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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Terayon Communication Systems, Inc.,
a Delaware corporation
True Acquisition, Inc.,
a Delaware corporation;
and
TrueChat, Inc.,
a company organized under the laws of the State of Colorado
_______________________________
Dated as of December 20, 2000
_______________________________
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SECTION 1. DESCRIPTION OF TRANSACTION................................................... 1
1.1 Merger of Merger Sub into the Company........................................... 1
1.2 Effect of the Merger............................................................ 1
1.3 Closing; Effective Time......................................................... 1
1.4 Articles of Incorporation and Bylaws; Directors and Officers.................... 2
1.5 Conversion of Shares............................................................ 2
1.6 Indemnification Escrow.......................................................... 3
1.7 Employee Stock Options.......................................................... 3
1.8 Closing of the Company's Transfer Books......................................... 5
1.9 Exchange of Certificates........................................................ 5
1.10 Appraisal Rights................................................................ 6
1.11 Tax Consequences................................................................ 6
1.12 Accounting Treatment............................................................ 7
1.13 Further Action.................................................................. 7
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................ 7
2.1 Due Organization; No Subsidiaries; Etc........................................... 7
2.2 Articles of Incorporation and Bylaws; Records.................................... 8
2.3 Capitalization, Etc.............................................................. 8
2.4 Financial Statements............................................................. 9
2.5 Absence of Changes............................................................... 9
2.6 Title to Assets.................................................................. 11
2.7 Bank Accounts; Receivables....................................................... 12
2.8 Equipment; Leasehold............................................................. 12
2.9 Proprietary Assets............................................................... 12
2.10 Contracts........................................................................ 14
2.11 Liabilities...................................................................... 16
2.12 Compliance with Legal Requirements............................................... 16
2.13 Governmental Authorizations...................................................... 16
2.14 Tax Matters...................................................................... 16
2.15 Employee and Labor Matters; Benefit Plans........................................ 18
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2.16 Environmental Matters........................................................... 20
2.17 Insurance....................................................................... 21
2.18 Related Party Transactions...................................................... 21
2.19 Legal Proceedings; Orders....................................................... 21
2.20 Authority; Binding Nature of Agreement.......................................... 22
2.21 Non-Contravention; Consents..................................................... 22
2.22 Financial Advisor............................................................... 23
2.23 Full Disclosure................................................................. 23
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................... 23
3.1 SEC Filings; Financial Statements............................................... 23
3.2 Authority; Binding Nature of Agreement.......................................... 24
3.3 Valid Issuance.................................................................. 24
3.4 Due Organization................................................................ 24
3.5 No Knowledge of Claims for Indemnification...................................... 25
3.6 Full Disclosure................................................................. 25
SECTION 4. CERTAIN COVENANTS OF THE COMPANY............................................ 25
4.1 Access and Investigation........................................................ 25
4.2 Operation of the Company's Business............................................. 25
4.3 Notification; Updates to Disclosure Schedule.................................... 27
4.4 No Negotiation.................................................................. 28
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES......................................... 28
5.1 Filings and Consents............................................................ 28
5.2 Information Statement; Company Shareholder Approval............................. 29
5.4 Disclosures, Public Announcements............................................... 29
5.5 Best Efforts.................................................................... 30
5.6 Tax Matters..................................................................... 30
5.7 Termination of Agreement........................................................ 30
5.8 FIRPTA Matters.................................................................. 30
5.9 Termination of Employee Plans................................................... 30
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5.10 Filing of Form S-8.............................................................. 31
5.11 Continuing Indemnity............................................................ 31
5.12 Stock Transfer Instructions..................................................... 31
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB................ 31
6.1 Accuracy of Representations..................................................... 31
6.2 Performance of Covenants........................................................ 32
6.3 Shareholder Approval............................................................ 32
6.4 Consents........................................................................ 32
6.5 Agreements and Documents........................................................ 32
6.6 FIRPTA Compliance............................................................... 33
6.7 No Restraints................................................................... 33
6.8 No Legal Proceedings............................................................ 33
6.9 Termination of Employee Plans................................................... 33
6.10 Shareholder Approval of Parachute Payments...................................... 33
6.11 Conversion of Preferred and Non-Voting Stock and Convertible Promissory Notes... 33
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.......................... 33
7.1 Accuracy of Representations..................................................... 33
7.2 Performance of Covenants........................................................ 34
7.3 No Restraints................................................................... 34
7.4 Shareholder Approval............................................................ 34
7.5 Agreements and Documents........................................................ 34
7.6 No Legal Proceedings............................................................ 34
7.7 Market Condition................................................................ 34
7.8 Financial Condition............................................................. 34
7.9 Payment of Outstanding Promissory Notes......................................... 35
SECTION 8. TERMINATION.................................................................. 35
8.1 Termination Events.............................................................. 35
8.2 Termination Procedures.......................................................... 35
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8.3 Effect of Termination........................................................... 35
SECTION 9. INDEMNIFICATION, ETC.......................................................... 36
9.1 Survival of Representations, Etc................................................ 36
9.2 Indemnification................................................................. 36
9.3 Threshold; Ceiling.............................................................. 37
9.4 Administration of Claims........................................................ 37
9.5 Defense of Third-Party Claims................................................... 37
9.6 Exercise of Remedies by Indemnitees Other Than Parent........................... 38
9.7 Indemnification for the Registration of Parent Common Stock..................... 38
SECTION 10. MISCELLANEOUS PROVISIONS...................................................... 39
10.1 Company Shareholders' Agent..................................................... 39
10.2 Further Assurances.............................................................. 40
10.3 Fees and Expenses............................................................... 40
10.4 Attorneys' Fees................................................................. 40
10.5 Notices......................................................................... 40
10.6 Legal Representation............................................................ 41
10.7 Time of the Essence............................................................. 41
10.8 Headings........................................................................ 41
10.9 Counterparts.................................................................... 41
10.10 Governing Law................................................................... 41
10.11 Successors and Assigns.......................................................... 41
10.12 Remedies Cumulative; Specific Performance....................................... 42
10.13 Waiver.......................................................................... 42
10.14 Amendments...................................................................... 42
10.15 Severability.................................................................... 42
10.16 Parties in Interest............................................................. 42
10.17 Entire Agreement................................................................ 42
10.18 Construction.................................................................... 43
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EXHIBITS
Exhibit A - Certain Definitions
Exhibit B - Form of Amended and Restated Articles of Incorporation of
Surviving Corporation
Exhibit C - Directors and Officers of Surviving Corporation
Exhibit D - Form of Indemnification Escrow Agreement
Exhibit E - Form of legal opinion of Perkins Coie LLP
Exhibit F - Form of legal opinion of Cooley Godward llp
Exhibit G - Form of Retention Escrow Agreement
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (the "Agreement") is
made and entered into as of December 20, 2000 (the "Execution Date"), by and
among: Terayon Communication Systems, Inc., a Delaware corporation ("Parent");
True Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"); and TrueChat, Inc., a company organized under the laws of
the State of Colorado (the "Company"). Certain other capitalized terms used in
this Agreement are defined in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company in accordance with this Agreement, the Delaware General
Corporation Law and the Colorado Business Corporation Act (the "Merger"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "purchase."
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company.
Agreement
The parties to this Agreement agree as follows:
SECTION 1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law and the Colorado Business Corporation Act.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward llp, One Maritime Plaza, 20/th/ Floor, San Francisco,
California 94111 at 10:00 a.m. on a date to be designated by Parent (the
"Closing Date"), which shall be no later than the fifth business day after which
the last condition set forth in Sections 6 and 7 has been fulfilled or waived.
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed
1.
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certificate of merger conforming to the requirements of the Delaware General
Corporation Law and the Colorado Business Corporation Act shall be filed with
the Secretary of State of the State of Delaware and the Secretary of State of
the State of Colorado, respectively. The Merger shall become effective at the
time such certificate of merger is filed with the Secretary of State of the
State of Delaware and the Secretary of State of the State of Colorado (the
"Effective Time").
1.4 Articles of Incorporation and Bylaws; Directors and Officers. Unless
otherwise determined by Parent and the Company prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 Conversion of Shares.
(a) Subject to Sections 1.9(c) and 1.10, at the Effective Time, by
virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any shareholder of the Company (the "Company
Shareholders"), or any holders of options to purchase shares of the Company (the
"Company Option Holders"):
(i) each share of the Class B Common stock (no par value) of the
Company ("Company Common Stock") outstanding immediately prior to the Effective
Time (other than Appraisal Shares (as defined in Section 1.10(c)) shall be
converted into the right to receive the "Applicable Fraction" (as defined in
Section 1.5(b)(i)) of a share of the common stock (par value $0.001 per share)
of Parent ("Parent Common Stock"); and
(ii) each share of the common stock (no par value) of Merger Sub
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock of the Surviving Corporation.
(b) For purposes of this Agreement:
(i) The "Applicable Fraction" shall be the fraction: (A) having
a numerator equal to the Aggregate Merger Amount (as defined in Section
1.5(b)(v)); and (B) having a denominator equal to the amount determined by
multiplying the Designated Parent Stock Price (as defined in Section 1.5(b)(iv)
by the Adjusted Fully Diluted Company Share Amount (as defined in Section
1.5(b)(iii)).
(ii) The "TrueChat Fully Diluted Shares" shall mean the aggregate
number of shares of Company Common Stock and the number of shares of Company
Common Stock issuable under Company Options.
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(iii) The "Adjusted Fully Diluted Company Share Amount" shall be
the sum of (A) the aggregate number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (including any such shares
that are subject to a repurchase option or risk of forfeiture under any
restricted stock purchase agreement or other agreement), and (B) the aggregate
number of shares of Company Common Stock purchasable under or otherwise subject
to all Company Options (as defined in Section 1.7(a)) outstanding immediately
prior to the Effective Time (including all shares of Company Common Stock that
may ultimately be purchased under Company Options that are unvested or are
otherwise not then exercisable).
(iv) The "Designated Parent Stock Price" shall be $16.00.
(v) The "Aggregate Merger Amount" shall be $10,790,072.04.
(c) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends.
1.6 Indemnification Escrow. At the Effective Time, a number of shares of
Parent Common Stock equivalent to 10% of the number resulting from the division
of the Aggregate Merger Amount by the Designated Parent Stock Price (such shares
being the "Indemnification Escrow Shares") shall be deposited into escrow
pursuant to an Escrow Agreement in the form of Exhibit D (the "Indemnification
Escrow Agreement"). The Indemnification Escrow Shares so deposited shall be
referred to herein as the "Indemnification Escrow Fund." At or immediately
following the Effective Time, the Indemnification Escrow Shares shall be
deducted by Parent from: (1) each Company Shareholder's proportionate share of
the shares of Parent Common Stock issuable in the Merger (excluding, however,
any shares of Parent Common Stock issuable in the Merger to CableLabs, Inc.);
and (2) each Company Option Holder's proportionate share of Parent Common Stock
subject to Company Options in accordance with Schedule 1.6 attached hereto. The
Indemnification Escrow Shares will be paid out to the extent and upon the terms
set forth in the Indemnification Escrow Agreement.
1.7 Employee Stock Options.
(a) At the Effective Time, each stock option that is then outstanding
under the Company's 2000 Equity Incentive Plan, whether vested or unvested (a
"Company Option"), shall be assumed by Parent in accordance with the terms (as
in effect as of the date of this Agreement) of the Company's 2000 Equity
Incentive Plan and the stock option agreement by which such Company Option is
evidenced. All rights with respect to Company Common Stock underlying
outstanding Company Options shall thereupon be converted into rights with
respect to Parent Common Stock.
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(b) From and after the Effective Time:
(i) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock;
(ii) the number of shares of Parent Common Stock subject to each
such assumed Company Option shall be equal to the number of shares of Company
Common Stock that were subject to such Company Option immediately prior to the
Effective Time multiplied by the Applicable Fraction, rounded down to the
nearest whole number of shares of Parent Common Stock;
(iii) the per share exercise price ("Parent Exercise Price") for
the Parent Common Stock issuable upon exercise of each such assumed Company
Option shall be determined by dividing the exercise price per share of Company
Common Stock subject to such Company Option, as in effect immediately prior to
the Effective Time, by the Applicable Fraction, and rounding the resulting
exercise price up to the nearest whole cent; and
(iv) all restrictions on the exercise of each such assumed
Company Option shall continue in full force and effect, and the term,
exercisability, vesting schedule and other provisions of such Company Option
shall otherwise remain unchanged; provided, however, that each such assumed
Company Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction effected by Parent after
the Effective Time.
(c) The Company and Parent shall take all action that may be
necessary (under the Company's 2000 Equity Incentive Plan and otherwise) to
effectuate the provisions of this Section 1.7.
(d) Within two business days of the Closing, Parent will send to each
holder of an assumed Company Option a written notice setting forth (i) the
number of shares of Parent Common Stock subject to such assumed Company Option
and (ii) the exercise price per share of Parent Common Stock issuable upon
exercise of such assumed Company Option. The notice will also reflect the number
of shares awarded to each holder of an assumed Company Option pursuant to
Section 1.7(e).
(e) All vested Company Options may be exercised on a cashless basis,
at the option of the holder of a Company Option. Any Company Options exercised
on a cashless basis shall be exchanged for the number of shares of Parent Common
Stock determined by subtracting from the number of Option Conversion Shares the
number of Exercise Shares. For the purposes of this Agreement, "Option
Conversion Shares" shall be equal to the number of Company Options being
exercised multiplied by the Applicable Fraction (as defined in Section
1.5(b)(i)). "Exercise Shares" shall be equal to the fraction having a numerator
equal to the aggregate of the Parent Exercise Price (as defined in Section
1.7(b)(iii)) due for the Company Options being exercised and a denominator equal
to the Fair Market Value of the Parent Common Stock. The "Fair Market Value" of
the Parent Common Stock for any Company Options exercised at Closing shall be
the Designated Parent Stock Price. Thereafter, the Fair Market Value of the
Parent Common Stock shall be, as of any date, the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on the Nasdaq
National Market (or the exchange
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or market with the greatest volume of trading in the Parent Common Stock) on the
day of determination (or the last market trading day prior to the day of
determination, if the day of determination is not a market trading day), as
reported in The Wall Street Journal or such other source as the Board of
Directors of Parent, in good faith, deems reliable. Prior to Closing, the
Company will provide Parent with a schedule setting forth any holders of Company
Options that agree to exercise their vested Company Options at Closing and their
chosen method of exercise.
1.8 Closing of the Company's Transfer Books. At the Effective Time,
holders of certificates representing shares of the Company's capital stock
("Company Stock") that were outstanding immediately prior to the Effective Time
shall cease to have any rights as shareholders of the Company, and the stock
transfer books of the Company shall be closed with respect to all shares of such
Company Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of the Company's capital stock shall be made on such
stock transfer books after the Effective Time. If, after the Effective Time, a
valid certificate previously representing any of such shares of Company Stock is
presented to the Surviving Corporation or Parent, such certificate shall be
canceled and shall be exchanged as provided in Section 1.9.
1.9 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time, the
Company will deliver to Parent a certified shareholder list of the Company
verifying that each holder of capital stock owns the number of shares of capital
stock set forth opposite his, her or its name on such certified shareholder
list. At or as soon as practicable after the Effective Time, Parent will send to
the holders of the Company Stock (i) a letter of transmittal in customary form
and containing such provisions as Parent may reasonably specify, (ii)
instructions for use in effecting the surrender of Company Stock, if applicable,
in exchange for certificates representing Parent Common Stock and (iii)
instructions for use in effecting the receipt of certificates representing
Parent Common Stock. Upon surrender of Company Stock to Parent for exchange, if
applicable, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by Parent, the holder of such Company
Stock shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock that such holder
has the right to receive pursuant to the provisions of this Section 1, and the
Company Stock so surrendered shall be canceled.
(b) No dividends or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock with respect to the shares of
Parent Common Stock represented thereby, and no cash payment in lieu of any
fractional share shall be paid to any such holder, until such holder surrenders
such Company Stock in accordance with this Section 1.9 (at which time such
holder shall be entitled to receive all such dividends and distributions and
such cash payment).
(c) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any holder of Company Stock
who would otherwise be entitled to receive a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of
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Parent Common Stock issuable to such holder) shall, upon surrender of such
holder's Company Stock, be paid in cash the dollar amount (rounded to the
nearest whole cent), without interest, determined by multiplying such fraction
by the Designated Parent Stock Price.
(d) Parent and the Surviving Corporation shall be entitled to deduct
and withhold from any consideration payable or otherwise deliverable to any
holder or former holder of Company Stock pursuant to this Agreement such amounts
as Parent or the Surviving Corporation may be required to deduct or withhold
therefrom under the Code or under any provision of state, local or foreign tax
law. To the extent such amounts are so deducted or withheld, such amounts shall
be treated for all purposes under this Agreement as having been paid to the
Person to whom such amounts would otherwise have been paid.
(e) Neither Parent nor the Surviving Corporation shall be liable to
any holder Company Stock for any shares of Parent Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, delivered to any
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.10 Appraisal Rights.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of the Company (the "Company Shares")
that constitute Appraisal Shares (as defined in Section 1.10(c)) shall not be
converted into or represent the right to receive Parent Common Stock in
accordance with Section 1.5, and each holder of Appraisal Shares shall be
entitled only to such rights with respect to such Appraisal Shares as may be
granted to such holder in Section 7-113-101 et seq. of the Colorado Business
Corporation Act. From and after the Effective Time, a holder of Appraisal Shares
shall not have and shall not be entitled to exercise any of the voting rights or
other rights of a stockholder of Parent. If any holder of Appraisal Shares shall
fail to perfect or shall otherwise lose such holder's right of appraisal under
Section 7-113-201 et seq. of the Colorado Business Corporation Act, then (i) any
right of such holder to require Parent to purchase the Appraisal Shares for cash
shall be extinguished, and (ii) such Appraisal Shares shall automatically be
converted into and shall represent only the right to receive (upon the surrender
of the certificate or certificates representing such Appraisal Shares) Parent
Common Stock in accordance with Section 1.5.
(b) The Company (i) shall give Parent written notice of any demand by
any shareholder of the Company for appraisal of such shareholder's Company
Shares pursuant to the Colorado Business Corporation Act, and (ii) shall give
Parent the opportunity to participate in all negotiations and proceedings with
respect to any such demand.
(c) For purposes of this Agreement, "Appraisal Shares" shall refer to
any Company Shares outstanding immediately prior to the Effective Time that are
held by shareholders who are entitled to demand and who properly demand
appraisal of such Company Shares pursuant to, and who comply with the applicable
provisions of, Section 7-113-101 et seq. of the Colorado Business Corporation
Act.
1.11 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this
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Agreement hereby adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
1.12 Accounting Treatment. For accounting purposes, the Merger is intended
to be treated as a "purchase."
1.13 Further Action. If, at any time after the Effective Time, any further
action is reasonably determined by Parent to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
Parent with full right, title and possession of and to all rights and property
of Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
SECTION 2. Representations and Warranties of the Company
The Company represents and warrants, to and for the benefit of the
Indemnitees, as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado and has all necessary
power and authority: (i) to conduct its business in the manner in which its
business is currently being conducted; (ii) to own and use its assets in the
manner in which its assets are currently owned and used; and (iii) to perform
its obligations under all Company Contracts.
(b) Except as set forth in Part 2.1 of the Disclosure Schedule, the
Company has not conducted any business under or otherwise used, for any purpose
or in any jurisdiction, any fictitious name, assumed name, trade name or other
name, other than the name "TrueChat, Inc."
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1 of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and is not reasonably likely to have a
Material Adverse Effect on the Company. The Company is in good standing as a
foreign corporation in each of the jurisdictions identified in Part 2.1 of the
Disclosure Schedule.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i) the
names of the members of the Company's board of directors, (ii) the names of the
members of each committee of the Company's board of directors, and (iii) the
names and titles of the Company's officers.
(e) The Company does not own any controlling interest in any Entity
and, except for the equity interests identified in Part 2.1 of the Disclosure
Schedule, the Company has never owned, beneficially or otherwise, any shares or
other securities of, or any direct or indirect equity interest in, any Entity.
The Company has not agreed and is not obligated to make any future investment in
or capital contribution to any Entity. The Company has not guaranteed and
7.
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is not responsible or liable for any obligation of any of the Entities in which
it owns or has owned any equity interest.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's articles
of incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) except as set forth in Part 2.2 of the
Disclosure Schedule, the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the shareholders of the Company, the board of directors of the
Company and all committees of the board of directors of the Company, except
where the failure to do so has not had and is not reasonably likely to have a
Material Adverse Effect on the Company. There have been no formal meetings or
other proceedings of the shareholders of the Company, the board of directors of
the Company or any committee of the board of directors of the Company that are
not accurately reflected in such minutes or other records, except where the
failure to do so has not had and is not reasonably likely to have a Material
Adverse Effect on the Company. There has not been any violation of any of the
provisions of the Company's articles of incorporation or bylaws, and the Company
has not taken any action that is inconsistent in any material respect with any
resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors, except where the
failure to do so has not had and is not reasonably likely to have a Material
Adverse Effect on the Company. The books of account, stock records, minute books
and other records of the Company are accurate, up-to-date and complete in all
material respects, and have been maintained in accordance with prudent business
practices, except where the failure to do so has not had and is not reasonably
likely to have a Material Adverse Effect on the Company.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i)
5,000,000 shares of Class A Preferred stock (no par value), of which 4,790,110
shares have been issued and are outstanding as of the date of this Agreement;
(ii) 12,500,000 shares of Class B Common stock (no par value) ("Company Common
Stock") of which 4,154,000 shares have been issued and are outstanding as of the
date of this Agreement; and (iii) 108,000 shares of Class C Non-voting stock (no
par value) of which 108,000 shares have been issued and are outstanding as of
the date of this Agreement. Each outstanding share of Class A Preferred stock is
convertible into one share of Company Common Stock. Each outstanding share of
Class C Non-voting stock is convertible into one share of Company Common Stock.
All of the outstanding shares of Company Common Stock, Class A Preferred stock
and Class C Non-voting stock have been duly authorized and validly issued, and
are fully paid and non-assessable. Part 2.3 of the Disclosure Schedule provides
an accurate and complete description of the allocation of all outstanding
capital stock of the Company and of the terms of each repurchase option which is
held by the Company and to which any of such shares is subject.
(b) The Company has reserved 4,320,000 shares of Company Common Stock
for issuance under its 2000 Equity Incentive Plan, of which options to purchase
3,298,000 shares are outstanding as of the date of this Agreement. Part 2.3 of
the Disclosure Schedule accurately sets forth, with respect to each Company
Option that is outstanding as of the date of this Agreement: (i) the name of the
holder of such Company Option; (ii) the total number of shares of
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Company Common Stock that are subject to such Company Option and the number of
shares of Company Common Stock with respect to which such Company Option is
immediately exercisable; (iii) the date on which such Company Option was granted
and the term of such Company Option; (iv) the vesting schedule for such Company
Option; (v) the exercise price per share of Company Common Stock purchasable
underlying such Company Option; and (vi) whether such Company Option has been
designated an "incentive stock option" as defined in Section 422 of the Code.
Except as set forth in Part 2.3 of the Disclosure Schedule, there is no: (i)
outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of the Company; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of the Company; (iii) Contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities; or (iv) to the knowledge of the Company,
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of the
Company.
(c) All outstanding shares of Company Common Stock, Class A Preferred
stock and Class C Non-voting stock and all outstanding Company Options, have
been issued and granted in compliance with (i) all applicable securities laws
and other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts, except where the failure to do so has not had and is not
reasonably likely to have a Material Adverse Effect on the Company.
(d) Except as set forth in Part 2.3 of the Disclosure Schedule, the
Company has never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities of the Company. All securities so reacquired
by the Company were reacquired in compliance with (i) the applicable provisions
of the Colorado Business Corporation Act and all other applicable Legal
Requirements, and (ii) all requirements set forth in applicable restricted stock
purchase agreements and other applicable Contracts, except where the failure to
do so has not had and is not reasonably likely to have a Material Adverse Effect
on the Company.
2.4 Financial Statements.
(a) Except as set forth in Part 2.4 of the Disclosure Schedule, the
Company has delivered to Parent the unaudited balance sheets of the Company as
of September 30, 2000, 1999 and 1998, and the related unaudited income
statements, statements of stockholders' equity and statements of cash flows of
the Company for the years then ended, together with the notes thereto
(collectively, the "Company Financial Statements").
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Company as of
the respective dates thereof and the results of operations of the Company for
the periods covered thereby, except where the failure to do so has not had and
is not reasonably likely to have a Material Adverse Effect on the Company.
Except as set forth in Part 2.4 of the Disclosure Schedule, the Company
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered.
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2.5 Absence of Changes. Except as set forth in Part 2.5 of the Disclosure
Schedule or it has not had and is not reasonably likely to have a Material
Adverse Effect on the Company, since September 30, 2000:
(a) there has not been any material adverse change in the Company's
business, condition, assets, liabilities, operations, financial performance or
prospects, and, to the knowledge of the Company, no event has occurred that
will, or could reasonably be expected to, have a Material Adverse Effect on the
Company;
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the Company's assets (whether
or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Company has not sold, issued or authorized the issuance of
(i) any capital stock or other security (except for Company Common Stock issued
upon the exercise of outstanding Company Options), (ii) any option or right to
acquire any capital stock or any other security (except for Company Options
described in Part 2.3 of the Disclosure Schedule), or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;
(e) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of its 2000
Equity Incentive Plan, (ii) any provision of any agreement evidencing any
outstanding Company Option, or (iii) any restricted stock purchase agreement;
(f) there has been no amendment to the Company's articles of
incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(g) the Company has not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(h) the Company has not made any capital expenditure which, when
added to all other capital expenditures made on behalf of the Company since
September 30, 2000, exceeds $25,000;
(i) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract that is or would
constitute a Material Contract (as defined in Section 2.10(a)), or (ii) amended
or prematurely terminated, or waived any material right or remedy under, any
such Contract;
(j) the Company has not (i) acquired, leased or licensed any right or
other asset from any other Person, (ii) sold or otherwise disposed of, or leased
or licensed, any right or other asset to any other Person, or (iii) waived or
relinquished any right;
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(k) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(l) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(m) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business), or (ii) incurred or guaranteed any indebtedness for borrowed money;
(n) the Company has not (i) established or adopted any Plan (as
defined in Section 2.15), (ii) paid any bonus or made any profit-sharing or
similar payment to, or increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hired any new employee;
(o) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(p) the Company has not made any Tax election;
(q) the Company has not commenced or settled any Legal Proceeding;
(r) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(s) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(r)" above.
2.6 Title to Assets.
(a) The Company owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts 2.1,
2.7(b) and 2.9 of the Disclosure Schedule and all of the Company's rights under
the Contracts identified in Part 2.10 of the Disclosure Schedule; and (iii) all
other assets reflected in the Company's books and records as being owned by the
Company. Except as set forth in Part 2.6 of the Disclosure Schedule, all of said
assets are owned by the Company free and clear of any liens or other
Encumbrances, except for (x) any lien for current taxes not yet due and payable,
and (y) minor liens that have arisen in the ordinary course of business and that
do not (in any case or in the aggregate) materially detract from the value of
the assets subject thereto or materially impair the operations of the Company.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that
are material to the business of the Company and that are being leased or
licensed to the Company.
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2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution.
(b) As of September 30, 2000, the Company had no accounts receivable,
notes receivable or other receivables.
2.8 Equipment; Leasehold.
(a) All material items of equipment and other tangible assets owned
by or leased to the Company are adequate for the uses to which they are being
put, are in good condition and repair (ordinary wear and tear excepted) and are
adequate for the conduct of the Company's business in the manner in which such
business is currently being conducted.
(b) The Company does not own any real property or any interest in
real property, except for the leasehold created under the real property lease
identified in Part 2.10 of the Disclosure Schedule.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) a
brief description of such Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application. Part
2.9(a)(ii) of the Disclosure Schedule identifies and provides a brief
description of all other Company Proprietary Assets owned by the Company. Part
2.9(a)(iii) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to the Company by any Person
(except for any Proprietary Asset that is licensed to the Company under any
third party software license generally available to the public at a cost of less
than $10,000), and identifies the license agreement under which such Proprietary
Asset is being licensed to the Company. Except as set forth in Part 2.9(a)(iv)
of the Disclosure Schedule, the Company has good and marketable title to all of
the Company Proprietary Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii) of
the Disclosure Schedule, free and clear of all liens and other Encumbrances, and
has a valid right to use all Proprietary Assets identified in Part 2.9(a)(iii)
of the Disclosure Schedule. Except as set forth in Part 2.9(a)(v) of the
Disclosure Schedule, the Company is not obligated to make any payment to any
Person for the use of any Company Proprietary Asset. Except as set forth in Part
2.9(a)(vi) of the Disclosure Schedule, the Company has not developed jointly
with any other Person any Company Proprietary Asset with respect to which such
other Person has any rights.
(b) The Company has taken all measures and precautions necessary to
protect and maintain the confidentiality and secrecy of all Company Proprietary
Assets (except Company Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Company Proprietary Assets. Except as set forth in Part 2.9(b) of the Disclosure
Schedule, the Company has not (other than pursuant to license agreements
identified in Part 2.10 of the Disclosure Schedule) disclosed or delivered to
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any Person, or permitted the disclosure or delivery to any Person of, (i) the
source code, or any portion or aspect of the source code, of any Company
Proprietary Asset, or (ii) the object code, or any portion or aspect of the
object code, of any Company Proprietary Asset.
(c) None of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. The Company is not
infringing, misappropriating or making any unlawful use of, and the Company has
not at any time infringed, misappropriated or made any unlawful use of, or
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To the
best of the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure Schedule:
(i) each Company Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of the Company; and (ii)
there has not been any claim by any customer or other Person alleging that any
Company Proprietary Asset (including each version thereof that has ever been
licensed or otherwise made available by the Company to any Person) does not
conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company, and, to the knowledge of the Company, there is no basis
for any such claim. Except as set forth in Part 2.9(d) of the Disclosure
Schedule, the Company has established adequate reserves on the Unaudited Interim
Balance Sheet to cover all costs associated with any obligations that the
Company may have with respect to the correction or repair of programming errors
or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. Except as set forth in Part
2.9(e) of the Disclosure Schedule, (i) the Company has not licensed any of the
Company Proprietary Assets to any Person on an exclusive basis, and (ii) the
Company has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule,
(i) all current and former employees of the Company have executed and delivered
to the Company an agreement (containing no exceptions to or exclusions from the
scope of its coverage) that is substantially identical to the form of
Confidential Information and Invention Assignment Agreement previously delivered
to Parent, and (ii) all current and former consultants and independent
contractors to the Company have executed and delivered to the Company an
agreement (containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of Consultant Confidential
Information and Invention Assignment Agreement previously delivered to Parent.
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2.10 Contracts.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of, or
the performance of services by, any employee, consultant or independent
contractor;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) each Company Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any technology;
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or sale
of any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.18);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid;
(xi) any other Company Contract that was entered into outside
the ordinary course of business or was inconsistent with the Company's past
practices;
(xii) any other Company Contract that has a term of more than
60 days and that may not be terminated by the Company (without penalty) within
60 days after the delivery of a termination notice by the Company; and
(xiii) any other Company Contract that contemplates or involves
(A) the payment or delivery of cash or other consideration in an amount or
having a value in excess of
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$25,000 in the aggregate, or (B) the performance of services having a value in
excess of $25,000 in the aggregate.
(Contracts in the respective categories described in clauses "(i)" through
"(xiii)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered to Parent accurate and complete copies
of all written Contracts identified in Part 2.10 of the Disclosure Schedule,
including all amendments thereto. Part 2.10 of the Disclosure Schedule provides
an accurate description of the terms of each Company Contract that is not in
written form. To the knowledge of the Company, each Contract identified in Part
2.10 of the Disclosure Schedule is valid and in full force and effect, and, to
the knowledge of the Company, is enforceable by the Company in accordance with
its terms, except where the failure to be enforceable or valid has not had and
is not reasonably likely to have a Material Adverse Effect on the Company,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule and
except where it is not reasonably likely to have a Material Adverse Effect on
the Company.:
(i) the Company has not violated or breached, or committed any
default under, any Company Contract, and, to the knowledge of the Company, no
other Person has violated or breached, or committed any default under, any
Company Contract;
(ii) to the knowledge of the Company, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or could reasonably be expected to, (A) result in a violation or
breach of any of the provisions of any Company Contract, (B) give any Person the
right to declare a default or exercise any remedy under any Company Contract,
(C) give any Person the right to accelerate the maturity or performance of any
Company Contract, or (D) give any Person the right to cancel, terminate or
modify any Company Contract;
(iii) since September 17, 1999, the Company has not received any
notice or other communication regarding any actual or possible violation or
breach of, or default under, any Company Contract; and
(iv) the Company has not waived any of its material rights
under any Material Contract.
(d) No Person is renegotiating, or has a right pursuant to the terms of
any Company Contract to renegotiate, any amount paid or payable to the Company
under any Material Contract or any other material term or provision of any
Material Contract.
(e) The Contracts identified in Part 2.10 of the Disclosure Schedule
collectively constitute all of the Contracts necessary to enable the Company to
conduct its business in the manner in which its business is currently being
conducted.
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(f) Part 2.10 of the Disclosure Schedule identifies and provides a
brief description of each proposed Company Contract in an amount or having a
value in excess of $25,000 as to which any bid, offer, award, written proposal,
term sheet or similar document has been submitted or received by the Company
since September 17, 1999, except for any bid, offer, award, written proposal,
term sheet or similar document that has resulted in a Company Contract.
(g) Part 2.10 of the Disclosure Schedule provides an accurate
description and breakdown of the Company's backlog under Company Contracts.
2.11 Liabilities. The Company has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; (b) accounts payable or accrued salaries that have been
incurred by the Company since June 30, 2000 in the ordinary course of business
and consistent with the Company's past practices; (c) liabilities under the
Company Contracts identified in Part 2.10 of the Disclosure Schedule, to the
extent the nature and magnitude of such liabilities can be specifically
ascertained by reference to the text of such Company Contracts; and (d) the
liabilities identified in Part 2.11 of the Disclosure Schedule.
2.12 Compliance with Legal Requirements. The Company is, and has at all
times since September 17, 1999 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and will not have a Material Adverse Effect on the Company. Except
as set forth in Part 2.12 of the Disclosure Schedule, since September 17, 1999,
the Company has not received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement.
2.13 Governmental Authorizations. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which its business is currently being conducted,
except where the failure to do so has not had and is not reasonably likely to
have a Material Adverse Effect on the Company. The Company is, and at all times
since September 17, 1999 has been, in substantial compliance with the terms and
requirements of the respective Governmental Authorizations identified in Part
2.13 of the Disclosure Schedule. Since September 17, 1999, the Company has not
received any notice or other communication from any Governmental Body regarding
(a) any actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization.
2.14 Tax Matters.
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(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body on or before the Closing Date (the "Company
Returns") (i) have been or will be filed on or before the applicable due date
(including any extensions of such due date), and (ii) have been, or will be when
filed, accurately and completely prepared in all material respects in compliance
with all applicable Legal Requirements. All amounts shown on the Company Returns
to be due on or before the Closing Date have been or will be paid on or before
the Closing Date. The Company has delivered to Parent accurate and complete
copies of all Company Returns filed since the incorporation of the Company which
have been requested by Parent.
(b) Except as set forth in Part 2.14 of the Disclosure Schedule, the
Company Financial Statements fully accrue all actual and contingent liabilities
for Taxes with respect to all periods through the dates thereof in accordance
with generally accepted accounting principles. The Company will establish, in
the ordinary course of business and consistent with its past practices, reserves
adequate for the payment of all Taxes for the period from September 30, 2000
through the Closing Date, and the Company will disclose the dollar amount of
such reserves to Parent on or prior to the Closing Date.
(c) Except as set forth in Part 2.14 of the Disclosure Schedule,
there have been no examinations or audits of any Company Return. The Company has
delivered to Parent accurate and complete copies of all audit reports and
similar documents (to which the Company has access) relating to the Company
Returns. Except as set forth in Part 2.14 of the Disclosure Schedule, no
extension or waiver of the limitation period applicable to any of the Company
Returns has been granted (by the Company or any other Person), and no such
extension or waiver has been requested from the Company.
(d) Except as set forth in Part 2.14 of the Disclosure Schedule, no
claim or proceeding is pending or has been threatened against or with respect to
the Company in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Company with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Company except liens for current
Taxes not yet due and payable. The Company has not entered into or become bound
by any agreement or consent pursuant to Section 341(f) of the Code. The Company
has not been, and the Company will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing. The Company has not made any distribution of stock of a
"controlled corporation" as defined by Section 355(a)(1) of the Code.
(e) Except as set forth on Schedule 2.14(e), there is no agreement,
plan, arrangement or other Contract covering any employee or independent
contractor or former employee or independent contractor of the Company that,
considered individually or considered collectively with any other such
Contracts, will, or could reasonably be expected to, give rise
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directly or indirectly to the payment of any amount that would not be deductible
pursuant to Section 280G of the Code. The Company is not, and has never been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.15 Employee and Labor Matters; Benefit Plans.
(a) Part 2.15(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company ("Employee"), except for Plans which
would not require the Company to make payments or provide benefits having a
value in excess of $25,000 in the aggregate.
(b) Except as set forth in Part 2.15(a) of the Disclosure Schedule,
the Company does not maintain, sponsor or contribute to, and, to the best of the
knowledge of the Company, has not at any time in the past maintained, sponsored
or contributed to, any employee pension benefit plan (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not excluded from coverage under specific Titles or Merger Subtitles
of ERISA) for the benefit of Employees or former Employees (a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of Employees or former Employees which are described in Part
2.15(c) of the Disclosure Schedule (the "Welfare Plans"), none of which is a
multiemployer plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies of
the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-
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loss agreements, investment management agreements, subscription and
participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) The Company is not required to be, and, to the knowledge of the
Company, has never been required to be, treated as a single employer with any
other Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or
(o) of the Code. The Company has never been a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code. To the knowledge of
the Company, the Company has never made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA, resulting
in "withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(f) The Company does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any Employee except as agreed hereunder.
(g) Except as set forth in Part 2.15(g) of the Disclosure Schedule,
no Welfare Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code or Part 6 of Title I of ERISA, (ii) deferred compensation benefits accrued
as liabilities on the Unaudited Interim Balance Sheet, and (iii) benefits the
full cost of which are borne by current or former Employees (or the Employees'
beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
applicable provisions of Section 4980B of the Code ("COBRA") have been complied
with in all material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination from the Internal Revenue
Service and the Company is not aware of any reason why any such determination
letter should be revoked.
(k) Except as set forth in Part 2.15(k) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any payment (including any bonus, golden parachute or
severance payment) to any current or former Employee or director of the Company
(whether or not under any Plan), or materially increase the
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benefits payable under any Plan, or result in any acceleration of the time of
payment or vesting of any such benefits (except as required under Section
411(d)(3) of the Code).
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each Employee
who is not fully available to perform work because of disability or other leave
and sets forth the basis of such leave and the anticipated date of return to
full service.
(n) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Disclosure Schedule,
the Company has good labor relations, and the Company does not have any reason
to believe that (i) the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the Company's labor relations, or (ii) any of the Company's employees intends
to terminate his or her employment with the Company.
2.16 Environmental Matters. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by the Company of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, except where the failure to do so has not had and is not
reasonably likely to have a Material Adverse Effect on the Company. The Company
has not received any notice or other communication (in writing or otherwise),
whether from a Governmental Body, citizens group, employee or otherwise, that
alleges that the Company is not in compliance with any Environmental Law, and,
to the knowledge of the Company, there are no circumstances that may prevent or
interfere with the Company's compliance with any Environmental Law in the
future. To the knowledge of the Company, no current or prior owner of any
property leased or controlled by the Company has received any notice or other
communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or the Company is not in compliance with any Environmental Law. All
Governmental Authorizations currently held by the Company pursuant to
Environmental Laws are identified in Part 2.16 of the Disclosure Schedule. (For
purposes of this Section 2.16: (i) "Environmental Law" means any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "Materials of Environmental
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Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now regulated
by any Environmental Law or that is otherwise a danger to health, reproduction
or the environment.)
2.17 Insurance. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder, and the Company has
delivered to Parent accurate and complete copies of the insurance policies
identified on Part 2.17 of the Disclosure Schedule. Each of the insurance
policies identified in Part 2.17 of the Disclosure Schedule is in full force and
effect. Since September 17, 1999, the Company has not received any notice or
other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy, or (c) material adjustment in the
amount of the premiums payable with respect to any insurance policy.
2.18 Related Party Transactions. Except as set forth in Part 2.18 of the
Disclosure Schedule: (a) no Related Party has, and no Related Party has at any
time since September 17, 1999 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of the Company; (b)
no Related Party is, or has at any time since September 17, 1999 been, indebted
to the Company; (c) since September 17, 1999, no Related Party has entered into,
or has had any direct or indirect financial interest in, any material Contract,
transaction or business dealing involving the Company; (d) no Related Party is
competing, or has at any time since September 17, 1999 competed, directly or
indirectly, with the Company; and (e) no Related Party has any claim or right
against the Company (other than rights under Company Options and rights to
receive compensation for services performed as an employee of the Company).
(For purposes of this Section 2.18 each of the following shall be deemed to be a
"Related Party": (i) each individual who is, or who has at any time since
September 17, 1999 been, an officer of the Company; (ii) each member of the
immediate family of each of the individuals referred to in clause "(i)" above;
and (iii) any trust or other Entity (other than the Company) in which any one of
the individuals referred to in clauses "(i)" and "(ii)" above holds (or in which
more than one of such individuals collectively hold), beneficially or otherwise,
a material voting, proprietary or equity interest.)
2.19 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule,
there is no pending Legal Proceeding, and (to the best of the knowledge of the
Company) no Person has threatened to commence any Legal Proceeding: (i) that
involves the Company or any of the assets owned or used by the Company or any
Person whose liability the Company has or may have retained or assumed, either
contractually or by operation of law; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Merger or any of the other transactions contemplated by this
Agreement. To the best of the knowledge of the Company, except as set forth in
Part 2.19 of the Disclosure Schedule, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that could
reasonably be expected to, give rise to or serve as a basis for the commencement
of any such Legal Proceeding.
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(b) Except as set forth in Part 2.19 of the Disclosure Schedule, no
Legal Proceeding has ever been commenced by or has ever been pending against the
Company.
(c) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned or used by the Company, is subject. To
the knowledge of the Company, no officer or other employee of the Company is
subject to any order, writ, injunction, judgment or decree that prohibits such
officer or other employee from engaging in or continuing any conduct, activity
or practice relating to the Company's business.
2.20 Authority; Binding Nature of Agreement. The Company has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under this Agreement; and the execution, delivery and performance by
the Company of this Agreement have been duly authorized by all necessary action
on the part of the Company and its board of directors. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.21 Non-Contravention; Consents. Except as set forth in Part 2.21 of the
Disclosure Schedule, and except where it is not reasonably likely to have a
Material Adverse Effect on the Company, neither (a) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (b) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(i) contravene, conflict with or result in a violation of (A)
any of the provisions of the Company's articles of incorporation or bylaws or
(B) any resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors;
(ii) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which the Company, or any of the assets owned or used by the
Company, is subject;
(iii) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
Company's business or to any of the assets owned or used by the Company;
(iv) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Company Contract
that is or would constitute a Material Contract, or give any Person the right to
(A) declare a default or exercise any remedy under any such Company Contract,
(B) accelerate the maturity or performance of any such Company Contract, or (C)
cancel, terminate or modify any such Company Contract; or
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(v) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Company
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Company).
Except as set forth in Part 2.21 of the Disclosure Schedule or otherwise
required by the terms of this Agreement, the Company is not and will not be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement
or (y) the consummation of the Merger or any of the other transactions
contemplated by this Agreement.
2.22 Financial Advisor. Except as set forth in Part 2.22 of the Disclosure
Schedule, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or any of the
other transactions contemplated by this Agreement based on arrangements made by
or on behalf of the Company. The total of all fees, commissions and other
amounts that have been paid by the Company to those Persons set forth in Part
2.22 of the Disclosure Schedule and all fees, commissions and other amounts that
may become payable to those Persons set forth in Part 2.22 of the Disclosure
Schedule by the Company if the Merger is consummated will not exceed the amount
set forth in Part 2.22 of the Disclosure Schedule. The Company has furnished to
Parent accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid or may become payable and all
indemnification and other agreements related to the engagement of each of the
Persons set forth in Part 2.22 of the Disclosure Schedule.
2.23 Full Disclosure.
(a) This Agreement (including the Disclosure Schedule) does not (i)
contain any representation, warranty or information that is false or misleading
with respect to any material fact, or (ii) omit to state any material fact or
information necessary in order to make the representations, warranties and
information contained and to be contained herein and therein (in the light of
the circumstances under which such representations, warranties and information
were or will be made or provided) not false or misleading.
(b) The information supplied by the Company for inclusion in the
Information Statement (as defined in Section 5.2) will not, as of the date of
the Information Statement or as of the date on which the Information Statement
is mailed to Company Shareholders in connection with the Company's solicitation
of the approval of Company Shareholders of this Agreement and the Merger, (i)
contain any statement that is inaccurate or misleading with respect to any
material fact, or (ii) omit to state any material fact necessary in order to
make such information (in the light of the circumstances under which it is
provided) not false or misleading.
SECTION 3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
3.1 SEC Filings; Financial Statements.
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(a) Parent has delivered to the Company accurate and complete copies
of each report, registration statement (on a form other than Form S-8) and
definitive proxy statement filed by Parent with the SEC between August 17, 1998
and the date of this Agreement (the "Parent SEC Documents"). Parent has made all
necessary filings with the SEC as required under the Exchange Act. As of the
time it was filed with the SEC (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing): (i) each of the
Parent SEC Documents complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be); and
(ii) none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of the date of this
Agreement, none of the Company's Form 10-K for the year ended December 31, 1999
(as amended on April 28, 2000), Form 10-Q for the quarter ended September 30,
2000 or Forms 8-K filed on July 18, 2000, October 5, 2000 (as amended on October
18, 2000) and October 23, 2000 contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such financial statements and (in the case of unaudited statements) as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to year-end audit adjustments; and (iii)
fairly present the consolidated financial position of Parent and its
subsidiaries as of the respective dates thereof and the consolidated results of
operations of Parent and its subsidiaries for the periods covered thereby.
3.2 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement (including the contemplated issuance of
Parent Common Stock in the Merger in accordance with this Agreement) have been
duly authorized by all necessary action on the part of Parent and Merger Sub and
their respective boards of directors. No vote of Parent's stockholders is needed
to approve the Merger. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (a) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (b) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.3 Valid Issuance. Subject to Section 1.5(c), the Parent Common Stock to
be issued in the Merger will, when issued in accordance with the provisions of
this Agreement, be validly issued, fully paid and nonassessable.
3.4 Due Organization. Each of the Parent and the Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each
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of the Parent and the Merger Sub has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its businesses as now
conducted.
3.5 No Knowledge of Claims for Indemnification. Neither Parent nor the
Merger Sub is aware of any information, situation or circumstance that is
reasonably likely to give rise to a claim for indemnification under the
provisions of Section 9 of this Agreement.
3.6 Full Disclosure. The information supplied by the Parent for inclusion
in the Information Statement (as defined in Section 5.2) will not, as of the
date of the Information Statement or as of the date on which the Information
Statement is mailed to Company Shareholders in connection with the Company's
solicitation of the approval of Company Shareholders of this Agreement and the
Merger, (a) contain any statement that is inaccurate or misleading with respect
to any material fact, or (b) omit to state any material fact necessary in order
to make such information (in the light of the circumstances under which it is
provided) not false or misleading.
SECTION 4. Certain Covenants of the Company
4.1 Access and Investigation. During the period from the Execution Date
through the Effective Time (the "Pre-Closing Period"), the Company shall, and
shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (b)
provide Parent and Parent's Representatives with copies of such existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Parent may reasonably request.
4.2 Operation of the Company's Business. During the Pre-Closing Period and
except as otherwise noted in the Disclosure Schedule delivered on the Execution
Date:
(a) except as requested in writing by Parent, the Company shall
conduct its business and operations in the ordinary course and in substantially
the same manner as such business and operations have been conducted prior to the
date of this Agreement;
(b) the Company shall use reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and maintain its relations and goodwill with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Company;
(c) the Company shall keep in full force all insurance policies
identified in Part 2.17 of the Disclosure Schedule;
(d) the Company shall cause its officers to report regularly (but in
no event less frequently than weekly) to Parent concerning the status of the
Company's business;
(e) the Company shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and shall not repurchase,
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redeem or otherwise reacquire any shares of capital stock or other securities
(except that the Company may repurchase Company Common Stock from former
employees and consultants pursuant to the terms of existing restricted stock
purchase agreements);
(f) the Company shall not sell, issue or authorize the issuance of
(i) any capital stock or other security, (ii) any option or right to acquire any
capital stock or other security, or (iii) any instrument convertible into or
exchangeable for any capital stock or other security (except that the Company
shall be permitted (x) to grant stock options to employees in accordance with
its past practices, (y) to issue Company Common Stock upon the exercise of
outstanding Company Options, and (z) to issue shares of Company Common Stock
upon the conversion of shares of Class A Preferred stock or Class C Non-voting
stock);
(g) the Company shall not amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of its 2000 Equity
Incentive Plan, (ii) any provision of any agreement evidencing any outstanding
Company Option or Company Warrant, or (iii) any provision of any restricted
stock purchase agreement, except, as to acceleration of vesting, that
acceleration is as already provided for in such documents as of the Execution
Date;
(h) the Company shall not amend or permit the adoption of any
amendment to the Company's articles of incorporation or bylaws, or effect or
permit the Company to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction (except that the Company may issue shares of Company
Common Stock upon the conversion of shares of Class A Preferred stock or Class C
Non-voting stock);
(i) the Company shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(j) the Company shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of the Company during the Pre-Closing Period, do not exceed $25,000 per
month;
(k) the Company shall not (i) enter into, or permit any of the assets
owned or used by it to become bound by, any Contract that is or would constitute
a Material Contract, or (ii) amend or prematurely terminate, or waive any
material right or remedy under, any such Contract;
(l) the Company shall not (i) acquire, lease or license any right or
other asset from any other Person, (ii) sell or otherwise dispose of, or lease
or license, any right or other asset to any other Person or (iii) waive or
relinquish any right;
(m) the Company shall not (i) lend money to any Person (except that
the Company may make routine travel advances to employees in the ordinary course
of business), or (ii) incur or guarantee any indebtedness for borrowed money;
(n) the Company shall not incur any further debt, including any debt
pursuant to: (i) the promissory note issued to YAS Corporation dated as of
October 19, 2000; (ii) the promissory note issued to P. Eric Krauss dated as of
October 23, 2000; (iii) the promissory note
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issued to David Fellows dated as of October 23, 2000; and (iv) the promissory
note issued to William Schleyer dated as of October 23, 2000 (collectively, the
"Outstanding Promissory Notes");
(o) the Company shall not (i) establish, adopt or amend any Plan,
(ii) pay any bonus or make any profit-sharing payment, cash incentive payment or
similar payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hire any new employee;
(p) the Company shall not change any of its methods of accounting or
accounting practices in any material respect;
(q) the Company shall not make any Tax election;
(r) the Company shall not commence or settle any material Legal
Proceeding;
(s) the Company shall not agree or commit to take any of the actions
described in clauses "(e)" through "(r)" above.
Notwithstanding the foregoing, the Company may take any action described in
clauses "(e)" through "(r)" above if Parent gives its prior written consent to
the taking of such action by the Company, which consent will not be unreasonably
withheld (it being understood that Parent's withholding of consent to any action
will not be deemed unreasonable if Parent determines in good faith that the
taking of such action would not be in the best interests of Parent or would not
be in the best interests of the Company).
4.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of:
(i) the discovery by the Company of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company in this Agreement if (A) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any breach of any covenant or obligation of the Company;
and
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(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Disclosure Schedule specifying such change. No such update shall be deemed to
supplement or amend the Disclosure Schedule for the purpose of (i) determining
the accuracy of any of the representations and warranties made by the Company,
or (ii) determining whether any of the conditions set forth in Section 6 has
been satisfied.
4.4 No Negotiation. Until the earlier of January 31, 2001 or the date on
which Parent advises the Company in writing that Parent is terminating this
Agreement, the Company shall not, directly or indirectly:
(a) Enter into any agreement, understanding or arrangement relating
to any Acquisition Proposal;
(b) Consider or engage in any discussions or negotiations relating to
any Acquisition Proposal;
(c) Provide any information regarding the Company or its business or
operations to any party (other than to representatives of Parent) which is in
relation to any Acquisition Proposal;
(d) Solicit or encourage the submission of any Acquisition Proposal;
or
(e) Permit any representative or affiliate of the Company or of any
of the Company's Shareholders to do any of the foregoing.
The Company shall promptly (and in no event later than 24 hours after receipt by
the Company of any Acquisition Proposal, any inquiry or indication of interest
that could lead to an Acquisition Proposal or any request for nonpublic
information) advise Parent orally and in writing of any Acquisition Proposal,
any inquiry or indication of interest that could lead to an Acquisition Proposal
or any request for nonpublic information relating to the Company (including the
identity of the Person making or submitting such Acquisition Proposal, inquiry,
indication of interest or request, and the terms thereof) that is made or
submitted by any Person prior to receiving written notice from Parent that
Parent is terminating all negotiations regarding this transaction. The Company
shall keep Parent fully informed with respect to the status of any such
Acquisition Proposal, inquiry, indication of interest or request and any
modification or proposed modification thereto.
SECTION 5. Additional Covenants of the Parties
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5.1 Filings and Consents. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, and (b) shall use all commercially reasonable efforts to obtain all
Consents (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger and the other transactions contemplated by this Agreement. The Company
shall (upon request) promptly deliver to Parent a copy of each such filing made,
each such notice given and each such Consent obtained by the Company during the
Pre-Closing Period.
5.2 Information Statement; Company Shareholder Approval.
(a) Promptly after the execution of this Agreement, the Company and
Parent shall prepare an information statement that complies with Rule 502 of the
Securities Act (the "Information Statement"). The Information Statement shall
include the recommendation of the board of directors of the Company in favor of
the Merger, provided such recommendation is consistent with the fiduciary
obligations of the board of directors of the Company.
(b) As promptly as practicable upon completion of the Information
Statement, the Company shall, in accordance with its articles of incorporation
and bylaws and the applicable requirements of the Colorado Business Act, solicit
the approval of its shareholders for the purpose of permitting them to consider
and to vote upon and approve the Merger and this Agreement. The Company shall
cause a copy of the Information Statement to be delivered to each shareholder of
the Company who is entitled to vote upon the Merger and this Agreement.
5.3 Registration of Shares. Parent will, as promptly as practicable
following the Closing, but in no event later than fifteen (15) days following
the Closing, prepare and file with the SEC a registration statement on Form S-3
under the Securities Act with respect to the registration of the shares of
Common Stock issuable to the Company Shareholders in connection with the
transactions contemplated by this Agreement (the "Registration Statement").
Parent will, and will cause its accountants and lawyers to, cause the
Registration Statement to be declared effective as promptly as practicable after
filing with the SEC, and the Registration Statement shall be kept effective
continuously for a period of one year following the Closing Date. None of the
information supplied or to be supplied by Parent for inclusion or incorporation
by reference in the Registration Statement will, at the time the Registration
Statement is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. If at any time prior to the date on which the
Registration Statement is declared effective by the SEC any event in respect of
Parent, its officers and directors, or any of its subsidiaries should occur
which is required to be described in an amendment of, or a supplement to, the
Registration Statement, any such amendment or supplement to the Registration
Statement shall be promptly filed with the SEC. The Registration Statement will
comply as to form in all material respects with the provisions of the Securities
Act and the rules and regulations thereunder.
5.4 Disclosures, Public Announcements. At all times, the Company and
Parent shall remain subject to the terms of that certain Non-Disclosure
Agreement between the parties
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dated as of September 27, 2000. During the Pre-Closing Period, the Company and
Parent will keep the terms of this Agreement and the transactions contemplated
hereunder strictly confidential. Accordingly, during the Pre-Closing Period,
except as required by law, (a) the Company shall not (and the Company shall not
permit any of its Representatives to) issue any press release or make any public
statement regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without Parent's prior written
consent, and (b) Parent shall not (and Parent shall not permit any of its
Representatives to) issue any press release or make any public statement
regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without the Company's prior written
consent.
5.5 Best Efforts. During the Pre-Closing Period, (a) the Company shall use
its best efforts to cause the conditions set forth in Section 6 to be satisfied
on a timely basis, and (b) Parent and Merger Sub shall use their best efforts to
cause the conditions set forth in Section 7 to be satisfied on a timely basis.
5.6 Tax Matters. Neither Parent, Merger Sub nor Company has taken or will
take any action, or will fail to take any action, either before or after the
Closing of the Merger, which could reasonably be expected to cause the Merger to
fail to qualify as a reorganization under Section 368(a) of the Code. Parent
shall report, and shall cause the Surviving Company to report, the Merger for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code.
5.7 Termination of Agreement. Prior to the Closing, the Company shall
enter into an agreement with the required majority of the holders of Class A
Preferred stock reasonably satisfactory in form and content to Parent (and
conditioned and effective on the Closing), terminating all of the rights of the
holders of the Company's Class A Preferred stock under the Securities Purchase
Agreement dated as of October 29, 1999, as amended, between the Company and
certain Company Shareholders.
5.8 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897 - 2(h)(2)
of the United States Treasury Regulations.
5.9 Termination of Employee Plans. Following the Effective Time, Parent
shall arrange for each employee of the Company or any Company subsidiary to
participate in any counterpart Parent Plan (which shall mean all plans, programs
and arrangements that are maintained by Parent or its subsidiaries at the
Effective Time) in accordance with eligibility criteria thereof, provided that
(a) such participants shall receive full credit for years of service with the
Company or any Company subsidiary (and service otherwise credited by the Company
or any Company subsidiary) prior to the Effective Time for all purposes for
which such service was recognized under Company Plans including, but not limited
to, eligibility to participate, vesting (except with respect to stock options),
and, to the extent not duplicative of benefits received under such Company Plan,
the amount of benefits, (b) such participants and their dependents (to the
extent that the terms and conditions of each such Parent Plan provide for
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coverage and/or benefits of eligible employees' dependents) shall participate in
Parent's Plans on terms no less favorable than those offered by Parent to
employees of Parent, and (c) Parent, to the extent permitted by the relevant
insurance carrier, shall cause any and all pre-existing condition limitations,
eligibility waiting periods and evidence of insurability requirements under any
group plans to be waived with respect to such participants and their eligible
dependents and shall provide each such participant with credit for any co-
payments and deductibles paid prior to the Effective Time for purposes of
satisfying any applicable deductible, out-of-pocket, or similar requirements
under all Parent Plans in which such participants are eligible to participate
after the Effective Time. Notwithstanding any of the foregoing to the contrary,
none of the provisions contained herein shall operate to duplicate any benefit
provided to any employee of the Company or the funding of any such benefit. The
Company shall terminate all of its other employee benefit plans effective as of
the Closing or as soon as practicable thereafter, provided that no welfare plan
shall be terminated if, but for such termination, any former employee of the
Company would have continuation coverage rights under COBRA, unless and until
the expiration of such rights or such date as a Parent Plan provides such COBRA
continuation coverage for such former employees of the Company.
5.10 Filing of Form S-8. As soon as practicable following the Effective
Time, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate form) with respect to the shares of Parent Common Stock
subject to Company Options assumed by Parent and shall use its reasonable
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Company Options remain outstanding. The parties specifically
contemplate that such Form S-8 may be either a new Form S-8 or an amendment to
an existing Form S-8, in Parent's sole discretion.
5.11 Continuing Indemnity. Parent agrees that after the Effective Date, the
Company will not alter the rights of any person who has a right to
indemnification (the "Company Indemnitees") from the Company pursuant to the
Articles of Incorporation and/or Bylaws of the Company, as applicable, in effect
as of the Execution Date. In addition, Parent agrees that the Company shall be
bound by all determinations made by the Board of Directors of the Company prior
to the Closing (including, but not limited to, determinations of whether
officers and/or directors acted in good faith). Parent agrees that it will not
take or permit any action that would impair in any material respect the ability
or obligation of the Company to comply with this Section 5.11. Notwithstanding
the foregoing, Parent and the Company shall have no obligation to indemnify the
Company Indemnitees with respect to acts related to this Agreement or the
transactions contemplated herein.
5.12 Stock Transfer Instructions. Parent agrees that it will cause to be
delivered, within five business days of the Closing, a letter executed by Boston
Equiserve, as Transfer Agent, Registrar and Exchange Agent (the "Transfer
Agent") of the Parent Common Stock, stating that it has received irrevocable
instructions from Parent to issue the Parent Common Stock in the names of the
Company Shareholders, and that it will forward validly executed share
certificates covering the Parent Common Stock in the names of each of the
Company Shareholders.
SECTION 6. Conditions Precedent to Obligations of Parent and Merger Sub
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The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
6.1 Accuracy of Representations. Each of the representations and
warranties made by the Company in this Agreement and in each of the other
agreements and instruments delivered to Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in all
material respects as of the Closing Date as if made at the Closing Date.
6.2 Performance of Covenants. All of the covenants and obligations that
the Company are required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all respects.
6.3 Shareholder Approval. The principal terms of the Merger shall have
been duly approved by the affirmative vote of at least (a) 90% of the shares of
Company Common Stock entitled to vote with respect thereto, and (b) 90% of the
shares of Class A Preferred stock entitled to vote with respect thereto.
6.4 Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in Part 2.21 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
6.5 Agreements and Documents. Parent and the Merger Sub shall have
received the following agreements and documents, each of which shall be in full
force and effect:
(a) the agreement referred to in Section 5.7, executed by certain
Company shareholders;
(b) Retention Agreements in the form of Exhibit G (or variations
thereof agreed to in writing by the Parent), executed by each employee of the
Company who holds either Company Stock or a Company Option;
(c) an Indemnification Escrow Agreement in the form of Exhibit D
executed by the Company Shareholders' Agent (as defined in Section 10.1)
(d) confidential invention and assignment agreements, reasonably
satisfactory in form and content to Parent, executed by all employees and former
employees of the Company and by all consultants and independent contractors and
former consultants and former independent contractors to the Company who have
not already signed such agreements (including the individuals identified in Part
2.9(f) of the Disclosure Schedule);
(e) the statement referred to in Section 5.8(a), executed by the
Company;
(f) a legal opinion of Perkins Coie LLP, dated as of the Closing
Date, in the form of Exhibit E;
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(g) a certificate executed by the Company's Chief Executive (but
without personal liability thereto) certifying that each of the representations
and warranties set forth in Section 2 is accurate in all respects as of the
Closing Date as if made on the Closing Date and that the conditions set forth in
Sections 6.1, 6.2, 6.3 and 6.4 have been duly satisfied (the "Company Closing
Certificate"); and
(h) written resignations of all directors of the Company, effective
as of the Effective Time.
6.6 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.8(b).
6.7 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.8 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Merger or seeking to prohibit or limit
the exercise by Parent of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.9 Termination of Employee Plans. The Company shall have provided Parent
with evidence, reasonably satisfactory to Parent, as to the termination of the
benefit plans referred to in Section 5.9.
6.10 Shareholder Approval of Parachute Payments. The Company shall have
obtained the required shareholder approvals for any "parachute payments" (as
defined in Section 280G of the Code) related to the transactions contemplated by
or related to this Agreement, such that all of any such payments will be
deductible by the Company or its successor.
6.11 Conversion of Preferred and Non-Voting Stock and Convertible
Promissory Notes. The Company shall have taken all required corporate action,
including the solicitation of shareholder consent, with respect to the
conversion of all outstanding shares of Class A Preferred stock and Class C Non-
voting stock and all such outstanding Class A Preferred stock and Class C Non-
voting stock shall have been converted to Company Common Stock. Except for the
Outstanding Promissory Notes, the Company shall have taken all required
corporate action with respect to the conversion of all convertible promissory
notes and all such convertible promissory notes shall have been converted to
Company Common Stock.
SECTION 7. Conditions Precedent to Obligations of the Company
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
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7.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all material respects as of the date of this Agreement (without
giving effect to any materiality or similar qualifications contained in such
representations and warranties), and shall be accurate in all material respects
as of the Closing Date as if made at the Closing Date (without giving effect to
any materiality or similar qualifications contained in such representations and
warranties).
7.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all respects.
7.3 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.4 Shareholder Approval. The principal terms of the Merger shall have
been duly approved by the affirmative vote of at least (a) 80% of the shares of
Company Common Stock entitled to vote with respect thereto, and (b) 80% of the
shares of Class A Preferred stock entitled to vote with respect thereto.
7.5 Agreements and Documents. The Company shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) an Indemnification Escrow Agreement;
(b) a certificate executed by an officer of Parent (but without
personal liability thereto) certifying that each of the representations and
warranties set forth in Section 3 is accurate in all material respects as of the
Closing Date as if made on the Closing Date and that the conditions set forth in
Sections 7.1, 7.2 and 7.3 have been duly satisfied (the "Parent Closing
Certificate"); and
(c) a legal opinion of Cooley Godward llp, dated as of the Closing
Date, in the form of Exhibit F.
7.6 No Legal Proceedings. No Person shall have commenced any Legal
Proceeding challenging or seeking the recovery of a material amount of damages
in connection with the transactions contemplated by this Agreement.
7.7 Market Condition. There shall not have occurred any general suspension
of trading on the NASDAQ National Market System or any suspension of trading in
Parent Common Stock, or any general bank moratorium or closing or any war,
national emergency or other event affecting the economy or securities trading
markets generally that would make completion of the Merger impossible,
impracticable or, in the reasonable judgment of the Board of Directors of the
Company, inadvisable.
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7.8 Financial Condition. There shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Parent and its
subsidiaries, taken as a whole, from that set forth in the Parent SEC Documents
that, in the reasonable judgment of the Company's Board of Directors exercised
in good faith, is material and adverse and that makes it, in the Company's
reasonable judgment exercised in good faith, impracticable to complete the
Merger on the terms and in the manner contemplated in this Agreement.
7.9 Payment of Outstanding Promissory Notes. Parent shall pay the
Outstanding Promissory Notes described in Section 4.2(n), provided, however,
that the aggregate amount paid pursuant to the Outstanding Promissory Notes
shall not exceed $11,000,000.00 when added to the Aggregate Merger Amount.
SECTION 8. Termination
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Parent or Merger Sub to
comply with or perform any covenant or obligation of Parent or Merger Sub set
forth in this Agreement);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of the Company to
comply with or perform any covenant or obligation set forth in this Agreement or
in any other agreement or instrument delivered to Parent);
(c) by Parent if a Company Material Adverse Effect has occurred;
(d) by Company if a Parent Material Adverse Effect has occurred;
(e) by Parent if the Closing has not taken place on or before January
31, 2001 (other than as a result of any failure on the part of Parent or Merger
Sub to comply with or perform any covenant or obligation of Parent or Merger Sub
set forth in this Agreement);
(f) by the Company if the Closing has not taken place on or before
January 31, 2001 (other than as a result of the failure on the part of the
Company to comply with or perform any covenant or obligation set forth in this
Agreement or in any other agreement or instrument delivered to Parent); or
(g) by the mutual consent of Parent and the Company.
8.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Parent shall
deliver to the Company a written notice stating that Parent is terminating this
Agreement and setting forth a brief description of the basis on which Parent is
terminating this Agreement. If the Company wishes to terminate this Agreement
pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(f), the Company shall
deliver to Parent a written notice stating that the Company is terminating this
Agreement and
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setting forth a brief description of the basis on which the Company is
terminating this Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Parent shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in this
Section 8.3 and Section 10; and (c) the Company shall, in all events, remain
bound by and continue to be subject to Section 5.4.
SECTION 9. Indemnification, Etc.
9.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company (including
the representations and warranties set forth in Section 2 and the
representations and warranties set forth in the Company Closing Certificate)
shall survive the Closing and shall expire at 5:00 p.m. Pacific time on the date
that is twelve (12) months after the Closing Date (the "Expiration Time");
provided, however, that if, at any time prior to the Expiration Time, any
Indemnitee (acting in good faith) delivers to the Company Shareholders' Agent a
Claim Notice (as defined in the Indemnification Escrow Agreement) pursuant to
the terms of the Indemnification Escrow Agreement, then the claim asserted in
such Claim Notice shall survive beyond the Expiration Time until such time as
such claim is fully and finally resolved. All representations and warranties
made by Parent and Merger Sub shall survive the Closing.
(b) The representations, warranties, covenants and obligations of the
Company, and the rights and remedies that may be exercised by the Indemnitees,
shall not be limited or otherwise affected by or as a result of any information
furnished to, or any investigation made by or knowledge of, any of the
Indemnitees or any of their Representatives.
(c) The representations, warranties, covenants and obligations of
Parent and Merger Sub, and the rights and remedies that may be exercised by the
Company, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, the
Company or any of their Representatives.
(b) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company in this Agreement.
9.2 Indemnification.
(a) From and after the Effective Time (but subject to Section
9.1(a)), the Indemnitees may seek indemnification to the fullest extent
permitted by law from the Indemnification Escrow Fund, for any Damages that are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject (regardless of whether
or not such Damages relate to any third-party claim) and which arise from or as
a result of, or are directly or indirectly connected with: (i) any inaccuracy in
or
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breach of any representation or warranty set forth in Section 2 or in the
Company Closing Certificate (without giving effect to any "Material Adverse
Effect" or other materiality qualification or any similar qualification
contained or incorporated directly or indirectly in such representation or
warranty with respect to the calculation of Damages, but giving effect to any
update to the Disclosure Schedule delivered by the Company to Parent prior to
the Closing); (ii) any breach of any covenant or obligation of the Company
(including the covenants set forth in Sections 4 and 5); or (iii) any Legal
Proceeding relating to any inaccuracy or breach of the type referred to in
clause "(i)" or "(ii)" above (including any Legal Proceeding commenced by any
Indemnitee for the purpose of enforcing any of its rights under this Section 9).
(b) The Company acknowledges and agrees that, if the Surviving
Corporation suffers, incurs or otherwise becomes subject to any Damages as a
result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
9.3 Threshold; Ceiling.
(a) The Indemnitees shall not be entitled to seek any indemnification
payment pursuant to Section 9.2(a) until such time as the total amount of all
Damages (including the Damages arising from such inaccuracy or breach or any
cause of action relating thereto and all other Damages arising from any other
inaccuracies in or breaches of any representations or warranties or any causes
of action relating thereto) that have been directly or indirectly suffered or
incurred by any one or more of the Indemnitees, or to which any one or more of
the Indemnitees has or have otherwise become subject, exceeds $100,000 in the
aggregate. If the total amount of such Damages exceeds $100,000, then the
Indemnitees shall be entitled to be indemnified against and compensated and
reimbursed for all such Damages as limited by Section 9.3(b).
(b) The maximum liability under Section 9.2(a) shall be the pro rata
share of such Company Shareholder and Company Option Holder in the
Indemnification Escrow Fund.
9.4 Administration of Claims. All claims for indemnification by any
Indemnitee pursuant to this Section 9 shall be made in accordance with the
provisions of the Indemnification Escrow Agreement including, but not limited
to, any requirement for submission of claims to binding arbitration.
9.5 Defense of Third-Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Indemnitees shall have the right to seek indemnification
pursuant to this Section 9, Parent shall have the right, at its election, to
proceed with the defense of such claim or Legal Proceeding on its own. If
Parent so proceeds with the defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be borne and paid exclusively out of the Indemnification
Escrow Fund; and
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(b) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding with the consent of the Company Shareholders' Agent
(as defined in Section 10.1); provided, however, that such consent shall not be
unreasonably withheld.
Parent shall give the Company Shareholders' Agent prompt notice of the
commencement of any such Legal Proceeding against Parent or the Surviving
Corporation; provided, however, that any failure on the part of Parent to so
notify the Company Shareholders' Agent shall not limit any of the rights of the
Indemnitees under this Section 9 (except to the extent such failure materially
prejudices the defense of such Legal Proceeding).
9.6 Exercise of Remedies by Indemnitees Other Than Parent. No Indemnitee
(other than Parent or any successor thereto or assign thereof as permitted
pursuant to Section 10.11) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Parent (or any
successor thereto or assign thereof as permitted pursuant to Section 10.11)
shall have consented to the assertion of such indemnification claim or the
exercise of such other remedy.
9.7 Indemnification for the Registration of Parent Common Stock. In the
event any Parent Common Stock are included and sold pursuant to an effective
registration statement under this Agreement:
(a) To the extent permitted by law, the Parent will indemnify and
hold harmless each Company Shareholder and Company Option Holder ("Holder") and
each person, if any, who controls such Holder within the meaning of the
Securities Act or the Exchange Act against any actual expenses (including legal
fees and costs), losses, claims, damages (including settlement amounts) or
liabilities (joint or several) (collectively, "Losses") to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such Losses arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements thereto, untrue
in light of the circumstances under which they were made, (ii) the omission or
alleged omission to state therein 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, or (iii) any violation or alleged
violation by the Parent of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law. The Parent will reimburse (as
incurred) each such Holder or controlling person for any Losses reasonably
incurred by them in connection with investigating or defending any Violations;
provided, however, that the indemnity agreement contained in this Section 9.7(a)
shall not apply to amounts paid in settlement of any claims for Violations if
such settlement is made without the consent of the Parent, which consent shall
not be unreasonably withheld, nor shall the Parent be liable in any such case
for any Losses that arise out of or are based upon a Violation that occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by, or on behalf of, any such Holder or
controlling person.
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(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Parent and its officers, directors, agents and
employees and each other Holder selling securities in such registration
statement, and any person who controls any of the foregoing within the meaning
of the Securities Act or the Exchange Act, against any Losses to which the
Parent or such officer, director, agent, employee or other selling Holder or
controlling person may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such Losses arise out of or are based
upon any Violation that occurs in reliance upon and in conformity with written
information furnished by, or on behalf of, such Holder expressly for use in
connection with such registration; and each such Holder will reimburse (as
incurred) any Losses reasonably incurred by the Parent or its officers,
directors, agents, employees, or underwriters or other selling Holders or
controlling persons in connection with investigating or defending any
Violations; provided, however, that (i) the indemnity agreement contained in
this Section 9.7(b) shall not apply to amounts paid in settlement of any claims
for Violations if such settlement is made without the consent of the Holder,
which consent shall not be unreasonably withheld and (ii) the obligations of
such Holders shall be limited to an amount equal to the proceeds, before
expenses and commissions, received by each such Holder of Parent Common Stock
sold as contemplated herein.
(c) If the indemnification provided for in this Section 9.7 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any Losses, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the Violations
that resulted in such Losses as well as any other relevant equitable
considerations; provided, that, in no event shall any contribution by a Holder
under this Section 9.7(c) exceed the proceeds, before expenses and commissions,
to each such Holder, except in the case of willful fraud by such Holder. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the Violation resulting
in such Losses relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such Violation.
(d) The obligations of the Parent and Holders under this Section 9.7
shall survive the completion of any offering of Parent Common Stock and the
termination of registration rights pursuant to Section 5.3.
SECTION 10. Miscellaneous Provisions
10.1 Company Shareholders' Agent. Prior to Closing, the Company
Shareholders will designate in writing to the Parent a Company Shareholders'
Agent for purposes of Section 9 (the "Company Shareholders' Agent") and such
designee shall have the powers and duties set forth in the Indemnification
Escrow Agreement. Parent shall be entitled to deal exclusively with the Company
Shareholders' Agent on all matters relating to Section 9, and shall be entitled
to rely conclusively (without further evidence of any kind whatsoever) on any
document executed or purported to be executed on behalf of any Company
Shareholder by the Company Shareholders' Agent, and on any other action taken or
purported to be taken on behalf of any
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Company Shareholder by the Company Shareholders' Agent, as fully binding upon
such Company Shareholder. If the Company Shareholders' Agent shall die, become
disabled or otherwise be unable to fulfill his responsibilities as agent of the
Company Shareholders, then the Company Shareholders holding a majority in
interest in the capital stock of the Company shall, within ten days after such
death or disability, appoint a successor agent and, promptly thereafter, shall
notify Parent of the identity of such successor. Any such successor shall become
the "Company Shareholders' Agent" for purposes of Section 9 and this Section
10.1. If for any reason there is no Company Shareholders' Agent at any time, all
references herein to the Company Shareholders' Agent shall be deemed to refer to
the Company Shareholders.
10.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
10.3 Fees and Expenses. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees, accounting fees, investment
banking fees and success fees) that have been incurred or that are incurred by
such party in connection with the transactions contemplated by this Agreement,
including all fees, costs and expenses incurred by such party in connection with
or by virtue of (a) the investigation and review conducted by Parent and its
Representatives with respect to the Company's business (and the furnishing of
information to Parent and its Representatives in connection with such
investigation and review), (b) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule) and all agreements, certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the transactions contemplated by this Agreement, (c) the
preparation and submission of any filing or notice required to be made or given
in connection with any of the transactions contemplated by this Agreement, and
the obtaining of any Consent required to be obtained in connection with any of
such transactions, and (d) the consummation of the Merger; provided, however,
that, Parent shall pay all such fees, costs and expenses of the Company (the
aggregate of all such fees, costs and expenses of the Company shall be referred
to in this Agreement as the "Identified Shareholder Expenses").
10.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
Terayon Communication Systems, Inc.
40.
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2952 Bunker Hill Lane
Santa Clara, California 95954
Fax: (408) 727-6205
Attention: General Counsel
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with a copy to:
Cooley Godward LLP
One Maritime Plaza, 20/th/ Floor
San Francisco, California 94111
Fax: (415) 951-3699
Attention: Karyn S. Tucker
if to the Company:
TrueChat, Inc.
11001 W. 120/th/ Avenue, Suite 400
Broomfield, CO 80021
Fax: (303) 410-4252
Attention: Gregory D. Leibold
with a copy to:
Perkins Coie LLP
1899 Wynkoop St.
Denver, CO 80202
Fax: (303) 291-2400
Attn: Donald Salcito
10.6 Legal Representation. For all transactions related to the Merger, the
Company is represented by its legal counsel, Perkins Coie LLP and Parent and
Merger Sub are represented by their legal counsel Cooley Godward llp.
10.7 Time of the Essence. Time is of the essence of this Agreement.
10.8 Headings. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.10 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
10.11 Successors and Assigns. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); and Merger Sub and its
successors and assigns (if any). This Agreement shall inure to the benefit of:
the Company; the Company's shareholders (to the extent set forth in Section
1.5); the holders of assumed Company Options (to the extent set forth in Section
1.7); Parent; Merger Sub; the other Indemnitees (subject to Section 9.8); and
the respective successors and assigns (if any) of the foregoing. Following the
Closing, Parent may
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freely assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9), in whole to any other Person without
obtaining the consent or approval of any other party hereto or of any other
Person, provided that such assignment occurs in connection with Parent's sale of
the capital stock, business or assets of the Company that effectively constitute
all or substantially all of the capital stock or similar securities of the
Company or all or substantially all of the Company's business or assets as then
conducted by Parent.
10.12 Remedies Cumulative; Specific Performance. Except as limited by
Section 9.3, the rights and remedies of the parties hereto shall be cumulative
(and not alternative). The parties to this Agreement agree that, in the event
of any breach or threatened breach by any party to this Agreement of any
covenant, obligation or other provision set forth in this Agreement for the
benefit of any other party to this Agreement, such other party shall be entitled
(in addition to any other remedy that may be available to it) to (a) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision and (b) an
injunction restraining such breach or threatened breach.
10.13 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.14 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.15 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.16 Parties in Interest. Except for the provisions of Sections 1.5, 1.6
and 9, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.17 Entire Agreement. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter hereof and
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thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof and thereof; provided,
however, that the Mutual Non-Disclosure Agreement executed on behalf of Parent
and the Company on September 27, 2000 shall not be superseded by this Agreement
and shall remain in effect in accordance with its terms until the earlier of (a)
the Effective Time, or (b) the date on which such Mutual Non-Disclosure
Agreement is terminated in accordance with its terms.
10.18 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
Remainder of This Page Intentionally Left Blank
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The parties hereto have caused this Agreement to be executed and delivered
as of the date first above written.
Terayon Communications Systems, Inc.,
a Delaware corporation
By: /s/ Zaki Rakib
-------------------------------
Zaki Rakib
Chief Executive Officer
True Acquisition, Inc.,
a Delaware corporation
By: /s/ Zaki Rakib
-------------------------------
Zaki Rakib
Chief Executive Officer
TrueChat, Inc.,
a company organized under the laws
of the State of Colorado
By: /s/ Frank Christofferson
-------------------------------
Print Name: Frank Christofferson
-----------------------
Title: President
----------------------------
<PAGE>
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) any merger, consolidation, reorganization, recapitalization
(other than the extension of the conversion or payment terms of outstanding
convertible securities or debt of the Company) or similar transaction involving
the Company or any of its affiliates;
(b) any transfer of more than fifty percent (50%) of the Company
Stock or any of its affiliates or securities convertible into Company Stock or
any of its affiliates (other than upon the exercise or conversion of outstanding
options, warrants or other convertible securities);
(c) any transfer of any asset of the Company or any of its affiliates
not in the ordinary course of business; or
(d) any transaction that may be inconsistent with or that may have an
adverse effect on the Merger.
Acquisition Proposal. "Acquisition Proposal" shall mean any proposal,
plan, agreement, understanding or arrangement contemplating:
(a) any merger, consolidation, reorganization, recapitalization
(other than the extension of the conversion or payment terms of outstanding
convertible securities or debt of the Company) or similar transaction involving
the Company or any of its affiliates;
(b) any transfer of more than fifty percent (50%) of the Company
Stock or any of its affiliates or securities convertible into Company Stock or
any of its affiliates (other than upon the exercise or conversion of outstanding
options, warrants or other convertible securities);
(c) any transfer of any asset of the Company or any of its affiliates
not in the ordinary course of business; or
(d) any transaction that may be inconsistent with or that may have an
adverse effect on the Merger.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit B is attached (including the Disclosure
Schedule), as it may be amended from time to time.
Company Contract. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (b) by which the Company or any of its assets is or may
become bound or
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under which the Company has, or may become subject to, any obligation; or (c)
under which the Company has or may acquire any right or interest.
Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Parent on behalf of the Company.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department,
A-2.
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agency, commission, instrumentality, official, organization, unit, body or
Entity and any court or other tribunal).
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) Parent's current and future affiliates (including the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)," "(b)" and "(c)" above.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. A violation or other matter will be deemed to
have a "Material Adverse Effect" on a Person if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement or, as regarding
the Company in the Company Closing Certificate, but for the presence of
"Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on such Person's business, condition, assets, liabilities,
operations, or financial performance or prospects; provided, that any change,
circumstance or effect that arises directly or indirectly out of, or results
directly or indirectly from the announcement of, the transactions contemplated
by the Agreement shall not be deemed to constitute a Material Adverse Effect on
a Person; and provided further that a decrease in the price of Parent's Common
Stock that is not accompanied by another event which would be deemed to have a
Material Adverse Effect on Parent, shall not be deemed to constitute a Material
Adverse Effect on Parent.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
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SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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Exhibit B
FORM OF AMENDED AND RESTATED ARTICLES
OF INCORPORATION OF SURVIVING CORPORATION
<PAGE>
Exhibit D
FORM OF INDEMNIFICATION ESCROW AGREEMENT
<PAGE>
Exhibit E
FORM OF LEGAL OPINION OF PERKINS COIE LLP
<PAGE>
Exhibit G
FORM OF RETENTION ESCROW AGREEMENT
