<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 28, 1999
(December 15, 1999)
INFORMATICA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
77-0333710
(Commission File Number) (I.R.S. Employer Identification No.)
3350 West Bayshore Road, Palo Alto, CA 94303
(Address of Principal Executive Offices) (Zip Code)
(650) 682-6200
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 15, 1999, pursuant to the Agreement and Plan of Merger,
dated as of December 15, 1999, by and among Informatica Corporation (the
"Registrant"), I-1 Merger Corp., a Delaware corporation ("Merger Sub") and
Influence Software, Inc., a privately held California corporation ("Influence")
(the "Agreement"), the Registrant completed the merger of Merger Sub, a
wholly-owned subsidiary of the Registrant, with and into Influence, with
Influence being the surviving corporation of the merger and becoming a
wholly-owned subsidiary of the Registrant. The transaction was closed on
December 15, 1999 and is being accounted for as a pooling transaction.
As consideration for the transaction, the Registrant issued 649,542
shares of the Registrant's common stock, $0.001 par value, in exchange for the
outstanding shares of capital stock of Influence, subject to the withholding of
10% of such shares in escrow in accordance with the terms of the Agreement. At
the effective time of the merger, all outstanding options to purchase shares of
Influence common stock were automatically converted into options to purchase the
Registrant's common stock based upon the conversion factor set forth in the
Agreement with corresponding adjustment to their respective exercise prices.
The Registrant currently intends that Influence's business will continue
to be operated in its current manner. Certain of the assets of Influence were
used in the development and support of Influence's industry-specific, analytic
software applications for enterprise and electronics business performance
management, and the Registrant currently intends to use such assets in
substantially the same manner.
The total value of consideration paid for the purchase transaction was
determined based on arm's length negotiations between the Registrant and
Influence, which took into account Influence's financial position, operating
history, products, intellectual property and other factors relating to
Influence's business and certain income tax aspects of the transaction. There
are no material relationships between Influence and either the Registrant or
Merger Sub or any of their respective affiliates or any director or officer of
the Registrant or Merger Sub or any associate of such director or officer.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
It is impractical for Registrant to file the required financial
statements at this time. Registrant intends to file with the Securities
and Exchange Commission such financial statements within 60 days of the
filing date of this report.
(b) Pro Forma Financial Information
See response to Item 7(a).
(c) Exhibits
The Exhibit Index appearing on page 4 is incorporated herein by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INFORMATICA CORPORATION
(the Registrant)
By: /s/ Diaz Nesamoney
-----------------------------------
Diaz Nesamoney,
President
Dated: December 28, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
<S> <C> <C>
2.1 Agreement and Plan of Merger by and 6
among Informatica Corporation, I-1
Merger Corp., and Influence Software,
Inc.
</TABLE>
4
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Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibits to this
Agreement and Plan of Merger have been omitted. Such exhibits will be submitted
to the Securities and Exchange Commission upon request.
<TABLE>
<CAPTION>
EXHIBIT NAME
------- ----
<S> <C>
Exhibit B Proprietary Information and Inventions Agreement
Exhibit C Opinion from Company Counsel
Exhibit D Opinion from Acquiror's Counsel
Exhibit E Form of Affiliates Agreement
</TABLE>
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INFORMATICA CORPORATION
I-1 MERGER CORP.
AND
INFLUENCE SOFTWARE, INC.
DECEMBER 15, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 THE MERGER.................................................1
1.1 The Merger.....................................................1
1.2 Effective Time of the Merger...................................1
ARTICLE 2 THE SURVIVING CORPORATION..................................2
2.1 Articles of Incorporation......................................2
2.2 Bylaws.........................................................2
2.3 Directors and Officers of Surviving Corporation................2
ARTICLE 3 CONVERSION OF SECURITIES...................................2
3.1 Conversion of Shares...........................................2
3.2 Options........................................................2
3.3 Restricted Shares..............................................2
3.4 Exchange of Certificates.......................................3
3.5 Escrow.........................................................3
3.6 Dividends; Transfer Taxes......................................3
3.7 No Fractional Shares...........................................4
3.8 Closing of Company Transfer Books..............................4
3.9 Closing........................................................4
3.10 Supplementary Action...........................................4
3.11 Dissenting Shares..............................................4
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............5
4.1 Due Organization; Good Standing; Authority; Binding Nature of
Agreements.....................................................5
4.2 Articles of Incorporation and Bylaws; Records..................6
4.3 Capitalization; Ownership of Stock.............................6
4.4 Financial Statements...........................................7
4.5 Absence of Changes.............................................8
4.6 Title to Assets; Equipment; Real Property, Leases..............9
4.7 [Intentionally left blank.]...................................10
4.8 Receivables; Major Customers..................................10
4.9 Intentionally Left Blank......................................10
4.10 Proprietary Assets............................................10
4.11 Contracts.....................................................12
4.12 Compliance With Legal Requirements............................14
4.13 Governmental Authorizations...................................14
4.14 Tax Matters...................................................14
4.15 Employee and Labor Matters....................................16
4.16 Benefit Plans; ERISA..........................................17
4.17 Environmental Matters.........................................19
4.18 Sale of Products; Performance of Services.....................19
4.19 Insurance.....................................................19
4.20 Related Party Transactions....................................21
4.21 Proceedings; Orders...........................................21
4.22 Non-Contravention; Consents...................................22
4.23 Brokers.......................................................23
4.24 Pooling of Interests..........................................23
</TABLE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.25 Year 2000 Compliance..........................................23
4.26 Tax Treatment.................................................23
4.27 Full Disclosure...............................................23
4.28 Powers of Attorney............................................23
4.29 Voting Arrangements...........................................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND
MERGER SUB ...............................................24
5.1 Due Organization; Good Standing; Authority; Binding Nature
of Agreements.................................................24
5.2 Capitalization; Ownership of Stock............................24
5.3 Brokers.......................................................24
5.4 Pooling of Interests..........................................24
5.5 Non-Contravention; Consents...................................25
5.6 SEC Reports...................................................25
5.7 Tax Treatment.................................................25
ARTICLE 6 ADDITIONAL AGREEMENTS.....................................25
6.1 Stock Options.................................................25
6.2 Certain Employee Benefit Matters..............................26
6.3 Expenses......................................................26
6.4 Pooling Accounting............................................27
6.5 Indemnification of the Company's Officers and Directors.......27
6.6 Additional Agreements.........................................27
ARTICLE 7 CONDITIONS TO CONSUMMATION OF THE MERGER..................27
7.1 Conditions to Each Party's Obligation to Effect the Merger....27
7.2 Additional Conditions to Acquiror's and Merger Sub's
Obligation to Consummate the Merger...........................28
7.3 Additional Conditions to the Company's Obligation to
Consummate the Merger.........................................29
ARTICLE 8 ESCROW AND INDEMNIFICATION................................30
8.1 Indemnification...............................................30
8.2 Escrow Fund...................................................30
8.3 Damage Threshold..............................................30
8.4 Escrow Periods................................................31
8.5 Claims Upon Escrow Fund.......................................31
8.6 Valuation.....................................................32
8.7 Objections to Claims..........................................32
8.8 Resolution of Conflicts.......................................33
8.9 Shareholders' Agent...........................................33
8.10 Actions of the Shareholders' Agent............................34
8.11 Claims........................................................34
ARTICLE 9 MISCELLANEOUS PROVISIONS..................................34
9.1 Survival of Representations and Covenants.....................34
9.2 Transfer Taxes................................................35
9.3 Notices.......................................................35
9.4 Time of the Essence...........................................35
9.5 Headings......................................................35
</TABLE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
9.6 Counterparts..................................................36
9.7 Governing Law.................................................36
9.8 Waiver........................................................36
9.9 Amendments....................................................36
9.10 Severability..................................................36
9.11 Parties in Interest...........................................36
9.12 Entire Agreement..............................................36
9.13 Construction..................................................36
</TABLE>
INDEX OF SCHEDULES AND EXHIBITS
A. Certain Definitions
B. Proprietary Information and Inventions Agreement
C. Opinion from Company Counsel
D. Opinion from Acquiror's Counsel
E. Form of Affiliates Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 15, 1999, by and
among Informatica Corporation ("Acquiror"), a Delaware corporation, I-1 Merger
Corp. ("Merger Sub"), a Delaware corporation, and Influence Software, Inc. (the
"Company"), a California corporation. Certain capitalized terms used in this
Agreement are defined in Exhibit A.
WHEREAS, the Boards of Directors of Acquiror, Merger Sub and the Company
each have determined that the acquisition of the Company by Acquiror is in the
best interests of their respective companies and stockholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits, and accordingly have agreed to effect the merger provided
for herein upon the terms and subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the merger
contemplated herein shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests transaction;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time Merger Sub shall be merged with and into the Company, the
Company shall be the surviving corporation (the "Surviving Corporation") and the
separate existence of Merger Sub shall thereupon cease (the "Merger"). Without
limiting the generality of the foregoing, at the Effective Time all property,
rights, powers, privileges and franchises of Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Merger Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
Immediately following the Effective Time, the Surviving Corporation shall be a
wholly-owned subsidiary of Acquiror.
1.2 Effective Time of the Merger. The Merger shall become effective when
a properly executed agreement of merger (the "Agreement of Merger"), in such
form as may be agreed by the parties hereto and as required by the relevant
provisions of the California General Corporation Law (the "CGCL"), has been duly
filed with both the Secretary of State of the State California and the Secretary
of State of the State of Delaware, which filings shall be made as soon as
practicable after the closing of the Transactions hereof upon satisfaction or
waiver of the conditions set forth in Article 7. When used in this Agreement,
the term "Effective Time" shall mean the date and time at which such Agreement
of Merger has been accepted for filing by the Secretary of State of the State of
California or at such later time as is provided in the Agreement of Merger.
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ARTICLE 2
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. At the Effective Time, the Articles of
Incorporation attached as Exhibit A to the Agreement of Merger shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by California Law and such Articles of Incorporation.
2.2 Bylaws. The Bylaws of the Company, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
2.3 Directors and Officers of Surviving Corporation. The directors of
the Company shall resign effective as of the Effective Time. The directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Articles of Incorporation and Bylaws of the Surviving Corporation, and the
officers of Merger Sub immediately prior to the Effective Time shall be the
initial and only officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed.
ARTICLE 3
CONVERSION OF SECURITIES
3.1 Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, and subject to Section 3.4, each
share of common stock, no par value per share, of the Company ("Company Stock")
that is issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive, upon surrender of the certificate formerly
representing such share of Company Stock (the "Certificate"), that number of
shares of the Common Stock of Acquiror, $0.001 par value per share ("Acquiror
Stock"), as equals the Exchange Ratio; provided, however, that each share of
Company Stock that is held in the treasury of the Company or by any subsidiary
of the Company immediately prior to the Effective Time shall not be so converted
but shall be canceled and retired, and no consideration shall be delivered in
exchange therefor. The "Exchange Ratio" shall be equal to 0.1239.
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of the common stock, no
par value per share, of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall be converted into and continue as one share of
the common stock of the Surviving Corporation.
3.2 Options. All outstanding stock options to purchase Company Stock,
whether vested or unvested ("Company Stock Options"), to purchase Company Stock
shall be assumed by Acquiror in accordance with Section 6.1.
3.3 Restricted Shares. Shares of Company Stock which are subject to
repurchase by the Company in the event the holder thereof ceases to be employed
by the Company shall be converted into Acquiror Stock on the same basis as
provided in Section 3.1 above and shall be registered in such holder's name, but
shall be held by the Company or Acquiror pursuant to the existing agreements in
effect on the date of this Agreement.
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3.4 Exchange of Certificates.
(a) Within a reasonable period of time after the Effective Time,
Acquiror shall make available, and each holder of shares of Company Stock will
be entitled to receive upon surrender to American Stock Transfer, acting as
exchange agent (the "Exchange Agent") of one or more Certificates, certificates
representing the number of whole shares of Acquiror Stock into which such shares
of Company Stock are converted in the Merger (other than the Escrow Shares),
subject to this Section 3.4. The shares of Acquiror Stock into which the shares
of the Company Stock shall be converted in the Merger shall be deemed to have
been issued at the Effective Time.
(b) As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of Company Stock (i) a
letter of transmittal (which shall specify that delivery shall be effected only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Acquiror may reasonably specify that are
not inconsistent with the terms of this Agreement) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Acquiror Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor (i) a certificate representing that number of whole shares of
Acquiror Stock and (ii) a check representing the amount of cash which such
holder has the right to receive in respect of the Certificate so surrendered
pursuant to Section 3.7.
3.5 Escrow. As security for the Shareholders' indemnification
obligations set forth herein, Acquiror will deliver to the Escrow Agent under an
Escrow Agreement dated as of the date hereof by and among Acquiror, the
Shareholders' Agent and the Escrow Agent (the "Escrow Agreement"), ten percent
(10%) of the aggregate number of shares of Acquiror Stock to be issued pursuant
to Section 3.1 in respect of Company Stock (the "Escrow Fund"). Such shares
shall be in escrow on behalf of the Shareholders, on a pro rata basis, in
accordance with each such Shareholder's percentage ownership ("Pro Rata
Portion") of Company Stock immediately prior to the Merger. Such shares ("Escrow
Shares") shall be held as security for the Shareholders' indemnification
obligations under Article 8.
3.6 Dividends; Transfer Taxes.
(a) No dividends that are declared on shares of Acquiror Stock
after the Effective Time (if any) will be paid to persons entitled to receive
certificates representing shares of Acquiror Stock until such persons surrender
their Certificates. Upon such surrender, there shall be paid to the person in
whose name the certificates representing such shares of Acquiror Stock shall be
issued any dividends which shall have become payable with respect to such shares
of Acquiror Stock between the Effective Time and the time of such surrender. In
no event shall the person entitled to receive such dividends be entitled to
receive interest on such dividends.
(b) If any certificates for any shares of Acquiror Stock are to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Person requesting such exchange shall (i) pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Acquiror Stock in a name other than that of the registered holder
of the Certificate surrendered or (ii) establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
(c) Notwithstanding anything in this Agreement to the contrary,
neither the Exchange Agent nor any party hereto shall be liable to a holder of
shares of Company Stock for any shares of Acquiror Stock or dividends thereon or
the cash payments otherwise due hereunder delivered to a public official
pursuant to applicable escheat laws following the passage of time specified
therein.
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3.7 No Fractional Shares. Notwithstanding anything herein to the
contrary, no fractional shares of Acquiror Stock shall be issued pursuant to the
Merger. In lieu of the issuance of any such fractional share of Acquiror Stock,
cash adjustments will be paid in respect of any fractional share of Acquiror
Stock that would otherwise be issuable. The amount of such adjustment shall be
the product of (i) such fraction of a share of Acquiror Stock multiplied by (ii)
the average closing price per share of Acquiror Stock as reported on the Nasdaq
National Market on the five trading days immediately preceding the date of the
Closing ("Acquiror Share Value").
3.8 Closing of Company Transfer Books. As of the date hereof, the stock
transfer books of the Company shall be closed and no transfer of shares of
Company Stock shall thereafter be made. If Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for certificates
representing shares of Acquiror Stock or cash in accordance with the terms
hereof. The holders of shares of Company Stock to be exchanged for shares of
Acquiror Stock pursuant to this Agreement shall cease to have any rights as
shareholders of the Company, except for the right to surrender such Certificates
in exchange for shares of Acquiror Stock as provided hereunder or such
dissenters' rights as are provided under applicable law.
3.9 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Morrison & Foerster
LLP, 755 Page Mill Road, Palo Alto, California 94304, concurrently with the
execution of this Agreement.
3.10 Supplementary Action. If, at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of the Company, or otherwise to
carry out the provisions of this Agreement, the officers and directors of the
Surviving Corporation are hereby authorized and empowered on behalf of the
Company in the name of and on behalf of the Company to execute and deliver any
and all things necessary or proper to vest or to perfect or confirm title to
such property or rights in the Surviving Corporation, and otherwise to carry out
the purposes and provisions of this Agreement.
3.11 Dissenting Shares.
(a) Notwithstanding any provisions of this Agreement to the
contrary, any shares of Company Stock held by a holder who has exercised such
holder's dissenters' rights in accordance with the CGCL and who, as of the
Effective Time, has not effectively withdrawn or lost such dissenter's rights
("Dissenting Shares"), shall not be converted into or represent a right to
receive the consideration described in Section 3.1, but the holder of the
Dissenting Shares shall only be entitled to such rights as are granted by the
CGCL.
(b) Notwithstanding the provisions of subsection (a) above, if
any holder of shares of Company Stock who demands dissenters' rights with
respect to such shares shall effectively withdraw or lose (through the failure
to perfect or otherwise) such holder's dissenters' rights under the CGCL, then,
as of the Effective Time or the occurrence of such event, such holder's shares
shall automatically be converted into and represents only the right to receive
the consideration described in Section 3.1, subject in any event to Section 3.5.
(c) The Company shall give Acquiror (i) prompt written notice of
any written demands for payment with respect to any shares of Company Stock
pursuant to dissenters' rights, and any withdrawals of such demands or losses of
such rights, and any other instruments served pursuant to the CGCL, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for dissenters' rights. The Company shall not, except with the prior
written consent of Acquiror,
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voluntarily make any payment with respect to demands for dissenters' rights or
offer to settle or settle any such demands.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule delivered by
the Company to Acquiror at or prior to the execution of this Agreement (the
"Disclosure Schedule"), the parts of which are numbered to correspond to the
Section numbers of this Agreement, the Company hereby represents and warrants to
Acquiror and Merger Sub as follows:
4.1 Due Organization; Good Standing; Authority; Binding Nature of
Agreements.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, and has all
necessary corporate power and authority: (i) to conduct its business in the
manner in which its business is currently being conducted and in the manner in
which its business is proposed to be conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used and in the manner
in which its assets are proposed to be owned and used; (iii) to perform its
obligations under all Company Contracts; and (iv) to enter into and perform all
of its obligations under the Transactional Agreements.
(b) The Company has never conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious name,
assumed name, trade name or name other than the name set forth in its articles
of incorporation, as amended.
(c) The Company is duly qualified and in good standing as a
foreign corporation in each of the jurisdictions in which the nature of its
business or the ownership or leasing of its properties requires such
qualification, and any failure to qualify would have a Material Adverse Effect
as the Company. For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse (i) to
the business, assets (including intangible assets), capitalization, operations,
financial condition or results of operations of such entity taken as a whole
with its subsidiaries; (ii) such entities' ability to consummate the
transactions contemplated by this Agreement or perform as obligations under this
Agreement; or (iii) the Acquiror's ability to vote, receive dividends with
respect to or otherwise exercise ownership rights with respect to the stock of
the Surviving Corporation, except to the extent that any such change, event,
violation, inaccuracy, circumstance or effect results from (A) changes in
general economic conditions or changes affecting the industry generally in which
such entity operates that do not affect such entity in a disproportionate manner
or (B) Company entering into this Agreement.
(d) Neither the Company nor any of its shareholders has ever
approved, or commenced any proceeding or made any election contemplating, the
dissolution or liquidation of the Company or the winding up or cessation of the
Company's business or affairs.
(e) The Company has no subsidiaries, and the Company has never
owned, beneficially or otherwise, any shares or other securities of, or any
direct or indirect interest of any nature in, any Entity.
(f) The execution, delivery and performance of the Transactional
Agreements to which the Company is a party have been duly authorized by all
necessary action on the part of Company, its officers, its board of directors,
and its shareholders.
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(g) Each of the Transactional Agreements to which the Company is
a party constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms and conditions.
4.2 Articles of Incorporation and Bylaws; Records.
(a) The Company has delivered to Acquiror accurate and complete
copies of: (i) The Company's articles of incorporation and bylaws, including all
amendments thereto; (ii) the stock records of the Company; and (iii) the minutes
and other records of the meetings and other proceedings (including any actions
taken by written consent or otherwise without a meeting) of the shareholders of
the Company and the board of directors of the Company. There have been no
meetings or other proceedings of the shareholders of the Company or the board of
directors of the Company that are not reflected in such minutes or other
records.
(b) There has not been any violation of any of the provisions of
the Company's articles of incorporation or bylaws or of any resolution adopted
by the Company's shareholders or the Company's board of directors, and to the
Knowledge of the Company no event has occurred, and no condition or circumstance
exists, that likely would (with or without notice or lapse of time) constitute
or result directly or indirectly in such a violation.
(c) The books of account, stock records, minute books and other
records of the Company are accurate, up to date and complete, and have been
maintained in accordance with sound and prudent business practices. All of the
records of the Company are in the actual possession and direct control of the
Company.
4.3 Capitalization; Ownership of Stock. As of the date of this Agreement
and as of the Closing:
(a) The authorized capital stock of the Company consists of ten
million (10,000,000) shares of Common Stock, no par value per share. As of the
date of this Agreement, the outstanding capital of the Company consists of (i)
five million two hundred forty-two thousand five hundred (5,242,500) shares of
Common Stock and (ii) options to purchase one million one hundred fifty-eight
thousand five hundred (1,158,500) shares of Common Stock. All of such Common
Stock and options are owned of record by the shareholders and optionholders,
respectively, free and clear of any Encumbrances. Section 4.3 of the Disclosure
Schedule includes a list of all Company Stock Options as of the date hereof,
including the name of each holder of Company Stock Options, the date of grant,
the number of shares of Company Stock subject to such options, the vesting
commencement date and the vesting schedule.
(b) All of the shares of Company Stock currently outstanding (i)
have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, and (iii) have been issued in full compliance with all applicable
securities laws and other applicable Legal Requirements. The Company has
delivered to Acquiror accurate and complete copies of the stock certificates
evidencing the currently outstanding shares of Common Stock.
(c) There is no (i) outstanding preemptive right, subscription,
option, call, warrant or right (whether or not currently exercisable) to acquire
any shares of the capital stock or other securities of the Company; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
the Company; (iii) Contract under which the Company is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other
securities; or (iv) condition or circumstance that likely would directly or
indirectly give rise
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to or provide a basis for the assertion of a claim by any Person to the effect
that such Person is entitled to acquire or receive any shares of capital stock
or other securities of the Company.
(d) The Company has neither repurchased, redeemed or otherwise
reacquired, and has not agreed, committed or offered (in writing or otherwise)
to reacquire, any shares of capital stock or other securities. Any securities
reacquired by the Company were (or will have been) reacquired in full compliance
with the applicable provisions of all applicable Legal Requirements.
4.4 Financial Statements.
(a) The Company has delivered to Acquiror the following financial
statements and notes (collectively, the "Financial Statements"):
(i) the audited balance sheet of the Company as of
October 31, 1999, and the related statements of
operations, changes in shareholders' equity and
fund balance and cash flows of the Company as of
October 31, 1999, together with the notes
thereto; and
(ii) the unaudited balance sheets of the Company as
of November 30, 1999 (the "Unaudited Interim
Balance Sheet") and related unaudited statements
of operations, for the month then ended.
(b) All of the Financial Statements are accurate and complete in
all material respects. The Financial Statements are in accordance with the books
and records of the Company, present fairly the financial position of the Company
as of the respective dates thereof and the results of operations and, with
respect to the audited Financial Statements, changes in shareholders' equity and
fund balance and cash flows of the Company for the respective periods covered
thereby, and have been prepared in conformity with GAAP applied on a consistent
basis, subject, in the case of the unaudited financial statements, to normal
recurring year-end adjustments, the effect of which will not be material and the
absence of notes and statements of cash flows and changes in shareholders'
equity.
(c) At the date of the Unaudited Interim Balance Sheet, (i) the
Company had no Liabilities of any nature (matured or unmatured, fixed or
contingent) required by GAAP consistently applied to be provided for in such
Unaudited Interim Balance Sheet which were not provided for, (ii) the Company
had no material Liabilities of any nature (matured or unmatured, fixed or
contingent) which were not required by GAAP to be provided for in the Unaudited
Interim Balance Sheet and (iii) all reserves established by the Company and set
forth in the Unaudited Interim Balance Sheet were adequate for the purposes for
which they were established.
(d) As of the date of this Agreement, the Company has no
Liabilities in excess of $20,000 individually or in the aggregate, except for
(i) Liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; and (ii) accounts payable and Liabilities (of the type
required to be reflected as current liabilities in the "liabilities" column of a
balance sheet prepared in accordance with GAAP) incurred and accrued by the
Company in the Ordinary Course of Business since the date of the Unaudited
Interim Balance Sheet.
(e) The Company has provided to Ernst & Young LLP copies of any
and all agreements related to software licenses or other transactions for which
revenue has been recognized that would have an impact on how such revenue was
recognized.
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4.5 Absence of Changes. Since September 30, 1999:
(a) there has not been any material adverse change in the
Company's business, condition, assets, liabilities, operations, financial
performance, results of operations or prospects, and no event has occurred that
likely would have an adverse effect on the Company's business, condition,
assets, liabilities, operations, financial performance, results of operations or
prospects;
(b) there has not been any material loss, damage or destruction
to, or any interruption in the use of, any of the Company's assets (whether or
not covered by insurance);
(c) the Company has not (i) declared, accrued, set aside or paid
any dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Company has not sold or otherwise issued any shares of
capital stock or any other securities;
(e) the Company has not amended its articles of incorporation or
bylaws and has not effected or been a party to any recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) the Company has not purchased or otherwise acquired any asset
from any other Person, except for assets acquired by the Company in the Ordinary
Course of Business;
(g) the Company has not leased or licensed any asset from any
other Person except for assets leased or licensed in the Ordinary Course of
Business;
(h) the Company has not made any individual capital expenditure,
measured by invoice amount, in excess of $10,000;
(i) the Company has not sold or otherwise transferred, and has
not leased or licensed, any asset to any other Person except for products sold
by the Company from its inventory in the Ordinary Course of Business;
(j) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable or
other indebtedness, except in the Ordinary Course of Business;
(k) the Company has not pledged or hypothecated any of its assets
or otherwise permitted any of its assets to become subject to any Encumbrance,
except in the Ordinary Course of Business;
(l) the Company has not made any loan or advance to any other
Person, including without limitation, any shareholder of the Company;
(m) the Company has not (i) established or adopted any Employee
Benefit Plan or (ii) paid any bonus or made any profit sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees other than increases for non-officer employees consistent
with the Company's review and compensation policies in force prior to the date
of this Agreement;
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<PAGE> 13
(n) the Company has not entered into, and neither the Company nor
any of the assets owned or used by the Company has become bound by, any
Contract, except in the Ordinary Course of Business;
(o) no Contract by which the Company or any of the assets owned
or used by the Company is or was bound, or under which the Company has or had
any rights or interest, has been amended or terminated, except in the Ordinary
Course of Business;
(p) there has been no borrowing or agreement to borrow by the
Company or change in the contingent obligations of the Company by way of
guaranty, endorsement, indemnity, warranty or otherwise or grant of a mortgage
or security interest in any property of the Company, and the Company has not
incurred, assumed or otherwise become subject to any Liabilities, other than
accounts payable (of the type required to be reflected as current liabilities on
a balance sheet prepared in accordance with GAAP) incurred by the Company in the
Ordinary Course of Business;
(q) the Company has not discharged any Encumbrance or discharged
or paid any indebtedness or other Liability, except any that (i) are reflected
as current liabilities in the Unaudited Interim Balance Sheet or have been
incurred by the Company since the date thereof in the Ordinary Course of
Business, and (ii) have been discharged or paid in the Ordinary Course of
Business;
(r) the Company has not forgiven any debt or otherwise released
or waived any right or claim;
(s) the Company has not changed any of its methods of accounting
or accounting practices in any respect;
(t) the Company has not entered into any transaction or taken any
other action outside the Ordinary Course of Business; and
(u) the Company has not agreed or committed (in writing or
otherwise) to take any of the actions referred to in clauses (c) through (t)
above.
4.6 Title to Assets; Equipment; Real Property, Leases.
(a) The Company owns, and has good, valid and marketable title
to, all assets it purports to own, including (i) all assets reflected on the
Unaudited Interim Balance Sheet; (ii) all assets acquired by the Company since
the date of the Unaudited Interim Balance Sheet; (iii) all assets referred to in
Section 4.6(b) of the Disclosure Schedule and all of the Company's rights under
Company Contracts; and (iv) all other assets reflected in the Company's books
and records as being owned by the Company. All of said assets are owned by the
Company free and clear of any Encumbrances, except liens for current taxes and
assessments not delinquent.
(b) The Company does not own any real property or any interest in
real property, except for the leaseholds created under the real property leases
identified in Section 4.6(d) of the Disclosure Schedule (the "Leased Premises").
The Company has delivered to Acquiror complete copies of all such leases.
Acquiror will obtain a valid leasehold interest in such leases, in each case
free and clear of all title defects, Encumbrances and restrictions of any kind,
except: (i) mechanics', carriers', workers' and other similar liens arising in
the Ordinary Course of Business since the date of the Unaudited Interim Balance
Sheet and (ii) liens for current taxes not yet due and payable.
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<PAGE> 14
(c) Section 4.6(e) of the Disclosure Schedule identifies all
personal property assets that are being leased or licensed to the Company.
(d) All leases pursuant to which the Company leases real or
personal property are valid and effective in accordance with their respective
terms and, to the Company's Knowledge, there exists no default thereunder or
occurrence or condition which could result in a default thereunder or
termination thereof.
(e) The Company owns, or has a valid leasehold interest in or
license to, all assets necessary for the conduct of its business as presently
conducted.
4.7 [Intentionally left blank.]
4.8 Receivables; Major Customers.
(a) Section 4.8 of the Disclosure Schedule provides a materially
accurate and complete breakdown and aging of all accounts and notes receivable
and a list of all other receivables of the Company as of November 30, 1999.
(b) Section 4.8(b) of the Disclosure Schedule accurately
identifies, and provides an accurate and complete list of the revenues received
from, each customer or other Person that accounted for more than $25,000 of the
gross revenues of the Company during fiscal year 1998 and the ten months ended
October 31, 1999. To the Knowledge of the Company, it has not received any
notice or other communication (in writing or otherwise), or received any other
information, indicating that any customer or other Person identified in Section
4.8(b) of the Disclosure Schedule may cease dealing with the Company or may
otherwise substantially reduce the volume of business transacted by such Person
with the Company below historical levels.
(c) All existing accounts receivable of the Company (including
those accounts receivable reflected on the Unaudited Interim Balance Sheet that
have not yet been collected and those accounts receivable that have arisen since
such date and have not yet been collected) (i) represent valid obligations of
customers of the Company arising from bona fide transactions entered into in the
Ordinary Course of Business; and (ii) are current and in the aggregate, the
Company has no reason to expect they will not be collected in full (without any
counterclaim or setoff), net of reserves, on or before the later of 90 days from
the date of invoice or 60 days from the date hereof.
(d) The Company has provided to Acquiror a copy of the Company's
standard form of customer contract for each product or service it offers to
customers. The Company's policy is to seek to have customer relationships
governed by such standard contracts to the extent commercially practicable. The
Company has no oral contracts or agreements to deliver products or provide
services.
4.9 [Intentionally left blank].
4.10 Proprietary Assets.
(a) Schedule 4.10 of the Disclosure Schedule sets forth each of
the following Proprietary Assets owned by or licensed to the Company or
otherwise used in connection with the Company's business: all United States and
foreign (i) patent and patent applications; (ii) registered trademarks and
trademark applications; (iii) registered copyrights and applications for
copyright registration; (iv) mask work registrations and applications to
register mask works; and (v) any other such
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<PAGE> 15
Proprietary Asset that is the subject of an application to, or certificate or
registration issued by, any state, government or other public legal authority.
(b) All material designs, drawings, specifications, schematics,
designs, source code, object code, scripts, documentation, flow charts,
diagrams, data lists, databases, compilations and information incorporating,
embodying or reflecting any of the Proprietary Assets of the Company at any
stage of their development were written, developed and created solely and
exclusively by employees of the Company without the assistance of any third
party or entity or were created by third parties who assigned ownership of their
rights to the Company by means of valid and enforceable consultant
confidentiality and invention assignment agreements, copies of which have been
made available to Acquiror. The Company has taken reasonable measures and
precautions necessary to protect the confidentiality and value of each
Proprietary Asset that is owned by or licensed to the Company or that is
otherwise used in connection with the Company's business.
(c) The Company has not granted any third party any right to
manufacture, reproduce, license, use, distribute, market or exploit any of its
Proprietary Assets or any adaptations, translations, or derivative works based
on the Proprietary Assets or any portion thereof. No Proprietary Asset is a
"derivative work" of any original work currently owned by a third party as the
term "derivative work" is defined in the United States Copyright Act, Title 17,
U.S.C. Section 101.
(d) All current and former employees and consultants of the
Company have executed a Proprietary Information and Inventions Agreement
substantially in the form attached as Exhibit B. Such agreements constitute
valid and binding obligations of the Company and such person, enforceable in
accordance with their respective terms. To the Knowledge of the Company, no such
employee or consultant is in violation thereof. The Company does not believe it
is or will be necessary to utilize any inventions, trade secrets or proprietary
information of any Company employees made prior to their employment by the
Company, except for inventions, trade secrets or proprietary information
identified in Schedule 4.10(c) of the Disclosure Schedule, which have been
assigned to the Company.
(e) None of the Proprietary Assets owned or used by the Company
violate or infringe or, if used in the Company's business as currently proposed
to be conducted, would violate or infringe, any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual property
right of others. The Company is not infringing and has not at any time infringed
or received any written notice or other communication (in writing or otherwise)
of any actual, alleged, possible or potential infringement of any Proprietary
Asset owned or used by any other Person. To the Company's Knowledge, no Person
is infringing, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Proprietary Asset owned or used by Company. The
Company has not entered into any agreement to indemnify any other Person against
any charge of infringement, misappropriation or other conflict with respect to
any Proprietary Asset.
(f) There are no royalties, honoraria, fees or other payments
payable by the Company to any person by reason of the ownership, use, license,
sale or disposition of any Proprietary Asset of the Company.
(g) The Proprietary Assets owned by or licensed to the Company
include all Proprietary Assets necessary to conduct the Company's business to
the same extent and in the same manner as currently conducted. Such ownership or
right to use, and to license others to use, are free and clear of, and without
liability under, all claims and right of third parties (other than the
licensor).
(h) All proprietary software developed by the Company and
currently sold, licensed or otherwise used by the Company in its business is
free from significant programming errors, operates in
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<PAGE> 16
substantial conformity with its user documentation and other descriptions and
standards applicable thereto provided by the Company, and does not contain any
virus, timer, clock, counter, or other limiting design, instruction or routine,
that would, without the user's knowledge and consent, erase data or programming
code or cause such software to become inoperable or otherwise incapable of being
used in the full manner for which it was designed and created.
4.11 Contracts.
(a) Section 4.11 of the Disclosure Schedule lists each of the
following Company Contracts:
(i) any Company Contract or series of related Company
Contracts requiring in the aggregate payments after the date hereof by or to the
Company of more than $50,000;
(ii) any Company Contract with or for the benefit of any
current or former officer, director, stockholder, employee or consultant of the
Company;
(iii) any Company Contract with any labor union or
association representing any employee of the Company;
(iv) any Company Contract for the purchase or sale of
materials, supplies, equipment, merchandise or services that contain an
escalation, renegotiation or redetermination clause or that obligate the Company
to purchase all or substantially all of its requirements of a particular product
from a supplier, or for periodic minimum purchases of a particular product from
a supplier;
(v) any Company Contract for sale of any of the assets
or properties of the Company other than in the Ordinary Course of Business or
for the grant to any Person of any options, rights of first refusal, or
preferential or similar rights to purchase any such assets or properties;
(vi) any agreement of surety, guarantee or
indemnification, other than agreements in the Ordinary Course of Business with
respect to obligations in an aggregate amount not in excess of $50,000;
(vii) any Company Contract containing covenants of the
Company not to compete in any line of business, in any geographic area or with
any Person or covenants of any other Person not to compete with the Company or
in any line of business of the Company;
(viii) any Company Contract granting or restricting the
right of the Company to use any Proprietary Assets;
(ix) any Company Contract with customers or suppliers
for the sharing of fees, the rebating of charges or other similar arrangements;
(x) any Company Contract with any holder of securities
of the Company as such (including, without limitation, any Company Contract
containing an obligation to register any of such securities under any federal or
state securities laws);
(xi) any Company Contract obligating the Company to
deliver services or product enhancements or containing a "most favored nation"
pricing clause;
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<PAGE> 17
(xii) any Company Contract relating to the acquisition
by the Company of any operating business or the capital stock of any other
person;
(xiii) any Company Contract requiring the payment to any
Person of a brokerage or sales commission or a finder's or referral fee (other
than arrangements to pay commission or fees to employees in the Ordinary Course
of Business);
(xiv) any Company Contract or note relating to or
evidencing outstanding indebtedness for borrowed money;
(xv) any lease, sublease or other Company Contract under
which the Buyer is lessor or lessee of any real property or equipment or other
tangible property with respect to obligations in excess of $50,000; and
(xvi) any other material Company Contract whether or not
made in the ordinary course of business.
Except as identified in Section 4.11 of the Disclosure Schedule, all such
Company Contracts are in writing. The Company has delivered to Acquiror accurate
and complete copies of all written Company Contracts identified in Section 4.11
of the Disclosure Schedule, including all amendments thereto.
(b) Each Company Contract is valid and in full force and effect,
and is enforceable by the Company in accordance with its material terms, except
as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity.
(c) Neither the Company nor, to the Company's Knowledge, any
party to a Company Contract is in default under any Company Contract. No event
has occurred, and no circumstance or condition exists, that likely would (with
or without notice or lapse of time) (A) result in a violation or breach of any
of the provisions of any Company Contract, (B) give any Person the right to
declare a default or exercise any remedy or hinder any Company Contract, (C)
give any Person the right to accelerate the maturity or performance of any
Company Contract, or (D) give any Person the right to cancel, terminate or
modify any Company Contract. The Company has not waived any of its rights under
any Company Contract, except in the Ordinary Course of Business.
(d) To the Company's Knowledge, each Person against which the
Company has or may acquire any rights under any Company Contract is solvent and
is able to satisfy all of such Person's current and future monetary obligations
and other obligations and Liabilities to the Company.
(e) (i) The Company has never guaranteed or otherwise agreed to
cause, insure or become liable for, and has never pledged any of its assets to
secure, the performance or payment of any obligation or other Liability of any
other Person except in the Ordinary Course of Business; and (ii) the Company has
never been a party to or bound by (A) any joint venture agreement, partnership
agreement, profit sharing agreement, cost sharing agreement, loss sharing
agreement or similar Contract, or (B) any Contract that creates or grants to any
Person, or provides for the creation or grant of, any stock appreciation right,
phantom stock right or similar right or interest.
(f) To the Knowledge of the Company, the performance of the
Company Contracts will not result in any violation of or failure to comply with
any Legal Requirement.
(g) Schedule 4.11(h) of the Disclosure Schedule identifies and
provides an accurate and brief description of each proposed Contract as to which
any bid, offer, written proposal, term sheet or
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similar document has been submitted or received by the Company that would commit
the Company to deliver goods or provide services with a value in excess of
$25,000 and is outstanding.
(h) To the Company's Knowledge, no party to any Company Contract
has notified the Company or made a claim to the effect that the Company has
failed to perform a material obligation thereunder. In addition, to the
Knowledge of the Company, there is no plan, intention or indication of any
contracting party to any Company Contract to cause the termination, cancellation
or modification of such Contract or to reduce or otherwise change its activity
thereunder so as to materially adversely affect the benefits derived or expected
to be derived therefrom by the Company.
4.12 Compliance With Legal Requirements.
(a) The Company is in compliance with each Legal Requirement that
is applicable to it or to the conduct of its business or the ownership or use of
any of its assets and any failure to comply would not have a Material Adverse
Effect on the Company's business.
(b) The Company has not received at any time any written notice
or other communication (in writing or otherwise) from any Governmental Body, or
any other Person, regarding (i) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement, or (ii) any
actual, alleged, possible or potential obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any cleanup or any
remedial, corrective or response action of any nature.
(c) To the Knowledge of the Company, no Governmental Body has
proposed or is considering any Legal Requirement (other than any Legal
Requirement that would be applicable generally to the data integration industry)
that, if adopted or otherwise put into effect, would specifically affect the
Company and (i) would be likely to have an adverse effect on the Company's
business, condition, assets, liabilities, operations, financial performance,
results of operations or prospects or on the ability of the Company to comply
with or perform any covenant or obligation under this Agreement or any of the
other Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
4.13 Governmental Authorizations.
(a) Section 4.13 of the Disclosure Schedule identifies (i) each
Governmental Authorization that is held by the Company; and (ii) each other
Governmental Authorization that, to the Knowledge of the Company, is held by any
of the Company's employees and is used in connection with the Company's
business. The Company has delivered to Acquiror accurate and complete copies of
all of the Governmental Authorizations identified in Section 4.13 of the
Disclosure Schedule, including all renewals thereof and all amendments thereto.
Each Governmental Authorization identified or required to be identified in
Section 4.13 of the Disclosure Schedule is valid and in full force and effect.
(b) The Governmental Authorizations identified in Section 4.13 of
the Disclosure Schedule constitute all of the Governmental Authorizations
necessary (i) to enable the Company to conduct its business in the manner in
which its business is currently being conducted and (ii) to permit the Company
to own and use its assets in the manner in which they are currently owned and
used.
4.14 Tax Matters.
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by the Company (whether pursuant to any Tax
Return or otherwise) has been duly paid in full
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on a timely basis. Any Tax required to have been withheld or collected by the
Company has been duly withheld and collected, and (to the extent required) each
such Tax has been paid to the appropriate Governmental Body.
(b) Section 4.14(b) of the Disclosure Schedule accurately
identifies all Tax Returns required to be filed by or on behalf of the Company
with any Governmental Body with respect to any taxable period ending on or
before the date hereof ("Company Returns"). All Company Returns (i) have been or
will be filed when due, and (ii) have been, or will be when filed, accurately
and completely prepared in material compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the date hereof, and all amounts otherwise payable in connection with the
Company Returns on or before the date hereof, have been paid. The Company has
delivered to Acquiror accurate and complete copies of Company Returns filed by
the Company.
(c) The Company's liability for unpaid Taxes for all periods
ending on or before the date of the Financial Statements does not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred taxes) reported in the Financial Statements.
The Company has established in the Ordinary Course of Business reserves for the
payment of all Taxes for the period from the date of the Financial Statements
through the date hereof and has disclosed the dollar amount of such reserves to
the Acquiror.
(d) Section 4.14(d) of the Disclosure Schedule accurately
identifies each examination or audit of any Company Return that has been
conducted by any Governmental Body. The Company has delivered to Acquiror
accurate and complete copies of all audit reports and similar documents relating
to Company Returns. No extension or waiver of the limitation period applicable
to any of the Company Returns has been granted (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.
(e) No claim or other Proceeding is pending or to the Company's
Knowledge has been threatened against or with respect to Company in respect of
any Tax. There are no unsatisfied Liabilities for Taxes (including liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by the Company.
The Company has not entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. The Company has not been, and will not
be, required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing. The Company is
in compliance with the terms and conditions of any applicable Tax exemptions,
Tax agreements or Tax orders of any Governmental Body to which it may be subject
or which it may have claimed, and the transactions contemplated by this
Agreement will not have any adverse affect on such compliance.
(f) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, individually or collectively, could
give rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code.
(g) All stock options that the Company has treated as incentive
stock options under Section 421 of the Code meet the requirements of Section 422
of the Code.
(h) The Company is not a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code and has not been
a United States real property holding corporation within the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
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(i) Company has no net operating losses or other tax attributes
presently subject to limitation under Code Sections 382, 383, or 384.
(j) The Company is not liable for Taxes incurred by any
individual, trust, corporation, partnership or other entity other than Company,
either as a transferee or pursuant to Treasury Regulations Section 1.1502-6, or
pursuant to any other provision of federal, state or local law or regulation.
The Company is not, and has never been, a party to or bound by any tax indemnity
agreement, tax sharing agreement, tax allocation agreement or similar Contract.
(k) The Company is not a party to any joint venture, partnership
or other arrangement or contract which could be treated as a partnership for
United States federal income tax purposes.
(l) The Company has qualified as an S corporation (within the
meaning of Section 1361 of the Code and similar provisions of California law)
since its inception and has duly elected to be an S corporation (under the
provisions of Section 1362 of the Code and similar provisions of California law)
for all taxable periods since inception. Such elections have not been revoked or
terminated at any time and are in full force and effect as of the date hereof.
4.15 Employee and Labor Matters.
(a) Section 4.15(a) of the Disclosure Schedule accurately sets
forth, with respect to each employee of the Company (including any employee of
the Company who is on a leave of absence or on layoff status) (i) the name of
such employee and the date as of which such employee was originally hired by the
Company; (ii) such employee's title; (iii) such employee's annualized
compensation as of the date of this Agreement; (iv) each Current Benefit Plan in
which such employee participates or is eligible to participate; and (v) any
Governmental Authorization that is held by such employee and that is used in
connection with the Company's business.
(b) Schedule 4.15(b) of the Disclosure Schedule contains a list
of individuals who are currently performing services for the Company and are
classified as "consultants" or "independent contractors," and the respective
compensation of each such "consultant" or "independent contractor."
(c) There is no former employee of the Company who is receiving
or is scheduled to receive (or whose spouse or other dependent is receiving or
is scheduled to receive) any benefits (whether from the Company or otherwise)
relating to such former employee's employment with the Company.
(d) The Company is not a party to or bound by any employment
agreement or any union contract, collective bargaining agreement or similar
Contract.
(e) The employment of each of the Company's employees is
terminable by the Company at will. The Company has delivered to Acquiror or made
available accurate and complete copies of all employee manuals and handbooks,
disclosure materials, policy statements, employment agreements and other
materials relating to the employment of the current employees of the Company.
(f) To the Knowledge of the Company (i) no officer or key
employee the Company intends to terminate his or her employment with the Company
and the Company does not have a present intention to terminate the employment of
any employee; (ii) no employee of the Company has received since June 30, 1999,
nor is any officer currently considering, an offer to join a business that
likely would be competitive with the Company's business; and (iii) no employee
of the Company is a party to or is bound by any confidentiality agreement,
noncompetition agreement or other Contract (with any Person)
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that likely would have material adverse effect on (A) the performance by such
employee of any of his or her duties or responsibilities as an employee of the
Company, or (B) the Company's business or operations.
(g) To the Company's Knowledge, the Company is not engaged, and
has never been engaged, in any unfair labor practice of any nature. There has
never been any slowdown, work stoppage, labor dispute or union organizing
activity, or any similar activity or dispute, affecting the Company or any of
its employees. There is not now pending, and to the Knowledge of the Company no
Person has threatened to commence, any such slowdown, work stoppage, labor
dispute or union organizing activity or any similar or dispute, nor has any
event occurred, nor does any condition or circumstance exist, that likely would
directly or indirectly give rise to or provide a basis for the commencement of
any such slowdown, work stoppage, labor dispute or union organizing activity or
any similar activity or dispute.
(h) Each employee of the Company is in compliance with all
applicable visa and work permit requirements. No visa or work permit held by an
employee of the Company will expire during the six (6) month period beginning at
the date of this Agreement.
4.16 Benefit Plans; ERISA.
(a) Section 4.16 of the Disclosure Schedule lists (i) all
Employee Benefit Plans, (ii) all employment agreements (with respect to which
the Company's performance of its obligations would have a Material Adverse
Effect), including, but not limited to, any individual benefit arrangement,
policy or practice with respect to any current or former employee or director of
the Company or any ERISA Affiliate, and (iii) all other employee benefit, bonus
or other incentive compensation, stock option, stock purchase, stock
appreciation, severance pay, lay-off or reduction in force, change in control,
sick pay, vacation pay, salary continuation, retainer, leave of absence,
educational assistance, service award, employee discount, fringe benefit plans,
arrangements, policies or practices, whether legally binding or not, which the
Company or any ERISA Affiliate maintains, contributes to or has any obligation
to or liability for (collectively, the "Plans").
(b) None of the Plans is a Defined Benefit Plan, and neither the
Company nor any ERISA Affiliate has ever sponsored, maintained or contributed
to, or ever been obligated to contribute to, a Defined Benefit Plan.
(c) None of the Plans is a Multiemployer Plan, and neither the
Company nor any ERISA Affiliate has ever contributed to, or ever been obligated
to contribute to, a Multiemployer Plan.
(d) The Company does not maintain or contribute to any welfare
benefit plan that provides health benefits to an employee after the employee's
termination of employment or retirement except as required under Section 4980B
of the Code and Sections 601 through 608 of ERISA (or other comparable state
law).
(e) Each Plan that is an Employee Benefit Plan that complies by
its terms and in operation with the requirements provided by any and all
statutes, orders or governmental rules or regulations currently in effect and
applicable to the Plan, including but not limited to ERISA and the Code, unless
any failure to so comply would not have a Material Adverse Effect.
(f) All reports, forms and other documents required to be filed
with any Governmental Body with respect to any Plan (including without
limitation, summary plan descriptions, Forms 5500 and summary annual reports)
have been timely filed and are accurate, unless any failure to
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have made a timely and accurate filing of such reports, forms and other
documents would not have a Material Adverse Effect.
(g) Each Plan intended to qualify under Section 401(a) of the
Code is (i) the subject of a favorable determination letter issued by the
Internal Revenue Service that provides that it so qualifies through the last day
of the "TRA 86 Remedial Amendment Period," as such term is defined in Section
3.02 of Revenue Procedure 96-55 issued by the Internal Revenue Service and that
its related trust is exempt from taxation under Section 501 of the Code, or (ii)
is permitted to rely upon a favorable opinion, notification or advisory letter
issued by the Internal Revenue Service with respect to such Plans that provides
that the Plan meets the requirements of Section 401(a) of the Code and that its
trust is exempt from taxation under Section 501 of the Code. To the Company's
Knowledge, nothing has occurred since the date of the Internal Revenue Service's
favorable determination letter that could jeopardize the qualification of such
Plan or the tax exempt status of its related trust.
(h) All contributions for all periods ending prior to the Closing
(including periods from the first day of the current plan year to the Closing)
have been made prior to the Closing by the Company in accordance with past
practice and the recommended contribution in any applicable actuarial report.
(i) All insurance premiums due and owing have been paid in full,
subject only to normal retrospective adjustments in the ordinary course, with
regard to the Plans for plan years ending on or before the Closing.
(j) With respect to each Plan:
(i) no nonexempt prohibited transactions (as defined in
Section 406 or 407 of ERISA or Section 4975 of the Code);
(ii) no action or claims (other than routine claims for
benefits made in the ordinary course of Plan administration for which Plan
administrative review procedures have not been exhausted) are pending,
threatened or imminent against or with respect to the Plan, any employer who is
participating (or who has participated) in any Plan or any fiduciary (as defined
in Section 3(21) of ERISA) of the Plan;
(iii) neither the Company nor, to the Company's
Knowledge, any fiduciary with respect to the Plan, has Knowledge of any facts
which could give rise to any such action or claim; and
(iv) it provides that it may be amended or terminated at
any time, except for benefits protected under applicable law.
(k) Neither the Company nor, to the Company's Knowledge, any
ERISA Affiliate has any liability or is threatened with any liability (whether
joint or several) (i) for any excise tax imposed by Section 4971, 4975, 4976,
4977 or 4979 of the Code, or (ii) to a fine under Section 502 of ERISA.
(l) All of the Plans listed in the Disclosure Schedule, to the
extent applicable, are in compliance with the continuation of group health
coverage provisions contained in Section 4980B of the Code and Sections 601
through 608 of ERISA, unless the failure to so comply would not have a Material
Adverse Effect.
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(m) Complete copies of all documents creating or evidencing any
Plan listed in the Disclosure Schedule have been delivered or made available to
Acquiror, and complete copies of all reports, forms and other documents required
to be filed with any governmental entity (including, without limitation, summary
plan descriptions, Forms 5500 and summary annual reports for all plans subject
to ERISA) have been delivered or made available to Acquiror.
(n) All expenses and liabilities relating to all of the Plans
described in the Disclosure Schedule have been, and will, on the Closing, be
fully accrued on the Company's books and records and disclosed in accordance
with generally accepted accounting principles and in Plan financial statements.
4.17 Environmental Matters. The Company is and, to the Knowledge of the
Company, has been at all times in compliance in all material respects with all
Environmental Laws. The Company has now and at all times has had all the
necessary permits required under Environmental Laws for the operation of its
business, and is not and has not been in violation of any of the terms and
conditions of any of its permits. The Company has not received any notice or
other communication (in writing or otherwise) that alleges that the Company is
not in compliance with any Environmental Law. The Company has not generated,
manufactured, produced, transported, imported, used, treated, refined,
processed, handled, stored, discharged, released, or disposed of any Hazardous
Materials (whether lawfully or unlawfully) at any of the Leased Premises
occupied or controlled by the Company on or at any time prior to the date hereof
other than common household and office products in de minimis quantities. To the
Knowledge of the Company: (a) there are not and have not been any releases or
threatened releases of any Hazardous Materials in any quantity (other than
common household and office products in de minimis quantities) at, on, or from
the Leased Premises, (b) there are no circumstances that may prevent or
interfere with the Company's compliance with any Environmental Law, and (c) no
former owner or user of the Leased Premises engaged in any type of manufacturing
or commercial activity which might be reasonably expected to generate,
manufacture, produce, transport, import, use, treat, refine, process, handle,
store, discharge, release, or dispose of any Hazardous Materials (whether
lawfully or unlawfully) on the Leased Premises.
4.18 Sale of Products; Performance of Services.
(a) The Company has not made any express warranties or
guarantees relating to its products that are in effect as of the date hereof. No
customer or other Person has ever asserted or threatened to assert any material
claim against the Company (i) under or based upon any warranty provided by or on
behalf of the Company, or (ii) under or based upon any other warranty relating
to any product sold by the Company or any services performed by the Company. To
the Knowledge of the Company, no event has occurred, and no condition or
circumstance exists, that likely would (with or without notice or lapse of time)
directly or indirectly give rise to or serve as a basis for the assertion of any
such claim. During the twelve (12) month period ended on November 30, 1999, the
Company has received no customer complaints pursuant to which the Company gave a
credit or accepted a product return for a refund in either case in excess of
$18,000.
4.19 Insurance.
(a) Section 4.19 of the Disclosure Schedule accurately sets
forth, with respect to each insurance policy maintained by or at the expense of,
or for the direct or indirect benefit of, the Company:
(i) the name of the insurance carrier that issued such
policy and the policy number of such policy;
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(ii) whether such policy is a "claims made" or an
"occurrences" policy;
(iii) a brief description of the coverage provided by
such policy and the material terms and provisions
of such policy (including all applicable coverage
limits, deductible amounts and co-insurance
arrangements);
(iv) the annual premium payable with respect to such
policy, and the cash value (if any) of such policy;
and
(v) a description of any claims pending, and any claims
that have been asserted in the past, with respect
to such policy.
Section 4.19 also identifies (1) each pending application for insurance that has
been submitted by or on behalf of the Company and (2) each self-insurance or
risk-sharing arrangement affecting the Company or any of its assets. The Company
has delivered to Acquiror accurate and complete copies of all of the insurance
policies identified in Section 4.19 of the Disclosure Schedule (including all
renewals thereof and endorsements thereto) and binders relating thereto
indicating that such policies are in full force and effect as of the date
hereof, and all of the pending applications identified in Section 4.19 of the
Disclosure Schedule.
(b) Each of the policies identified in Section 4.19 of the
Disclosure Schedule is valid, enforceable and in full force and effect, and has
been issued by an insurance carrier that, to the Knowledge of the Company, is
solvent, financially sound and reputable. All of the information contained in
the applications submitted in connection with said policies was (at the times
said applications were submitted) accurate and complete in all material
respects, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis.
(c) There is no pending claim under or based upon any of the
policies identified in Section 4.19 of the Disclosure Schedule.
(d) The Company has not received:
(i) any notice or other communication (in writing or
otherwise) regarding the actual or possible
cancellation or invalidation of any of the policies
identified in Section 4.19 of the Disclosure
Schedule or regarding any actual or possible
adjustment in the amount of the premiums payable
with respect to any of said policies;
(ii) any notice or other communication (in writing or
otherwise) regarding any actual or possible refusal
of coverage under, or any actual or possible
rejection of any claim under, any of the policies
identified in Section 4.19 of the Disclosure
Schedule; or
(iii) any indication that the issuer of any of the
policies identified in Section 4.19 of the
Disclosure Schedule may be unwilling or unable to
perform any of its obligations thereunder.
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4.20 Related Party Transactions.
(a) No Related Party has, and no Related Party has at any time
since January 1, 1999, had, any direct or indirect interest of any nature in any
asset used in or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since January 1,
1999, has been, indebted to the Company;
(c) since January 1, 1999, no Related Party has entered into, or
has had any direct or indirect financial interest in, any Contract, transaction
or business dealing of any nature involving the Company and no such Contract,
transaction or business dealing of any nature is necessary to operate the
business of the Company as it is currently conducted;
(d) to the Company's Knowledge, no Related Party is competing, or
has at any time since January 1, 1999, competed, directly or indirectly, with
the Company in any market served by the Company;
(e) no Related Party has any claim or right against the Company;
and
(f) to the Knowledge of the Company, no event has occurred, and
no condition or circumstance exists, that likely would (with or without notice
or lapse of time) directly or indirectly give rise to or serve as a basis for
any claim or right in favor of any Related Party against the Company.
4.21 Proceedings; Orders.
(a) There is no pending Proceeding, and to the Knowledge of the
Company, no Person has threatened to commence any Proceeding (i) that involves
the Company; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
To the Knowledge of the Company, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that likely would directly or indirectly
give rise to or serve as a basis for the commencement of any such Proceeding.
(b) No Proceeding has ever been commenced by or against the
Company, and no Proceeding otherwise involving or relating to the Company has
been pending or threatened at any time.
(c) The Company has delivered to Acquiror accurate and complete
copies of any pleadings, correspondence and other written materials to which the
Company has access that relate to the Proceedings identified in Section 4.21 of
the Disclosure Schedule.
(d) There is no Order to which the Company, or any of the assets
owned or used by the Company, is subject.
(e) To the Knowledge of the Company, no officer or employee of
the Company is subject to any Order that prohibits such officer or employee from
engaging in or continuing any conduct, activity or practice relating to the
Company's business.
(f) There is no Order that, or to the Knowledge of the Company,
proposed Order (other than any proposed Order that would be applicable generally
to the data integration industry) that, if issued or otherwise put into effect,
(i) likely would have an adverse effect on the Company's business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or on any aspect
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or portion thereof) or on the ability of the Company to comply with or perform
any covenant or obligation under this Agreement or any of the other
Transactional Agreements, or (ii) may have the effect of preventing, delaying,
making legal or otherwise interfering with any of the Transactions.
4.22 Non-Contravention; Consents. Neither the execution and delivery of
this Agreement or the other Transactional Agreements, nor the consummation or
performance of any of the Transactions, will directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the Company's articles of incorporation or bylaws, or (ii)
any resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors, if any;
(b) to the Knowledge of the Company, contravene, conflict with or
result in a violation of, or give any Governmental Body or other Person the
right to challenge any of the Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Company, or
any of the assets owned or used by the Company, is subject;
(c) cause the Company to become subject to, or to become liable
for the payment of, any Tax;
(d) cause any of the assets owned or used by the Company to be
reassessed or revalued by any taxing authority or other Governmental Body;
(e) to the Knowledge of the Company, contravene, conflict with or
result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by the Company or any of its
employees or that otherwise relates to the Company's business or to any of the
assets owned or used by the Company;
(f) contravene, conflict with or result in a violation or breach
of, or result in a default under, any material provision of any of the Company
Contracts;
(g) give any Person the right to (i) declare a default or
exercise any remedy under any Company Contract, (ii) accelerate the maturity or
performance of any Company Contract, or (iii) cancel, terminate or modify any
Company Contract;
(h) give any Person the right to any payment by the Company or
give rise to any acceleration or change in the award, grant, vesting or
determination of options, warrants, rights, severance payments or other
contingent obligations of any nature whatsoever of the Company in favor of any
Person, in any such case as a result of the change in control of the Company or
otherwise resulting from the Transactions; or
(i) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by the Company.
Except as set forth in Section 4.22 of the Disclosure Schedule, the Company will
not be required to make any filing with or give any notice to, or obtain any
Consent from, any Person in connection with the execution and delivery of this
Agreement and the other Transactional Agreements or the consummation or
performance of any of the Transactions. As of the date hereof, all such filings,
notices and Consents have been duly made, given or obtained and are in full
force and effect, other than those which by their
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nature are required to be made, given or obtained after the execution of this
Agreement, all of which shall be made, given or obtained within the time
required therefor.
4.23 Brokers. The Company has not agreed or become obligated to pay, or
taken any action that likely would result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
4.24 Pooling of Interests. To the Company's Knowledge, neither the
Company nor any of its Affiliates has, through the date of this Agreement, taken
or agreed to take any action which would prevent Acquiror from accounting for
the business combination to be effected by the Merger as a pooling of interests.
4.25 Year 2000 Compliance. All of the Company's products (including
products currently under development) will record, store, process and calculate
and present calendar dates falling on and after January 1, 2000, and will
calculate any information dependent on or relating to such dates in the same
manner and with the same functionality, data integrity and performance as the
products record, store, process, calculate and present calendar dates on or
before December 31, 1999, or calculate any information dependent on or relating
to such dates (collectively "Year 2000 Compliant"). All of the Company's
material products will lose no functionality with respect to the introduction of
records containing dates falling on or after January 1, 2000. All of the
Company's internal computer systems, including without limitation, its
accounting systems, are Year 2000 Compliant.
4.26 Tax Treatment. Neither the Company nor any of its affiliates has
taken any action or knows of any fact, agreement, plan or other circumstance
that could pose a material risk to the status of the Merger as a reorganization
under the provisions of Section 368(a) of the Code.
4.27 Full Disclosure.
(a) Neither this Agreement (including all Schedules and Exhibits
hereto), nor any of the Transactional Agreements, contains any untrue statement
of material fact or omits to state any fact necessary to make any of the
representations, warranties or statements contained herein or therein on behalf
of the Company or any of the Shareholders not misleading. To the extent any
representation or warranty permits omission of items otherwise required to be
discussed because they are not material or do not or would not have a material
adverse effect on the Company, such omissions in the aggregate will not and do
not have a material adverse effect on the Company.
(b) As of the date of this Agreement, the Company has provided
Acquiror and Acquiror's Representatives with full and complete access to all of
the Company's records and other documents and data requested by them.
(c) There is no fact within the Knowledge of Company (other than
publicly known facts relating exclusively to political or economic matters of
general applicability) that (i) would likely have Material Adverse Effect on the
Company or a material adverse effect on the ability of the Company to comply
with or perform any covenant or obligation under this Agreement or any of the
other Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
4.28 Powers of Attorney. The Company has not given a power of attorney
to any Person.
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4.29 Voting Arrangements. The Company is not a party to any, nor to the
Company's knowledge are there any, outstanding shareholder agreements, voting
trusts, proxies or other arrangements or understandings relating to the voting
of any shares of the capital stock of the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Acquiror and Merger Sub represent and warrant to the Company as follows:
5.1 Due Organization; Good Standing; Authority; Binding Nature of
Agreements.
(a) Acquiror is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
necessary corporate power and authority to enter into and perform its
obligations under the Transactional Agreements to which it is a party. The
Acquiror has all necessary corporate power and authority: (i) to conduct its
business in the manner in which its business is currently being conducted and in
the manner in which its business is proposed to be conducted; (ii) to own and
use its assets in the manner in which its assets are currently owned and used
and in the manner in which its assets are proposed to be owned and used; and
(iii) to perform its obligations under all of its Contracts. Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, and has all necessary corporate power and authority
to enter into and perform its obligations under the Transactional Agreements to
which it is a party. The Acquiror is duly qualified and in good standing as a
foreign corporation in each of the jurisdictions in which the nature of its
business or the ownership or leasing of its properties requires such
qualification and any failure to qualify would have a Material Adverse Effect.
(b) The execution, delivery and performance of each of the
Transactional Agreements to which it is a party have been duly authorized by all
necessary action on the part of each of Acquiror and Merger Sub and their
respective boards of directors and the sole stockholder of Merger Sub.
(c) Each of the Transactional Agreements to which it is a party
constitutes the legal, valid and binding obligation of Acquiror and Merger Sub,
enforceable against Acquiror and Merger Sub in accordance with its terms.
5.2 Capitalization; Ownership of Stock. As of the date of this Agreement
and as of the Closing, the authorized capital stock of the Acquiror consists of
one hundred million (100,000,000) shares of Common Stock, $0.001 par value per
share and two million (2,000,000) shares of Preferred Stock, $0.001 par value
per share. As of the date of this Agreement, the outstanding capital of the
Acquiror consists of (i) fifteen million three hundred fifteen thousand nine
hundred fifty nine (15,315,959) shares of Common Stock, and (ii) options to
purchase three million five hundred forty seven thousand nine hundred forty two
(3,547,942) shares of Common Stock.
5.3 Brokers. The Acquiror has not agreed or become obligated to pay, or
taken any action that likely would result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
5.4 Pooling of Interests. To the Acquiror's Knowledge, neither the
Acquiror nor any of its Affiliates has, through the date of this Agreement,
taken or agreed to take any action which would prevent Acquiror from accounting
for the business combination to be effected by the Merger as a pooling of
interests.
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5.5 Non-Contravention; Consents. Neither the execution and delivery of
this Agreement or the Transactional Agreements to which Acquiror or Merger Sub,
as the case may be, is a party, nor the consummation or performance of any of
the Transactions, will directly or indirectly (with or without notice or lapse
of time) contravene, conflict with or result in a violation of (i) any of the
provisions of Acquiror's or Merger Sub's respective certificate of incorporation
or bylaws, or (ii) any resolution adopted by Acquiror's or Merger Sub's
stockholders, Acquiror's or Merger Sub's board of directors or any committee of
Acquiror's or Merger Sub's board of directors. With the exception of the filing
of the Agreement of Merger in the State of California and any necessary filings
pursuant to federal and state securities laws or the rules of other regulatory
bodies, Acquiror and Merger Sub will not be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Transactions.
5.6 SEC Reports.
(a) Neither this Agreement (including all Schedules and Exhibits
hereto), nor any of the Transactional Agreements, contains any untrue statement
of material fact or omits to state any fact necessary to make any of the
representations, warranties or statements contained therein not misleading with
respect to Acquiror or Merger Sub.
(b) Acquiror has filed all reports required to be filed by it
with the SEC pursuant to the Securities Act and the Exchange Act (all such
reports and amendments thereto, collectively, the "Acquiror SEC Reports"). None
of the Acquiror SEC Reports, as of their respective dates (as amended through
the date hereof), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the balance sheets (including the related notes)
included in the Acquiror SEC Reports fairly presents the consolidated financial
position of Acquiror and its subsidiaries as of the date thereof, and the other
related statements (including the related notes) included therein fairly present
the results of operations and the changes in cash flows of Acquiror and its
subsidiaries for the respective periods set forth therein, all in conformity
with GAAP consistently applied during the periods involved, except as otherwise
noted therein and subject, in the case of the unaudited interim financial
statements, to (i) normal year end adjustments which would not in the aggregate
be material in amount or effect and (ii) the permitted exclusion of all
footnotes that would otherwise be required by GAAP.
5.7 Tax Treatment. Neither Acquiror nor any of its affiliates has taken
any action or knows of any fact, agreement, plan or other circumstance that
could pose a material risk to the status of the Merger as a reorganization under
the provisions of Section 368(a) of the Code.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Stock Options.
(a) As of the Effective Time, any Company Stock Options
exercisable for Company Stock, which are outstanding as of the date hereof and
have not expired as of the Effective Time, shall be assumed by Acquiror and
converted into options, such that each Company Stock Option shall be converted
into an option to purchase such shares of Acquiror Stock as the holder thereof
would have received in the Merger had such option been exercised prior to the
Effective Time, at an aggregate purchase price equal to the aggregate purchase
price applicable prior to such conversion; provided, however, that in the case
of any Company Stock Option to which Section 421 of the Code applies by
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reason of its qualification under Section 422 of the Code, the conversion
formula shall be adjusted, if necessary, to comply with Section 424(a) of the
Code to the effect that the number of shares shall be rounded down to the
nearest whole share and the exercise price shall be rounded up to the nearest
cent. Except as provided above, the converted stock options shall be subject to
the same terms and conditions (including, without limitation, expiration date,
vesting and exercise provisions) as were applicable to the Company Stock Options
immediately prior to the Effective Time.
(b) No such option shall be converted into a stock option to
purchase a partial share of Acquiror Stock.
(c) The consummation of the Merger shall not be treated as a
termination of employment for purposes of such stock options.
(d) If is intended that Company Stock Options assumed by Acquiror
shall qualify following the Effective Time as incentive stock options as defined
in Section 422 of the Internal Revenue Code, to the extent Company Stock Options
qualified as incentive stock options immediately prior to the Effective Time and
the provisions of this Section 6.1 shall be applied consistent with such intent.
(e) Acquiror shall reserve a number of shares of Acquiror Stock
sufficient to cover the issuance of Acquiror Stock pursuant to the exercise of
Company Stock Options assumed pursuant to this Section 6.1.
(f) Acquiror agrees to file, if available for use by Acquiror, a
registration statement on Form S-8 for the shares of Acquiror Stock issuable
with respect to assumed Company Stock Options as soon as is reasonably
practicable after the Effective Time and intends to maintain the effectiveness
of such registration statement thereafter for so long as any of such options or
other rights remain outstanding.
6.2 Certain Employee Benefit Matters. Employees of the Company who
become employees of the Surviving Corporation or Acquiror shall receive employee
benefits which in the aggregate are no less favorable to such employees than
those provided from time to time by Acquiror to similarly situated employees.
The Acquiror shall provide or cause to be provided that under each employee
benefit plan, policy, program or arrangement where service is relevant to a
determination of an employee's eligibility to participate, vesting, or level or
amount of benefits, employees of the Company who become employees of the
Surviving Corporation or Acquiror shall be credited with their periods of
service with the Company prior to the Closing. The Acquiror shall make
available, or cause to be made available, to employees of Company who become
employees of the Surviving Corporation or Acquiror, medical, dental, disability
and other welfare benefits plans and programs without regard to any preexisting
condition limitation, actively-at-work requirement or similar limitation, except
to the extent an analogous restriction applied to the employee under the
analogous plan and had not been satisfied as of the Closing. In determining an
employee's share of the cost of coverage under any plan or program of the
Acquiror for the year in which the Closing falls, the Acquiror shall make its
commercially reasonable best efforts to credit the employee with any pre-Closing
co-pays and deductibles made by or on behalf of such employee under each
comparable plan maintained by the Company prior to the Effective Time, for such
year.
6.3 Expenses. All costs and expenses incurred in connection with the
Transactional Agreements and the transactions contemplated hereby and thereby
("Transaction Fees") shall be paid by the party incurring such expenses,
provided that the amount by which the aggregate legal, accounting and investment
banking fees, if any, incurred by the Company exceeds One Hundred Fifty Thousand
Dollars ($150,000) shall be assumed and paid by the Shareholders.
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6.4 Pooling Accounting. Each of the Company and Acquiror shall each use
its respective Best Efforts to cause the business combination to be effected by
the Merger to be accounted for as a pooling of interests. Neither Company nor
Acquiror shall take any action that would adversely affect the ability of
Acquiror to account for the business combination to be effected by the Merger as
a pooling of interests.
6.5 Indemnification of the Company's Officers and Directors.
(a) Acquiror hereby agrees that the indemnification obligations
set forth in the Company's Articles of Incorporation and the Company's Bylaws,
in each case on the date of this Agreement, shall survive the Merger and shall
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of the individuals who on or prior to the Effective Time were
directors, officers or employees (each such term being used in this Section 6.5
in the manner defined in the Company's Articles of Incorporation and the
Company's Bylaws in effect on the date hereof) of the Company.
(b) Acquiror shall take all action necessary to cause the
Surviving Corporation to perform its obligations under Section 6.5(a) and to
fulfill its indemnification obligations under the Surviving Corporation's
articles of incorporation and bylaws.
(c) The obligations of Acquiror under this Section 6.5 shall not
be terminated or modified in such a manner as to adversely affect any director,
officer or employee to whom this Section 6.5 applies without the consent of such
affected director, officer or employee (it being expressly agreed that each such
director, officer or employee to whom this Section 6.5 applies shall be a
third-party beneficiary of this Section 6.5).
Notwithstanding the foregoing, Acquiror may dissolve, liquidate, merge out of
existence or otherwise terminate the existence of the Surviving Corporation,
provided that Acquiror will provide substantially similar protection to the
directors, officers and employees affected by such termination.
6.6 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Acquiror and the Company (or
of the Surviving Corporation on behalf of the Company) shall take all such
necessary action.
ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to consummate the Merger and to take the
other actions required to be taken by it at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by both the Company and Acquiror, in whole or in
part):
(a) All necessary approvals under federal and state securities
laws and other authorizations relating to the issuance of the Acquiror Stock to
be issued to Company shareholders in connection with the Merger shall have been
received.
(b) This Agreement, the Merger and the other actions contemplated
hereby shall have been approved by the requisite vote of the shareholders of the
Company under applicable law.
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(c) Acquiror shall have received a letter from Ernst & Young LLP
dated as of the date hereof and addressed to Acquiror, and Company shall have
received a letter from Ernst & Young LLP dated as of the date hereof and
addressed to Company, regarding such firm's unqualified concurrence with
Acquiror's management's and Company's management's conclusion that the business
combination to be effected by the Merger will qualify as a pooling of interests
transaction under GAAP if consummated in accordance with this Agreement.
7.2 Additional Conditions to Acquiror's and Merger Sub's Obligation to
Consummate the Merger. Acquiror's and Merger Sub's obligations to consummate the
Merger and to take the other actions required to be taken by Acquiror and Merger
Sub at the Closing is subject to the satisfaction of each of the following
conditions (any of which may be waived by Acquiror, in whole or in part):
(a) Acquiror's Board of Directors shall have ratified or approved
the execution of this Agreement and the other Transactional Agreements by
Acquiror and shall have approved the consummation of the Transactions.
(b) In addition to the documents required to be received under
this Section 7.2, Acquiror shall also have received the following documents:
(i) the opinion letter from Wilson Sonsini Goodrich
& Rosati, counsel to the Company, dated the date
hereof, in the form attached as Exhibit C;
(ii) a certificate, duly executed by the Company,
certifying that (A) each of the representations
and warranties made by the Company in this
Agreement and in the other Transactional
Agreements is accurate as of the date hereof ,
(B) each of the covenants and obligations that
the Company is required to have complied with or
performed pursuant to this Agreement or any of
the other Transactional Agreements at or prior
to the Closing has been duly complied with and
performed in all respects, and (C) each of the
conditions set forth in Section 7.2 has been
satisfied in all respects; and
(iii) such other documents as Acquiror may request in
good faith for the purpose of (i) evidencing the
accuracy of any representation or warranty made
by the Company, (ii) evidencing the compliance
by the Company, or the performance by the
Company of, any covenant or obligation set forth
in this Agreement, (iii) evidencing the
satisfaction of any condition set forth in
Section 7.1 or this Section 7.2, or (iv)
otherwise facilitating the consummation or
performance of any of the Transactions.
(iv) copies of resolutions of the Company, certified
by the Secretary of the Company, authorizing the
execution, delivery and performance of the
Transactional Agreements and the Transactions,
and copies of resolutions of the meeting of
shareholders of the Company (or written consent
in lieu thereof), certified by the Secretary of
the Company, authorizing the execution, delivery
and performance of the Transactional Agreements
and the Transactions.
(c) Each Person (other than Acquiror and Merger Sub) shall have
executed and delivered all Transactional Agreements to which it is a party.
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(d) Acquiror's Board of Directors shall have received the written
opinion of Broadview International LLC, financial advisor to Acquiror, dated the
date of this Agreement, to the effect that the Exchange Ratio is fair to the
Acquiror from a financial point of view.
(e) The holders of no more than five percent (5%) of the
outstanding shares of Company Stock shall have demanded and not lost or
withdrawn, or shall be eligible to demand, dissenters' rights.
7.3 Additional Conditions to the Company's Obligation to Consummate the
Merger. The Company's obligation to consummate the Merger and to take the other
actions required to be taken by the Company at the Closing shall be subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The Company shall have received the following documents:
(i) the opinion letter from Morrison & Foerster LLP,
counsel to Acquiror and Merger Sub, dated the
date hereof, in the form attached as Exhibit D;
(ii) a certificate, duly executed by Acquiror,
certifying that (A) each of the representations
and warranties made by Acquiror in this
Agreement and in the other Transactional
Agreements is accurate in all respects as of the
date hereof, (B) each of the covenants and
obligations that Acquiror is required to have
complied with or performed pursuant to this
Agreement or any of the other Transactional
Agreements at or prior to the Closing has been
duly complied with and performed in all
respects, and (C) each of the conditions set
forth in Section 7.3 has been satisfied in all
respects; and
(iii) such other documents as the Company may request
in good faith for the purpose of (A) evidencing
the accuracy of any representation or warranty
made by Acquiror and Merger Sub, (B) evidencing
the compliance by Acquiror and Merger Sub with,
or the performance by Acquiror and Merger Sub
of, any covenant or obligation set forth in this
Agreement or any of the other Transactional
Agreements, (C) evidencing the satisfaction of
any condition set forth in Section 7.1 or this
Section 7.3, or (D) otherwise facilitating the
consummation or performance of any of the
Transactions.
(b) Subject to the terms and conditions of this Agreement, each
of Acquiror and Merger Sub shall have executed and delivered all Transactional
Agreements to which it is a party.
(c) Acquiror and Company shall each have received written
opinions from their respective tax counsel (Morrison & Foerster LLP and Wilson
Sonsini Goodrich & Rosati, respectively), in form and substance reasonably
satisfactory to them, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such
opinions shall not have been withdrawn; provided, however, that if the counsel
to either Acquiror or Company does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to such party if counsel to
the other party renders such opinion to such party. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
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ARTICLE 8
ESCROW AND INDEMNIFICATION
8.1 Indemnification.
(a) By the Company. From and after the Effective Time and subject
to the limitations contained in Sections 8.2 and 8.3, the Shareholders will,
severally and pro rata, in accordance with their Pro Rata Portion, indemnify and
hold Acquiror harmless against any loss, expense, liability or other damage,
including reasonable attorneys' fees, to the extent of the amount of such loss,
expense, liability or other damage (collectively, "Damages") that Acquiror has
incurred by reason of the breach by the Company of any representation, warranty,
covenant or agreement of the Company contained in this Agreement that occurs or
becomes known to Acquiror during the Escrow Period. Such indemnification shall
be Acquiror's sole and exclusive remedy for any such breach of this Agreement by
the Company, provided, however, that, in addition to the Shareholders' Pro Rata
Portion of the Escrow Fund, each Shareholder shall be fully liable to the
Acquiror for any Damages relating to such Shareholder's willful misconduct or
fraud in connection with the representations and warranties set forth herein and
the transactions contemplated under this Agreement and in connection with the
Merger without limitation. Acquiror acknowledges that, with respect to the
evaluation of the Financial Statements for purposes of making any claim under
this Section 8.1 for a breach of the representations set forth in Section 4.4,
Acquiror and its independent public accountants, Ernst & Young LLP, have had the
opportunity to review Company's accounting policies and methods and underlying
assumptions inherent in the Financial Statements and, accordingly, Acquiror
shall be required to consistently apply the accounting policies, methods and
assumptions in the audited Financial Statements.
(b) By Acquiror. From and after the Effective Time and subject
to the limitations contained in Section 8.2, Acquiror will indemnify and hold
the Shareholders harmless against any Damage that the Shareholders have incurred
by reason of the breach by Acquiror or Merger Sub of any representation,
warranty, covenant or agreement of Acquiror or Merger Sub contained in this
Agreement that occurs or becomes known to the Shareholders during the Escrow
Period. A release of Escrow Shares in the amount of such Damages (and
corresponding offset against any Damages otherwise assertable by Acquiror
against Escrow Shares) shall be the Shareholders' sole and exclusive remedy for
any such breach by Acquiror or Merger Sub, provided, however, that, in addition
to any right to receive shares from the Escrow Fund, Acquiror shall be fully
liable to the Shareholders for any Damages relating to Acquiror's willful
misconduct or fraud in connection with the representations and warranties set
forth herein and the transactions contemplated under this Agreement and in
connection with the Merger without limitation.
8.2 Escrow Fund. As security for the indemnities in Section 8.1, the
Escrow Shares shall be deposited with the Escrow Agent within ten (10) days of
the Closing, such deposit to be governed by the terms set forth in this Article
8 and in the Escrow Agreement. Notwithstanding the foregoing, the
indemnification obligations of each of Acquiror, Merger Sub and the Shareholders
pursuant to this Article 8 shall be limited to the amount and assets deposited
and present in the Escrow Fund and the sole recourse of Acquiror, Merger Sub and
the Shareholders shall be to make claims against the Escrow Fund in accordance
with the terms of the Escrow Agreement or to make claims for the reduction of
the Escrow Fund, as the case may be (except for cases involving willful
misconduct or fraud as set forth above in Section 8.1(a)).
8.3 Damage Threshold.
(a) Acquiror's Damages. Notwithstanding the foregoing, the
Shareholders shall have no liability under Section 8.1 and Acquiror may not
receive any shares from the Escrow Fund unless
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and until an Officer's Certificate or Certificates for an aggregate amount of
Damages in excess of $250,000 has been delivered to the Shareholders' Agent and
to the Escrow Agent; provided, however, that after an Officer's Certificate or
Certificates for an aggregate of $250,000 in Damages has been delivered,
Acquiror shall be entitled to receive Escrow Shares equal in value to the full
amount of Damages identified in such Officer's Certificate or Certificates, and
provided further that the full amount by which the Company's Transaction Fee
exceeds $150,000 may, at Acquiror's option, be deducted from the Escrow Fund.
(b) Shareholders' Damages. Notwithstanding the foregoing,
Acquiror shall have no liability under Section 8.1 and the Escrow Fund shall not
be reduced unless and until a Shareholders' Agent Certificate or Certificates
for an aggregate amount of Damages in excess of $250,000 has been delivered to
the Acquiror and to the Escrow Agent; provided, however, that after a
Shareholders' Agent Certificate or Certificates for an aggregate of $250,000 in
Damages has been delivered, the Escrow Fund shall be reduced in the full amount
of Damages identified in such Shareholders' Agent Certificate or Certificates.
8.4 Escrow Periods. The Escrow Fund shall commence on the date hereof
and terminate (a) as to items reasonably expected to be encountered in the audit
process, on the earlier to occur of (i) the first anniversary of the date of the
Closing and (ii) the date of issuance of the first independent audit report on
Acquiror's financial statements after the Closing, which financial statements
include the financial results of Company, or (b) as to all other items, on the
first anniversary of the Closing (the "Escrow Period"), provided, however, that
the number of Escrow Shares, which, in the reasonable judgment of Acquiror,
subject to the objection of the Shareholders' Agent and the subsequent
resolution of the matter in the manner provided in Section 8.8, are necessary to
satisfy any unsatisfied claims specified in any Officer's Certificate
theretofore delivered to the Escrow Agent and the Shareholders' Agent prior to
termination of the Escrow Period with respect to Damages incurred or litigation
pending prior to expiration of the Escrow Period, shall remain in the Escrow
Fund until such claims have been finally resolved, or, if earlier, until
released in accordance with Section 8.1 above and 8.5(b) below.
8.5 Claims Upon Escrow Fund.
(a) Claims by Acquiror. Upon receipt by the Escrow Agent on or
before the last day of the Escrow Period of a certificate signed by any
appropriately authorized officer of Acquiror (an "Officer's Certificate"):
(i) Stating the aggregate amount of Acquiror's
Damages or an estimate thereof, in each case to
the extent known or determinable at such time,
and
(ii) Specifying in reasonable detail the individual
items of such Damages included in the amount so
stated, the date each such item was paid or
properly accrued or arose, and the nature of the
misrepresentation, breach or claim to which such
item is related, and
(iii) The Escrow Agent shall, subject to the
provisions of Sections 8.3, 8.7 and 8.8 hereof,
deliver to Acquiror out of the Escrow Fund, as
promptly as practicable, Escrow Shares having a
value equal to such Damages all in accordance
with the Escrow Agreement and Section 8.6 below.
Amounts paid or distributed from the Escrow Fund
shall be paid or distributed pro rata among the
Holders (as defined in the Escrow Agreement)
based upon their respective percentage interests
therein at
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the time. Notwithstanding anything herein to the
contrary, no Escrow Shares shall be distributed
to Acquiror until the first anniversary of the
Closing and after giving effect to any offsets
due pursuant to Section 8.1(b).
(b) Claims by Shareholders. Upon receipt by the Escrow Agent on
or before the last day of the Escrow Period of a certificate signed by the
Shareholders' Agent (a "Shareholders' Agent Certificate"):
(i) Stating the aggregate amount of the
Shareholders' Damages or an estimate thereof, in
each case to the extent known or determinable at
such time, and
(ii) Specifying in reasonable detail the individual
items of such Damages included in the amount so
stated, the date each such item was paid or
properly accrued or arose, and the nature of the
misrepresentation, breach or claim to which such
item is related, the amount available in the
Escrow Fund shall be reduced by the amount of
such Damages, and the Escrow Agent shall release
from the Escrow Fund to the Shareholders all or
a portion of the Escrow Shares which have a
value equal to the amount of such Damages. The
amount by which the Escrow Fund is reduced shall
be distributed pro rata among the Shareholders
based upon their respective percentage interests
therein at the time.
8.6 Valuation. For the purpose of compensating Acquiror or the
Shareholders for their respective Damages pursuant to this Agreement, the value
per share of the Escrow Shares shall be the Acquiror Share Value. In determining
the amount of any indemnity, there shall be taken into account any tax benefit,
insurance proceeds or other similar recovery or offset realized, directly or
indirectly.
8.7 Objections to Claims.
(a) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such Officer's Certificate shall be delivered
to the Shareholders' Agent and for a period of thirty (30) days after such
delivery, the Escrow Agent shall make no delivery of Escrow Shares pursuant to
Section 8.5 unless the Escrow Agent shall have received written authorization
from the Shareholders' Agent to make such delivery. After the expiration of such
thirty (30) day period, the Escrow Agent shall make delivery of the Escrow
Shares in the Escrow Fund in accordance with Section 8.5, provided that no such
delivery may be made if the Shareholders' Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent and to Acquiror prior to the
expiration of such thirty (30) day period.
(b) At the time of delivery of any Shareholders' Agent
Certificate to the Escrow Agent, a duplicate copy of such Shareholders' Agent
Certificate shall be delivered to the Acquiror and for a period of thirty (30)
days after such delivery, the Escrow Agent shall not deliver any Escrow Shares
to Acquiror for any Damages incurred by Acquiror to the extent of the claim set
forth in such Shareholders' Agent Certificate and shall not release any Escrow
Shares to the Shareholders, unless the Escrow Agent shall have received written
authorization from Acquiror to deliver or release the Escrow Shares to the
Shareholders. After the expiration of such thirty (30) day period, the Escrow
Agent shall deliver such Escrow Shares to Acquiror or Shareholders, as
applicable, provided that no delivery or release may be made if Acquiror shall
object in a written statement to the claim made in the Shareholders' Agent
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Certificate, and such statement shall have been delivered to the Escrow Agent
and to the Shareholders' Agent prior to the expiration of such thirty (30) day
period.
8.8 Resolution of Conflicts.
(a) In case the Shareholders' Agent or Acquiror, as applicable,
shall so object in writing to any claim or claims made in any Acquiror's
Officer's Certificate or Shareholders' Agent Certificate, the non-objecting
party shall have twenty-one (21) days to respond in a written statement to the
objection. If after such twenty-one (21) day period there remains a dispute as
to any claims, the Shareholders' Agent and Acquiror shall attempt in good faith
for twenty-one (21) days to agree upon the rights of the respective parties with
respect to each of such claims. If the Shareholders' Agent and Acquiror should
so agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties and shall be furnished to the Escrow Agent. The Escrow Agent
shall be entitled to rely on any such memorandum and shall distribute the Escrow
Shares from the Escrow Fund in accordance with the terms of the memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either Acquiror or the Shareholders' Agent may, by written notice
to the other, demand arbitration of the matter unless the amount of the damage
or loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three (3) arbitrators. Within fifteen (15)
days after such written notice is sent, Acquiror (on the one hand) and the
Shareholders' Agent (on the other hand) shall each select one arbitrator, and
the two arbitrators so selected shall promptly select a third arbitrator. The
decision of the arbitrators as to the validity and amount of any claim in such
Officer's Certificate or Shareholders' Agent Certificate shall be binding and
conclusive upon the parties to this Agreement, and notwithstanding anything in
Sections 8.1 through 8.5, the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance with such decision.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Clara County, California under the commercial rules then in effect of the
American Arbitration Association.
8.9 Shareholders' Agent.
(a) Mani Subramaian shall be constituted and appointed as agent
(the "Shareholders' Agent") for and on behalf of the Shareholders to give and
receive notices and communications, to authorize delivery to Acquiror of the
Escrow Shares or other property from the Escrow Fund in satisfaction of claims
by Acquiror, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgment of the Shareholders' Agent for
the accomplishment of the foregoing. Such agency may be changed by the holders
of a majority in interest of the Escrow Shares from time to time upon not less
than ten (10) days' prior written notice to Acquiror. No bond shall be required
of the Shareholders' Agent, and the Shareholders' Agent shall receive no
compensation for services. Notices or communications to or from the
Shareholders' Agent shall constitute notice to or from each of the Shareholders.
(b) The Shareholders' Agent shall not be liable for any act done
or omitted hereunder as Shareholders' Agent while acting in good faith and in
the exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith. The
Shareholders shall severally and pro rata, in accordance with their Pro Rata
Portion, indemnify
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the Shareholders' Agent and hold him harmless against any loss, liability or
expense incurred without gross negligence or bad faith on the part of the
Shareholders' Agent and arising out of or in connection with the acceptance or
administration of his duties under this Agreement or the Escrow Agreement,
provided, that the Shareholders' Agent shall be reimbursed for counsel fees and
other out-of-pocket expenses incurred by such Shareholder Agent in connection
with the administration of his duties under this Agreement or the Escrow
Agreement or the Escrow Agreement from the proceeds of the sale of Escrow Shares
by the Shareholder Agent. For such purpose, the Shareholder Agent shall be
authorized to direct the Escrow Agent to deliver or cause to be delivered to the
Shareholder Agent such number of Escrow Shares the sale of which by the
Shareholder Agent in ordinary open-market brokers transactions is sufficient to
cover such out-of-pocket costs.
(c) The Shareholders' Agent shall have reasonable access to
information about Company and Acquiror and the reasonable assistance of
Company's and Acquiror's officers and employees for purposes of performing its
duties and exercising its rights under this Article 8, provided that the
Shareholders' Agent shall treat confidentially and not disclose any nonpublic
information from or about Company or Acquiror to anyone (except on a need to
know basis to individuals who agree to treat such information confidentially).
8.10 Actions of the Shareholders' Agent. A decision, act, consent or
instruction of the Shareholders' Agent shall constitute a decision of all of the
Shareholders for whom shares of Acquiror Stock otherwise issuable to them are
deposited in the Escrow Fund and shall be final, binding and conclusive upon
each such Shareholder, and the Escrow Agent and Acquiror may rely upon any
decision, act, consent or instruction of the Shareholders' Agent as being the
decision, act, consent or instruction of each and every such Shareholder. The
Escrow Agent and Acquiror are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Shareholders' Agent.
8.11 Claims. In the event Acquiror becomes aware of a third-party claim
which Acquiror believes may result in a demand against the Escrow Fund, Acquiror
shall notify the Shareholders' Agent of such claim, and the Shareholders' Agent
and the Shareholders for whom shares of Acquiror Stock otherwise issuable to
them are deposited in the Escrow Fund shall be entitled, at their expense, to
participate in any defense of such claim. Acquiror shall have the right to
settle any such claim; provided, however, that Acquiror may not effect the
settlement of any such claim without the consent of the Shareholders' Agent,
which consent shall not be unreasonably withheld. In the event that the
Shareholders' Agent has consented to any such settlement, the Shareholders'
Agent shall have no power or authority to object to the amount of any claim by
Acquiror against the Escrow Fund for indemnity with respect to such settlement,
unless such claim is in an amount in excess of any amount consented to by the
Shareholders' Agent.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Survival of Representations and Covenants. All representations,
warranties, covenants and agreements of the Company contained in this Agreement
shall survive the Closing and any investigation at any time made by or on behalf
of Acquiror until the end of the Escrow Period. If shares or other assets are
retained in the Escrow Fund beyond expiration of the period specified in the
Escrow Agreement, then because and to the extent of a timely claim being
asserted against the Escrow Fund (notwithstanding the expiration of such time
period) the representation, warranty, covenant or agreement applicable to such
claim shall survive until, but only for purposes of, the resolution of the claim
to which such retained shares or other assets relate.
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9.2 Transfer Taxes. Each Shareholder shall be individually responsible
for his, her or its respective sales, use and transfer taxes, including but not
limited to any value added, stock transfer, gross receipts, stamp duty and real,
personal or intangible property transfer taxes, due by reason of the
consummation of the Transactions, including but not limited to any interest or
penalties in respect thereof.
9.3 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by telecopier) to the
address or telecopier number set forth beneath the name of such party below (or
to such other address or telecopier number as such party shall have specified in
a written notice given to the other parties hereto):
if to the Company:
Influence Software, Inc.
845 Stewart Drive
Sunnyvale, CA 94086
Attention: Marven L. Mouchawar
Telefax: (650) 617-0310
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Steve L. Camahort
Telefax: (650) 461-5375
if to Acquiror or Merger Sub:
Informatica Corporation
3350 West Bayshore Road
Palo Alto, CA 94303
Attention: Diaz Nesamoney
Telefax: (650) 687-0039
with a copy to:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304
Attention: Cori M. Allen, Esq.
Telefax: 650-494-0792
9.4 Time of the Essence. Time is of the essence in the performance of
each of the terms hereof with respect to the obligations and rights of each
party hereto.
9.5 Headings. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
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9.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
9.7 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
9.8 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise or waiver of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.9 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Acquiror, Merger Sub and the Company.
9.10 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
9.11 Parties in Interest. Except for the provisions of Article 8 hereof
applicable to the Shareholders, none of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns (if any).
9.12 Entire Agreement. The Transactional Agreements (including Schedules
and Exhibits thereto) set forth the entire understanding of the parties relating
to the subject matter thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter thereof.
9.13 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
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(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits and Schedules to this Agreement.
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IN WITNESS WHEREOF, each of Acquiror, Merger Sub and the Company has
caused this Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
INFORMATICA CORPORATION
By: /s/ Diaz Nesamoney
-----------------------------------
Diaz Nesamoney
President
I-1 MERGER CORP.
By: /s/ Diaz Nesamoney
-----------------------------------
Diaz Nesamoney
President
INFLUENCE SOFTWARE, INC.
By: /s/ Marv Mouchawar
-----------------------------------
Marv Mouchawar
President and CEO
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INDEX OF SCHEDULES AND EXHIBITS
A. Certain Definitions
B. Proprietary Information and Inventions Agreement
C. Opinion from Company Counsel
D. Opinion from Acquiror's Counsel
E. Form of Affiliates Agreement
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIROR. "Acquiror" shall have the meaning specified in the first
paragraph of the Agreement.
ACQUIROR SHARE VALUE. "Acquiror Share Value" shall have the meaning
specified in Section 3.7 of the Agreement.
ACQUIROR STOCK. "Acquiror Stock" shall have the meaning specified in
Section 3.1(a) of the Agreement.
AFFILIATE. "Affiliate" shall have the meaning specified in Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
AFFILIATES AGREEMENT. "Affiliates Agreement" shall mean the Affiliates
Agreement attached hereto as Exhibit E.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger to
which this Exhibit A is attached (including the Disclosure Schedule and all
Exhibits), as it may be amended from time to time.
AGREEMENT OF MERGER. "Agreement of Merger" shall have the meaning
specified in Section 1.2 of the Agreement.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible. An obligation to use "Best
Efforts" under this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially adverse change in
the benefits to such Person of this Agreement, the other Transactional
Agreements and the Transactions.
CERTIFICATE. "Certificate" shall have the meaning specified in Section
3.1(a) of the Agreement.
CGCL. "CGCL" shall have the meaning specified in Section 1.2 of the
Agreement.
CLOSING. "Closing" shall have the meaning specified in Section 3.9 of
the Agreement.
CODE. "Code" shall have the meaning specified in the Recitals of the
Agreement.
COMPANY. The "Company" shall mean Influence Software, Inc., a California
corporation.
COMPANY STOCK. "Company Stock" shall have the meaning specified in
Section 3.1(a) of the Agreement.
COMPANY CONTRACT. "Company Contract" shall mean any Contract:
(a) to which Company is a party;
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(b) by which the Company or any of its assets is or may become bound or
under which the Company has, or may become subject to, any obligation; or
(c) under which the Company has or may acquire any right or interest.
COMPANY RETURNS. "Company Returns" shall have the meaning specified in
Section 4.14(b) of the Agreement.
COMPANY STOCK. "Company Stock" shall have the meaning specified in
Section 3.1(a).
COMPANY STOCK OPTIONS. "Company Stock Options" shall have the meaning
specified in Section 3.2.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean, with respect to any Person, any legally
binding written, oral, implied or other agreement, contract, understanding,
arrangement, instrument, note, guaranty, indemnity, representation, warranty,
deed, assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance, obligation,
promise or undertaking of any nature to which such Person is a party or by which
its properties or assets maybe bound or affected or under which it or its
business, properties or assets receive benefits.
CURRENT BENEFIT PLAN. "Current Benefit Plan" shall mean any Employee
Benefit Plan that is currently in effect and:
(a) that was established or adopted by the Company or any ERISA
Affiliate or is maintained or sponsored by the Company;
(b) in which the Company participates;
(c) with respect to which the Company or any ERISA Affiliate is or may
be required or permitted to make any contribution; or
(d) with respect to which the Company or any ERISA Affiliate is or may
become subject to any Liability.
DAMAGES. "Damages" shall have the meaning specified in Section 8.1.
DEFINED BENEFIT PLAN. "Defined Benefit Plan" shall mean either a plan
described in Section 3(35) of ERISA or a plan subject to the minimum funding
standards set forth in Section 302 of ERISA and Section 412 of the Code.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall have the meaning
specified in Article 4 of the Agreement.
DISSENTING SHARES. "Dissenting Shares" shall have the meaning specified
in Section 3.12 of the Agreement.
EFFECTIVE TIME. "Effective Time" shall have the meaning specified in
Section 1.2 of the Agreement.
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EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
EMPLOYMENT AGREEMENTS. "Employment Agreements" shall mean the employment
agreements between Acquiror and each of Vish Agashe, Bennett Indart, Firoz
Kanchwaia, Sean Kelley, David Lyle, Marvin Mouchawar, and Sanjath Shringen,
entered into concurrently herewith.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, licensee,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset.
ENTITY. "Entity" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ENVIRONMENTAL LAW. "Environmental Law" shall mean any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health or the environment.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
ERISA AFFILIATE. "ERISA Affiliate" shall mean any Person that is, was or
would be treated as a single employer with the Company under Section 414 of the
Code.
ESCROW AGENT. "Escrow Agent" shall mean U.S. Bank Trust National
Association, and its successors and assigns.
ESCROW AGREEMENT. "Escrow Agreement" shall have the meaning specified in
Section 3.5 of the Agreement.
ESCROW FUND. "Escrow Fund" shall have the meaning specified in Section
3.5 of the Agreement.
ESCROW SHARES. "Escrow Shares" shall have the meaning specified in
Section 3.5 of the Agreement.
ESCROW PERIOD. "Escrow Period" shall have the meaning specified in
Section 8.4 of the Agreement.
EXCHANGE AGENT. "Exchange Agent" shall have the meaning specified in
Section 3.4 of the Agreement.
EXCHANGE RATIO. "Exchange Ratio" shall have the meaning specified in
Section 3.1(a) of the Agreement.
FINANCIAL STATEMENTS. "Financial Statements" shall have the meaning
specified in Section 4.4 of the Agreement.
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GAAP. "GAAP" shall mean Generally Accepted Accounting Principles,
applied on a basis consistent with the basis on which the Financial Statements
were prepared.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal);
(d) multinational organization or body; or
(e) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, Judicial, administrative, regulatory, police, military
or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall mean any substance,
chemical, waste or other material which is listed, defined or otherwise
identified as hazardous, toxic or dangerous under any applicable law; as well as
any petroleum, petroleum product or by-product, crude oil, natural gas, natural
gas liquids, liquefied natural gas, or synthetic gas useable for fuel, and
"source," "special nuclear," and "by-product" material as defined in the Atomic
Energy Act of 1954, 42 U.S.C. Sections 2011 et seq.
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. A corporation shall be deemed to have "Knowledge" of a
particular fact or matter only if a director, officer or key employee of such
corporation has or had Knowledge of such fact or matter.
LEASED PREMISES. "Leased Premises" shall have the meaning specified in
Section 4.6(d) of the Agreement.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is or has been issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Body.
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MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall have the
meaning specified in Section 4.1(c) of the Agreement.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability, regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
MERGER. "Merger" shall have the meaning specified in Section 1.1 of the
Agreement.
MERGER SUB. "Merger Sub" shall have the meaning specified in the first
paragraph of the Agreement.
MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean a plan described in
Section 3(37) of ERISA.
OFFICER'S CERTIFICATE. "Officer's Certificate" shall have the meaning
specified in Section 8.5 of the Agreement.
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling, pronouncement,
determination, decision, opinion, verdict, sentence, subpoena, writ or award
that is issued, made, entered, rendered or otherwise put into effect by or under
the authority of any court, administrative agency or other Governmental Body or
any arbitrator or arbitration panel; or
(b) Contract with any Governmental Body that is entered into in
connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of the
Company shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, consistent with the Company's
past practices and taken in the ordinary course of the Company's normal day to
day operations;
(b) such action is not required to be authorized by the Company's
shareholders, the Company's board of directors or any committee of the Company's
board of directors and does not require any other separate or special
authorization of any nature; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any special or separate authorization, in the
ordinary course of the normal day to day operations of other Entities that are
employed in businesses similar to Company's business.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation,
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commenced, brought, conducted or heard by or before, or otherwise has involved,
any Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or unregistered), service mark
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know how, franchise,
system, computer software, invention, design, blueprint, proprietary product,
technology, proprietary right or other intellectual property right.
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. "Proprietary
Information and Inventions Agreement" shall mean an agreement between the
Company and its employees and consultants, substantially in the form of Exhibit
C.
PRO RATA PORTION. "Pro Rata Portion" shall have the meaning specified in
Section 3.5 of the Agreement.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party":
(a) each individual who is, or who has at any time been, an officer of
the Company;
(b) each member of the family of each of the individuals referred to in
clause "(a)" above;
(c) any Entity (other than the Company) in which any one of the Persons
referred to in clauses "(a)" or "(b)" above holds (or in which more than one of
such individuals collectively hold), beneficially or otherwise, a material
voting, proprietary or equity interest.
REPRESENTATIVES. "Representatives" of a specified party shall mean
officers, directors, employees, attorneys, accountants, advisors and
representatives of such party, including, without limitation, in the case of
Company, all subsidiaries of Company and all such Persons with respect to such
subsidiaries. The Related Parties shall be deemed to be "Representatives" of
Company.
SEC. "SEC" shall mean the Securities and Exchange Commission.
SHAREHOLDER. "Shareholder" shall mean a shareholder of the Company
immediately prior to the Effective Time.
SHAREHOLDERS' AGENT. "Shareholders' Agent" shall have the meaning
specified in Section 8.9 of the Agreement.
SHAREHOLDERS' AGENT CERTIFICATE. "Shareholders' Agent Certificate" shall
have the meaning specified in Section 8.5 of the Agreement.
SURVIVING CORPORATION. "Surviving Corporation" shall have the meaning
specified in Section 1.1 of the Agreement.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any
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customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), (a) imposed, assessed or collected by or under
the authority of any Governmental Body, or (b) payable pursuant to any tax
sharing agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean:
(a) the Agreement;
(b) the Escrow Agreement;
(c) the Affiliates Agreement;
(d) the Employment Agreements; and
(e) the Agreement of Merger.
TRANSACTION FEES. "Transaction Fees" shall have the meaning specified in
Section 6.3 of the Agreement.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including, without
limitation, the Merger, and the performance by Company, Acquiror, the
Shareholders, and the other parties to the Transactional Agreements of their
respective obligations under the Transactional Agreements.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet" shall
have the meaning specified in Section 4.4(a)(ii) of the Agreement.
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