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EXHIBIT 99.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
January 16, 2001
among
WEBTRENDS, CORPORATION
NETIQ CORPORATION
and
NORTH ACQUISITION CORPORATION
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TABLE OF CONTENTS(1)
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions................................................2
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger.................................................6
SECTION 2.02. Conversion of Shares.......................................6
SECTION 2.03. Surrender and Payment......................................7
SECTION 2.04. Stock Options..............................................8
SECTION 2.05. Employee Stock Purchase Plan...............................9
SECTION 2.06. Adjustments...............................................10
SECTION 2.07. Fractional Shares.........................................10
SECTION 2.08. Withholding Rights........................................10
SECTION 2.09. Lost Certificates.........................................11
SECTION 2.10. Tax Consequences..........................................11
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Articles of Incorporation.................................11
SECTION 3.02. Bylaws....................................................11
SECTION 3.03. Directors and Officers....................................11
SECTION 3.04. Additional Actions........................................11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power.............................12
SECTION 4.02. Corporate Authorization...................................12
SECTION 4.03. Governmental Authorization................................13
SECTION 4.04. Non-contravention.........................................13
SECTION 4.05. Capitalization............................................13
SECTION 4.06. Subsidiaries..............................................14
SECTION 4.07. SEC Filings...............................................15
SECTION 4.08. Financial Statements......................................16
SECTION 4.09. Disclosure Documents......................................16
SECTION 4.10. Agreements, Contracts and Commitments.....................16
SECTION 4.11. Absence of Certain Changes................................18
SECTION 4.12. No Undisclosed Material Liabilities.......................20
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(1) The Table of Contents is not a part of this Agreement.
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SECTION 4.13. Compliance with Laws and Court Orders.....................20
SECTION 4.14. Litigation................................................20
SECTION 4.15. Finders' Fees.............................................21
SECTION 4.16. Opinion of Financial Advisor..............................21
SECTION 4.17. Taxes.....................................................21
SECTION 4.18. Employee Benefit Plans....................................23
SECTION 4.19. Environmental Matters.....................................25
SECTION 4.20. Company Intellectual Property.............................25
SECTION 4.21. Tax Treatment.............................................28
SECTION 4.22. Antitakeover Statutes and Rights Agreement................28
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 5.01. Corporate Existence and Power.............................28
SECTION 5.02. Corporate Authorization...................................29
SECTION 5.03. Governmental Authorization................................29
SECTION 5.04. Non-contravention.........................................29
SECTION 5.05. Capitalization............................................30
SECTION 5.06. Subsidiaries..............................................30
SECTION 5.07. SEC Filings...............................................31
SECTION 5.08. Financial Statements......................................32
SECTION 5.09. Disclosure Documents......................................32
SECTION 5.10. Absence of Certain Changes................................33
SECTION 5.11. Compliance with Laws and Court Orders.....................34
SECTION 5.12. Litigation................................................34
SECTION 5.13. Finders' Fees.............................................34
SECTION 5.14. Opinion of Financial Advisor..............................35
SECTION 5.15. Tax Treatment.............................................35
SECTION 5.16. Ownership of Company Equity...............................35
SECTION 5.17. No Undisclosed Material Liabilities.......................35
SECTION 5.18. Environmental Matters.....................................35
SECTION 5.19. Parent Intellectual Property..............................36
SECTION 5.20. Agreements, Contracts and Commitments.....................37
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company....................................39
SECTION 6.02. Shareholder Meeting; Proxy Material.......................40
SECTION 6.03. No Solicitation...........................................40
SECTION 6.04. Required Consents.........................................42
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ARTICLE 7
COVENANTS OF PARENT
SECTION 7.01. Conduct of Parent.........................................43
SECTION 7.02. Obligations of Merger Subsidiary..........................43
SECTION 7.03. Director and Officer Liability............................43
SECTION 7.04. Registration Statement; Stockholder Meeting; Proxy
Material..................................................44
SECTION 7.05. Nasdaq Stock Market Listing...............................45
SECTION 7.06. Board of Director Membership..............................45
SECTION 7.07. Employee Benefits.........................................45
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
SECTION 8.01. Reasonable Efforts........................................46
SECTION 8.02. Certain Filings...........................................46
SECTION 8.03. Public Announcements......................................46
SECTION 8.04. Further Assurances........................................47
SECTION 8.05. Access to Information.....................................47
SECTION 8.06. Notices of Certain Events.................................47
SECTION 8.07. Confidentiality...........................................48
SECTION 8.08. Tax-free Reorganization; Purchase Accounting..............49
SECTION 8.09. Affiliates................................................49
SECTION 8.10. 401(k) Plan...............................................49
SECTION 8.11. Section 16................................................49
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party...................50
SECTION 9.02. Conditions to the Obligations of Parent and Merger
Subsidiary................................................51
SECTION 9.03. Conditions to the Obligations of the Company..............51
ARTICLE 10
TERMINATION
SECTION 10.01. Termination..............................................52
SECTION 10.02. Effect of Termination....................................53
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices..................................................54
SECTION 11.02. Survival of Representations and Warranties...............55
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SECTION 11.03. Amendments; No Waivers...................................55
SECTION 11.04. Expenses.................................................55
SECTION 11.05. Successors and Assigns...................................57
SECTION 11.06. Governing Law............................................57
SECTION 11.07. WAIVER OF JURY TRIAL.....................................57
SECTION 11.08. Counterparts; Effectiveness..............................57
SECTION 11.09. Entire Agreement.........................................57
SECTION 11.10. Captions.................................................57
SECTION 11.11. Severability.............................................57
SECTION 11.12. Specific Performance.....................................58
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 16, 2001 among
WebTrends Corporation, an Oregon corporation ("COMPANY"), NetIQ Corporation, a
Delaware corporation ("PARENT"), and North Acquisition Corporation, an Oregon
corporation and a wholly-owned subsidiary of Parent ("MERGER SUBSIDIARY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Oregon Business Corporation Act ("OREGON LAW"), Parent and
Company will enter into a business combination transaction pursuant to which
Merger Subsidiary will merge with and into Company (the "MERGER").
B. The Board of Directors of Parent (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Parent and fair to, advisable and in the best interests of, Parent and its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) has determined to
recommend that the stockholders of Parent vote to approve the issuance of shares
of Parent Stock (as defined below) to the shareholders of Company pursuant to
the terms of the Merger.
C. The Board of Directors of Company (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Company and fair to, advisable and in the best interests of, Company and its
shareholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) has determined to
recommend the approval of this Agreement and the Merger by the shareholders of
Company.
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's and Company's willingness to enter into this
Agreement, certain affiliates of Company shall enter into a Voting Agreement in
substantially the form attached hereto as Exhibit A (the "VOTING AGREEMENT").
E. Parent, Company and Merger Subsidiary desire to make certain
representations and warranties and other agreements in connection with the
Merger.
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended.
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NOW THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"ACQUISITION PROPOSAL" means, other than the transactions contemplated
by this Agreement, any offer or proposal for, any indication of interest in, or
any submission of inquiries from any Third Party relating to (A) any acquisition
or purchase, direct or indirect, of 20% or more of the consolidated assets of
Company and Company Subsidiaries or over 20% of any class of equity or voting
securities of Company or any Company Subsidiaries whose assets, individually or
in the aggregate, constitute more than 20% of the consolidated assets of
Company, (B) any tender offer (including a self-tender offer) or exchange offer
that, if consummated, would result in such Third Party's beneficially owning 20%
or more of any class of equity or voting securities of Company or any Company
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of Company or (C) a merger, consolidation,
share exchange, business combination, sale of substantially all the assets,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving Company or any Company Subsidiaries whose assets,
individually or in the aggregate, constitute more than 20% of the consolidated
assets of Company.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person.
"BUSINESS DAY" means a day, other than Saturday, Sunday or other day on
which commercial banks in California are authorized or required by law to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BALANCE SHEET" means the consolidated balance sheets of Company
as of December 31, 1999 and the footnotes thereto set forth in the Company 10-K.
"COMPANY BALANCE SHEET DATE" means December 31, 1999.
"COMPANY STOCK" means the common stock, no par value, of Company.
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"COMPANY 10-K" means Company's annual report on Form 10-K for the fiscal
year ended December 31, 1999.
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including, without limitation, any enforceable judicial or administrative
interpretation thereof), treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit or governmental restriction or requirement or
any agreement with any governmental authority, relating to human health and
safety, the environment or to pollutants, contaminants, wastes or chemicals or
any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of Company or any Company Subsidiary as
currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"KNOWLEDGE" of any Person that is not an individual means the knowledge
of such Person's officers after reasonable inquiry.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset other than restrictions on transfer
imposed by federal or state securities laws. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect on the condition (financial or otherwise), business, assets or
results
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of operations of such Person and its Subsidiaries, taken as a whole, it being
understood that a decline in stock price shall not constitute, in and of itself,
a Material Adverse Effect.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"OFFICER" of any Person means any executive officer of such Person
within the meaning of Rule 3b-7 under the 1934 Act.
"PARENT BALANCE SHEET" means the consolidated balance sheets of Parent
as of June 30, 2000 and the footnotes therein set forth in the Parent 10-K.
"PARENT BALANCE SHEET DATE" means June 30, 2000.
"PARENT STOCK" means the common stock, $0.001 par value, of Parent.
"PARENT 10-K" means Parent's annual report on Form 10-K for the fiscal
year ended June 30, 2000.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
"SHAREHOLDER" means a holder of record of Company common stock
immediately prior to the Effective Time.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"THIRD PARTY" means any Person as defined in Section 13(d) of the 1934
Act, other than Parent or any of its Affiliates.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
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368 Reorganization .................................... 4.21
Adjusted Option ....................................... 2.04
Certificates .......................................... 2.03
Closing ............................................... 2.01
Closing Date .......................................... 2.01
Company ............................................... Preamble
Company Employee ...................................... 7.07
Company Intellectual Property ......................... 4.20
Company Insider ....................................... 8.11
Company Proxy Statement ............................... 4.09
Company Registered Intellectual Property .............. 4.20
Company SEC Documents ................................. 4.07
Company Securities .................................... 4.05
Company Stockholder Meeting ........................... 6.02
Company Stock Option .................................. 2.04
Company Stock Option Plan ............................. 2.04
Company Subsidiaries .................................. 4.06
Company Subsidiaries Securities ....................... 4.06
Confidentiality Agreement ............................. 6.03
Effective Time ........................................ 2.01
Employee Plans ........................................ 4.18
End Date .............................................. 10.01
Exchange Agent ........................................ 2.03
Fixed Exchange Ratio .................................. 2.02
Indemnified Person .................................... 7.03
Intellectual Property ................................. 4.20
Merger ................................................ Recitals
Merger Consideration .................................. 2.02
Merger Subsidiary ..................................... Preamble
Multiemployer Plan .................................... 4.18
Oregon Law ............................................ Recitals
Parent ................................................ Preamble
Parent Benefit Plans .................................. 7.07
Parent Intellectual Property .......................... 5.19
Parent Proxy Statement ................................ 5.09
Parent Registered Intellectual Property ............... 5.19
Parent SEC Documents .................................. 5.07
Parent Stockholder Meeting ............................ 7.04
Payment Event ......................................... 11.04
Registration Statement ................................ 5.09
Registered Intellectual Property ...................... 4.20
Superior Proposal ..................................... 6.03
Surviving Corporation ................................. 2.01
Taxes ................................................. 4.17
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Taxing Authority ...................................... 4.17
Voting Agreement ...................................... Recitals
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ARTICLE 2
THE MERGER
SECTION 2.01. The Merger. (a) At the Effective Time (as defined below),
Merger Subsidiary shall be merged with and into Company in accordance with
Oregon Law, whereupon the separate existence of Merger Subsidiary shall cease,
and Company shall be the surviving corporation (the "SURVIVING CORPORATION").
(b) Subject to the provision of this Agreement, Company and Merger
Subsidiary will file the articles of merger with the Oregon Secretary of State
and make all other filings or recordings required by Oregon Law in connection
with the Merger as soon as practicable on or after the Closing Date (as herein
defined). The Merger shall become effective at such time (the "EFFECTIVE TIME")
as the articles of merger is duly filed with the Oregon Secretary of State (or
at such later time as may be specified in the articles of merger). The closing
of the Merger (the "CLOSING") shall take place at the office of Davis Polk &
Wardwell, 1600 El Camino Real, Menlo Park, California, at a time and date to be
specified by the parties, which shall be no later than the second business date
after the satisfaction or waiver of the conditions set forth in Article 9, or at
such other time, date and location as the parties hereto agree in writing (the
"CLOSING DATE").
(c) At the Effective Time, the effect of the Merger shall be as provided
in this Agreement and applicable provisions of Oregon Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, the
Surviving Corporation shall possess all the rights, powers, privileges and
franchises and be subject to all of the obligations, liabilities, restrictions
and disabilities of Company and Merger Subsidiary.
SECTION 2.02. Conversion of Shares. At the Effective Time,
(a) except as otherwise provided in Section 2.02(b), each share of
Company Stock outstanding immediately prior to the Effective Time shall be
converted into the right to receive 0.48 shares of Parent Stock (the "FIXED
EXCHANGE RATIO" and together with the cash in lieu of fractional shares of
Parent Stock as specified below, the "MERGER CONSIDERATION");
(b) each share of Company Stock held by Company as treasury stock or
owned by Parent immediately prior to the Effective Time shall be canceled, and
no payment shall be made with respect thereto; and
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(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 2.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent (the "EXCHANGE AGENT") for the purpose of
exchanging certificates representing shares of Company Stock (the
"CERTIFICATES") for the Merger Consideration. Parent will make available to the
Exchange Agent, as needed, the Merger Consideration to be paid in respect of the
shares of Company Stock and any dividends or distributions to which holder of
Company Stock may be entitled pursuant to Section 2.03(f). Promptly after the
Effective Time (and in any event no later than five Business Days after receipt
by Parent of a complete list from Company of the names and addresses of its
shareholders of record), Parent will send, or will cause the Exchange Agent to
send, to each holder of shares of Company Stock at the Effective Time a letter
of transmittal and instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of shares of Company Stock that have been converted into
the right to receive the Merger Consideration will receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed and
validly executed letter of transmittal in accordance with the instructions
thereto, the Merger Consideration in respect of Company Stock represented by
such Certificate. Until so surrendered, each such Certificate shall represent
from and after the Effective Time for all corporate purposes, subject to Section
2.03(f) as to the payment of dividends or other distributions, the ownership of
the number of full shares of Parent Stock into which such shares of Company
Stock shall have been so converted and the right to receive such Merger
Consideration and any dividends or distributions payable pursuant to Section
2.03(f).
(c) If any portion of the Merger Consideration is to be issued to a
Person other than the Person in whose name the Certificate is registered, it
shall be a condition to such issuance that the Certificate so surrendered shall
be properly endorsed and guaranteed or otherwise be in proper form for transfer
and that the Person requesting such issuance shall pay to the Exchange Agent any
transfer or other Taxes required as a result of such payment to a Person other
than the registered holder of such Certificate or establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Company Stock. If, after the Effective Time, Certificates
are
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presented to the Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders
of shares of Company Stock six months after the Effective Time shall be returned
to Parent, upon demand, and any such holder who has not exchanged them for the
Merger Consideration in accordance with this Section prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration, and any
dividends and distributions with respect thereto, in respect of such shares
without any interest thereon. Notwithstanding the foregoing, Parent shall not be
liable to any holder of shares of Company Stock for any amounts paid to a public
official pursuant to applicable abandoned property, escheat or similar laws. Any
amounts remaining unclaimed by holders of shares of Company Stock immediately
prior to such time when the amounts would otherwise escheat to or become
property of any governmental authority shall become, to the extent permitted by
applicable law, the property of Parent free and clear of any claims or interest
of any Person previously entitled thereto.
(f) No dividends or other distributions with respect to securities of
Parent constituting part of the Merger Consideration with a record date after
the Effective Time, and no cash payment in lieu of fractional shares as provided
in Section 2.07, shall be paid to the holder of any unsurrendered Certificates
until such Certificates are surrendered as provided in this Section. Following
such surrender, there shall be paid, without interest, to the Person in whose
name the securities of Parent have been registered, (i) at the time of such
surrender, the amount of any cash payable in lieu of fractional shares to which
such Person is entitled pursuant to Section 2.07 and the amount of all dividends
or other distributions with a record date after the Effective Time previously
paid or payable on the date of such surrender with respect to such securities,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time and prior to surrender
and with a payment date subsequent to surrender payable with respect to such
securities.
SECTION 2.04. Stock Options. (a) The terms of each outstanding option (a
"COMPANY STOCK OPTION") to purchase shares of Company Stock under any employee
stock option or compensation plan or arrangement of the Company (a "COMPANY
STOCK OPTION PLAN"), whether or not exercisable or vested, shall be adjusted as
necessary to provide that, at the Effective Time, each Company Stock Option
outstanding immediately prior to the Effective Time shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, the same number of shares of Parent
Stock as the holder of such Company Stock Option would have been entitled to
receive pursuant to the Merger had such holder exercised such
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Company Stock Option in full immediately prior to the Effective Time, at a price
per share of Parent Stock equal to (A) the aggregate exercise price for the
shares of Company Stock otherwise purchasable pursuant to such Company Stock
Option divided by (B) the aggregate number of shares of Parent Stock deemed
purchasable pursuant to such Company Stock Option (each, as so adjusted, an
"ADJUSTED OPTION"), provided that any fractional share of Parent Stock resulting
from an aggregation of all the shares of a holder subject to Company Stock
Option shall be rounded down to the nearest whole share, and provided further
that, for any Company Stock Option to which Section 421 of the Code applies by
reason of its qualification under any of Sections 422 through 424 of the Code,
the option price, the number of shares purchasable pursuant to such option and
the terms and conditions of exercise of such option shall be determined in order
to comply with Section 424 of the Code.
(b) Prior to the Effective Time, Company shall take any actions that are
necessary to give effect to the transactions contemplated by this Section 2.04.
(c) Parent shall take such actions as are necessary for the assumption
of the Company Stock Options pursuant to this Section 2.04, including the
reservation, issuance and listing of Parent Stock as is necessary to effectuate
the transactions contemplated by this Section 2.04. Parent shall prepare and
file with the SEC a registration statement on an appropriate form, or a
post-effective amendment to a registration statement previously filed under the
1933 Act, with respect to the shares of Parent Stock subject to the Adjusted
Option and, where applicable, shall have such registration statement declared
effective as soon as is reasonably practicable following the Effective Time and
maintain the effectiveness of such registration statement covering such Adjusted
Option (and to maintain the current status of the prospectus contained therein)
for so long as such Adjusted Option remains outstanding.
SECTION 2.05. Employee Stock Purchase Plan. Prior to the Effective Time,
outstanding purchase rights under the Company ESPP shall be exercised in
accordance with Section 21.3 of the 1999 Employee Stock Purchase Plan (the
"COMPANY ESPP") and each share of Company Common Stock purchased pursuant to
such exercise shall by virtue of the Merger, and without any action on the part
of the holder thereof, be converted into the right to receive the Merger
Consideration with respect to the number of shares of Company Common Stock that
were issuable upon exercise of such purchase rights under the Company ESPP
immediately prior to the Effective Time and any dividends or distributions to
which such holder may be entitled pursuant to Section 2.03(f) without issuance
of certificates representing issued and outstanding shares of Company Common
Stock to Company ESPP participants. Parent agrees that as soon as practicable
after the Effective Time it shall cause certificates representing shares of
Parent Stock, together with any cash portion of the Merger Consideration and
such dividends or distributions required by Section 2.03(f), to be delivered to
such
<PAGE> 15
holders in satisfaction of such holders rights under this Section 2.05 with no
further action required by such holders. Company agrees that it shall terminate
the Company ESPP immediately following the aforesaid purchase of shares of
Company Common Stock thereunder. Parent further agrees that it shall use its
best efforts to ensure that all Company employees or Parent employees who were
Company employees immediately prior to the Effective Time shall be eligible to
participate in the Parent 1999 Employee Stock Purchase Plan as of the first
offering period thereunder following the Effective Time.
SECTION 2.06. Adjustments. The Fixed Exchange Ratio shall be adjusted to
reflect appropriately the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible into
or exercisable or exchangeable for Parent Common Stock or Company Common Stock),
extraordinary cash dividend, reorganization, recapitalization, reclassification,
combination, exchange of shares or other like change with respect to Parent
Common Stock or Company Common Stock occurring or having a record date on or
after the date hereof and prior to the Effective Time.
SECTION 2.07. Fractional Shares. No fractional shares of Parent Stock
shall be issued in the Merger. All fractional shares of Parent Stock that a
holder of shares of Company Stock would otherwise be entitled to receive as a
result of the Merger shall be aggregated and if a fractional share results from
such aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash (rounded to the nearest whole cent) without interest determined
by multiplying the average closing sale price of a share of Parent Stock on the
Nasdaq National Market on the five (5) trading day immediately preceding the
Effective Time by the fraction of a share of Parent Stock to which such holder
would otherwise have been entitled.
SECTION 2.08. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Stock or Company Stock Option, as the case may
be, in respect of which the Surviving Corporation or Parent, as the case may be,
made such deduction and withholding.
SECTION 2.09. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim
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that may be made against it with respect to such Certificate, the Exchange Agent
will issue, in exchange for such lost, stolen or destroyed Certificate, the
Merger Consideration and any dividends or distributions pursuant to Section
2.03(f) to be paid in respect of the shares of Company Stock represented by such
Certificate, as contemplated by this Article.
SECTION 2.10. Tax Consequences. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
and that this Agreement shall constitute a "plan of reorganization" for the
purposes of the Code.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Articles of Incorporation. At the Effective Time, (i) the
Third Restated Articles of Incorporation of the Surviving Corporation as in
effect immediately prior to the Effective Time shall be amended so as to contain
the provisions, and only the provisions, contained immediately prior thereto in
the Articles of Incorporation of Merger Subsidiary, except for Article I thereof
which shall continue to read "The name of the corporation is WebTrends
Corporation".
SECTION 3.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of
Merger Subsidiary at the Effective Time shall be the officers of the Surviving
Corporation.
SECTION 3.04. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Company, or (b) otherwise carry out the
provisions of this Agreement, the officers and directors of the Surviving
Corporation are authorized to take, and will take, any and all such lawful
actions.
<PAGE> 17
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Company represents and warrants to Parent, subject to such exceptions as
are specifically disclosed in the disclosure letter supplied by Company to
Parent dated as of the date hereof, which disclosure shall provide an exception
to or otherwise qualify the representations or warranties of Company contained
in the section of this Agreement corresponding by number to such disclosure and
the other representations and warranties herein to the extent such disclosure
shall reasonably appear to be applicable to such other representations or
warranties that:
SECTION 4.01. Corporate Existence and Power. Company is a corporation
duly incorporated and validly existing under the laws of the State of Oregon and
has all corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the aggregate, a Material
Adverse Effect on Company. Company is duly qualified to do business as a foreign
corporation and is in good standing as a foreign corporation in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material Adverse Effect on Company. Company has heretofore
delivered to Parent true and complete copies of the articles of incorporation
and bylaws of Company as currently in effect and no amendments have been made to
such documents since the date of such delivery.
SECTION 4.02. Corporate Authorization. (a) The execution, delivery and
performance by Company of this Agreement and the consummation by Company of the
transactions contemplated hereby are within Company's corporate powers and,
except for the required approval of Company's shareholders in connection with
the consummation of the Merger, have been duly authorized by all necessary
corporate action on the part of Company. The affirmative vote of the holders of
at least a majority of the outstanding shares of Company Stock is the only vote
of the holders of any of Company's capital stock necessary in connection with
the consummation of the Merger. Assuming the due authorization, execution and
delivery of this Agreement by Parent and, if applicable, Merger Subsidiary, this
Agreement constitute valid and binding agreements of Company, enforceable
against the Company in accordance with its terms.
(b) At a meeting duly called and held, Company's Board of Directors has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby are fair to and in the best interests of Company's shareholders, (ii)
unanimously approved and adopted this Agreement and the transactions
contemplated hereby and (iii) unanimously resolved (subject to
<PAGE> 18
Section 6.03(b)) to recommend approval and adoption of this Agreement by its
shareholders.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by Company of this Agreement and the consummation by Company of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any governmental body, agency, official or authority, domestic,
foreign or supranational, other than (i) the filing of the articles of merger
with respect to the Merger with the Oregon Secretary of State and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business, (ii) compliance with any applicable requirements of
the HSR Act, (iii) compliance with any applicable requirements of the 1933 Act,
the 1934 Act, and any other applicable securities laws, whether state or
foreign, (iv) any actions or filings the absence of which would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Company or the Surviving Corporation or materially to impair
the ability of Company to consummate the transactions contemplated by this
Agreement.
SECTION 4.04. Non-contravention. The execution and delivery by Company
of this Agreement do not and the performance of this Agreement by the Company
will not (i) contravene, conflict with, or result in any violation or breach of
any provision of the articles of incorporation or bylaws of Company, (ii)
assuming compliance with the matters referred to in Section 4.03, contravene,
conflict with or result in a violation or breach of any provision of any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order, or decree, (iii) require any consent or other action by any Person under,
constitute a default, or an event that, with or without notice or lapse of time
or both, would constitute a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which Company or Company Subsidiaries are entitled under
any provision of any agreement or other instrument binding upon Company or
Company Subsidiaries or any license, franchise, permit, certificate, approval or
other similar authorization affecting, or relating in any way to, the assets or
business of Company and Company Subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of Company or Company Subsidiaries, except
for such contraventions, conflicts and violations referred to in clause (ii).
SECTION 4.05. Capitalization. (a) The authorized capital stock of
Company consists of 300,000,000 shares of Common Stock, no par value per share
of which there were 26,425,505 shares issued and outstanding as of December 31,
2000, and 15,000,000 shares of Preferred Stock, no par value per share of which
no shares are issued or outstanding. As of December 31, 2000 5,788,384 shares
were reserved for issuance under the Company Stock Option Plans, of which
1,421,356 shares were issued and outstanding pursuant to exercised options,
4,783,059 shares were subject to outstanding options (of which
<PAGE> 19
options to purchase 555,401 shares were exercisable) and 1,076,709 shares were
available for future grant. As of December 31, 2000, there were reserved for
issuance under the Company ESPP 1,465,000 shares of Common Stock, of which
61,540 shares were issued pursuant to exercised options, and 1,403,460 shares
were available for future issuance. All outstanding shares of capital stock of
Company have been, and all shares that may be issued pursuant to the 1997 Stock
Incentive Compensation Plan, the Amended and Restated 1998 Stock Incentive Plan
and the 1999 Employee Stock Purchase Plan, as amended, will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable. No outstanding shares of Company Common Stock are
subject to lapsing rights of repurchase, vesting or similar provisions. Other
than vesting of stock options over time based on continuing service with
Company, there are no securities of Company that shall become vested or
exercisable based on performance or other contingencies. No Company Subsidiary
owns any shares of Company Stock.
(b) Except as set forth in this Section 4.05 and for changes since
December 31, 2000 resulting from the exercise of employee stock options
outstanding on such date, or issuances under the Company ESPP, there are no
outstanding (i) shares of capital stock or voting securities of Company, (ii)
securities of Company convertible into or exchangeable for shares of capital
stock or voting securities of Company or (iii) options or other rights to
acquire from Company, or other obligation of Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Company (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "COMPANY SECURITIES"). There are
no outstanding obligations of Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any of Company Securities.
SECTION 4.06. Subsidiaries. (a) Schedule 4.06 lists all Subsidiaries of
Company and their jurisdictions of incorporation ("COMPANY SUBSIDIARIES").
Company Subsidiaries are duly incorporated, validly existing and in good
standing under the laws of their jurisdictions of incorporation, have all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on their respective businesses as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not have, individually and in the
aggregate, a Material Adverse Effect on Company. Company Subsidiaries are duly
qualified to do business as foreign corporations and are in good standing as
foreign corporations in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on Company.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, Company Subsidiaries, is owned by Company, directly
or
<PAGE> 20
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). There are no outstanding (i) securities of Company or Company
Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in Company Subsidiaries or (ii)
options or other rights to acquire from Company or Company Subsidiaries, or
other obligation of Company or Company Subsidiaries to issue, any capital stock
or other voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in, Company Subsidiaries (the items in clauses
(i) and (ii) being referred to collectively as the "COMPANY SUBSIDIARIES
SECURITIES"). There are no outstanding obligations of Company or Company
Subsidiaries to repurchase, redeem or otherwise acquire any of Company
Subsidiaries Securities.
SECTION 4.07. SEC Filings. (a) Company has timely filed all forms,
reports, schedules, statements and other documents required to be filed by it
since February 18, 1999 under the 1933 Act or 1934 Act (the "COMPANY SEC
DOCUMENTS"). Company has made available to Parent true and complete copies of
Company SEC Documents.
(b) As of its filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such filing), each Company SEC Document
filed pursuant to the 1934 Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
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.
(e) The Company Subsidiaries are not required to file any forms, reports
or other documents with the SEC.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Company
included in the Company SEC Documents (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto,
<PAGE> 21
(ii) were prepared in conformity with GAAP (except as may be indicated in the
notes thereto), and (iii) fairly present the consolidated financial position of
the Company and its consolidated Company Subsidiaries as of the dates thereof
and their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
SECTION 4.09. Disclosure Documents. (a) The proxy or information
statement of Company to be filed with the SEC in connection with the Merger (the
"COMPANY PROXY STATEMENT") and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the 1934 Act. At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of Company, and
at the time such shareholders vote on adoption of this Agreement, the Company
Proxy Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties
contained in this Section 4.09(a) will not apply to statements or omissions
included in the Company Proxy Statement based upon information furnished to
Company by Parent or Merger Subsidiary specifically for use therein.
(b) None of the information provided by Company for inclusion in the
Registration Statement or any amendment or supplement thereto or in the Parent
Proxy Statement, at the time the Registration Statement or any amendment or
supplement becomes effective or at the time the Parent Proxy Statement is first
mailed to Parent's stockholders, and at the time such stockholders vote upon the
issuance of shares of Parent Stock in connection with the Merger and at the
Effective Time, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
SECTION 4.10. Agreements, Contracts and Commitments. Neither Company nor
any Company Subsidiary is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment with
any officer or director or higher level employee or member of Company's Board of
Directors, other than those that are terminable by Company or any Company
Subsidiary on no more than thirty (30) days' notice without liability or
financial obligation to Company.
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
<PAGE> 22
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than (i) any
agreement of indemnification entered into in connection with the sale or license
of software products in the ordinary course of business, or (ii) any
indemnification obligation of the Company or any Company Subsidiary to its
officers or directors;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Company or any Company Subsidiary to engage
in any line of business or to compete with any person or granting any exclusive
distribution rights;
(e) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Company or any Company Subsidiary after the
date of this Agreement of a material amount of assets not in the ordinary course
of business or pursuant to which Company has any material ownership interest in
any corporation, partnership, joint venture or other business enterprise other
than Company Subsidiaries;
(f) any dealer, distributor, joint marketing or development agreement
currently in force under which Company or any Company Subsidiary has continuing
material obligations to jointly market any product, technology or service and
which may not be canceled without penalty upon notice of ninety (90) days or
less and, in the case of dealer, distributor or joint marketing agreements,
which involve payments by or to the Company of $500,000 or more, or any material
agreement pursuant to which Company or any Company Subsidiary has continuing
material obligations to jointly develop any intellectual property that will not
be owned, in whole or in part, by Company or Company Subsidiaries;
(g) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology other than source
code escrow agreements or other similar arrangements entered into in the normal
course of business;
(h) any agreement, contract or commitment currently in force to license
any third party to manufacture or reproduce any Company product, service or
technology or any agreement, contract or commitment currently in force to sell
or distribute any Company products, including any parts or components thereof,
service or technology except agreements with distributors or sales
representative in the normal course of business cancelable without penalty upon
notice of ninety (90) days or less and substantially in the form previously
provided to Parent;
<PAGE> 23
(i) any material mortgages, indentures, guarantees, loans or credit
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;
(j) any settlement agreement entered into prior to the date of this
Agreement; or
(k) any other agreement, contract or commitment that includes receipts
or expenditures of $1,000,000 or more individually.
Neither Company nor any Company Subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither Company nor any Company Subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the material terms or conditions of any of the agreements, contracts or
commitments to which Company or any Company Subsidiary is a party or by which it
is bound that are required to be disclosed as exceptions to this Section 4.10
(any such agreement, contract or commitment, a "Company Contract") in such a
manner as would permit any other party to cancel or terminate any such Company
Contract, or would permit any other party to seek material damages or other
remedies (for any or all of such breaches, violations or defaults, in the
aggregate.)
Each Company Contract: (i) is valid and binding on the Company or its
Subsidiaries, as the case may be and, to the knowledge of the Company, on the
other parties thereto, and is in full force and effect, and (ii) upon
consummation of the transactions contemplated by this Agreement, shall continue
in full force and effect without penalty or other adverse consequence. To the
knowledge of the Company, no other party to any Company Contract is in material
breach thereof or material default thereunder.
SECTION 4.11. Absence of Certain Changes. Since September 30, 2000, the
business of Company and Company Subsidiaries has been conducted in the ordinary
course consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Company or Company
Subsidiaries, or any repurchase, redemption or other acquisition by Company or
any Company Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Company or Company Subsidiaries;
<PAGE> 24
(c) any amendment of any material term of any outstanding security of
Company or Company Subsidiaries;
(d) any incurrence, assumption or guarantee by Company or Company
Subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(e) any creation or other incurrence by Company or Company Subsidiaries
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any material loan, advance or capital contributions to
or investment in any Person other than loans, advances or capital contributions
to or investments in any Company Subsidiaries in the ordinary course of business
consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Company or Company
Subsidiaries;
(h) any transaction or commitment made, or any contract or agreement
entered into, by Company or Company Subsidiaries relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by Company or Company Subsidiaries of any contract or other
right, in either case, material to Company and Company Subsidiaries, taken as a
whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
(i) any change in any method of accounting, method of tax accounting or
accounting principles or practice by Company or Company Subsidiaries, except for
any such change required by reason of a concurrent change in GAAP or Regulation
S-X under the 1934 Act;
(j) any (i) grant of any severance or termination pay to (or amendment
to any existing arrangement with) any director, officer or employee of Company
or Company Subsidiaries, (ii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements, (iii) entering
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of Company or Company Subsidiaries, (iv) establishment, adoption or amendment
(except as required by applicable law) of any collective bargaining, bonus,
profit-sharing, thrift, pension, retirement, deferred compensation,
compensation, stock option, restricted stock or other benefit plan or
arrangement covering any director, officer or employee of Company or any Company
Subsidiary or (v) increase in compensation, bonus or other benefits payable to
any director, officer or employee
<PAGE> 25
of Company or Company Subsidiaries, other than in the ordinary course of
business consistent with past practice;
(k) any material Tax election made or changed, any annual tax accounting
period changed, any method of tax accounting adopted or changed, any material
amended Tax Returns or claims for material Tax refunds filed, any material
closing agreement entered into, any material Tax claim, audit or assessment
settled, or any right to claim a material Tax refund, offset or other reduction
in Tax liability surrendered; or
(l) any revaluation by Company or Company Subsidiaries of any of its
assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable other than in the ordinary
course of business.
SECTION 4.12. No Undisclosed Material Liabilities. There are no
liabilities or obligations of Company or any Company Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, of a nature required to be disclosed on a balance sheet or in the
related notes to consolidated financial statements prepared in accordance with
GAAP, other than:
(a) liabilities or obligations disclosed and provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof, and
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practices since the Company Balance Sheet Date
that are immaterial in the aggregate.
SECTION 4.13. Compliance with Laws and Court Orders. Company and Company
Subsidiaries are and have been in compliance with, and to the knowledge of
Company, are not under investigation with respect to and have not been
threatened to be charged with or given notice of any violation of, any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, except for failures to comply or violations that have not had
and could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Company.
SECTION 4.14. Litigation. Except as set forth in Company SEC Documents
filed prior to the date hereof, there is no action, suit, investigation or
proceeding (or to the knowledge of the Company any basis therefor) pending
against, or, to the knowledge of Company, threatened against, Company, Company
Subsidiaries, any present or former officer, director or employee of Company or
Company Subsidiaries or any Person for whom Company or
<PAGE> 26
Company Subsidiaries may be liable or any of their respective properties before
any court or arbitrator or before or by any governmental body, agency or
official, domestic, foreign or supranational, that, if determined or resolved
adversely in accordance with the plaintiff's demands, could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company or that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger or any of the other transactions contemplated
hereby.
SECTION 4.15. Finders' Fees. Except for Dain Rauscher Wessels, a copy of
whose engagement agreement dated January 8, 2001 has been provided to Parent,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Company or Company
Subsidiaries who might be entitled to any fee or commission from Company or any
of its Affiliates in connection with the transactions contemplated by this
Agreement.
SECTION 4.16. Opinion of Financial Advisor. Company has received the
opinion of Dain Rauscher Wessels, financial advisor to Company, to the effect
that, as of the date of this Agreement, the Merger Consideration is fair to
Company's shareholders from a financial point of view.
SECTION 4.17. Taxes. (a) All material Tax Returns required by applicable
law to be filed with any Taxing Authority by, or on behalf of, Company or
Company Subsidiaries have been filed when due in accordance with all applicable
laws, and all such material Tax Returns were (at the time they were filed), or
will be at the time of filing, true and complete in all material respects.
(b) Company and Company Subsidiaries has paid (or has had paid on its
behalf) or has withheld and remitted to the appropriate Taxing Authority all
material Taxes due and payable prior to the date hereof, or, where payment is
not yet due, has established (or has had established on its behalf and for its
sole benefit and recourse) in accordance with GAAP an adequate accrual for all
material Taxes through the end of the last period for which Company and Company
Subsidiaries ordinarily record items on their respective books.
(c) There is no claim, audit, action, suit, proceeding or investigation,
or any basis therefore, now pending or, to the knowledge of Company, threatened
against or with respect to Company or Company Subsidiaries in respect of any Tax
or Tax asset.
(d) Schedule 4.17(d) contains a list of all jurisdictions in which
Company or Company Subsidiaries currently files Tax Returns.
(e) Company and Company Subsidiaries as of the Effective Time will have
withheld with respect to its employees all Taxes required to be withheld
<PAGE> 27
from such employees' salaries, wages and other compensation, except such Taxes
which are not material to Company.
(f) Neither Company nor Company Subsidiaries have executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(g) No material adjustments relating to any Tax Returns filed by Company
or Company Subsidiaries has been proposed in writing formally or informally by
any Taxing Authority to Company or Company Subsidiaries or any representative
thereof.
(h) There is no contract, agreement, plan or arrangement to which
Company or any Company Subsidiary is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, concerning any
employee or former employee of Company or Company Subsidiaries that,
individually or collectively, would reasonably be expected to give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162(m) of the Code. There is no contract, agreement, plan or arrangements
to which Company is a party or by which it is bound to compensate any individual
for excise taxes paid pursuant to Section 4999 of the Code.
(i) Neither Company nor Company Subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Company or Company Subsidiaries.
(j) "TAX" means (i) any tax, governmental fee or other like assessment
or charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional similar amount imposed by any governmental authority (a
"TAXING AUTHORITY") responsible for the imposition of any such tax (domestic or
foreign), and any liability for any of the foregoing as transferee, (ii) in the
case of Company or Company Subsidiaries, liability for the payment of any amount
of the type described in clause (i) as a result of being or having been before
the Closing Date a member of an affiliated, consolidated, combined or unitary
group, or a party to any agreement or arrangement, as a result of which
liability of Company or Company Subsidiaries to a Taxing Authority is determined
or taken into account with reference to the activities of any other Person, and
(iii) liability of Company or Company Subsidiaries for the payment of any amount
as a result of being party to any Tax sharing agreement or with respect to the
payment of any amount imposed on any person of the type described in (i) or (ii)
as a result of any existing express or implied agreement or arrangement
(including, but not limited to, an indemnification agreement or arrangement).
"TAX RETURN" shall mean any report, return, document, declaration or other
information or filing required to be
<PAGE> 28
supplied to any Taxing Authority with respect to Taxes, including information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
SECTION 4.18. Employee Benefit Plans. (a) Schedule 4.18 contains a
correct and complete list identifying each material "employee benefit plan", as
defined in Section 3(3) of ERISA, each employment, severance or similar
contract, plan, arrangement or policy and each other plan or arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program,
disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by Company or any
ERISA Affiliate and covers any employee or former employee of Company or any
Company Subsidiary, or with respect to which Company or any Company Subsidiary
has any liability. Copies of such plans (and, if applicable, related trust or
funding agreements or insurance policies) and all amendments thereto and written
interpretations thereof have been furnished to Parent together with the most
recent annual report (Form 5500 including, if applicable, Schedule B thereto)
and tax return (Form 990) prepared in connection with any such plan or trust.
Such plans are referred to collectively herein as the "EMPLOYEE PLANS".
(b) Neither Company nor any ERISA Affiliate nor any predecessor thereof
sponsors, maintains or contributes to, or has in the past six years sponsored,
maintained or contributed to, any employee plan subject to Title IV of ERISA.
(c) Neither Company nor any ERISA Affiliate nor any predecessor thereof
contributes to, or has in the past six years contributed to, any multiemployer
plan, as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN").
(d) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has pending
or has time remaining in which to file, an application for such determination
from the Internal Revenue Service, and Company is not aware of any reason why
any such determination letter should be revoked. Company has made available to
Parent copies of the most recent Internal Revenue Service determination letters
with respect to each such Employee Plan. Each Employee Plan has been maintained
in material compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations,
<PAGE> 29
including but not limited to ERISA and the Code, which are applicable to such
Employee Plan. No material events have occurred with respect to any Employee
Plan that could result in payment or assessment by or against Company of any
material excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D,
4980E or 5000 of the Code.
(e) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any Director,
Officer, employee, agent, representative, or independent contractor of Company
or any Company Subsidiary to severance pay, any bonus, retirement, job security
or similar benefit or accelerate the time of payment or vesting or trigger any
payment of funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any Employee Plan.
(f) Neither Company nor Company Subsidiaries has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of Company or Company Subsidiaries except
as required to avoid excise tax under Section 4980B of the Code.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by Company or any of its Affiliates
relating to, or change in employee participation or coverage under, an Employee
Plan which would increase materially the expense of maintaining such Employee
Plan above the level of the expense incurred in respect thereof for the fiscal
year ended December 31, 1999.
(h) Neither Company nor Company Subsidiaries is a party to or subject
to, or is currently negotiating in connection with entering into, any collective
bargaining agreement or other contract or understanding with a labor union or
organization.
(i) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending as of the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the Balance Sheet.
(j) There is no action, suit, investigation, audit or proceeding pending
against or involving or, to the knowledge of Company, threatened against or
involving, any Employee Plan before any court or arbitrator or any state,
federal or local governmental body, agency or official.
SECTION 4.19. Environmental Matters. (a) Except as set forth in Company
SEC Documents prior to the date hereof and except as could not
<PAGE> 30
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or, to the knowledge of Company, any
basis therefor) is pending or, to the knowledge of Company, is
threatened by any governmental entity or other Person relating to or
arising out of any Environmental Law;
(ii) Company is and has been in compliance with all Environmental
Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to Company or
Company Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise arising
under or relating to any Environmental Law and there are no facts,
conditions, situations or set of circumstances that could reasonably be
expected to result in or be the basis for any such liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which Company has knowledge in relation to
the current or prior business of Company or Company Subsidiaries or any property
or facility now or previously leased by Company or Company Subsidiaries that has
not been delivered to Parent at least five days prior to the date hereof.
(c) For purposes of this Section 4.19, the terms "COMPANY" and
"SUBSIDIARY" shall include any entity that is, in whole or in part, a
predecessor of Company or Company Subsidiaries.
SECTION 4.20. Company Intellectual Property. For the purposes of this
Agreement, the following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising, out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names,
<PAGE> 31
logos, common law trademarks and service marks, trademark and service mark
registrations and applications therefor throughout the world; (vi) all databases
and data collections and all rights therein throughout the world; (vii) all
moral and economic rights of authors and inventors, however denominated,
throughout the world, and (viii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Company or Company Subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications (including
provisional applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (iii) registered copyrights and applications for
copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other public legal
authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or Company
Subsidiaries.
(a) Section 4.20 of Company Schedules is a complete and accurate list of
all Company Registered Intellectual Property and specifies, where applicable,
the jurisdictions in which each such item of Company Registered Intellectual
Property has been issued or registered.
(b) No Company Intellectual Property or product or service of Company or
Company Subsidiaries is subject to any proceeding or outstanding decree, order,
judgment, contract, license, agreement, or stipulation restricting in any manner
the use, transfer, or licensing thereof by Company or Company Subsidiaries, or
which may affect the validity, use or enforceability of such Company
Intellectual Property.
(c) Company owns and has good and exclusive title to, or has license to
use (sufficient for the conduct of its business as currently conducted and as
proposed to be conducted), each item of Company Intellectual Property or other
Intellectual Property used by Company or Company Subsidiaries free and clear of
any lien or encumbrance (excluding licenses and related restrictions); and
Company or Company Subsidiaries is the exclusive owner of all trademarks and
trade names used in connection with the operation or conduct of the business of
Company and Company Subsidiaries, including the sale of any products or the
provision of any services by Company and Company Subsidiaries.
<PAGE> 32
(d) Company or Company Subsidiaries owns exclusively, and has good title
to, all copyrighted works that are Company or Company Subsidiaries products or
which Company or Company Subsidiaries otherwise expressly purports to own.
(e) To the extent that any Intellectual Property has been developed or
created by a third party for Company or Company Subsidiaries, Company has a
written agreement with such third party with respect thereto and Company thereby
either (i) has obtained ownership of, and is the exclusive owner of, or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(f) Neither Company nor Company Subsidiary has transferred ownership of,
or granted any exclusive license with respect to, any Intellectual Property that
is or was material Company Intellectual Property, to any third party.
(g) The operation of the business of Company and Company Subsidiaries as
such business currently is conducted, including Company's and Company
Subsidiaries' design, development, manufacture, marketing and sale of the
products or services of Company and Company Subsidiaries (including products,
currently under development) has not, does not and, to the knowledge of Company,
will not infringe or misappropriate the Intellectual Property of any third party
or, to its knowledge, constitute unfair competition or trade practices under the
laws of any jurisdiction.
(h) Neither Company nor Company Subsidiaries has received notice from
any third party that the operation of the business of Company or Company
Subsidiaries or any act, product or service of Company or Company Subsidiaries,
may infringe or misappropriate the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(i) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
(j) Company and Company Subsidiaries have taken reasonable steps to
protect Company's and Company Subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade secrets or
confidential information of third parties provided to Company or Company
Subsidiaries, and, without limiting the foregoing, each of Company and Company
Subsidiaries has and enforces a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in the
form provided to Parent and all current and former employees and contractors of
Company and Company Subsidiaries have executed such an agreement, except
<PAGE> 33
where the failure to do so is not reasonably expected to have a Material Adverse
Effect on Company.
SECTION 4.21. Tax Treatment. Neither Company nor any of its Affiliates
has taken or agreed to take any action, or is aware of any fact or circumstance,
that would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code (a "368 REORGANIZATION").
SECTION 4.22. Antitakeover Statutes and Rights Agreement. Company has
taken all action necessary to exempt the Merger, this Agreement and the
transactions contemplated hereby from Sections 60.801 through 60.816 of Oregon
Law, and, accordingly, neither such Section nor any other antitakeover or
similar statute or regulation applies or purports to apply to any such
transactions.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to Company subject to the exceptions
specifically in the disclosure letter supplied by Parent to Company dated as of
the date hereof, which disclosure shall provide an exception to or otherwise
qualify the representations or warranties of Parent contained in the section of
this Agreement corresponding by number to such disclosure and the other
representations and warranties herein to the extent such disclosure shall
reasonably appear to be applicable to such other representations or warranties
that:
SECTION 5.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the aggregate, a Material
Adverse Effect on Parent. Parent is duly qualified to do business as a foreign
corporation and is in good standing as a foreign corporation in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material Adverse Effect on Parent. Parent has heretofore
delivered to Company true and complete copies of the certificate of
incorporation and bylaws of Parent as currently in effect and no amendments have
been made to such documents since the date of such delivery. Since the date of
its incorporation, Merger Subsidiary has not engaged in any activities other
than in connection with or as contemplated by this Agreement.
<PAGE> 34
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action. Assuming due
authorization, execution and delivery of this Agreement by Company, this
Agreement constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary, enforceable against each of Parent and Merger Subsidiary in
accordance with its terms.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority, domestic, foreign or supranational, other
than (i) the filing of the articles of merger with respect to the Merger with
the Oregon Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (ii)
compliance with any applicable requirements of the HSR Act, (iii) compliance
with any applicable requirements of the 1933 Act, the 1934 Act and any other
securities laws, whether state or foreign, and (iv) any actions or filings the
absence of which would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or materially to impair the
ability of Parent to consummate the transactions contemplated by this Agreement.
SECTION 5.04. Non-contravention. The execution and delivery by Parent
and Merger Subsidiary of this Agreement and the performance of this Agreement by
Parent and Merger Subsidiary will not (i) contravene, conflict with, or result
in any violation or breach of any provision of the certificate of incorporation
or bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 5.03, contravene, conflict with or result in a
violation or breach of any provision of any law, rule, statute, regulation,
judgment, injunction, order or decree, (iii) require any consent or other action
by any Person under, constitute a default under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which Parent or any of its Subsidiaries
is entitled under any provision of any agreement or other instrument binding
upon Parent or any of its Subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of Parent and its Subsidiaries or (iv) result
in the creation or imposition of any Lien on any asset of Parent or any of its
Subsidiaries, except for such contraventions, conflicts and violations referred
to in clause (ii) and for such failures to obtain any such consent or other
action, defaults, terminations, cancellations, accelerations, changes, losses or
Liens referred to in clauses (iii) and (iv) that would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent or
<PAGE> 35
materially to impair the ability of Parent and Merger Subsidiary to consummate
the transactions contemplated by this Agreement.
SECTION 5.05. Capitalization. (a) The authorized capital stock of Parent
consists of 100,000,000 shares of Common Stock, par value $.001 per share and
5,000,000 shares of Preferred Stock par value $.001 per share. As of December
31, 2000, there were outstanding 39,584,175 shares of Common Stock, no
outstanding shares of Preferred Stock, stock options to purchase an aggregate of
6,898,014 shares of Parent Common Stock and 2,350,000 shares of Common Stock
reserved for issuance under Parent's employee stock purchase plans. All
outstanding shares of capital stock of Parent have been, and all shares that may
be issued pursuant to Parent stock options will be, when issued in accordance
with the respective terms thereof, duly authorized, validly issued, fully paid
and nonassessable.
(b) Except as set forth in this Section 5.05 and for changes since
December 31, 2000 resulting from the exercise of stock options, issuances under
Parent's employee stock purchase plan or the grant of stock based compensation
to directors or employees or from the issuance of stock in connection with a
merger or other acquisition or business combination determined by Parent's Board
of Directors to be in the best interests of Parent and its stockholders, there
are no other outstanding (i) shares of capital stock or voting securities of
Parent, (ii) securities of Parent convertible into or exchangeable for shares of
capital stock or voting securities of Parent or (iii) options or other rights to
acquire from Parent or other obligation of Parent to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Parent. There are no outstanding obligations of
Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
of the securities referred to in clause (i), (ii) or (iii) above.
(c) The shares of Parent Stock to be issued as part of the Merger
Consideration have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and nonassessable and the issuance thereof is not subject to
any preemptive or other similar right.
SECTION 5.06. Subsidiaries. (a) Schedule 5.06 lists all subsidiaries of
Parent and their jurisdictions of incorporation as of the date hereof ("PARENT
SUBSIDIARIES"). Parent Subsidiaries are duly incorporated, validly existing and
in good standing under the laws of their jurisdictions of incorporation, have
all corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on their respective businesses as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not have, individually or in the aggregate,
a Material Adverse Effect on Parent. Parent Subsidiaries are duly qualified to
do business as
<PAGE> 36
foreign corporations in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, Parent Subsidiaries, is owned by Parent, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). There are no outstanding (i) securities of Parent or Parent
Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in Parent Subsidiaries or (ii)
options or other rights to acquire from Parent or Parent Subsidiaries, or other
obligation of Parent or Parent Subsidiaries to issue, any capital stock or other
voting securities or ownership interests in, or any securities convertible into
or exchangeable for any capital stock or other voting securities or ownership
interests in, Parent Subsidiaries (the items in clauses (i) and (ii) being
referred to collectively as the "PARENT SUBSIDIARIES SECURITIES"). There are no
outstanding obligations of Parent or Parent Subsidiaries to repurchase, redeem
or otherwise acquire any of Parent Subsidiaries Securities.
SECTION 5.07. SEC Filings. (a) Parent has timely filed with the SEC all
forms, reports, schedules, statements and other documents required to be filed
by it since July 29, 1999 under the 1933 Act and 1934 Act (the Documents
referred to in this Section 5.06(a), collectively, the "PARENT SEC DOCUMENTS").
Parent has made available to Company true and complete copies of the Parent SEC
Documents.
(b) As of its filing date or, if amended or superseded by a filing prior
to the date hereof, on the date of such filing, each Parent SEC Document
complied as to form in all material respects with the applicable requirements of
the 1933 Act and 1934 Act, as the case may be.
(c) As of its filing date, each Parent SEC Document filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(d) Each Parent SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
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.
<PAGE> 37
(e) Other than as included within the Parent SEC Documents, the Parent
Subsidiaries are not required to file any forms, reports or other documents with
the SEC.
SECTION 5.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
included in the Parent SEC Documents (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) were prepared in conformity with GAAP (except as may be indicated
in the notes thereto), and (iii) fairly present the consolidated financial
position of Parent and its consolidated Parent Subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
SECTION 5.09. Disclosure Documents. (a) None of the information provided
by Parent for inclusion in the Company Proxy Statement or any amendment or
supplement thereto, at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of Company and at the time
the shareholders vote on adoption of this Agreement and at the Effective Time,
will contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Registration Statement of Parent to be filed with the SEC with
respect to the offering of Parent Stock in connection with the Merger (the
"REGISTRATION STATEMENT") and any amendments or supplements thereto and the
proxy statement to be mailed to Parent's shareholders (the "PARENT PROXY
STATEMENT"), when filed, will comply as to form in all material respects with
the requirements of the 1933 Act and the 1934 Act. At the time the Registration
Statement or any amendment or supplement thereto becomes effective and at the
Effective Time, at the time the Parent Proxy Statement is first mailed to
Parent's stockholders, at the time such stockholders vote upon the issuance of
shares of Parent Stock in connection with the Merger and at the Effective Time,
the Registration Statement, as amended or supplemented and the Parent Proxy
Statement, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. The representations and warranties
contained in this Section 5.09 will not apply to statements or omissions in the
Registration Statement or any amendment or supplement thereto or in the Parent
Proxy Statement based upon information furnished to Parent or Merger Subsidiary
by Company in writing specifically for use therein.
SECTION 5.10. Absence of Certain Changes. Since the September 30, 2000
and except as disclosed in the Parent SEC Documents, the business of
<PAGE> 38
Parent and its Subsidiaries has been conducted in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent;
(b) any change in any method of accounting, method of tax accounting or
accounting principles or practice by Parent or its Subsidiaries, except for any
such change required by reason of a concurrent change in GAAP or Regulation S-X
under the 1934 Act;
(c) any revaluation by Parent or its Subsidiaries of any of its assets,
including without limitation, writing down the value of capitalized inventory or
writing off notes or accounts receivable other than in the ordinary course of
business;
(d) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent, or any
repurchase, redemption or other acquisition by Parent or any Parent Subsidiaries
of any outstanding shares of capital stock or other securities of Parent, other
than any actions for which the Fixed Exchange Ratio would be adjusted pursuant
to Section 2.06 hereof or any dividend of rights to acquire securities of Parent
that will also be delivered to Company Stockholders as part of the Merger
Consideration;
(e) any incurrence, assumption or guarantee by Company or Company
Subsidiaries of any material indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(f) any creation or other incurrence by Company or Company Subsidiaries
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(g) any making of any material loan, advance or capital contributions to
or investment in any Person other than loans, advances or capital contributions
or investments in any Parent Subsidiaries in the ordinary course of business
consistent with past practices;
(h) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Company or Company
Subsidiaries;
<PAGE> 39
(i) any transaction or commitment made, or any contract or agreement
entered into, by Parent or Parent Subsidiaries relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by Parent or Parent Subsidiaries of any contract or other right,
in either case, material to Parent and Parent Subsidiaries, taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement; or
(j) any material Tax election made or changed, any annual tax accounting
period changed, any method of tax accounting adopted or changed, any material
amended Tax Returns or claims for material Tax refunds filed, any material
closing agreement entered into, any material Tax claim, audit or assessment
settled, or any right to claim a material Tax refund, offset or other reduction
in Tax liability surrendered.
SECTION 5.11. Compliance with Laws and Court Orders. Parent and Parent
Subsidiaries are and have been in compliance with, and to the knowledge of
Parent, are not under investigation with respect to and have not been threatened
to be charged with or given notice of any violation of, any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order or decree,
except for failures to comply or violations that have not had and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
SECTION 5.12. Litigation. Except as set forth in Parent SEC Documents
filed prior to the date hereof, there is no action, suit, investigation or
proceeding (or, to the knowledge of Parent, any basis therefor) pending against,
or, to the knowledge of Parent, threatened against, Parent, Parent Subsidiaries,
any present or former officer, director or employee of Parent or Parent
Subsidiaries or any Person for whom Parent or Parent Subsidiaries may be liable
or any of their respective properties before any court or arbitrator or before
or by any governmental body, agency or official, domestic, foreign or
supranational, that, if determined or resolved adversely in accordance with the
plaintiff's demands, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the Merger or
any of the other transactions contemplated hereby.
SECTION 5.13. Finders' Fees. Except for Credit Suisse First Boston
Corporation, a copy of whose engagement agreement dated November 15, 2000 has
been provided to the Company, and for Wit SoundView Corporation, a copy of whose
engagement letter dated December 22, 2000 has been provided to the Company,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Parent or Parent
Subsidiaries who might be entitled to any fee or commission from Parent or any
<PAGE> 40
of its Affiliates in connection with the transactions contemplated by this
Agreement.
SECTION 5.14. Opinion of Financial Advisor. Parent has received the
opinion of Credit Suisse First Boston Corporation, financial advisor to Parent,
to the effect that, as of the date of this Agreement, the Fixed Exchange Ratio
is fair to Parent from a financial point of view.
SECTION 5.15. Tax Treatment. Neither Parent nor any of its Affiliates
has taken or agreed to take any action, or is aware of any fact or circumstance,
that would prevent the Merger from qualifying as a 368 Reorganization.
SECTION 5.16. Ownership of Company Equity. Neither Parent, Merger
Subsidiary, nor any of their Affiliates beneficially owns or has any direct or
indirect right or agreement to acquire any securities or property of Company
other than pursuant to this Agreement. Neither Parent, Merger Subsidiary, nor
any of their Affiliates is a member of any "group" within the meaning of Section
13(d)(3) of the 1934 Act, as amended, with respect to any voting securities of
Company or any of its Affiliates, except pursuant to the Voting Agreement.
SECTION 5.17. No Undisclosed Material Liabilities. There are no
liabilities or obligations of Parent or any Parent Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, of a nature required to be disclosed on a balance sheet or in the
related notes to consolidated financial statements prepared in accordance with
GAAP, other than:
(a) liabilities or obligations disclosed and provided for in the Parent
Balance Sheet or in the notes thereto or in the Parent SEC Documents filed prior
to the date hereof, and
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practices since the Parent Balance Sheet Date that
are immaterial in the aggregate.
SECTION 5.18. Environmental Matters. Except as set forth in Parent SEC
Documents prior to the date hereof and except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit,
<PAGE> 41
proceeding or review (or, to the knowledge of Parent, any basis
therefor) is pending or, to the knowledge of Parent, is threatened by
any governmental entity or other Person relating to or arising out of
any Environmental Law;
(ii) Parent is and has been in compliance with all Environmental
Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to Parent or Parent
Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or
relating to any Environmental Law and there are no facts, conditions,
situations or set of circumstances that could reasonably be expected to
result in or be the basis for any such liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which Parent has knowledge in relation to
the current or prior business of Parent or Parent Subsidiaries or any property
or facility now or previously leased by Parent or Parent Subsidiaries that has
not been delivered to Parent at least five days prior to the date hereof.
(c) For purposes of this Section 5.18, the terms "PARENT" and
"SUBSIDIARY" shall include any entity that is, in whole or in part, a
predecessor of Parent or Parent Subsidiaries.
SECTION 5.19. Parent Intellectual Property. For the purposes of this
Agreement, the following terms have the following definitions:
"PARENT INTELLECTUAL PROPERTY" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, Parent or Parent Subsidiaries.
(a) No Parent Intellectual Property or product or service of Parent or
Parent Subsidiaries is subject to any proceeding or outstanding decree, order or
judgment restricting in any manner the use, transfer, or licensing thereof by
Parent or Parent Subsidiaries, or which may affect the validity, use or
enforceability of such Parent Intellectual Property.
(b) Parent owns and has good and exclusive title to, or has license to
use (sufficient for the conduct of its business as currently conducted and as
proposed to be conducted), each item of Parent Intellectual Property or other
Intellectual Property used by Parent or Parent Subsidiaries free and clear of
any lien or encumbrance (excluding licenses and related restrictions); and
Parent or Parent Subsidiaries is the exclusive owner of all trademarks and trade
names used in connection with the operation or conduct of the business of Parent
and Parent
<PAGE> 42
Subsidiaries, including the sale of any products or the provision of any
services by Parent and Parent Subsidiaries.
(c) Parent or Parent Subsidiaries owns exclusively, and has good title
to, all copyrighted works that are Parent or Parent Subsidiaries products or
which Parent or Parent Subsidiaries otherwise expressly purports to own.
(d) The operation of the business of Parent and Parent Subsidiaries as
such business currently is conducted, including Parent's and Parent
Subsidiaries' design, development, manufacture, marketing and sale of the
products or services of Parent and Parent Subsidiaries (including products,
currently under development) has not, does not and to the knowledge of Parent
will not infringe or misappropriate the Intellectual Property of any third party
or, to its knowledge, constitute unfair competition or trade practices under the
laws of any jurisdiction.
(e) Neither Parent nor Parent Subsidiaries has received notice from any
third party that the operation of the business of Parent or Parent Subsidiaries
or any act, product or service of Parent or Parent Subsidiaries, may infringe or
misappropriate the Intellectual Property of any third party or constitutes
unfair competition or trade practices under the laws of any jurisdiction.
(f) Parent and Parent Subsidiaries have taken reasonable steps to
protect Parent's and Parent Subsidiaries' rights in Parent's confidential
information and trade secrets that it wishes to protect or any trade secrets or
confidential information of third parties provided to Parent or Parent
Subsidiaries, and, without limiting the foregoing, each of Parent and Parent
Subsidiaries has and enforces a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in the
form provided to Company and all current and former employees and contractors of
Parent and Parent Subsidiaries have executed such an agreement, except where the
failure to do so is not reasonably expected to have a Material Adverse Effect on
Parent.
SECTION 5.20. Agreements, Contracts and Commitments. Neither Parent nor
any Parent Subsidiary is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment with
any officer or member of Parent's Board of Directors, other than those that are
terminable by Parent or any Parent Subsidiary on no more than thirty (30) days'
notice without liability or financial obligation to Parent other than as
disclosed in the Parent SEC Documents.
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
<PAGE> 43
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Parent or any Parent Subsidiary to engage
in any line of business or to compete with any person or granting any exclusive
distribution rights;
(d) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Parent or any Parent Subsidiary after the date
of this Agreement of a material amount of assets not in the ordinary course of
business or pursuant to which Parent has any material ownership interest in any
corporation, partnership, joint venture or other business enterprise other than
Parent Subsidiaries;
(e) any (x) dealer, distributor, joint marketing or development
agreement currently in force under which Parent or any Parent Subsidiary has
continuing material obligations to jointly market any product, technology or
service and which may not be canceled without penalty upon notice of ninety (90)
days or less, or (y) material agreement pursuant to which Parent or any Parent
Subsidiary has continuing material obligations to jointly develop any
intellectual property that will not be owned, in whole or in part, by Parent or
Parent Subsidiaries, in any case specified in clauses (x) or (y) above with
payments made by or to the Parent of $500,000 or more;
(f) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology other than source
code escrow agreements or other similar arrangements entered into in the normal
course of business;
(g) any agreement, contract or commitment currently in force to license
any third party to manufacture or reproduce any Parent product, service or
technology or any agreement, contract or commitment currently in force to sell
or distribute any Parent products, including any parts or components thereof,
service or technology except agreements (x) with distributors or sales
representative in the normal course of business cancelable without penalty upon
notice of ninety (90) days or less and substantially in the form previously
provided to Company or (y) with payments made by or to the Parent of less than
$500,000;
<PAGE> 44
(h) any material mortgages, indentures, guarantees, loans or credit
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;
(i) any other agreement, contract or commitment that includes receipts
or expenditures of $2,000,000 or more individually.
Neither Parent nor any Parent Subsidiaries, nor to Parent's knowledge
any other party to a Parent Contract (as defined below), is in breach, violation
or default under, and neither Parent nor any Parent Subsidiaries has received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any of the agreements, contracts or commitments
to which Parent or any Parent Subsidiary is a party or by which it is bound that
are required to be disclosed as exceptions to this Section 5.20 (any such
agreement, contract or commitment, a "Parent Contract") in such a manner as
would permit any other party to cancel or terminate any such Parent Contract, or
would permit any other party to seek material damages or other remedies (for any
or all of such breaches, violations or defaults, in the aggregate.)
Each Parent Contract: (i) is valid and binding on the Parent or its
Subsidiaries, as the case may be and, to the knowledge of the Parent, on the
other parties thereto, and is in full force and effect, and (ii) upon
consummation of the transactions contemplated by this Agreement, shall continue
in full force and effect without penalty or other adverse consequence. To the
knowledge of the Parent, no other party to any Parent Contract is in material
breach thereof or material default thereunder.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.01. Conduct of the Company. Effective Time, Company and
Company Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their commercially-reasonable
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
<PAGE> 45
(a) Company will not permit, adopt or propose any change to its articles
of incorporation or bylaws;
(b) Company will not, and will not permit any Company Subsidiaries to,
merge or consolidate with any other Person or acquire a material amount of stock
or assets of any other Person;
(c) Company will not, and will not permit any Company Subsidiaries to,
sell, lease, license, transfer or otherwise dispose of any material subsidiary
or any material amount of assets, securities or property, tangible or
intangible, except (i) pursuant to existing contracts or commitments and (ii) in
the ordinary course consistent with past practice;
(d) Company will not, and will not permit any Company Subsidiaries to,
(i) take any action that would make any representation and warranty of Company
hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time or (ii) omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time; and
(e) Company will not, and will not permit any Company Subsidiaries to,
agree or commit to do any of the foregoing.
SECTION 6.02. Shareholder Meeting; Proxy Material. Promptly after the
date hereof, in accordance with Oregon Law and its Articles of Incorporation and
Bylaws, Company shall cause a meeting of its shareholders (the "COMPANY
SHAREHOLDER MEETING") to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval and adoption of this
Agreement and the Merger. Subject to Section 6.03(b), the Board of Directors of
Company shall recommend approval and adoption of this Agreement and the Merger
by Company's shareholders. In connection with such meeting, Company will (i)
promptly prepare and file with the SEC, use its best efforts to have cleared by
the SEC and thereafter mail to its shareholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for such meeting, (ii)
subject to Section 6.03(b), use its best efforts to obtain the necessary
approvals by its shareholders of this Agreement and the transactions
contemplated hereby and (iii) otherwise comply with all legal requirements
applicable to such meeting.
SECTION 6.03. No Solicitation. (a) Neither Company nor any Company
Subsidiaries shall, nor shall Company or any Company Subsidiary authorize or
permit any of its or their officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors to, directly or
indirectly, (i) solicit, initiate or take any action to encourage the submission
of any Acquisition Proposal, (ii) enter into or participate in any discussions
or
<PAGE> 46
negotiations with, furnish any non-public information relating to Company or
Company Subsidiaries or afford access to the business, properties, assets, books
or records of Company or Company Subsidiaries to, otherwise cooperate in any way
with, or knowingly assist, participate in, or encourage any effort by any Third
Party that is seeking to make, or has made, an Acquisition Proposal or (iii)
grant any waiver or release under any standstill or similar agreement with
respect to any class of equity securities of Company or Company Subsidiaries.
(b) Notwithstanding the foregoing, the Board of Directors of Company,
directly or indirectly through advisors, agents or other intermediaries, may (i)
engage in negotiations or discussions with any Third Party that, subject to
Company's compliance with Section 6.03(a), has made a Superior Proposal or, (ii)
furnish to such Third Party that has made a Superior Proposal nonpublic
information relating to Company or Company Subsidiaries pursuant to a
confidentiality agreement with terms no less favorable to Company than those
contained in the Confidentiality Agreement dated as of December 13, 2000 between
Company and Parent (the "CONFIDENTIALITY AGREEMENT"), (iii) following receipt of
such Superior Proposal, take and disclose to its shareholders a position
contemplated by Rule 14e-2(a) under the 1934 Act or otherwise recommend the
Superior Proposal and make disclosure to them, (iv) following receipt of such
Superior Proposal, fail to make, withdraw, or modify in a manner adverse to
Parent its recommendation to its shareholders referred to in Section 6.02 hereof
and/or (v) take any non-appealable, final action ordered to be taken by Company
by any court of competent jurisdiction, but in each case referred to in the
foregoing clauses (i) through (iv) only if the Board of Directors of Company
determines in good faith by a majority vote after consultation with outside
legal counsel to Company, that it must take such action to comply with its
fiduciary duties under applicable law.
(c) The Board of Directors of Company shall not take any of the actions
referred to in clauses (i) through (iv) of the preceding subsection unless
Company shall have delivered to Parent a prior written notice advising Parent
that it intends to take such action, and Company shall continue to advise Parent
after taking such action. In addition, Company shall notify Parent promptly (but
in no event later than 24 hours) after receipt by Company (or any of its
advisors) of any unsolicited inquiry or Acquisition Proposal, of any indication
that a Third Party is considering making an Acquisition Proposal or of any
request for information relating to Company or Company Subsidiaries or for
access to the business, properties, assets, books or records of Company or
Company Subsidiaries by any Third Party that may be considering making, or has
made, an Acquisition Proposal. Company shall provide such notice orally and in
writing and shall identify the Third Party making, and the terms and conditions
of, any such Acquisition Proposal, indication or request. Company shall keep
Parent fully informed, on a current
<PAGE> 47
basis, of the status and material details of any such Acquisition Proposal,
indication or request. In addition to the foregoing, Company shall (i) provide
Parent with at least forty-eight (48) hours prior notice (or such lesser notice
as provided to the members of Company's Board of Directors but in no event less
than eight hours) of any meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to consider a Superior
Proposal and (ii) provide Parent with at least three (3) business days prior
written notice of a meeting of Company's Board of Directors at which Company's
Board of Directors is reasonably expected to recommend a Superior Proposal to
its shareholders and together with such notice a description of the terms and
conditions relating to such Superior Proposal. Company shall, and shall cause
Company Subsidiaries and the advisors, employees and other agents of Company and
any Company Subsidiaries to, cease immediately and cause to be terminated any
and all existing activities, discussions or negotiations, if any, with any Third
Party conducted prior to the date hereof with respect to any Acquisition
Proposal and shall use its reasonable best efforts, consistent with its rights
under confidentiality agreements with such Parties, to cause any such Party (or
its agents or advisors) in possession of confidential information about Company
that was furnished by or on behalf of Company to return or destroy all such
information.
"SUPERIOR PROPOSAL" means any bona fide, unsolicited written Acquisition
Proposal for any of the following transactions (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transactions involving Company pursuant to which the shareholders of Company
immediately preceding such transaction hold less than 51% of the equity interest
in the surviving or resulting entity of such transaction; (ii) a sale or other
disposition by Company of assets representing in excess of 51% of the fair
market value of Company's business immediately prior to such sale; or (iii) the
acquisition by any person or group, directly or indirectly, of beneficial
ownership or right to acquire beneficial ownership of shares representing in
excess of 51% of the voting power of the then outstanding shares of capital
stock of Company, in each case on terms that the Board of Directors of Company
determines in good faith by a majority vote, on the basis of the advice of a
financial advisor of nationally recognized reputation and taking into account
all the terms and conditions of the Acquisition Proposal, including any break-up
fees, expense reimbursement provisions and timing and conditions to
consummation, are more favorable and provide greater value to Company's
shareholders than as provided hereunder and for which financing, to the extent
required, is then fully committed or reasonably determined to be available by
the Board of Directors of Company.
SECTION 6.04. Required Consents. Company shall obtain each of the
consents required in connection with the consummation of the transactions
contemplated hereby identified in Schedule 6.04 to this Agreement.
<PAGE> 48
ARTICLE 7
COVENANTS OF PARENT
Parent agrees that:
SECTION 7.01. Conduct of Parent. Parent agrees that, from the date
hereof until the Effective Time, Parent and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their best efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
(a) Parent will not adopt or propose any change in its articles of
incorporation or bylaws; and
(b) Parent will not, and will not permit any of its Subsidiaries to, (i)
take any action that would make any representation and warranty of Parent
hereunder, other than the representations and warranties set forth in Section
5.10 (e)-(j) and Section 5.20, inaccurate in any respect at, or as of any time
prior to, the Effective Time; (ii) omit to take any action necessary to prevent
any such representation or warranty, other than the representations and
warranties set forth in Section 5.10(e)-(j) and Section 5.20, from being
inaccurate in any respect at any such time; or (iii) enter into any agreement
with respect to any acquisition of or investment in any company, business,
product or technology that would require approval by Parent's stockholders,
other than an agreement regarding the merger, consolidation, or sale of
substantially all of the assets of Parent in which Parent's stockholders
immediately prior to the consummation of such transaction would hold less than a
majority of the equity interests in the surviving or resulting entity of such
transaction; and
(c) Parent will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
SECTION 7.02. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.03. Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
<PAGE> 49
(a) For six years after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless the present and former
officers and directors of Company (each an "INDEMNIFIED PERSON") in respect of
acts or omissions occurring at or prior to the Effective Time to the fullest
extent permitted by Oregon Law or any other applicable laws or provided under
Company's articles of incorporation and bylaws in effect on the date hereof,
provided that such indemnification shall be subject to any limitation imposed
from time to time under applicable law.
(b) For six years after the Effective Time, Parent shall cause the
Surviving Corporation to provide, if available, officers' and directors'
liability insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such Indemnified Person currently covered by
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof, provided that, in satisfying its obligation under
this Section 7.03(b), the Surviving Corporation shall not be obligated to pay
annual premiums in excess of $1,000,000.
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.03.
(d) The rights of each Indemnified Person under this Section 7.03 shall
be in addition to any rights such Person may have under the articles of
incorporation or bylaws of Company or Company Subsidiaries, or under Oregon Law
or any other applicable laws or under any agreement of any Indemnified Person
with Company or Company Subsidiaries. These rights shall survive consummation of
the Merger and are intended to benefit, and shall be enforceable by, each
Indemnified Person.
SECTION 7.04. Registration Statement; Stockholder Meeting; Proxy
Material. Parent shall promptly prepare and file the Registration Statement
under the 1933 Act and the Parent Proxy Statement under the 1934 Act with the
SEC and shall use its best efforts to cause the Registration Statement to be
declared effective by the SEC as promptly as practicable. Parent shall promptly
take any action required to be taken under foreign or state securities or Blue
Sky laws in connection with the issuance of Parent Stock in the Merger. Parent
shall cause a meeting of its stockholders (the "PARENT STOCKHOLDER MEETING") to
be duly called
<PAGE> 50
and held as soon as reasonably practicable for the purpose of voting on the
approval of the issuance of Parent Stock in connection with the Merger. The
Board of Directors of Parent shall recommend approval of the issuance of Parent
Stock in connection with the Merger by Parent's stockholders. In connection with
such meeting, the Company will (a) use its best efforts to have cleared by the
SEC and thereafter mail to its stockholders as promptly as practicable the
Parent Proxy Statement and all other proxy materials for such meeting, (b) use
its reasonable best efforts to obtain the necessary approvals by its
stockholders of the transactions contemplated by this Agreement and (c)
otherwise comply with all legal requirements applicable to such meeting.
SECTION 7.05. Nasdaq Stock Market Listing. Parent shall use its best
efforts to cause the shares of Parent Stock to be issued in connection with the
Merger to be listed on the Nasdaq National Market.
SECTION 7.06. Board of Director Membership. The Board of Directors of
Parent shall take action to have Elijahu Shapira elected as a director on the
Board of Directors of Parent.
SECTION 7.07. Employee Benefits. On and after the Effective Time, Parent
hereby agrees to do the following, and to cause its Subsidiaries and the
Surviving Corporation, as applicable, to do the following:
(a) Parent shall provide, or cause its Subsidiaries and the Surviving
Corporation to provide employee benefits (other than equity-based benefits) to
each person who is employed by Parent, its Subsidiaries or the Surviving
Corporation on or after the Effective Time and who was employed with Company
immediately prior to the Effective Time ("COMPANY EMPLOYEE") that are
substantially comparable in the aggregate to the employee benefits provided to
similarly-situated active employees of Parent, its Subsidiaries and the
Surviving Corporation ("PARENT BENEFIT PLANS").
(b) Parent shall cause each Company Employee's service with Company to
be recognized as service for purposes of eligibility and vesting (but not
benefit accrual) in each Parent Benefit Plan that is extended to the Company
Employee on or after the Closing Date; provided, however, that such crediting of
service shall not operate to duplicate the payment or funding of any benefit
under such Parent Benefit Plan.
(c) Parent shall cause the Parent Benefit Plans to waive any preexisting
condition exclusion or waiting period limitation that was likewise waived or
otherwise satisfied as to each Company Employee under the terms of any
corresponding Employee Plan immediately prior to the Effective Time.
<PAGE> 51
SECTION 7.08. Consultation on Certain Matters. Parent agrees that prior
to entering into an agreement with respect to any material transaction described
in Section 7.01(b)(iii) prior to the Effective Time, Parent will consult with
management of Company regarding such transaction (regardless of whether Parent
Stockholder approval would be required).
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. Reasonable Efforts. Subject to the terms and conditions of
this Agreement, Company and Parent will use their commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, each of Parent and Company
agrees to make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act with respect to the transactions contemplated hereby as promptly
as practicable and in any event within ten business days of the date hereof and
to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and to use commercially
reasonable efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.
SECTION 8.02. Certain Filings. Company and Parent shall cooperate with
one another (i) in connection with the preparation of the Company Proxy
Statement, the Parent Proxy Statement and the Registration Statement, (ii) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency, official, or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (iii) in taking such actions or making any
such filings, furnishing information required in connection therewith or with
the Company Proxy Statement, the Parent Proxy Statement or the Registration
Statement and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 8.03. Public Announcements. (a) Parent and Company will receive
the prior written consent from the other before issuing any press release or
making any public statement with respect to this Agreement, the Merger or an
<PAGE> 52
Acquisition Proposal and, except as may be required by applicable law or any
stock exchange rule, will not issue any such press release or make any such
public statement prior to obtaining such written consent; provided, however,
that no such consultation or agreement shall be required if, prior to the date
of such release or public statement, either party shall have withheld,
withdrawn, amended or modified its unanimous recommendation in favor of the
Merger.
(b) The parties will prepare a joint announcement for release upon
announcement of the Merger.
SECTION 8.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Company or Merger Subsidiary,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of Company or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
SECTION 8.05. Access to Information. From the date hereof until the
Effective Time and subject to applicable law, Company and Parent shall (i) give
to the other party, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices, properties, books
and records of such party, (ii) furnish to the other party, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably request
and (iii) instruct its employees, counsel, financial advisors, auditors and
other authorized representatives to cooperate with the other party in its
investigation. Any investigation pursuant to this Section shall be conducted in
such manner as not to interfere unreasonably with the conduct of the business of
the other party. No information or knowledge obtained in any investigation
pursuant to this Section shall affect or be deemed to modify any representation
or warranty made by any party hereunder or the conditions to the obligations of
the parties to consummate the Merger.
SECTION 8.06. Notices of Certain Events. Each of Company and Parent
shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
<PAGE> 53
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting Company or any Company Subsidiary or Parent or Parent Subsidiary that,
if pending on the date of this Agreement, would have been required to have been
disclosed pursuant to this Agreement, as the case may be, or that relate to the
consummation of the transactions contemplated by this Agreement.
(d) the occurrence, or failure to occur, of any event, which occurrence
or failure to occur would be reasonably likely to cause (i) any representation
or warranty contained in this Agreement to be untrue or inaccurate at any time
from the date of this Agreement to the Effective Time, or (ii) any material
failure of Parent and Merger Subsidiary or Company, as the case may be, or of
any officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement. Notwithstanding the above, the delivery of any notice pursuant
to this section will not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 8.07. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, each of Parent and Company will hold, and will
use its best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other party furnished to it or its Affiliates in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by such party, (ii) in the public domain through no fault of such party or
(iii) later lawfully acquired by such party from sources other than the other
party, provided that each of Parent and Company may disclose such information to
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by this Agreement so
long as such party informs such Persons of the confidential nature of such
information and directs them to treat it confidentially. Each of Parent and
Company shall satisfy its obligation to hold any such information in confidence
if it exercises the same care with respect to such information as it would take
to preserve the confidentiality of its own similar information. If this
Agreement is terminated, each of Parent and Company will, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the other party,
<PAGE> 54
upon request, all documents and other materials, and all copies thereof, that it
or its Affiliates obtained, or that were obtained on their behalf, from the
other party in connection with this Agreement and that are subject to such
confidence.
SECTION 8.08. Tax-free Reorganization; Purchase Accounting. (a) Prior to
the Effective Time, each party shall use its best efforts to cause the Merger to
qualify as a 368 Reorganization, and will not take any action reasonably likely
to cause the Merger not so to qualify.
(b) Each party has agreed that the transaction be accounted for as a
purchase under GAAP.
SECTION 8.09. Affiliates. Within 30 days following the date of this
Agreement, Company shall deliver to Parent a letter identifying all known
Persons who may be deemed affiliates of Company under Rule 145 of the 1933 Act.
Company shall use its reasonable best efforts to obtain a written agreement from
each Person who may be so deemed as soon as practicable and, in any event, at
least 30 days prior to the Effective Time, substantially in the form of Exhibit
B hereto.
SECTION 8.10. 401(k) Plan. Company agrees to terminate or amend its
401(k) Plan, in accordance with reasonable directions from Parent, effective
immediately prior to the Effective Time. If Company's 401(k) Plan is terminated,
Parent agrees to take, or cause to be taken, such actions as are necessary to
permit participants in Company's 401(k) Plans to roll over their accounts under
such plans, after the Effective Time (and after completion of the termination of
Company's 401(k) Plan), into a qualified plan or plans maintained by Parent.
SECTION 8.11. Section 16. Prior to the Effective Time, the Board of
Directors of Parent, or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the interpretative guidance of
the SEC so that (i) the assumption of Company Stock Options held by Company
Insiders (as defined below) pursuant to this Agreement, and (ii) the receipt by
Company Insiders of Parent Stock in exchange for Company Stock pursuant to the
Merger, shall in each case be an exempt transaction for purposes of Section 16
of the 1934 Act by any officer or director of Company who may become a covered
person of Parent for purposes of Section 16 of the 1934 Act (a "COMPANY
INSIDER").
<PAGE> 55
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party. The obligations
of Company, Parent and Merger Subsidiary to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
shareholders of Company in accordance with Oregon Law and the issuance of Parent
Common Stock in connection with the Merger shall have been approved by the
stockholders of Parent in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(d) there shall not have been instituted or pending any action or
proceeding (or any investigation or other inquiry that might result in such
action or proceeding) by any government or governmental authority or agency,
domestic, foreign or supranational, before any court or governmental authority
or agency, domestic, foreign or supranational, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the consummation of the Merger, seeking to obtain material
damages or otherwise directly or indirectly relating to the transactions
contemplated by the Merger or (ii) seeking to restrain or prohibit Parent's
ownership or operation (or that of its respective Subsidiaries or Affiliates) of
all or any material portion of the business or assets of Company and Company
Subsidiaries, taken as a whole, or of Parent and its Subsidiaries, taken as a
whole, or to compel Parent or any of its Subsidiaries or Affiliates to dispose
of or hold separate all or any material portion of the business or assets of
Company Subsidiaries, taken as a whole, or of Parent and its Subsidiaries, taken
as a whole;
(e) the Registration Statement shall have been declared effective and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(f) Parent and Company shall have each received written opinions of
their respective counsel, Davis Polk & Wardwell and Perkins Coie LLP in form and
substance reasonably satisfactory to each of them, that the Merger will be
treated for federal income tax purposes as a reorganization qualifying under the
<PAGE> 56
provision of Section 368(a) of the Code and that each of Parent, Merger
Subsidiary and Company will be a party to the reorganization within the meaning
of Section 368(a) of the Code. The Company, Parent and Merger Subsidiary shall
execute and deliver to Davis Polk & Wardwell and Perkins Coie LLP certificates
substantially in the form attached hereto as Exhibits C-1 and C-2, respectively,
at such time or times as reasonably requested by them in connection with the
delivery of their opinions provided herein; and
(g) all actions by or in respect of, or filings with, any governmental
body, agency, official or authority, domestic, foreign or supranational,
required to permit the consummation of the Merger shall have been taken, made or
obtained.
SECTION 9.02. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) Company shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of Company contained in
this Agreement and in any certificate or other writing delivered by Company
pursuant hereto shall be true (disregarding each exception therein for
materiality and Material Adverse Effect) at and as of the Effective Time as if
made at and as of such time except for (A) changes contemplated by this
Agreement, (B) those representations and warranties, that address matters only
as of a particular date (which shall remain true and current as of such date)
and (C) such exceptions in each case as would not have a Material Adverse Effect
on Company; (iii) no Material Adverse Effect with respect to Company has
occurred and (iv) Parent shall have received a certificate signed by the Chief
Executive Officer and Chief Financial Officer of Company to the foregoing
effect;
(b) Each of Elijahu Shapira and W. Glen Boyd shall have entered into
employment agreements in form attached hereto as Exhibit D, and such agreements
shall be in full force and effect.
SECTION 9.03. Conditions to the Obligations of the Company. The
obligations of Company to consummate the Merger are subject to the satisfaction
of the following further conditions:
(a) (i) Parent shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of Parent contained in
this Agreement and in any certificate or other writing delivered by Parent
pursuant hereto shall be true (disregarding each exception therein for
materiality and
<PAGE> 57
Material Adverse Effect) at and as of the Effective Time as if made at and as of
such time except for (A) changes contemplated by this Agreement, (B) those
representations and warranties that address matters only as of a particular date
(which shall remain true and correct as of such date) and (C) such exceptions in
each case as would not have a Material Adverse Effect on Parent (iii) no
Material Adverse Effect with respect to Parent has occurred and (iv) Company
shall have received a certificate signed by the Chief Executive Officer and
Chief Financial Officer of Parent to the foregoing effect;
(b) The shares of Parent Stock to be issued in the Merger shall have
been listed on the Nasdaq National Market.
ARTICLE 10
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the Merger by the shareholders of Company or approval of
the issuance of Parent Stock in connection with the Merger by the stockholders
of Parent:
(a) by mutual written agreement of Company and Parent;
(b) by either Company or Parent, if:
(i) the Merger has not been consummated on or before June 30,
2001 (the "END DATE"), provided that the right to terminate this
Agreement pursuant to this Section 10.01(b)(i) shall not be available to
any party whose breach of any provision of this Agreement results in the
failure of the Merger to be consummated by such time;
(ii) there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or any judgment,
injunction, order or decree of any court or governmental body having
competent jurisdiction enjoining Company or Parent from consummating the
Merger is entered and such judgment, injunction, judgment or order shall
have become final and nonappealable;
(iii) this Agreement shall not have been approved and adopted in
accordance with Oregon Law by Company's shareholders at the Company
Shareholder Meeting (or any adjournment thereof); or
<PAGE> 58
(iv) the issuance of Parent Stock in connection with the Merger
shall not have been approved by Parent's stockholders in accordance with
Delaware Law at the Parent Stockholder Meeting (or any adjournment
thereof);
(c) by Parent, if:
(i) a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Company set forth in this
Agreement shall have occurred that would cause the condition set forth
in Section 9.02(a) not to be satisfied, and such condition is incapable
of being satisfied by the End Date;
(ii) Company shall have willfully and materially breached its
obligations under Sections 6.02 and 6.03; or
(iii) as permitted by Section 6.03(b)(iv), the Board of Directors
of Company shall have failed to make or withdrawn, or modified in a
manner adverse to Parent, its approval or recommendation of this
Agreement or the Merger, or shall have failed to call the Company
Shareholder Meeting in accordance with Section 6.02; or
(d) by Company, if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Parent or Merger Subsidiary set
forth in this Agreement shall have occurred that would cause the condition set
forth in Section 9.03(a) not to be satisfied, and such condition is incapable of
being satisfied by the End Date.
The party desiring to terminate this Agreement pursuant to this Section 10.01
(other than pursuant to Section 10.01(a)) shall give notice of such termination
to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, and except as provided in Section 11.04, this
Agreement shall become void and of no effect without liability of any party (or
any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party hereto, provided that, if such
termination shall result from the willful (i) failure of either party to fulfill
a condition to the performance of the obligations of the other party or (ii)
failure of either party to perform a covenant hereof, such party shall be fully
liable for any and all liabilities and damages incurred or suffered by the other
party as a result of such failure. The
<PAGE> 59
provisions of this Section 10.02 and Sections 8.07, 11.04, 11.06, 11.07 and
11.08 shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
Chief Financial Officer
NetIQ Corporation
3553 North First Street
San Jose, CA 95134
Fax: (408) 330-0959
with a copy to:
William M. Kelly, Esq.
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, CA 94025
Fax: (650) 752-2111
if to Company, to:
WebTrends Corporation
851 SW Sixth Avenue
Suite 1200
Portland, OR 97204
Fax: (503) 294-7130
<PAGE> 60
with a copy to:
Roy W. Tucker, Esq.
Perkins Coie LLP
1211 SW Fifth Avenue, Suite 1500
Portland OR 97204-3715
Fax: (503) 727-2222
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m., and such day is a
business day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
that by their terms survive the Effective Time and as provided for in Section
10.02 with respect to termination.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective, provided that, after the
adoption of this Agreement by the shareholders of Company and without their
further approval, no such amendment or waiver shall reduce the amount or change
the kind of consideration to be received in exchange for any shares of capital
stock of Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense; provided, however, that
Parent and Company shall share equally all fees and expenses, other than
<PAGE> 61
attorneys' and accountants' fees and expenses, incurred (i) in relation to the
printing and filing of the Proxy Statement (including any preliminary materials
related thereto) and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto or (ii) for the
pre-merger notification and report forms under the HSR Act (including such
forms, if any, as may be required to be filed by any Company Shareholders).
(b) If a Payment Event (as hereinafter defined) occurs, Company shall
pay Parent (by wire transfer of immediately available funds), if, pursuant to
(x) below, simultaneously with the occurrence of such Payment Event or, if
pursuant to (y) below, within two Business Days following such Payment Event, a
fee of $41.0 million. If a Payment Event occurs, payment of the foregoing fee
shall be the sole and exclusive remedy of Parent against Company in connection
with this Agreement.
"PAYMENT EVENT" means the termination of this Agreement pursuant to (x)
Sections 10.01(b)(i) or 10.01(b)(iii) if, prior to any such termination, a Third
Party shall have publicly announced an Acquisition Proposal or (y) Sections
10.01(c)(ii) or 10.01(c)(iii) if, prior to any such termination, a Third Party
shall have made an Acquisition Proposal and, in any such case specified in
clause (x) or (y), within 12 months following any such termination: (i) Company
merges with or into, or is acquired, directly or indirectly, by merger or
otherwise by, a Third Party, in any such case where the securities of the
surviving or resulting entity issued in respect of the stock of the Company
outstanding immediately prior to such transaction represent less than 50% of the
outstanding securities of the surviving or resulting entity immediately after
such transaction; (ii) a Third Party, directly or indirectly, acquires more than
50% of the total assets of Company and Company its Subsidiaries, taken as a
whole; (iii) a Third Party, directly or indirectly, acquires more than 50% of
the outstanding shares of Company Stock; or (iv) Company adopts or implements a
plan of liquidation, recapitalization or share repurchase relating to more than
50% of the outstanding shares of Company Stock or an extraordinary dividend
relating to more than 50% of such outstanding shares or 50% of the assets of
Company and Company Subsidiaries, taken as a whole.
(c) Company acknowledges that the agreements contained in this Section
11.04 are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent and Merger Subsidiary would not enter
into this Agreement. Accordingly, if Company fails promptly to pay any amount
due to Parent pursuant to this Section 11.04, it shall also pay any costs and
expenses incurred by Parent or Merger Subsidiary in connection with a legal
action to enforce this Agreement that results in a judgment against Company for
such amount.
<PAGE> 62
SECTION 11.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of their wholly-owned subsidiaries, the right to enter into the
transactions contemplated by this Agreement, but any such transfer or assignment
will not relieve Parent or Merger Subsidiary of its obligations hereunder.
SECTION 11.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 11.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
SECTION 11.08. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. Except as
provided in Section 7.03, no provision of this Agreement is intended to confer
any rights, benefits, remedies, obligations or liabilities hereunder upon any
Person other than the parties hereto and their respective successors and
assigns.
SECTION 11.09. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 11.10. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms,
<PAGE> 63
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
SECTION 11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
<PAGE> 64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WEBTRENDS CORPORATION
By: /s/ Elijahu Shapira
---------------------------------------
Name: Elijahu Shapira
Title: President & Chief Executive
Officer
NETIQ CORPORATION
By: /s/ Ching-Fa Hwang
---------------------------------------
Name: Ching-Fa Hwang
Title: Chief Executive Officer
NORTH ACQUISITION CORPORATION
By: /s/ James A. Barth
---------------------------------------
Name: James A. Barth
Title: President
<PAGE> 65
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT APPEAR IN THE
TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only, is not a part of this
document and may be discarded.)
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME
--------------- -----------
<S> <C>
1.01..............................................................define.section
2.....................................................................merger.art
2.01......................................................................merger
2.01(a)................................................................surv.corp
2.01(b).........................................................file.cert.merger
2.01(c)..........................................................possess.all.rts
2.02.................................................................conv.shares
2.02(a)...........................................................out.share.conv
2.02(b)...............................................................each.share
2.03....................................................................surr.pay
2.03(a)................................................................exc.agent
2.03(b)..........................................................holder.entitled
2.03(c)............................................................cert.endorsed
2.03(d).........................................................no.furth.reg.shr
2.03(e)............................................................unclaimed.ret
2.03(f)...............................................................surr.pay.f
2.04...............................................................stock.options
2.04(b).......................................................prior.eff.co.shall
2.07.................................................................frac.shares
3..................................................................surv.corp.art
3.02......................................................................bylaws
3.03.....................................................................dir.off
4.....................................................................rep.war.co
4.......................................................................co.exist
4.02....................................................................co.autho
4.03................................................................co.gov.autho
4.04..................................................................co.non.con
4.05......................................................................co.cap
4.05(a)(i)........................................................no.out.shr.cap
4.05(a)(ii)......................................................no.sec.conv.shr
4.05(a)(iii)..........................................................no.options
4.06......................................................................co.sub
4.06(a).................................................................sub.corp
4.06(b)...........................................................co.own.sub.stk
4.06(b)(i)..........................................................nno.vtng.sec
4.06(b)(ii)............................................................no.rights
4.07..............................................................co.sec.filings
4.07(b)..............................................................report.true
4.08.................................................................co.fin.stmt
4.09................................................................co.disc.docs
4.09(a)...........................................................co.docs.comply
4.10, 4.11, 5.20.................................................co.abs.cert.chg
4.11(a)............................................................co.no.mat.adv
4.11(b)............................................................co.no.div.cap
4.11(c)..........................................................co.no.amend.sec
4.11(d).............................................................co.no.indebt
4.11(e)...............................................................co.no.lien
4.11(f)...............................................................co.no.loan
4.11(g).............................................................co.no.damage
4.11(h)..............................................................co.no.trans
4.11(i)...........................................................co.no.chg.acct
4.11(j)..............................................................co.no.sever
4.12............................................................co.no.undis.liab
4.12(a)..................................................................co.liab
4.12(b)..............................................................co.ord.liab
4.13, 5.11.................................................co.comp.law.court.ord
4.14, 5.12...............................................................co.liti
4.15, 5.13.........................................................co.finder.fee
4.17.......................................................................taxes
4.17(d)..................................................................taxes.g
4.18............................................................co.emp.bene.plan
4.19..................................................................co.env.mat
4.19(a)............................................................co.except.10k
4.19(b).........................................................co.no.env.invest
4.19(c)...............................................................co.env.def
4.20...........................................................co.intellect.prop
4.21...........................................................pooling.tax.treat
5....................................................................rep.war.buy
5.01...................................................................buy.exist
5.02...................................................................buy.autho
5.03...............................................................buy.gov.autho
5.04.................................................................buy.non.con
5.05..............................................................capitalization
5.07.................................................................SEC.filings
5.07(a)............................................................sec.filings.a
5.09...............................................................buy.disc.docs
5.09(a)........................................................buy.sub.info.true
5.10............................................................abs.cert.changes
6..........................................................................cov.o
6.01..................................................................co.conduct
6.01(a)..........................................................co.not.chg.cert
6.01(b).............................................................co.not.merge
6.01(c)..............................................................co.not.sell
6.01(e).............................................................co.not.agree
6.01(d)...............................................................co.not.lie
6.02............................................................co.stk.mtg.proxy
6.03.............................................................co.other.offers
6.03(a).............................................................no.solicit.a
6.03(b).............................................................no.solicit.b
6.03(b)(iv)........................................................no.solict.biv
6.03(c).............................................................no.solicit.c
6.04...........................................................required.consents
7........................................................................cov.buy
7.02............................................................oblig.merger.sub
7.03............................................................buy.dir.off.liab
8.....................................................................cov.buy.co
8.01................................................................best.efforts
8.02.............................................................certain.filings
8.03.............................................................public.announce
8.04...............................................................further.assur
8.05..........................................................access.informatiom
8.06............................................................co.notice.events
8.06(a)..........................................................co.consent.pers
8.06(b).......................................................not.gov.reg.agency
8.06(c).............................................................note.actions
8.07..................................................................buy.confid
8.08..............................................................tax.free.reorg
9................................................................cond.merger.art
9.01.............................................................cond.oblig.each
9.01(a)............................................................adopt.del.law
9.01(b).............................................................hsr.wait.exp
9.01(c)..........................................................no.law.prohibit
9.01(g).........................................................actions.obtained
9.02............................................................cond.obl.buy.sub
9.02(a)........................................................co.perf.all.oblig
9.01(f).........................................................buy.rec.all.docs
9.03...............................................................cond.oblig.co
9.03(b)...........................................................oblig.prior.ET
10......................................................................term.art
10.01.......................................................................term
10.01(a)..........................................................mutual.consent
10.01(b)........................................................offer.not.consum
10.01(b)(i)........................................................termination.b
10.01(b)(iii)...................................................termination.biii
10.01(c)(iii).....................................................termnation.biv
10.02................................................................effect.term
11......................................................................misc.art
11.01....................................................................notices
11.02...............................................................surv.rep.war
11.03..............................................................amend.waivers
11.03(a)..................................................................signed
11.03(b).........................................................delay.not.waive
11.04...................................................................expenses
11.04(b)..............................................................expenses.b
11.05...............................................................succ.assigns
11.06..............................................................governing.law
11.07...........................................................jury trial waive
11.08.............................................................counter.effect
11.09...........................................................entire agreement
11.10...................................................................captions
11.11...............................................................severability
11.12.......................................................specific.performance
</TABLE>
