material compliance with all
applicable laws respecting employment practices, terms and conditions of
employment and wages and hours and is not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against eShare pending
before the National Labor Relations Board or any other governmental agency
arising out of eShare's activities, and eShare has no knowledge of any facts or
information which would give rise thereto.
4.11. Absence of Undisclosed Liabilities. eShare has no liabilities
or obligations (whether choate or inchoate, absolute or contingent, or
otherwise) except (i) liabilities which are reflected and reserved against or
disclosed on the Balance Sheet and (ii) liabilities incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date and which have not resulted in, and could not reasonably be expected (so
far as can be foreseen at the time) to result in, individually or in the
aggregate, an eShare Material Adverse Effect.
4.12. No Brokers. Except as disclosed in Section 4.12 of the eShare
Disclosure Schedule, neither eShare nor any affiliate of eShare has entered into
or will enter into any Contract or understanding, whether oral or written, with
any Person which will result in the obligation of Melita to pay any finder's
fee, brokerage commission or similar payment in connection with the transactions
contemplated hereby.
4.13. No Other Agreements to Sell the Assets, Merge, Etc. eShare has
no legal obligation, absolute or contingent, to any other person to sell any
Assets, to sell any capital stock of eShare or to effect any merger,
consolidation or other reorganization of eShare or to enter into any agreement
with respect thereto.
4.14. Employee Benefit Plans.
(a) The eShare Disclosure Schedule sets forth a true and
complete list of all the following: (i) each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA, established by eShare, or any ERISA
Affiliate or under which eShare, or any ERISA Affiliate contributes or under
which any Employees of eShare or any beneficiary thereof is covered, is eligible
for coverage or has benefit rights with respect to service to eShare or any
ERISA Affiliate or under which any obligation exists to issue capital stock of
eShare (each, an "eShare Employee Plan"), and (ii) each other plan, program,
policy, contract or arrangement providing for bonuses, pensions, deferred pay,
stock or stock-related awards, severance pay, salary continuation or similar
benefits, hospitalization, medical, dental or disability benefits, life
insurance or other employee benefits, or compensation to or for any eShare
Employees or any beneficiaries or dependents of any eShare Employees (other than
directors' and officers' liability insurance policies), whether or not oral or
written or insured or funded, or constituting an employment or severance
agreement or arrangement with any officer or director of eShare (each, an
"eShare Benefit Arrangement"). The eShare Disclosure Schedule also (i) sets
forth a true and complete list of each eShare Employee Plan maintained by eShare
or any ERISA Affiliate during the five years preceding the date of this
Agreement that was covered during such period by Title IV of ERISA, (ii)
identifies each eShare Employee Plan that is intended to be qualified under
Section 401(a) of the Code, and (iii) identifies the eShare Employee Plans and
eShare Benefit
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<PAGE> 22
Arrangements that are maintained by eShare. eShare has made available to Melita
with respect to each eShare Employee Plan and eShare Benefit Arrangement: (i) a
true and complete copy of all written documents comprising such eShare Employee
Plan or eShare Benefit Arrangement (including amendments and individual
agreements relating thereto) or, if there is no such written document, an
accurate and complete description of such eShare Employee Plan or eShare Benefit
Arrangement; (ii) the most recent Form 5500 or Form 5500-C (including all
schedules thereto), if applicable; (iii) the most recent financial statements
and actuarial reports, if any, including without limitation, any such reports
relating to any health or medical plan; (iv) the summary plan description
currently in effect and all material modifications thereof, if any; and (v) the
most recent Internal Revenue Service determination letter, if any. Any such
eShare Employee Plans and eShare Benefit Arrangements not so provided are not in
the aggregate material to eShare.
(b) Each eShare Employee Plan and eShare Benefit
Arrangement has been established and maintained in all material respects
substantially in accordance with its terms and substantially in compliance with
all applicable laws, including, but not limited to, ERISA and the Code where the
failure to comply with such terms or laws would have an eShare Material Adverse
Effect. To the best of eShare's knowledge, neither eShare nor any of its
Employees nor any other disqualified person or party-in-interest with respect to
any eShare Employee Plan, have engaged directly or indirectly in any "prohibited
transaction," as such term is defined in section 4975 of the Code or Section 406
of ERISA, with respect to which eShare could have or has any material liability.
All contributions required to be made to eShare Employee Plans and eShare
Benefit Arrangements have been made timely or, to the extent such contributions
have not been made timely the liability resulting therefrom is not material.
Each eShare Employee Plan that is intended to be qualified under Section 401(a)
of the Code and whose related trust is intended to be exempt from taxation under
Section 501(a) of the Code has received, or has applied for and has not been
denied, a favorable determination letter with respect to its qualification and
to eShare's best knowledge, nothing has occurred which could cause a loss of
such qualification. Neither eShare nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation other than a liability for
premiums not yet due.
(c) Neither eShare nor any ERISA Affiliate has ever
maintained, sponsored or contributed to any eShare Employee Plan or eShare
Benefit Plan that is or was subject to Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in Section 412 of the Code),
whether or not waived.
(d) Neither eShare nor any ERISA Affiliate has ever
maintained or sponsored or contributed to any employee pension benefit plan.
(e) Neither eShare nor any ERISA Affiliate has any
liability under Title IV of ERISA, nor do any circumstances exist that could
result in any of them having any liability under Title IV of ERISA. To the best
of eShare's knowledge, eShare has no liability for any failure to comply with
the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code or to the extent eShare has any such liability, such
liability is not material.
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<PAGE> 23
(f) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims for benefits)
pending or, to eShare's knowledge, threatened, with respect to any eShare
Employee Plan or eShare Benefit Arrangement.
(g) No Employees and no beneficiaries or dependents of
Employees are or may become entitled under any eShare Employee Plan or eShare
Benefit Arrangement to post-employment welfare benefits of any kind, including
without limitation death or medical benefits, other than coverage mandated by
Section 4980B of the Code.
(h) There are no agreements with, or pending petitions
for recognition of, a labor union or association as the exclusive bargaining
agent for any of the employees of eShare; no such petitions have been pending at
any time within two years of the date of this Agreement and, to eShare's best
knowledge, there has not been any organizing effort by any union or other group
seeking to represent any employees of eShare as their exclusive bargaining agent
at any time within two years of the date of this Agreement. There are no labor
strikes, work stoppages or other labor troubles, other than routine grievance
matters, now pending, or, to eShare's knowledge, threatened, against eShare nor
have there been any such labor strikes, work stoppages or other labor troubles,
other than routine grievance matters, with respect to eShare at any time within
two years of the date of this Agreement.
(i) eShare has not scheduled or agreed upon future
increases of benefits levels (or creations of new benefits) with respect to any
eShare Employee Plan or eShare Benefit Arrangement, and no such increases or
creation of benefits have been proposed or made the subject of representations
to employees under circumstances which make it reasonable to expect that such
increases would be granted. No loan is outstanding between eShare or any ERISA
Affiliate and any Employee.
4.15. Environmental Matters.
(a) Except as set forth in Section 4.15 of the eShare
Disclosure Schedule, eShare is in full compliance with all applicable
Environmental Laws (as hereinafter defined), other than those as to which the
failure to so comply would not result in an eShare Material Adverse Effect, and
there are no circumstances that may prevent or interfere with such full
compliance in the future. Except as set forth in Section 4.15 of the eShare
Disclosure Schedule, eShare has not received any written or oral communication,
whether from a governmental authority, citizens' group, employee, agent or
otherwise, that alleges that eShare is not in such full compliance with
Environmental Laws or that alleges that any properties or assets of eShare may
have been affected by any Materials of Environmental Concern. All permits and
other governmental authorizations currently held or being applied for by eShare
pursuant to the Environmental Laws are identified in Section 4.15 of the eShare
Disclosure Schedule and will not be terminated, suspended or otherwise adversely
affected by the Merger.
(b) Except as set forth in Section 4.15 of the eShare
Disclosure Schedule, there is no Environmental Claim pending or threatened (i)
against eShare, (ii) against any Person whose liability for any Environmental
Claim eShare has or may have retained or assumed either contractually or by
operation of law, or (iii) against any real or personal property which eShare or
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<PAGE> 24
any of its Subsidiaries own, lease, manage, supervise or participate in the
management of, or in which eShare or any of its Subsidiaries hold a security
interest in connection with a loan or loan participation, other than such as
would not, either individually or in the aggregate, result in an eShare Material
Adverse Effect.
(c) Except as set forth in Section 4.15 of the eShare
Disclosure Schedule, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim against
eShare or against any person or entity whose liability for any Environmental
Claim eShare has or may have retained or assumed, either contractually or by
operation of law, other than such as would not, either individually or in the
aggregate, result in an eShare Material Adverse Effect.
(d) Without in any way limiting the generality of the
foregoing, (i) all on-site and off-site locations where eShare has stored,
released, discharged, disposed of, or arranged for the disposal of Materials of
Environmental Concern are identified in Section 4.15 of the eShare Disclosure
Schedule, (ii) all underground storage tanks, whether or not regulated under
Subtitle I of the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6991 et
seq., or applicable state and local laws, rules and regulations, and the
capacity and contents of such tanks, located on property owned, leased, managed
or supervised by eShare, or in which eShare holds a security interest in
connection with a loan or loan participation are identified in Section 4.15 of
the eShare Disclosure Schedule, (iii) except as set forth in Section 4.15 of the
eShare Disclosure Schedule, there is no asbestos contained in or forming part of
any building, building component, structure or office space owned, leased,
managed or supervised by eShare or in which eShare holds a security interest in
connection with a loan or loan participation, and (iv) except as set forth in
Section 4.15 of the eShare Disclosure Schedule, no polychlorinated biphenyls are
used or stored at any property owned, leased, managed or supervised by eShare or
in which eShare holds a security interest in connection with a loan or loan
participation.
(e) Section 4.15 of the eShare Disclosure Schedule sets
forth an accurate and complete list of outstanding loans of eShare as to which
the borrower has submitted (or is required to submit) to eShare any
environmental audits, analysis or surveys of any real property securing such
loans, and a brief description of the environmental audit, analysis or survey,
to the extent applicable. eShare will make available to Melita all reports of
environmental audits, analysis and surveys referred to on Section 4.15 of the
eShare Disclosure Schedule.
4.16. Company Computer Software and Hardware. (a) Section 4.16 of
the eShare Disclosure Schedule sets forth a true and complete list of: (i) all
software and associated documentation owned by eShare material to the business
of eShare (the "eShare Proprietary Software"); (ii) all software (other than the
eShare Proprietary Software and "shrink-wrap" software) used in connection with
the business of eShare (the "eShare Licensed Software" and together with the
eShare Proprietary Software, the "eShare Software"). eShare is in possession of
all technical and descriptive materials to run its business in accordance with
its historical practices, except as would not have an eShare Material Adverse
Effect. The eShare Proprietary
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<PAGE> 25
Software consists of: (i) source and object code embodied in magnetic media; and
(ii) all development and procedural tools, documentation, and manuals necessary
to maintain, enhance, develop derivative works, support and service the eShare
Proprietary Software, including licenses to use compilers, assemblers, libraries
and other aids. No parties other than eShare possess any current or contingent
rights to any source code for the eShare Proprietary Software.
(b) eShare has a valid right, title and interest in and to all
intellectual property rights in the eShare Proprietary Software, including all
copyrights (registered and unregistered), trade secrets, and proprietary and
confidential information rights therein. eShare has developed the eShare
Proprietary Software entirely through its own efforts for its own account or has
acquired prior to the date hereof valid right, title and interest in the eShare
Proprietary Software and the eShare Proprietary Software is free and clear of
all liens, claims and encumbrances. The eShare Disclosure Schedule lists all
parties other than employees of eShare who have created any portion of, or
otherwise have any rights in or to, the eShare Software. eShare has secured from
all parties who have created any portion of, or otherwise have any rights in or
to, the eShare Proprietary Software valid and enforceable written assignments of
any such work or other rights to eShare and has provided true and complete
copies of such assignments to Melita. The use of the eShare Licensed Software
and the use and distribution of the eShare Proprietary Software does not breach
any terms of any Contract between eShare and any third party. To the best
knowledge of eShare, eShare has been granted under the license agreements
relating to the eShare Licensed Software (the "eShare License Agreements") valid
and subsisting license rights with respect to all software comprising the eShare
Licensed Software and such rights may be exercised in any jurisdiction in which
eShare currently conducts its business or could reasonably be expected to
conduct its business in the future. eShare is in compliance with each of the
terms and conditions of each of the eShare License Agreements except to the
extent failure to so comply, individually or in the aggregate, would not have an
eShare Material Adverse Effect. In the case of any commercially available
"shrink-wrap" software programs (such as Lotus 1-2-3), eShare has not made and
is not using any unauthorized copies of any such software programs and none of
the employees, agents or representatives of eShare have made or are using any
such unauthorized copies, except as would not have an eShare Material Adverse
Effect.
(c) Except as set forth on the eShare Disclosure Schedule, the
eShare Proprietary Software and, to the actual knowledge of eShare, the eShare
Licensed Software do not infringe the patent, copyright, moral rights or trade
secret rights or any other intellectual property or legal right of any third
party which may exist anywhere in the world.
(d) eShare has not granted rights in the eShare Software to any
third party except for rights granted to value added resellers, distributors or
customers in the ordinary course of business pursuant to contracts with
customers.
(e) To the best knowledge of eShare, the eShare Software and the
related computer hardware used by eShare in its operations (the "eShare
Hardware") are adequate in all material respects, when taken together with the
other assets, resources and personnel of eShare, to run the business of eShare
in the same manner as such business has operated since December 31, 1998, except
as would not result in an eShare Material Adverse Effect.
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<PAGE> 26
(f) The eShare Proprietary Software is "Millennium Compliant"
(defined below). For the purposes of this Agreement "Millennium Compliant"
means:
(i) the functions, calculations, and other computing
processes of the eShare Proprietary Software (collectively, "Processes") perform
in a consistent manner regardless of the date in time on which the Processes are
actually performed and regardless of the date input to the eShare Proprietary
Software, whether before, on, or after January 1, 2000 and whether or not the
dates are affected by leap years;
(ii) the eShare Proprietary Software accepts, calculates,
compares, sorts, extracts, sequences, and otherwise processes date inputs and
date values, and returns and displays date values, in a consistent manner
regardless of the dates used, whether before, on, or after January 1, 2000;
(iii) the eShare Proprietary Software will function without
interruptions caused by the date in time on which the Processes are actually
performed or by the date input to the eShare Proprietary Software, whether
before, on, or after January 1, 2000;
(iv) the eShare Proprietary Software accepts and responds
to two-digit year-date input in a manner that resolves any ambiguities as to the
century in a defined, predetermined, and appropriate manner; and
(v) the eShare Proprietary Software stores and displays
date information in ways that are unambiguous as to the determination of the
century.
(g) The eShare Disclosure Schedule includes a true and complete
list and summary of principal terms concerning support and maintenance
agreements relating to the eShare Software, including without limitation the
identity of the parties entitled to receive such service or maintenance, the
term of such agreements and any other provisions relating to the termination of
such agreements.
4.17. Customers. Section 4.17 of the eShare Disclosure Schedule
includes a list of the top ten customers of eShare, plus any other customer or
group of related customers from whom payments were received which equaled or
exceeded five percent (5%) of eShare's gross sales for the fiscal years ended
1997 or 1998, or from whom payments are projected to equal or exceed such
percentage for the current fiscal year (the "Large Customers"). Except as set
forth in Section 4.17 of the eShare Disclosure Schedule, eShare has no knowledge
that any of the Large Customers intends to terminate or otherwise modify
adversely its relationship with eShare or to materially decrease its purchases
of goods or services from eShare. eShare has maintained its customer lists and
related information on a confidential and proprietary basis and has not granted
to any third party any right to use such customer lists for any purpose
unrelated to the business of eShare.
4.18. Transactions with Affiliates. Except as set forth in Section
4.18 of the eShare Disclosure Schedule, no officer, director or holder of 5% or
more of the outstanding share capital of eShare, or any person or affiliated
group with whom any such stockholder, officer or director
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<PAGE> 27
has any direct or indirect relation by blood, marriage or adoption, or any
entity in which any such person, owns (other than through a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by all such persons) any beneficial interest in: (i) any contract,
arrangement or understanding or any related series of the same involving
aggregate consideration in excess of U.S. $10,000 with, or relating to, the
business or operations of eShare; (ii) any loan, arrangement, understanding,
agreement or contract or any related series of the same for or relating to
indebtedness of eShare in excess of U.S. $10,000 in the aggregate; or (iii) any
property or related group of properties with an aggregate value of at least U.S.
$10,000 (real, personal or mixed), tangible or intangible, used or currently
intended to be used in, the business or operations of eShare.
4.19. Management Letters. True and accurate copies of all management
letters by eShare from any of its accountants since December 31, 1996 are
included in Section 4.19 of the eShare Disclosure Schedule.
4.20. Proxy Statement. Neither the information supplied or to be
supplied by or on behalf of eShare for inclusion in the Proxy Statement or any
other document to be filed by Melita or any of its Subsidiaries with the SEC or
any other Governmental Body or self-regulatory organization which is charged
with regulating or supervising any business conducted by Melita or eShare or any
Subsidiary of Melita in connection with the Merger or any other transaction
contemplated hereby will on the date of its filing contain, to the best of
eShare's knowledge, any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
4.21. Tax Matters. Except as set forth in Section 4.21 of the eShare
Disclosure Schedule:
(a) The Taxpayers of eShare have duly filed all tax
reports and returns required to be filed by them, including all federal, state,
local and foreign tax returns and reports and have paid in full all taxes
required to be paid by such Taxpayers before such payment became delinquent or
which is being contested in good faith and for which adequate reserves have been
set aside in eShare's financial records. To the best of eShare's knowledge,
eShare has made adequate provision, in conformity with generally accepted
accounting principles consistently applied, for the payment of all taxes which
may subsequently become due. All taxes which any Taxpayer of eShare has been
required to collect or withhold have been duly collected or withheld and, to the
extent required when due, have been or will be duly paid to the proper taxing
authority.
(b) The federal income tax returns of eShare and its
predecessors have not been examined by the Internal Revenue Service for any
periods since their inception. There are no audits of eShare's tax returns known
by eShare to be pending, and there are no claims which have been or may be
asserted relating to any of eShare's tax returns filed for any year which if
determined adversely would result in the assertion by any governmental agency of
any deficiency
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<PAGE> 28
which could reasonably be expected (so far as can be foreseen at the time) to
result in, individually or in the aggregate, an eShare Material Adverse Effect.
There have been no waivers of statutes of limitations by eShare.
(c) None of the Taxpayers of eShare has filed a statement
under Section 341(f) of the Code (or any comparable state income tax provision)
consenting to have the provisions of Section 341(f)(2) (collapsible corporations
provisions) of the Code (or any comparable state income tax provision) apply to
any disposition of any of eShare's assets or property, and no property of eShare
is property which Melita or eShare is or will be required to treat as owned by
another person pursuant to the provisions of Section 168(f) (safe harbor leasing
provisions) of the Code. eShare is not a party to any tax-sharing agreement or
similar arrangement with any other party.
(d) For the purpose of this Agreement, any federal,
state, local or foreign income, sales, use, transfer, payroll, personal
property, occupancy or other tax, levy, impost, fee, imposition, assessment or
similar charge, together with any related addition to tax, interest or penalty
thereon, is referred to as a "tax."
4.22. Reports and Financial Statements. Section 4.22 of the eShare
Disclosure Schedule contains true and correct copies of (i) the audited
consolidated financial statements of eShare as of December 31, 1998, and for the
three year period then ended, and (ii) unaudited interim consolidated financial
statements of eShare as of March 31, 1999, and for the three month period then
ended and the corresponding period of 1998 (the "eShare Financial Statements").
The eShare Financial Statements fairly present (subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments which are not expected, individually or in the aggregate, to result
in an eShare Material Adverse Effect) the consolidated financial position of
eShare as of the respective dates thereof and the results of its operations and
cash flows for the respective periods then ended, in each case, in accordance
with generally accepted accounting principles consistently applied.
4.23. Payments. eShare has not, directly or indirectly, paid nor has
it delivered any fee, commission or other sum of money or item or property,
however characterized, any finder, agent, government official or other party, in
the United States or any other country, which is in any manner related to the
business or operations of eShare, which eShare knows or has reason to believe to
have been illegal under any federal, state or local laws of the United States or
any other country having jurisdiction; and eShare has not participated, directly
or indirectly, in any boycotts or other similar practices affecting any of its
actual or potential customers and has at all times done business in an open and
ethical manner.
4.24. Information Supplied. The financial and other information
provided to Melita by or on behalf of eShare on or prior to the date hereof and
listed on Section 4.24 of the eShare Disclosure Schedule was prepared in good
faith and, as of the dates provided and in light of the circumstances under
which such information was provided (as supplemented by further information
provided by eShare to Melita prior to the date hereof), accurately reflected in
all material respects the status or matters purported to be reflected by such
financial or other
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<PAGE> 29
information. To the best of eShare's knowledge, the information provided in
these representations and warranties and the eShare Disclosure Schedule is not
false or misleading in any material respect, as of the dates provided and in
light of the circumstances under which such information was provided (as
supplemented by further information provided by eShare to Melita prior to the
date hereof).
4.25. Other Reports. Since October 1, 1996, to the best of eShare's
knowledge, eShare has filed all required forms, reports and documents required
to be filed with any Governmental Body or self-regulatory organization which is
charged with regulating or supervising any business conducted by eShare (other
than such forms, reports and documents which if not filed would not adversely
affect in any significant manner the licenses and regulatory status of eShare),
each of which complied in all material respects with applicable requirements in
effect on the dates of such filings and to the best of eShare's knowledge, none
of which, as of its date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading.
4.26. Vote Required. The affirmative vote of the holders of record
of (i) a simple majority of the outstanding shares of the eShare Common Stock
and (ii) two-thirds of the outstanding shares of the eShare Series A Preferred,
eShare Series B Preferred and eShare Series C Preferred, voting together as a
single class, with respect to the adoption of this Agreement are the only votes
of the holders of any class or series of the capital stock of eShare required to
adopt this Agreement and approve the Merger and the other transactions
contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MELITA
Melita and MICA hereby represent and warrant to eShare as follows:
5.1. Organization of Melita. Melita is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia, has full corporate power and authority to conduct its business as and
to the extent it is presently being conducted and as and to the extent proposed
by Melita to be conducted, and to own, lease and operate its properties and
assets. Melita is duly qualified, licensed or admitted to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification, licensing or admission necessary and where the
failure to be so qualified, licensed or admitted has or could reasonably be
expected (so far as can be foreseen at the time) to have a Melita Material
Adverse Effect. Each jurisdiction in which Melita is qualified to do business as
a foreign corporation is listed in Section 5.1 of the Melita Disclosure
Schedule. Except for Melita's Subsidiaries, Melita does not directly or
indirectly own any material equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any material equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity other than portfolio securities acquired by
Melita in the ordinary course of business.
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<PAGE> 30
5.2. Authorization. Melita has all necessary corporate power and
authority to enter into this Agreement, has taken all corporate action necessary
to consummate the transactions contemplated hereby and, subject to obtaining the
Melita Shareholders' Approval, to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by Melita and the
consummation by Melita of the transactions contemplated hereby have been duly
and validly approved by the Board of Directors of Melita. Subject to Section
6.3, the Board of Directors of Melita has recommended adoption of this Agreement
by the shareholders of Melita and directed that this Agreement be submitted to
the shareholders of Melita for their consideration, and no other corporate
proceedings on the part of Melita or its shareholders are necessary to authorize
the execution, delivery and performance of this Agreement by Melita and the
consummation by Melita of the transactions contemplated hereby, other than
obtaining the Melita Shareholders' Approval. This Agreement has been duly and
validly executed and delivered by Melita and constitutes a legal, valid and
binding obligation of Melita enforceable against Melita in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3. Subsidiaries. Section 5.3 of the Melita Disclosure Schedule
sets forth a complete and accurate list of all of Melita's Subsidiaries, and
indicates Melita's ownership interest in each. Section 5.3 of the Melita
Disclosure Schedule also sets forth the jurisdiction of incorporation of each of
Melita's Subsidiaries, each jurisdiction in which such Subsidiary is qualified,
licensed or admitted to do business and the number of shares of capital stock of
such Subsidiary authorized and outstanding. Each Subsidiary of Melita (i) is a
corporation or other legal entity duly organized, validly existing and (if
applicable) in good standing under the laws of the jurisdiction of its
incorporation or organization and has the full power and authority to own, lease
or operate its properties and assets and conduct its business as and to the
extent currently conducted, except where the failure to be duly organized,
validly existing and in good standing does not have, and could not reasonably be
expected (so far as can be foreseen at the time) to have, a Melita Material
Adverse Effect, and (ii) is duly qualified, licensed or admitted and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification,
license or admission necessary, except where the failure to be so qualified,
licensed or admitted does not have and could not reasonably be expected (so far
as can be foreseen at the time) to have a Melita Material Adverse Effect.
5.4. Capital Stock.
(a) As of the date hereof, the authorized capital stock
of Melita consists solely of 100,000,000 shares of the Melita Common Stock, of
which 15,659,590 shares are issued and outstanding, no shares are held in the
treasury of Melita and 1,747,610 shares are reserved for issuance pursuant to
outstanding Options. Except for shares of the Melita Common Stock issued or
issuable upon exercise of outstanding Options, and except as contemplated by
Section 6.2(a) since the Balance Sheet Date, there has not been, and as of the
Closing Date there will not have been, any change in the number of issued and
outstanding shares of the Melita Common Stock or material change in the number
of shares of the Melita Common Stock held in treasury or
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<PAGE> 31
reserved for issuance since such date. All of the issued and outstanding shares
of the Melita Common Stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized, validly issued,
fully paid and nonassessable. Except as described in this Section 5.4, there are
no outstanding Options obligating Melita or any of its Subsidiaries to issue or
sell any shares of capital stock of Melita or to grant, extend or enter into any
Option with respect thereto.
(b) All of the outstanding shares of capital stock of
each Subsidiary of Melita are duly authorized, validly issued, fully paid and
nonassessable and are owned, beneficially and of record, by Melita or a
Subsidiary of Melita, free and clear of any Liens. There are no (i) outstanding
Options obligating Melita or any of its Significant Subsidiaries to issue or
sell any shares of capital stock of any Significant Subsidiary of Melita or to
grant, extend or enter into any such Option or (ii) voting trusts, proxies or
other commitments, understandings, restrictions or arrangements in favor of any
person other than Melita or any of its Wholly-Owned Subsidiaries with respect to
the voting of or the right to participate in dividends or other earnings on any
capital stock of any Subsidiary of Melita.
(c) There are no outstanding contractual obligations of
Melita or any Subsidiary of Melita to repurchase, redeem or otherwise acquire
any material number of shares of the Melita Common Stock or any capital stock of
any Subsidiary of Melita or to provide a material amount of funds to, or make
any material investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary of Melita or any other Person.
(d) The shares of Melita Common Stock issued pursuant to
Article 3 will, when issued, be duly authorized, validly issued, fully paid and
nonassessable and no stockholder of Melita will have any preemptive right of
subscription or purchase in respect thereof. The shares of Melita Common Stock
will, when issued, be registered under the Securities Act and the Exchange Act
and registered or exempt from registration under any applicable state securities
laws and will be approved for listing upon official notice issuance by the
Exchange.
5.5. Government Approvals; Compliance with Laws and Orders.
(a) Melita and each of its Significant Subsidiaries has
obtained from the appropriate Governmental Bodies or self-regulatory
organizations which are charged with regulating or supervising any business
conducted by Melita or any Subsidiary of Melita all permits, variances,
exemptions, orders, approvals and licenses necessary for the conduct of its
business and operations as and to the extent currently conducted (the "Melita
Permits"), which Melita Permits are valid and remain in full force and effect,
except where the failure to have obtained such Melita Permits or the failure of
such Melita Permits to be valid and in full force and effect, individually or in
the aggregate, does not have and could not reasonably be expected (so far as can
be foreseen at the time) to have a Melita Material Adverse Effect. Melita and
its Subsidiaries are in compliance with the terms of the Melita Permits, except
failures so to comply which, individually or in the aggregate, do not have and
could not reasonably be expected (so far as can be foreseen at the time) to have
a Melita Material Adverse Effect.
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<PAGE> 32
(b) Neither Melita nor any of its Significant
Subsidiaries has received notice of any Order or any complaint, proceeding or
investigation of any Governmental Body or self-regulatory organization which is
charged with regulating or supervising any business conducted by Melita or any
Significant Subsidiary of Melita pending or, to the knowledge of Melita,
threatened, which affects or could reasonably be expected (so far as can be
foreseen at the time) to affect the validity of any such Melita Permit or impair
the renewal thereof, except where the invalidity of any such Melita Permit or
the non-renewal thereof does not have and could not reasonably be expected (so
far as can be foreseen at the time) to have a Melita Material Adverse Effect. As
of the date hereof, neither Melita nor any of its Significant Subsidiaries is a
party or subject to, any agreement, consent decree or Order, or other
understanding or arrangement with, or any directive of, any Governmental Body or
self-regulatory organization which is charged with regulating or supervising any
business conducted by Melita or any Significant Subsidiary of Melita which
imposes any material restrictions on or otherwise affects in any material way,
the conduct of the business of Melita or any of its Significant Subsidiaries.
(c) Melita and its Subsidiaries are not and have not been
in violation of or default under any Laws or Order of any Governmental Body or
self-regulatory organization which is charged with regulating or supervising any
business conducted by Melita or any Subsidiary of Melita, except for violations
which, individually or in the aggregate, have not had and could not reasonably
be expected (so far as can be foreseen at the time) to have a Melita Material
Adverse Effect.
5.6. Absence of Certain Changes or Events. Since the Balance Sheet
Date (i) there has not been any change, event or development (or threat thereof)
which has had, or that could reasonably be expected (so far as can be foreseen)
to have, individually or in the aggregate, a Melita Material Adverse Effect,
(ii) Melita and its Subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice and (iii) neither Melita
nor any of its Significant Subsidiaries has taken any action which, if taken
after the date hereof, would constitute a breach of any provision of Section
6.2. Without limiting the generality of the foregoing, since the Balance Sheet
Date except as described in the Melita SEC Reports filed prior to the date of
this Agreement or as disclosed in the Melita Disclosure Schedule, there has not
been any:
(a) change in the condition (financial or otherwise),
assets, liabilities, working capital, reserves, earnings, business or prospects
of Melita or any of its Subsidiaries, except for changes contemplated hereby or
changes which have not, individually or in the aggregate, had a Melita Material
Adverse Effect;
(b) (i) except for normal periodic increases in the
ordinary course of business consistent with past practice, increase in the
compensation payable or to become payable to any Melita Employee whose total
cash compensation for services rendered to Melita or any of its Subsidiaries is
currently at an annual rate of more than $150,000, (ii) except in the ordinary
course of business consistent with past practice, bonus, incentive compensation,
service award or other like benefit granted, made or accrued, contingently or
otherwise, for or to the credit of any Melita Employees, (iii) except in the
ordinary course of business consistent with past practice or
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as required by law, employee welfare, pension, retirement, profit-sharing or
similar payment or arrangement made or agreed to by Melita or any of its
Subsidiaries for any Melita Employee, provided, however, that any employee,
welfare, pension, retirement profit-sharing or similar payment or arrangement
made or agreed to by Melita or any of its subsidiaries for any Melita Employee
pursuant to the existing plans and arrangements described in Section 5.14 of the
Melita Disclosure Schedule shall be permitted, or (iv) new employment agreement
to which Melita or any of its Subsidiaries is a party;
(c) except in the ordinary course of business consistent
with past practice or as required by law, addition to or modification of the
employee benefit plans, arrangements or practices described in Section 5.14 of
the Melita Disclosure Schedule affecting Melita Employees other than (i)
contributions made for 1999 in accordance with the normal practices of Melita or
its Subsidiaries or (ii) the extension of coverage to other Melita Employees who
became eligible after the Balance Sheet Date;
(d) sale, assignment or transfer of any of the assets of
Melita or any of its Subsidiaries, which are material, singly or in the
aggregate, to Melita and its Subsidiaries, taken as a whole, other than in the
ordinary course;
(e) cancellation of any indebtedness or waiver of any
rights of substantial value to Melita and its Subsidiaries, taken as a whole,
whether or not in the ordinary course of business;
(f) amendment, cancellation or termination of any
Contract, license or other instrument material to Melita and its Subsidiaries,
taken as a whole;
(g) capital expenditure or the execution of any lease or
any incurring of liability therefor by Melita or any of its Subsidiaries,
involving payments in excess of $50,000 in any 12 month period or $250,000 in
the aggregate;
(h) failure to repay when due any material obligation of
Melita or any of its Subsidiaries, except in the ordinary course of business or
where such failure could not have a Melita Material Adverse Effect;
(i) material change in accounting methods or practices by
Melita or any of its Subsidiaries affecting their respective assets, liabilities
or business;
(j) material revaluation by Melita or any of its
Subsidiaries of any of their respective assets, including without limitation,
writing-off notes or accounts receivable which are, individually or in the
aggregate, material to Melita and its Subsidiaries, taken as a whole;
(k) damage, destruction or loss (whether or not covered
by insurance) having a Melita Material Adverse Effect;
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(l) mortgage, pledge or other encumbrance of any assets
of Melita or any of its Subsidiaries, which are material singly or in the
aggregate, to Melita and its Subsidiaries taken as a whole, except purchase
money mortgages arising in the ordinary course of business;
(m) declaration, setting aside or payment of dividends or
distributions in respect of any capital stock of Melita or any redemption,
purchase or other acquisition of any of Melita's equity securities;
(n) issuance by Melita or any of its Subsidiaries of, or
commitment of Melita or any of its Subsidiaries to issue, any shares of capital
stock or other equity securities or Options;
(o) indebtedness incurred by Melita or any of its
Subsidiaries for borrowed money or any commitment to borrow money entered into
by Melita or any of its Subsidiaries, or any loans made or agreed to be made by
Melita or any of its Subsidiaries;
(p) liabilities incurred involving $250,000 or more,
except in the ordinary course of business and consistent with past practice, or
any increase or change in any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves other than in the ordinary course of
business consistent with past practices;
(q) payment, discharge or satisfaction of any liabilities
other than the payment, discharge or satisfaction (i) in the ordinary course of
business and consistent with past practice of liabilities reflected or reserved
against in the Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the Balance Sheet Date and (ii) of other
liabilities involving not more than $250,000 singly and not more than $750,000
in the aggregate; or
(r) agreement or commitment by Melita or any of its
Subsidiaries to do any of the foregoing.
5.7. Compliance with Contracts and Commitments.
(a) Section 5.7 of the Melita Disclosure Schedule
contains an accurate and complete listing of each material Contract, whether
written or oral, required to be described in the Melita SEC Reports or filed as
exhibits thereto pursuant to the Exchange Act. Each of such Contracts (other
than Contracts which have expired or terminated in accordance with the terms
thereof) is in full force and effect and (i) to the best of Melita's knowledge,
neither Melita nor any of its Subsidiaries nor, to the best of Melita's
knowledge, any other party thereto has breached or is in default thereunder,
(ii) to the best of Melita's knowledge, no event has occurred which, with the
passage of time or the giving of notice or both would constitute such a breach
or default, (iii) to the best of Melita's knowledge, no claim of material
default thereunder has been asserted or threatened and (iv) neither Melita nor
any of its Subsidiaries nor, to the knowledge of Melita, any other party thereto
is seeking the renegotiation thereof or substitute performance thereunder,
except where such breach or default, or attempted renegotiation or substitute
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performance, individually or in the aggregate, does not have and could not
reasonably be expected (so far as can be foreseen at the time) to have a Melita
Material Adverse Effect.
(b) Neither Melita nor any Subsidiary of Melita is in
violation of any term of (i) its Articles of Incorporation, By-laws or other
organizational documents, (ii) any agreement or instrument related to
indebtedness for borrowed money or any other Contract to which it is a party or
by which it is bound, (iii) any applicable law, ordinance, rule or regulation of
any Governmental Body, or (iv) any applicable Order of any Governmental Body, or
self-regulatory organization which is charged with regulating or supervising any
business conducted by Melita or any Subsidiary of Melita, the consequences of
which violation, whether individually or in the aggregate, have or could
reasonably be expected (so far as can be foreseen at the time) to have a Melita
Material Adverse Effect.
5.8. Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by
Melita do not, and the performance by Melita of its obligations hereunder and
the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any Person any
right of payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of Melita or any of its Subsidiaries under, any of the
terms, conditions or provisions of (i) the Articles of Incorporation or By-laws
(or other comparable charter document) of Melita or any of its Subsidiaries, or
(ii) subject to the obtaining of the Melita Shareholders' Approval and the
taking of the actions described in paragraph (b) of this Section, (x) Laws or
Orders of any Governmental Body or self-regulatory organization which is charged
with regulating or supervising any business conducted by Melita or any
Subsidiary of Melita applicable to Melita or any of its Subsidiaries or any of
their respective assets or properties, or (y) any Contract to which Melita or
any of its Subsidiaries is a party or by which Melita or any of its Subsidiaries
or any of their respective assets or properties is bound, excluding from the
foregoing clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not reasonably be expected
to have a Melita Material Adverse Effect.
(b) Except for (i) the filing of the Proxy Statement with
the SEC and NASDAQ pursuant to the Exchange Act, and (ii) the filing of the
Certificate of Merger and other appropriate merger documents required by the
DGCL with the Secretary of State of the State of Delaware, no consent, approval
or action of, filing with or notice to any Governmental Body or other public or
private third party is necessary or required under any of the terms, conditions
or provisions of any Law or Order of any Governmental Body or self-regulatory
organization which is charged with regulating or supervising any business
conducted by Melita or any Subsidiary of Melita, or any Contract to which Melita
or any of its Subsidiaries is a party or by which Melita or any of its
Subsidiaries or any of their respective assets or properties is bound for the
execution and delivery of this Agreement by Melita, the performance by Melita of
its obligations hereunder or the consummation of the transactions contemplated
hereby, other than such consents,
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approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, could not reasonably be
expected to have a Melita Material Adverse Effect.
5.9. Litigation. Except as disclosed in Section 5.9 of the Melita
Disclosure Schedule, there are no actions, suits, arbitrations, investigations
or proceedings (adjudicatory, rulemaking or otherwise) pending or, to the
knowledge of Melita, threatened against Melita or any of its Subsidiaries (or
any Melita Employee Plan or Melita Benefit Arrangement), or any property of
Melita or any such Subsidiary (including Proprietary Rights), in any court or
before any arbitrator of any kind or before or by any Governmental Body, except
actions, suits, arbitrations, investigations or proceedings which, individually
or in the aggregate, have not had and if adversely determined or resolved, could
not reasonably be expected (so far as can be foreseen at the time) to have a
Melita Material Adverse Effect).
5.10. Labor Matters. Melita is in material compliance with all
applicable laws respecting employment practices, terms and conditions of
employment and wages and hours and is not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against Melita pending
before the National Labor Relations Board or any other governmental agency
arising out of Melita's activities, and Melita has no knowledge of any facts or
information which would give rise thereto.
5.11. Absence of Undisclosed Liabilities. Melita has no liabilities
or obligations (whether choate or inchoate, absolute or contingent, or
otherwise) except (i) liabilities which are reflected and reserved against or
disclosed on the Balance Sheet, and (ii) liabilities incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date and which have not resulted in, and could not reasonably be expected to
result in, individually or in the aggregate, a Melita Material Adverse Effect.
5.12. No Brokers. Except as disclosed in Section 5.12 of the Melita
Disclosure Schedule, neither Melita nor any Subsidiary or affiliate of Melita
has entered into or will enter into any Contract or understanding, whether oral
or written, with any Person which will result in the obligation of Melita to pay
any finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
5.13. No Other Agreements to Sell the Assets, Merge, Etc. Neither
Melita nor any Significant Subsidiary has any legal obligation, absolute or
contingent, to any other person to sell any Assets, to sell any capital stock of
Melita or any of its Significant Subsidiaries or to effect any merger,
consolidation or other reorganization of Melita or any of its Significant
Subsidiaries or to enter into any agreement with respect thereto.
5.14. Employee Benefit Plans.
(a) The Melita Disclosure Schedule sets forth a true and
complete list of all the following: (i) each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA, established by Melita, any of its
Significant Subsidiaries, or any ERISA Affiliate or under which Melita, any of
its Significant Subsidiaries, or any ERISA Affiliate contributes or
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under which any Employees of Melita or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights with respect to service to Melita,
any of its Significant Subsidiaries or any ERISA Affiliate or under which any
obligation exists to issue capital stock of Melita or any of its Significant
Subsidiaries (each, a "Melita Employee Plan"), and (ii) each other plan,
program, policy, contract or arrangement providing for bonuses, pensions,
deferred pay, stock or stock-related awards, severance pay, salary continuation
or similar benefits, hospitalization, medical, dental or disability benefits,
life insurance or other employee benefits, or compensation to or for any Melita
Employees or any beneficiaries or dependents of any Melita Employees (other than
directors' and officers' liability insurance policies), whether or not oral or
written or insured or funded, or constituting an employment or severance
agreement or arrangement with any officer or director of Melita or any
Significant Subsidiary (each, an "Melita Benefit Arrangement"). Any such Melita
Employee Plans or Melita Benefit Arrangements maintained for any officer,
director or employee of a Subsidiary of Melita that is not a Significant
Subsidiary are not in the aggregate material to Melita and its Significant
Subsidiaries taken as a whole. The Melita Disclosure Schedule also (i) sets
forth a true and complete list of each Melita Employee Plan maintained by
Melita, any ERISA Affiliate, or any of its Significant Subsidiaries, during the
five years preceding the date of this Agreement that was covered during such
period by Title IV of ERISA, (ii) identifies each Melita Employee Plan that is
intended to be qualified under Section 401(a) of the Code, and (iii) identifies
the Melita Employee Plans and Melita Benefit Arrangements that are maintained,
respectively, by each of Melita and its Significant Subsidiaries. Melita has
made available to eShare with respect to each Melita Employee Plan and Melita
Benefit Arrangement: (i) a true and complete copy of all written documents
comprising such Melita Employee Plan or Melita Benefit Arrangement (including
amendments and individual agreements relating thereto) or, if there is no such
written document, an accurate and complete description of such Melita Employee
Plan or Melita Benefit Arrangement; (ii) the most recent Form 5500 or Form
5500-C (including all schedules thereto), if applicable; (iii) the most recent
financial statements and actuarial reports, if any, including without
limitation, any such reports relating to any health or medical plan" (iv) the
summary plan description currently in effect and all material modifications
thereof, if any; and (v) the most recent Internal Revenue Service determination
letter, if any. Any such Melita Employee Plans and Melita Benefit Arrangements
not so provided are not in the aggregate material to Melita and its Subsidiaries
taken as a whole.
(b) Each Melita Employee Plan and Melita Benefit
Arrangement has been established and maintained in all material respects
substantially in accordance with its terms and substantially in compliance with
all applicable laws, including, but not limited to, ERISA and the Code where the
failure to comply with such terms or laws would have a Melita Material Adverse
Effect. To the best of Melita's knowledge, neither Melita nor any of its
Significant Subsidiaries nor any of their respective Employees nor any other
disqualified person or party-in-interest with respect to any Melita Employee
Plan, have engaged-directly or indirectly in any "prohibited transaction," as
such term is defined in section 4975 of the Code or Section 406 of ERISA, with
respect to which Melita or its Significant Subsidiaries could have or has any
material liability. All contributions required to be made to Melita Employee
Plans and Melita Benefit Arrangements have been made timely or, to the extent
such contributions have not been made timely the liability resulting therefrom
is not material. Each Melita Employee Plan that is
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intended to be qualified under Section 401(a) of the Code and whose related
trust is intended to be exempt from taxation under Section 501(a) of the Code
has received, or has applied for and has not been denied, a favorable
determination letter with respect to its qualification and to Melita's best
knowledge, nothing has occurred which could cause a loss of such qualification.
Neither Melita, any ERISA Affiliate nor any Significant Subsidiary has incurred
any liability to the Pension Benefit Guaranty Corporation other than a liability
for premiums not yet due.
(c) Neither Melita, any ERISA Affiliate nor any
Significant Subsidiary has ever maintained, sponsored or contributed to any
Melita Employee Plan or Melita Benefit Plan that is or was subject to Section
412 of the Code has incurred any "accumulated funding deficiency" (as defined in
Section 412 of the Code), whether or not waived.
(d) Neither Melita, any ERISA Affiliate nor any
Significant Subsidiary has ever maintained or sponsored or contributed to any
employee pension benefit plan.
(e) Neither Melita nor any ERISA Affiliate has any
liability under Title IV of ERISA, nor do any circumstances exist that could
result in any of them having any liability under Title IV of ERISA. To the best
of Melita's knowledge, neither Melita nor any Significant Subsidiary has any
liability for any failure to comply with the continuation coverage requirements
of Section 601 et seq. of ERISA and Section 4980B of the Code or to the extent
Melita or any Significant Subsidiary has any such liability, such liability is
not material.
(f) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims for benefits)
pending or, to Melita's knowledge, threatened, with respect to any Melita
Employee Plan or Melita Benefit Arrangement.
(g) No Employees and no beneficiaries or dependents of
Employees are or may become entitled under any Melita Employee Plan or Melita
Benefit Arrangement to post-employment welfare benefits of any kind, including
without limitation death or medical benefits, other than coverage mandated by
Section 4980B of the Code.
(h) There are no agreements with, or pending petitions
for recognition of, a labor union or association as the exclusive bargaining
agent for any of the employees of Melita or any of its Significant Subsidiaries;
no such petitions have been pending at any time within two years of the date of
this Agreement and, to Melita's best knowledge, there has not been any
organizing effort by any union or other group seeking to represent any employees
of Melita or any of its Significant Subsidiaries as their exclusive bargaining
agent at any time within two years of the date of this Agreement. There are no
labor strikes, work stoppages or other labor troubles, other than routine
grievance matters, now pending, or, to Melita's knowledge, threatened, against
Melita or any of its Significant Subsidiaries, nor have there been any such
labor strikes, work stoppages or other labor troubles, other than routine
grievance matters, with respect to Melita or any of its Significant Subsidiaries
at any time within two years of the date of this Agreement.
(i) Neither Melita, nor any Significant Subsidiary has
scheduled or agreed upon future increases of benefits levels (or creations of
new benefits) with respect to any Melita
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Employee Plan or Melita Benefit Arrangement, and no such increases or creation
of benefits have been proposed or made the subject of representations to
employees under circumstances which make it reasonable to expect that such
increases would be granted. No loan is outstanding between Melita, any
Subsidiary, or any ERISA Affiliate and any Employee.
5.15. Environmental Matters.
(a) Except as set forth in Section 5.15 of the Melita
Disclosure Schedule, Melita and its Subsidiaries are in full compliance with all
applicable Environmental Laws (as hereinafter defined), other than those as to
which the failure to so comply would not result in a Melita Material Adverse
Effect, and there are no circumstances that may prevent or interfere with such
full compliance in the future. Except as set forth in Section 5.15 of the Melita
Disclosure Schedule, neither Melita nor any of its Subsidiaries has received any
written or oral communication, whether from a governmental authority, citizens'
group, employee, agent or otherwise, that alleges that Melita or any of its
Subsidiaries are not in such full compliance with Environmental Laws or that
alleges that any properties or assets of Melita or any of its Subsidiaries may
have been affected by any Materials of Environmental Concern. All permits and
other governmental authorizations currently held or being applied for by Melita
pursuant to the Environmental Laws are identified in Section 5.15 of the Melita
Disclosure Schedule and will not be terminated, suspended or otherwise adversely
affected by the Merger.
(b) Except as set forth in Section 5.15 of the Melita
Disclosure Schedule, there is no Environmental Claim pending or threatened (i)
against Melita or any of its Subsidiaries, (ii) against any Person whose
liability for any Environmental Claim Melita or any of its Subsidiaries have or
may have retained or assumed either contractually or by operation of law, or
(iii) against any real or personal property which Melita or any of its
Subsidiaries own, lease, manage, supervise or participate in the management of,
or in which Melita or any of its Subsidiaries hold a security interest in
connection with a loan or loan participation, other than such as would not,
either individually or in the aggregate, result in a Melita Material Adverse
Effect.
(c) Except as set forth in Section 5.15 of the Melita
Disclosure Schedule, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim against
Melita or any of its Subsidiaries or against any person or entity whose
liability for any Environmental Claim Melita or any of its Subsidiaries have or
may have retained or assumed, either contractually or by operation of law, other
than such as would not, either individually or in the aggregate, result in a
Melita Material Adverse Effect.
(d) Without in any way limiting the generality of the
foregoing, (i) all on-site and off-site locations where Melita or any of its
Subsidiaries has stored, released, discharged, disposed of, or arranged for the
disposal of Materials of Environmental Concern are identified in Section 5.15 of
the Melita Disclosure Schedule, (ii) all underground storage tanks, whether or
not regulated under Subtitle I of the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6991 et
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seq., or applicable state and local laws, rules and regulations, and the
capacity and contents of such tanks, located on property owned, leased, managed
or supervised by Melita or any of its Subsidiaries, or in which Melita or any of
its Subsidiaries holds a security interest in connection with a loan or loan
participation are identified in Section 5.15 of the Melita Disclosure Schedule,
(iii) except as set forth in Section 5.15 of the Melita Disclosure Schedule,
there is no asbestos contained in or forming part of any building, building
component, structure or office space owned, leased, managed or supervised by
Melita or any of its Subsidiaries or in which Melita or any of its Subsidiaries
holds a security interest in connection with a loan or loan participation, and
(iv) except as set forth in Section 5.15 of the Melita Disclosure Schedule, no
polychlorinated biphenyls are used or stored at any property owned, leased,
managed or supervised by Melita or any of its Subsidiaries or in which Melita or
any of its Subsidiaries holds a security interest in connection with a loan or
loan participation.
(e) Section 5.15 of the Melita Disclosure Schedule sets
forth an accurate and complete list of outstanding loans of Melita and its
Subsidiaries as to which the borrower has submitted (or is required to submit)
to Melita or its Subsidiaries any environmental audits, analysis or surveys of
any real property securing such loans, and a brief description of the
environmental audit, analysis or survey, to the extent applicable. Melita and
its Subsidiaries will make available to eShare all reports of environmental
audits, analysis and surveys referred to on Section 5.15 of the Melita
Disclosure Schedule.
5.16. Melita Computer Software and Hardware. (a) Section 5.16 of the
Melita Disclosure Schedule sets forth a true and complete list of: (i) all
software and associated documentation owned by Melita material to the business
of Melita (the "Melita Proprietary Software"); (ii) all software (other than the
Melita Proprietary Software and "shrink-wrap" software) used in connection with
the business of Melita (the "Melita Licensed Software" and together with the
Melita Proprietary Software, the "Melita Software"). Melita is in possession of
all technical and descriptive materials to run its business in accordance with
its historical practices, except as would not have a Melita Material Adverse
Effect. The Melita Proprietary Software consists of: (i) source and object code
embodied in magnetic media; and (ii) all development and procedural tools,
documentation, and manuals necessary to maintain, enhance, develop derivative
works, support and service the Melita Proprietary Software, including licenses
to use compilers, assemblers, libraries and other aids. No parties other than
Melita possess any current or contingent rights to any source code for the
Melita Proprietary Software.
(b) Melita has a valid right, title and interest in and to all
intellectual property rights in the Melita Proprietary Software, including all
copyrights (registered and unregistered), trade secrets, and proprietary and
confidential information rights therein. Melita has developed the Melita
Proprietary Software entirely through its own efforts for its own account or has
acquired prior to the date hereof valid right, title and interest in the Melita
Proprietary Software and the Melita Proprietary Software is free and clear of
all liens, claims and encumbrances. The Melita Disclosure Schedule lists all
parties other than employees of Melita who have created any portion of, or
otherwise have any rights in or to, the Melita Software. Melita has secured from
all parties who have created any portion of, or otherwise have any rights in or
to, the Melita Proprietary Software valid and enforceable written assignments of
any such work or other rights to Melita
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and has provided true and complete copies of such assignments to Buyer. The use
of the Melita Licensed Software and the use and distribution of the Melita
Proprietary Software does not breach any terms of any contract between Melita
and any third party. To the best knowledge of Seller, Melita has been granted
under the license agreements relating to the Melita Licensed Software (the
"Melita License Agreements") valid and subsisting license rights with respect to
all software comprising the Melita Licensed Software and such rights may be
exercised in any jurisdiction in which Melita currently conducts its business or
could reasonably be expected to conduct its business in the future. Each of
Melita and the Melita Subsidiaries is in compliance with each of the terms and
conditions of each of the Melita License Agreements except to the extent failure
to so comply, individually or in the aggregate, would not have a Melita Material
Adverse Effect. In the case of any commercially available "shrink-wrap" software
programs (such as Lotus 1-2-3), Melita has not made and is not using any
unauthorized copies of any such software programs and none of the employees,
agents or representatives of Melita have made or are using any such unauthorized
copies, except as would not have a Melita Material Adverse Effect.
(c) The Melita Proprietary Software and, to the actual knowledge
of Melita and the Stockholders, the Melita Licensed Software do not infringe the
patent, copyright, moral rights or trade secret rights or any other intellectual
property or legal right of any third party which may exist anywhere in the
world.
(d) Neither Melita nor any of the Melita Subsidiaries has granted
rights in the Melita Software to any third party except for rights granted to
value added resellers, distributors or customers in the ordinary course of
business pursuant to contracts with customers.
(e) To the best knowledge of Sellers, the Melita Software and the
related computer hardware used by Melita in its operations (the "Melita
Hardware") are adequate in all material respects, when taken together with the
other assets, resources and personnel of Melita and the Melita Subsidiaries, to
run the business of Melita and the Melita Subsidiaries in the same manner as
such business has operated since December 31, 1998, except as would not result
in a Melita Material Adverse Effect.
(f) The Melita Proprietary Software is "Millennium Compliant"
(defined below). For the purposes of this Agreement "Millennium Compliant"
means:
(i) the functions, calculations, and other computing
processes of the Melita Proprietary Software (collectively, "Processes") perform
in a consistent manner regardless of the date in time on which the Processes are
actually performed and regardless of the date input to the Melita Proprietary
Software, whether before, on, or after January 1, 2000 and whether or not the
dates are affected by leap years;
(ii) the Melita Proprietary Software accepts, calculates,
compares, sorts, extracts, sequences, and otherwise processes date inputs and
date values, and returns and displays date values, in a consistent manner
regardless of the dates used, whether before, on, or after January 1, 2000;
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(iii) the Melita Proprietary Software will function without
interruptions caused by the date in time on which the Processes are actually
performed or by the date input to the Melita Proprietary Software, whether
before, on, or after January 1, 2000;
(iv) the Melita Proprietary Software accepts and responds
to two-digit year-date input in a manner that resolves any ambiguities as to the
century in a defined, predetermined, and appropriate manner; and
(v) the Melita Proprietary Software stores and displays
date information in ways that are unambiguous as to the determination of the
century.
(g) The Melita Disclosure Schedule includes a true and complete
list and summary of principal terms concerning support and maintenance
agreements relating to the Melita Software, including without limitation the
identity of the parties entitled to receive such service or maintenance, the
term of such agreements and any other provisions relating to the termination of
such agreements.
5.17. Transactions with Affiliates.
Except as set forth in Section 5.17 of the Melita Disclosure Schedule,
no officer, director or holder of 5% or more of the outstanding share capital of
Melita or any Melita Subsidiary, or any person or affiliated group with whom any
such stockholder, officer or director has any direct or indirect relation by
blood, marriage or adoption, or any entity in which any such person, owns (other
than through a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by all such persons) any beneficial
interest in: (i) any contract, arrangement or understanding or any related
series of the same involving aggregate consideration in excess of U.S. $10,000
with, or relating to, the business or operations of Melita or any Melita
Subsidiary; (ii) any loan, arrangement, understanding, agreement or contract or
any related series of the same for or relating to indebtedness of Melita or a
Melita Subsidiary in excess of U.S. $10,000 in the aggregate; or (iii) any
property or related group of properties with an aggregate value of at least U.S.
$10,000 (real, personal or mixed), tangible or intangible, used or currently
intended to be used in, the business or operations of Melita or any Melita
Subsidiary.
5.18. Management Letters.
True and accurate copies of all management letters by Melita or any
Subsidiary from any of their accountants since December 31, 1995 are included in
Section 5.18 of the Melita Disclosure Schedule.
5.19. Proxy Statement.
(a) To the best of Melita's knowledge, the Proxy
Statement relating to the Melita Shareholders' Meeting, as amended or
supplemented from time to time, and any other documents relating to the Melita
Shareholders Meeting to be filed with the SEC or any other Governmental Body or
self-regulatory organization which is charged with regulating or
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supervising any business conducted by Melita or any Subsidiary of Melita in
connection with the Merger and the other transactions contemplated hereby will
not, on the date of its filing or, in the case of the Proxy Statement, at the
date it is mailed to shareholders, and at the time of the Melita Shareholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, insofar as the information therein relates to Melita. The Proxy
Statement and any such other documents filed by Melita with the SEC under the
Exchange Act will comply as to form in all material respects with the
requirements of the Exchange Act and the Securities Act.
(b) Neither the information supplied or to be supplied by
or on behalf of Melita for inclusion, nor the information incorporated by
reference from documents filed by Melita with the SEC, in any document to be
filed by eShare or any of its Subsidiaries with any Governmental Body or
self-regulatory organization which is charged with regulating or supervising any
business conducted by Melita or eShare or any Subsidiary of either in connection
with the Merger or any other transaction contemplated hereby will on the date of
its filing contain, to the best of Melita's knowledge, any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
5.20. Tax Matters. Except as set forth in Section 5.20 of the Melita
Disclosure Schedule:
(a) The Taxpayers of Melita have duly filed all tax
reports and returns required to be filed by them, including all federal, state,
local and foreign tax returns and reports and have paid in full all taxes
required to be paid by such Melita Taxpayers before such payment became
delinquent. To the best of Melita's knowledge, Melita has made adequate
provision, in conformity with generally accepted accounting principles
consistently applied, for the payment of all taxes which may subsequently become
due. All taxes which any Taxpayer of Melita has been required to collect or
withhold have been duly collected or withheld and, to the extent required when
due, have been or will be duly paid to the proper taxing authority.
(b) The consolidated federal income tax returns of Melita
and its predecessors and the federal income tax returns of each Subsidiary of
Melita whose results of operations are not consolidated in the federal income
tax returns of Melita, have not been examined by the Internal Revenue Service
for any periods since their inception. There are no audits of Melita's tax
returns known by Melita to be pending, and there are no claims which have been
or may be asserted relating to any of Melita's tax returns filed for any year
which if determined adversely would result in the assertion by any governmental
agency of any deficiency which could reasonably be expected to result in,
individually or in the aggregate, a Melita Material Adverse Effect. There have
been no waivers of statutes of limitations by Melita.
(c) None of the Taxpayers of Melita has filed a statement
under Section 341(f) of the Code (or any comparable state income tax provision)
consenting to have the provisions of Section 341(f)(2) (collapsible corporations
provisions) of the Code (or any comparable state
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income tax provision) apply to any disposition of any of Melita's assets or
property, no property of Melita is property which Melita or eShare is or will be
required to treat as owned by another person pursuant to the provisions of
Section 168(f) (safe harbor leasing provisions) of the Code. Melita is not a
party to any tax-sharing agreement or similar arrangement with any other party.
5.21. Reports and Financial Statements. Melita has timely filed with
the SEC all Melita SEC Reports and has previously made available to eShare true
and complete copies of all Melita SEC Reports. As of their respective dates, the
Melita SEC Reports (i) complied as to form in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except as disclosed in Section 5.21 of the Melita Disclosure
Schedule, since June 30, 1997, Melita has not received from the SEC, any state
securities commissioner or agency, or NASDAQ, notice of any actual or threatened
inquiry, investigation, hearing, prosecution, stop order proceeding or other
adverse action by such agency or authority against Melita, any of its
subsidiaries or Affiliates or any listing of any security issued by Melita or
any of its subsidiaries. The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in each case,
the notes, if any, thereto) included in the Melita SEC Reports (the "Melita
Financial Statements") complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, and fairly
present (subject, in the case of the unaudited interim financial statements, to
normal, recurring year-end audit adjustments which are not expected,
individually or in the aggregate, to result in a Melita Material Adverse Effect)
the consolidated financial position of Melita and its consolidated subsidiaries
as of the respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended, in each case,
in accordance with generally accepted accounting principles consistently
applied. Each Significant Subsidiary of Melita is treated as a consolidated
subsidiary of Melita in the Melita Financial Statements for all periods covered
thereby.
5.22. Payments. Melita has not, directly or indirectly, paid nor has
it delivered any fee, commission or other sum of money or item or property,
however characterized, to any finder, agent, government official or other party,
in the United States or any other country, which is in any manner related to the
business or operations of Melita, which Melita knows or has reason to believe to
have been illegal under any federal, state or local laws of the United States or
any other country having jurisdiction; and Melita has not participated, directly
or indirectly, in any boycotts or other similar practices affecting any of its
actual or potential customers and has at all times done business in an open and
ethical manner.
5.23. Information Supplied. The financial and other information
provided to eShare by or on behalf of Melita on or prior to the date hereof and
listed on the Melita Disclosure Schedule at Section 5.23 of such Schedule was
prepared in good faith and, as of the dates provided and in light of the
circumstances under which such information was provided (as supplemented by
further information provided by Melita to eShare prior to the date hereof),
accurately reflected in all material respects the status or matters purported to
be reflected by such financial or other information. To the best of Melita's
knowledge, the information provided in these
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representations and warranties and the Melita Disclosure Schedule is not false
or misleading in any material respect, as of the dates provided and in light of
the circumstances under which such information was provided (as supplemented by
further information provided by Melita to eShare prior to the date hereof).
5.24. Other Reports. Since January 1, 1991, to the best of Melita's
knowledge, Melita and each Subsidiary of Melita has filed all required forms,
reports and documents required to be filed with any Governmental Body or
self-regulatory organization which is charged with regulating or supervising any
business conducted by Melita or any Subsidiary of Melita (other than such forms,
reports and documents which if not filed would not adversely affect in any
significant manner the licenses and regulatory status of Melita or any
Subsidiary), each of which complied in all material respects with applicable
requirements in effect on the dates of such filings and, to the best of Melita's
knowledge, none of which, as of its date, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
5.25. Vote Required. The affirmative vote of the holders of record
of at least a majority of the outstanding shares of the Melita Common Stock with
respect to the adoption of this Agreement is the only vote of the holders of any
class or series of the capital stock of Melita required to adopt this Agreement
and approve the Merger and the other transactions contemplated hereby.
5.26. Fairness Opinion. Melita has received the oral opinion of
Broadview International, LLC to the effect that the Merger is fair from a
financial point of view to Melita's shareholders.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
6.1. Conduct of the Business of eShare. Except with the prior
written consent of Melita or as expressly contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time: (i) eShare
will conduct its business only in, and eShare will not take any action except
in, the ordinary course consistent with past practice, (ii) eShare will not
enter into any material transaction other than in the ordinary course of
business consistent with past practice and (iii) to the extent consistent with
the foregoing, with no less diligence and effort than would be applied in the
absence of this Agreement, eShare will preserve intact its current business
organizations and reputation, keep available the service of its current officers
and employees, preserve its relationships with customers, suppliers and others
having business dealings with it with the objective that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time and comply in all
material respects with all Laws and Orders of all Governmental Bodies or
regulatory authorities applicable to it. Without limiting the generality of the
foregoing and except as otherwise expressly permitted in this Agreement, prior
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to the Effective Time, eShare will not, without the prior written consent of
Melita (except to the extent set forth in the eShare Disclosure Schedule):
(a) except for (i) 1,670,769 shares of eShare Common
Stock reserved for issuance upon exercise of eShare Options outstanding as of
the date hereof and (ii) 589,367 shares of eShare Common Stock reserved for
issuance upon exercise of eShare Warrants outstanding as of the date hereof,
issue, deliver, sell, dispose of, pledge or otherwise encumber, or authorize or
propose the issuance, delivery, sale, disposition or pledge or other encumbrance
of (A) any additional shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of its
capital stock, or (B) any other securities in respect of, in lieu of, or in
substitution for, shares of the capital stock of eShare outstanding on the date
hereof;
(b) except as contemplated in subsection (a) above,
directly or indirectly redeem, repurchase or otherwise acquire, or propose to
redeem, repurchase or otherwise acquire, any of its outstanding securities or
any Option with respect thereto;
(c) split, combine, subdivide, reclassify or take similar
action with respect to any shares of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or declare, set aside for payment
or pay any dividend, or make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make any
payments to shareholders in their capacity as such, other than in a manner
consistent with prior business practices;
(d) (i) increase in any manner the compensation or fringe
benefits of any of its directors or officers; (ii) increase in any manner the
compensation or fringe benefits of any employee (other than a director or
officer) other than merit increases in the ordinary course of business
consistent with past practice (including dates of review and of effectiveness of
merit increases) that, in the aggregate, do not result in a material increase in
benefits or compensation expense to eShare; (iii) pay or agree to pay any
pension, retirement allowance or other employee benefit not required or
contemplated by any of the existing benefit, severance, pension or employment
plans, agreements or arrangements as in effect on the date hereof to any such
director, officer or employees, whether past or present; (iv) enter into any new
or amend any existing employment agreement with any such director, officer or
employee; (v) enter into any new or amend any existing severance agreement with
any such director, officer or employee; or (vi) except as may be required to
comply with applicable law, become obligated under any new pension plan or
arrangement, welfare plan or arrangement, multi-employer plan or arrangement,
employee benefit plan or arrangement, severance plan or arrangement, benefit
plan or arrangement, or similar plan or arrangement, which was not in existence
on the date hereof, or amend any such plan or arrangement in existence on the
date hereof if such amendment would have the effect of enhancing or accelerating
any benefits thereunder;
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(e) enter into any contract or amend or modify any
existing contract, or engage in any new transaction outside the ordinary course
of business and not consistent with past practice or not on an arm's length
basis, with any Affiliate of eShare;
(f) adopt a plan of complete or partial liquidation, or
resolutions providing for or authorizing such liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of eShare (other than the Merger);
(g) make any acquisition, by means of merger,
consolidation, purchase of a substantial equity interest in or a substantial
portion of the assets of, or otherwise, of (i) any business or corporation,
partnership, association or other business organization or division thereof or
(ii) except in the ordinary course and consistent with past practice, any other
assets;
(h) adopt or propose any amendments to its Certificate of
Incorporation or By-laws, except as contemplated by this Agreement;
(i) other than borrowings under existing credit
facilities or other borrowings in the ordinary course (but in all cases only in
the aggregate at any time outstanding up to $100,000 of additional borrowings
after the date hereof), (x) incur any indebtedness for borrowed money or
guarantee any such indebtedness other than in the ordinary course of business
consistent with past practices or, except in the ordinary course consistent with
past practice, (y) make any loans, advances or capital contributions to, or
investments in, any Person or (z) voluntarily purchase, cancel, prepay or
otherwise provide for a complete or partial discharge in advance of a scheduled
repayment date with respect to, or waive any right under, any indebtedness for
borrowed money other than in the ordinary course of business consistent with
past practice;
(j) make any change in the lines of business in which it
participates or is engaged;
(k) enter into any agreement providing for acceleration
of payment or performance or other consequence as a result of a change of
control of eShare;
(l) enter into any contract, arrangement or understanding
requiring the purchase of equipment, materials, supplies or services over a
period greater than 12 months and for the expenditure of greater than $300,000
per year which is not cancelable without penalty on 30 days' or less notice; or
(m) except to the extent required by applicable law, (x)
permit any material change in (A) pricing, marketing, purchasing, investment,
accounting, financial reporting, inventory, credit, allowance or tax practice or
policy or (B) any method or calculating any bad debt, contingency or other
reserve for accounting, financial reporting or tax purposes or (y) make any
material tax election or settle or compromise any material income tax liability
with any Governmental Body or regulatory authority; provided, however, that
eShare may increase its policy pricing in the ordinary course of business;
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(n) other than dispositions of assets which are not,
individually or in the aggregate, material to eShare, sell, lease, grant any
security interest in or otherwise dispose of or encumber any of its assets or
properties;
(o) take any action that would cause any representations
set forth in Article 4 not to be true in all material respects from and after
the date hereof until the Effective Time;
(p) fail to maintain in full force the insurance policies
in effect on the date hereof or change any self-insurance program in effect in
any material respect;
(q) in the event that a claim is made for damage, which
damage would have an eShare Material Adverse Effect during the period prior to
the Closing Date which is covered by such insurance, fail to promptly notify
Melita of the pendency of such a claim;
(r) do any act or omit to do any act, or permit any act
or omission to act, which will cause a breach of any Contract or commitment of
eShare, except to the extent that such breach would not have an eShare Material
Adverse Effect;
(s) fail to duly comply with all Laws and Orders
applicable to it and its properties, operations, business and employees except
to the extent that such non-compliance would not have an eShare Material Adverse
Effect; or
(t) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any Contract to do any of
the foregoing.
6.2. Conduct of the Business of Melita. Except with the prior
consent of eShare or as expressly contemplated by this Agreement, during the
period from the date of this Agreement to the Effective Time: (i) Melita will,
and will cause each of its Subsidiaries to, conduct its business only in, and
Melita will not take, and will cause each of its Subsidiaries not to take, any
action except in, the ordinary course consistent with past practice, (ii) Melita
will not, and Melita will cause each of its Subsidiaries not to, enter into any
material transaction other than in the ordinary course of business consistent
with past practice and (iii) to the extent consistent with the foregoing, with
no less diligence and effort than would be applied in the absence of this
Agreement, Melita will, and will cause each of its Subsidiaries to, preserve
intact its current business organizations and reputation, keep available the
service of its current officers and employees, preserve its relationships with
customers, suppliers and others having business dealings with it with the
objective that their goodwill and ongoing businesses shall be unimpaired at the
Effective Time and comply in all material respects with all Laws and Orders of
all Governmental Bodies or regulatory authorities applicable to it. Without
limiting the generality of the foregoing and except as otherwise expressly
permitted in this Agreement, prior to the Effective Time, Melita will not and
will not permit any of its Subsidiaries to, without the prior written consent of
Melita (except to the extent set forth in the Melita Disclosure Schedule):
(a) except for 2,883,306 shares of Melita Common Stock
reserved for issuance upon exercise of Melita Options outstanding as of the date
hereof or issuable pursuant to additional Melita Options which may be granted
after the date hereof but prior to the Effective
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Time, issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, disposition or pledge or
other encumbrance of (A) any additional shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for any shares of its capital stock, or any rights, warrants,
options, calls, commitments or any other agreements of any character to purchase
or acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of its capital stock, or (B) any other securities in respect of, in
lieu of, or in substitution for, shares of the capital stock of Melita
outstanding on the date hereof;
(b) except as contemplated in subsection (a) above,
directly or indirectly redeem, repurchase or otherwise acquire, or propose to
redeem, repurchase or otherwise acquire, any of its outstanding securities or
any Option with respect thereto;
(c) split, combine, subdivide, reclassify or take similar
action with respect to any shares of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or declare, set aside for payment
or pay any dividend, or make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make any
payments to shareholders in their capacity as such, other than in a manner
consistent with prior business practices;
(d) except in connection with the execution of the
Employment Agreements, (i) increase in any manner the compensation or fringe
benefits of any of its directors or officers; (ii) increase in any manner the
compensation or fringe benefits of any employee (other than a director or
officer) other than merit increases in the ordinary course of business
consistent with past practice (including dates of review and effectiveness of
merit increases) that, in the aggregate, do not result in a material increase in
benefits or compensation expense to Melita and its Subsidiaries taken as a
whole; (iii) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any of the existing benefit,
severance, pension or employment plans, agreements or arrangements as in effect
on the date hereof to any such director, officer or employees, whether past or
present; (iv) enter into any new or amend any existing employment agreement with
any such director, officer or employee; (v) enter into any new or amend any
existing severance agreement with any such director, officer or employee; or
(vi) except as may be required to comply with applicable law, become obligated
under any new pension plan or arrangement, welfare plan or arrangement,
multi-employer plan or arrangement, employee benefit plan or arrangement,
severance plan or arrangement, benefit plan or arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, or amend any such
plan or arrangement in existence on the date hereof if such amendment would have
the effect of enhancing or accelerating any benefits thereunder;
(e) except in connection with the execution of the
Employment Agreements, enter into any contract or amend or modify any existing
contract, or engage in any new transaction outside the ordinary course of
business and not consistent with past practice or not on an arm's length basis,
with any Affiliate of Melita or any of its Subsidiaries;
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(f) adopt a plan of complete or partial liquidation, or
resolutions providing for or authorizing such liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Melita or any of its Subsidiaries (other than the Merger, and other than such
of the foregoing with respect to any subsidiary of Melita as do not change the
beneficial ownership interest of Melita in such Subsidiary);
(g) make any acquisition, by means of merger,
consolidation, purchase of a substantial equity interest in or a substantial
portion of the assets of, or otherwise, of (i) any business or corporation,
partnership, association or other business organization or division thereof or
(ii) except in the ordinary course and consistent with past practice, any other
assets;
(h) adopt or propose any amendments to its Articles of
Incorporation or By-laws, except as contemplated by this Agreement, or alter
through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Subsidiary not constituting
an inactive Subsidiary of Melita;
(i) other than borrowings under existing credit
facilities or other borrowings in the ordinary course (but in all cases only in
the aggregate at any time outstanding up to $100,000 of additional borrowings
after the date hereof), (x) incur any indebtedness for borrowed money or
guarantee any such indebtedness other than in the ordinary course of business
consistent with past practices or, except in the ordinary course consistent with
past practice, (y) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to Melita or any Wholly-Owned
Subsidiary of Melita) or (z) voluntarily purchase, cancel, prepay or otherwise
provide for a complete or partial discharge in advance of a scheduled repayment
date with respect to, or waive any right under, any indebtedness for borrowed
money other than in the ordinary course of business consistent with past
practice;
(j) make any change in the lines of business in which it
participates or is engaged;
(k) except in connection with the execution of the
Employment Agreements, enter into any agreement providing for acceleration of
payment or performance or other consequence as a result of a change of control
of Melita or its Subsidiaries;
(l) enter into any contract, arrangement or understanding
requiring the purchase of equipment, materials, supplies or services over a
period greater than 12 months and for the expenditure of greater than $300,000
per year which is not cancelable without penalty on 30 days' or less notice; or
(m) except to the extent required by applicable law, (x)
permit any material change in (A) pricing, marketing, purchasing, investment,
accounting, financial reporting, inventory, credit, allowance or tax practice or
policy or (B) any method or calculating any bad debt, contingency or other
reserve for accounting, financial reporting or tax purposes or (y) make any
material tax election or settle or compromise any material income tax liability
with any Governmental Body or regulatory authority;
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(n) other than dispositions of assets which are not,
individually or in the aggregate, material to Melita and its Subsidiaries taken
as a whole, sell, lease, grant any security interest in or otherwise dispose of
or encumber any of its assets or properties;
(o) take any action that would cause any representations
set forth in Article 5 not to be true in all material respects from and after
the date hereof until the Effective Time;
(p) fail to maintain in full force the insurance policies
in effect on the date hereof or change any self-insurance program in effect in
any material respect;
(q) in the event that a claim is made for damage, which
damage would have a Melita Material Adverse Effect during the period prior to
the Closing Date which is covered by such insurance, fail to promptly notify
eShare of the pendency of such a claim;
(r) do any act or omit to do any act, or permit any act
or omission to act, which will cause a breach of any Contract or commitment of
Melita or any of its Subsidiaries, except to the extent that such breach would
not have a Melita Material Adverse Effect;
(s) fail to duly comply with all Laws and Orders
applicable to it and its properties, operations, business and employees except
to the extent that such non-compliance would not have a Melita Material Adverse
Effect; or
(t) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any Contract to do any of
the foregoing.
6.3. No Solicitation; Transaction Moratorium.
(a) eShare shall not, nor shall it authorize or permit
any officer, director, employee, investment banker, financial advisor, attorney,
accountant or other agent or representative (each, a "Representative") retained
by or acting for or on behalf of it to, directly or indirectly, initiate,
solicit, encourage, participate in any negotiations regarding, furnish any
confidential information in connection with, endorse or otherwise cooperate
with, assist, participate in or facilitate the making of any proposal or offer
for, or which may reasonably be expected to lead to, an Acquisition Transaction
by any Person or group (a "Potential Acquiror"); provided, however, that (i)
eShare may furnish or cause to be furnished information concerning itself and
its businesses, properties or assets to a Potential Acquiror (provided that such
information is supplied on terms, including confidentiality terms, substantially
similar to those set forth in the existing confidentiality agreement between
eShare and Melita), (ii) eShare may engage in discussions or negotiations with a
Potential Acquiror, (iii) following receipt of a proposal or offer for an
Acquisition Transaction, eShare may take and disclose to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act or
otherwise make disclosure to its stockholders and (iv) following receipt of a
proposal or offer for an Acquisition Transaction, the Board of Directors of
eShare may withdraw or modify its recommendation to eShare 's stockholders
contemplated by Section 6.4 and thereby elect to terminate this Agreement
pursuant to Section 8.1(a), but in each case referred to in the foregoing
clauses (i) through (iv) only to the extent that the Board of Directors of
eShare shall conclude in good faith on the basis of
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advice from independent counsel that such action is necessary or appropriate in
order for such Board of Directors to act in a manner which is consistent with
its fiduciary obligations under applicable law. eShare will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition
Transaction, all of which such activities, discussions and negotiations which
have occurred since December 31, 1998 are set forth in section 6.3 of the eShare
Disclosure Schedule. As used in this Agreement, "Acquisition Transaction" means
any merger, consolidation or other business combination involving the relevant
party to this Agreement or any of its Significant Subsidiaries or any
acquisition in any manner of all or a substantial portion of the equity of, or
all or a substantial portion of the assets of, such party or any of its
Significant Subsidiaries, whether for cash, securities or any other
consideration or combination thereof other than pursuant to the transactions
contemplated by this Agreement.
(b) If at any time eShare or any Representative thereof
provides a Significant Response (as defined below) to any inquiry or
solicitation by a Potential Acquiror, eShare shall immediately deliver to Melita
a written notice advising it of the fact that such Significant Response has been
given. As a consequence of the delivery of such notice, all duties and
obligations of Melita hereunder shall be suspended during the Transaction
Moratorium Period. "Transaction Moratorium Period" means a period beginning on
the date of such notice and ending on the date of receipt by Melita of a written
notice signed by the Chief Executive Officer of eShare certifying that all
discussions and contacts between eShare and its Representatives, on the one
hand, and the Potential Acquiror to whom eShare had provided a Significant
Response and any Representatives or Affiliates thereof, on the other, have ended
and are not expected to resume. In the event that a Transaction Moratorium
Period continues for a period in excess of 30 days, Melita may, at any time
prior to its receipt of a notice terminating such Transaction Moratorium Period,
terminate this Agreement pursuant to Section 8.1(a). If eShare delivers a notice
of Significant Response, the Final Termination Date and each of the dates set
forth herein as relating to or affecting a date by which Melita is required to
perform duties and obligations hereunder shall in each case be extended on a
day-for-day basis for each day in any Transaction Moratorium Period.
"Significant Response" means any action by eShare or any of its Representatives
in response to an inquiry, solicitation or request for documents or other
information received by eShare or any of its Representatives from a Potential
Acquiror other than participation by eShare in a preliminary discussion or
discussions with such Potential Acquiror or any Representative thereof and shall
include, without limitation, (i) any action by eShare or any of its
Representatives to provide a Potential Acquiror information regarding eShare
other than publicly available information, (ii) any execution by eShare and a
Potential Acquiror of a confidentiality agreement relating to information about
eShare and (iii) any participation by eShare or any of its Representatives in
substantive discussions with a Potential Acquiror regarding the terms and
conditions of an Acquisition Transaction or regarding a term sheet or similar
document relating to an Acquisition Transaction.
6.4. Meetings of Shareholders.
(a) Subject to the fiduciary duties of eShare's Board of
Directors under applicable law as advised in writing by counsel (i) eShare will
take all action necessary in
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accordance with applicable law and its Certificate of Incorporation and Bylaws
to convene a meeting of its stockholders (the "eShare Stockholders' Meeting") as
promptly as practicable to consider and vote upon the approval of the Merger and
the other transactions contemplated hereby (the "eShare Stockholders' Approval")
and (ii) the Board of Directors of eShare shall recommend and declare advisable
such approval, and eShare shall take all lawful action to solicit, and use all
reasonable efforts to obtain, such approval. Melita agrees to cooperate in all
reasonable respects with eShare in eShare's efforts to obtain the eShare
Stockholders' Approval.
(b) Subject to the fiduciary duties of Melita's Board of
Directors under applicable law, as advised in writing by counsel (i) Melita will
take all action necessary in accordance with applicable law and its Articles of
Incorporation and Bylaws to convene a meeting of its shareholders (the "Melita
Shareholders' Meeting") as promptly as practicable to consider and vote upon the
approval of the Merger and the other transactions contemplated hereby (the
"Melita Shareholders' Approval") and (ii) the Board of Directors of Melita shall
recommend and declare advisable such approval and Melita shall take all lawful
action to solicit, and use all reasonable efforts to obtain, such approval.
eShare agrees to cooperate in all reasonable respects with Melita in Melita's
efforts to obtain Melita Shareholders' Approval.
6.5 Proxy Statement. Melita will, as promptly as practicable,
prepare and file with the SEC a proxy statement in connection with the vote of
Melita's shareholders with respect to the Merger (such proxy statement, together
with any amendments thereof or supplements thereto, in each case in the form or
forms mailed to Melita's shareholders, is herein called the "Proxy Statement").
Melita will use all reasonable efforts to have, or cause the Proxy Statement to
be, cleared for mailing and mailed to its shareholders as promptly as
practicable, and also will take any other action required to be taken under
federal or state securities laws in connection with the Melita Shareholders'
Meeting.
6.6. Reasonable Efforts. eShare and Melita shall and Melita shall
use all reasonable efforts to cause its Subsidiaries to: (i) promptly make all
filings and seek to obtain all Authorizations required under all applicable laws
with respect to the Merger and the other transactions contemplated hereby and
will cooperate with each other with respect thereto; (ii) use all reasonable
efforts to promptly take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate to satisfy
the conditions set forth in Article 7 and to consummate and make effective the
transactions contemplated by this Agreement on the terms and conditions set
forth herein as soon as practicable (including seeking to remove promptly any
injunction or other legal barrier that may prevent such consummation); and (iii)
not take any action (including, without limitation, effecting or agreeing to
effect or announcing an intention or proposal to effect, any acquisition,
business combination or other transaction) which might reasonably be expected to
impair the ability of the parties to consummate the Merger at the earliest
possible time (regardless of whether such action would otherwise be permitted or
not prohibited hereunder).
6.7. Access to Information. Upon reasonable notice, each of eShare
and Melita shall (and Melita shall cause its Subsidiaries to) afford to
officers, employees, counsel, accountants and other authorized representatives
of the other party (the "Respective Representatives") access,
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during normal business hours throughout the period prior to the Effective Time,
to its properties, books and records (including without limitation, the work
papers of independent accountants) and, during such period, shall (and Melita
shall cause each of its Subsidiaries to) furnish promptly to such Respective
Representatives all information concerning its business, properties and
personnel as may reasonably be requested, provided that no investigation
pursuant to this Section 6.7 shall affect or be deemed to modify any of the
respective representations or warranties made by Melita or eShare. Each of
eShare and Melita agrees that it will not, and will cause its Respective
Representatives not to, use any information obtained pursuant to this Section
6.7 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of law, each party
hereto will keep confidential, and will cause its Respective Representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.7 except as otherwise consented to by the other party; provided,
however, that neither Melita nor eShare shall be precluded from making any
disclosure which it deems required by law in connection with the transactions
contemplated by this Agreement. In the event any party is required to disclose
any information or documents pursuant to the immediately preceding sentence,
such party shall promptly give written notice of such disclosure that is
proposed to be made to the other party so that the parties can work together to
limit the disclosure to the greatest extent possible and, in the event that
either party is legally compelled to disclose any information, to seek a
protective order or other appropriate remedy or both. Upon any termination of
this Agreement, each of eShare and Melita will collect and deliver to the other
party all documents obtained pursuant to this Section 6.7 or otherwise for such
party or its Respective Representatives by it or any of its Respective
Representatives then in their possession and any copies thereof. All requests
for access to eShare or Melita and their respective Subsidiaries pursuant to
this Section 6.7 shall be made through their Respective Representatives named in
the Melita Disclosure Schedule or the eShare Disclosure Schedule, as the case
may be.
6.8. Supplements or Amendments.
(a) If at any time prior to the Melita Shareholders'
Meeting any event with respect to eShare or any of its officers and directors
should occur which is required to be described in an amendment of, or a
supplement to, the Proxy Statement, eShare shall notify Melita thereof by
reference to this Section 6.8(a) and such event shall be so described, and such
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the shareholders of Melita and such amendment or supplement
shall comply with all provisions of applicable law. If at any time prior to the
Effective Time, eShare or any of its officers or directors becomes aware of any
fact or condition which would cause any material statement in the Proxy
Statement regarding eShare to have been untrue or would cause the Proxy
Statement to omit to state a material fact required to have been stated therein
or necessary in order to make the statements therein regarding eShare, in light
of the circumstances under which they were made, not misleading, eShare shall
promptly notify Melita in writing of such fact or condition.
(b) If at any time prior to the Melita Shareholders'
Meeting any event with respect to Melita or any of its Subsidiaries or their
respective officers or directors should occur
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which is required to be described in an amendment of, or a supplement to, the
Proxy Statement, Melita shall notify eShare thereof by reference to this Section
6.8(b) and such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the shareholders of Melita and such amendment or supplement shall comply with
all provisions of applicable law. If at any time prior to the Effective Time,
Melita or any of its Subsidiaries or any of their respective officers or
directors becomes aware of any fact or condition which would cause any material
statement regarding Melita in the Proxy Statement to have been untrue or would
cause the Proxy Statement to omit to state a material fact required to have been
stated therein or necessary in order to make the statements therein regarding
Melita, in light of the circumstances under which they were made, not
misleading, Melita shall promptly notify eShare in writing of such fact or
condition.
6.9. Registration and Listing of Share Consideration.
(a) Melita will cause to be registered, under the
applicable provisions of the Securities Act, the offer and sale of certain
portions of the Merger Consideration pursuant to the terms of the Registration
Rights Agreement.
(b) Melita will use its best efforts to cause the Merger
Consideration to be listed on NASDAQ.
6.10. Affiliates of Melita and eShare. Contemporaneously with the
execution and delivery of this Agreement, each Affiliate of eShare or Melita,
including for these purposes any Person who may be deemed to be an "affiliate"
of eShare or Melita for purposes of Rule 145 under the Securities Act or the
Commission's Codification of Financial Reporting Policies, has executed and
delivered to Melita a written agreement, in the form attached hereto as Exhibit
G, providing, inter alia, that such person will not offer to sell, transfer or
otherwise dispose of any of the shares of Melita Common Stock issued to such
person pursuant to the Merger, except (i) in accordance with the applicable
provisions of the Securities Act and the rules and regulations thereunder, (ii)
until such time as financial results covering at least thirty days of combined
operations of eShare and Melita have been published within the meaning of
Section 201.01 of the Commission's Codification of Financial Reporting Policies;
provided, however, that each Affiliate shall be permitted to make sales to the
extent permitted by applicable accounting rules and regulations promulgated by
the Commission. Melita shall be entitled to place legends on any certificates of
Melita Common Stock issued to such Affiliates to restrict transfer of such
shares as set forth above and to make "stop transfer" notations on the share
records of Melita with respect to such shares. Such written agreements shall
also bind each such Affiliate to vote all of the Shares and the shares of Melita
Common Stock held by or under the voting control of such Affiliate in favor of
approval of the Merger at the eShare Shareholders Meeting and the Melita
Stockholders Meeting, as appropriate.
6.12. Consents. eShare and Melita shall use their respective best
efforts, without payment of any consideration to the persons or entities from
whom or which consents or agreements are required, to obtain at the earliest
practicable date, all consents and agreements of third parties necessary for the
performance by eShare and Melita of their respective obligations
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under this Agreement or any agreement referred to herein or contemplated hereby
or to the consummation of the transactions contemplated hereby or thereby except
for those consents and agreements which, if not obtained, would not have an
eShare Material Adverse Effect or a Melita Material Adverse Effect. No
consideration, whether such consideration shall consist of the payment of money
or shall take any other form, for any such consent or agreement necessary to the
consummation of the transactions contemplated hereby shall be given or promised
by either of eShare or Melita or any of Melita's Subsidiaries without the prior
written approval of the other party.
6.13. Filings and Authorizations. eShare and Melita shall, as
promptly as practicable following the execution and delivery of this Agreement,
file or supply, or cause to be filed or supplied, all notifications, reports and
other information required to be filed or supplied pursuant to the HSR Act in
connection with the transactions contemplated by this Agreement. In addition to
and not in limitation of the foregoing, each of the parties will (x) take
promptly all actions necessary to make the filings required of Melita and eShare
or their affiliates under the HSR Act, (y) comply at the earliest practicable
date with any request for additional information received by such party or its
affiliates from the Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division") pursuant to the
HSR Act, and (z) cooperate with the other party in connection with such party's
filings under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the Merger or the other matters contemplated by this
Agreement commenced by either the FTC or the Antitrust Division or state
attorneys general. Each of eShare and Melita will proceed diligently and in good
faith and will use all commercially reasonable efforts to do, or cause to be
done, all things necessary, proper or advisable to, as promptly as practicable,
(i) make, or cause to be made, all such other filings and submissions, as may be
required to consummate the Merger and the other transactions contemplated hereby
in accordance with the terms of this Agreement, (ii) obtain, or cause to be
obtained, all authorizations, approvals, consents and waivers from all persons
and governmental authorities necessary to be obtained in order to consummate
such transfer and such transactions and (iii) take, or cause to be taken, all
other actions necessary, proper or advisable in order to fulfill their
respective obligations hereunder.
6.14. Further Assurances; Notice of Breach; Cure. At any time and
from time to time after the Closing, the parties agree to use their best efforts
to cooperate with each other, to execute and deliver such other documents,
instruments of transfer or assignment (which documents and instruments must be
in form reasonably satisfactory to each party executing the same) and do all
such further acts and things as may reasonably be required to carry out the
transactions contemplated hereunder. Each party shall promptly notify the other
party in writing of any information delivered to or obtained by such party which
would prevent the satisfaction of any condition set forth in Article 7 or
consummation of the transactions contemplated by this Agreement, or would
indicate a breach of the representations or warranties of any of the parties to
this Agreement. After giving or receiving notice that any representation,
warranty or covenant set forth herein has been breached or that any condition
set forth in Article 7 cannot be satisfied, the affected party shall have 15
days to cure same or to demonstrate to the other party's reasonable satisfaction
that such breach or condition both is curable and will be cured prior to the
estimated Effective Time. If such party fails to cure or demonstrate such
ability to cure such
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breach or satisfy such condition, the other party shall have the right to waive
the breach or failure of condition unless the nature of such breach or failure
of condition renders closing under this Agreement impossible. If such breach or
failure of condition is not waived, this Agreement may be terminated in
accordance with Section 8.1.
6.15. Cooperation on Litigation. Melita and eShare agree to furnish
or cause to be furnished to each other, upon reasonable request, as promptly as
practicable, such information (including access to books and records) and
assistance as is reasonably necessary for the preparation for or the prosecution
or defense of any suit, action, litigation or arbitration or other proceeding or
investigation against Melita or eShare, respectively, arising from this
Agreement or the transactions contemplated hereby. The party requesting such
information and assistance shall reimburse the other party for all reasonable
out-of-pocket costs and expenses incurred by such party in providing such
information and in rendering such assistance.
ARTICLE 7
CONDITIONS TO CLOSING
7.1. Conditions to Obligations of the Parties. The respective
obligations of each party to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to the Closing Date, of each of
the following conditions, unless waived in writing by the party being benefited
thereby, to the extent permitted by applicable law.
(a) eShare Stockholders' Approval. eShare shall have
obtained the eShare Stockholders' Approval from the requisite holders of the
Shares in accordance with applicable law and the Certificate of Incorporation
and Bylaws of eShare.
(b) Melita Shareholders' Approval. Melita shall have
obtained the Melita Shareholders' Approval from the requisite holders of shares
of the Melita Common Stock in accordance with applicable law and the Articles of
Incorporation and Bylaws of Melita.
(c) Government Consents. All (i) Authorizations specified
in the eShare Disclosure Schedule and the Melita Disclosure Schedule and (ii)
other Authorizations required in connection with the execution and delivery of
this Agreement and the performance of the obligations hereunder shall have been
made or obtained in each case without limitation or restriction unacceptable to
Melita and eShare in their reasonable judgment, except, in the case of
Authorizations referred to in clause (ii) above, where the failure to have
obtained such Authorizations could not reasonably be expected (so far as can be
foreseen at the time) to have a Melita Material Adverse Effect or an eShare
Material Adverse Effect, as the case may be.
(d) No Suits nor Injunctions. There shall be no suits,
actions, inquiry, investigations nor proceedings, nor shall there be in effect
any Order or injunction of any court or Governmental Body of competent
jurisdiction, restraining, enjoining or otherwise preventing consummation of the
transactions contemplated by this Agreement or permitting such
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consummation only subject to any condition or restriction unacceptable to Melita
and eShare in their reasonable judgment.
(e) Proxy Statement. The Proxy Statement shall have been
approved for distribution to Melita's shareholders at the time that it is mailed
to Melita shareholders, and no order suspending such approval shall have been
issued, no action, suit, proceeding or investigation by the SEC to suspend such
approval shall have been initiated and be continuing, and all necessary
approvals under state securities laws or the Securities Act or Exchange Act
relating to the issuance of the Melita Common Stock shall have been received.
(f) Tax Opinion. Melita and eShare shall have received
the written opinion of Morris, Manning & Martin, L.L.P., in form and substance
satisfactory to them, to the effect that the Merger, if consummated according to
this Agreement, will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, and that the federal income tax
consequences to eShare's shareholders will be consistent with such type of
reorganization.
7.2. Conditions to Obligations of Melita. The obligations of Melita
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or part by Melita to the
extent permitted by applicable law:
(a) Representations and Warranties True. Each of the
representations and warranties made by eShare in this Agreement shall be true
and correct in all material respects as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, and eShare shall have delivered to Melita a certificate, dated the
Closing Date and executed on behalf of eShare by its Chairman of the Board,
President or any Executive or Senior Vice President, to such effect.
(b) Performance. eShare shall have performed or complied
in all material respects with all agreements and conditions contained herein
required to be performed or complied with by it prior to or at the time of the
Closing.
(c) Compliance Certificate. eShare shall have delivered
to Melita a certificate, dated the Closing Date, signed by the Chairman of the
Board or Chief Executive Officer of eShare, certifying as to the fulfillment of
the precedent conditions specified herein.
(d) Opinion of Counsel for eShare. Melita shall have
received from Morrison & Foerster L.L.P., or other counsel for eShare
satisfactory to Melita, an opinion dated the Closing Date in substantially the
form set forth in Exhibit E hereto.
(e) Proceedings. All corporate proceedings taken by
eShare in connection with the transactions contemplated hereby and all documents
incident thereto shall reasonably be satisfactory in all respects to Melita and
Melita's counsel, and Melita and Melita's counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
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(f) Escrow Agreement. eShare shall have executed and
delivered to Melita the Escrow Agreement in the form of Exhibit D hereto.
(g) Third Party Consents. All required authorizations,
consents or approvals of any third party (other than a Governmental Body), the
failure to obtain which could have an eShare Material Adverse Effect, shall have
been obtained.
(h) Fairness Opinion. Melita shall have received a
written opinion of Broadview International LLC, or another investment banking
firm, dated the date of the Proxy Statement, to the effect that the financial
terms of the Merger are fair from a financial point of view to Melita and its
shareholders.
(i) Pooling Letter. Melita shall have received from
Arthur Andersen LLP, independent certified public accountants, regarding the
availability of "pooling of interests" accounting treatment for the Merger.
(j) Employment Agreements. Each of James Tito and Bradley
Birnbaum shall have executed their respective Employment Agreement in the form
of Exhibit B-1 and B-2 hereto, respectively, in each case with such additions,
deletions and changes as Melita and eShare have agreed.
7.3. Conditions to Obligations of eShare. The obligations of eShare
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or in part by eShare to
the extent permitted by applicable law.
(a) Representations and Warranties True. Each of the
representations and warranties made by Melita in this Agreement shall be true
and correct in all material respects as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date and Melita shall have delivered to eShare a certificate, dated the
Closing Date and executed on behalf of Melita by its Chairman of the Board,
Chief Executive Officer, or any Executive or Senior Vice President, to such
effect.
(b) Performance. Melita shall have performed or complied
in all material respects with all agreements and conditions contained herein
required to be performed or complied with by it prior to or at the time of the
Closing.
(c) Compliance Certificate. Melita shall have delivered
to eShare a certificate, dated the date of the Closing, signed by the Chairman
of the Board, President, or any Executive or Senior Vice President of Melita,
certifying as to the fulfillment of the precedent conditions specified herein.
(d) Opinion of Counsel for Melita. eShare shall have
received from Morris, Manning & Martin, LLP, or other counsel for Melita
satisfactory to eShare, an opinion dated the Closing Date in substantially the
form set forth in Exhibit F hereto.
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(e) Proceedings. All corporate proceedings taken by
Melita in connection with the transactions contemplated hereby and all documents
incident thereto shall reasonably be satisfactory in all respects to eShare and
eShare's counsel, and eShare and eShare's counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
(f) Third Party Consents. All required authorizations,
consents or approvals of any third party (other than a Governmental Body), the
failure to obtain which could have a Melita Material Adverse Effect, shall have
been obtained.
(g) Registration Rights Agreement. Melita shall have
executed and delivered to the Stockholders the Registration Rights Agreement in
the form of Exhibit C hereto.
(h) Listing of Melita Shares on NASDAQ. The shares of the
Melita Common Stock required to be issued hereunder shall have been approved for
listing on NASDAQ, subject only to official notice of issuance.
ARTICLE 8
TERMINATION AND ABANDONMENT;
BREAK-UP FEE AND EXPENSE REIMBURSEMENT
8.1. Termination Rights. This Agreement may be terminated by Melita
or eShare at any time after the Final Termination Date unless the Closing has
occurred on or prior to such date, unless the failure of such occurrence shall
be due to a failure of the party seeking to terminate this Agreement to perform
or observe its agreements and conditions set forth herein required to be
performed or observed by such party at or before the Closing. This Agreement may
be terminated at an earlier time upon the mutual written consent of the parties.
In addition, either party may terminate this Agreement prior to the Final
Termination Date by delivery of written notice to such effect to the other party
(a) in accordance with termination rights specifically provided elsewhere in
this Agreement, (b) in the event that any condition precedent to the closing of
the Merger has not been or cannot be satisfied within the time periods
(including any grace or cure periods) and in the manner provided herein, and (c)
in the event that a party breaches in some material respect a representation,
warranty or covenant contained herein and such party fails to cure or
demonstrate an ability to cure such breach within the time period provided in
Section 6.14.
8.2. Termination Expenses and Liability.
(a) General Provision. Except to the extent a party is
entitled pursuant to the provisions of subsection (b) below to receive any
termination payment, or unless a party commits a breach of any representation,
warranty or covenant contained herein, upon a termination of this Agreement by
either party, each party shall bear its own costs and expenses and neither party
shall have any liability to the other in connection with or following any valid
termination of this Agreement. Upon a breach of any representation, warranty or
covenant made by a party herein,
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such party shall have such liability for breach of contract and shall pay such
damages as may be determined by a court of law or equity.
(b) Termination Fee - Melita. In the event that eShare directly or
indirectly, through any officer, employee, director, representative, parent,
affiliate, broker, advisor or agent (i) seeks, solicits, initiates or encourages
the submission of any inquiry, proposal or offer from any corporation, or any
lender, partnership, person or other entity or group relating to any acquisition
or purchase of the assets of eShare, or exchange offer, merger, reverse merger,
consolidation, business combination, recapitalization, spin-off, liquidation,
dissolution, or similar transaction involving, directly or indirectly, eShare
(each an "Acquisition Proposal"); or (ii) participates or cooperates in or
considers or pursues any discussions or negotiations regarding any Acquisition
Proposal or furnishes to any person or entity information concerning eShare for
any Acquisition Proposal; specifically, except to the extent that the fiduciary
duties of the officers and directors of eShare require them to take any of the
foregoing actions in response to an unsolicited offer; or (iii) files an Form
S-1 registration statement with the Securities and Exchange Commission, eShare
shall be obligated to reimburse Melita for all reasonable out-of-pocket costs
and expenses incurred in connection with this transaction up to a maximum of
$100,000. In addition, in the event that a definitive agreement is executed
within nine months of the taking of any such action described in the foregoing
sentence, and eShare executes a definitive agreement with a party other than
Melita providing for the sale of eShare to such party, eShare shall be obligated
to pay to Melita a fee of $3,750,000 upon the closing of such transaction.
Should eShare execute such a definitive agreement for the sale of eShare to EIS
International, Inc. or Lycos, Inc. within nine months of the taking of any such
action described in the foregoing sentence, eShare shall be obligated to pay to
Melita a fee of $3,750,000 in addition to the fee in the sentence above upon the
closing of such transaction.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties.
(a) All representations and warranties made or undertaken
by the parties in this Agreement or the Other Agreements (i) are material, have
been relied upon by the other parties hereto, shall survive the Closing
hereunder, and shall not merge in the performance of any obligation by any party
hereto, and (ii) shall terminate and expire on the first anniversary of the
Closing Date. For purposes of this Agreement, "Claims Period" shall mean the
period commencing immediately following the Closing and ending on the first
anniversary of the Closing Date.
(b) Each of Melita and eShare acknowledges and agrees
that no due diligence or other investigation of such party by the other or its
representatives will diminish or obviate any of the representations, warranties,
covenants or agreements made or to be performed by such
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party pursuant to this Agreement or the Other Agreements or the other's right to
fully rely upon such representations, warranties, covenants and agreements.
Section 9.2 Indemnification by eShare.
(a) Subject to the other provisions of this Agreement,
eShare shall indemnify and hold harmless Melita and, if applicable, its
subsidiaries and affiliates, each of their respective officers, directors,
employees, agents and representatives, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Melita
Indemnified Parties"), from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines and other
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, reasonable
attorneys' fees and expenses) arising out of or relating to:
(i) any breach of the representations,
warranties, covenants or agreements made by
eShare in the Agreement which survive
Closing pursuant to their terms or Section
9.1 of the Agreement;
(ii) any breach of the representations,
warranties, covenants or agreements made by
eShare or any affiliate in any certificate,
agreement, exhibit or schedule (the "eShare
Ancillary Documents") delivered by eShare
pursuant to this Agreement, which
representation, warranty, covenant or
agreement survives Closing pursuant to their
terms or Section 9.1 of this Agreement;
(iii) any fraud, willful misconduct, bad faith or
intentional breach of any representation,
warranty, covenant or agreement made by
eShare in any eShare Ancillary Document.
The claims, liabilities, obligations, losses, costs, expenses,
penalties, fines, judgments and damages of the Melita Indemnified Parties
described in this Section 9.2(a) as to which the Melita Indemnified Parties are
entitled to indemnification are referred to as "Melita Losses" in this
Agreement.
(b) No Melita Indemnified Party is entitled to make any
claim for indemnification under this Agreement after the Claims Period;
provided, however, that if prior to the close of business on the last day of the
Claims Period eShare has been notified of a claim for indemnity under this
Agreement and such claim has not been finally resolved or disposed of at such
date, the basis for such claim shall continue to survive with respect to such
claim and shall remain a basis for indemnity under this Agreement with respect
to such claim until such claim is finally resolved or disposed of in accordance
with the terms of this Agreement; provided, further, however, that the Melita
Indemnified Party and eShare shall be obligated under this Agreement to exercise
reasonable efforts to resolve any such claim as quickly as is reasonably
practicable.
(c) Indemnification Procedure.
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(i) Promptly after receipt by a Melita
Indemnified Party of notice by a third party
of any complaint or the commencement of any
action or proceeding with respect to which
indemnification is being sought under this
Agreement, such Melita Indemnified Party
shall notify eShare of such complaint or of
the commencement of such action or
proceeding; provided, however, that failure
to so notify eShare shall not relieve eShare
from liability for such claims except and
only to the extent that such failure to
notify eShare results in the forfeiture of,
or otherwise prejudices the Shareholder's
ability to establish, rights and defenses
otherwise available to eShare with respect
to such claim. eShare shall have the right,
upon written notice to the Melita
Indemnified Party, to assume the defense of
such action or proceeding, including the
employment of counsel reasonably
satisfactory to the Melita Indemnified Party
and the payment of the fees and
disbursements of such counsel as incurred.
If eShare does not elect to assume control
of the defense of any such claims, eShare
shall be bound by the results otherwise
obtained with respect to such claim. In the
event, however, that eShare declines or
fails to assume the defense of the action or
proceeding or to employ counsel reasonably
satisfactory to such Melita Indemnified
Party, in either case in a timely manner,
then such Melita Indemnified Party may
employ counsel to represent or defend it in
any such action or proceeding and eShare
shall pay the reasonable fees and
disbursements of such counsel upon receipt
of an invoice; provided, however, that
eShare shall not be required to pay the fees
and disbursements of more than one counsel
for all Melita Indemnified Parties in any
jurisdiction in any single action or
proceeding. In any action or proceeding with
respect to which indemnification is being
sought under this Agreement, the Melita
Indemnified Parties or eShare, whichever is
not assuming the defense of such action,
shall have the right to participate in such
litigation and to retain its own counsel at
such party's own expense. The Melita
Indemnified Parties or eShare, as the case
may be, shall at all times use reasonable
efforts to keep eShare or the Melita
Indemnified Parties, as the case may be,
reasonably apprised of the status of the
defense of any claim the defense of which
they are maintaining, and to cooperate in
good faith with each other with respect to
the defense of any such action.
(ii) No Melita Indemnified Party may settle or
compromise any claim or consent to the entry
of any judgment with respect to which
indemnification is being sought from eShare
under this Agreement without the prior
written consent of eShare, unless such
settlement, compromise or consent includes
an unconditional release of eShare and its
affiliates from all liability arising out of
such claim and
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does not contain any equitable order,
judgment or term which affects, restrains or
interferes with the business of eShare or
any of its affiliates. eShare shall not,
without the prior written consent of Melita,
settle or compromise any claim or consent to
the entry of any judgment with respect to
which indemnification is being sought under
this Agreement unless such settlement,
compromise or consent includes an
unconditional release of the Melita
Indemnified Parties from all liability
arising out of such claim and does not
contain any equitable order, judgment or
term which in any manner affects, restrains
or interferes with the business of Melita,
any of the Melita Indemnified Parties or any
of their respective affiliates.
(iii) In the event that a Melita Indemnified Party
does claim a right to payment pursuant to
this Agreement, such Melita Indemnified
Party shall send written notice of such
claim to eShare. Such notice shall specify
the basis for such claim. As promptly as
possible after the Melita Indemnified Party
has given such notice, such Melita
Indemnified Party and eShare shall establish
the merits and amount of such claim (by
mutual agreement, litigation, arbitration,
mediation or otherwise) and, within five
business days of the final determination of
the merits and amount of such claim, eShare
shall deliver to the Melita Indemnified
Party an amount of cash in immediately
available funds in either case in an amount
sufficient to satisfy and discharge in full
such claim as so determined.
Section 9.3 Indemnification by Melita.
(a) Subject to the other provisions of this Agreement,
Melita shall indemnify and hold harmless eShare and each of their heirs,
executors, successors and assigns (collectively, the "eShare Indemnified
Parties"), from, against and in respect of any and all claims, liabilities,
obligations, losses, costs, expenses, penalties, fines and other judgments (at
equity or at law) and damages whenever arising or incurred (including, without
limitation, amounts paid in settlement, costs of investigation and reasonable
attorneys' fees and expenses) arising out of or relating to:
(i) any breach of the representations,
warranties, covenants or agreements made by
Melita in this Agreement which survives
Closing pursuant to its terms or Section 9.1
of this Agreement;
(ii) any breach of the representations,
warranties, covenants or agreements made by
Melita in any certificate, agreement,
exhibit or schedule (the "Melita Ancillary
Documents") delivered by Melita pursuant to
this Agreement, which representation,
warranty,
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covenant or agreement survives Closing
pursuant to its terms or Section 9.1 of this
Agreement;
(iii) any fraud, willful misconduct, bad faith or
intentional breach of any representation,
warranty, covenant or agreement made by
Melita in any Melita Ancillary Document.
The claims, liabilities, obligations, losses, costs, expenses,
penalties, fines, judgments and damages of eShare Indemnified Parties described
in this Section 9.3(a) as to which eShare Indemnified Parties are entitled to
indemnification are referred to as "eShare Losses" in this Agreement.
(b) No eShare Indemnified Party is entitled to make any
claim for indemnification under this Agreement after the appropriate Claims
Period; provided, however, that if prior to the close of business on the last
day of the Claims Period, Melita has been notified of a claim for indemnity
under this Agreement and such claim has not been finally resolved or disposed of
at such date, the basis for such claim shall continue to survive with respect to
such claim and shall remain a basis for indemnity under this Agreement with
respect to such claim until such claim is finally resolved or disposed of in
accordance with the terms of this Agreement; provided, further, however, that
eShare Indemnified Party and Melita shall be obligated under this Agreement to
exercise reasonable efforts to resolve any such claim as quickly as is
reasonably practicable.
(c) Indemnification Procedure.
(i) Promptly after receipt by an eShare
Indemnified Party of notice by a third party
of any complaint or the commencement of any
action or proceeding with respect to which
indemnification is being sought under this
Agreement, such eShare Indemnified Party
shall notify Melita of such complaint or of
the commencement of such action or
proceeding; provided, however, that failure
to so notify Melita does not relieve Melita
from liability for such claim except and
only to the extent that such failure to
notify Melita results in the forfeiture of,
or otherwise prejudices Melita's or any of
its affiliates ability to establish rights
and defenses otherwise available to Melita
or any of its affiliates with respect to
such claim. Melita will have the right, upon
written notice to the eShare Indemnified
Party, to assume the defense of such action
or proceeding, including the employment of
counsel reasonably satisfactory to the
eShare Indemnified Party and the payment of
the reasonable fees and disbursements of
such counsel as incurred. If Melita does not
elect to assume control of the defense of
any such claims, Melita shall be bound by
the results otherwise obtained with respect
to such claim. In the event, however, that
Melita declines or fails to assume the
defense of the action or proceeding or to
employ
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counsel reasonably satisfactory to such
eShare Indemnified Party, in either case in
a timely manner, then such eShare
Indemnified Party may employ counsel to
represent or defend it in any such action or
proceeding and Melita shall pay the
reasonable fees and disbursements of such
counsel as incurred; provided, however, that
Melita is not required to pay the fees and
disbursements of more than one counsel for
all eShare Indemnified Parties in any
jurisdiction in any single action or
proceeding. In any action or proceeding with
respect to which indemnification is being
sought under this Agreement, the eShare
Indemnified Parties or Melita, whichever is
not assuming the defense of such action,
shall have the right to participate in such
litigation and to retain its own counsel at
such party's own expense. The eShare
Indemnified Parties or Melita, as the case
may be, shall at all times use reasonable
efforts to keep Melita or the eShare
Indemnified Parties, as the case may be,
reasonably apprised of the status of the
defense of any claim the defense of which
they are maintaining and to cooperate in
good faith with each other with respect to
the defense of any such action.
(ii) No eShare Indemnified Party may settle or
compromise any claim or consent to the entry
of any judgment with respect to which
indemnification is being sought from Melita
under this Agreement without the prior
written consent of Melita, unless such
settlement, compromise or consent includes
an unconditional release of Melita and its
affiliates from all liability arising out of
such claim and does not contain any
equitable order, judgment or term which in
any manner affects, restrains or interferes
with the business of Melita, or any of its
affiliates. Melita shall not, without the
prior written consent of each of eShare,
settle or compromise any claim or consent to
the entry of any judgment with respect to
which indemnification is being sought under
this Agreement unless such settlement,
compromise or consent includes an
unconditional release of the eShare
Indemnified Parties from all liability
arising out of such claim and does not
contain any equitable order, judgment or
term which in any material manner affects,
restrains or interferes with the business of
eShare, any of the eShare Indemnified
Parties or any of their respective
affiliates.
(iii) In the event that a eShare Indemnified Party
does claim a right to payment pursuant to
this Agreement, such eShare Indemnified
Party shall send written notice of such
claim to Melita. Such notice shall specify
the basis for such claim. As promptly as
possible after such eShare Indemnified Party
has given such notice, eShare and Melita
shall establish the merits and amount of
such
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<PAGE> 67
claim (by mutual agreement, litigation,
arbitration, mediation or otherwise) and,
within five business days of the final
determination of the merits and amount of
such claim, Melita shall deliver an amount
of cash in immediately available funds to
such eShare Indemnified Party as appropriate
to satisfy and discharge such claim as so
determined.
Section 9.4 Liability Limits; Waiver of Consequential Damages.
(a) eShare shall only be liable for Melita Losses arising
under this Agreement after such Melita Losses exceed, in the aggregate, $250,000
(the "eShare Basket Amount"), but shall be responsible for all Melita Losses
when the eShare Basket Amount is exceeded.
(b) Melita shall only be liable for eShare Losses arising
under this Agreement only after such eShare Losses exceed, in the aggregate,
$250,000 (the "Melita Basket Amount"), but shall be responsible for all eShare
Losses when the Melita Basket Amount is exceeded.
(c) eShare's indemnification obligations under this
Agreement shall not exceed in the aggregate an amount equal to the Merger
Consideration (the "eShare Cap Amount").
(d) Melita's indemnification obligations under this
Agreement shall not exceed in the aggregate an amount equal to the Merger
Consideration (the "Melita Cap Amount").
(e) Once Melita Losses exceed the eShare Basket Amount or
eShare Losses exceed the Melita Basket Amount, as the case may be, a breach for
which a party is entitled to seek indemnification hereunder shall be deemed to
occur upon the initial Melita Loss or series of related Melita Losses or eShare
Loss or series of related eShare Losses.
(f) Notwithstanding anything to the contrary elsewhere in
this Agreement, no party (or its Affiliates) shall, in any event, be liable to
any other party (or its Affiliates) for any consequential damages, including,
but not limited to, loss of revenue or income, or loss of business reputation or
opportunity relating to the breach or alleged breach of this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1. Expenses. Except as otherwise provided in Section 8.2 and in
this Section, each party shall bear its own expenses, including the fees and
expenses of any attorneys, accountants, investment bankers, brokers, finders or
other intermediaries or other Persons engaged by it, incurred connection with
this Agreement and the transactions contemplated hereby. eShare shall pay all
legal, accounting and investment banking fees incurred by eShare in connection
with this proposed transaction and all legal and accounting expenses related to
the proposed initial public offering of eShare prior to the execution of this
Agreement.
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<PAGE> 68
10.2. Non-Solicitation. Melita and eShare agree that, without the
other's prior written consent, each will not, for a period of one year from the
date of this Agreement, directly or indirectly, (i) solicit the employment of
any key employee, officer or senior manager of the other party or (ii) hire any
key employee, officer or senior manager employed by the other party or any
former key employee, officer or senior manager whose employment with the other
party has ceased within 90 days of such solicitation or hire, provided that this
sentence shall not prohibit advertisements, solicitations, position listings or
notices of employment opportunities that are published or made available to
members of the public or hiring of personnel responding thereto.
10.3. Public Disclosure. Except as may be required to comply with
the requirements of applicable law, or otherwise to comply with the terms and
conditions of this Agreement, in which case prior notice thereof shall, to the
extent practicable, be given to the other party hereto, and reasonable efforts
to obtain such party approval shall be made, the parties hereto agree that no
press release or similar public announcement or communication will be made or
caused to be made concerning the execution or performance of this Agreement
without the prior approval of the other party.
10.4. Governing Law; Consent to Jurisdiction. This Agreement shall
be deemed to be made in and in all respects shall be interpreted, construed and
governed by and in accordance with the laws of the State of Georgia (without
regard to principles of conflicts of law) applicable to agreements made and to
be entirely performed within such state. eShare and Melita irrevocably agree
that any legal action or proceeding arising out of or in connection with this
Agreement, or the transactions contemplated hereby, shall be brought in the
United States District Court for the Northern District of Georgia. Any and all
service of process and any other notice in any such action, suit or proceeding
shall be effective against any party if given personally or by registered or
certified mail, return receipt requested, or by any other means of mail that
requires signed receipt, postage prepaid, mailed to such party as herein
provided.
10.5. Notices. Any notices or other communications required under
this Agreement shall be in writing, shall be deemed to have been given and
received when delivered in person, or addressed
(a) if to Melita to:
Melita International Corporation
5051 Peachtree Corners Circle
Norcross, Georgia 30092-2500
Attn: Chairman of the Board and Chief Executive Officer
Tel: 770-239-4000
Fax: 770-239-4511
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<PAGE> 69
with a copy to:
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
Attn: John F. "Sandy" Smith, Esq.
Tel: 404-504-7651
Fax: 404-365-9532
(b) if to eShare to:
eShare Technologies, Inc.
51 Mall Drive
Commack, NY 11725
Attn: Chairman of the Board and Chief Executive Officer
Phone: (516) 864-4700
Fax: (516) 864-0833
with a copy to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0050
Attn: Michael J. W. Rennock, Esq.
Phone: (212) 468-8000
Fax: (212) 468-7900
and:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0050
Attn: Mark L. Mandel, Esq.
Phone: (212) 468-8000
Fax: (212) 468-7900
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties to this Agreement in the manner herein
provided.
10.6. Headings; Singular/Plural. Article, section and paragraph
headings contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement. Where the
context so requires or permits, the use of singular form includes the plural,
and the use of the plural form includes the singular.
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<PAGE> 70
10.7. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same instrument.
10.8. Assignment. This Agreement may not be assigned by a party
hereto without the prior written consent of the other hereto. This Agreement
shall be binding upon and inure to the benefit of successors and assigns of the
parties hereto.
10.9. Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
fullest extent possible. In any event, all other provisions of this Agreement
shall be deemed valid and enforceable to the fullest extent permitted.
10.10. Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
at any time, but only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
10.11. No Third Party Beneficiaries. Except as provided in Section
6.9, nothing in this Agreement shall convey any rights or remedies upon any
person or entity that is not a party to this Agreement or a permitted assignee
of a party to this Agreement.
10.12. Entire Agreement. This Agreement and the Exhibits and the
Disclosure Schedules hereto and any collateral agreements executed in connection
with the consummation of the transactions contemplated herein, constitute the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior written or oral understandings,
agreements or undertakings with respect thereto.
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
MELITA INTERNATIONAL CORPORATION
Attest:
By: /s/ Anna M. Phillips By: /s/ Aleksander Szlam
------------------------------------ -------------------------------
Anna M. Phillips Aleksander Szlam
Chairman of the Board and
Chief Executive Officer
MICA CORPORATION I
Attest:
By: /s/ Anna M. Phillips By: /s/ Aleksander Szlam
------------------------------------ -------------------------------
Anna M. Phillips Aleksander Szlam
Chairman of the Board and
Chief Executive Officer
ESHARE TECHNOLOGIES, INC.
Attest:
By: /s/ Gregory Riedel By: /s/ James P. Tito
------------------------------------ -------------------------------
Gregory Riedel James P. Tito
Chief Financial Officer Chairman of the Board and
Chief Executive Officer
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<PAGE> 1
EXHIBIT 2.2
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO.1 TO AGREEMENT AND PLAN OF MERGER (this "Amendment")
is made and entered into as of September 1, 1999, by and between Melita
International Corporation, a Georgia corporation ("Melita"), MICA Corporation I,
a Delaware corporation and wholly-owned subsidiary of Melita ("MICA"), and
eShare Technologies, Inc., a Delaware corporation ("eShare).
W I T N E S S E T H:
WHEREAS, Melita, MICA and eShare have entered into that certain
Agreement and Plan of Merger dated as of June 14, 1999 (the "Merger Agreement")
providing for the merger of MICA with and into eShare (the "Merger") upon the
terms and subject to the conditions set forth therein; and
WHEREAS, Melita, MICA and eShare have reinstated and reaffirmed that
the Merger Agreement is in full force and effect;
WHEREAS, Melita, MICA and eShare desire to adjust certain of the terms
of the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to, and on the terms and conditions
herein set forth, the parties hereto agree as follows:
1. Conversion Ratio. Section 3.1(a) of the Merger Agreement is
amended by deleting it in its entirety and substituting therefor the following:
"(a) eShare Common Stock. Each Share other than shares of
eShare Common Stock held in treasury or by Melita, MICA or any other
Subsidiary of Melita other than in a fiduciary capacity shall be
converted into a right to receive 0.461654905 shares of Melita Common
Stock."
2. Treatment of Shares Underlying Forfeited Options. Section 3.4
of the Merger Agreement is amended by adding the following sentence at the end
thereof:
"Should the holders of unvested options terminate their employment for
any reason and thereby forfeit such options, the shares of Melita
Common Stock which would have been purchasable upon the exercise of
such options shall be allocated to the former stockholders of eShare
pro rata and issued to them."
3. Registration Rights Agreement. Exhibit C to the Merger
Agreement is amended by deleting it in its entirety and substituting therefor
the document attached hereto as Attachment 1.
<PAGE> 2
4. Waiver. eShare hereby waives, effective as of the Closing, the
right to assert any claim for breach of the terms of the Merger Agreement based
upon any purported Melita Material Adverse Effect related to Melita's condition
(financial or otherwise), assets, liabilities, working capital, reserves,
earnings, business or prospects as a result of Melita's failure to meet analysts
expectations with respect to its financial performance during the quarter ended
June 30, 1999.
5. Fairness Opinion. This Amendment shall be conditioned upon the
receipt by Melita of a written opinion of Broadview International LLC, or
another investment banking firm, dated as of the date hereof, to the effect that
the financial terms of the Merger, as amended hereby, are fair from a financial
point of view to Melita and its shareholders.
6. Closing. The parties will make every effort to close the
Merger as soon as is practicable following execution of this Amendment and in
any event by September 10, 1999.
7. Indemnification. Subject to the terms and conditions of the
Merger Agreement, each of the directors and shareholders of eShare shall be
deemed to be an eShare Indemnified Party for purposes of Article 9 of the Merger
Agreement with respect to any claim relating to the subject matter of Chancery
No. 161645, Circuit Court of Fairfax County, Virginia brought by the Complainant
therein against such person.
8. Miscellaneous. Capitalized terms not defined herein shall have
the meanings given to such terms in the Merger Agreement. Except as expressly
modified hereby, the Merger Agreement and the other agreements entered into
thereunder or contemplated thereby shall continue in full force and effect. This
Agreement shall be deemed to be made in and in all respects shall be
interpreted, construed and governed by and in accordance with the laws of the
State of Georgia (without regard to principles of conflicts of law) applicable
to agreements made and to be entirely performed within such state.
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<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
MELITA INTERNATIONAL CORPORATION
Attest:
By: /s/ Anna M. Phillips By: /s/ Aleksander Szlam
------------------------------ -----------------------------
Anna M. Phillips Aleksander Szlam
Chairman of the Board and
Chief Executive Officer
MICA CORPORATION I
Attest:
By: /s/ Anna M. Phillips By: /s/ Aleksander Szlam
------------------------------ -----------------------------
Anna M. Phillips Aleksander Szlam
Chairman of the Board and
Chief Executive Officer
ESHARE TECHNOLOGIES, INC.
Attest:
By: /s/ Gregory Riedel By: /s/ James P. Tito
------------------------------ -----------------------------
Gregory Riedel James P. Tito
Chief Financial Officer Chairman of the Board and
Chief Executive Officer
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<PAGE> 1
EXHIBIT 2.3
CERTIFICATE OF MERGER
OF
MICA CORPORATION I
AND
ESHARE TECHNOLOGIES, INC.
It is hereby certified that:
1. The constituent business corporations participating in the
merger herein certified are:
(i) MICA CORPORATION I, which is incorporated under the
laws of the State of Delaware; and
(ii) ESHARE TECHNOLOGIES, INC., which is incorporated
under the laws of the State of Delaware.
2. An Agreement of Merger has been approved, adopted, certified,
executed, and acknowledged by each of the aforesaid constituent corporations in
accordance with the provisions of Section 251 of the General Corporation Law of
the State of Delaware, to wit, by MICA Corporation I in accordance with the laws
of the State of Delaware and by eShare Technologies, Inc. in the same manner as
is provided in Section 251 of the General Corporation Law of the State of
Delaware.
3. The name of the surviving corporation in the merger herein
certified is ESHARE TECHNOLOGIES, INC., which will continue its existence as
said surviving corporation under its present name upon the effective date of
said merger pursuant to the provisions of the General Corporation Law of the
State of Delaware.
4. The Certificate of Incorporation of eShare Technologies, Inc.,
as now in force and effect, shall continue to be the Certificate of
Incorporation of said surviving corporation until amended and changed pursuant
to the provisions of the General Corporation Law of the State of Delaware.
5. The executed Agreement of Merger between the aforesaid
constituent corporations is on file at the principal place of business of the
aforesaid surviving corporation, the address of which is as follows:
<PAGE> 2
6. A copy of the aforesaid Agreement of Merger will be furnished
by the aforesaid surviving corporation, on request, and without cost, to any
stockholder of each of the aforesaid constituent corporations.
Dated: September 1, 1999.
ESHARE TECHNOLOGIES, INC.
By: /s/ James P. Tito
--------------------------------
James P. Tito
Its: Chief Executive Officer
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<PAGE> 1
EXHIBIT 99.1
MELITA INTERNATIONAL COMPLETES ACQUISITION OF ESHARE TECHNOLOGIES
COMBINED ENTITY CREATES `FIRST OF ITS KIND' WEB AND TELEPHONY-BASED
COLLABORATIVE CUSTOMER CONTACT MANAGEMENT SOLUTIONS
ATLANTA, Sept. 1 /PRNewswire/ -- Melita International (Nasdaq: MELI), a leading
provider of interactive customer contact management solutions, announced today
that it has completed its acquisition of eShare Technologies, a leading provider
of real-time customer service and interactive communication solutions for
e-commerce and online communities. Under the terms of the agreement, Melita will
exchange 6.05 million shares of its common stock for all outstanding shares of
eShare Technologies.
The transaction brings together two leaders in the customer contact center
communication and Internet-based customer interaction marketplaces, creating one
company that will provide Internet and telephony-based collaborative,
multi-media customer contact solutions.
"This acquisition will change the face of Melita International forever," said
Aleksander Szlam, chairman and CEO of Melita International. "As the new Melita,
we will redefine how e-commerce is supported and perceived by consumers and the
industry. By infusing eShare's innovations into Melita's customer contact
management solutions, we will transform the customer contact business model and
the e-commerce marketplace."
eShare Technologies achieved industry-wide recognition as the pre-eminent expert
in people-to-people interactions on the Internet, supplying application software
and services to businesses, consumers and community sites for more than 1,000
customers worldwide. These innovative technologies include Internet-based
software for business-to-business, business-to-consumer and consumer-to-consumer
markets to facilitate e-commerce. As a result of the acquisition, eShare
Technologies is now a business division of Melita International, and its
president and chief executive officer, James Tito, will continue to oversee
eShare operations and will be a member of Melita's executive team.
"Melita is an extremely well respected and recognized pioneer in the call center
marketplace," said Tito. "By joining forces, eShare also recognized that the
acquisition will create a new organization that raises the bar on how customer
contacts and relationships are managed. The new Melita will offer real-time,
comprehensive customer collaboration and communication solutions to address both
business and consumer needs, utilizing a multitude of multi-media applications."
"eShare Technologies is the perfect complement to Melita," Szlam added. "In
order to provide our 1600 plus customers with a leading-edge, customer- focused
solution, both companies recognized that a co-marketing/alliance agreement was
not enough. This validates Melita's strategy that only by acquiring a company
with complementary applications and a shared vision, would we be able to extend
our leadership position into the new generation of collaborative customer
contact management."
<PAGE> 2
A recent Forrester Research report indicates that worldwide e-commerce
transactions are projected to grow from $32 billion in 1998 to over $400 billion
by 2002, creating a market of nearly $4 billion for Internet commerce software
applications. In addition to Melita's core market, the combined entity will
address this rapidly growing market segment.
About Melita International
Melita International is the leading total-solution provider of integrated
customer interaction and intelligent contact management applications that enable
businesses to automate their contact center activities, enhance telephone and
Internet-based customer commerce and provide a superior level of Customer
Care(R). Consumers also benefit from Melita's intelligent contact blending
capabilities because on-hold times can be dramatically reduced or eliminated.
Melita's more than 600 customer sites in 30 countries on six continents include
leading organizations in the financial services, retail, media, communications
and service bureau industries. In 1999, Investors Business Daily recognized
Melita as having one of the best earnings increases in the United States, and
Forbes ASAP named Melita #38 in its "Dynamic 100" listing. Melita
International's Web address is www.melita.com.
This press release contains forward-looking statements relating to product
integration, functionality and benefits, revenue from operations, marketing
strategies and product development processes. Such statements are made based on
management's belief as well as assumptions made by, and information currently
available to, management, pursuant to the 'safe-harbor' provisions of the
Private Securities Litigation Reform Act of 1995. While these statements reflect
our best current judgment, they are subject to risks and uncertainties that
could cause a change in focus and direction. A discussion of certain risk
factors that may cause actual results to differ from these forward-looking
statements can be found in Melita's Form 10-K for the period ended December 31,
1998, on file with the SEC.
