<PAGE>
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) April 27, 2000
---------------------------
GLOBESPAN, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-26401 75-2658218
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 Schulz Drive
Red Bank, New Jersey 07701
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (732) 345-7500
--------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF THE OUTSTANDING STOCK OF T.SQWARE, INC.
On April 27, 2000, pursuant to an agreement and plan of
merger, dated April 20, 2000 (the "Merger Agreement"), among GlobeSpan,
Needles Acquisition Corp. (a wholly owned subsidiary of GlobeSpan) and
T.sqware, Inc. ("T.sqware"), Needles Acquisition Corp. was merged with
and into T.sqware (the "Merger"). T.sqware was the surviving
corporation in the Merger. On the closing date, GlobeSpan issued an
aggregate of 2,022,431 shares of its common stock to the stockholders
of T.sqware and assumed the outstanding T.sqware options for the
equivalent of 177,569 GlobeSpan stock options. T.sqware stockholders
will also be eligible to receive up to an aggregate of 1.0 million
additional shares of GlobeSpan common stock if the average closing
price of GlobeSpan common stock is less than $85 for the 20 trading
day period commencing April 20, 2000 (the last trading day before the
Merger was announced) and ending May 18, 2000. The terms of the Merger
were determined through arms length negotiations between T.sqware
and GlobeSpan.
The foregoing description of the Merger is qualified in its
entirety by reference to the Merger Agreement, a copy of which is
attached hereto as Exhibit 2.1 and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The required financial statements for the Merger are not yet available
and will be filed by amendment as soon as possible after the filing of
this report.
(b) PRO FORMA FINANCIAL INFORMATION.
The required pro forma financial information for the Merger is not yet
available and will be filed by amendment as soon as possible after the
filing of this report.
(c) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Description
No. -----------
---
<S> <C>
2.1 Agreement and Plan of Merger, dated April 20, 2000, among
GlobeSpan, Inc., Needles Acquisition Corp. and T.sqware, Inc.
</TABLE>
2
<PAGE>
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.
GLOBESPAN, INC.
By: /s/ Robert McMullan
---------------------------------------------
Name: Robert McMullan
Title: Chief Financial Officer, Vice President
and Treasurer
Date: May 12, 2000
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
No. -----------
---
<S> <C>
2.1 Agreement and Plan of Merger, dated April 20, 2000, among
GlobeSpan, Inc., Needles Acquisition Corp. and T.sqware, Inc.
</TABLE>
4
<PAGE>
Exhibit 2.1
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
among
GLOBESPAN, INC.,
NEEDLES ACQUISITION CORP.
and
T.SQWARE, INC.
Dated as of April 20, 2000
<PAGE>
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I. DEFINITIONS................................................2
SECTION 1.01. Defined Terms...........................................2
SECTION 1.02. Other Defined Terms.....................................6
ARTICLE II. THE MERGER.................................................8
SECTION 2.01. The Merger..............................................8
SECTION 2.02. Effect of the Merger....................................8
SECTION 2.03. Consummation of the Merger..............................8
SECTION 2.04. Charter, Bylaws, Directors and Officers.................8
ARTICLE III. CONVERSION OF SECURITIES...................................9
SECTION 3.01. Exchange Ratio..........................................9
SECTION 3.02. Retention Options......................................10
SECTION 3.03. Conversion of Capital Stock of Acquisition Corp........10
SECTION 3.04. Dissenting Shares......................................10
SECTION 3.05. Surrender and Exchange of Shares.......................11
SECTION 3.06. Dissenting Shares After Payment of Fair Value..........13
SECTION 3.07. Closing of Stock Transfer Books........................13
SECTION 3.08. Ancillary Agreements...................................13
SECTION 3.09. No Further Ownership Rights............................13
SECTION 3.10. Closing................................................13
SECTION 3.11. Change in Structure....................................14
SECTION 3.12. Adjustment of Merger Consideration.....................14
SECTION 3.13. Company Agent..........................................14
ARTICLE IV. REPRESENTATIONS AND WARRANTIESOF THE COMPANY....................14
SECTION 4.01. Organization and Qualification.........................14
ii
<PAGE>
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<S> <C>
SECTION 4.02. Authorization of Agreements; Non-Contravention.........15
SECTION 4.03. Capitalization.........................................16
SECTION 4.04. Financial Statements, Etc..............................17
SECTION 4.05. Absence of Undisclosed Liabilities.....................17
SECTION 4.06. Absence of Certain Changes or Events...................18
SECTION 4.07. Governmental Approvals.................................20
SECTION 4.08. Litigation.............................................20
SECTION 4.09. Notice of Infringement.................................20
SECTION 4.10. Assets.................................................21
SECTION 4.11. Real Property..........................................21
SECTION 4.12.1 Intellectual Property Schedules.......................22
SECTION 4.12.2 Intellectual Property Representations and Warranties..24
SECTION 4.13. Labor Matters..........................................27
SECTION 4.14. Taxes..................................................29
SECTION 4.15. Compliance with Law; Permits...........................31
SECTION 4.16. Employee Benefit Plans.................................31
SECTION 4.17. Environmental, Health and Safety Matters...............34
SECTION 4.18. Contracts..............................................35
SECTION 4.19. Insurance..............................................38
SECTION 4.20. Pending Transactions...................................38
SECTION 4.21. Claims Against Officers and Directors..................39
SECTION 4.22. Employees..............................................39
SECTION 4.23. Customers, Suppliers, Etc..............................39
SECTION 4.24. Accounts Receivable....................................39
SECTION 4.25. Improper and Other Payments............................39
SECTION 4.26. Brokers................................................40
SECTION 4.27. Transactions with Affiliates...........................40
SECTION 4.28. Year 2000 Compliance...................................40
SECTION 4.29. Product Warranty; Product Liability....................41
SECTION 4.30. Inventory..............................................41
ARTICLE V. REPRESENTATIONS AND WARRANTIESOF PARENT...................42
SECTION 5.01. Organization and Qualification.........................42
SECTION 5.02. Authorization of Agreements; Non-Contravention.........42
iii
<PAGE>
<CAPTION>
Page
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<S> <C>
SECTION 5.03. Capitalization.........................................43
SECTION 5.04. Governmental Approvals.................................43
SECTION 5.05. Brokers................................................43
ARTICLE VI. REPRESENTATIONS AND WARRANTIESOF ACQUISITION CORP...............45
SECTION 6.01. Organization and Qualification.........................45
SECTION 6.02. Authorization of Agreements, Etc.......................45
SECTION 6.03. Validity...............................................45
SECTION 6.04. Governmental Approvals.................................45
SECTION 6.05. Brokers................................................45
SECTION 6.06. Interim Operations of Acquisition Corp.................46
ARTICLE VII. COVENANTS.................................................46
SECTION 7.01. Covenants of the Company...............................46
SECTION 7.02. Covenants of Parent....................................51
SECTION 7.03. Covenants of Parent and the Company....................57
SECTION 7.04. Tax Free Reorganization................................59
ARTICLE VIII. CONDITIONS TO THE MERGER..................................59
SECTION 8.01. Conditions to the Obligation of the Company to
Effect the Merger...................................59
SECTION 8.02. Conditions to the Obligation of Parent and Acquisition
Corp. to Effect the Merger..........................60
ARTICLE IX. TERMINATION AND ABANDONMENT.....................................63
SECTION 9.01. Termination and Abandonment............................63
SECTION 9.02. Effect of Termination..................................64
ARTICLE X. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION..............64
SECTION 10.01. Survival of Representations...........................64
iv
<PAGE>
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SECTION 10.02. General Indemnity.....................................64
SECTION 10.03. Exclusive Remedy; Fraud...............................64
ARTICLE XI. MISCELLANEOUS...................................................65
SECTION 11.01. Expenses, Etc.........................................65
SECTION 11.02. Execution in Counterparts.............................65
SECTION 11.03. Notices...............................................65
SECTION 11.04. Waivers...............................................66
SECTION 11.05. Amendments, Supplements, Etc..........................66
SECTION 11.06. Entire Agreement......................................67
SECTION 11.07. Applicable Law........................................67
SECTION 11.08. Binding Effect, Benefits..............................67
SECTION 11.09. Assignability.........................................67
SECTION 11.10. Severability..........................................67
SECTION 11.11. No Third Party Beneficiaries..........................67
SECTION 11.12. Consent to Jurisdiction...............................68
</TABLE>
v
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<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
A Form of Escrow Agreement
B Lock-Up Agreement
C.1 Noncompete Agreement (US Employees)
C.2 Noncompete Agreement (French Employees)
D Representation Letter
E Amended and Restated Certificate of Incorporation of the
Surviving Corporation
F Amended and Restated Bylaws of the Surviving Corporation
G Voting Agreement
H Opinion of Counsel to Parent and Acquisition Corp.
I Opinion of Counsel to Company and Principal Stockholders
</TABLE>
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 20, 2000, among
GLOBESPAN, INC., a Delaware corporation ("Parent"), NEEDLES ACQUISITION CORP., a
Delaware corporation and a wholly owned subsidiary of Parent ("Acquisition
Corp."), and T.SQWARE, INC., a Delaware corporation (the "Company"). The Company
and Acquisition Corp. are hereinafter sometimes referred to as the "Constituent
Corporations" and the Company as the "Surviving Corporation".
WHEREAS, Parent, Acquisition Corp. and the Company desire that
Acquisition Corp. merge with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth herein and in accordance with
the General Corporation Law of the State of Delaware (the "DGCL"), with the
result that the Company shall continue as the surviving corporation and the
separate existence of Acquisition Corp. shall cease; and
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, Parent, Acquisition Corp. and the Company desire that at
the Effective Time (as hereinafter defined), all outstanding shares of the
Company's Common Stock, $0.001 par value (the "Company Common Stock") (excluding
(x) any shares of capital stock held in treasury of the Company and (y) any
Dissenting Shares (as hereinafter defined)) be converted into the right to
receive the number of shares of fully paid and nonassessable shares of Common
Stock, $.001 par value, of Parent ("Parent Common Stock"), as hereinafter
provided; and
WHEREAS, Parent, Acquisition Corp. and the Company desire that at
the Effective Time, each outstanding option to purchase one share of Company
Common Stock (each, a "Company Option") be converted into the number of Parent
Options (as hereinafter defined) as hereinafter provided; and
WHEREAS, Parent, Acquisition Corp. and the Company desire that,
immediately after the Effective Time and solely as a result of the Merger,
Parent will own all of the issued and outstanding capital stock of the
Company; and
WHEREAS, the respective Boards of Directors of Parent and
Acquisition Corp. have unanimously approved the Merger; and
WHEREAS, the Board of Directors of the Company has unanimously
approved the Merger;
<PAGE>
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"AFFILIATE" with respect to any Person means any Person controlling,
controlled by or under common control with such Person; notwithstanding
the foregoing, a Principal Stockholder shall be deemed to be an Affiliate
of the Company.
"ANCILLARY AGREEMENTS" means the Escrow Agreement, the Noncompete
Agreements, the Lock-up Agreements, and the Intellectual Property
Assignment Agreements.
"CLAIM" means any action, cause of action, suit (in contract, tort
or otherwise), proceeding, hearing, inquiry, investigation, charge,
complaint, claim, or demand by or before any Governmental Agency.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY EMPLOYEE" means each employee of the Company and/or any
of the Subsidiaries who:
(i) at the Effective Time, is performing work duties for the
Company or any of the Subsidiaries or is absent by reason of a
scheduled day off;
(ii) at the Effective Time, is absent from work by reason of a
sick day (not covered under clause (iii) below) or a paid vacation
day, personal day or holiday;
(iii) at the Effective Time, is absent from work by reason of
a family or medical leave covered under Section 102 of the Family
and Medical Leave Act of 1993;
2
<PAGE>
(iv) at the Effective Time, is absent from work due to any
other authorized leave under the policies or practices of the
Company or any of the Subsidiaries and such person returns to work
within the period permitted by such policies or practices, but not
later than 30 days after the Effective Time or such later time as
may be required by law; or
(v) at the Effective Time, is leased to the Company or any
Subsidiary pursuant to the Service Agreement, dated September 8,
1997, between the Company and TriNet Employer Group ("TriNet") and
any extensions or amendments thereof.
"COMPANY PREFERRED STOCK" shall mean the Series A Preferred Stock,
$0.001 par value, of the Company (the "Series A Preferred Stock"); the
Series B Preferred Stock, $0.001 par value, of the Company (the "Series B
Preferred Stock"); the Series B-1 Preferred Stock, $0.001 par value, of
the Company (the "Series B-1 Preferred Stock"); the Series C Preferred
Stock, $0.001 par value, of the Company (the "Series C Preferred Stock");
and the Series D Preferred Stock, $0.001 par value, of the Company (the
"Series D Preferred Stock").
"COMPUTER PROGRAMS" means all databases and data collections and all
rights therein throughout the world; all software including all source
code, object code, firmware, development tools, files, records and data;
and all media on which any of the foregoing is recorded.
"ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and
similar provisions having the force or effect of law, all judicial and
administrative orders and determinations, and all common law concerning
public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those
relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control or
cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or by-products, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGREEMENT" means the escrow agreement, substantially in the
form attached hereto as Exhibit A.
"FRENCH SUBSIDIARY" means T.sqware, S.A.
3
<PAGE>
"FULLY DILUTED COMPANY COMMON STOCK" means, at any time, the sum of
(x) the number of shares of Company Common Stock issued and outstanding as
of such time plus (y) the number of shares of Company Common Stock
issuable upon exercise or conversion of the Company Options, the Company
Preferred Stock and all other rights to acquire any shares of Company
Common Stock issued and outstanding or in effect as of such time.
"HART-SCOTT ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"HAZARDOUS SUBSTANCE" means any substance, whether liquid, solid or
gas, listed, identified or designated as hazardous or toxic under any
Environmental, Health and Safety Requirements, which, applying criteria
specified in any Environmental, Health and Safety Requirements, is
hazardous or toxic, or the use or disposal of which is regulated under any
Environmental, Health and Safety Requirements.
"INTELLECTUAL PROPERTY" means any or all of the following and all
rights in, arising out of, or associated therewith anywhere in the world
relating to, used in or useful to the Company: (1) all United States,
international and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (2) all inventions (whether patentable or
not), patterns, drawings, blueprints, specifications, product plans,
products in development, processes, applications, circuits, invention
disclosures, improvements, trade secrets, proprietary information, know
how, mask works (and all information contained in a mask but not yet fixed
in a chip), technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (3) all copyrights,
copyrights registrations and applications therefor; (4) all industrial
designs and any registrations and applications therefor throughout the
world; (5) all mask works (including all registrations and works that have
become fixed but are not registered); (6) any licenses to any of the
foregoing; or (7) any similar, corresponding or equivalent rights to any
of the foregoing and (8) all documentation related to any of the
foregoing.
"INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT" means the agreement
between the Company, on the one hand, and a Company Employee, on the other
hand, pursuant to which the employee agrees to (1) maintain the
confidentiality of the Intellectual Property and trade secrets of the
Company and (2) to assign all rights to any Intellectual Property
developed by such employee while working for the Company and any of its
Subsidiaries.
"KEY COMPANY EMPLOYEES" means those Company Employees as agreed to
prior to the date hereof between Parent and the Company.
4
<PAGE>
"LIEN" means any mortgage, lien, pledge, security interest, charge
or encumbrance of any nature whatsoever.
"LOCK-UP AGREEMENT" means the Lock-up Agreement among Parent and
each of the Company Employees who receives Parent Common Stock pursuant to
this Agreement, substantially in the form of Exhibit B hereto.
"MATERIAL ADVERSE EFFECT" means such event, change or effect that
has had, or would reasonably be expected to have, a material adverse
effect on the assets, liabilities, business, results of operations,
properties, operations, prospects or condition (financial or otherwise) of
such Person; PROVIDED, HOWEVER, that no change (i) in the general economic
or capital markets trading conditions in any of the countries in which
such party operates, (ii) that generally affects the industry in which
such party is operated or (iii) resulting from the signing of this
Agreement and the Ancillary Agreements by the parties hereto and thereto
shall be taken into account for purposes of determining the occurrence or
existence of a Material Adverse Effect. For purposes of this definition, a
Material Adverse Effect on the prospects of the Company shall mean any
event, change or effect which makes it reasonably certain that the Company
would not be able to achieve at least 50% of the target sales amounts set
forth in the Company's March Sales Plan for 2000-2001 dated as of March
31, 2000 (a copy of which has been previously provided to Parent).
"NONCOMPETE AGREEMENT" means the Noncompete Agreement between Parent
and each of the Stockholders in the form of Exhibit C hereto.
"OPTION PLAN" means the option plan of the Parent.
"PERSON" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization
or other entity, as well as any syndicate or group that would be deemed to
be a person under Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended.
"PRINCIPAL STOCKHOLDERS" means Michel Desbard, Alain Fanet and
Cesar Douady.
"REPRESENTATION LETTER" means the Representation Letter between
Parent and each of the Stockholders in the form of Exhibit D hereto.
"STOCKHOLDERS" at any time means the holders of Company Common Stock
and Company Preferred Stock as of such time.
5
<PAGE>
"SUBSIDIARY" or "SUBSIDIARIES", when used with respect to the
Company, means any corporation or other business entity a majority of
whose outstanding equity securities is at the time owned, directly or
indirectly, by the Company and/or one or more other Subsidiaries of the
Company.
"TAX" and "TAXES" means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, AD VALOREM, value
added, transfer, gains, franchise, profits, license, withholding on
amounts paid or received, payroll, employment, excise, severance, stamp,
occupation, premium, property, or windfall profit taxes, custom duties or
other taxes, or other like assessments or charges of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional
amount imposed by any governmental authority responsible for the
imposition of any such taxes (domestic or foreign) and (ii) liability of
the Company or any of the Subsidiaries for the payment of any amounts of
the type described in (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for federal, state, local or
foreign Tax purposes, or being a party to any agreement or arrangement
whereby liability of the Company or any of the Subsidiaries for payments
of such amounts was determined or taken into account with reference to the
liability of any other person for any period prior to, or up to and
including, the Effective Time, and (iii) liability of the Company or any
of the Subsidiaries with respect to the payment of any amounts described
in (i) as a result of any express or implied obligation to indemnify any
other person.
"TRADEMARKS" means all trade names, trade dress, logos, common law
trademarks and service marks; trademark and service mark registrations and
applications therefor and all goodwill associated therewith throughout the
world.
SECTION 1.2. OTHER DEFINED TERMS. The following terms shall
have the meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term: Section:
----- --------
<S> <C>
Accounts Receivable 4.24
Acquisition Corp. Recitals
Acquisition Proposal 7.01(b)(i)
Applicable Laws 4.15
Certificates 3.05(b)
Closing 3.10
Closing Date 3.10
Closing Price 3.01(a)(i)
COBRA 4.16(n)
Code Recitals
6
<PAGE>
Common Stock Consideration 3.01(b)
Company Recitals
Company Affiliated Group 4.14(c)
Company Common Stock Recitals
Company Financial Statements 4.04
Company Option Recitals
Company Transaction Expenses 11.01(b)
Computer Systems 4.28 (a)
Constituent Corporations Recitals
Contingent Common Stock Consideration 3.01(b)(i)
Contingent Exchange Ratio 3.01(b)(i)
Contingent Right 3.01(b)(i)
Development Agreements 4.12.1(k)
DGCL Recitals
Dissenting Shares 3.04
Effective Time 2.03
Engineers 8.02(j)
ERISA Affiliates 4.16(a)
Escrow Account 3.05(a)
Exchange Agent 3.05(a)
Exchange Ratio 3.01(b)(i)
Final Exchange Ratio 3.01(b)(i)
GAAP 4.04
Governmental Agency 4.07
HIPAA 4.16(n)
Holder 7.02(i)(i)
Indemnified Party 7.02(i)(v)(y)
Indemnifying Party 7.02(i)(v)(y)
Information Statement 7.01(d)
Intellectual Property 4.12
Licensed Software 4.12.1(f)
Major Customers 4.23
Major Suppliers 4.23
Merger Recitals
Owned Software 4.12.1(f)
Parent Recitals
Parent Common Stock Recitals
Parent Filings 5.06
Parent Indemnified Persons 10.02
Parent Option 3.01(b)(ii)
7
<PAGE>
Penalties 4.12.1(k)
Permits 4.15
Permitted Liens 4.10
Plans 4.16(a)
Reboul, MacMurray 8.01(c)
Registrable Shares 7.02(i)(i)
Registration Effective Period 7.02(i)(iii)(x)
Registration Statement 7.02(i)(iii)
SEC 5.04
Securities Act 5.03(c)
Series A Preferred Stock 1.01
Series B Preferred Stock 1.01
Series B-1 Preferred Stock 1.01
Series C Preferred Stock 1.01
Series D Preferred Stock 1.01
SPARC Agreement 4.12.2(o)
Stockholder Escrow Amount 3.05(a)
Sun 4.12.2(o)
Surviving Corporation Recitals
Suspension Right 7.02(i)(iii)(z)
Tax Returns 4.14
Twentieth Trading Day 3.01(b)(i)
Transaction Expenses 11.01(a)
Unit 3.01(b)(i)
Violation 7.02(i)(v)
Warrant 3.01(b)(iii)
Year 2000 Compliant 4.28
</TABLE>
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. Subject to the terms and conditions
of this Agreement, at the Effective Time, in accordance with this Agreement
and the DGCL, Acquisition Corp. shall be merged with and into the Company,
the separate corporate existence of Acquisition Corp. shall cease, and the
Company shall continue as the surviving corporation and shall continue to be
governed by the laws of the State of Delaware.
8
<PAGE>
SECTION 2.2. EFFECT OF THE MERGER. The Merger shall have the
effects set forth in Section 259(a) of the DGCL.
SECTION 2.3. CONSUMMATION OF THE MERGER. As soon as practicable
after the satisfaction or waiver of the conditions to the obligations of the
parties to effect the Merger set forth herein, provided that this Agreement has
not been terminated previously, the parties hereto will cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware a
properly executed certificate of merger in accordance with the DGCL (the time of
such filing, or at such later time as may be agreed upon by the parties as set
forth in such certificate of merger, being the "Effective Time").
SECTION 2.4. CHARTER, BYLAWS, DIRECTORS AND OFFICERS. As of the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended and restated to read as set forth in Exhibit E hereto, until
thereafter amended in accordance with the provisions thereof and as provided by
the DGCL. The Bylaws of the Surviving Corporation from and after the Effective
Time shall be amended and restated to read as set forth in Exhibit F hereto,
continuing until thereafter amended in accordance with the provisions thereof
and the Certificate of Incorporation of the Surviving Corporation and as
provided by the DGCL. The initial directors and officers, respectively, of the
Surviving Corporation shall be (i) the directors of Acquisition Corp.
immediately prior to the Effective Time and (ii) the officers of the Company
immediately prior to the Effective Time, respectively, in each case until their
removal or until their respective successors are duly elected and qualified.
ARTICLE III.
CONVERSION OF SECURITIES
SECTION 3.1. EXCHANGE RATIO.
(a) "COMMON STOCK CONSIDERATION" has the meaning set forth in
Section 3.01(b) below.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof:
(i) COMMON STOCK. Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than
Dissenting Shares) shall be converted into the right to receive a unit
(each, a "Unit") which shall include (a) the number of shares of Parent
Common Stock equal to the Common Stock Consideration divided by the Fully
Diluted Company Common Stock (such result being referred to herein as the
"Exchange
9
<PAGE>
Ratio"), together with (b) a Contingent Right. For purposes of this
Agreement, "Common Stock Consideration" means 2,200,000 shares of Parent
Common Stock.
A "Contingent Right" means a right attached to each share of Parent
Common Stock issuable pursuant to Section 3.01(b)(i) and not separable
therefrom entitling the holder thereof to receive the number of shares of
Parent Common Stock equal to the Contingent Common Stock Consideration
divided by the Fully Diluted Company Common Stock (such result being
referred to herein as the "Contingent Exchange Ratio"). For purposes of
this Agreement, "Contingent Common Stock Consideration" means such number
of shares of Parent Common Stock equal to (i) $187,000,000 divided by the
average of the closing price per share of Parent Common Stock on the
Nasdaq National Market for the 20 trading day period commencing with the
trading day ending at 4:00 p.m. immediately prior to the public
announcement of the Merger and ending at 4:00 p.m. on such 20th trading
day (the "Twentieth Trading Day") less (ii) 2,200,000, provided that in no
event shall the Contingent Common Stock Consideration be less than zero or
more than 1,000,000 shares of Parent Common Stock. The sum of the Exchange
Ratio and the Contingent Exchange Ratio shall be the "Final Exchange
Ratio."
The Parent shall calculate and deliver to the Company the Exchange
Ratio as of two business days prior to the Effective Time and the Chief
Executive Officer of the Company shall deliver a certificate to Parent and
Acquisition Corp. on such date certifying in their capacity as such
officers on behalf of the Company as to the true and correct portion of
the total Common Stock Consideration payable or issuable to each
Stockholder of the Company. The Parent shall calculate the Contingent
Exchange Ratio and certify such amount to the Exchange Agent (as defined
below) on the first trading day following the Twentieth Trading Day.
(ii) STOCK OPTIONS. Except for Company Options held by a
holder domiciled in France, each outstanding Company Option will, without
any further action on the part of any holder thereof, be exchanged for an
option (each, a "Parent Option" and collectively, the "Parent Options") to
purchase that number of shares of Parent Common Stock equal to the Final
Exchange Ratio (rounded down to the nearest whole share), at an exercise
price per share of Parent Common Stock equal to the exercise price per
share of Company Common Stock of such Company Option immediately prior to
the Effective Time divided by the Final Exchange Ratio (rounded up to the
nearest whole cent). Except as provided above, the term, exercisability,
vesting schedule, status as an "incentive stock option" under Section 422
of the Code, if applicable, and all other terms and conditions of the
Company Options will otherwise continue unamended with respect to the
Parent Options. Continuous employment with the Company will be credited to
an optionee of the Company for purposes of determining the number of
Shares of Parent Common Stock subject to exercise under an exchanged
Company Option after the Effective Time. Each Company Option held by any
holder
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domiciled in France, once exercised pursuant to the terms and provisions
of the Company 1997 Stock Option Plan, the Sub-Plan to the 1997 Option
Plan and such holder's stock option agreement, exercise notice,
subscription agreement and award agreement will be treated as previously
agreed between the parties.
(iii) WARRANTS. Each warrant (a "Warrant") to purchase Series
A Preferred Stock outstanding immediately prior to the Effective Time
pursuant to any warrant agreement of the Company shall be exercised by the
holder thereof prior to the Effective Time (subject to applicable
withholding taxes, if any) and the Series A Preferred Stock purchased upon
exercise thereof shall then, prior to the Effective Time, be converted
into Company Common Stock pursuant to Section 3.01(b)(iv) below.
(iv) PREFERRED STOCK. Each share of Company Preferred Stock
issued and outstanding immediately prior to the Effective Time shall,
effective upon the Effective Time, be converted into the right, subject to
Section 3.04 hereof, to receive a Unit as provided in Section 3.01(b)(i).
(v) TREASURY STOCK. Each share of capital stock that is held
in the treasury of the Company shall be canceled and retired and no
capital stock of Parent, cash or other consideration shall be paid or
delivered in exchange therefor.
SECTION 3.2. RETENTION OPTIONS. Parent shall grant to certain
Company Employees, as previously agreed to by the Company and Parent, Parent
Options exercisable in the aggregate for 500,000 shares of Parent Common Stock,
options on 337,930 of which will be granted at the Effective Time and the
remainder of which shall be granted on or prior to the first anniversary of the
Effective Time.
SECTION 3.3. CONVERSION OF CAPITAL STOCK OF ACQUISITION CORP. At
the Effective Time, each share of Common Stock of Acquisition Corp. issued and
outstanding immediately prior to the Effective Time shall remain outstanding
and, by virtue of the Merger, automatically and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and nonassessable share of Common Stock of the Surviving Corporation.
SECTION 3.4. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of capital stock of the Company that are
outstanding immediately prior to the Effective Time and that are held by
Stockholders who have not voted such shares in favor of the approval and
adoption of this Agreement and who shall have delivered a written demand for
appraisal of such shares in accordance with the DGCL ("Dissenting Shares") shall
not be converted into or be exchangeable for the right to receive the
consideration provided in Section 3.01 of this Agreement, but the holders of
such shares shall be entitled to payment of the appraised value of such shares
in accordance with the
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provisions of the DGCL; PROVIDED, HOWEVER, that (i) if any holder of Dissenting
Shares shall subsequently deliver a written withdrawal of his or her demand for
appraisal of such shares (with the written approval of the Surviving
Corporation), or (ii) if any holder fails to perfect or loses his or her
appraisal rights as provided in the DGCL, or (iii) if any holder of Dissenting
Shares fails to demand payment within the time period provided in the DGCL, such
holder shall forfeit the right to appraisal of such shares and such shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the consideration provided
in Section 3.01 of this Agreement, without any interest thereon.
SECTION 3.5. SURRENDER AND EXCHANGE OF SHARES.
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(a) On the Closing Date, Parent shall deposit with American Stock
Transfer Trust Company (the "Exchange Agent") for exchange to the extent of the
Exchange Ratio, and on the second business day following the Twentieth Trading
Day, Parent shall deposit with the Exchange Agent for exchange to the extent of
the Contingent Exchange Ratio, in each case in accordance with Section 3.01, the
aggregate number of shares of Parent Common Stock issuable in exchange for
outstanding shares of Company Common Stock and cash in an amount sufficient to
permit payment of cash in lieu of fractional shares pursuant to Section 3.05(c);
provided, however, that pursuant to the terms of the Escrow Agreement, on behalf
of the holders of Company Common Stock, Parent shall deposit into an escrow
account (the "Escrow Account") a number of shares of Parent Common Stock
representing (i) 10% of the Common Stock Consideration and 10% of the Contingent
Common Stock Consideration (the "Stockholder Escrow Amount") plus (ii) an
additional 25% of the Parent Common Stock which the Principal Stockholders are
entitled to receive pursuant to the Merger (such 25% to be calculated based on
the total number of shares of Parent Common Stock which the Principal
Stockholders are entitled to receive pursuant to the Merger). The portion of the
Stockholder Escrow Amount contributed on behalf of each holder of Company Common
Stock shall be in proportion to the aggregate number of shares of Parent Common
Stock which such holder would otherwise be entitled to receive by virtue of
ownership of outstanding shares of Company Common Stock.
(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of record of a certificate
or certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock and which shares
where converted into the right to receive shares of Parent Common Stock pursuant
to Section 3.01, (i) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and validly
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executed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock (less the number
of shares of Parent Common Stock to be deposited in the Escrow Account on such
holder's behalf pursuant to the Escrow Agreement), to which such holder is
entitled pursuant to Section 3.01 and cash in lieu of fractional shares, and the
Certificate so surrendered shall be cancelled. As soon as practicable after the
Effective Time, and subject to and in accordance with the provisions of Section
7.02 hereof, Parent shall cause to be distributed to the Escrow Agent (as
defined in the Escrow Agreement) a certificate or certificates (in such
denominations as may be requested by the Escrow Agent) representing that number
of shares of Parent Common Stock equal to the number of shares of Parent Common
Stock in the Escrow Account, which certificate shall be registered in the name
of the Escrow Agent. Such shares shall be beneficially owned by the holders on
whose behalf such shares were deposited in the Escrow Account and shall be
available to compensate Parent as provided in Article X. Until surrendered, each
outstanding Certificate that, prior to the Effective Time, represented shares of
Company Common Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of Parent Common Stock into which such
shares of Company Common Stock shall have been so converted an cash in lieu of
fractional shares.
(c) No dividends or other distributions with respect to Parent
Common Stock declared or made after the Effective Time and with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby until the holder of record of such Certificate shall surrender such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable (but for the provisions of this Section 3.05(c)) with respect to such
whole shares of Parent Common Stock.
(c) If a certificate representing shares of the capital stock of the
Company has been lost, stolen or destroyed, and a replacement certificate has
not been issued as of the Effective Time, the holder of such certificate shall
submit an affidavit describing the lost, stolen or destroyed certificate, the
number of shares evidenced thereby and affirming the status of that certificate
in lieu of surrendering such certificate to Parent, which shall deem such
certificate canceled. Until so surrendered, each outstanding certificate that,
prior to the Effective Time, represented shares of the capital stock of the
Company that shall have been converted as aforesaid shall be deemed for all
corporate purposes, except as hereinafter provided, to evidence the ownership of
the consideration into which such shares have been so converted.
(e) No certificates representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of certificates evidencing
stock of the Company held by the
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Stockholders, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a shareholder of Parent. Each holder of
shares of the capital stock of the Company who would otherwise have been
entitled to receive in the Merger a fraction of a share of Parent Common Stock
(after taking into account all certificates surrendered by such holder) shall be
entitled to receive from Parent at the Effective Time, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Parent Common Stock multiplied by $85. It is understood (i) that the payment of
cash in lieu of fractional shares of Parent Common Stock is solely for the
purpose of avoiding the expense and inconvenience to Parent of issuing
fractional shares and does not represent separately bargained for consideration;
and (ii) that no holder of shares of Company capital stock will receive cash in
lieu of fractional shares of Parent Common Stock in an amount greater than the
value of one full share of Parent Common Stock.
SECTION 3.6. DISSENTING SHARES AFTER PAYMENT OF FAIR VALUE.
Dissenting Shares, if any, after payment of fair value in respect thereto have
been made to dissenting Stockholders pursuant to the DGCL, shall be canceled.
SECTION 3.7. CLOSING OF STOCK TRANSFER BOOKS. On and after the
Effective Time, there shall be no transfers on the stock transfer books of the
Company of shares of capital stock of the Company.
SECTION 3.8. ANCILLARY AGREEMENTS. At the Effective Time, Parent
and each Stockholder shall execute and deliver each of the Ancillary Agreements
to which the Company and each such Stockholder is a party.
SECTION 3.9. NO FURTHER OWNERSHIP RIGHTS. The Common Stock
Consideration and Contingent Common Stock Consideration delivered upon the
surrender for exchange of any certificate of Company Common Stock in accordance
with the terms hereof shall be deemed to have been delivered and paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
previously represented by such certificate.
SECTION 3.10. CLOSING. Subject to the provisions of Article IX
hereof, the closing of the transactions contemplated by this Agreement (the
"Closing") and all actions specified in this Agreement to occur at the Closing
shall take place at the offices of Reboul, MacMurray, Hewitt, Maynard & Kristol,
45 Rockefeller Plaza, New York, New York at 10:00 a.m., New York time, as soon
as practicable following the day on which the last of the conditions set forth
in Sections 9.01 and 9.02 (other than conditions which by their terms are to be
satisfied at the Closing) shall have been fulfilled or waived, or at such other
time and/or place and/or on such other date as Parent and the Company shall
agree (the date on which the Closing takes place, the "Closing Date").
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SECTION 3.11. CHANGE IN STRUCTURE. Parent may at any time change
the method of effecting the combination with the Company (including without
limitation the provisions of this Article III) if and to the extent it deems
such change to be desirable, including without limitation to provide for a
merger of the Company directly into Parent, in which Parent is the surviving
corporation; provided, however, that no such change shall (A) alter or change
the amount of consideration to be issued to the Stockholders or holders of
Company Options as provided for in this Agreement, (B) impede consummation of
the transactions contemplated by this Agreement or (C) adversely affect the
Company, the Stockholders or the holders of Company Options in their capacity as
holders of Company Options.
SECTION 3.12. ADJUSTMENT OF MERGER CONSIDERATION. In the event of
any change in the Parent Common Stock between the date of this Agreement and the
Effective Time by reason of any stock split, stock dividend, subdivision,
reclassification, combination, merger, consolidation, exchange of Parent Common
Stock or the like, the terms set forth in this Agreement shall be appropriately
adjusted.
SECTION 3.13. COMPANY AGENT. In the event that the Merger is
approved by the Stockholders as provided herein, the Stockholders shall, without
any further act of any Stockholder, be deemed to have (i) consented to and
approved (A) the appointment of Michel Desbard, and failing him, Alain Fanet, as
the Company Agent of the Stockholders under the Escrow Agreement and as the
attorney in fact and agent for and on behalf of each Stockholder and the taking
by the Company Agent of any and (B) all actions and the making of any decisions
taken by him under the Escrow Agreement; (ii) agreed to indemnify and hold
harmless the Company Agent for all actions so taken, absent bad faith and gross
negligence.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Acquisition Corp.,
except as set forth in the disclosure schedule delivered by the Company to
Parent and Acquisition on the date hereof (the "Disclosure Schedule"), as
follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own or lease and operate its
properties and assets and to carry on its business as it is now being
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conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary. Schedule 4.01(a) sets forth the jurisdictions in which
the Company is so qualified.
(b) The Company does not own of record or beneficially, directly or
indirectly, (i) any shares of capital stock or securities convertible into
capital stock of or interests in any limited liability company or other
corporation or (ii) any equity interest in any partnership, joint venture or
other non-corporate business enterprise. The Company is not party to any
contract to provide loans or advances to or make any investment (in the form of
a loan, capital contribution or similar payment) in any entity or enterprise
that is not wholly owned by it (other than the French Subsidiary).
(c) Section 4.01(c) of the Disclosure Schedule sets forth the (i)
name and jurisdiction of incorporation of each Subsidiary of the Company, (ii)
the number of shares of authorized capital stock of each class of its capital
stock, (iii) the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof and the number of shares held by
each such holder. Each Subsidiary is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has all
requisite power and authority to own or lease and operate its properties and
assets and to carry on its business as it is now being conducted. Each
Subsidiary is duly qualified to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary. There has been no
formal request for the dissolution of the French Subsidiary or appointment of an
ADMINISTRATEUR PROVISOIRE, MANDATAIRE AD HOC or MANDATAIRE AMIABLE to manage the
French Subsidiary's affairs. The French Subsidiary is not subject to any
judicial reorganization (REDRESSEMENT JUDICIAIRE) or liquidation or to any
payment freezes (CESSATION DES paiements). The minute books of the French
Subsidiary contain records of all the shareholders and board of directors
meetings held in the French Subsidiary. All of those books and records are in
the possession of the French Subsidiary and, together with the registry of
transfer of shares (REGISTRE DES MOUVEMENTS DE TITRES) and shareholders'
accounts (COMPTES D'ACTIONNAIRES), are complete, sincere and properly kept in
accordance with applicable laws in France. Section 4.01(c) of the Disclosure
Schedule sets forth those jurisdictions in which each Subsidiary is so
qualified.
SECTION 4.2. AUTHORIZATION OF AGREEMENTS; NON-CONTRAVENTION. (1)
The execution and delivery by the Company of this Agreement and each Ancillary
Agreement to which the Company is a party, and the consummation by the Company
of the transactions contemplated hereby and thereby, have been duly authorized
by all requisite corporate action. This Agreement has been duly and validly
executed by the Company and, subject to due execution by any other parties
thereto, will constitute the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting the enforcement of creditors' rights generally. Each
Ancillary Agreement
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(other than the Noncompete Agreements, as to which no representation or warranty
is made) to which the Company is party, when duly executed and delivered in
accordance with this Agreement, subject to due execution by any other parties
thereto, will constitute a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting the enforcement of creditors' rights generally. No other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement, the Ancillary Agreements or the transactions contemplated hereby or
thereby.
(b) NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement by the Company and each Ancillary Agreement to which the Company
or the French Subsidiary is a party, the consummation of the transactions
contemplated hereby and thereby will not (i) conflict with any provision of the
Certificate of Incorporation or the By-Laws of the Company (in each case as in
effect at the Effective Time) (ii) result (with the giving of notice or the
lapse of time or both) in any violation of or default or loss of a benefit
under, or permit the termination, cancellation or acceleration of any obligation
under, any mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any Subsidiary or any
of their respective properties, other than any such violation, default, loss,
termination, cancellation or acceleration that would not materially adversely
affect the ability of the Company to consummate the transactions contemplated
hereby and which would not otherwise have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
SECTION 4.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
33,880,710 shares of Company Common Stock, 3,131,982 of which are validly issued
and outstanding; 8,560,000 shares of Series A Preferred Stock, 8,560,000 of
which are validly issued and outstanding; 8,220,001 shares of Series B Preferred
Stock, 8,220,001 of which are validly issued and outstanding; 2,447,133 shares
of Series B-1 Preferred Stock, 2,447,113 of which are validly issued and
outstanding; 1,100,000 shares of Series C Preferred Stock, 1,100,000 of which
are validly issued and outstanding and 6,666,667 shares of Series D Preferred
Stock, 6,575,377 of which are validly issued and outstanding. All of such shares
of capital stock are validly issued and outstanding, fully paid and
nonassessable, and no other shares of capital stock of the Company have ever
been issued. No subscription, warrant, option, convertible security, stock
appreciation or other right (contingent or other) to purchase or acquire any
shares of any class of capital stock of the Company is authorized or outstanding
and there is not any commitment of the Company to issue any shares, warrants,
options or other such rights or to distribute to holders of any class of its
capital stock any evidences of indebtedness or assets. The Company does not have
any obligation (contingent or other) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect
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thereof. Section 4.03(a) of the Disclosure Schedule sets forth a complete and
correct list as of the date hereof of the holders of record of the Company
Common Stock and the holders of all options or other rights to purchase capital
stock of the Company, including by name of the holder the number of shares or
the number of shares obtainable on exercise of options or rights held.
(b) The authorized capital stock and the number of issued and
outstanding shares of capital stock of each of the Subsidiaries is set forth on
Section 4.03(b) of the Disclosure Schedule. All of such issued and outstanding
shares of capital stock are validly issued and outstanding, fully paid and
nonassessable, and no other shares of capital stock of any of the Subsidiaries
are issued and outstanding. No subscription, warrant, option, convertible
security, stock appreciation or other right (contingent or other) to purchase or
acquire any shares of any class of capital stock of any of the Subsidiaries is
authorized or outstanding and there is not any commitment of any of the
Subsidiaries to issue any shares, warrants, options or other such rights or to
distribute to holders of any class of its capital stock any evidences of
indebtedness or assets. None of the Subsidiaries has any obligation (contingent
or other) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Section 4.03(b) of the Disclosure Schedule sets
forth a complete and correct list as of the date hereof of the holders of record
of the shares of capital stock of each Subsidiary and the holders of all options
or other rights to purchase capital stock of each Subsidiary, including by name
of the holder the number of shares or the number of shares obtainable on
exercise of options or rights held.
SECTION 4.4. FINANCIAL STATEMENTS, ETC. The Company has previously
furnished to Parent (i) the unaudited consolidated balance sheet of the Company
and the Subsidiaries as of December 31, 1999 and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended and (ii) the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of March 31, 2000, and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows for
the two months then ended (collectively, the "Company Financial Statements").
The Company Financial Statements are attached hereto as Schedule 4.04. The
Company Financial Statements were prepared from the books and records of the
Company and the Subsidiaries and present fairly in all respects the consolidated
financial position of the Company and the Subsidiaries as of the respective
dates specified therein and the consolidated results of operations of the
Company and the Subsidiaries for the respective periods then ended, and were
prepared in conformity with generally accepted accounting principles in the
United States ("GAAP") consistently applied, subject in the case of interim
financial statements to the absence of certain footnote disclosures and normal
year-end audit adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse).
SECTION 4.5. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set
forth on the Company's December 31, 1999 consolidated balance sheet, neither the
Company nor any of the Subsidiaries has any liabilities or obligations of any
kind or nature, whether known or unknown or
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secured or unsecured (whether absolute, accrued, contingent or otherwise, and
whether due or to become due) of a nature customarily accrued, reserved against
or disclosed in a corporate balance sheet prepared in conformity with GAAP or
which would have a Material Adverse Effect on the Company, other than
liabilities incurred in the ordinary course of business and other liabilities,
individually or in the aggregate, not exceeding $50,000.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
otherwise expressly stated in this Agreement, since December 31, 1999, neither
the Company nor any of the Subsidiaries has:
(i) issued, sold or otherwise disposed of any stock, bonds or other
corporate securities, or granted any options, warrants or other rights to
purchase or obtain (including upon conversion, exchange or exercise) any
stock;
(ii) declared, set aside or made any payment or distribution to
stockholders (whether in cash or in kind) or purchased or redeemed any
shares of its capital stock or other securities;
(iii) entered into, adopted, amended or terminated any bonus, profit
sharing, compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit of any
director, officer or employee, or increased in any manner the compensation
or fringe benefits of any director or officer, or increased the
compensation or fringe benefits of any officer consultant, employee or
director other than in the ordinary course of business, or made any
payment of a cash bonus to any director or officer or to any employee of,
or consultant or agent to, the Company or any of the Subsidiaries or made
any other material change in the terms or conditions of employment;
(iv) announced any plan or legally binding commitment to create any
employee benefit plan, program or arrangement or to amend or modify in any
material respect any existing employee benefit plan, program or
arrangement;
(v) eliminated the vesting conditions or otherwise accelerated the
payment of any compensation, including any stock options;
(vi) transferred, leased or otherwise disposed of any of its assets,
whether tangible or intangible, except for fair consideration in the
ordinary course of business, or acquired, any assets or properties, except
for fair consideration in the ordinary course of business or, in each
case, with a fair market value not exceeding $50,000 individually or in
the aggregate;
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(vii) made any investment of a capital nature, in an amount,
individually or in the aggregate, greater than or equal to $50,000,
whether by purchase of stock or securities, contributions to capital,
property transfers or otherwise, in any other partnership, corporation or
other entity (other than in the French Subsidiary);
(viii) canceled or compromised any debt or claim, in an amount,
individually or in the aggregate, greater than or equal to $50,000, owed
to it other than in the ordinary course of business;
(ix) except in the ordinary course of business, waived or abandoned
any rights of material value held by it, including, without limitation,
any Intellectual Property or Trademarks, in an amount, individually or in
the aggregate, greater than or equal to $50,000.
(x) except in the ordinary course of business, transferred or
granted any rights under or with respect to any Intellectual Property, or
permitted any material license, permit or other form of authorization
relating to any Intellectual Property or Trademarks to lapse;
(xi) made any loan, or entered any transaction with, any of its
directors, officers and employees in an amount, individually or in the
aggregate, greater than or equal to $25,000 outside the ordinary course of
business;
(xii) suffered any casualty loss or damage in an amount,
individually or in the aggregate, greater than or equal to $50,000
(whether or not such loss or damage shall have been covered by insurance)
which affects the Company in any material respect;
(xiii) made any loan, advance or capital contribution to or
investment in any Person, in an amount, individually or in the aggregate,
greater than or equal to $50,000 (other than any loan, advance, capital
contribution to or investment in the French Subsidiary made in the
ordinary course of business);
(xiv) changed in any material respect the method of accounting or
accounting principle or practice by the Company, or revalued, written down
or written off the value of any assets of the Company or any Subsidiary
other than normal course amortization and depreciation;
(xv) entered into any material agreement, contract, lease or license
other than in the ordinary course of business which in any way binds the
Company or any Subsidiary to pay consideration, or provide goods or
services, in an amount, greater than or equal to $50,000 and no party has
accelerated, terminated, cancelled or modified any agreement or contract
involving more than $50,000 to which the Company or any Subsidiary is a
party;
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(xvi) except for changes made in connection with the issuance of the
Series D Preferred Stock, altered any term of any outstanding security of
the Company or any Subsidiary;
(xvii) (1) failed to maintain in full force and effect substantially
the same level and type of insurance coverage as in effect on December 31,
1999 or (2) changed or suffered a change in any insurance coverage or the
issuance of any insurance policy, except in the ordinary course of
business; or
(xviii) suffered any event, occurrence, development or state of
circumstances or facts which, individually or in the aggregate, has had a
Material Adverse Effect on the Company.
SECTION 4.7. GOVERNMENTAL APPROVALS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state, municipal or foreign governmental agency, public body, court, tribunal,
arbitrator, mediator or other authority (each a "Governmental Agency") having
jurisdiction over the Company, any Subsidiary, or any Principal Stockholder is
required to be made or obtained by the Company, any Subsidiary or any Principal
Stockholder in connection with the execution and delivery of this Agreement and
each Ancillary Agreement to which any of the Company and Principal Stockholder
is a party by the Company or the Principal Stockholders or the consummation by
the Company or the Principal Stockholders of the transactions contemplated
hereby.
SECTION 4.8. LITIGATION. (i) There is no action, suit, dispute,
investigation, proceeding or claim pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of the Subsidiaries, or their
respective properties or rights before any Governmental Agency, (ii) there is no
suit or claim by the Company or any Subsidiary pending, or which the Company or
any Subsidiary intends to initiate, against any other Person, and (iii) neither
the Company nor any of its Subsidiaries is subject to any order, judgment,
decree, injunction, stipulation, or consent order of or with any Governmental
Agency which, in the case of clauses (i), (ii) and (iii), if adversely decided,
is reasonably likely to result in liability, individually or in the aggregate,
to the Company equal to or greater than $50,000. Since January 1, 1997, neither
the Company nor any of its Subsidiaries has entered into any agreement to settle
or compromise any proceeding pending or threatened against it which,
individually or in the aggregate, required the Company to pay $50,000 or more.
No such pending or threatened actions, suits or proceedings would limit the
ability of the Seller to consummate the transactions contemplated hereby or by
the Ancillary Agreements to which the Company are a party or have a Material
Adverse Effect on the Company. The French Subsidiary is not criminally liable,
and is not likely to be held criminally liable, pursuant to Article 121-2 of the
French CODE PENAL.
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SECTION 4.9. NOTICE OF INFRINGEMENT
(a) INTELLECTUAL PROPERTY. No third party has notified the Company,
the Principal Stockholders or any of its Subsidiaries that anything made, sold,
developed, published, distributed, or used by the Company or any of its
Subsidiaries has infringed, may have infringed, infringes, may infringe, will
infringe, or could infringe any Intellectual Property of any third party.
(b) TRADEMARKS. No third party has notified the Company, the
Principal Stockholders or any of its Subsidiaries that anything made, sold,
developed, published, distributed, or used by the Company or any of its
Subsidiaries has infringed, may have infringed, infringes, may infringe, will
infringe, or could infringe any Trademarks, United States or foreign of any
Third Party.
SECTION 4.10. ASSETS.
(a) The Company and the Subsidiaries have good and marketable title
to all assets of any nature whatsoever reflected in the Company Financial
Statements or acquired after December 31, 1999; in each case, free and clear of
any Liens, except (i) Liens for current taxes not yet due, (ii) mechanic's and
materialmen's and other Liens which may have arisen in the ordinary course of
business and which, in the aggregate, would not have a Material Adverse Effect,
and (iii) Liens securing indebtedness reflected in the Company Financial
Statements (collectively, "Permitted Liens"). All assets used by the Company and
the Subsidiaries in the operation of their respective businesses are reflected
in the Company Financial Statements to the extent GAAP requires the same to be
reflected unless acquired after the date of such Company Financial Statements.
(b) All tangible personal property, fixtures, machinery and
equipment of the Company and the Subsidiaries are free from material defects,
have been maintained in accordance with normal industry practice, are in good
operating condition and repair (ordinary wear and tear excepted) and are
suitable for the purposes for which they are being used.
(c) This Section 4.10 does not relate to real property or interests
in real property, such items being the subject of Section 4.11.
SECTION 4.11. REAL PROPERTY. (a) Neither the Company nor any
Subsidiary owns or holds title to any real property.
(b) Section 4.11(b) of the Disclosure Schedule lists and describes
all real property leased or subleased to the Company or any of its Subsidiaries
with annual lease payments in excess of $10,000. The Company has delivered to
Parent correct and complete copies of the leases and subleases listed in Section
4.11(b) of the Disclosure Schedule. With respect to each material lease and
sublease listed in Section 4.11(b) of the Disclosure Schedule:
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(i) the lease or sublease is legal, valid, binding, enforceable, and
in full force and effect in all material respects;
(ii) the Company is not, and to the knowledge of the Company, no
other party is, in breach of any lease or sublease, and no event has
occurred which, with notice or lapse of time, would constitute a material
breach or default or permit termination, modification, or acceleration
thereunder;
(iii) no party to the lease or sublease has repudiated any provision
thereof;
(iv) there are no material disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(v) neither the Company nor any of its Subsidiaries has assigned,
transferred conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold to any material extent;
(vi) all facilities leased or subleased thereunder have received all
material approvals of governmental authorities (including material
licenses and permits) required in connection with the operation thereof,
and have been operated and maintained in accordance with applicable laws,
rules, and regulations in all material respects; and
(vii) no lease or sublease contains a change of control provision
which requires the Company to obtain the consent of a landlord or
overlandlord in connection with the consummation of the transaction
contemplated hereby.
SECTION 4.12.1 INTELLECTUAL PROPERTY SCHEDULES.
(a) Section 4.12.1(a) of the Disclosure Schedule sets forth a list
of registered patents, trademarks, copyrights, mask works and applications for
same and a summary description of all other Intellectual Property owned by the
Company or any of its Subsidiaries. For each listed patent, trademark,
copyright, mask work, or application for same, Section 4.12.1(a) of the
Disclosure Schedule shall specify, where applicable, the jurisdictions in which
each such Intellectual Property has been issued or registered or in which an
application for such issuance or registration has been filed, including the
respective registration or application numbers and the names of all owners or
assignees or parties with an ownership interest.
(b) Excluding licenses and sublicenses, Section 4.12.1(b) of the
Disclosure Schedule sets forth: (i) all agreements signed with current and
former employees and with current and former consultants and independent
contractors (1) to maintain confidentiality of trade secrets of the Company and
its Subsidiaries, (2) to assign all rights to any Intellectual Property
developed by such
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employees, consultants or independent contractors while working for the Company
and/or such Subsidiaries, as appropriate, and (3) to assist in the perfection
and/or enforcement of the Company's and such Subsidiaries' rights in any such
Intellectual Property; (ii) all obligations to convey or share ownership of
Intellectual Property; (iii) all obligations to convey or share use of or access
to Intellectual Property; and (iv) all assignment obligations arising from or in
conjunction with any joint ventures, product development services, conveyances
of know how, or technology transfers. For each listed Intellectual Property
obligation, the schedule shall specify the scope of each Intellectual Property
obligation (except where the scope can be determined from a written agreement
listed on the Disclosure Schedule and provided to Parent) and all other parties
with concurrent obligations to the same Intellectual Property.
(c) Excluding licenses and sublicenses, Section 4.12.1(c) of the
Disclosure Schedule sets forth: (i) all assignment obligations to third parties;
(ii) all obligations to convey or share ownership of Intellectual Property;
(iii) all obligations to convey or share use of or access to Intellectual
Property; and (iv) all assignment obligations arising from or in conjunction
with any joint ventures, product development services, conveyances of know how,
or technology transfers. For each listed Intellectual Property obligation, the
schedule shall specify, where applicable, the scope of each Intellectual
Property obligation (except where the scope can be determined from a written
agreement listed on the schedule and provided to Parent).
(d) Section 4.12.1(d) of the Disclosure Schedule sets forth a list
of all Intellectual Property licenses, sublicenses, or other agreements under
which the Company or any of its Subsidiaries are authorized to use or licensing
Intellectual Property licensed to the Company or any of its Subsidiaries. For
each listed Intellectual Property license, the schedule shall specify the
licensed Intellectual Property rights, the jurisdictions in which each such
Intellectual Property right has been licensed by the Company, and, where they
cannot be determined from the scope of the written agreement as provided to
Parent, the conditions on transferability and the term of the license. The
Company's products do not include any embedded software which is not developed
by the Company and for which the Company pays no royalties or upfront fees in a
manner that is prohibited.
(e) Section 4.12.1(e) of the Disclosure Schedule sets forth a list
of all Intellectual Property licenses, sublicenses, or other agreements
authorizing the use or licensing of Intellectual Property, licensed by the
Company or any of its Subsidiaries (excluding licenses granted to customers or
distributors in the ordinary course of business) to a third party. For each
listed Intellectual Property license, the schedule shall specify the licensed
Intellectual Property rights, the jurisdictions in which each such Intellectual
Property right has been licensed by the licensee, and, where they cannot be
determined from the scope of the written agreements as provided to Parent, the
conditions on transferability and the term of the license.
(f) Section 4.12.1(f) of the Disclosure Schedule sets forth a list
of all material computer software programs, applications and databases used in
connection with the Business, whether
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owned by the Company or any of its Subsidiaries (the "Owned Software") or
licensed by the Company or any of its Subsidiaries from third parties (the
"Licensed Software").
(g) Section 4.12.1(g) of the Disclosure Schedule sets forth a list
of all confidentiality and non-disclosure agreements to which the Company or any
of its Subsidiaries are a party, the existence of which or the noncompliance
with which could be reasonably likely to have an adverse effect on the business
of any of the Company, Parent or any of their respective Subsidiaries. For each
listed agreement, the schedule shall specify the parties thereto and, if other
than as set forth in such agreement, the term of the agreement.
(h) Section 4.12.1(h) of the Disclosure Schedule sets forth a list
of Agreements that the Company or any of its Subsidiaries have entered into that
limit the use of so-called residual knowledge or information by the Company, its
Subsidiaries, or any of their respective employees in any product or development
efforts.
(i) Section 4.12.1(i) of the Disclosure Schedule sets forth a list
of all license agreements of the Company (whether the Company is a licensor or
licensee) that relate to technology actually used in present products of the
Company.
(j) Section 4.12.1(j) of the Disclosure Schedule sets forth a list
of all licenses pursuant to which the Company has received source code from
licensors or provided source code to licensees.
(k) Section 4.12.1(k) of the Disclosure Schedule sets forth a list
of all contracts, agreements or arrangements relating to the design, testing and
implementation of any software, firmware or hardware program, product or project
(hereinafter referred to as "Development Agreements") to which the Company or
any of its Subsidiaries is a party. The Company and the Subsidiaries have
satisfied, or will satisfy, all requirements, including but not limited to any
minimum production and development schedule, set forth in any Development
Agreement and neither the Company nor any of the Subsidiaries is in default (nor
has any event occurred which, with the giving of notice or passage of time would
result in an event of default) under any Development Agreement. No amounts
("Penalties") are owed by the Company or any of its Subsidiaries, and no such
Penalties are reasonably anticipated by the Company or any of its Subsidiaries
to be owed, due to the failure of the Company or any of its Subsidiaries to
satisfy any requirements under any Development Agreement, by the Company or any
of its Subsidiaries to any third party with whom the Company or any of its
Subsidiaries has entered into a Development Agreement. Section 4.12.1(k) of the
Disclosure schedule also sets forth a list of all Penalties which are owed, or
are reasonably anticipated by the Company or any of the Subsidiaries to be owed,
by any of them pursuant to any Development Agreement.
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SECTION 4.12.2 INTELLECTUAL PROPERTY REPRESENTATIONS AND
WARRANTIES.
(a) Except as set forth in Section 4.12.2(a) of the Disclosure
Schedule, the Company and its Subsidiaries own and have good and exclusive title
to, or have assignable licenses to use, each item of Intellectual Property
included in Section 4.12.1(a) of the Disclosure Schedule free and clear of all
liens, encumbrances and adverse claims of title (other than Permitted Liens),
such Intellectual Property is valid and enforceable (to the extent constituting
an asset that can be "enforced"), and the rights of the Company and its
Subsidiaries therein will not be terminated, canceled or modified as a result of
the transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.12.2(b) of the Disclosure
Schedule, the Company and its Subsidiaries own and have good and exclusive title
to, or have assignable licenses to use, each Intellectual Property obligation
listed in Section 4.12.1(b) of the Disclosure Schedule free and clear of all
liens, encumbrances and adverse claims of title (other than Permitted Liens),
such obligations are valid and enforceable, and the rights of the Company and
its Subsidiaries in respect thereof will not be terminated, canceled or modified
as a result of the transactions contemplated by this Agreement.
(c) The Intellectual Property licenses, sublicenses or other
agreements listed in Section 4.12.1(d) of the Disclosure Schedule are current,
enforceable, free and clear of encumbrances (other than Permitted Liens), are
not subject to revocation or cancellation because of nonfeasance or malfeasance
by the Company or its Subsidiaries prior to the Effective Time, and will not
become terminable or be subject to cancellation or modification as a result of
the transactions contemplated by this Agreement.
(d) The Intellectual Property licenses, sublicenses or other
agreements listed in Section 4.12.1(e) of the Disclosure Schedule are current,
enforceable, free and clear of liens and encumbrances (other than Permitted
Liens), and will not become terminable or be subject to cancellation or
modification as a result of the transactions contemplated by this Agreement.
(e) Except as set forth in Section 4.12.2(e) of the Disclosure
Schedule, the Company and its Subsidiaries own and have good and exclusive title
to all Owned Software (and licenses to use all Licensed Software), in each case
free and clear of all liens, encumbrances and adverse claims of title (other
than Permitted Liens), and the rights of the Company and its Subsidiaries in
respect thereof will not be terminated, canceled or modified as a result of the
transactions contemplated by this Agreement. The Company and each of the
Subsidiaries have taken all steps reasonably necessary to protect their
respective right, title and interest in and to the Owned Software and the
Licensed Software listed in Section 4.12.1(f) of the Disclosure Schedule
including, without limitation, the use of written agreements containing
appropriate confidentiality provisions with all third parties having access to
the source code or object code relating to the Owned Software or the Licensed
Software.
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(f) The Company and its Subsidiaries possess or have access to the
original and all copies of all documentation, including, without limitation, all
source and object code for all Owned Software. Upon consummation of the
transactions contemplated by this Agreement, the Company and its Subsidiaries
will continue to own all of the Owned Software, free and clear of all claims,
liens, encumbrances, obligations and liabilities and, with respect to the
agreements for the license of the Licensed Software which require action as a
result of the consummation of the transactions contemplated by this Agreement in
order for the Company and its Subsidiaries to continue to use and operate such
Licensed Software after the Closing Date, the Company and its Subsidiaries will
have taken such action.
(g) The Company and its Subsidiaries own and have good and exclusive
title to, or have good and valid licenses to use, all Intellectual Property
rights necessary to conduct its business without interference.
(h) The Company and its Subsidiaries have taken all reasonable
measures and precautions necessary to protect and maintain the confidentiality
and secrecy of the Intellectual Property owned and/or used by the Company and/or
its Subsidiaries and otherwise to maintain and protect the value of the
Intellectual Property owned and/or used by the Company and/or its Subsidiaries.
No officer, director, employee, agent or representative of the Company and/or
any of its Subsidiaries has taken any material actions or entered into any
material agreements or assignments or incurred any material liability or
obligation limiting or restricting the Company's or any of its Subsidiary's
rights to Intellectual Property.
(i) Except as set forth in Section 4.12.2(i) of the Disclosure
Schedule, the Company and its Subsidiaries have obtained from all current and
former employees and from all current and former consultants and independent
contractors signed agreements restricting the use and disclosure of the
Intellectual Property of the Company and its Subsidiaries and requiring such
employees, consultants and independent contractors (1) to maintain the
confidentiality of trade secrets of the Company and its Subsidiaries, (2) to
assign all rights to any Intellectual Property developed by such employees while
working for the Company and/or such Subsidiaries to the Company or such
Subsidiaries, as appropriate, and (3) to assist in the perfection and/or
enforcement of the Company's and such Subsidiaries' rights in any such
Intellectual Property. To the knowledge of the Company, there are no
inconsistent and/or conflicting obligations to convey or assign the Intellectual
Property to a third party.
(j) Each confidentiality or non-disclosure agreement listed in
Section 4.12.1(h) of the Disclosure is valid and enforceable in accordance with
its terms.
(k) There are no outstanding claims for infringement,
misappropriation, unauthorized use, possession, or violation of the Intellectual
Property rights of any third party by the
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Company or any of its Subsidiaries in the operation of their respective business
and there is no basis for any such claim.
(l) Except as disclosed in Section 4.12.2(l) of the Disclosure
Schedule, the Company and its Subsidiaries have not entered into any agreements
and are not under any obligations that limit or impair the use of residual
know-how and techniques known to the Company, any of its Subsidiaries or any of
their respective employees in any products or development efforts.
(m) The operations of the Company, including the design,
development, manufacture, license and sale of the products (including products
currently under development) or services provided by the Company, do not (1)
infringe or misappropriate the Intellectual Property of any other person, (2)
violate the rights of any person (including rights to privacy or publicity), or
(3) constitute unfair competition or trade practices under the laws of any
jurisdiction.
(n) Each item of Intellectual Property and Trademarks of the
Company are valid and subsisting. All necessary registration, maintenance and
renewal fees in connection with such registered patents, copyrights, trademarks
and mask works, have been paid and all necessary documents and certificates in
connection with such registered patents, copyrights, trademarks and mask works,
have been filed with the relevant patent, copyright, trademark or other
authorities in the Untied States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such registered patents, copyrights, trademarks
and mask works.
(o) None of the Intellectual Property or Trademarks owned by the
Company or any of the Subsidiaries has title owned jointly by the Company or any
of the Subsidiaries, on the one hand, and any third party, on the other hand.
Without limiting the foregoing, there is no joint technology developed pursuant
to Section 2.4 of the SPARC Technology License and Distribution Agreement, dated
August 18, 1994 ("SPARC Agreement"), between Sun Microsystems Inc. ("Sun") and
the Company, as amended.
(p) Neither the Company nor any of the Subsidiaries (i) has had to
return ownership rights or title to any Intellectual Property developed by it to
Sun pursuant to the SPARC Agreement or (ii) is in default of Section 4.2 of the
SPARC Agreement. Section 4.12.2(s) of the Disclosure Schedule lists all of the
Company's Derivative Technology (as defined in the SPARC Agreement).
(q) None of the Company's products which are currently in
development or which are planned for future development, including without
limitation the production version of TS704, use any Intellectual Property of
Matra MHS, SA.
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SECTION 4.13. LABOR MATTERS.
(i) Except with respect to the French Subsidiary, neither the
Company nor any of the Subsidiaries is or has been a party to any
collective bargaining or union agreement, and no such agreement is or has
been applicable to any employees of the Company or any of the
Subsidiaries.
(ii) There are not any controversies between the Company or any of
the Subsidiaries and any of such employees that might be expected to
affect the conduct of the Company's business, or any unresolved labor
union grievances or unfair labor practice or labor arbitration proceedings
pending, or, to the knowledge of the Company, threatened relating to the
Company's business.
(iii) There is no pending or, to the knowledge of the Company,
threatened litigation between the Company or the French Subsidiary, on the
one hand, and current or former officers or employees, on the other hand,
including without limitation, any claims for wrongful termination, breach
of any express or implied contract of employment or for violation of equal
employment opportunity laws. The French Subsidiary is not the subject of,
and has not been threatened in writing with, any proceedings by the Labor
Inspectorate (INSPECTION DUE TRAVAIL).
(iv) Except with respect to the French Subsidiary, there are no
labor unions or other organizations representing or purporting to
represent any employees of the Company or any of the Subsidiaries and
there are not any organizational efforts currently being made or
threatened involving any of such employees.
(v) There is, and during the past two years there has been, no
redundancy plan, labor strike, dispute, work stoppage or lockout pending,
or, to the knowledge of the Company, threatened, against or affecting the
Company or a Subsidiary.
(vi) The Company and the Subsidiaries are in compliance in all
material respects with all laws and regulations or other legal or
contractual requirements regarding the terms and conditions of employment
of employees, leased employees, former employees or prospective employees
or other labor related matters, including, the hiring and retention of
independent contractors without limitation, laws, rules, regulations,
orders, rulings, conciliation agreements, decrees, judgments and awards
relating to wages, hours, the payment of social security and similar
taxes, equal employment opportunity, employment discrimination, fair labor
standards and occupational health and safety, wrongful discharge or
violation of the personal rights of employees, former employees or
prospective employees.
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(vii) Neither the Company nor any of the Subsidiaries is liable for
any arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing.
(viii) None of the Principal Stockholders, the Company and the
Subsidiaries has received notice during the past two years of the intent
of any governmental entity responsible for the enforcement of labor or
employment laws to conduct an investigation of the Company or a Subsidiary
and no such investigation is in progress.
(ix) Section 4.13 (i) of the Disclosure Schedule sets forth the
immigration status of each Company Employee working in the United States
who is not a United States citizen and (y) describes any Company Employee
whose immigration status may be adversely affected by any of the
transactions contemplated by this Agreement.
(x) The collective bargaining agreement for the steel industry
applies to all employees of the French Subsidiary and such employees are
entitled to benefit from this collective bargaining agreement.
(xi) The French Subsidiary has complied with all legal and
regulatory requirements with regard to the implementation and operation of
personnel representatives or labor unions. There are no negotiations
pending with such representatives regarding the implementation of a
"CONVENTION D'ENTREPRISE". In particular, the French Subsidiary has
complied in all respects with the requirements of the law governing the
elections of personnel representatives. Where the French Subsidiary has no
candidates for such elections, the minutes attesting to such deficiency
have been recorded, duly posted and forwarded to the appropriate labor
inspector.
(xii) The French Subsidiary has complied with all laws and
regulations governing the reduction of working time (in particular, the
laws Aubry I and II). The French Subsidiary has not suffered any
difficulty whatsoever relating to the implementation of the working time.
SECTION 4.14. TAXES.
(a) Each of the Company, the Subsidiaries and any affiliated,
combined or unitary group of which any such entity is or was a member has (A)
timely filed (taking into account properly filed extensions) all material
Federal and all material state, local and foreign returns, declarations,
reports, estimates, information returns and statements ("Tax Returns") required
to be filed by it in respect of any Taxes, (B) timely paid all material Taxes
that are due and payable with respect to the periods covered by the Tax Returns
referred to in clause (A), (C) established reserves that are adequate for the
payment of all Taxes not yet due and payable with respect to the results of
operations of the Company and the Subsidiaries, and (D) complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and has timely withheld from
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employee wages and paid over to the proper governmental authorities all material
amounts required to be so withheld and paid over.
(b) Except as set forth on Section 4.14 of the Disclosure Schedule,
the period of assessment under applicable law, after giving effect to extensions
or waivers, with respect to the income and franchise Tax Returns of the Company
or any of the Subsidiaries has expired for all of the taxable years of the
Company and such Subsidiaries. Section 4.14 of the Disclosure Schedule indicates
those Tax Returns of the Company and the Subsidiaries that either have been
audited or are currently the subject of an audit. There is no dispute or claim
(including any anticipated claim) concerning any Taxes of the Company or any of
the Subsidiaries either (i) claimed or raised by any authority in writing or
(ii) as to which the Company or any of its affiliates has knowledge based on
contact with a government Taxing authority.
(c) Neither the Company nor any Subsidiary has ever been an
includible member of an "affiliated group" (within the meaning of Section 1504
of the Code). All Tax Returns of the Company and the Subsidiaries have been
filed on a separate company, non-combined, non-consolidated and non-unitary
basis.
(d) Neither the Company nor any of the Subsidiaries has (i) received
or is the subject of an application for a tax ruling or entered into a legally
binding agreement (such as a closing agreement) with a taxing authority, which
ruling or agreement could have a material effect on the Taxes of the Company or
any of the Subsidiaries after the Effective Time.
(e) (i) no extensions of time have been granted to the Company or
any of the Subsidiaries to file any Tax Return required by applicable law to be
filed by it prior to the Effective Time, which have expired, or will expire,
before the Effective Time without such Tax Return having been filed, (ii) no
written deficiency or adjustment for any Taxes of the Company or any of the
Subsidiaries has been proposed, asserted or assessed, and no federal, state,
local or foreign audits or other administrative proceedings or court proceedings
are in process, or to the knowledge of the Company, pending or threatened with
regard to any such Taxes of the Company or any of the Subsidiaries, (iii) no
waiver or consent extending any statute of limitations past the date hereof for
the assessment or collection of any Taxes has been executed by the Company or
any of the Subsidiaries, nor have any requests for such waivers or consents been
proposed in writing and (iv) neither the Company nor any of the Subsidiaries
owns or leases any interest in real property in any jurisdiction in which a Tax
will be payable with respect to such interest in real property as a result of
the transactions contemplated hereby.
(f) The Company is not a party to any written tax-sharing or
allocation agreements, arrangements or understandings.
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(g) Neither the Company nor any of the Subsidiaries is a party to
any agreement, contract or arrangement that would result, by reason of the
consummation of any of the transactions contemplated herein, separately or in
the aggregate, in the payment of any "excess parachute payments" by the Company
or any Subsidiary within the meaning of Section 280G of the Code.
(h) The Company and each of the Subsidiaries has complied in all
material respects with all applicable laws relating to the withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441 and 1442 of the Code)
and has, within the time and within the manner prescribed by law, withheld and
paid over to the proper taxing authorities all material amounts required to be
withheld and paid over under all applicable laws in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder or other
third party.
(i) Neither the Company nor any of the Subsidiaries is required to
include in income any material adjustment pursuant to Section 481(a) of the Code
by reason of a voluntary change in accounting method (nor has any taxing
authority proposed in writing any such adjustment or change of accounting
method).
(j) No currently effective power of attorney has been granted by or
with respect to the Company or any of the Subsidiaries with respect to any
matter relating to Taxes.
(k) Neither the Company nor any of the Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision).
(l) No written claim or other claim of which the Company has
knowledge has ever been made by any governmental authority in a jurisdiction
where the Company or any of the Subsidiaries does not file Tax Returns that the
Company or any such Subsidiary is or may be subject to taxation by that
jurisdiction.
(m) The Company has previously delivered or made available to
Parent complete and accurate copies of each of: (i) all audit reports, letter
rulings and technical advice memoranda relating to federal, state and local
Taxes due from or with respect to the Company and each of the Subsidiaries, (ii)
the federal, state, local and foreign Tax Returns filed by the Company and each
of the Subsidiaries and (iii) any closing agreements entered into by the Company
or any of the Subsidiaries with any taxing authority.
(n) The Company is not and has not been at any time over the
last five years a "U.S. real property holding corporation" (as defined in
Section 897(c)(2) of the Code).
SECTION 5.15. COMPLIANCE WITH LAW; PERMITS. Neither the Company nor
any of the Subsidiaries is in any material respect in default under or in
violation of (i) any order or decree of any Governmental Agency or (ii) any
laws, ordinances, governmental rules or regulations to which the
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Company or any Subsidiary or any of their respective properties or assets is
subject ("Applicable Laws"). Section 4.15 of the Disclosure Schedule sets forth
a list of all material permits, authorizations, approvals, registrations,
variances and licenses ("Permits") issued to or used by the Company or any of
the Subsidiaries in connection with the conduct of its business. Such Permits
constitute all Permits necessary for the Company or the Subsidiaries to own, use
and maintain their properties and assets or required for the conduct of its
business in substantially the same manner as it is currently conducted, except
for Permits the absence of which would not have a Material Adverse Effect on the
Company. Each Permit listed on Section 4.15 of the Disclosure Schedule is in
full force and effect and no proceeding is pending or, to the knowledge of the
Company, threatened, to modify, suspend, revoke or otherwise limit any of such
Permits and no administrative or governmental actions have been taken or, to the
knowledge of the Company, threatened, in connection with the expiration or
renewal of any of such Permits. Neither the Company or any of the Subsidiaries
nor the Surviving Corporation will be required, as a result of the consummation
of the transactions contemplated hereby, to obtain or renew any material
Permits.
SECTION 4.16. EMPLOYEE BENEFIT PLANS. Except as disclosed on
Schedule 4.16:
(a) Section 4.16 of the Disclosure Schedule sets forth a complete
and accurate list of all Plans, Foreign Pension Plans and Foreign Plans. "Plans"
mean any "employee benefit plan" (as that term is defined in Section 3(3) of
ERISA), as well as any other plan, program or arrangement involving direct and
indirect compensation, under which the Company, or any entity that is a member
of a "controlled group of corporations" with or is under "common control" with
the Company as defined in Section 414(b) or (c) of the Code ("ERISA Affiliate"),
has any present or future obligations or liability on behalf of its employees or
former employees, contractual employees or their dependents or beneficiaries.
"Foreign Plan" means any employee benefit plan that is structured like an
employee benefit plan described in Section 3(3) of ERISA which is maintained
outside the United States primarily for the benefit of persons substantially all
of whom are nonresident aliens and who are employees of the Company or any of
its ERISA Affiliates and is not covered by ERISA pursuant to Section 4(b)(4) of
ERISA. "Foreign Pension Plan" means any pension plan that is structured like an
employee pension benefit plan described in Section 3(2) of ERISA which is (i)
maintained outside the United States primarily for the benefit of persons
substantially all of whom are nonresident aliens and who are employees of the
Company, or any of its ERISA Affiliates, (ii) is not covered by ERISA pursuant
to Section 4(b)(4) of ERISA, and (iii) provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment;
(b) The Company and each of the Subsidiaries have complied, and
currently are in compliance, in all material respects with all laws and
regulations applicable to the Plans, including, without limitation, ERISA and
the Code;
(c) No ERISA Affiliate has maintained, adopted or established,
contributed to or been required to contribute to, or otherwise participated in
or been required to participate in, any
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employee benefit plan or other program or arrangement subject to Title IV of
ERISA (including, without limitation, a "multi-employer plan" (as defined in
Section 3(37) of ERISA) and a defined benefit plan (as defined in Section 3(35)
of ERISA));
(d) Neither the Company nor any of the Subsidiaries provides or may
be required to provide and no Plan, other than a Plan that is an employee
pension benefit plan (within the meaning of Section 3(2)(A) of ERISA), provides
or may be required to provide health or medical benefits (whether or not
insured), with respect to current or former employees of the Company or any of
the ERISA Affiliates beyond their retirement or other termination of service
with the Company or the Subsidiaries (other than (A) coverage mandated by
applicable law, (B) deferred compensation benefits accrued as liabilities on the
books of the Company or the ERISA Affiliates, or (C) benefits the full cost of
which is borne by the current or former employee (or his or her beneficiary)).
No ERISA Affiliate maintains any Plan under which any employee or former
employee of any of the ERISA Affiliates may receive medical benefits which
cannot be modified or terminated by the ERISA Affiliates at any time without the
consent of any person, and no employees or former employees of the ERISA
Affiliates will have any claim in respect of such benefits as of the Effective
Time;
(e) The transactions contemplated hereby will not result in (i) any
portion of any amount paid or payable by the Company to a "disqualified
individual" (within the meaning of Section 280G(c) of the Code and the
regulations promulgated thereunder), whether paid or payable in cash, securities
of the Company or otherwise and whether considered alone or in conjunction with
any other amount paid or payable to such a "disqualified individual," being an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code
and the regulations promulgated thereunder, (ii) any employee of the Company or
any of the ERISA Affiliates being entitled to severance pay, unemployment
compensation, or any other payment, (iii) an acceleration of the time of payment
or vesting, or an increase in the amount of compensation due to any such
employee or former employee (unless a partial plan termination results under a
Plan) or (iv) any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available;
(f) No ERISA Affiliate has incurred any material liability with
respect to any Plan under ERISA (including, without limitation, Title I or Title
IV thereof, other than liability for premiums due to the Pension Benefit
Guaranty Corporation), the Code or other applicable law, which has not been
satisfied in full or been accrued on the consolidated balance sheet of the
Company and the ERISA Affiliates in accordance with ordinary business practices
as of December 31, 1998 pending full satisfaction, and no event has occurred,
and there exists no condition or set of circumstances, which could result in the
imposition of any material liability under ERISA, the Code or other applicable
law with respect to any Plan;
(g) To the knowledge of Company, with respect to each Plan that is
funded wholly or partially through an insurance policy, all premiums required to
have been paid to date under the insurance policy have been paid, and, as of the
Effective Time there will be no material liability of any of
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the ERISA Affiliates under any such insurance policy or ancillary agreement with
respect to such insurance policy in the nature of a retroactive rate adjustment,
loss sharing arrangement or other actual or contingent liability arising wholly
or partially out of events occurring prior to the Effective Time;
(h) None of the ERISA Affiliates has made any contribution to any
Plan that may be subject to any excise tax under Section 4972 of the Code;
(i) Each Plan sponsored by the Company or an ERISA Affiliate that is
intended to be qualified under Section 401 of the Code has received a favorable
determination letter from the Internal Revenue Service as to the qualification
of such Plan, and such letter has not been modified, revoked or limited by the
failure to satisfy any condition thereof or by a subsequent amendment thereto,
or failure to amend such Plan;
(j) All contributions due and payable on or before the Closing Date
in respect of any Plan have been made in full and proper form, or adequate
accruals have been provided for in the financial statements for such amounts for
periods ending on the Closing Date in accordance with the Company's ordinary
business practices;
(k) Neither the Company nor any of its ERISA Affiliates, nor to the
knowledge of the Company and its ERISA Affiliates, any other "disqualified
person" or "party in interest" (as defined in Section 4975 of the Code and
Section 3(14) of ERISA, respectively) with respect to a Plan has breached the
fiduciary rules of ERISA or engaged in a prohibited transaction which could
subject the Company or its ERISA Affiliates to any material tax or penalty
imposed under Section 4975 of the Code or Section 502 (i), (j) or (l) of ERISA;
(l) All reporting and disclosure obligations imposed under ERISA
and the Code have been materially satisfied with respect to each Plan;
(m) The Company and its ERISA Affiliates have neither made not
agreed to make, nor are required to make (in order to bring any Plan into
compliance with ERISA or the Code) any changes in benefits that would materially
increase the costs of maintaining any Plan;
(n) Each Plan which is subject to the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the Health
Insurance Portability and Accountability Act ("HIPAA") has been maintained in
material compliance with COBRA and HIPAA, including all notice requirements, and
no tax payable on account of Section 4980B or any other section of the Code has
been or is reasonably expected to be incurred;
(o) With respect to any Plan, there has not been any act or
omission by the Company or any of its ERISA Affiliates that has given rise to or
could reasonably be expected to give
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rise to any fines, penalties or related charges under ERISA or the Code for
which the Company or any of its ERISA Affiliates could be liable;
(p) No Proceedings (other than routine benefit claims) are pending
or, to the Knowledge of the Company, threatened against or relating to any Plan,
or any fiduciary thereof, and to the Knowledge of the Company, there is no basis
for any such Proceeding;
(q) The Company has, in accordance with applicable law, timely
deposited and transmitted all amounts withheld from employees for contributions
or premium payments for each Plan into the appropriate trusts or accounts;
(r) Each Foreign Employee Benefit Plan and each Foreign Pension
Plan have been maintained in good standing with each applicable Governmental
Authority;
(s) All contributions due and owing have been made with respect to
all Foreign Employee Benefit Plans and Foreign Pension Plans on a timely basis,
in accordance with applicable law;
(t) Neither the Company nor any ERISA Affiliate has incurred any
obligation material in connection with the termination of or withdrawal from any
Foreign Employee Benefit Plan or Foreign Pension Plan;
(u) The present value of the accrued benefit liabilities (whether
vested or not) under each Foreign Pension Plan, determined as of the end of the
Company's most recently ended fiscal year on the basis of actuarial assumptions
provided for in such Foreign Pension Plan, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities;
and
(v) Except as set forth in Section 4.16(v) of the Disclosure
Schedule, the French Subsidiary has not paid, provided or contributed towards,
or is under any obligation, liability or commitment to pay, provide or
contribute towards any retirement, death or disability benefit for or in respect
of any present or past officer or employee of the French Subsidiary.
SECTION 4.17. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS.
(a) (i) To the knowledge of the Company, as of the Effective Time,
except for non-compliance with Environmental Health and Safety Requirements in a
manner that could not reasonably be expected to subject the Company to material
liability, no Hazardous Substances are present on any property currently
occupied by the Company or any Subsidiary, or were present on any other property
occupied by the Company, or any Subsidiary or their respective predecessors or
affiliates at the time the property ceased to be occupied by them.
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(ii) The Company, the Subsidiaries, their respective
predecessors, and Affiliates are in material compliance with all Environmental
Health and Safety Requirements and have all material permits and authorizations
required pursuant to any Environmental Health and Safety Requirements, which
permits and set forth in Section 4.17 of the Disclosure Schedule. Within the
last five years, neither the Company nor any Subsidiary has received any written
notification from a Governmental Agency that there is any violation of any
Environmental Health and Safety Requirements with respect to the Company and
properties of the Company which would have a Material Adverse Effect on the
Company. Neither the Company nor any Subsidiary has received any written
notification from a Governmental Agency pursuant to Section 104, 106, or 107 of
the Comprehensive Environmental Response, Compensation, and Liability Act.
(iii) To the knowledge of the Company, there is no asbestos
which is friable or likely to become friable, polychlorinated biphenyls,
landfills, surface impoundments, disposal areas or underground tanks on property
currently occupied by the Company or any Subsidiary nor are there any off-site
locations where the Company has stored, disposed of (including spilled or
abandoned) or arranged for the disposal of any Hazardous Substances.
(iv) The Company has provided or made available to Parent
copies of all environmental assessments or audit reports and other similar
studies or analyses relating to property currently occupied by the Company or
any Subsidiary.
(b) Neither this Agreement nor the consummation of the transactions
that are contemplated hereby will result in any obligations for site
investigation or cleanup, or notification to or consent of Governmental Agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible party transfer" Environmental, Health and Safety Requirements.
SECTION 4.18. CONTRACTS.
(a) Section 4.18(a) of the Disclosure Schedule lists the following
contracts relating to the Company and/or any of its Subsidiaries:
(i) any contract with a sales representative, distributor, dealer,
broker, sales agency, or other person engaged in sales or distribution of
the Company's products or services, or any contract to act as one of the
foregoing on behalf of any person, which is not terminable by the Company
on 30 or fewer days' notice without material penalties;
(ii) any contract of any nature which involves the payment or
receipt of cash or other property, an unperformed commitment, or goods or
services in an amount, individually or in the aggregate, greater than or
equal to $50,000 in any one year of such contract or $100,000 for the
duration of such contract;
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(iii) any contract pursuant to which the Company or any Subsidiary
has made or will make loans or advances, or has or will have incurred
indebtedness for borrowed money or become a guarantor or surety or pledged
its credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business)
in excess of $50,000;
(iv) any indenture, credit agreement, loan agreement, note,
mortgage, security agreement, loan commitment or other contract relating
to the borrowing of funds, an extension of credit or financing or a
leasing transaction of a type required to be capitalized in accordance
with Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board;
(v) any contract involving a partnership or joint venture;
(vi) any contract containing any non-competition provisions or other
restrictions with respect to the geographical area of operations or scope
or type of business of the Company or any of the Subsidiaries;
(vii) any power of attorney or agency agreement with any person
pursuant to which such person is granted the authority to act for or on
behalf of the Company or any of the Subsidiaries, or the Company or the
Subsidiaries is granted the authority to act for or on behalf of any
person;
(viii) any contract not yet executed or fully performed and relating
to any acquisition or disposition of the Company or any predecessor in
interest of the Company, or any acquisition or disposition of any
Subsidiary, division, line of business, or real property;
(ix) all collective bargaining agreements, employment and consulting
agreements (whether written or oral), independent contractor agreements
(whether written or oral), executive compensation plans (whether written
or oral), bonus plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans, group life insurance, hospitalization
insurance or other similar plans or arrangements (whether written or oral)
maintained for or providing benefits to employees of, or independent
contractors or other agents of the Company;
(x) any (i) lease for real property or (ii) lease or series of
leases for the same or similar items of personal property, in either case
which require, or could reasonably be expected to require, payments in an
amount, individually or in the aggregate, greater than or equal to $10,000
in any one year of such lease of series of leases or $50,000 for the
duration of such lease or series of leases;
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(xi) any material agreement concerning confidentiality;
(xii) any agreement under which it has loaned or advanced any amount
to any of its directors, officers, and employees outside the ordinary
course of business;
(xiii) any agreement under which the consequences of default or
termination could reasonably be expected to have a Material Adverse Effect
on the Company;
(xiv) any contract containing a provision limiting the Company's
rights under such contract upon a change of control of the Company the
failure to obtain consent to which would have a Material Adverse Effect on
the Company;
(xv) continuing contract for the future purchase, sale, development
or manufacture of products, material, supplies, equipment, software or
services requiring payment to or from the Company or any of its
Subsidiaries (i) in an amount, individually or in the aggregate, in excess
of $50,000 during any one year of such contract or $100,000 for the
duration of such contract, which is not terminable on 120 days or less
notice without material cost or other liability at, or at any time after,
the Effective Time or in which the Company or such Subsidiary has granted
or received manufacturing rights or most favored nations pricing
provisions rights relating to any product, group of products or territory,
or (ii)(A) in which the Company or such Subsidiary has granted or received
rights to any Intellectual Property (B) which require consent or are
otherwise terminable upon a change of control of the Company or (C) in
which the Company or such Subsidiary has granted exclusive market rights
relating to any product, group of products or territory;
(xvi) agreement for the sale of any assets, properties or rights
having a value in excess of $50,000 other than in the ordinary course of
business;
(xvii) any agreement, contract or commitment by the Company or
Subsidiary relating to material capital expenditures or involving future
obligations in an amount, individually or in the aggregate, greater than
or equal to $50,000 in any one year or $100,000 for the duration of such
agreement, contract or commitment, other than those listed in its
financial statements ending December 31, 1999;
(xviii) any material voting trust or stockholders agreement known to
the Company between or among the Company or any Subsidiary and
Stockholders which does not terminate at the Effective Time;
(xix) any tax sharing or tax indemnification agreement between or
among the Company or any Subsidiary; and
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(xx) any agreement pursuant to which either the execution of this
Agreement or any of the Ancillary Agreements by the Company or the
consummation of the transactions contemplated hereby or thereby will or
may result in (i) a breach by the Company or any of its Subsidiaries of
any term, provisions or condition of such agreement, or (ii) the ability
of the other party thereto to terminate such agreement or materially
change any of the terms, provisions or conditions thereof, which in the
case of either items (i) or (ii), could reasonably be expected to have a
Material Adverse Effect on the Company.
(xxi) any contract not specified above that is material to the
Company or any of the Subsidiaries or which involves payment, or the
possibility of liability or penalty, in an amount, individually or in the
aggregate, greater than or equal to $50,000 in any one year or $100,000
for the duration of such contract.
(b) The Company has delivered to Parent complete and accurate copies
of the contracts, agreements or arrangements set forth on Schedule 4.18(a). Each
such contract or agreement is a valid and subsisting agreement, without any
material default of the Company or any of the Subsidiaries thereunder and, to
the knowledge of the Company, without any material default thereunder of the
other party or parties thereto. The Company has not received notice of any
cancellation or termination of, or of any threat to cancel or terminate, any
such contracts or agreements and does not reasonably expect the consummation of
the transactions contemplated hereby will result in such notice.
SECTION 4.19. INSURANCE.
The Company and its Subsidiaries maintain, and at all times since
January 1, 1998, have maintained, policies of insurance and bonds of the type
and in amounts customarily carried by Persons conducting businesses or owning
assets similar to those of the Company and its Subsidiaries. Section 4.19 of the
Disclosure Schedule contains a list of all such insurance policies presently in
effect, and correct and complete copies of all such policies along with a
history of claims made under such policies have been provided to Parent. The
Company and its Subsidiaries have fully paid all payments required under the
terms of each of the foregoing insurance policies and neither the Company nor
any of its Subsidiary has received notice of intent to cancel any of the
foregoing insurance policies.
Except as set forth in Section 4.19 of the Disclosure Schedule, the
Company does not have any knowledge of any state of facts or the occurrence of
any event, which reasonably might (i) form the basis for any claim against the
Company or any of its Subsidiaries not reasonably expected to be fully covered
by the insurance policies referred to in Section 4.19 of the Disclosure
Schedule, and which exceeds $50,000 in liability, or (ii) increase the insurance
premiums paid by the Company, in excess of $50,000 per annum in the aggregate,
or affect the availability of the insurance coverage listed in Section 4.19 of
the Disclosure Schedule on substantially the same terms as now in effect.
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SECTION 4.20. PENDING TRANSACTIONS. Except for this Agreement and
the transactions contemplated hereby, neither the Company nor any of the
Subsidiaries is a party to or bound by any agreement, negotiation, discussion,
commitment or undertaking with respect to a merger or consolidation with, or an
acquisition of any property and assets having a value equal to or greater than
$50,000 of, any other corporation or Person or the sale, lease or exchange of
any properties and assets having a value equal to or greater than $50,000 to any
other Person other than in the ordinary course of business.
SECTION 4.21. CLAIMS AGAINST OFFICERS AND DIRECTORS. There are no
pending or, to the knowledge of the Company, threatened claims against any
director, officer, employee or agent of the Company or any of the Subsidiaries
or any other Person which could give rise to any claim from any director,
officer, employee or agent of the Company or any of the Subsidiaries or any
other Person for indemnification from the Company or any of the Subsidiaries
reasonably likely, if determined adversely, to result in a liability to the
Company of $50,000 or more.
SECTION 4.22. EMPLOYEES. The Company neither knows nor could
reasonably expect that any of the Key Company Employees is about to resign or
terminate his or her employment or that any Key Company Employee will resign or
terminate his or her employment as a result of the transactions contemplated by
this Agreement.
SECTION 4.23. CUSTOMERS, SUPPLIERS, ETC. Section 4.23(a) of the
Disclosure Schedule lists all design wins of the Company as of the date hereof.
For purposes of this Section 4.23, the "Major Customers" are those design wins
listed in Section 4.23(a) of the Disclosure Schedule. Section 4.23(b) lists the
10 largest suppliers of the Company on the basis of cost of goods or services
purchased for the most recent fiscal year (the "Major Suppliers"). From December
31, 1998 through the date hereof, (w) there has not been any adverse change in
the business relationship with any Major Supplier, (x) there has been no
material dispute between the Company or any of the Subsidiaries, on the one
hand, and any Major Customer or Major Supplier, on the other hand, (y) there has
been no complaint from any Major Customer which calls into question the
commercial viability of the Company's products and (z) the Company has received
no notice that any Major Customer intends to terminate the applicable design win
due to the lack of commercial viability of the Company's or any of the
Subsidiaries' products or that any Major Supplier intends to reduces its sale of
goods or services to the Company or any of the Subsidiaries.
SECTION 4.24. ACCOUNTS RECEIVABLE. Each account receivable of the
Company and its Subsidiaries (collectively, the "Accounts Receivables")
disclosed on the Company Financial Statements are disclosed in accordance with
GAAP. Except to the extent reserved for in the Company Financial Statements, no
Account Receivable is subject to any claim for reduction, counterclaim, set-off,
recoupment or other claim for credit, allowances or adjustments by the obligor
thereof. The Company has no knowledge of any event or condition, which could
reasonably be expected to result in
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a write-down or write-off of Accounts Receivable in an amount, individually or
in the aggregate, equal to or greater than $50,000.
SECTION 4.25. IMPROPER AND OTHER PAYMENTS. Neither the Company nor
any of the Subsidiaries, nor to the Company's knowledge, any director, officer,
employee, agent or representative of the Company or any of the Subsidiaries, nor
any Person acting on behalf of any of them, has (i) made, paid or received any
bribes, kickbacks or other similar payments to or from any person, whether
lawful or unlawful, (ii) made any unlawful contributions, directly or
indirectly, to a domestic or foreign political party or candidate, or (iii) made
any improper foreign payment (as defined in the Foreign Corrupt Practices Act).
SECTION 4.26. BROKERS. Neither the Company nor any of the
Subsidiaries has used any broker or finder in connection with the transactions
contemplated hereby, and neither the Company nor any of the Subsidiaries has or
will have any liability or otherwise suffer or incur any loss as a result of or
in connection with any brokerage or finder's fee or other commission of any
person retained by the Company, any of the Subsidiaries or the Stockholders in
connection with any of the transactions contemplated by this Agreement.
SECTION 4.27. TRANSACTIONS WITH AFFILIATES. Except for (x)
agreements which terminate at the Effective Time, (y) for an amount,
individually or in the aggregate, of less than $50,000, and (x) property with a
fair market value, individually or in the aggregate, of less than $50,000 (i)
there are no agreements between any of the Company's Affiliates (excluding, for
the purposes of this Section 4.27, the French Subsidiary), on the one hand, and
the Company, on the other hand, for the provision of goods or services to or by
the Company or any Subsidiary; (ii) no Affiliates of the Company have been
involved in any other business arrangement or relationship with, or pertaining
to, the Company or any Subsidiary within the past twelve months; (iii) there are
no facilities occupied in whole or in part by the Company or any Subsidiary, and
no other property, assets, franchises, licenses or rights used by the Company or
any Subsidiary, that are owned, leased by or to, or occupied by any Affiliate of
the Company; and (iv) no Affiliate of the Company owns any asset, tangible or
intangible, which is used by the Company or any Subsidiary. All agreements
entered into by the French Subsidiary on the one hand, and its Affiliates,
directors, officers or stockholders on the other hand, have been validly
executed and approved in compliance with the requirements of the by-laws of the
French Subsidiary and the applicable provisions of the law no 66-537 of July 24,
1966.
SECTION 4.28. YEAR 2000 COMPLIANCE. (a) There is no material
failure to be Year 2000 Compliant (as herein defined) of any computer software
or hardware owned, used, licensed or sold by the Company or any Subsidiary,
including, without limitation, computer hardware systems, software applications,
firmware, microchips, equipment containing embedded microchips and other
embedded systems that are used by the Company or any Subsidiary, or the
software, hardware, firmware and other technology which constitutes part of the
products and services manufactured,
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marketed or sold by the Company or any Subsidiary, licensed by the Company or
any Subsidiary to third parties (the "Computer Systems").
(b) For purposes of this Agreement, "Year 2000 Compliant" means that
(1) neither performance nor functionality of the Computer Systems is affected by
dates prior to, during and after the year 2000; (2) no value for any
then-current date will cause any interruption in operation; (3) date-based
functionality must behave consistently for dates prior to, during and after year
2000; and (4) in all interfaces and data storage, the century in any date must
be specified either explicitly or by unambiguous algorithms or inferencing
rules.
(c) Except for guarantees or warranties which, individually or in
the aggregate, could not reasonably be expected to result in liability greater
than or equal to $50,000, neither the Company nor any Subsidiary has provided
any written guarantee or warranty for any product sold or licensed, or service
provided by the Company expressly to the effect that such product or service (x)
complies with or accounts for the fact of the arrival of the year 2000, (y) will
not be adversely affected with respect to functionality, interoperability,
performance or volume capacity (including, without limitation, the processing
and reporting of data) by virtue of the arrival of the year 2000 or (z) is
otherwise Year 2000 Compliant.
SECTION 4.29. PRODUCT WARRANTY; PRODUCT LIABILITY. (a) All of the
products manufactured, sold, leased, and delivered by the Company and it
Subsidiaries have conformed in all respects with all applicable contractual
commitments and all express and implied warranties, and the Company and its
Subsidiaries have no liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) for
replacement or repair thereof or other damages in connection therewith except
for liabilities which, individually or in the aggregate, could not reasonably be
expected to be greater than or equal to $50,000. None of the products
manufactured, sold, leased, or delivered by the Company and its Subsidiaries are
subject to any guaranty, warranty or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Schedule 4.29 includes copies of
the standard terms and conditions of sale or lease for the Company (containing
applicable guaranty, warranty, and indemnity provisions).
(b) None of the Company or its Subsidiaries has any liability, and
there is no basis for any present or future Claim, arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased or delivered by the Company or any of its
Subsidiaries, except for liabilities and Claims in an amount which, individually
or aggregate, could not reasonably be expected to result in a liability greater
than or equal to $50,000.
SECTION 4.30. INVENTORY. To the Company's knowledge, none of the
inventory of the Company and the Subsidiaries have any defects that (i)
materially call into question the commercial
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viability of the Company's products as a whole or (ii) make the inventory
unshippable or, after shipment, likely to be returned.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to the Company, except as set forth
in the Disclosure Schedule delivered by Parent to the Company as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION.
Parent is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own or lease and operate its properties and
assets and to carry on its business as it is now being conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of its properties owned or leased or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect on
Parent.
SECTION 5.2. AUTHORIZATION OF AGREEMENTS; NON-CONTRAVENTION. (a) The
execution and delivery by Parent of this Agreement and each Ancillary Agreement
to which Parent is a party, and the consummation by Parent of the transactions
contemplated hereby and thereby, have been duly authorized by all requisite
corporate action. This Agreement has been duly and validly executed by Parent
and, subject to due execution by any other parties thereto, will constitute the
legal, valid and binding obligation of Parent, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application affecting the enforcement
of creditors' rights generally. Each Ancillary Agreement to which Parent is
party, when duly executed and delivered in accordance with this Agreement,
subject to due execution by any other parties thereto, will constitute a legal,
valid and binding obligation of Parent, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application affecting the enforcement
of creditors' rights generally. No other corporate proceedings on the part of
Parent are necessary to authorize this Agreement, the Ancillary Agreements or
the transactions contemplated hereby or thereby.
(b) NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement by the Parent and each Ancillary Agreement to which the Parent is
a party and the consummation of the transactions contemplated hereby and thereby
will not (i) conflict with any provision of the Certificate of Incorporation of
Parent (as in effect at the Effective Time) (ii) result (with the giving of
notice or the lapse of time or both) in any violation of or default or loss of a
benefit under, or
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permit the acceleration of any obligation under, any mortgage, indenture, lease,
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or any of Parent's properties, other than any such violation, default,
loss or acceleration that would not materially adversely affect the ability of
Parent to consummate the transactions contemplated hereby and which would not
otherwise have a Material Adverse Effect on Parent.
SECTION 5.3. CAPITALIZATION.
(a) The authorized capital stock of Parent consists of 100,000,000
shares of Parent Common Stock. As of December 31, 1999 (but adjusted to account
for the three-for-one stock split effected on February 28, 2000), 58,134,678
shares of Parent Common Stock were issued and outstanding, all of which were
duly and validly issued, fully paid and nonassessable. Except for options to
purchase an aggregate 8,749,593 shares of Parent Common Stock granted pursuant
to the stock option plans of Parent, as of the date hereof there are no
subscription, warrant, option, convertible security, stock appreciation or other
right (contingent or other) to purchase or acquire, or any securities
convertible into or exchangeable for, any shares of any class of capital stock
of Parent or any subsidiary thereof is authorized or outstanding and as of the
date hereof there is not any commitment of Parent or any such subsidiary to
issue any shares, warrants, options or other such rights or to distribute to
holders of any class of its capital stock any evidences of indebtedness or
assets. As of the date hereof, neither Parent nor any of its subsidiaries has
any obligation (contingent or other) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or to make any other distribution in respect thereof.
(b) Parent has provided to the Company true, complete and correct
copies of Parent's Certificate of Incorporation and Bylaws, in each case, as in
effect on the date hereof.
(c) The shares of Parent Common Stock to be issued to pursuant to
this Agreement have been duly authorized, and upon issuance to the Stockholders
entitled to receive such shares, will be validly issued and outstanding, fully
paid and nonassessable, and will be free of any Liens other than (i) those
created or suffered to exist by the shareholder to whom any such shares are
issued and (ii) restrictions on transfer imposed by this Agreement, the
Securities Act of 1933 (the "Securities Act") and any applicable state
securities laws.
SECTION 5.4. GOVERNMENTAL APPROVALS. Except as set forth on Schedule
5.05, no order, authorization, approval or consent from, or filing with, any
federal or state governmental or public body or other authority having
jurisdiction over Parent is required for the execution, delivery and performance
by Parent of this Agreement or any of the Ancillary Agreements to which Parent
is a party, or is necessary in order to ensure, with respect to Parent, the
legality, validity, binding effect and enforceability of this Agreement.
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SECTION 5.5. BROKERS. Neither Parent nor any of its subsidiaries has
used any broker or finder in connection with the transactions contemplated
hereby, and neither Parent nor any of its subsidiaries has or shall have any
liability or otherwise suffer or incur any loss as a result of or in connection
with any brokerage or finder's fee or other commission of any person retained by
Parent, any of its subsidiaries or the stockholders of Parent in connection with
any of the transactions contemplated by this Agreement.
SECTION 5.6. SEC FILINGS. Parent has provided to the Company true
and complete copies of (i) the Quarterly Reports of Parent on Form 10-Q for the
three months ended June 30, 1999 and September 30, 1999, (ii) its proxy and
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of Parent subsequent to June 23, 1999 and (iii) all
other reports, statements and registration statements filed by Parent with the
SEC subsequent to September 30, 1999 (collectively, the "Parent Filings"). The
Parent Filings (including, without limitation, any financial statements or
schedules included therein) (i) were prepared in all material respects in
compliance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time of filing (or if amended,
supplemented or superceded by a filing prior to the date hereof, on the date of
that filing) and as of the date of this Agreement, when taken as a whole, do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Parent is current in all filings required to be made by it with the
SEC under applicable law.
SECTION 5.7. FINANCIAL STATEMENTS. The consolidated financial
statements of Parent included in Parent Filings have been prepared in accordance
with GAAP consistently applied and consistent with prior periods, subject, in
the case of unaudited interim consolidated financial statements, to year-end
adjustments (which consist of normal recurring accruals) and the absence of
certain footnote disclosures. The consolidated balance sheets of Parent included
in the Parent Filings fairly present the financial position of Parent as of
their respective dates, and the related consolidated statements of operations,
stockholders' equity and cash flows included in the Parent Filings fairly
present the results of operations of Parent for the respective periods then
ended, subject, in the case of unaudited interim financial statements, to
year-end adjustments (which consist of normal recurring accruals) and the
absence of certain footnote disclosures. Except for liabilities or obligations
that are accrued or reserved against in Parent's financial statements (or
reflected in the notes thereto) included in the Parent's Filings made prior to
the date hereof or that were incurred subsequent to September 30, 1999 in the
ordinary course of business, none of Parent and its subsidiaries has any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of a nature required by GAAP to be reflected in a consolidated balance sheet (or
reflected in the notes thereto) or which would have a Material Adverse Effect on
the Parent. Parent has not suffered any event, occurrence, development or state
of circumstances or facts which has had a Material Adverse Effect on the Parent
subsequent to September 30, 1999.
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SECTION 5.8. LITIGATION. Except as described in the Parent Filings
or as would not, individually or in the aggregate, have a Parent Material
Adverse Effect, (i) there is no action, suit, dispute, investigation, proceeding
or claim pending or, to the knowledge of Parent, threatened against or affecting
Parent or its properties or rights, before any court, administrative agency,
governmental body, arbitrator, mediator or other dispute resolution body, and
Parent is not aware of any facts or circumstances which may give rise to any
such action, suit, dispute, investigation, proceeding or claim, (ii) Parent is
not subject to any order, judgment, decree, injunction, stipulation, or consent
order of or with any court or other governmental agency, and (iii) Parent has
not entered into any agreement to settle or compromise any proceeding pending or
threatened against it which has involved any obligation other than the payment
of money or for which Parent has any continuing obligation.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF ACQUISITION CORP.
Acquisition Corp. represents and warrants to the Company, except
as set forth in the Disclosure Schedule delivered by Acquisition Corp. To the
Company, as follows:
SECTION 6.1. ORGANIZATION AND QUALIFICATION. Acquisition Corp.
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has not engaged in any business
other than in connection with its formation and the negotiation of this
Agreement.
SECTION 6.2. AUTHORIZATION OF AGREEMENTS, ETC. Acquisition Corp.
has all requisite corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. The execution and delivery of this
Agreement by Acquisition Corp. and the performance by Acquisition Corp. of its
obligations hereunder, have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or Bylaws of
Acquisition Corp., or any provision of any indenture, agreement or other
instrument to which Acquisition Corp. is a party or by which it or any of its
properties or assets is bound or affected, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any Liens upon the properties or assets of Acquisition Corp.
SECTION 6.3. VALIDITY. This Agreement has been duly executed
and delivered by Acquisition Corp. and constitutes the legal, valid and
binding obligation of Acquisition Corp., enforceable against Acquisition
Corp. in accordance with its terms.
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SECTION 6.4. GOVERNMENTAL APPROVALS. No order, authorization,
approval or consent from, or filing with, any federal or state governmental or
public body or other authority having jurisdiction over Acquisition Corp. is
required for the execution, delivery and performance by Acquisition Corp. of
this Agreement, or is necessary in order to ensure, with respect to Acquisition
Corp., the legality, validity, binding effect and enforceability of this
Agreement.
SECTION 6.5. BROKERS. Acquisition Corp. has not used any
broker or finder in connection with the transactions contemplated hereby, and
Acquisition Corp. has not or shall not have any liability or otherwise suffer
or incur any loss as a result of or in connection with any brokerage or
finder's fee or other commission of any person retained by Acquisition Corp.
in connection with any of the transactions contemplated by this Agreement.
SECTION 6.6. INTERIM OPERATIONS OF ACQUISITION CORP.
Acquisition Corp. was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
ARTICLE VII.
COVENANTS
SECTION 7.1. COVENANTS OF THE COMPANY.
(a) CONDUCT OF THE COMPANY'S BUSINESS. The Company covenants and
agrees that, prior to the Effective Time, unless Parent shall otherwise consent
in writing or as otherwise expressly contemplated by this Agreement:
(i) the business of the Company and the Subsidiaries shall be
conducted in all material respects only in, and the Company and the
Subsidiaries shall not take any material action except in, the ordinary
course of business and each of the Company and the Subsidiaries shall use
its commercially reasonable efforts to preserve intact its present
business organization, keep available the services of its current officers
and employees, maintain its assets (other than those permitted to be
disposed of hereunder) in good repair and condition, maintain its books of
account and records in the usual, regular and ordinary manner and preserve
its goodwill and ongoing business;
(ii) the Company shall not directly or indirectly do any of the
following: (1) issue, sell, pledge, dispose of or encumber (or permit any
of the Subsidiaries to issue, sell, pledge, dispose of or encumber) (A)
any capital stock of the Company or any of the Subsidiaries, or (B) any
property or assets (including Intellectual Property Rights) of the Company
or any of the
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Subsidiaries, except the ordinary course of business; (2) amend its
Certificate of Incorporation or Bylaws; (3) split, combine or reclassify
any outstanding shares of its capital stock, or declare, set aside or pay
any dividend payable in cash, stock, property or otherwise with respect to
such shares (except for any dividends paid in the ordinary course to the
Company or to any Subsidiary); (4) redeem, purchase, acquire or offer to
acquire (or permit any of the Subsidiaries to redeem, purchase, acquire or
offer to acquire) any shares of its capital stock; or (5) enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this paragraph (ii);
(iii) neither the Company nor any of the Subsidiaries shall (1)
enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit of any
director, officer or employee or consultant, or increased in any manner
the compensation or fringe benefits of any employee, consultant, director
or officer, or increase the compensation or fringe benefits of any
executive officer other than in the ordinary course of business, or make
any payment of a cash bonus to any director or officer or to any employee
of, or consultant or agent to, the Company or any of the Subsidiaries or
make any other material change in the terms or conditions of employment;
(2) announce any plan or legally binding commitment to create any employee
benefit plan, program or arrangement or to amend or modify in any material
respect any existing employee benefit plan, program or arrangement; (3)
eliminate the vesting conditions or otherwise accelerate the payment of
any compensation, including any stock options; (4) incur any obligation or
liability (fixed or contingent) to be paid or fulfilled by the Company or
any Subsidiary except normal trade or business obligations incurred in the
ordinary course of business and except for obligations and liabilities,
individually or in the aggregate, not in excess of $50,000, none of which
individually or in the aggregate would have a Material Adverse Effect on
the Company, or incur any indebtedness for money borrowed which is to be
repaid by the Company; (5) mortgage, pledge or subject to any Lien, any of
its assets, whether tangible or intangible, other than involuntary Liens
incurred in the ordinary course of business; (6) transfer, lease or
otherwise dispose of any of its assets, whether tangible or intangible,
except for fair consideration in the ordinary course of business, or
acquired, any assets or properties, except for fair consideration in the
ordinary course of business; (7) make any loan, advance, capital
contribution or investment of a capital nature, whether by purchase of
stock or securities, contributions to capital, property transfers or
otherwise, in any other partnership, corporation or other entity, or
purchase any property or assets, other than loans, advances, capital
contributions and investments in the French Subsidiary in the ordinary
course of business; (8) cancel or compromise any debt or claim owed to it
other than in the ordinary course of business; (9) waive, release or
abandon any rights of material value held by it; (10) transfer or grant
any rights under or with respect to any Intellectual Property, or permit
any license, permit or other form of authorization relating to an
Intellectual Property to lapse other than in the
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ordinary course of business; (11) change in any material respect the
method of accounting or accounting principle or practice by the Company,
or revalue, write down or write off the value of any assets of the Company
or any Subsidiary other than normal course amortization and depreciation;
or (12) enter into any material agreement, contract, lease or license
other than in the ordinary course of business which in any way binds the
Company to pay consideration, or provide goods or services;
(iv) the Company shall, and shall cause its Subsidiaries to, use
commercially reasonable efforts, to the extent not prohibited by the
foregoing provisions of this Section 7.01(a), to maintain its
relationships with its suppliers and customers, clients, and others having
business dealings with it, and if and as requested by Parent or
Acquisition Corp.;
(v) the Company shall, and shall cause its Subsidiaries to, use
commercially reasonable efforts to make reasonable arrangements for
representatives of Parent or Acquisition Corp. to meet with customers and
suppliers of the Company or any of the Subsidiaries, and the Company shall
schedule, and the management of the Company shall participate in, meetings
of representatives of Parent or Acquisition Corp. with employees of the
Company or any of the Subsidiaries; and
(vi) the Company shall provide to Parent a draft of any Federal
income Tax return or material state, local or foreign Tax return (other
than returns relating to state or local sales and use taxes or federal,
state or local withholding taxes) required to be filed on behalf of the
Company or any Subsidiary between the date of this Agreement and the
Effective Time at least 15 days prior to the date on which such return is
due and shall not file any such return without the consent of Parent, such
consent not to be unreasonably withheld or delayed, unless such filing is
required by law.
(b) INQUIRIES AND NEGOTIATIONS.
(i) From and after the date of this Agreement until the earlier of
the Effective Time and the termination of this Agreement in accordance
with its terms, the Company and its Subsidiaries shall not, and shall not
permit their respective officers, directors, employees, representatives,
brokers, investment bankers, agents and Affiliates to, directly or
indirectly, (1) solicit, initiate, continue or engage in discussions or
negotiations with any Person, encourage submission of any inquiries,
proposals or offers by, or take any other action intended or designed to
facilitate the efforts of any Person, other than Parent, relating to the
possible acquisition of the Company or any of its Subsidiaries (whether by
way of arrangement, amalgamation, take-over bid, tender offer, purchase of
capital stock, purchase of assets or otherwise) or any material portion of
its or their capital stock or assets (with any such efforts by any such
Person, including a firm proposal to make such an acquisition, to be
referred to as an "Acquisition Proposal"), (2) provide information with
respect to the Company or any of its
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Subsidiaries, or afford any access to the properties, books or records of
the Company or any of its Subsidiaries, to any Person, other than Parent,
relating to a possible Acquisition Proposal by any Person other than
Parent, (3) make or authorize any statement, recommendation or
solicitation in support of any possible Acquisition Proposal by any
Person, other than by Parent, or (4) enter into an agreement with any
Person, other than Parent, providing for a possible Acquisition Proposal.
(ii) If the Company or any of its Subsidiaries receives any
unsolicited offer or proposal to enter negotiations relating to an
Acquisition Proposal, or any request for non-public information relating
to the Company or any of its Subsidiaries in connection with any
Acquisition Proposal, the Company shall promptly notify Parent thereof, in
writing, including information as to the identity of the party making any
such offer proposal or request and the specific terms of such offer
proposal or request, as the case may be. Promptly upon receipt by the
Company, the Company shall immediately provide Parent with a true and
complete copy of any Acquisition Proposal or other written communication
concerning a possible Acquisition Proposal received from such third party.
(iii) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than
Parent) conducted heretofore with respect to any Acquisition Proposal. The
Company agrees not to release any third party from any confidentiality or
standstill agreement with respect to any of the foregoing to which the
Company is a party.
(iv) The Company shall use commercially reasonable efforts to ensure
that the officers, directors, employees, agents and Affiliates of the
Company or any of its Subsidiaries and any bankers, investment bankers or
other agents, advisors or representatives retained by the Company are
aware of the restrictions described in this Section 7.01(b), and shall be
responsible for any breach of this Section 7.01(b) by such bankers,
investment bankers, officers, directors, employees, agents, advisors,
representatives or Affiliates.
(c) NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent and Acquisition Corp. of (i) the occurrence, or failure to
occur, of any event that the Company believes would be likely to cause any of
its representations or warranties contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder to the extent that such failure would cause the conditions to closing
set forth in Article VIII not to be satisfied; provided, however, that failure
to give such notice shall not constitute a waiver of any defense that may be
validly asserted.
(d) SHAREHOLDER APPROVAL. As promptly as practicable the Company
shall use commercially reasonable efforts, subject to and in accordance with
applicable law, its by-laws and certificate of incorporation and any outstanding
shareholder agreements, to obtain the approval and
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adoption of this Agreement, the Merger and related matters by the Stockholders.
The Company shall provide to Parent reasonable opportunity to review and comment
on any material (collectively, the "Information Statement") proposed to be
mailed to the Company's Stockholders and/or other security holders in connection
with the foregoing approval. Approval of this Agreement, the Merger and related
matters has been recommended by the Company's Board of Directors and management
and such approval shall not be withdrawn between the date hereof and the Closing
Date. Concurrently with the execution of this Agreement, certain Stockholders
have executed the Voting Agreement, substantially in the form attached hereto as
Exhibit G, agreeing among other things (i) to vote in favor of the Merger and
the transactions contemplated by this Agreement and (ii) to take all action
necessary to waive any notice or other time periods contemplated by any
agreement that could result in a delay of the date of the stockholders meeting
required to approve the transactions contemplated hereby or that could otherwise
result in a delay of the consummation of the transactions contemplated hereby.
(e) REPRESENTATION LETTERS. The Company shall use commercially
reasonable efforts to obtain from each holder of Company Common Stock a
Representation Letter, whereby each securityholder makes certain investment
representations and acknowledges certain restrictions under applicable
securities laws on the resale of the securities issuable pursuant to this
Agreement.
(f) REGULATORY APPROVALS. The Company will promptly execute and
file, or join in the execution and filing of any application or other document
that may be necessary in order to obtain the authorization, approval or consent
of any Governmental Agency, which may be required in connection with the
consummation of the transactions contemplated by this Agreement. The Company
will use commercially reasonable efforts to promptly obtain all such
authorizations, approvals and consents.
(g) NECESSARY CONSENTS. During the term of this Agreement, the
Company will use its best efforts to obtain such written consents and take such
other actions as may be necessary to allow the consummation of the transactions
contemplated hereby and to allow the Company to carry on its business after the
Effective Time in all material respects as it is conducted on the date hereof.
(h) SATISFACTION OF CONDITIONS PRECEDENT. During the term of this
Agreement, the Company will use commercially reasonable efforts to satisfy or
cause to be satisfied all the conditions precedent that are set forth in Article
VIII and the Company will use its commercially reasonable efforts to cause the
Merger and the other transactions contemplated by this Agreement to be
consummated and shall take such steps as are appropriate so that the
representations and warranties of the Company in this Agreement remain complete
and correct on and as of the Closing Date.
(i) INSURANCE POLICIES. Neither the Company nor any of its
Subsidiaries shall take, or omit to take, any action which would cause any of
the insurance policies disclosed in Section 4.19 of the Disclosure Schedule
above to cease to be in full force and effect in any material respect
immediately following the Closing.
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(j) EMPLOYEE RETENTION ARRANGEMENTS. Between the date hereof and
the Effective Time, the Company shall use its commercially reasonable efforts to
assist Parent in its efforts to enter into employment agreements with all
Company Employees and to ensure that all Key Company Employees remain as
employees of the Company (or employees of TriNet leased to the Company, as the
case may be) at least through the Effective Time, including without limitation,
honoring the terms of the employee retention programs previously disclosed to
Parent. Parent shall grant to certain Company Employees, as previously agreed to
by the Company and Parent, Parent Options exercisable in the aggregate for
500,000 shares of Parent Common Stock, options on 337,930 of which will be
granted at the Effective Time and the remainder of which shall be granted on or
prior to the first anniversary of the Effective Time.
(k) ANCILLARY AGREEMENTS. The Company and each of the Principal
Stockholders shall execute and deliver the Ancillary Agreements to which the
Company and each such Principal Stockholder is a party and the Company shall use
its commercially reasonable efforts to cause each holder of the Company Common
Stock to provide a Representation Letter at or immediately prior to the
Effective Time.
(l) COMPANY AUDITORS. The Company will use reasonable efforts to
cause its management and its independent auditors to facilitate on a timely
basis (1) the preparation of financial statements (including, without
limitation, pro forma financial statements if required) as required by the
Parent to comply with applicable rules and regulations of the SEC and (2) the
delivery of such representations, consents and reports from the Company's
independent accountants as may be reasonably requested by the Parent or its
accountants.
SECTION 7.2. COVENANTS OF PARENT.
(a) ESTABLISHMENT OF ESCROW. As soon as practicable after the
Effective Time, without any act of any Stockholder, the Escrow Amount will be
deposited with the Escrow Agent (plus a proportionate share of any additional
shares of Parent Common Stock as may be issued upon any stock splits, stock
dividends or recapitalizations effected by Parent following the Effective Time),
such deposit to constitute the Escrow Fund to be governed by the terms of the
Escrow Agreement and the Company Agent (as defined in the Escrow Agreement)
shall be appointed pursuant to the terms of the Escrow Agreement.
(b) EMPLOYEE MATTERS. Parent agrees that, as of the Effective Time,
except as set forth in Sections 7.02(b) or 4.16 of the Disclosure Schedule, it
shall cause the Surviving Corporation to continue to employ all of the employees
of the Company and the Subsidiaries who are Company Employees and who execute
confidentiality and intellectual property assignments, it being understood that,
except as provided by applicable law and by the agreements disclosed in Item
4.16 of the Disclosure Schedule, nothing in this Agreement shall be deemed to
(i) create any employment status other than employment at will or (ii) offer a
guarantee by the Surviving Corporation or the Company
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that such entity will employ any Company Employee for any specified time period,
except as specified in applicable employment agreements. It being understood and
agreed, however, that nothing in this Section 7.02(b) shall require Parent to
maintain the organizational structure of the Company as in effect on the date
hereof. Following the Effective Time, Parent, in its sole and absolute
discretion, shall for at least one (1) full calendar year either: (a) continue
(or cause Company to continue) the agreement with TriNet Employer Group, Inc.
that provides eligible employees with benefit plans, programs and arrangements
and the Company's 401(k) plan (collectively, the "Company Employee Plans") on
substantially the same terms in the aggregate as in effect immediately prior to
the Effective Time, or (b) arrange for each participant in the Company Employee
Plans ("Company Participants") to participate in any similar plans of the Parent
("Parent Plans") on a plan-by-plan basis on terms no less favorable than those
offered to employees of Parent, or (c) a combination of clauses (a) and (b).
Each Company Participant who continues to be employed by Company, Parent or any
of its subsidiaries immediately following the Effective Time shall, to the
extent permitted by law and applicable tax qualification requirements, and
subject to any generally applicable break in service or similar rule, receive
credit for purposes of eligibility to participate and vesting under the Parent
Plans for years of service with Company or its Subsidiaries (or, if applicable,
predecessor entities) prior to the Effective Time. Subject to the approval of
any insurance carrier-which Parent shall use commercially reasonable efforts to
obtain-and to the extent consistent with law and applicable tax qualification
requirements, Parent shall cause any and all pre-existing condition limitations,
eligibility waiting periods and evidence of insurability requirements under any
group health plans to be waived with respect to such Company Participants and
their eligible dependents and beneficiaries and shall provide them with credit
for any co-payments, deductibles or similar expenses prior to the Effective Time
for purposes of satisfying any applicable deductible, out-of-pocket, or similar
requirements under any Parent Plans in which they are eligible to participate
after the Effective Time. Notwithstanding any of the foregoing to the contrary,
none of the provisions contained herein shall operate to duplicate any benefit
provided to any employee of Company or the funding of any such benefit. Nothing
in this Section 7.02(b) shall be construed to entitle any employee to continue
his or her employment for any period of time, nor to interfere with the rights
of Parent and/or Company to discharge or discipline any employee, to change the
terms of any employee's employment, or to amend or terminate employee benefit
plans or programs at any time.
(c) ADVICE OF CHANGES. During the period from the date of this
Agreement until the earlier of the Effective Time and the termination of this
Agreement in accordance with its terms, Parent will promptly advise the Company
in writing (a) of any event occurring subsequent to the date of this Agreement
which becomes known to Parent that would render any representation or warranty
of Parent contained in this Agreement, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect, (b) of
any Material Adverse Effect on Parent which becomes known to Parent, and (c) of
any material breach by Parent of any covenant or agreement contained in this
Agreement.
(d) REGULATORY APPROVALS. Parent will promptly execute and file, or
join in the execution and filing, of any application or other document that may
be necessary in order to obtain the
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authorization, approval or consent of any governmental body, federal, state,
local or foreign that may be reasonably required, or that the Company may
reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement. Parent will use its commercially reasonable
efforts to promptly obtain all such authorizations, approvals and consents.
(e) NECESSARY CONSENTS. During the term of this Agreement, will use
its commercially reasonable efforts to obtain such written consents and take
such other actions as may be necessary or appropriate to allow the consummation
of the transactions contemplated hereby.
(f) SATISFACTION OF CONDITIONS PRECEDENT. During the term of this
Agreement, Parent will use its commercially reasonable efforts to satisfy or
cause to be satisfied all the conditions precedent that are set forth in Article
VIII, and Parent will use its commercially reasonable efforts to cause the
Merger and the other transactions contemplated by this Agreement to be
consummated and shall take such commercially reasonable steps as are appropriate
so that the representations and warranties of Parent in this Agreement remain
complete and correct on and as of the Closing Date.
(g) ISSUANCE AND LISTING OF PARENT COMMON STOCK. Parent hereby
covenants that all Parent Common Stock issued in connection with the Merger,
will, when issued, be validly issued, fully paid and non-assessable. As soon as
practicable after the Effective Time, the Company will take all reasonably
necessary steps, pursuant to the rules and regulations of the National
Association of Securities Dealers, to have the shares of Company Common Stock
issued at the Effective Time accepted for quotation on the Nasdaq National
Market.
(h) ACQUISITION OPTION PLAN. As set forth in Section 3.02, Parent
shall grant to certain Company Employees, as previously agreed to by the Company
and Parent, Parent Options exercisable in the aggregate for 500,000 shares of
Parent Common Stock, options on 337,930 of which will be granted at the
Effective Time and the remainder of which shall be granted on or prior to the
first anniversary of the Effective Time. The parties hereto acknowledge and
agree that options will be granted to employees of the Company under the Option
Plan only if such employees execute and deliver to Parent the documentation
described in Section 8.02(e) below. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of any options granted to employees of Company.
As soon as practicable after the Effective Time and in any event no later than
10 business days after the Closing Date, Parent shall file a registration
statement on Form S-8 (or any successor or other appropriate forms) under the
Securities Act or another appropriate form with respect to the shares of Parent
Common Stock subject to such options and shall use its best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(i) REGISTRATION OF SHARES ISSUED IN THE MERGER.
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(i) REGISTRABLE SHARES. For purposes of this Agreement,
"Registrable Shares" shall mean the shares of Parent Common Stock issued in the
Merger or pursuant to the Contingent Rights, including any and all Escrow Shares
and excluding shares of Parent Common Stock issuable upon exercise of options
granted pursuant to the Merger (the issuance of which will be registered on Form
S-8); provided however, that upon a distribution of shares of Parent Common
Stock issued in the Merger without additional consideration, to underlying
beneficial owners (such as the general and limited partners, stockholders or
trust beneficiaries of a holder of Registrable Shares (a "Holder")) such
underlying beneficial owners shall be entitled to the same rights under this
Section 7.02(i) as the initial Holder from which the Registrable Shares were
received and shall be deemed Holders for the purposes of this Section 7.02(i).
In no event shall a Contingent Right be deemed a Registrable Share.
(ii) REQUIRED REGISTRATION. Parent shall use commercially
reasonable efforts to prepare and file with the Commission as soon as
practicable after the Closing Date a registration statement under the Securities
Act with respect to the Registrable Shares (the "Registration Statement") and to
effect all such registrations, qualifications and compliances in connection
therewith (including, without limitation, filing any Exchange Act reports or
financial statements with the Commission and obtaining appropriate
qualifications under applicable state securities or "blue sky" laws and
compliance with any other applicable governmental requirements or regulations)
as any selling Holder may reasonably request and that would permit or facilitate
the public sale of Registrable Shares (provided however that Parent shall not be
required in connection therewith to qualify to do business or to file a general
consent to service of process in any such state or jurisdiction) and shall use
its commercially reasonable efforts in each case to cause such Registration
Statement and all other such registrations, qualifications and compliances to
become effective no later than 90 days after the Closing Date.
(iii) EFFECTIVENESS; SUSPENSION RIGHT.
(x) Parent will use commercially reasonable efforts to
maintain the effectiveness of the Registration Statement and other applicable
registrations, qualifications and compliances for one (1) year from the Closing
Date (the "Registration Effective Period"), and from time to time will amend or
supplement the Registration Statement and the prospectus contained therein as
and to the extent necessary to comply with the Securities Act, the Exchange Act
and any applicable state securities statute or regulation, subject to the
following limitations and qualifications.
(y) Following the date on which the Registration Statement is
first declared effective and subject to the restrictions set forth in the
Lock-up Agreements, the Holders will be permitted (subject in all cases to
Section 7.02(j) below) to offer and sell Registrable Shares during the
Registration Effective Period in the manner described in the Registration
Statement provided that the Registration Statement remains effective and has not
been suspended.
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(z) Notwithstanding any other provision of this Section
7.02(i), Parent shall have the right at any time to require that all Holders
suspend further open market offers and sales of Registrable Shares whenever, and
for such period of time (but not to exceed ninety (90) days) as, in the
reasonable judgment of Parent after consultation with counsel there is material
undisclosed information or events with respect to Parent (the "Suspension
Right"). In the event Parent exercises the Suspension Right, such suspension
will continue for the period of time reasonably necessary for disclosure to
occur at a time that is not detrimental to Parent and its stockholders or until
such time as the information or event is no longer material, each as determined
in good faith by Parent after consultation with counsel. Parent will promptly
give the Holders notice of any such suspension and will use all reasonable
efforts to minimize the length of the suspension. Notwithstanding the foregoing,
Parent will not exercise its Suspension Right so as to suspend open market
offers and sales of Registrable Securities for a total of more than 45 days in
any fiscal quarter.
(iv) EXPENSES. Parent shall bear all costs and expenses for
purposes of this Section 7.02(i), including, without limitation, printing
expenses (including a reasonable number of prospectuses for circulation by the
selling Holders), reasonable legal fees and disbursements of counsel for Parent
and one counsel for the selling Holders (up to $25,000), "blue sky" expenses,
accounting fees and filing fees, but shall not include underwriting commissions
or similar charges, legal fees and disbursements of other counsel for the
selling Holders.
(v) INDEMNIFICATION.
(w) To the extent permitted by law, Parent will indemnify and
hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder, its officers, directors, stockholders or partners
and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a
"Violation"): (A) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (B) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (C) any violation or
alleged violation by Parent of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law; and Parent
will pay to each such Holder (and its officers, directors, stockholders or
partners), underwriter or controlling person, any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however,
that the indemnify agreement contained in this Section 7.02(i)(v)(w) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of
Parent (such consent not to be unreasonably withheld); nor shall Parent be
liable in any such case for any such
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loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon (A) a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in the Registration
Statement by any such Holder, or (B) a Violation that would not have occurred if
such Holder had delivered to the purchaser the version of the Prospectus most
recently provided by Parent to the Holder as of the date of such sale.
(x) To the extent permitted by law, each selling Holder will
indemnify and hold harmless Parent, each of its directors, each of its
officers who has signed the Registration Statement, each person, if any,
who controls Parent within the meaning of the Securities Act, any
underwriter, any other Holder selling securities pursuant to the
Registration Statement and any controlling person of any such underwriter
or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation
(which includes without limitation the failure of the Holder to comply
with the prospectus delivery requirements under the Securities Act, and
the failure of the Holder to deliver the most current prospectus provided
by Parent prior to such sale), in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in the
Registration Statement or such Violation is caused by the Holder's failure
to deliver to the purchaser of the Holder's Registrable Shares a
prospectus (or amendment or supplement thereto) that had been made
available to the Holder by Parent; and each such Holder will pay any legal
or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 7.02(i)(v)(x) in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 7.02(i)(v)(x) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of such Holder, which consent shall not be
unreasonably withheld. The aggregate indemnification and contribution
liability of each Holder under this Section 7.02(i)(v)(y) shall not exceed
the net proceeds received by such Holder in connection with sale of shares
pursuant to the Registration Statement.
(y) Each person entitled to indemnification under this Section
7.02(i)(v) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought and shall permit the
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Indemnifying Party to assume the defense of any such claim and any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party who conducts the defense of such claim or any
litigation resulting therefrom shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's
expense, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 7.02(i)
unless the Indemnifying Party is materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or litigation,
shall (except with the consent of each Indemnified Party) consent to
entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified
Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with the
defense of such claim and litigation resulting therefrom.
(z) To the extent that the indemnification provided for in this
Section 7.02(i)(v) is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss, liability,
claim, damage or expense referred to herein, then the Indemnifying Party,
in lieu of Indemnifying such Indemnified Party hereunder, shall contribute
to the amount paid or payable by such Indemnified Party as a result of
such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions which resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations.
The relative fault of the Indemnifying Party and of the Indemnified Party
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(vi) CURRENT PUBLIC INFORMATION. Until the earlier of the second
anniversary of the Closing Date or the date all shares of Parent Common Stock
subject to this Section 7.02(i) have been sold, Parent will timely file all
reports required to be filed by it under the Exchange Act, and the rules and
regulations adopted by the Commission thereunder, all to the extent required to
enable such Holders to sell their shares pursuant to Rule 144 and the
Registration Statement. Upon written request, Parent will deliver to such
Holders a written statement as to whether it has complied with such
requirements.
(j) PROCEDURES FOR SALE OF SHARES UNDER REGISTRATION STATEMENT.
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(i) DELIVERY OF PROSPECTUS. For any offer or sale of any of
the Registrable Shares by a Holder in a transaction that is not exempt under the
Securities Act, the Holder, in addition to complying with any other federal
securities laws, shall deliver a copy of the final prospectus (or amendment of
or supplement to such prospectus) of Parent covering the Registrable Shares in
the form furnished to the Holder by Parent to the purchaser of any of the
Registrable Shares on or before the settlement date for the purchase of such
Registrable Shares.
(ii) COPIES OF PROSPECTUSES. Parent shall, within two (2)
trading days following the request, furnish to such Holder a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall not as of the date of delivery to the Holder
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or incomplete in the light of the circumstances then existing.
SECTION 7.3. COVENANTS OF PARENT AND THE COMPANY.
(a) ACCESS TO INFORMATION.
(i) Each of Parent and the Company shall, and shall cause its
respective subsidiaries, officers, directors, employees, representatives,
advisors and agents to, afford, from the date hereof to the Effective
Time, the officers, employees, representatives, advisors and agents of the
other party complete access at all reasonable times to its officers,
directors, employees, representatives, advisors, agents, properties,
books, records and workpapers, and shall furnish each other party all
financial, operating and other information and data as Parent or Company,
through its officers, employees or agents, may reasonably request and
shall promptly furnish to the other monthly operating and financial
reports in such form as Parent or the Company shall reasonably request.
(ii) The Company, at least three business days prior to the
Effective Time, shall deliver to Parent a list setting forth the names and
locations of each bank or other financial institution at which the Company
and the Subsidiaries has an account (giving the account numbers) or safe
deposit box and the names of all persons authorized to draw thereon or
have access thereto.
(iii) If this Agreement is terminated prior to the Effective Time,
each of the parties hereto shall, and shall cause its officers, employees,
representatives, advisors and agents to, deliver to the other party, or if
requested, destroy, all confidential documents, work papers and other
materials, and all copies thereof, obtained by it or on its behalf from
such other party as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution and delivery hereof.
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(iv) Each of the parties hereto and its officers and employees shall
not disclose or use any information so obtained, except as required by
applicable law or legal process without the prior written consent of the
other party; PROVIDED that any such information may be disclosed to a
party's financial advisors, accountants, counsel and other
representatives, and lenders and regulatory authorities whose approvals
are required hereunder, as may be appropriate or required in connection
with the transactions contemplated hereby, but only if such persons shall
be specifically informed by such party of the confidential nature of such
information and agree to comply with the restrictions contained herein,
and to preserve the confidentiality of any such information obtained. The
agreements contained in this Section 7.03(a) do not apply to information
that (i) is or becomes generally available to the public other than as a
result of a disclosure by a receiving party or its representatives, (ii)
becomes available to a party on a non-confidential basis from a source not
bound by any duty of confidentiality to the other party or (iii) is
independently developed by a receiving party without reference to any
confidential information.
(v) No investigation pursuant to this Section 7.03(a) shall affect,
add to or subtract from any representations or warranties of the parties
hereto or the conditions to the obligations of the parties hereto to
effect the Merger.
(b) FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, using all commercially reasonable efforts to
obtain all necessary waivers, consents and approvals and to effect all necessary
registrations and filings (including, without limitation, any necessary filings
under the Hart-Scott Act); PROVIDED that the foregoing shall not require Parent
to agree to make, or to require the Company or any of the Subsidiaries to make,
any divestiture of a significant asset in order to obtain any waiver, consent or
approval or to incur any material liability or expense.
(c) PUBLIC ANNOUNCEMENTS. Neither the Company nor Parent shall issue
any press release or make any public statements with respect to this Agreement
or the transactions contemplated hereby, without the prior written consent of
the Parent or the Company, as the case may be, except as may be required by law
or the rules and regulations of any national securities exchange or which is
requested or required by any regulatory body which asserts jurisdiction over
such party, in which case such party (or parties) shall be allowed to make such
disclosure provided that the party (or parties) making such disclosure shall
notify the other party (or parties) as promptly as practicable.
SECTION 7.4. TAX FREE REORGANIZATION. No party shall take any
action prior to or after the Effective Time that could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code.
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ARTICLE VIII.
CONDITIONS TO THE MERGER
SECTION 8.1. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO
EFFECT THE MERGER. The obligation of the Company to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Acquisition Corp. contained in this Agreement
that are qualified or limited in any respect as to materiality or Material
Adverse Effect shall be true and correct in all respects and those that
are not so qualified shall be true and correct in all material respects,
in each case on and as of the Effective Time with the same force and
effect as though such representations and warranties had been made at and
as of the Effective Time other than representations and warranties made as
of a specific time (which shall be true and correct as of that time), and
Parent and Acquisition Corp. shall have certified to such effect to the
Company in writing.
(b) PERFORMANCE. Parent and Acquisition Corp. shall have performed
and complied with all covenants, agreements and conditions contained
herein required to be performed and complied with by it prior to or at the
Effective Time, and Parent and Acquisition Corp. shall have certified to
such effect to the Company in writing.
(c) OPINION OF COUNSEL. The Company shall have received the opinion
of Reboul, MacMurray, Hewitt, Maynard & Kristol ("Reboul MacMurray"),
counsel to Parent and Acquisition Corp., to the effect set forth in
Exhibit H hereto.
(d) ESCROW AGREEMENT. The Escrow Agreement shall have been executed
and delivered by each party thereto other than the Company and the
Stockholders and said agreement shall be in full force and effect as of
the Closing Date.
(e) ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have
occurred any event or change since the date hereof that has a Material
Adverse Effect on Parent.
(f) COMPLIANCE WITH LAW. There shall be no order, injunction, decree
or ruling by any Governmental Agency, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger or
this Agreement, that would prohibit or render illegal the transactions
contemplated by this Agreement.
(g) CONSENTS, WAIVERS, ETC. Parent shall have received all written
consents, assignments, waivers, authorizations or other certificates
necessary to provide for the
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continuation in full force and effect of any and all material contracts
and leases of Parent to consummate the transactions contemplated hereby,
except when the failure to receive such consents or other certificates
would not have a Material Adverse Effect on Parent. Any waiting period
(and any extension thereof) under the Hart-Scott Act applicable to the
Merger shall have expired or been terminated.
(h) SHAREHOLDER APPROVAL. The Merger and this Agreement shall have
been approved and adopted by the requisite majority of the Stockholders in
accordance with applicable law and the by-laws and certificate of
incorporation of the Company.
(i) TAX OPINION. The Company shall have received a written opinion
from its tax counsel (Wilson, Sonsini, Goodrich & Rosati, Professional
Corporation) in form and substance reasonably satisfactory to it to the
effect that the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code for U.S. federal income tax purposes, and
such opinion shall not have been withdrawn. The parties to this Agreement
will make such representations as are reasonably requested by such counsel
for the purpose of rendering such opinion.
SECTION 8.2. CONDITIONS TO THE OBLIGATION OF PARENT AND
ACQUISITION CORP. TO EFFECT THE MERGER. The obligation of Parent and
Acquisition Corp. to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Principal Stockholders contained in this
Agreement that are qualified or limited in any material respect as to
materiality or Material Adverse Effect shall be true and correct in all
respects and those that are not so qualified shall be true and correct in
all material respects, in each case on and as of the Effective Time with
the same force and effect as though such representations and warranties
had been made at and as of the Effective Time other than representations
and warranties made as of a specific time (which shall be true and correct
as of that time), and the Company and the Principal Stockholders shall
have certified to such effect to Parent in writing.
(b) PERFORMANCE. The Company and the Principal Stockholders shall
have performed and complied with all agreements and conditions contained
herein required to be performed and complied with by them prior to or at
the Effective Time, and the Company and the Principal Stockholders shall
have certified to such effect to Parent in writing.
(c) OPINION OF COUNSEL. Parent shall have received the opinion of
Wilson, Sonsini, Goodrich and Rosati, P.C., counsel to the Company, to the
effect set forth in Exhibit I hereto.
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(d) ANCILLARY AGREEMENTS. With the exception of the Lock-Up
Agreements (other than as provided in Section 8.02(o)) and the
Intellectual Property Assignment Agreements (other than as provided in
Section 8.02(j)), each Ancillary Agreement shall have been executed and
delivered by each party thereto other than Parent, Acquisition Corp. and
each such agreement shall be in full force and effort as of the Closing
Date.
(e) ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have
occurred any event or change since the date hereof that has a Material
Adverse Effect on the Company.
(f) COMPLIANCE WITH LAW. There shall be no order, injunction, decree
or ruling by any Governmental Agency or threat thereof, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable
to the Merger or this Agreement, that would prohibit or render illegal the
transactions contemplated by this Agreement.
(g) CONSENTS, WAIVERS, ETC. The Company shall have received all
written consents, assignments, waivers, authorizations or other
certificates necessary to provide for the continuation in full force and
effect of any and all material contracts and leases of the Company to
consummate the transactions contemplated hereby. Any waiting period (and
any extension thereof) under the Hart-Scott Act applicable to the Merger
shall have expired or been terminated.
(h) SHAREHOLDER APPROVAL. The Merger and this Agreement shall have
been approved and adopted by the requisite majority of the Stockholders in
accordance with applicable law and the by-laws and certificate of
incorporation of the Company.
(i) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding
shall have been instituted or threatened seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions
contemplated hereby.
(j) EMPLOYEES OF THE COMPANY AND THE SUBSIDIARIES. Each of the Key
Company Employees and 90% of the engineers listed on Section 8.02(j) of
the Disclosure Schedule (the "Engineers") shall (A) have executed and
delivered to Parent (1) a confidentiality agreement on the standard Parent
form, which form has previously been approved by the Company and (2) a
Noncompete Agreement, and (B) be an employee of the Company or the French
Subsidiary as of the Effective Time. Each of the Key Company Employees and
90% of the Engineers shall either (A) have executed and delivered to
Parent an Intellectual Property Assignment Agreement or (B) be a
French-domiciled employee of the French Subsidiary covered by Articles
113-9 and 611-7 of the French intellectual property code who has not
entered into any agreement or arrangement contrary to such provisions.
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(k) COMPANY WARRANTS. All of the holders of the Warrants shall have
taken all action necessary to exercise such Warrants in accordance with
the terms thereof, the Series A Preferred Stock issuable upon such
exercise shall have been so issued and all of the Warrants shall have been
canceled. All holders of the resulting shares of Series A Preferred Stock
shall have taken all action necessary to convert such stock into Company
Common Stock in accordance with the terms thereof, the Company Common
Stock issuable upon such conversion shall have been so issued and all of
the Series A Preferred Stock shall have been canceled.
(l) AMENDMENT TO COMPANY CHARTER. The holders of the Company
Preferred Stock shall have taken all action necessary to amend the
Company's Amended and Restated Certificate of Incorporation in accordance
with the terms thereof, to delete the last sentence of
Section 3.3 thereof.
(m) RESIGNATION OF DIRECTORS. Each member of the Board of Directors
of the Company and of each Subsidiary of the Company shall have delivered
to Parent an instrument resigning such person's position as of the
Effective Time, and each director of the French Subsidiary shall deliver
the certificate representing his or her director qualifying share, an
ordre de mouvement in respect of such director qualifying share duly
endorsed by such director in blank, and any other documentation required
pursuant to the laws of France.
(n) DISSENTING SHAREHOLDERS. The Company shall not have received on
or prior to the Effective Time notice from the holders of more than 5% of
the Company Common Stock of their intention to exercise rights of dissent
under the DGCL.
(o) LOCK-UP AGREEMENTS. Each Principal Stockholder and each
Stockholder of the Company who is not a Company Employee and, after giving
effect to the Merger, will beneficially own five thousand (5,000) or more
shares of Parent Common Stock, shall have signed a Lock-Up Agreement and
each such Lock-up Agreement shall be in full force and effect.
(p) TAX OPINION. The Parent shall have received a written opinion
from its tax counsel (Reboul MacMurray) in form and substance reasonably
satisfactory to it to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code for U.S.
federal income tax purposes, and such opinion shall not have been
withdrawn. The parties to this Agreement will make such representations as
are reasonably requested by such counsel for the purpose of rendering such
opinion.
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ARTICLE IX.
TERMINATION AND ABANDONMENT
SECTION 9.1. TERMINATION AND ABANDONMENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the Stockholders as follows:
(a) Parent and the Company may terminate this Agreement by mutual
written consent of the Board of Directors of each party at any time prior
to the Closing;
(c) Parent may terminate this Agreement by giving written notice to
the Company at any time prior to noon New York time on April 24, 2000,
that, based upon its due diligence investigation, it believes either (i)
that there has occurred or is reasonably likely to occur an event or
change of which no officer of Parent who has been directly involved in
such due diligence investigation previously had actual knowledge that has
had or will reasonably be expected to have a Material Adverse Effect on
the Company or (ii) that Parent is reasonably certain that one or more
material conditions to Parent's obligation to effect the Merger will not
be satisfied on or prior to June 5, 2000, and prior to noon New York time
on April 25, 2000, the Company shall not have provided written evidence
satisfactory to Parent in its reasonable discretion that no such event or
change has occurred or will reasonably be expected to occur or that such
condition or conditions is not reasonably certain not to be satisfied,
such termination to be effective as of 12:01 p.m. New York time on April
25, 2000.
(c) Parent may terminate this Agreement by giving written notice to
the Company at any time prior to the Closing (A) in the event the Company
has (1) either (x) breached in any respect any representation or warranty
in this Agreement which is qualified in any material respect as to
materiality or (y) has breached in any material respect any other
representation, warranty, or covenant contained in this Agreement, (2)
Parent has notified the Company of the breach, and (3) the breach has
continued without cure for a period of fifteen days after the notice of
breach or (B) if the Closing shall not have occurred on or before June 5,
2000, by reason of the failure of any condition precedent under Section
8.02 hereof (unless the failure results primarily from Parent itself
breaching any representation, warranty or covenant contained in this
Agreement);
(d) the Company may terminate this Agreement by giving written
notice to Parent at any time prior to the Closing (A) in the event Parent
has (1) either (x) breached in any respect any representation or warranty
in this Agreement which is qualified in any material respect as to
materiality or (y) has breached in any material respect any other
representation, warranty or covenant contained in this Agreement, (2) the
Company has notified Parent of the breach, and (3) the breach has
continued without cure for a period of fifteen days after the
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notice of breach or (B) if the Closing shall not have occurred on or
before June 5, 2000, by reason of the failure of any condition precedent
under Section 8.01 hereof (unless the failure results primarily from the
Company itself breaching any representation, warranty or covenant
contained in this Agreement);
(e) either Parent or the Company may terminate this Agreement by
giving written notice to the other at any time prior to the Effective Time
if a permanent injunction or other order by any United States or French
federal, provincial or state court shall have been issued and shall have
become final and nonappealable that would (i) make illegal or otherwise
restrain or prohibit the consummation of the Merger, (ii) prohibit
Parent's direct or indirect ownership or operation of all or any material
portion of the business or assets of the Company or any of the
Subsidiaries or (iii) compel Parent to dispose of or hold separate all or
any material portion of the business or assets of the Company or any of
the Subsidiaries.
SECTION 9.2. EFFECT OF TERMINATION. In the event of the termination
of this Agreement and the abandonment of the Merger pursuant to Section 9.01,
this Agreement shall thereafter become void and have no effect, and no party
hereto shall have any liability to any other party hereto or its stockholders or
directors or officers in respect thereof, and each party shall be responsible
for its own expenses; provided, however, that if this Agreement is terminated by
a party because of a breach of this Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired; provided,
further, that the provisions of Sections 7.03(c), 9.02, 11.01(a), 11.07, 11.09,
11.10 and 11.12 shall remain in full force and effect and survive the
termination of this Agreement.
ARTICLE X.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 10.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties made by any party hereto in this Agreement or pursuant hereto shall
survive the Effective Time for a period of one year.
SECTION 10.2. GENERAL INDEMNITY. Subject to the terms and conditions
of this Article X and pursuant to the terms and provisions set forth in the
Escrow Agreement, the Stockholders, jointly and severally, shall indemnify,
defend and hold the Company, Parent and their respective Affiliates and each of
their respective officers, directors, employees, stockholders, agents and
representatives (collectively "Parent Indemnified Persons") harmless from and
against all Damages (as defined in the Escrow Agreement).
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SECTION 10.3. EXCLUSIVE REMEDY; FRAUD. After the Closing, the rights
of the Parent Indemnified Persons under this Article X and the Escrow Agreement
shall be the exclusive remedy of the Parent Indemnified Persons with respect to
claims resulting from or relating to any misrepresentation, breach of warranty
or failure to perform any covenant or agreement contained in this Agreement,
except that such limitation shall not apply to limit the liability of any
indemnifying party for fraud by such indemnifying party. Notwithstanding the
foregoing, in no event shall the Company or any of the Stockholders be liable
for, and in no event shall Parent or any other Person be entitled to any
distribution from the Escrow Fund resulting from facts or circumstances actually
known by Parent or such Person on or prior to the Closing.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. EXPENSES, ETC.
(a) Whether or not the transactions contemplated by this Agreement
are consummated, neither the Company or the Principal Stockholders, on the one
hand, nor Parent and Acquisition Corp., on the other hand, shall have any
obligation to pay any of the fees and expenses of the other incident to the
negotiation, preparation and execution of this Agreement, including the fees and
expenses of counsel, accountants, investment bankers and other experts
(collectively, the "Transaction Expenses"), and Parent shall pay all such
Transaction Expenses incurred by Acquisition Corp.
(b) The Company and the Principal Stockholders represent and warrant
that the total of all Transaction Expenses incurred and to be incurred by the
Company and its Subsidiaries (collectively, the "Company Transaction Expenses")
shall not exceed $500,000. If and to the extent that the Company Transaction
Expenses exceed $500,000, the amount of such excess shall be deducted from the
consideration provided for in Section 3.01(a)(i) of this Agreement.
SECTION 11.2. EXECUTION IN COUNTERPARTS. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 11.3. NOTICES. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or national
overnight courier service, transmitted by telecopy or mailed by registered or
certified mail, postage prepaid, and shall be deemed given upon receipt, as
follows:
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If to Parent to:
GlobeSpan, Inc.
100 Schulz Drive
Red Bank, NJ 07701
Telecopy Number: (732) 345-7556
Attention: Bob McMullan
Niall Bartlett with copies to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Telecopy Number: (212) 841-5725
Attention: Jonathan P. Cramer, Esq.
If to the Company, to:
T.sqware, Inc.
2350 Mission College Blvd.
Suite 1140
Santa Clara, CA 95054
Telecopy Number: (408) 327-5999
Attention: Michel Desbard
with a copy to:
Wilson, Sonsini, Goodrich & Rosati, PC
650 Page Mill Road
Palo Alto, California 94304
Telecopy Number: (650) 493-9300
Attention: John Fore, Esq.
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 11.4. WAIVERS. The Company, on the one hand, and Parent and
Acquisition Corp., on the other hand, may, by written notice to the other, (i)
extend the time for the performance of any of the obligations or other actions
of the other under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in any
document delivered pursuant to this Agreement; (iii) waive compliance with any
of the conditions of the
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other contained in this Agreement; or (iv) waive performance of any of the
obligations of the other under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
SECTION 11.5. AMENDMENTS, SUPPLEMENTS, ETC. This Agreement may be
amended or supplemented at any time; PROVIDED that after receipt of Stockholder
approval of the Agreement, there shall be no amendment that by law requires
further approval by the Stockholders without the further approval of such
Stockholders. Any such instrument must be in writing and signed by all of the
parties hereto.
SECTION 11.6. ENTIRE AGREEMENT. This Agreement and its Schedules and
Exhibits, and the documents to be executed or delivered at the Effective Time in
connection herewith, constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by any party that is not embodied in this
Agreement or such other documents, and none of the parties shall be bound by, or
be liable for, any alleged representation, warranty, promise, inducement or
statement of intention not embodied herein or therein. As used herein, the
"knowledge" of the Company shall refer to the knowledge of each executive
officer of the Company and each of the Subsidiaries and, to the extent not
included in such group, Messrs. Michel Desbard, Cesar Douady and Alain Fanet. An
individual (including, without limitation, a Principal Stockholder) will be
deemed to have knowledge of a particular fact or other matter if such individual
is actually aware of such fact or other matter.
SECTION 11.7. APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York,
without regard to conflict of laws principles.
SECTION 11.8. BINDING EFFECT, BENEFITS. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 11.9. ASSIGNABILITY. Neither this Agreement, any of the
Ancillary Agreements nor any of the parties' rights hereunder or thereunder
shall be assignable by any party hereto prior to the Effective Time without the
prior written consent of the other parties hereto, except
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that Acquisition Corp. may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Agreement to the Parent or to any
direct or indirect wholly-owned subsidiaries of the Parent. After the Effective
Time, no assignment shall operate to release the original parties hereto.
SECTION 11.10. SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
SECTION 11.11. NO THIRD PARTY BENEFICIARIES. Except for the
provisions of Article X relating to indemnification (and Section 7.02(i)
relating to registration rights), this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 11.12. CONSENT TO JURISDICTION. All judicial proceedings
brought against any Principal Stockholder arising out or relating to this
Agreement or any Ancillary Agreement, or any obligation thereunder, may be
brought in any state or federal court of competent jurisdiction in the state,
county and city of New York. By executing and delivering this Agreement, each
Principal Stockholder irrevocably: (i) accepts generally and unconditionally the
nonexclusive jurisdiction and venue of such courts; waives any defense of FORUM
NON CONVENIENS; (ii) agrees that service of all process in any such proceeding
in any such court may be made by registered or certified mail, return receipt
requested, to the Parent at the address specified in this Agreement; (iii)
agrees that service as provided in clause (ii) above is sufficient to confer
personal jurisdiction over the Principal Stockholder in any such proceeding in
any such court, and otherwise constitutes effective and binding service in every
respect; (iv) agrees that the Parent retains the right to serve process in any
other manner permitted by law or to brig proceedings against the Principal
Stockholders in the courts of any other jurisdiction; and (v) agrees that the
provisions of this Section 11.12 relating to jurisdiction and venue shall be
binding and enforceable to the fullest extent permissible under New York General
Obligations Law Section 5-1402 or otherwise.
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
GLOBESPAN, INC.
By
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Name:
Title:
NEEDLES ACQUISITION CORP.
By
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Name:
Title:
T.SQWARE, INC.
By
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Name:
Title:
