SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TREEV, INC.
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(Name of Issuer)
Common Stock, par value $0.0001 per share
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(Title of Class of Securities)
894692300
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(CUSIP Number)
Ulrich Thol
CE Computer Equipment AG
Herforder Strasse 155A
33609 Bielefeld, Germany
Telephone: +49-521-9318-01
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
W. Jeffrey Lawrence
Shearman & Sterling
9 Appold Street
Broadgate West
London EC2A 2AP
United Kingdom
Telephone: +44 207 655 5000
November 19, 1999
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(Date of Event which Requires Filing of this Statement)
................................................................................
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-(g), check the
following box |_|.
Page 1 of 145
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CUSIP No. 894692300
(1) Name of Reporting Person: CE Computer Equipment Aktiengesellschaft
I.R.S. Identification No. of Above Person:
(2) Check the Appropriate Box if a Member of a Group (See Instructions):
|_| (a)
|_| (b)
(3) SEC Use Only
(4) Source of Funds* (See Instructions): OO
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e):___
(6) Citizenship or Place of Organization: Germany
- ------------------
(7) Sole Voting Power: 0
Number of ------------------------------------
Shares
Beneficially (8) Shared Voting Power: 6,479,343 shares of Common Stock
Owned by ----------------------------------
Each (9) Sole Dispositive Power: 0
Reporting --------------------------------
Person With (10) Shared Dispositive Power 0
-------------------------------
- ------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person:
6,479,343 shares of Common Stock
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions):
(13) Percent of Class Represented by Amount in Row (11): 42.8%
-------------------
(14) Type of Reporting Person (See Instructions): CO
- --------
* Pursuant to the Merger Agreement (as defined in response to Item 3),
the Reporting Person will, subject to the conditions specified therein,
acquire all of the outstanding shares of Issuer Common Stock (as
defined in response to Item 1) in exchange for American Depositary
Shares, each representing one newly issued ordinary share, without par
value, of the Reporting Person.
Page 2 of 145
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Item 1. Security and Issuer.
The class of equity securities to which this Statement on
Schedule 13D relates is the Common Stock, par value $0.0001 per share ("Issuer
Common Stock"), of TREEV, Inc., a Delaware corporation (the "Issuer"), with its
principal executive offices located at 500 Huntmar Park Drive, Herndon, VA
20170, U.S.A.
Item 2. Identity and Background.
This statement is being filed by CE Computer Equipment
Aktiengesellschaft, a German corporation (the "Reporting Person").
The Reporting Person's principal executive offices are located
at Herforder Strasse 155A, 33609 Bielefeld, Germany. The Reporting Person is a
European producer of digital archiving and electronic document management
systems.
The directors and executive officers of the Reporting Person
are set forth on Schedule I attached hereto. Schedule I sets forth the following
information with respect to each such person: (i) name; (ii) business address;
(iii) present principal occupation or employment and the name, principal
business and address of any corporation or other organization in which such
employment is conducted; and (iv) citizenship.
During the last five years, neither the Reporting Person nor,
to the best knowledge of the Reporting Person, any person named in Schedule I
attached hereto has been (a) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (b) a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Agreement and Plan of Merger, dated as of
November 19, 1999, between the Reporting Person and the Issuer (the "Merger
Agreement"), and subject to the conditions contained therein, the Reporting
Person will acquire all the outstanding shares of Issuer Common Stock in
exchange for American Depositary Shares ("Reporting Person ADSs"), each
representing one newly issued ordinary share, without par value, of the
Reporting Person (the "Reporting Person Ordinary Shares"). In connection with
the Merger Agreement, the Reporting Person has entered into a Voting and
Registration Rights Agreement, dated as of November 19, 1999, with certain
beneficial owners of shares of Issuer Common Stock (the "Voting Agreement"). As
a result of the execution of the Voting Agreement and the Irrevocable Proxies
(as defined below), the Reporting Person may be deemed to be the beneficial
owner of the shares of Issuer Common Stock subject to such agreement.
Page 3 of 145
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Item 4. Purpose of Transaction.
Pursuant to the Merger Agreement, the Reporting Person will
appoint an independent financial institution to act as exchange agent (the
"Exchange Agent"). A newly formed, wholly owned subsidiary of the Exchange Agent
("Merger Sub ") will be incorporated in Delaware and will be merged with and
into the Issuer (the "Merger"); the separate corporate existence of Merger Sub
will cease and the Issuer will be the surviving corporation of the Merger (the
"Surviving Corporation"). As soon as possible after the effective time of the
Merger, the Exchange Agent (as the sole stockholder of the Surviving
Corporation) will contribute to the Reporting Person, for the account of the
former stockholders of the Issuer, all of the issued and outstanding shares of
the common stock of the Surviving Corporation as a transfer in kind (the "Share
Exchange "), and the Reporting Person will issue Reporting Person Ordinary
Shares and will cause Reporting Person ADSs to be delivered to the Exchange
Agent for the account of the former stockholders of the Issuer. As a result of
the Merger and the Share Exchange, the Reporting Person will own all the
outstanding shares of Issuer Common Stock and the Issuer will be a wholly owned
subsidiary of the Reporting Person.
In the Merger, each share of Issuer Common Stock and each
share of the Issuer's Series A Cumulative Convertible Preferred Stock ("Series A
Preferred Stock"), Series M Convertible Preferred Stock ("Series M Preferred
Stock") and Series M1 Convertible Preferred Stock ("Series M1 Preferred Stock"
and, together with the Series A Preferred Stock and the Series M Preferred
Stock, the "Issuer Preferred Stock") will be converted into the right to receive
Reporting Person ADSs. Under the terms of the Merger Agreement, the Reporting
Person will issue a total of 1,330,000 Reporting Person Ordinary Shares in the
form of Reporting Person ADSs in exchange for the outstanding shares of Issuer
Common Stock and Issuer Preferred Stock and for the outstanding warrants
("Warrants") and options ("Options") for Issuer Common Stock. Each share of
Issuer Common Stock will be converted into a proportionate number of the
Reporting Person ADSs to be issued in the Merger, after giving effect to the
issuance of Reporting Person ADSs in respect of the Issuer Preferred Stock, the
Options and the Warrants. Each share of Series A Preferred Stock will be
converted into Reporting Person ADSs with a value of at least $10.00, and each
share of Series M Preferred Stock and Series M1 Preferred Stock will be
converted into Reporting Person ADSs with a value of at least $4.00.
Certain beneficial owners of shares of Issuer Common Stock
have agreed to vote their shares of Issuer Common Stock in favor of the Merger,
the Merger Agreement and the transactions contemplated by the Merger Agreement
pursuant to the terms of the Voting Agreement. In addition, each such holder has
granted an irrevocable proxy (the "Irrevocable Proxies") in favor of the
Reporting Person to vote their shares of Issuer Common Stock in favor of the
Merger, the Merger Agreement and any other matter that could reasonably be
expected to facilitate the Merger. The Reporting Person has the right under the
Voting Agreement to vote all the shares of Issuer Common Stock owned by Horace
T. Ardinger, Jr.; Douglas Adkins; James J. Leto; Robert P. Bernardi; John F.
Burton; C. Alan Peyser; Thomas A. Wilson; Mark A. Paiewonsky; Richard E.
McMahon; and Brian J. Hajost (collectively, the "Stockholders"). As of November
19, 1999, the Stockholders owned in the aggregate 5,374,299 outstanding shares
of Issuer Common Stock, representing approximately 38.3% of the shares of Issuer
Common Stock then outstanding.
Page 4 of 145
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As a result of the Merger and the Share Exchange, the
Reporting Person will own all the outstanding shares of Issuer Common Stock, and
there will not be any shares of Series A Preferred Stock outstanding. Shares of
Issuer Common Stock and Series A Preferred Stock are currently traded on the
Nasdaq National Market System. Following the Merger and the Share Exchange, the
Reporting Person intends to cause the Issuer Common Stock and the Series A
Preferred Stock to cease to be authorized to be quoted on the Nasdaq National
Market System. In addition, following the Merger and the Share Exchange, the
Issuer Common Stock and the Series A Preferred Stock will be eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act "). The Reporting Person
intends to seek to cause the Issuer to terminate the registration of the Issuer
Common Stock and the Series A Preferred Stock under the Exchange Act as soon as
possible.
Pursuant to the Merger Agreement, as of the effective time of
the Merger, (i) Hans-Jurgen Brintrup and Thomas Wenzke will become the directors
of the Surviving Corporation, (ii) Thomas Wenzke will become the Chief
Administrative Officer of the Surviving Corporation, (iii) the Certificate of
Incorporation of the Surviving Corporation will be amended and restated in its
entirety to read as the Certificate of Incorporation of Merger Sub as in effect
immediately prior to such time (except that the name of the Surviving
Corporation shall be "TREEV, Inc.") and (iv) the Bylaws of Merger Sub, as in
effect immediately prior to such time, will be the Bylaws of the Surviving
Corporation.
Except as set forth in this Statement, the Merger Agreement,
the Voting Agreement and the Irrevocable Proxies, neither the Reporting Person
nor, to the best knowledge of the Reporting Person, any of the individuals named
in Schedule I hereto has formulated any plans or proposals which relate to or
would result in: (i) the acquisition by any person of additional securities of
the Issuer or the disposition of securities of the Issuer, (ii) an extraordinary
corporate transaction involving the Issuer or any of its subsidiaries, (iii) a
sale or transfer of a material amount of the assets of the Issuer or any of its
subsidiaries, (iv) any change in the present board of directors or management of
the Issuer, (v) any material change in the Issuer's capitalization or dividend
policy, (vi) any other material change in the Issuer's business or corporate
structure, (vii) any change in the Issuer's charter or bylaws or other
instrument corresponding thereto or other action which may impede the
acquisition of control of the Issuer by any person, (viii) causing a class of
the Issuer's securities to be deregistered or delisted, (ix) a class of the
Issuer's securities becoming eligible for termination of registration or (x) any
action similar to any of those enumerated above.
The foregoing descriptions of the Merger Agreement, the Voting
Agreement and the Irrevocable Proxies do not purport to be complete and are
qualified in their entirety by reference to such agreements, which are attached
hereto as Exhibits 1 through 10, respectively, and which are incorporated herein
by reference in their entirety.
Item 5. Interest in Securities of the Issuer.
As a result of the execution of the Voting Agreement and the
Irrevocable Proxies, the Reporting Person may be deemed to be the beneficial
owner of 6,479,343 shares of Issuer Common Stock (which includes 1,105,044
shares of Issuer Common Stock which the Stockholders have the right to acquire
within 60 days pursuant to the exercise of Options
Page 5 of 145
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and Warrants), representing approximately 42.8% of the number of shares of
Issuer Common Stock outstanding as of November 19, 1999. The Reporting Person
has the right to vote all such shares of Issuer Common Stock in favor of the
Merger, the Merger Agreement and any other matter that could reasonably be
expected to facilitate the Merger. The Reporting Person does not have the right
to vote such shares of Issuer Common Stock in connection with any other matter.
Pursuant to the terms of the Voting Agreement, the Stockholders have agreed not
to dispose of the shares of Issuer Common Stock, Options or Warrants held by
them unless the transferee agrees in writing to be bound by the terms of the
Voting Agreement with respect to such shares of Issuer Common Stock, Options or
Warrants. The foregoing descriptions of the Voting Agreement and the Irrevocable
Proxies do not purport to be complete and are qualified in their entirety by
reference to such agreements, copies of which are attached hereto as Exhibits 2
through 10, respectively, and which are incorporated herein by reference in
their entirety.
Except as described herein, neither the Reporting Person nor,
to the best of the Reporting Person's knowledge, any other person referred to in
Schedule I attached hereto, has acquired or disposed of any shares of Issuer
Common Stock during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Except as provided in this Statement, the Merger Agreement,
the Voting Agreement and the Irrevocable Proxies, none of the persons named in
Item 2 has any contracts, arrangements, understandings or relationships (legal
or otherwise) with any persons with respect to any securities of the Issuer
including but not limited to, transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
Item 7. Material to Be Filed as Exhibits.
1. Agreement and Plan of Merger, dated as of November
19, 1999, between CE Computer Equipment AG and TREEV, Inc.
2. Voting and Registration Rights Agreement, dated as
of November 19, 1999, among CE Computer Equipment AG and certain beneficial
owners of shares of Common Stock of TREEV, Inc. set forth on Schedule A to such
Voting and Registration Rights Agreement.
3. Irrevocable Proxy, dated as of November 19, 1999,
granted by James J. Leto in favor of CE Computer Equipment AG.
4. Irrevocable Proxy, dated as of November 19, 1999,
granted by Robert P. Bernardi in favor of CE Computer Equipment AG.
5. Irrevocable Proxy, dated as of November 19, 1999,
granted by John F. Burton in favor of CE Computer Equipment AG.
Page 6 of 145
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6. Irrevocable Proxy, dated as of November 19, 1999,
granted by C. Alan Peyser in favor of CE Computer Equipment AG.
7. Irrevocable Proxy, dated as of November 19, 1999,
granted by Thomas A. Wilson in favor of CE Computer Equipment AG.
8. Irrevocable Proxy, dated as of November 19, 1999,
granted by Mark A. Paiewonsky in favor of CE Computer Equipment AG.
9. Irrevocable Proxy, dated as of November 19, 1999,
granted by Richard E. McMahon in favor of CE Computer Equipment AG.
10. Irrevocable Proxy, dated as of November 19, 1999,
granted by Brian H. Hajost in favor of CE Computer Equipment AG.
Page 7 of 145
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
November 29, 1999 CE Computer Equipment AG
By: /s/ Thomas Wenzke
-----------------------------
Name: Thomas Wenzke
Title: Member of the Board of
Management
Page 8 of 145
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SCHEDULE I
The name, present principal occupation and business address of
each member of the Supervisory Board of the Reporting Person are set forth
below. Each member of the Supervisory Board is a German citizen.
Position with the Reporting Person
Name and Principal Occupation
- ---- ------------------------
Dr. Uwe Swientek Chairman of the Supervisory Board;
Member of the Board of Management of
BMG Entertainment Storage Media and
Technology, Carl-Bertelsmann-Strasse 161
33311 Gutersloh, Germany
Prof. Dr. Peter Kupsch Vice-Chairman of the Supervisory Board;
Professor at the University of Bamberg, Im
Bauernfeld 15, 96049 Bamberg, Germany
Prof. Jurgen Witt Member of the Supervisory Board;
Professor at the University for Applied
Sciences Bielefeld, Kurt-Schumacher-
Strasse 6, 33615 Bielefeld, Germany
Page 9 of 145
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The name and present principal occupation of each member of
the Board of Management and executive officer of the Reporting Person are set
forth below. The principal place of business of each such person is Herforder
Strasse 155A, 33609 Bielefeld, Germany and each such person is a German citizen.
Each occupation set forth opposite an individual's name refers to employment
with the Reporting Person.
Position with the Reporting Person
Name and Principal Occupation
- ---- ------------------------
Hans-Jurgen Brintrup Member of the Board of Management,
Marketing and Sales
Thomas Wenzke Member of the Board of Management,
Finance
Ulrich Thol Financial Director
Peter J. Schmerler Executive Vice President, Sales
Page 10 of 145
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EXHIBIT INDEX
Exhibit No. Description Page No.
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1 Agreement and Plan of Merger, dated as of 12
November 19, 1999, between CE Computer Equipment
AG and TREEV, Inc.
2 Voting and Registration Rights Agreement, 102
dated as of November 19, 1999, among CE Computer
Equipment AG and certain beneficial owners of
shares of Common Stock of TREEV, Inc. set forth on
Schedule A of such Voting and Registration Rights
Agreement.
3 Irrevocable Proxy, dated as of November 19, 130
1999, granted by James J. Leto in favor of CE
Computer Equipment AG.
4 Irrevocable Proxy, dated as of November 19, 132
1999, granted by Robert P. Bernardi in favor of
CE Computer Equipment AG.
5 Irrevocable Proxy, dated as of November 19, 134
1999, granted by John F. Burton in favor of CE
Computer Equipment AG.
6 Irrevocable Proxy, dated as of November 19, 136
1999, granted by C. Alan Peyser in favor of CE
Computer Equipment AG.
7 Irrevocable Proxy, dated as of November 19, 138
1999, granted by Thomas A. Wilson in favor of
CE Computer Equipment AG.
8 Irrevocable Proxy, dated as of November 19, 140
1999, granted by Mark A. Paiewonsky in favor
of CE Computer Equipment AG.
9 Irrevocable Proxy, dated as of November 19, 142
1999, granted by Richard E. McMahon in favor
of CE Computer Equipment AG.
10 Irrevocable Proxy, dated as of November 19, 144
1999, granted by Brian H. Hajost in favor of CE
Computer Equipment AG.
Page 11 of 145
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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER, dated as of November 19, 1999
(this "Agreement"), between CE COMPUTER EQUIPMENT AG, an Aktiengesellschaft
organized and existing under the laws of the Federal Republic of Germany
("Parent") and TREEV, INC., a Delaware corporation ("Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (i) has
determined that the merger of the Merger Sub (as defined herein) with and into
the Company (the "Merger") is fair to and in the best interest of the Company
and its shareholders and has approved, and declared the advisability of, this
Agreement and the transactions, including, without limitation, the Merger,
contemplated hereby (the "Transactions") and (ii) has recommended the adoption
of this Agreement and the approval of the Transactions by the shareholders of
the Company;
WHEREAS, the Management Board (Vorstand) of Parent has
approved this Agreement and the Transactions in accordance with the laws of the
Federal Republic of Germany and has authorized the execution and delivery of
this Agreement;
WHEREAS, certain holders of Common Stock, par value $.0001 per
share, of the Company (the "Company Common Stock") have entered into a Voting
and Registration Rights Agreement with Parent, dated as of the date hereof (the
"Voting Agreement"), pursuant to which such holders of Company Common Stock have
agreed to vote all shares of the Company Common Stock owned by them in favor of
the Transactions at the Company Stockholders' Meeting (as defined herein);
WHEREAS, certain holders of ordinary shares, without par
value, (the "Parent Ordinary Shares"), of Parent have entered into a Voting
Agreement with the Company, dated as of the date hereof (the "Parent Voting
Agreement"), pursuant to which such holders of Parent Ordinary Shares have
agreed to vote all of the Parent Ordinary Shares owned by them in favor of the
Transactions at the Parent Stockholders' Meeting (as defined herein);
WHEREAS, the holder of the Company's Series M Convertible
Preferred Stock, par value $.0001 (the "Series M Preferred Stock"), and the
Series M1 Convertible Preferred Stock, par value $.0001 (the "Series M1
Preferred Stock"), has entered into an agreement with Parent, dated as of the
date hereof (the "Series M and Series M1 Agreement"), pursuant to which such
holder of Series M Preferred Stock and Series M1 Preferred Stock has agreed not
to exercise certain rights granted to him upon a change of control event;
WHEREAS, the Merger will be consummated upon the terms and
subject to the conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL");
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2
WHEREAS, for United States federal income tax purposes, the
Merger is intended to qualify as a reorganization within the meaning of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, the parties hereto intend that the Merger shall be
accounted for as a "pooling of interests" for financial reporting purposes under
applicable United States accounting rules and the accounting standards of the
United States Securities and Exchange Commission (the "SEC");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. Formation of Merger Sub. As promptly as
practicable following the date hereof, Parent shall appoint a United States bank
or trust company or other independent financial institution in the United States
reasonably satisfactory to Parent to act as exchange agent for the Share
Exchange (as defined below) and the delivery of the Merger Consideration (as
defined below) to former stockholders of the Company (the "Exchange Agent").
Following such appointment, the Exchange Agent shall cause to be incorporated
pursuant to the DGCL a corporation which shall be a constituent company in the
Merger (the "Merger Sub") and which shall not transact any business other than
participating in the Merger as described herein. Parent shall enter into an
Exchange Agent Agreement with the Exchange Agent in form and substance
reasonably satisfactory to Parent and the Company, which agreement shall set
forth the duties, responsibilities and obligations of the Exchange Agent
consistent with the terms of this Agreement. Solely to accommodate the
transactions described in this Article I and Article II, the Exchange Agent
shall hold, as the agent of Parent, all the issued and outstanding shares of
common stock, par value $.01 per share, of the Merger Sub (the "Merger Sub
Common Stock").
SECTION 1.02. The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the DGCL, at the Effective
Time (as defined below), the Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of the
Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.03. Effective Time; Closing. As promptly as
practicable and in no event later than the third business day following the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII (or such other date as may be agreed in writing by each of the parties
hereto), the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in such form as is required by, and executed in
accordance with, the
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3
relevant provisions of the DGCL. The term "Effective Time" means the date and
time of the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware. Immediately prior to the filing of the Certificate of
Merger, a closing (the "Closing") will be held at the offices of Shearman &
Sterling, 801 Pennsylvania Avenue, NW, Suite 900, Washington, D.C. 20004 (or
such other place as the parties may agree).
SECTION 1.04. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the property, rights, privileges, powers and franchises
of the Company and the Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities, obligations, restrictions, disabilities and duties of
each of the Company and the Merger Sub shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.05. Certificate of Incorporation; Bylaws. (a) At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended and restated in its entirety to read as the Certificate of
Incorporation of the Merger Sub, as in effect immediately prior to the Effective
Time, and shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such Certificate of
Incorporation; provided, however, that, at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall read as follows:
"The name of the Corporation is TREEV, Inc."
(b) At the Effective Time, the Bylaws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
SECTION 1.06. Officers. The officers of the Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, and such individuals shall serve until their successors shall have
been elected and shall qualify. A list of such officers is attached hereto as
Exhibit A.
SECTION 1.07. Board of Directors. The directors of the Merger
Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, and such individuals shall serve until their successors
shall have been elected and shall qualify. A list of such directors is attached
hereto as Exhibit B.
ARTICLE II
SHARE EXCHANGE; CONVERSION OF SECURITIES; EXCHANGE OF
CERTIFICATES
SECTION 2.01. The Share Exchange. Consistent with the terms of
this Agreement, as soon as possible after the Effective Time, Parent shall issue
the Parent
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4
Ordinary Shares (as defined below) underlying the Parent ADSs (as defined below)
to be issued on behalf of Parent in connection with the Merger (the "Merger
Consideration") and shall cause the Merger Consideration to be delivered to the
Exchange Agent for the account of the former stockholders of the Company, and
the Exchange Agent shall contribute, for the account of the former stockholders
of the Company, all of the issued and outstanding shares of Surviving
Corporation Common Stock (as defined below) to Parent as a transfer in kind (the
"Share Exchange"). Subject to Section 6.15, such exchange shall be effected in
accordance with ss.52 and ss.ss. 203, 185 et seq. (including in particular
ss.187) of the German Stock Corporation Law (Aktiengesetz) by registering the
contribution in kind agreement (Einbringungsvertrag) and the increase of the
Parent stated share capital with the commercial register (Handelsregister) for
Parent. At the Effective Time, the obligation of the parties to effect the Share
Exchange shall be unconditional.
SECTION 2.02. Conversion of Company Common Stock and Company
Preferred Stock. At the Effective Time, by virtue of the Merger and without any
action on the part of the Merger Sub, the Company or the holders of any share of
Company Common Stock or of any share of Preferred Stock, par value $.0001, of
the Company (the "Company Preferred Stock"), the outstanding Company Common
Stock and Company Preferred Stock shall be converted as follows:
(a) each share of Company Common Stock held in the
treasury of the Company or owned by Parent or any direct wholly owned subsidiary
of Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof, and no payment shall be made with
respect thereto;
(b) each issued and outstanding share of Series A
Cumulative Convertible Preferred Stock, par value $.0001 (the "Series A
Preferred Stock"), issued and outstanding immediately prior to the Effective
Time shall be converted, subject to Section 2.05, into the right to receive the
greater of (the "Series A Preferred Stock Exchange Ratio") (i) that number of
Parent American Depositary Shares ("Parent ADSs"), each representing one Parent
Ordinary Share, equal to $10.00 divided by the Parent Average Closing Price (as
defined below) and (ii) that number of Parent ADSs equal to a fraction (x) the
numerator of which is the sum of (A) 0.84 plus (B) 1.20 multiplied by the
product of (1) 1.92 and (2) the average closing price per share of Company
Common Stock as reported on the NASDAQ National Market System ("NASDAQ") during
the period commencing on the 17th trading day prior to the Company Stockholders'
Meeting and ending on the third trading day prior to the Company Stockholders'
Meeting (the "Determination Period"), and (y) the denominator of which is the
Parent Average Closing Price. For purposes of this Section 2.02, the "Parent
Average Closing Price" shall be the average closing price per Parent Ordinary
Share as reported on the Neuer Markt segment of the Frankfurt Stock Exchange
(the "Neuer Markt") during the Determination Period converted into U.S. dollars
at the average noon buying rate in New York City for cable transfers in Euros as
certified for customs purposes by the Federal Reserve Bank of New York during
the Determination Period;
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5
(c) subject to adjustment pursuant to paragraph (f) of
this Section 2.02, each issued and outstanding share of Series M Preferred Stock
issued and outstanding immediately prior to the Effective Time shall be
converted, subject to Section 2.05, into the right to receive that number of
Parent ADSs (as such number may be adjusted pursuant to paragraph (f) of this
Section 2.02, the "Series M Preferred Stock Exchange Ratio") equal to $4.00
divided by the Parent Average Closing Price;
(d) subject to adjustment pursuant to paragraph (f) of
this Section 2.02, each issued and outstanding share of Series M1 Preferred
Stock issued and outstanding immediately prior to the Effective Time shall be
converted, subject to Section 2.05, into the right to receive that number of
Parent ADSs (as such number may be adjusted pursuant to paragraph (f) of this
Section 2.02, the "Series M1 Preferred Stock Exchange Ratio") equal to $4.00
divided by the Parent Average Closing Price;
(e) subject to adjustment pursuant to paragraph (f) of
this Section 2.02, each issued and outstanding share of Company Common Stock
issued and outstanding immediately prior to the Effective Time shall be
converted, subject to Section 2.05, into the right to receive that number of
Parent ADSs (as such number may be adjusted pursuant to paragraph (f) of this
Section 2.02, the "Common Stock Exchange Ratio") equal to a fraction (i) the
numerator of which is 1,330,000 less the aggregate number of Parent ADSs
issuable pursuant to paragraphs (b), (c) and (d) of this Section 2.02 and
paragraphs (a)(iii) and (b) of Section 2.04 and (ii) the denominator of which is
the number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time;
(f) (i) if the Series M Preferred Stock Exchange Ratio
as initially calculated pursuant to paragraph (c) of this Section 2.02 is less
than the number of Parent ADSs into which the shares of Company Common Stock
into which a share of Series M Preferred Stock is convertible would be converted
into the right to receive in the Merger, then the Common Stock Exchange Ratio as
initially calculated pursuant to paragraph (e) of this Section 2.02 shall be
decreased and the Series M Preferred Stock Exchange Ratio as initially
calculated pursuant to paragraph (c) of this Section 2.02 shall be increased, in
each case to the extent (and only to the extent) necessary so that the Series M
Preferred Stock Exchange Ratio shall equal the number of Parent ADSs into which
the shares of Company Common Stock into which a share of Series M Preferred
Stock is convertible would be converted into the right to receive in the Merger
pursuant to paragraph (e) of this Section 2.02;
(ii) if the Series M1 Preferred Stock Exchange Ratio as
initially calculated pursuant to paragraph (d) of this Section 2.02 is less than
the number of Parent ADSs into which the shares of Company Common Stock into
which a share of Series M1 Preferred Stock is convertible would be converted
into the right to receive in the Merger, then the Common Stock Exchange Ratio as
initially calculated pursuant to paragraph (e) of this Section 2.02 shall be
decreased and the Series M1 Preferred Stock Exchange Ratio as initially
calculated pursuant to paragraph (d) of this Section 2.02 shall be increased, in
each case to the extent (and only to the extent) necessary so that the Series M1
Preferred Stock
<PAGE>
6
Exchange Ratio shall equal the number of Parent ADSs into which the shares of
Company Common Stock into which a share of Series M1 Preferred Stock is
convertible would be converted into the right to receive in the Merger pursuant
to paragraph (e) of this Section 2.02;
(iii) In no event shall any adjustment to the Common
Stock Exchange Ratio, the Series M Preferred Stock Exchange Ratio or the Series
M1 Preferred Stock Exchange Ratio pursuant to this Section 2.02(f) result in the
aggregate number of Parent ADSs issuable in connection with the Transactions
exceeding 1,330,000;
(g) each share of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding as one validly issued, fully paid and nonassessable share of common
stock, par value $.0001 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock"); and
(h) to the extent that any person would otherwise be
entitled to receive a fraction of a Parent ADS pursuant to this Section 2.02,
such fraction shall be treated in accordance with Section 2.06.
SECTION 2.03. Exchange of Shares of Company Common Stock and
Company Preferred Stock.
(a) Exchange Fund. The aggregate Merger Consideration
transferred by Parent to the Exchange Agent pursuant to Section 2.01, together
with any dividends or other distributions with respect to Parent ADSs to be made
pursuant to Section 2.03(c), is referred to herein as the "Exchange Fund".
(b) Exchange Procedures. Promptly after the Effective
Time, the Exchange Agent will mail to each former record holder of shares of
Company Common Stock and each former record holder of shares of Company
Preferred Stock entitled to receive Merger Consideration pursuant to Section
2.02, a form of letter of transmittal which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of a certificate or certificates formerly evidencing shares of Company
Common Stock or shares of Company Preferred Stock (together, the "Old Company
Certificates") to the Exchange Agent and instructions for use in effecting the
surrender to the Exchange Agent of Old Company Certificates in exchange for
Parent ADSs. The letter of transmittal shall contain such other terms and
conditions as Parent and the Company shall reasonably specify. Upon surrender of
an Old Company Certificate to the Exchange Agent, together with a letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and any other documents reasonably required by the Exchange Agent or
Parent and the Company, (i) the holder of such Old Company Certificate shall be
entitled to receive in exchange therefor (x) an American Depositary Receipt
("ADR") registered in the name of such holder evidencing the number of whole
Parent ADSs and a check for cash in lieu of any fractional Parent ADS into which
the shares of Company Common Stock or Company Preferred Stock previously
evidenced by such Old Company Certificate shall have
<PAGE>
7
been converted at the Effective Time and (y) if applicable, a check payable to
such holder representing the payment of any dividends and distributions pursuant
to Section 2.03(c), and (ii) such Old Company Certificate shall forthwith be
cancelled. If any cash is to be paid to, or any ADR evidencing Parent ADSs is to
be issued in the name of, a person other than the person in whose name the Old
Company Certificate so surrendered in exchange therefor is registered, it shall
be a condition of the payment or issuance that the Old Company Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such exchange shall pay any transfer or other
taxes required by reason of the payment of cash to, or the issuance of an ADR
evidencing Parent ADSs in the name of, a person other than the registered holder
of the Old Company Certificate so surrendered or shall establish to the
satisfaction of the Exchange Agent and Parent that such tax has been paid or is
not applicable. Until surrendered in accordance with the provisions of this
Section 2.03, each Old Company Certificate shall, at and after the Effective
Time, represent for all purposes only the right to receive Parent ADSs, cash in
lieu of any fractional Parent ADS and any dividends and distributions as
provided in Section 2.03(c), if any.
(c) Dividends; Distributions. No dividends or other
distributions declared after the Effective Time on Parent ADSs and payable to
the holders of record thereof after the Effective Time shall be paid to the
holder of any unsurrendered Old Company Certificates with respect to which the
Parent ADSs shall have been issued in the Merger. All such dividends or other
distributions shall be paid to the Exchange Agent (on behalf of holders of
unsurrendered Old Company Certificates) and shall be included in the Exchange
Fund, in each case until such Old Company Certificates shall be surrendered as
provided herein, but (i) upon such surrender there shall be paid to the person
in whose name the ADRs evidencing such Parent ADSs shall be issued and
registered the amount of dividends theretofore paid with respect to such Parent
ADSs as of any date subsequent to the Effective Time, and (ii) at the
appropriate payment date or as soon as practicable thereafter, there shall be
paid to such person the amount of dividends with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such Parent ADSs, subject in any case to any applicable
abandoned property, escheat and similar laws. No interest shall be payable with
respect to the payment of such dividends on the surrender of any outstanding Old
Company Certificates.
(d) No Further Rights in Company Common Stock and
Company Preferred Stock. All Parent ADSs issued upon conversion of the Company
Common Stock and the Company Preferred Stock in accordance with the terms hereof
(including any cash paid pursuant to Sections 2.03(b) and 2.03(c)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to the
Company Common Stock and the Company Preferred Stock.
(e) Transfer Books. After the Effective Time, there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock and shares of Company
Preferred Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Old Company Certificates are presented to the
Surviving Corporation, they shall be cancelled and
<PAGE>
8
exchanged for ADRs evidencing Parent ADSs or cash, or both, in accordance with
the procedures set forth in this Article II.
(f) Affiliates Letter. Notwithstanding anything to the
contrary contained herein, for purposes of qualifying the transactions
contemplated hereby for "pooling-of-interests" accounting treatment under
applicable United States accounting rules, including, without limitation,
applicable SEC accounting standards, no Parent ADSs (or a check for cash in lieu
of fractional shares) shall be delivered to a person who is an affiliate of the
Company unless such person shall have executed and delivered an agreement in the
form of Exhibit E or unless the Company and Parent shall have determined that
the transactions contemplated by this Agreement will not be accounted for as a
"pooling-of-interests" under United States generally accepted accounting
principles ("U.S. GAAP") because of other circumstances.
(g) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of the Old Company
Certificates one year after the Effective Time shall be delivered by the
Exchange Agent to a depositary bank designated by Parent, upon demand, whereupon
such depositary bank shall hold the Exchange Fund on behalf of holders of
unsurrendered Old Company Certificates, and any holders of the Old Company
Certificates who have not theretofore complied with this Section 2.03 shall
thereafter look only to Parent or such depositary bank for payment of their
claim for Merger Consideration and any dividends or distributions with respect
to Parent ADSs and Parent shall cause the depositary bank to satisfy such claim.
Such depositary bank shall maintain an office in the City of New York where
holders of Old Company Certificates may comply with this Article II. No interest
shall be paid in respect of any property or amounts held in the Exchange Fund.
(h) Withholding Taxes. Each of the Exchange Agent and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Old Company Certificates
such property or amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or non-U.S. tax law. To the extent that any property or amounts are so withheld
by the Exchange Agent or Parent, as the case may be, such withholdings shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Old Company Certificate in respect of which such deduction and withholding
was made by the Exchange Agent or Parent, as the case may be.
(i) No Liability. None of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any Parent ADSs, any dividends or distributions with respect to Parent ADSs or
any cash from the Exchange Fund, in each case properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(j) Lost, Stolen Or Destroyed Certificates. If any Old
Company Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that
<PAGE>
9
fact by the person claiming such Old Company Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by such
person of a bond in such reasonable amount as such entity may direct as
indemnity against any claim that may be made against it with respect to such Old
Company Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Old Company Certificate the appropriate number of Parent
ADSs, determined pursuant to Section 2.02, cash in lieu of any fractional Parent
ADS and, if applicable, any unpaid dividends and distributions on Parent ADSs
deliverable in respect thereof, in each case pursuant to this Agreement.
SECTION 2.04. Treatment of the Company Stock Plans and the
Company Warrants. (a) Subject to the consummation of the Merger, not later than
immediately prior to the Effective Time (i) the Company shall terminate the
Company Stock Plans (as defined below) and any other plan, program or
arrangement providing for the issuance, grant or purchase of any other interest
in respect of the capital stock of the Company without prejudice to the Company
Optionholders (as defined below); (ii) the Company shall cause all amounts
currently held as cash in participant accounts under the Company's Employee
Stock Purchase Plan to be returned to the applicable participants and all
previously purchased shares of Company Common Stock held in such accounts to be
distributed to the applicable participants; and (iii) the Parent and the Company
shall take all actions necessary to provide that each holder (a "Company
Optionholder") of an employee stock option (each a "Company Stock Option") that
is outstanding immediately prior to the Effective Time will be given the right
to receive, in exchange for each such Company Stock Option (whether or not then
vested and exercisable), that fraction of a Parent ADS equal to the "fair value"
of such Company Stock Option (calculated as generally accepted using the
"Black-Scholes" methodology, and as agreed to in good faith by
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") and Ernst & Young LLC
("Ernst & Young")), calculated as of the last day of the Determination Period,
divided by the Parent Average Closing Price (the "Option Exchange").
(b) Subject to the consummation of the Merger, not
later than immediately prior to the Effective Time, the Parent and the Company
shall take all actions necessary to provide that each holder (a "Company
Warrantholder") of a warrant to acquire Company Common Stock (each a "Warrant")
that is outstanding immediately prior to the Effective Time will be given the
right to receive, in exchange for each such Warrant (whether or not then
exercisable), that fraction of a Parent ADS equal to the "fair value" of such
Warrant (calculated as generally accepted using the "Black-Scholes" methodology,
and as agreed to in good faith by PricewaterhouseCoopers and Ernst & Young),
calculated as of the last day of the Determination Period, divided by the Parent
Average Closing Price (the "Warrant Exchange" and, together with the Option
Exchange, the "Option and Warrant Exchange").
(c) To the extent that any person would otherwise be
entitled to receive a fraction of a Parent ADS pursuant to this Section 2.04,
such fraction shall be treated in accordance with Section 2.06.
<PAGE>
10
(d) The Company agrees to use its reasonable best efforts, if
the Transactions contemplated by this Agreement shall be accounted for as a
"pooling-of-interests" under applicable United States accounting rules,
including, without limitation, applicable SEC accounting standards, to take such
actions (including, but not limited to, adopting all required amendments) with
respect to (i) all compensation and benefit plans and arrangements and (ii) all
awards outstanding under such plans or arrangements, in each case that are
required to enable the Transactions contemplated by this Agreement to be
accounted for as a "pooling-of-interests" under applicable United States
accounting rules, including, without limitation, applicable SEC accounting
standards.
SECTION 2.05. Antidilution Protection For Exchange Ratio. If,
between the date of this Agreement and the Effective Time, the outstanding
Parent Ordinary Shares or shares of Company Common Stock or Company Preferred
Stock shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, stock split,
combination or exchange of shares or a stock dividend or dividend payable in any
other securities shall be declared with a record date within such period, or any
similar event shall have occurred, the Common Stock Exchange Ratio, the Series A
Preferred Stock Exchange Ratio, the Series M Preferred Stock Exchange Ratio and
the Series M1 Preferred Stock Exchange Ratio, as the case may be, shall be
appropriately adjusted to provide to the holders of Company Common Stock and
Company Preferred Stock the same economic effect as contemplated by this
Agreement prior to such event.
SECTION 2.06. Treatment of Fractional Shares. (a) As promptly
as practicable following the Effective Time, the Exchange Agent will determine
the excess of (x) the aggregate number of Parent ADSs delivered to the Exchange
Agent over (y) the aggregate number of whole Parent ADSs to be distributed in
connection with the Merger (such excess being referred to herein as the "Excess
Shares"). Following the Effective Time the Exchange Agent will, on behalf of the
former stockholders of the Company, sell the Excess Shares at then-prevailing
prices on NASDAQ in the manner provided in Section 2.06(b).
(b) The sale of the Excess Shares by the Exchange Agent
will be executed on NASDAQ through one or more member firms and will be executed
in round lots to the extent practicable. The Exchange Agent will use reasonable
efforts to complete the sale of the Excess Shares as promptly following the
Effective Time as, in its sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing market
conditions. Until the net proceeds of such sale or sales have been distributed
to the former stockholders of the Company, the Exchange Agent will hold such
proceeds in trust for such holders (the "Company Shares Trust"). All
commissions, transfer taxes and other out-of-pocket transaction costs incurred
in connection with such sale of Excess Shares shall be deducted from the
proceeds of such sale. The Exchange Agent will determine the portion of the
Company Shares Trust to which each holder of Company Common Stock or Company
Preferred Stock is entitled, if any, by multiplying the amount of the aggregate
net proceeds comprising the Common Shares Trust by a fraction, the numerator of
which is the amount of the fractional share interest to which such holder of
Company Common Stock or Company
<PAGE>
11
Preferred Stock is entitled (after taking into account all such shares
held at the Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of Company
Common Stock or Company Preferred Stock are entitled pursuant to the Merger.
(c) As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of Company Common Stock with
respect to fractional share interests, the Exchange Agent will make available
such amounts to such holders. The parties acknowledge that the payment of cash
in lieu of the issuance of fractional Parent ADSs is not separately bargained
for consideration but merely represents a mechanical rounding off to avoid the
administrative and accounting issues that may be caused by the issuance of
fractional Parent ADSs.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect. The Company is duly qualified or licensed as a
foreign corporation to do business, and is in good standing in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Company Material Adverse Effect.
The term "Company Material Adverse Effect" means any change in or effect on the
business conducted by the Company that, individually or in the aggregate with
any other changes in or effects on the business conducted by the Company is
materially adverse to the business, operations, properties, financial condition,
assets or liabilities (including, without limitation, contingent liabilities) or
prospects of the Company.
(b) As of the date of this Agreement, the Company has
no subsidiaries. Except as set forth in Section 3.01(a) of the Disclosure
Schedule delivered by the Company to Parent prior to the execution of this
Agreement (the "Company Disclosure Schedule"), the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, limited liability company, partnership, joint venture or other
business association or entity.
<PAGE>
12
SECTION 3.02. Certificate of Incorporation and Bylaws. The
copy of the Company's Restated Certificate of Incorporation and the copy of the
Company's Bylaws, each as amended to date, that are both incorporated by
reference as exhibits to the Company's Form 10-K for the period ending December
31, 1998 are complete and correct copies thereof. Such Restated Certificate of
Incorporation and Bylaws are in full force and effect. The Company is not in
violation of any of the provisions of its Restated Certificate of Incorporation
or Bylaws.
SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of 100,000,000 shares of Company Common Stock and
20,000,000 shares of Company Preferred Stock. As of the date hereof, (i)
14,017,001 shares of Company Common Stock are issued and outstanding, all of
which were validly issued, fully paid and nonassessable, (ii) no shares of
Company Common Stock are held in the treasury of the Company, (iii) 1,750,000
shares of Series A Preferred Stock are authorized of which 1,605,025 shares are
issued and outstanding, all of which were validly issued, fully paid and
nonassessable, (iv) 4,000 shares of Series M Preferred Stock and 1,000 shares of
Series M1 Preferred Stock are authorized, all of which are issued and
outstanding and were validly issued, fully paid and nonassessable, (v) 1,222,452
shares of Company Common Stock were reserved for future issuance pursuant to the
terms of the Warrants and (vi) 3,111,317 shares of Company Common Stock were
reserved for issuance pursuant to Company Stock Options granted pursuant to the
benefit plans set forth on Section 3.03(a) of the Company Disclosure Schedule
(the "Company Stock Plans"). Except for the Company Stock Options granted
pursuant to the Company Stock Plans and shares of Company Common Stock issuable
pursuant to the Company Stock Plans, the issuance of shares of Company Common
Stock upon the conversion of the Company's Series A Preferred Stock, Series M
Preferred Stock and Series M1 Preferred Stock and the issuance of shares of
Company Common Stock upon the exercise of the Company's Warrants, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which the Company is a party or by which the Company is bound
relating to the issued or unissued capital stock of the Company or obligating
the Company to issue or sell any shares of capital stock of, or other equity
interests in, the Company. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Section
3.03(b) of the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in any person. Section
3.03(c) of the Company Disclosure Schedule contains a true and complete list of
all Warrants of the Company currently outstanding and exercisable, setting forth
the name of the current holder of such Warrant, the number of shares for which
such Warrant is exercisable, the exercise price and the expiration date. There
are no registration rights that are currently exercisable relating to any
Warrants or to any shares of Company Common Stock underlying the Warrants and
following the Effective Time, no such registration rights will be exercisable.
<PAGE>
13
SECTION 3.04. Authority Relative to this Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
adoption of this Agreement by the affirmative vote of a majority of the
outstanding shares of Company Common Stock entitled to vote with respect thereto
at the Company Stockholders' Meeting and the filing and recordation of the
Certificate of Merger as required by the DGCL). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the consummation of
the Transactions will not, (i) conflict with or violate any provision of the
Restated Certificate of Incorporation or Bylaws of the Company, (ii) assuming
that all consents, approvals, authorizations and permits described in Section
3.05(b) have been obtained and all filings and notifications described in
Section 3.05(b) have been made, conflict with or violate any United States
(federal, state or local) or foreign statute, law, ordinance, regulation, rule,
code, executive order, injunction, judgment, decree or other order ("Law")
applicable to the Company or by which any property or asset of the Company is
bound or affected or (iii) except as set forth in Section 3.05(a) of the Company
Disclosure Schedule, result in any breach of or constitute a default (or an
event which with the giving of notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, Company Permit (as
defined below), franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would neither, individually or in the
aggregate, (A) have a Company Material Adverse Effect nor (B) prevent or
materially delay the performance by the Company of its obligations under this
Agreement or the consummation of the Transactions.
<PAGE>
14
(b) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations hereunder
and the consummation of the Transactions will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
United States federal, state or local or any supranational or foreign
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal or arbitral body (a "Governmental Entity"), except (i)
applicable requirements of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), the rules and regulations of NASDAQ, the
rules and regulations of the Neuer Markt, state takeover laws, the premerger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), the
provisions of Section 721 of Title VII of the Defense Production Act of 1950, as
amended, and the regulations promulgated thereunder (the "Exon-Florio
Provision"), the notification requirements of the Office of Defense Trade
Controls (the "ODTC"), the filing and recordation of the Certificate of Merger
as required by the DGCL and as set forth in Section 3.05(b) of the Company
Disclosure Schedule, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
(A) prevent or materially delay the performance by the Company of its
obligations under this Agreement or the consummation of the Transactions or (B)
individually or in the aggregate have a Company Material Adverse Effect.
SECTION 3.06. Permits; Compliance with Laws. (a) The Company
has in effect of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Company Permits"), and all the Company Permits are valid and in full force and
effect, except where the failure to have, or the suspension or cancellation of,
any of the Company Permits, or the failure of any of such Company Permits to be
valid and in effect would not, individually or in the aggregate, (i) have a
Company Material Adverse Effect, or (ii) except as described in Section 3.06(a)
of the Company Disclosure Schedule, prevent or materially delay the performance
by the Company of its obligations under this Agreement or the consummation of
the Transactions, and, as of the date of this Agreement, no suspension or
cancellation of any of the Company Permits is pending or, to the knowledge of
the Company, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would not, individually or in the
aggregate, (i) have a Company Material Adverse Effect or (ii) prevent or
materially delay the performance by the Company of its obligations under this
Agreement or the consummation of the Transactions.
(b) Except as disclosed in Section 3.06(b) of the
Company Disclosure Schedule, the Company is not in conflict with, or in default
or violation of, (i) any Law applicable to the Company or by which any property
or asset of the Company is bound or affected, (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
<PAGE>
15
franchise or other instrument or obligation to which the Company is a party or
by which the Company or any property or asset of the Company is bound or
affected or (iii) any Company Permits, except in the case of each of clauses
(i), (ii) or (iii) for any such conflicts, defaults or violations that would
neither individually nor in the aggregate, (A) have a Company Material Adverse
Effect nor (B) prevent or materially delay the performance by the Company of its
obligations under this Agreement or the consummation of the Transactions.
SECTION 3.07. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1996 through the date of this Agreement
(collectively, the "Company Reports"). The Company Reports were prepared, and
all forms, reports and documents filed with the SEC after the date of this
Agreement and prior to the Effective Time will be prepared, in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and contained or will contain all exhibits required to be filed pursuant to the
Securities Act or the Exchange Act, as the case may be, and none of the Company
Reports contained, at the time it was filed, or, if amended, as of the date of
such amendment, nor will any forms, reports and documents filed with the SEC
after the date of this Agreement and prior to the Effective Time 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 made therein, in
the light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company Reports
and in any form, report or document filed after the date of this Agreement and
prior to the Effective Time was, or will be, as the case may be, prepared in
accordance with U.S. GAAP, except in the case of unaudited statements as
permitted by Form 10-Q under the Exchange Act, applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presents, or will fairly present, in all material
respects, the consolidated financial position of the Company and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not, and are not expected, individually or in the
aggregate, to have a Company Material Adverse Effect). The books and records of
the Company have been and are being maintained in accordance with U.S. GAAP and
any other applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the
audited balance sheet of the Company at December 31, 1998, including the notes
thereto, as included in the Company's Form 10-K for the year ended December 31,
1998 (the "1998 Company Balance Sheet"), the Company does not have any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet, or in
the notes thereto, prepared in accordance with U.S. GAAP, except for liabilities
and obligations incurred since December 31, 1998, which would not have a Company
Material Adverse Effect.
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16
(d) The Company has heretofore furnished to Parent
complete and correct copies of all amendments and modifications that have not
been filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since
December 31, 1998, except as set forth in Section 3.08 of the Company Disclosure
Schedule, or as expressly contemplated by this Agreement, or specifically
disclosed in any Company Report filed since December 31, 1998 and prior to the
date of this Agreement, (a) the Company has conducted its business only in the
ordinary course and in a manner consistent with past practice, (b) there has not
been any Company Material Adverse Effect, and (c) the Company has not taken any
action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 5.01.
SECTION 3.09. Absence of Litigation. Except as set forth in
Section 3.09 of the Company Disclosure Schedule or as disclosed in the Company
Reports filed with the SEC prior to the date of this Agreement, there is no
litigation, suit, claim, action, arbitration or proceeding, or inquiry or
investigation of which the Company has received notice, pending or, to the
knowledge of the Company, threatened against the Company or any property or
asset of the Company, by or before any court, arbitrator or Governmental Entity,
domestic or foreign, which (i) if determined in a manner adverse to the Company,
would, individually or in the aggregate, have a Company Material Adverse Effect,
or (ii) seeks to delay or prevent the consummation of any Transaction. Neither
the Company nor any property or asset of the Company is subject to any order,
writ, judgment, injunction, decree, determination or award having, individually
or in the aggregate, a Company Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. (a) Section 3.10(a) of
the Company Disclosure Schedule contains a true and complete list of (i) each
employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and each other
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other material benefit plans, programs or arrangements, and all
employment, termination, severance or other contracts or agreements to which the
Company is a party, with respect to which the Company has any obligation or
which are maintained, contributed to or sponsored by the Company for the benefit
of any current or former employee, officer or director of the Company, (ii) each
employee benefit plan which is subject to Title IV of ERISA or Section 302 of
the Code or the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") and which is maintained, contributed to or to which there is
an obligation to contribute by Company or any affiliate, (iii) any plan in
respect of which the Company could incur liability under Section 4212(c) of
ERISA and (iv) any material contracts, arrangements or understanding between the
Company or any of its affiliates and any employee of the Company, including,
without limitation, any contracts, arrangements or understandings relating to
the sale of the Company (collectively, the "Plans"). Each Plan is in writing and
the Company has previously
<PAGE>
17
furnished Parent with a true and complete copy of each Plan and a true and
complete copy of each material document prepared in connection with each such
Plan, or if such Plan is not set forth in a written document, the Company has
previously furnished Parent with a written summary of such Plan, including,
without limitation, (i) a copy of each trust or other funding arrangement, (ii)
each summary plan description and summary of material modifications, (iii) the
Internal Revenue Service ("IRS") Form 5500, filed with respect to the three most
recent plan years (iv) the most recently received IRS determination letter for
each such Plan, and (v) the actuarial report and financial statement prepared in
connection with each such Plan with respect to the three most recent plan years.
Other than as specifically disclosed in Section 3.10(a) of the Company
Disclosure Schedule, there are no other material employee benefit plans,
programs, arrangements or agreements, whether formal or informal, whether in
writing or not, to which the Company is a party, with respect to which the
Company has any obligation or which are maintained, contributed to or sponsored
by the Company, for the benefit of any current or former independent contractor
of the Company or any current or former employee, officer or director of the
Company. None of the Company or any affiliate has any express or implied
commitment (i) to create, incur liability with respect to or cause to exist any
other employee benefit plan, program or arrangement, (ii) to enter into any
contract or agreement to provide compensation or benefits to any individual or
(iii) to modify, change or terminate any Plan, other than with respect to a
modification, change or termination required by ERISA or the Code or as
specifically required by the terms of this Agreement.
(b) Other than as specifically disclosed in Section
3.10(b) of the Company Disclosure Schedule, none of the Plans (i) is a
multiemployer plan, within the meaning of Sections 3(37) or 4001(a)(3) of ERISA
(a "Multiemployer Plan"), or a single employer pension plan, within the meaning
of Section 4001(a)(15) of ERISA, for which the Company could incur liability
under Sections 4063 or 4064 of ERISA (a "Multiple Employer Plan"); (ii) provides
for the payment of separation, severance, termination or similar-type benefits
to any person; (iii) obligates the Company to pay separation, severance,
termination or other benefits as a result of any Transaction; (iv) obligates the
Company to make any payment or provide any benefit that could likely be subject
to a tax under Section 4999 of the Code; or (v) provides for or promises
post-termination of employee welfare plan benefits within the meaning of Section
3(3) of ERISA, including, without limitation, post-retirement medical or life
insurance benefits, to any current or former employee, officer or director of
the Company, except for the continuation of health care benefits under COBRA.
With respect to each Multiemployer Plan and Multiple Employer Plan, Section
3.10(b) of the Disclosure Schedule sets forth an accurate and current statement
of the total amount of withdrawal liability that the Company would incur in the
event of a complete withdrawal, within the meaning of Title IV of ERISA, from
each such plan. Each of the Plans is subject only to the laws of the United
States or a political subdivision thereof.
(c) Each Plan which is intended to be qualified under
Section 401(a) or Section 401(k) of the Code has received a favorable
determination letter from the IRS that such Plan is so qualified, and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has
<PAGE>
18
received a determination letter from the IRS that such trust is so exempt.
No fact or event has occurred since the date of any such determination letter
from the IRS that could likely have an adverse affect on the qualified status of
any such Plan or the exempt status of any such trust. Each trust maintained or
contributed to by the Company for the benefit of any current or former
independent contractor of the Company or any current or former employee, officer
or director of the Company which is intended to be qualified as a voluntary
employees' beneficiary association exempt from federal income taxation under
Sections 501(a) and 501(c)(9) of the Code has received a favorable determination
letter from the IRS that it is so qualified and so exempt, and no fact or event
has occurred since the date of such determination by the IRS that could
adversely affect such qualified or exempt status.
(d) There has been no prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to
any Plan. None of the Company or any affiliate is currently liable or has
previously incurred any liability for any tax or penalty arising under Sections
4971, 4972, 4979, 4980 or 4980B of the Code or Sections 502(c) or 4204, of
ERISA, and no fact or event exists which could give rise to any such liability.
None of the Company or any affiliate has incurred any liability under, arising
out of or by operation of Title IV of ERISA (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee pension benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and no fact or event exists which could give rise to any such
liability. No complete or partial termination for purposes of ERISA has occurred
within the five years preceding the date hereof with respect to any Plan that
the Company has maintained, sponsored or contributed to during the six-year
period preceding the Effective Time. No reportable event (within the meaning of
Section 4043 of ERISA) has occurred or is expected to occur with respect to any
Plan subject to Title IV of ERISA. No asset of the Company is the subject of any
lien arising under Section 302(f) of ERISA or Section 412(n) of the Code; the
Company has not been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists which could give
rise to any such lien or requirement to post any such security.
(e) Each Plan is now and has always been operated in
all material respects in accordance with the requirements of all applicable
Laws, including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such Plans and all Plan "fiduciaries" (within
the meaning of Section 3(21) of ERISA) have always acted in all material
respects in accordance with the provisions of all applicable Laws, including,
without limitation, ERISA and the Code. The Company has always performed all
material obligations required to be performed by it under, is not in any respect
in default under or in violation of, and has no knowledge of any default or
violation by any party to, any Plan. No legal action, suit or claim is pending
or, to the Company's knowledge, threatened with respect to any Plan (other than
claims for benefits in the ordinary course) and no fact or event exists that
could likely give rise to any such action, suit or claim. No Plan has incurred
an "accumulated funding deficiency" (within the meaning of Section 302 of ERISA
or Section 412 of the Code), whether or not waived. All contributions, premiums
or payments
<PAGE>
19
required to be made with respect to any Plan are fully deductible for income tax
purposes to the extent permitted by applicable Law, and no such deduction
previously claimed has been challenged by any Governmental Entity. The unaudited
balance sheet of the Company as at September 30, 1999, including the notes
thereto, as included in the Company's Form 10-Q (the "Third Quarter 1999 Company
Balance Sheet") reflects an accrual of all amounts of employer contributions and
premiums accrued but unpaid with respect to the Plans. With respect to each Plan
subject to Title IV of ERISA, the projected benefit obligations ("PBO") of each
such Plan (determined in accordance with the assumptions utilized by the Pension
Benefit Guaranty Corporation on a termination basis) does not exceed the fair
market value of the assets of such Plan (determined as of the date of the most
recent actuarial valuation) attributable to such obligations.
(f) Other than as specifically disclosed in Section
3.10(f) of the Company Disclosure Schedule, the Company is in compliance with
the requirements of the Americans with Disabilities Act.
(g) The Company has not incurred any liability under,
and has complied in all respects with, the Worker Adjustment Retraining
Notification Act and the regulations promulgated thereunder and all similar
state and local "plant-closing" laws ("WARN"), and does not reasonably expect to
incur any such liability as a result of actions taken or not taken prior to the
Effective Time. Section 3.10(g) of the Company Disclosure Schedule lists (i) all
the employees terminated or laid off by the Company during the 90 days prior to
the date hereof and (ii) all the employees of the Company who have experienced a
reduction in hours of work of more than 50% during any month during the 90 days
prior to the date hereof and describes all notices given by the Company in
connection with WARN. The Company will, by written notice to Parent, update
Section 3.10(g) of the Company Disclosure Schedule to include any such
terminations, layoffs and reductions in hours from the date hereof through the
Effective Time and will provide Parent with any related information which they
may reasonably request.
(h) The Company has made available to Parent true and
complete copies of, and where not written, written summaries of (i) all
employment and consulting agreements or other arrangements with executive
officers of the Company and with each other officer of the Company providing for
annual compensation in excess of $60,000, (ii) all severance plans, agreements,
programs and policies of the Company with or relating to its employees, (iii)
all bonus plans, agreements, programs and policies of the Company with or
relating to its employees whether written or unwritten, and (iv) all plans,
programs, agreements and other arrangements of the Company with or relating to
its employees which contain "change of control" provisions or provide for the
acceleration of vesting or the payment of benefits.
(i) Other than as specifically disclosed in Section
3.10(i) of the Company Disclosure Schedule, no amount paid or payable by the
Company in connection with the Transactions either solely as a result thereof or
as a result of such Transactions in conjunction with any other events will be an
"excess parachute payment" within the meaning
<PAGE>
20
of Section 280G of the Code and there are no agreements or arrangements in place
that would result, individually or in the aggregate, in the actual or deemed
payment by the Company of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(j) Except as provided in Section 3.10(j) of the
Company Disclosure Schedule or as otherwise required by Law, no Company Benefit
Plan provides retiree medical or retiree life insurance benefits to any person,
except for any continuation of health care benefits under COBRA.
SECTION 3.11. Labor Matters. (a) Except as set
forth in Section 3.11(a) of the Company Disclosure Schedule, (i) there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company and any of its employees, other than routine proceedings for
unemployment or worker's compensation benefits; (ii) the Company is not a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by the Company, nor are there any activities or proceedings
of any labor union to organize any such employees; (iii) the Company has not
breached or otherwise failed to comply with any provision of any collective
bargaining agreement or union contract, and there are no grievances outstanding
against the Company under any such agreement or contract; (iv) there are no
unfair labor practice complaints pending against the Company before the National
Labor Relations Board or any current union representation questions involving
employees of the Company; (v) there is no strike, slowdown, work stoppage or
lockout, or, to the knowledge of the Company, threat thereof, by or with respect
to any employees of the Company; (vi) the Company is in material compliance with
all applicable Laws relating to the employment of labor, including, but not
limited to, those related to wages, hours, collective bargaining and the payment
and withholding of taxes and other sums as required by the appropriate
Governmental Entity and the Company has withheld and paid to the appropriate
Governmental Entity or is holding for payment not yet due to such Governmental
Entity all amounts required to be withheld from employees of the Company and is
not liable for any arrears of wages, taxes, penalties or other sums for failure
to comply with any of the foregoing; (vii) the Company has paid in full to all
its employees or adequately accrued for in accordance with U.S. GAAP all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees; and (viii) there is no charge of discrimination in
employment or employment practices, for any reason, including, without
limitation, age, gender, race, religion or other legally protected category,
which has been asserted or is now pending or threatened before the United States
Equal Employment Opportunity Commission, or any other Governmental Entity in any
jurisdiction in which the Company has employed or currently employs any Person.
(b) Section 3.11(b) of the Company Disclosure Schedule
lists the name, accrued vacation, the place of employment, the current annual
salary rates, bonuses, deferred or contingent compensation, pension, "golden
parachute" and other like benefits paid or payable (in cash or otherwise) in the
fiscal year ended December 31, 1999 and which the Company has an obligation or
is required to pay, or which are scheduled for payment, in the fiscal year
ending December 31, 2000, the date of employment and a description of the
<PAGE>
21
position and job function of each current salaried employee whose total annual
compensation exceeds $90,000, officer and director of the Company and of each
consultant or agent of the Company whose total annual compensation for services
provided exceeds $90,000 who is employed or otherwise engaged in the Company.
SECTION 3.12. Real Property and Leases (a) Section 3.12(a) of
the Company Disclosure Schedule lists: (i) the street address of each parcel of
real property leased by the Company, as tenant, (ii) the identity of the lessor,
lessee and current occupant (if different from lessee) of each such parcel of
leased real property and (iii) the current use of each such parcel of leased
real property.
(b) The Company has delivered to the Parent true and
complete copies of all leases and subleases listed in Section 3.12(a) of the
Company Disclosure Schedule and any and all material ancillary documents
pertaining thereto (including, but not limited to, all amendments, consents for
alterations and documents recording variations and evidence of commencement
dates and expiration dates).
(c) The Company has sufficient title or leasehold
interests to all its properties and assets to conduct its business as currently
conducted or as contemplated to be conducted.
(d) All leases of real property leased for the use or
benefit of the Company to which the Company is a party requiring rental payments
in excess of $100,000 during the period of the lease, and all amendments and
modifications thereto, are in full force and effect and have not been modified
or amended, and there exists no default under any such lease by the Company, nor
any event which, with notice or lapse of time or both, would constitute a
default thereunder by the Company, which would permit any such lease to be
terminated by the other party thereto.
(e) To the knowledge of the Company, there are no
contractual or legal restrictions that preclude or restrict the ability to use
any real property leased by the Company for the purposes for which it is
currently being used. To the knowledge of the Company, there are no material
latent defects or material adverse physical conditions affecting the real
property, and improvements thereon, leased by the Company other than those which
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
SECTION 3.13. Intellectual Property.
(a) "Intellectual Property" shall mean: trademarks,
service marks, trade names, URLs and Internet domain names, designs and slogans
(collectively, "Trademarks"); patents (including any registrations,
continuations, continuations in part, renewals and applications for any of the
foregoing); copyrights (including any registrations and applications therefor);
computer software; databases; technology, trade secrets, confidential
information, know-how, proprietary processes, proprietary formulae, proprietary
algorithms,
<PAGE>
22
proprietary models, customer lists, inventions, source codes and
object codes (collectively, "Trade Secrets").
(b) Section 3.13(b) of the Company Disclosure Schedule sets
forth, for the Intellectual Property owned by the Company, a complete and
accurate list of all United States and foreign (i) patents and patent
applications; (ii) Trademark registrations (including material Internet domain
registrations) and applications and material unregistered Trademarks; and (iii)
copyright registrations and applications, indicating for each, the applicable
jurisdiction, registration number (or application number), and date issued (or
date filed).
(c) Section 3.13(c) of the Company Disclosure Schedule sets
forth a complete and accurate list of all material license agreements granting
to the Company any right to use or practice any rights under any Intellectual
Property other than Intellectual Property which is used for infrastructural
purposes and is commercially available on reasonable terms, (collectively, the
"License Agreements"), indicating for each the title and the parties thereto;
(d) Except as disclosed in Section 3.13(d) of the
Company Disclosure Schedule or as would not have a Company Material Adverse
Effect:
(i) the Company owns, free and clear of any
mortgage, pledge, security interest, attachment, encumbrance, lien or
charge of any kind, judgment, order or decree of any court or
Government Entity and arbitration awards, all Intellectual Property
used in the Company's business, and has a valid and enforceable right
to use all of the Intellectual Property licensed to the Company and
used in the Company's business;
(ii) the conduct of the Company's business as
currently conducted does not infringe upon any Intellectual Property
rights of any third party;
(iii) there is no suit, action, arbitration,
cause of action, claim, complaint, criminal prosecution, investigation,
demand letter, governmental or other administrative proceeding, whether
at law or at equity, before or by any court or Governmental Entity or
before any arbitrator pending or, to the Company's knowledge,
threatened, or any written claim from any person (A) alleging that the
Company's activities or the conduct of its businesses infringes upon,
violates, or constitutes the unauthorized use of the Intellectual
Property rights of any third party or (B) challenging the ownership,
use, validity or enforceability of any Intellectual Property owned by
the Company or, to the knowledge of the Company, licensed to the
Company;
(iv) to the knowledge of the Company, no third
party is misappropriating, infringing, diluting, or violating any
Intellectual Property owned by
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23
the Company and no such claims have been brought against any third
party by the Company; and
(v) the execution, delivery and performance by
the Company of this Agreement, and the consummation of the Transactions
will not result in the loss or impairment of, or give rise to any right
of any third party to terminate, any of the Company's rights to own any
of its Intellectual Property or its rights under the License
Agreements, nor require the consent of any Governmental Entity or third
party in respect of any such Intellectual Property.
(vi) The Software owned or purported to be
owned by the Company was either (A) developed by employees of Company
within the scope of their employment; (B) developed by independent
contractors who have assigned their rights to the Company pursuant to
written agreements; or (C) otherwise acquired by the Company from a
third party. For purposes of this Section 3.13(d)(vi), "Software" means
any and all (v) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in
source code or object code, (w) databases and compilations, including
any and all data and collections of data, whether machine readable or
otherwise, (x) descriptions, flow- charts and other work product used
to design, plan, organize or develop any of the foregoing, (y) the
technology supporting any Internet site(s) operated by or on behalf of
the Company and (z) all documentation, including user manuals and
training materials, relating to any of the foregoing.
(e) All material Trademarks registered in the United
States or any foreign jurisdiction have been in continuous use by the Company.
To the knowledge of the Company, there has been no prior use of such Trademarks
by any third party which would confer upon such third party superior rights in
such Trademarks; and the material Trademarks registered in the United States or
any foreign jurisdiction have been continuously used in the form appearing in,
and in connection with the goods and services listed in, their respective
registration certificates.
(f) Except as would not have a Company Material Adverse
Effect, the Company has taken reasonable steps in accordance with normal
industry practice to protect the Company's rights in confidential information
and Trade Secrets of the Company. Without limiting the foregoing and except as
would not have a Company Material Adverse Effect, since June 17, 1996 the
Company has enforced a policy of requiring each relevant employee, consultant
and contractor to execute proprietary information, confidentiality and
assignment agreements substantially in the Company's standard forms, and, except
under confidentiality obligations, to the knowledge of the Company there has
been no disclosure by the Company, any of its agents, employees, consultants,
contractors or other third party of material confidential information or Trade
Secrets.
SECTION 3.14. Year 2000 Compliance. The Company has (i)
undertaken an assessment of those Company Systems that could be adversely
affected by a failure to be
<PAGE>
24
Year 2000 Compliant, (ii) developed a plan and time line for rendering such
Company Systems Year 2000 Compliant, and (iii) to date, implemented such plan in
accordance with such timetable in all material respects. Based on such
inventory, review and assessment, all Company Systems are Year 2000 Compliant or
will be Year 2000 Compliant as required to avoid having a Company Material
Adverse Effect. The Company estimates that, as of June 30, 1999, the total
remaining cost of rendering the Company Systems Year 2000 Compliant was $90,000.
"Company Systems" means all computer, hardware, Software, Software systems and
equipment (including embedded microcontrollers in non-computer equipment)
embedded within or required to operate the products of the Company (including
existing products and technology and products and technology currently under
development), and/or material to or necessary for the Company to carry on its
business as currently conducted. "Year 2000 Compliant" means that the Company
Systems provide uninterrupted millennium functionality in that the Company
Systems will record, store, process and present calendar dates falling on or
after January 1, 2000, in the same manner and with the same functionality as the
Company Systems record, store, process and present calendar dates falling on or
before December 31, 1999.
SECTION 3.15. Taxes. (a) For purposes of this Agreement, "Tax"
or "Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts, and
other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto or with
respect to the failure to file any Return in a timely manner) imposed by any
governmental or taxing authority including, without limitation: taxes or other
charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges.
(b) (i) All returns and reports in respect of Taxes
("Returns") required to be filed by or with respect to the Company or any of its
former subsidiaries or any consolidated, combined or unitary group of which the
Company is or was a member since December 31, 1995 have been timely filed; (ii)
all Returns required to be filed by or with respect to the Company or any of its
former subsidiaries or any consolidated, combined or unitary group of which the
Company is or was a member prior to January 1, 1996 have been filed; (iii) all
Taxes required on such Returns have been timely paid or accrued for on the books
of accounts of the Company; (iv) all such Returns are true, correct and complete
in all material respects; (v) no adjustment in excess of $5,000 relating to such
Returns has been proposed formally or informally by any taxing authority; (vi)
there are no pending or, to the best knowledge of the Company, threatened
actions or proceedings for the assessment or collection of Taxes or in respect
of any liability for Taxes against the Company; (vii) no consent under Section
341(f) of the Code has been filed with respect to the Company; (viii) there are
no tax liens on any assets of the Company; (ix) no acceleration of the vesting
schedule, payment or delivery for any (A) property that is substantially
nonvested within the meaning of the regulations under Section 83 of the Code, or
(B) any form of incentive award (excluding the Company Stock Options) will occur
in connection with the transactions
<PAGE>
25
contemplated by this Agreement; (x) the Company has not been a member of any
partnership or joint venture or the holder of a beneficial interest in any trust
(other than a trust described in Section 3.10) during any period for which the
statute of limitations for any Tax has not expired; (xi) the Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (xii) the Company is not subject to any
accumulated earnings tax penalty or personal holding company tax; and (xiii) all
Taxes required by law to be withheld or collected by the Company have been so
withheld or collected, and have been properly remitted to the appropriate
government or taxing authority when due.
(c) (i) There are no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any Tax to
which the Company may be subject or liable; (ii) the Company (A) has not had and
is not projected to have any amount includible in income for the current taxable
year under Sections 551 or 951 of the Code, (B) does not have unrecaptured
overall foreign losses within the meaning of Section 904(f) of the Code and (C)
has not participated in or cooperated with an international boycott within the
meaning of Section 999 of the Code; (iii) the Company does not have any (A)
income reportable for a period ending after the Effective Time but attributable
to a transaction (e.g., an installment sale) occurring in or a change in
accounting method made for a period ending on or prior to the Effective Time
that resulted in a deferred reporting of income from such transaction or from
such change in accounting method (other than a deferred intercompany
transaction), or (B) deferred gain or loss arising out of any deferred
intercompany transaction; (iv) there are no requests for information currently
outstanding that could affect the Taxes of the Company; (v) there are no
proposed reassessments of any property (other than real property) owned by the
Company or other proposals that could increase the amount of any Tax to which
the Company would be subject; (vi) the Company is not obligated under any
agreement with respect to industrial development bonds or other obligations with
respect to which the excludibility from gross income of the holder for U.S.
federal income tax purposes could be affected by the transactions contemplated
hereunder; and (vii) no power of attorney that is currently in force has been
granted with respect to any matter relating to Taxes that could affect the
Company.
(d) Reserves and allowances have been provided for on
the 1998 Company Balance Sheet and on the Third Quarter 1999 Company Balance
Sheet in an amount adequate to satisfy all liabilities for Taxes relating to the
Company through such periods consistent with U.S. GAAP.
(e) Section 3.15(e) of the Company Disclosure Schedule
sets forth the amount of the Company's federal net operating loss carryforwards
as of January 1, 1999.
SECTION 3.16. Environmental Matters. (a) For purposes of
this Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) those substances defined in or regulated under
the following U.S. federal statutes and their state or foreign counterparts and
all regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the
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26
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Toxic Substances Control Act and the Clean Air Act; (B) petroleum
and petroleum products including crude oil and any fractions thereof; (C)
natural gas, synthetic gas, and any mixtures thereof; (D) radon; (E) asbestos;
and (F) any substance with respect to which any federal, state or local agency
with jurisdiction over such matter requires environmental investigation,
monitoring, reporting or remediation; and (ii) "Environmental Laws" means any
applicable U.S. federal, state or local or foreign Law relating to (A) releases
or threatened releases of Hazardous Substances or materials containing Hazardous
Substances; (B) the manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Substances or materials containing Hazardous Substances;
or (C) otherwise relating to pollution of the environment or the protection of
human health.
(b) Except as described in Section 3.16 of the Company
Disclosure Schedule or as would not, individually or in the aggregate, have a
Company Material Adverse Effect: (i) the Company has not violated and is not in
violation of any Environmental Law; (ii) there has been no contamination,
disposal, spilling, dumping, incineration, discharge, storage, treatment or
handling of any Hazardous Substance, on or from any of the properties currently
or, to the knowledge of the Company, formerly leased or operated by the Company
or any former subsidiary of the Company (including, without limitation, soils
and surface and ground waters); (iii) the Company is not actually, or to the
knowledge of the Company, potentially or allegedly liable for any off-site
contamination by Hazardous Substances; (iv) the Company is not actually, or to
the knowledge of the Company, potentially or allegedly liable under any
Environmental Law (including, without limitation, pending or threatened liens);
(v) the Company has all permits, licenses and other authorizations required
under any Environmental Law ("Environmental Permits"); (vi) the Company has
always been and is in compliance with its Environmental Permits; (vii) there are
no pending, or, to the knowledge of the Company, threatened claims against the
Company relating to any Environmental Law or Hazardous Substance; and (viii)
neither the execution of this Agreement nor the consummation of the Transactions
will require any investigation, remediation or other action with respect to
Hazardous Substances, or any notice to or consent of Governmental Entities or
third parties, pursuant to any applicable Environmental Law or Environmental
Permit.
SECTION 3.17. Material Contracts. (a) Section 3.17 of the
Company Disclosure Schedule contains a list of all contracts and agreements
(including, without limitation, oral and informal arrangements) to which the
Company is a party and that are material to the business, operations,
properties, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of the Company (such
contracts, agreements and arrangements as are required to be set forth in
Section 3.17(a) of the Company Disclosure Schedule together with all contracts
for employment and all contracts and agreements providing for benefits under any
Plan required to be listed in Section 3.10 of the Company Disclosure Schedule
being referred to herein collectively as the "Material Contracts"). Material
Contracts shall include, without limitation, the following, and shall be
categorized in the Company Disclosure Schedule as follows:
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27
(i) each contract and agreement which (A) is likely to
involve consideration of more than $100,000, in the aggregate, during
the calendar year ending December 31, 1999, (B) is likely to involve
consideration of more than $100,000, in the aggregate, over the
remaining term of such contract, and which, in either case, cannot be
canceled by the Company without penalty or further payment and without
more than 90 days' notice;
(ii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Company is a party which involve or are likely to involve
consideration of $100,000 or more individually or $500,000 or more in
the aggregate;
(iii) all management contracts (excluding contracts for
employment) and contracts with other consultants, including any
contracts involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or income
or revenues related to any product of the Company to which the Company
is a party which involve or are likely to involve consideration of
$100,000 or more individually or $500,000 or more in the aggregate;
(iv) all contracts and agreements under which the
Company has created, incurred, assumed or guaranteed (or may create,
incur, assume or guarantee) indebtedness or under which the Company has
imposed (or may impose) a security interest or lien on any of its
assets, whether tangible or intangible, to secure indebtedness which
involve or are likely to involve consideration of $50,000 or more
individually or $250,000 or more in the aggregate;
(v) all contracts and agreements with any Governmental
Entity to which the Company is a party which involve or are likely to
involve consideration of $100,000 or more individually or $500,000 or
more in the aggregate;
(vi) all contracts and agreements that limit the ability
of the Company to compete in any line of business or with any person or
entity or in any geographic area or during any period of time;
(vii) all contracts and agreements between or among the
Company and any affiliate of the Company; and
(viii) all other contracts and agreements, whether or not made
in the ordinary course of business, which are material to the Company
or the conduct of its business, or the absence of which would,
individually or in the aggregate, have a Company Material Adverse
Effect.
(b) Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect, each Material Contract is a
legal, valid and binding agreement, and
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28
none of the Material Contracts is in default by its terms or has been canceled
by the other party; the Company is not in receipt of any claim of default under
any such agreement; and the Company does not anticipate any termination of, or
change to, or receipt of a proposal with respect to, any Material Contract as a
result of the Transactions or otherwise. The Company has furnished or made
available to Parent true and complete copies of all Material Contracts,
including all amendments thereto.
SECTION 3.18. Insurance. (a) Section 3.18(a) of the Company
Disclosure Schedule sets forth, with respect to each insurance policy under
which the Company has been an insured, a named insured or otherwise the
principal beneficiary of coverage at any time within the past three years, (i)
the names of the insurer, the principal insured and each named insured, (ii) the
policy number, (iii) the period, type, scope and amount of coverage and (iv) the
premium charged.
(b) With respect to each such insurance policy: (i) the
policy is legal, valid, binding and enforceable in accordance with its terms
and, except for policies that have expired under their terms in the ordinary
course, is in full force and effect; (ii) the Company is not in material breach
or default (including any such breach or default with respect to the payment of
premiums or the giving of notice), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination or modification, under the policy; (iii) no party to the policy has
repudiated in writing, or given notice of an intent to repudiate, any provision
thereof; and (iv) to the knowledge of the Company, no insurer on the policy has
been declared insolvent or placed in receivership, conservatorship or
liquidation.
(c) At no time subsequent to January 1, 1997 has the
Company (i) been denied any insurance or indemnity bond coverage which it has
requested, (ii) made any material reduction in the scope or amount of its
insurance coverage, or (iii) received notice from any of its insurance carriers
that any insurance premiums will be subject to increase in an amount materially
disproportionate to the amount of the increases with respect thereto (or with
respect to similar insurance) in prior years or that any insurance coverage
listed in Section 3.18(a) of the Company Disclosure Schedule will not be
available in the future substantially on the same terms as are now in effect.
(d) Section 3.18(d) of the Company Disclosure Schedule
sets forth all risks against which the Company is self-insured or which are
covered under any risk retention program in which the Company participates,
together with details of the Company's loss experience during the last five
years with respect to product liability risks and during the last three years
with respect to all other covered risks.
(e) Except as may result from any facts or
circumstances relating solely to Parent or any of its affiliates, no insurance
policy listed in Section 3.18(a) of the Company Disclosure Schedule will cease
to be legal, valid, binding, enforceable in accordance with its terms and in
full force and effect on terms identical to those in effect as of the date
hereof as a result of the consummation of the Transactions.
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29
SECTION 3.19. Receivables. Section 3.19 of the Company
Disclosure Schedule sets forth an aged list of the Receivables of the Company as
of the date of the Third Quarter 1999 Company Balance Sheet showing separately
those Receivables that as of such date had been outstanding (i) 29 days or less,
(ii) 30 to 59 days, (iii) 60 to 89 days, (iv) 90 to 119 days and (v) more than
119 days. Except to the extent, if any, reserved for on the Third Quarter 1999
Company Balance Sheet, all Receivables reflected on the Third Quarter 1999
Company Balance Sheet arose from, and the Receivables existing on the date of
Closing will have arisen from, the sale of inventory or services to Persons not
affiliated with the Company and in the ordinary course of business consistent
with past practice and, except as reserved against on the Third Quarter 1999
Company Balance Sheet, constitute or will constitute, as the case may be, only
valid, undisputed claims of the Company not subject to valid claims of set-off
or other defenses or counterclaims other than normal cash discounts accrued in
the ordinary course of business consistent with past practice. All Receivables
reflected on the Third Quarter 1999 Company Balance Sheet or arising from the
date thereof until the Closing (subject to the reserve for bad debts, if any,
reflected on the Third Quarter 1999 Company Balance Sheet), to the knowledge of
the Company, are or will be good and have been collected or are or will be
collectible, without resort to litigation or extraordinary collection activity,
within 120 days of the Closing (or if the terms of any such Receivable permit
payment within a longer period of time, within such period of time).
"Receivables" means any and all accounts receivable, notes and other amounts
receivable by the Company from third parties, including, without limitation,
customers, arising from the conduct of the business of the Company or otherwise
before the date of Closing, whether or not in the ordinary course, together with
all unpaid financing charges accrued thereon.
SECTION 3.20. Brokers. No broker, finder or investment banker
(other than Banc of America Securities LLC ("Banc of America")) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Banc of America pursuant to which such firm
would be entitled to any payment relating to this Agreement or the Transactions.
SECTION 3.21. Accounting and Tax Matters. Except as disclosed
in the Company Reports or in Section 3.21 of the Company Disclosure Schedule,
neither the Company nor, to the knowledge of the Company, any of its affiliates
has taken or agreed to take any action (other than actions contemplated by this
Agreement) (a) that would prevent the Transactions from qualifying for "pooling
of interests" accounting treatment under applicable United States accounting
rules, including, without limitation, applicable SEC accounting standards, or
(b) that would prevent the Transactions from constituting a reorganization
within the meaning of Section 368(a) of the Code. The Company is not aware of
any agreement, plan or other circumstance that would prevent the Transactions
from so qualifying under Section 368(a) of the Code or from qualifying for
"pooling of interests" accounting treatment.
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30
SECTION 3.22. Pooling Affiliates. Section 3.22 of the Company
Disclosure Schedule sets forth the names and addresses of those persons who are,
in the Company's reasonable judgment, "affiliates" within the meaning of Rule
145 of the rules and regulations promulgated under the Securities Act or
applicable SEC accounting releases with respect to pooling of interests
accounting treatment (each such person, a "Pooling Affiliate") of the Company.
SECTION 3.23. Vote Required. The only vote of the holders of
any class or series of capital stock of the Company necessary to approve this
Agreement and the Transactions is the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock in favor of the
adoption of this Agreement (the "Company Stockholder Approval").
SECTION 3.24. State Takeover Statutes. The Board of Directors
of the Company has approved the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Merger and this Agreement the
provisions of Section 203 of the DGCL to the extent, if any, such Section is
applicable to the Merger and this Agreement. To the knowledge of the Company, no
other state takeover statute or similar statute or regulation applies to or
purports to apply to the Merger or this Agreement.
SECTION 3.25. Opinion of Financial Advisor. The Company has
received the written opinion of Banc of America, dated a date reasonably
proximate to the date hereof, to the effect that, as of such date, the
consideration to be received in the Merger by the Company's security holders is
fair to the Company from a financial point of view, a copy of which opinion
shall promptly, after the date of this Agreement, be delivered to Parent for
informational purposes only. Banc of America has authorized the inclusion of its
opinion in full in the Proxy Statement (as defined below).
SECTION 3.26. Board Approval. The Board of Directors of the
Company has, as of the date of this Agreement, (i) determined that the
Transactions are fair to, and in the best interests of the Company and its
stockholders, (ii) approved, and declared the advisability of, this Agreement
and the Transactions and (iii) recommended that the stockholders of the Company
adopt this Agreement and approve the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT
Parent hereby represents and warrants to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries.
Each of the Parent and each subsidiary of Parent (the "Parent Subsidiaries") has
been duly organized and is validly existing and in good standing (to the extent
applicable) under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite
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31
corporate power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
Each of Parent and each Parent Subsidiary is duly qualified or licensed to do
business, and is in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" means any
change in or effect on the business conducted by Parent that, individually or in
the aggregate with any other changes in or effects on the business conducted by
Parent is materially adverse to the business, operations, properties, financial
condition, assets or liabilities (including, without limitation, contingent
liabilities) or prospects of Parent and the Parent Subsidiaries taken as a
whole. Section 4.01(a) of the Disclosure Schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule") sets forth a complete and correct list of all the Parent
Subsidiaries. Except as set forth in Section 4.01(b) of the Parent Disclosure
Schedule, neither Parent nor any Parent Subsidiary owns directly or indirectly
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, limited liability company, partnership, joint venture or other
business association or entity.
SECTION 4.02. Organizational Documents. Parent heretofore has
furnished to the Company a complete and correct copy of its Articles of
Association (Satzung) and Management Board (Vorstand) Rules of Procedure
(Geschaftsordnung).
SECTION 4.03. Capitalization. As of the date hereof, (i) the
stated capital of Parent is euro 3,857,145, (ii) the authorized capital of
Parent is euro 1,928,572.50 and (iii) Parent has conditional capital of
euro 328,680 for issuance pursuant to stock options to be granted pursuant to
the benefit plan referred to in Section 4.03(a) of the Parent Disclosure
Schedule (the "Parent Stock Plan"). Except as set forth in Section 4.03(b) of
the Parent Disclosure Schedule and except for Parent Ordinary Shares issuable
pursuant to the Parent Stock Plan, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which either
Parent or any Parent Subsidiary is a party or by which either Parent or any
Parent Subsidiary is bound relating to the issued or unissued capital stock of
either Parent or any Parent Subsidiary or obligating either Parent or any Parent
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, either Parent or any Parent Subsidiary. Except as set forth in
Section 4.03(c) of the Parent Disclosure Schedule, there are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
or otherwise acquire any Parent Ordinary Shares or any capital stock of any
Parent Subsidiary. Except as disclosed in Section 4.03(d) of the Parent
Disclosure Schedule, each outstanding share of capital stock of each Parent
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by Parent or another Parent Subsidiary is free and clear
of all security interests, liens, claims, pledges,
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32
options, rights of first refusal, agreements, limitations on Parent's or such
other Parent Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever, except where the failure to own such shares free and clear
would not, individually or in the aggregate, have a Parent Material Adverse
Effect. Except as set forth in Section 4.03(e) of the Parent Disclosure Schedule
there are no material outstanding contractual obligations of Parent or any
Parent Subsidiary to provide funds to, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any Parent Subsidiary
which is not wholly owned by Parent or in any other person.
SECTION 4.04. Authority Relative to this Agreement. Parent has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and the
consummation by Parent of the Transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement or
to consummate the Transactions (other than the approval of this Agreement by the
affirmative vote of 75% of the outstanding Parent Ordinary Shares represented at
the Parent Stockholders' Meeting, the approval of the Supervisory Board
(Aufsichtsrat) of Parent and the filing of this Agreement and the approval of
the capital increase by the Management Board (Vorstand) and the Supervisory
Board (Aufsichtsrat) of Parent with the commercial register (Handelsregister)
for Parent). This Agreement has been duly executed and delivered by Parent and,
assuming the due authorization, execution and delivery by the other parties
hereto and subject to Section 6.15, constitutes the legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors' rights
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or law).
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent do not, and the
performance by Parent of its obligations hereunder and thereunder and the
consummation of the Transactions will not, (i) conflict with or violate any
provision of the Articles of Association (Satzung) or Management Board
(Vorstand) Rules of Procedure (Geschaftsordnung) of Parent, (ii) assuming that
all consents, approvals, authorizations and permits described in Section 4.05(b)
have been obtained and all filings and notifications described in Section
4.05(b) have been made, conflict with or violate any Law applicable to Parent or
by which any property or asset of Parent is bound or affected or (iii) except as
set forth in Section 4.05(a) of the Parent Disclosure Schedule, result in any
breach of or constitute a default (or an event which with the giving of notice
or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Parent
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (i), (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would neither,
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33
individually or in the aggregate, (A) have a Parent Material Adverse Effect nor
(B) prevent or materially delay the performance by Parent of its obligations
pursuant to this Agreement or the consummation of the Transactions.
(b) The execution and delivery of this Agreement by Parent do
not, and the performance by Parent of its obligations hereunder and the
consummation of the Transactions by Parent will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) applicable requirements of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules and regulations of NASDAQ, the rules
and regulations of the Neuer Markt, state takeover laws, the premerger
notification requirements of the HSR Act, appropriate filings under the
Exon-Florio Provision, the notification requirements of the ODTC, the filing and
recordation of the Certificate of Merger as required by the DGCL, compliance
with ss.ss. 52 and 33 of the German Stock Corporation Law (Aktiengesetz), the
filing of this Agreement and the approval of the capital increase by the
Management Board (Vorstand) and the Supervisory Board (Aufsichtsrat) of Parent
with the commercial register (Handelsregister) for Parent and as set forth in
Section 4.05(b) of the Parent Disclosure Schedule, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not (A) prevent or materially delay the
performance by Parent of its obligations pursuant to this Agreement or the
consummation of the Transactions or (B) individually or in the aggregate have a
Parent Material Adverse Effect.
SECTION 4.06. Financial Information, Books and Records. (a)
True and complete copies of (i) the audited consolidated balance sheet of Parent
for each of the two fiscal years ended as of December 31, 1997 and December 31,
1998, and the related audited consolidated statements of income and cashflows of
Parent, together with all related notes and schedules thereto, accompanied by
the reports thereon of the Parent's accountants (collectively referred to herein
as the "Parent Financial Statements)" and (ii) the unaudited consolidated
balance sheet of Parent as of June 30, 1999, and the related consolidated
statements of income and cash flows of Parent, together with all related notes
and schedules thereto (collectively referred to herein as the "Parent Interim
Financial Statements"), have been made available to the Company by Parent. The
Parent Financial Statements and, to the knowledge of Parent, the Parent Interim
Financial Statements (i) were prepared in accordance with the books of account
and other financial records of Parent, (ii) present fairly, in all material
respects, the consolidated financial condition and results of operations of
Parent and the Parent Subsidiaries as of the dates thereof or for the periods
covered thereby, subject, in the case of the Parent Interim Financial
Statements, to normal year-end audit adjustments, (iii) have been prepared in
accordance with the accounting principles of the International Accounting
Standards Committee ("IAS GAAP") applied on a basis consistent with the past
practices of Parent (except as may be indicated therein or in the notes or
schedules thereto) and (iv) include all adjustments (consisting only of normal
recurring accruals) that are necessary in accordance with IAS GAAP for a fair
presentation of the consolidated financial condition of Parent and the Parent
Subsidiaries and the results of the operations of Parent and the Parent
Subsidiaries as of the dates thereof or for the periods covered thereby.
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34
(b) Except as and to the extent set forth on the consolidated
balance sheet of Parent as at December 31, 1998, including the notes thereto
(the "1998 Parent Balance Sheet"), neither Parent nor any Parent Subsidiary has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet, or in the notes thereto, prepared in accordance with IAS GAAP, except for
liabilities and obligations incurred since December 31, 1998 which would not
have a Parent Material Adverse Effect.
(c) The (i) draft unaudited consolidated balance sheets
of Parent for each of the two fiscal years ended as of December 31, 1997 and
December 31, 1998, and the related draft unaudited consolidated statements of
income and cash flows of Parent, together with all related draft notes and
schedules thereto and (ii) draft unaudited consolidated balance sheets of Parent
as of June 30, 1998 and as of June 30, 1999, and the related draft unaudited
consolidated statements of income and cash flows of Parent, together with all
related draft notes and schedules thereto (collectively, the "Draft Financial
Statements") previously made available to the Company by Parent are set forth in
Section 4.06(c) of the Parent Disclosure Schedule. To the knowledge of Parent,
the Draft Financial Statements have been prepared in all material respects in
accordance with U.S. GAAP (except as indicated therein or in the notes thereto
or as set forth in Section 4.06(c) of the Parent Disclosure Schedule).
SECTION 4.07. Absence of Certain Changes or Events. Since
December 31, 1998, except as set forth in Section 4.07 of the Parent Disclosure
Schedule, or as expressly contemplated by this Agreement, and prior to the date
of this Agreement, (a) Parent and the Parent Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice, and (b) there has not been (i) any Parent Material Adverse Effect,
(ii) any declaration, setting aside or payment of any dividend or distribution
in respect of any capital stock of Parent or any redemption, purchase or other
acquisition of any of its securities, (iii) any change by Parent in its
accounting methods, principles or practices, (iv) any revaluation by Parent of
any material asset (including, without limitation, any writing down of the value
of inventory or writing off of notes or accounts receivable), other than in the
ordinary course of business consistent in all material respects with past
practice, or (v) as of the date hereof, any entry by Parent or any Parent
Subsidiary into any commitment or transaction material to Parent and the Parent
Subsidiary taken as a whole, except in the ordinary course of business and
consistent in all material respects with past practice.
SECTION 4.08. Absence of Litigation. Except as set forth in
Section 4.08 of the Parent Disclosure Schedule, there is no suit, action or
proceeding pending, and no person has threatened in a writing delivered to
Parent since January 1, 1998 to commence any suit action or proceeding, against
Parent or any property or asset of Parent that would, individually or in the
aggregate, have a Parent Material Adverse Effect. Neither Parent nor any
property or asset of Parent is subject to any order, writ, judgment, injunction,
decree, determination or award having, individually or in the aggregate, a
Parent Material Adverse Effect.
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35
SECTION 4.09. Intellectual Property. Parent owns, or is
validly licensed or otherwise has the right to use all Intellectual Property
that is material to the conduct of the business of Parent and the Parent
Subsidiaries, taken as a whole. As of the date of this Agreement, no suits,
actions or proceedings are pending, and no person has threatened in a writing
delivered to Parent since January 1, 1998 to commence any suit, action or
proceeding, alleging that Parent or any Parent Subsidiaries are infringing the
rights of any person with regard to any Intellectual Property, except for suits,
actions or proceedings that, individually or in the aggregate, would not have a
Parent Material Adverse Effect. To the knowledge of Parent, no person is
infringing the Intellectual Property rights of Parent or any Parent Subsidiary,
except for infringements which, individually or in the aggregate, would not have
a Parent Material Adverse Effect.
SECTION 4.10. Parent Ordinary Shares. Subject to Section 6.15,
the Parent Ordinary Shares that underlie the Parent ADSs to be delivered in
connection with the Merger have been duly authorized by all necessary corporate
action, and when issued in accordance with this Agreement, will be validly
issued, fully paid and non-assessable and not subject to preemptive rights.
SECTION 4.11. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
Parent.
SECTION 4.12. Accounting and Tax Matters. Except as disclosed
in Section 4.12 of the Parent Disclosure Schedule, neither Parent nor any Parent
Subsidiary nor, to the knowledge of Parent, any of their affiliates has taken or
agreed to take any action (other than actions contemplated by this Agreement)
(a) that would prevent the Transactions from qualifying for "pooling of
interests" accounting treatment under applicable United States accounting rules,
including, without limitation, applicable SEC accounting standards, or (b) that
would prevent the Transactions from constituting a reorganization within the
meaning of Section 368(a) of the Code. Parent is not aware of any agreement,
plan or other circumstance that would prevent the Transactions from so
qualifying under Section 368(a) of the Code or from qualifying for "pooling of
interests" accounting treatment.
SECTION 4.13. Pooling Affiliates. Section 4.13 of the Parent
Disclosure Schedule sets forth the names and addresses of those persons who are,
in Parent's reasonable judgment, a Pooling Affiliate of Parent.
SECTION 4.14. Vote Required. The only vote of the holders of
any class or series of capital stock of Parent necessary to approve this
Agreement is the affirmative vote of the holders of 75% of the outstanding
Parent Ordinary Shares represented at the Parent Stockholders' Meeting (the
"Parent Stockholder Approval").
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
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SECTION 5.01. Conduct of Business by the Company Pending the
Closing. The Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the business of
the Company shall be conducted only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice; and the Company shall use all reasonable efforts to preserve
substantially intact the business organization of the Company, to keep available
the services of the current officers, employees and consultants of the Company
and to preserve the current relationships of the Company with the customers,
suppliers and other persons with which the Company has significant business
relations. By way of amplification and not limitation, except as set forth in
Section 5.01 of the Company Disclosure Schedule or as expressly contemplated by
any other provision of this Agreement, the Company shall not, between the date
of this Agreement and the Effective Time, directly or indirectly, do, or propose
to do, any of the following without the prior written consent of Parent:
(a) amend or otherwise change its Restated Certificate of
Incorporation or Bylaws;
(b) issue, sell, pledge, dispose of, grant, transfer,
lease, license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance of,
(i) any shares of any class of capital stock of the Company, or
securities convertible into or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights
of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom
interest), of the Company (except for (A) the issuance of Company Stock
Options to employees of the Company in the ordinary course of business
and in a manner consistent with past practice and (B) the issuance of
shares of Company Common Stock issuable (v) pursuant to the Company
Stock Options; (w) pursuant to the Company's Employee Stock Purchase
Plan in accordance with the current terms thereof; (x) as dividends
paid to holders of Series A Preferred Stock in accordance with the
current terms thereof; (y) upon the exercise of conversion rights of
the Company Preferred Stock outstanding on the date of this Agreement;
or (z) upon the exercise of Warrants outstanding on the date of this
Agreement), or (ii) any property or assets of the Company, except in
the ordinary course of business and in a manner consistent with past
practice;
(c) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets or any other
business combination) any interest in any corporation, partnership,
other business organization or person or any division thereof or any
assets, other than acquisitions of assets (excluding the acquisition of
a business or substantially all of the stock or assets thereof) in the
ordinary course of business and in a manner consistent with past
practice; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person for
borrowed money, or make any loans or advances, except for
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37
(A) indebtedness for borrowed money incurred in the ordinary course of
business, consistent with past practice and incurred to refinance
outstanding indebtedness for borrowed money existing on the date of
this Agreement, or (B) indebtedness for borrowed money under the Loan
and Security Agreement with Greyrock Capital, up to the limit provided
for in such agreement as of the date of this Agreement; (iii) enter
into any contract or agreement material to the business, results of
operations or financial condition of the Company, in either case other
than in the ordinary course of business, consistent with past
practice; (iv) enter into any contract (other than license agreements
with end users entered into in the ordinary course of business
consistent with past practice) with a value exceeding $500,000 without
first submitting it to Parent for review and prior approval; (v) enter
into any contract for the license of Software by or to the Company,
including, without limitation, any prepaid sale of licenses, other
than in the ordinary course of business, consistent with past
practice; (vi) enter into any contract with any affiliate or any
relative of any of its directors, officers or employees (other than
employment agreements); or (vii) make or authorize any capital
expenditure, other than capital expenditures in the ordinary course of
business consistent with past practice and which are not, in the
aggregate, in excess of $250,000 for the period between the date of
this Agreement and December 31, 1999 and not, in the aggregate, in
excess of $500,000 for the quarter ending March 31, 2000;
(d) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for dividends paid to
holders of Series A Preferred Stock in accordance with the current
terms thereof;
(e) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(f) except in the ordinary course of business and in a
manner consistent with past practice, increase the compensation payable
or to become payable or the benefits provided to its directors,
officers or employees, or grant any rights to severance or termination
pay to, or enter into any employment or severance agreement with, any
director, officer or other employee of the Company, or establish,
adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any current or former director, officer or employee of the Company;
(g) take any action with respect to accounting policies
or procedures (including, without limitation, procedures with respect
to the payment of accounts payable and collection of accounts
receivable) other than reasonable and usual actions in the ordinary
course of business and consistent with past practice, as required by
U.S. GAAP or as may be required by the SEC;
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38
(h) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business and
consistent with past practice;
(j) amend, modify or consent to the termination of any
Material Contract, or amend, waive, modify or consent to the
termination of the Company's rights thereunder, other than in the
ordinary course of business and consistent with past practice;
(k) commence or settle any material litigation, suit,
claim, action, proceeding or investigation; or
(l) announce an intention, authorize or enter into any
formal or informal agreement or otherwise make any commitment to do any
of the foregoing.
SECTION 5.02. Conduct of Business by Parent Pending the
Closing. Parent agrees that, between the date of this Agreement to the Effective
Time, and except (i) to the extent the Company shall otherwise consent in
writing (which consent will not be unreasonably withheld), (ii) as set forth in
Section 5.02 of the Parent Disclosure Schedule or (iii) as contemplated or
permitted by or not inconsistent with this Agreement, Parent shall conduct its
business in the ordinary course and in a manner consistent with past practice
and, to the extent consistent therewith, use reasonable efforts to preserve
substantially intact its current business organization, keep available the
services of its current officers and employees and preserve its relationships
with customers, suppliers and other persons with which Parent has significant
business relations.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Access to Information; Confidentiality. (a)
Except as prohibited by any confidentiality agreement or similar agreement or
arrangement to which Parent or the Company or any of the Parent Subsidiaries is
a party or by applicable Law or the regulations or requirements of any stock
exchange or other regulatory organization with whose rules a party hereto is
required to comply, from the date of this Agreement to the Effective Time, the
Company and Parent shall (and Parent shall cause the Parent Subsidiaries to):
(i) provide to each other (and each other's officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "Representatives")) access at reasonable times upon prior notice
to their officers, employees, agents, properties, offices and other facilities
and to the books and records thereof, and (ii) furnish promptly such information
concerning their business, properties, contracts, assets, liabilities and
personnel as the other parties or their Representatives may reasonably request.
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39
(b) The parties hereto shall comply with their
respective obligations under the Confidentiality Agreement dated July 16, 1999
(the "Confidentiality Agreement") between Parent and the Company with respect to
the information disclosed pursuant to this Agreement.
(c) No investigation pursuant to this Section 6.01
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto.
SECTION 6.02. No Solicitation of Transactions. From the date
hereof to the earlier to occur of the termination of this Agreement and the
Effective Time, none of the Company nor any of its affiliates, officers,
directors, partners, controlling persons, representatives or agents will (a)
solicit, initiate, consider, encourage or accept any other proposals or offers
from any person, other than Parent, (i) relating to any acquisition or purchase
of all or any portion of the assets or capital stock of the Company (other than
sales of inventory in the ordinary course of business consistent with past
practice), (ii) to enter into any business combination with the Company, or
(iii) to enter into any other extraordinary business transaction involving or
otherwise relating to the Company (each a "Competing Transaction"), or (b)
participate in any discussions, conversations, negotiations or other
communications regarding, or furnish to any person, other than Parent, any
information with respect to, or otherwise cooperate in any way, assist or
participate in, facilitate or encourage any effort or attempt by any such other
Person, to seek to do any of the foregoing; provided, however, that nothing
contained in this Section 6.02 shall prohibit the Board of Directors of the
Company from furnishing information to, or entering into discussions or
negotiations with, any person in connection with an unsolicited (from the date
of this Agreement) proposal by such person to acquire the Company pursuant to a
merger, consolidation, share exchange, tender offer, exchange offer, business
combination or other similar transaction or to acquire all or substantially all
of the assets of the Company, if, and only to the extent that, (i) the Board of
Directors of the Company, after consultation with outside legal counsel (which
may include its regularly engaged outside legal counsel), determines in good
faith that such action is required for such Board of Directors to comply with
its fiduciary duties to the Company's stockholders under applicable Law and (ii)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person, the Company obtains from such person an executed
confidentiality agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement. The Company immediately shall cease
and cause to be terminated all existing discussions, conversations, negotiations
and other communications with all persons other than Parent conducted heretofore
with respect to any of the foregoing. The Company shall notify Parent promptly
if any such proposal or offer, or any inquiry or contact with any person with
respect thereto, is made and shall, in any such notice to Parent, indicate in
reasonable detail the identity of the person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer, inquiry
or contact, including, without limitation, a description of any financial terms
of such proposal, offer, inquiry or contact, if applicable. The Company hereby
agrees not to, without the prior written consent of Parent, release any person
from, or
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40
waive any provision of, any confidentiality or standstill agreement to
which the Company is a party.
SECTION 6.03. Registration Statement and Proxy Statement. (a)
As promptly as practicable after the execution of this Agreement, (i) the
Company shall prepare and file with the SEC a proxy statement and any amendment
or supplement thereto (the "Proxy Statement") to be sent to the stockholders of
the Company in connection with the meeting of the Company's stockholders to
consider the Transactions (the "Company Stockholders' Meeting") and (ii) Parent
shall prepare and file with the SEC the registration statement on Form F-4 and
any amendment and supplement thereto pursuant to which the Parent ADSs to be
issued in the Transactions (including in connection with the Option and
Warrant Exchange) will be registered with the SEC (including any amendments or
supplements, the "F-4 Registration Statement"), in which the Proxy Statement
shall be included as a prospectus. Copies of the Proxy Statement shall be
provided to NASDAQ in accordance with its rules. Each of the parties hereto
shall use all reasonable efforts to cause the F-4 Registration Statement to
become effective as promptly as practicable. Parent shall use all reasonable
efforts to cause the F-4 Registration Statement to remain effective until the
closing of the Option and Warrant Exchange. To the extent that presenting this
Agreement and the Merger to the Company's stockholders would not violate
applicable Law, the Company shall use all reasonable efforts to cause the Proxy
Statement to be delivered to the Company's stockholders as promptly as
practicable after the F-4 Registration Statement shall have been declared
effective under the Securities Act. Parent shall also take any action reasonably
required to be taken under any applicable Blue Sky Laws in connection with the
issuance of Parent ADSs in the Transactions (including the Option and Warrant
Exchange), and the Company shall furnish all information concerning the Company
and the holders of Company Common Stock, the Company Optionholders and the
Company Warrantholders as may be reasonably requested in connection with any
such action. Parent or the Company, as the case may be, shall furnish all
information concerning Parent or the Company as the other party may reasonably
request in connection with such actions and the preparation of the F-4
Registration Statement and Proxy Statement. The Company shall cause the Proxy
Statement to comply as to form and substance in all material respects with the
applicable requirements of (i) the Exchange Act, (ii) NASDAQ, (iii) the
Securities Act and (iv) the DGCL.
(b) The Proxy Statement shall include the approval and
the declaration of advisability of this Agreement and the Transactions and the
recommendation of the Board of Directors of the Company to the Company's
stockholders that they vote in favor of the adoption of this Agreement;
provided, however, that the Board of Directors of the Company may, at any time
prior to the Effective Time, withdraw, modify or change any such recommendation
to the extent that the Board of Directors of the Company determines in good
faith, after consultation with outside legal counsel (who may be the Company's
regularly engaged outside legal counsel), that such withdrawal, modification or
change of its recommendation is required by its fiduciary duties to the
Company's stockholders under applicable Law. In addition, the Proxy Statement
shall include the opinion of Banc of America referred to in Section 3.25.
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41
(c) No amendment or supplement to the Proxy Statement
or the F-4 Registration Statement shall be made without the prior review of
Parent and the Company, and any comments of Parent or the Company provided in a
timely manner shall be considered prior to filing such amendment or supplement,
to the extent practicable. Each of the parties hereto shall advise the other
party hereto, promptly after it receives notice thereof, of the time when the
F-4 Registration Statement has become effective or any supplement or amendment
has been filed, of the issuance of any stop order, of the suspension of the
qualification of Parent ADSs issuable in connection with the Transactions
(including the Option and Warrant Exchange) for offering or sale in any
jurisdiction, or of any request by the SEC or NASDAQ for amendment of the Proxy
Statement or the F-4 Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(d) The information supplied by the Company for
inclusion in the F-4 Registration Statement and the Proxy Statement shall not,
at (i) the time the F-4 Registration Statement is filed with the SEC, (ii) the
time the F-4 Registration Statement is declared effective, (iii) the time the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to the stockholders of the Company, (iv) the time of the Company Stockholders'
Meeting, (v) the closing of the Option and Warrant Exchange and (vi) the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, not misleading. If at any time prior to the Effective
Time or the closing of the Option and Warrant Exchange, any event or
circumstance relating to the Company or its officers or directors, should be
discovered by the Company that should be set forth in an amendment or a
supplement to the F-4 Registration Statement or the Proxy Statement, the Company
shall promptly inform Parent. All documents that the Company is responsible for
filing with the SEC in connection with the Transactions shall comply as to form
in all material respects with the applicable requirements of NASDAQ, the DGCL,
the Securities Act and the Exchange Act.
(e) The information supplied by Parent for inclusion in
the F-4 Registration Statement and the Proxy Statement shall not, at (i) the
time the F-4 Registration Statement is filed with the SEC, (ii) the time the F-4
Registration Statement is declared effective, (iii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company, (iv) the time of the Company Stockholders' Meeting,
(v) the closing of the Option and Warrant Exchange and (vi) the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, not misleading. If, at any time prior to the Effective Time or the
closing of the Option and Warrant Exchange, any event or circumstance relating
to Parent or any Parent Subsidiary, or their respective officers or directors,
should be discovered by Parent that should be set forth in an amendment or a
supplement to the F-4 Registration Statement or the Proxy Statement, Parent
shall promptly inform the Company. All documents that Parent are responsible for
filing with the SEC in connection with the Transactions shall comply as to form
in all
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42
material respects with the applicable requirements of NASDAQ, the DGCL,
the Securities Act and the Exchange Act.
(f) Parent shall cause the Option and Warrant Exchange to be
commenced promptly after the F-4 Registration Statement has been declared
effective by the SEC and shall use all reasonable efforts to cause the Option
and Warrant Exchange to be consummated not later than the Effective Time. Parent
shall cause the Option and Warrant Exchange to be commenced by causing the Proxy
Statement and related documents to be mailed to each Company Optionholder and
Company Warrantholder, and the Proxy Statement shall state, in addition to such
other disclosures as are required by applicable Law: (i) that all Company Stock
Options and Warrants validly tendered will be accepted for exchange; (ii) the
dates of acceptance for exchange (which shall be a period of at least 20
business days from the date the Proxy Statement is mailed) (the "Offer Period");
and (iii) that any Company Stock Option or Warrant not tendered will remain
outstanding or otherwise be treated in accordance with its terms. As soon as
practicable after the expiration of the Offer Period, Parent shall (i) cause to
be accepted for exchange all Company Stock Options or Warrants tendered and not
validly withdrawn pursuant to the Exchange Offer and (ii) cause to be canceled
all Company Stock Options or Warrants so accepted for exchange by Parent. No
fractional Parent ADSs shall be issued in connection with the Option and Warrant
Exchange. Each Company Optionholder or Company Warrantholder who would otherwise
be entitled to receive a fraction of a Parent ADS shall be paid an amount in
cash (without interest) equal to the product obtained by multiplying (i) the
fractional Parent ADS interest to which such Company Optionholder or Company
Warrantholder (after taking into account all fractional Parent ADS interests
then held by such holder) would otherwise be entitled by (ii) the Parent Average
Closing Price. The Option and Warrant Exchange shall not be subject to any
conditions other than the occurrence of the Effective Time.
SECTION 6.04. Stockholders' Meetings. (a) To the extent that
convening and holding a meeting would not violate applicable law, the Company
shall call and hold the Company Stockholders' Meeting as promptly as
practicable, for the purpose of voting upon the adoption of this Agreement and
the Merger contemplated hereby. The Company shall use all reasonable efforts to
solicit from its stockholders proxies in favor of the adoption of this Agreement
pursuant to the Proxy Statement and shall take all other action necessary or
advisable to secure the vote or consent of stockholders required by the DGCL or
applicable stock exchange requirements to obtain such approval, except to the
extent that the Board of Directors of the Company determines in good faith after
consultation with outside legal counsel (who may be the Company's regularly
engaged outside legal counsel) that the withdrawal, modification or change of
its recommendation is required by its fiduciary duties to the Company's
stockholders under applicable Law.
(b) Parent shall call and hold a meeting of the
Parent's stockholders (the "Parent Stockholders' Meeting" and together with the
Company Stockholders' Meeting, the "Stockholders' Meetings"), as promptly as
practicable for the purpose of voting upon the approval of this Agreement.
Parent shall take all action necessary or advisable to secure the vote or
consent of stockholders required by the Articles of Association (Satzung),
applicable
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43
Law or applicable stock exchange requirements to obtain such approval, except to
the extent that the Management Board (Vorstand) and Supervisory Board
(Aufsichtsrat) of Parent determines in good faith after consultation with
outside legal counsel (who may be Parent's regularly engaged outside legal
counsel) that the withdrawal, modification or change of its recommendation is
required by its fiduciary duties to Parent's stockholders under applicable Law.
(c) Each of the parties hereto, subject to the exercise
of their fiduciary duties to their respective stockholders, as described in this
Section 6.04, shall take all other action necessary or, in the opinion of the
other parties hereto, advisable to promptly and expeditiously secure any vote or
consent of stockholders required by applicable Law and such party's Certificate
of Incorporation and Bylaws or Articles of Association (Satzung), as applicable,
to consummate and make effective the Transactions.
SECTION 6.05. Further Action; Consents; Filings. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
all reasonable efforts to (i) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the
Transactions, (ii) use all reasonable efforts to obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Parent or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Transactions, (iii) make all
necessary filings, and thereafter make any other required or appropriate
submissions, with respect to this Agreement and the Transactions required under
(A) the rules and regulations of the NASDAQ, (B) the rules and regulations of
the Neuer Markt, (C) the Securities Act, the Exchange Act and any other
applicable federal or state securities Laws, (D) the HSR Act, (E) the
Exon-Florio Provision, (F) the rules and regulations of the ODTC and (G) any
other applicable Law. The parties hereto shall cooperate with each other in
connection with the making of all such filings, including by providing copies of
all such documents to the nonfiling party and its advisors prior to filing and,
if requested, by accepting all reasonable additions, deletions or changes
suggested in connection therewith. Notwithstanding the foregoing or anything
else to the contrary contained in this Agreement, Parent shall not be required
to sell, license, waive any rights in or to, or otherwise dispose of or hold
separate or in trust any part of the assets or business of the Company or any
part of the assets or business of Parent or any of its affiliates or otherwise
enter into any type of agreement or arrangement, including, without limitation,
a consent decree, with any Governmental Entity.
(b) Parent and the Company shall file as promptly as
practicable after the date of this Agreement notifications under the HSR Act and
shall respond as promptly as practicable to all inquiries or requests received
from the Federal Trade Commission or the Antitrust Division of the Department of
Justice for additional information or documentation and shall respond as
promptly as practicable to all inquiries and requests received from any state
attorney general or other Governmental Entity in connection with antitrust
matters. The parties shall cooperate with each other in connection with the
making of all such filings or
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44
responses, including providing copies of all such
documents to the other party and its advisors prior to filing or responding.
(c) To the extent requested by Parent, the Company
shall cooperate with Parent to identify any "Encumbrances" that may adversely
affect the Company's right to sublicense any Intellectual Property rights owned
or licensed by the Company (including the right to further sublicense such
rights) in the Company's client or server software (including without limitation
development tools, tests and other development components) which will exist as
of the Effective Time, and any maintenance upgrades and new releases of such
software, if any, which will be already in progress at the Company as of the
Effective Time, and/or any components of the foregoing (collectively, the
"Software Products"). Such cooperation shall include, upon Parent's request,
granting Parent full access, subject to existing or other reasonable
confidentiality restrictions, to the Company's technology licenses, acquisition
agreements and Intellectual Property claims relating to the Software
Products. "Encumbrance" means any restriction or limitation that would prevent
or materially limit or restrict the Company's ability to sublicense any
Intellectual Property right owned or licensed by the Company (including the
right to further sublicense such rights) with respect to the Software Products,
including, without limitation, limitations on source code access and
sublicensing rights, as well as prohibitions or required consents to assignment
of rights from the Company to the Parent upon the Effective Time which rights,
if not available, would constitute an Encumbrance. The Company shall use all
reasonable efforts in consultation with Parent to remove, limit or diminish such
Encumbrances in a reasonable priority order designated by the Parent, with the
goal of removing or minimizing as soon as practicable all such Encumbrances and
having no ongoing financial obligations in connection therewith.
SECTION 6.06. Notices of Certain Events. (a) Each of Parent
and the Company shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or may
be required in connection with the Transactions; (ii) any notice or other
communication from any Governmental Entity in connection with the Transactions;
(iii) any actions, suits, claims, investigations or proceedings commenced or, to
its knowledge, threatened against, relating to or involving or otherwise
affecting the Company, Parent or the Parent Subsidiaries that could delay or
otherwise affect the consummation of the Transactions; (iv) the occurrence of a
default or event that, with the giving of notice or lapse of time or both, would
become a default under any Material Contract of the Company; (v) any change or
event that is reasonably likely to result in a Company Material Adverse Effect
or a Parent Material Adverse Effect or is reasonably likely to delay or impede
the ability of either the Company or Parent to perform its respective
obligations pursuant to this Agreement or to consummate the Transactions; (vi)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause (x) any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate or
(y) any covenant, condition or agreement of such party contained in this
Agreement not to be complied with or satisfied; and (vii) any failure of Parent
or the Company, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however,
<PAGE>
that the delivery of any notice pursuant to this Section 6.06 shall not limit
or otherwise affect the remedies available hereunder to the party receiving such
notice.
(b) The Company shall give prompt notice to Parent of
the exercise (i) by any holder of the Company's Series A Preferred Stock of any
right or benefit (a "Change of Control Right") of such holder of Series A
Preferred Stock as a "Series A Holder" (as defined in the Certificate of
Amendment to Certificate of Designations of Series A Cumulative Convertible
Preferred Stock of Network Imaging Corporation, the previous name of the Company
(the "Series A Certificate of Designations")) as a result of a "Change of
Control" (as defined in the Series A Certificate of Designations), and (ii) by
the holder of the Company's Series M Preferred Stock or Series M1 Preferred
Stock of any right or benefit (a "Redemption Right") of such holder as (x) a
holder of Series M Preferred Stock as a result of a "Redemption Event" (as
defined in the Certificate of Designations, Preferences and Rights of Series M
Convertible Preferred Stock of Network Imaging Corporation, the previous name of
the Company (the "Series M Certificate of Designations")) or (y) a holder of
Series M1 Preferred Stock as a result of a "Redemption Event" (as defined in the
Certificate of Designations, Preferences and Rights of Series M1 Convertible
Preferred Stock of Network Imaging Corporation, the previous name of the Company
(the "Series M1 Certificate of Designations")).
SECTION 6.07. Pooling Matters. From and after the date of this
Agreement and until the Effective Time, neither Parent nor the Company, nor any
of their respective subsidiaries or other affiliates, shall knowingly take any
action, or knowingly fail to take any action, that is reasonably likely to
jeopardize the treatment of the Transactions as a "pooling of interests" for
accounting purposes. Between the date of this Agreement and the Effective Time,
Parent and the Company each shall take all reasonable actions necessary to cause
the characterization of the Transactions as a pooling of interests for
accounting purposes if such a characterization becomes jeopardized by action
taken by Parent or the Company, respectively, prior to the Effective Time.
Following the Effective Time, Parent shall not knowingly take any action, or
fail to take any action, that would jeopardize the characterization of the
Transactions as a "pooling of interests" for accounting purposes.
SECTION 6.08. Letters of Accountants. (a) Parent shall use all
reasonable efforts to cause to be delivered to the Company a "comfort" letter of
PricewaterhouseCoopers dated and delivered as of the date the F-4 Registration
Statement shall have become effective and a "bring-down comfort" letter of
PricewaterhouseCoopers dated and delivered as of the Effective Time. The Company
shall use all reasonable efforts to cause to be delivered to Parent a "comfort"
letter of Ernst & Young dated and delivered as of the date the F-4 Registration
Statement shall have become effective and a "bring-down comfort" letter of Ernst
& Young dated and delivered as of the Effective Time. Each such letter shall be
addressed to Parent and the Company, and shall be in form and substance
reasonably satisfactory to the recipient thereof and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with mergers such as the one contemplated by this Agreement.
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46
(b) Each of Parent and the Company shall use all reasonable
efforts to cause to be delivered to the other an opinion from
PricewaterhouseCoopers and Ernst & Young, respectively, addressed to each of
Parent and the Company and dated as of the Closing, that the Transactions will
qualify for "pooling of interests" accounting treatment under applicable United
States accounting rules, including, without limitation, applicable SEC
accounting standards.
SECTION 6.09. Plan of Reorganization. (a) This Agreement is
intended to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date hereof and until the earlier to occur of the termination of this
Agreement or the Effective Time, each party hereto shall use all reasonable
efforts to cause the Transactions to qualify, and will not knowingly take any
actions or cause or permit any actions to be taken, which could prevent the
Transactions from qualifying, as a reorganization within the meaning of Section
368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, the Parent nor any of their affiliates shall knowingly take any
action or knowingly cause or permit any action to be taken which would cause the
Transactions to fail to qualify as a reorganization within the meaning of
Section 368(a) of the Code.
(b) The Company, on the one hand, and Parent and Merger
Sub, on the other hand, shall execute and deliver to Cooley Godward LLP, counsel
to the Company, and to PricewaterhouseCoopers, tax advisor to Parent,
certificates substantially in the form attached hereto as Exhibits C and D,
respectively, at such time or times as reasonably requested by such firms in
connection with their delivery of opinions with respect to the Transactions.
Prior to the Effective Time, none of the Company, Parent or Merger Sub shall
take or cause to be taken any action which could cause to be untrue (or fail to
take or cause not to be taken any action which could cause to be untrue) any of
the representations in Exhibits C and D, respectively.
SECTION 6.10. Continuation of Benefits. (a) For a period of
one year following the Effective Time, Parent and the Company shall continue and
maintain the employee benefit plans and programs of the Company for the
employees of the Company as in effect immediately prior to the Effective Time
(subject to applicable Law); provided, however, that Parent and the Company
shall not continue to maintain the Company Stock Plans. From and after the
Effective Time, Parent shall honor, and shall cause the Company to honor, in
accordance with their terms, all contracts, arrangements, policies, plans and
commitments of the Company in accordance with such terms that are applicable to
any employees of the Company that have been disclosed or made available to
Parent pursuant to the provisions of Section 3.10 of this Agreement.
(b) To the extent that service is relevant for purposes
of eligibility, participation or vesting under any employee benefit plan,
program or arrangement established or maintained by the Company, employees of
the Company shall be credited with service accrued prior to the Effective Time
with the Company to the extent such service was recognized by the Company under
such plans.
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47
SECTION 6.11. Pooling Affiliates. (a) Not less than 30 days
prior to the Effective Time, the Company shall deliver to Parent a list of names
and addresses of those persons who, in the Company's reasonable judgment, at the
record date for the Company Stockholders' Meeting, were Pooling Affiliates of
the Company. The Company shall provide Parent such information and documents as
Parent may reasonably request for purposes of reviewing such list. The Company
shall use all reasonable efforts to deliver or cause to be delivered to Parent,
prior to the Effective Time, an affiliate letter in the form attached hereto as
Exhibit E (the "Company Affiliate Letter"), executed by each of the Pooling
Affiliates of the Company identified in the above-referenced list. The foregoing
notwithstanding, Parent shall be entitled to place legends as specified in the
Company Affiliate Letter on the certificates evidencing any of Parent ADSs to be
received by (i) any Pooling Affiliate of the Company or (ii) any person Parent
reasonably identifies (by written notice to the Company) as being a person who
may be deemed a Pooling Affiliate of the Company, pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the depositary
for the Parent ADSs, consistent with the terms of the Company Affiliate Letter,
regardless of whether such person has executed the Company Affiliate Letter and
regardless of whether such person's name and address appear in Section 3.22 of
the Company Disclosure Schedule.
(b) Not less than 30 days prior to the Effective Time,
Parent shall deliver to the Company a list of names and addresses of those
persons who were, in Parent's reasonable judgment, Pooling Affiliates of Parent.
Parent shall provide the Company such information and documents as the Company
shall reasonably request for purposes of reviewing such list. Parent shall use
all reasonable efforts to deliver or cause to be delivered to the Company, prior
to the Effective Time, an affiliate letter in the form attached hereto as
Exhibit F (the "Parent Affiliate Letter"), executed by each of the Pooling
Affiliates of Parent identified in the above-referenced list.
SECTION 6.12. Indemnification of Directors and Officers. (a)
Parent agrees that the indemnification obligations set forth in the Company's
Restated Certificate of Incorporation and Bylaws, in each case as of the date of
this Agreement, shall survive the Transactions and shall not, except to the
extent required by applicable Law, be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of the individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company.
(b) The Company shall, to the fullest extent permitted
under applicable Law and regardless of whether the Transactions become
effective, indemnify and hold harmless, and, after the Effective Time, Parent
shall, to the fullest extent permitted under applicable Law, indemnify and hold
harmless, each present and former director or officer of the Company and each
such person who served at the request of the Company as a director, officer,
trustee, partner, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties") against all costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in
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48
connection with any claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), whether civil, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer or director, in each case occurring before the Effective
Time (including the transactions contemplated by this Agreement). Without
limiting the foregoing, in the event of any such claim, action, suit, proceeding
or investigation, the Company or Parent, as the case may be, shall pay the fees
and expenses of counsel selected by any Indemnified Party, which counsel shall
be reasonably satisfactory to the Company or Parent, as the case may be,
promptly after statements therefor are received (unless Parent shall elect to
defend such action) and (ii) the Company and Parent shall cooperate in the
defense of any such matter, provided, however, that none of the Company or
Parent shall be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld or delayed).
(c) For six years from the Effective Time, Parent shall
provide (to the extent available in the market) to the Company's current
directors and officers liability insurance protection of the same kind and scope
as that provided by the Company's directors' and officers' liability insurance
policies (copies of which have been made available to Parent); provided,
however, that in no event shall Parent be required to expend more than 175% of
the current amount expended by the Company (the "Insurance Amount") to maintain
or procure insurance coverage pursuant hereto and further provided that if
Parent is unable to maintain or obtain the insurance called for by this Section
6.12(c), it shall use all reasonable efforts to obtain as much comparable
insurance as is available for the Insurance Amount.
(d) The rights of an Indemnified Party to
indemnification and advancement of expenses under this Section 6.12 shall not be
deemed exclusive of any other rights which the Indemnified Party may at any time
be entitled to under applicable Law, any charter or bylaw provision, any
agreement, vote of stockholders, resolution of disinterested directors or
otherwise.
SECTION 6.13. Public Announcements. The initial press release
concerning the Transactions shall be a joint press release and, thereafter,
Parent and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or the Transactions and shall not issue any such press release or make any such
public statement without the prior written approval of the other, except to the
extent required by applicable Law or the requirements of NASDAQ or the Neuer
Markt, in which case the issuing party shall use all reasonable efforts to
consult with the other party before issuing any such release or making any such
public statement.
SECTION 6.14. Stock Exchange Listings. (a) Each of the parties
hereto shall use all reasonable efforts to obtain, prior to the Effective Time,
the approval for listing on NASDAQ, effective upon official notice of issuance,
of the Parent ADSs representing the Parent Ordinary Shares issuable to the
Company's stockholders, the Company Optionholders and the Company Warrantholders
in the Transactions as promptly as practicable after the date hereof, and in any
event prior to the Effective Time.
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49
(b) Each of the parties hereto shall use all reasonable
efforts to obtain the approval for listing on the Neuer Markt and all other
stock exchanges on which the Parent Ordinary Shares are listed of the Parent
Ordinary Shares underlying the Parent ADSs issuable to the Company's
stockholders in the Transactions as promptly as practicable after the Effective
Time.
SECTION 6.15. Certain Obligations of Parent. Certain
obligations of Parent set forth in this Agreement, including those obligations
designed to survive the consummation of the Share Exchange require additional
corporate actions by or with respect to Parent specified in the German Stock
Corporation Law (Aktiengesetz) including ss.52 and ss.ss.203, 185 et seq. of the
German Stock Corporation Law (Aktiengesetz) be taken. Parent shall recommend to
its Supervisory Board (Aufsichsrat) and to the Parent Stockholders' Meeting that
such action be taken. As required by law, certain of such obligations of Parent
shall be incorporated in agreements in connection with the contributions in kind
to Parent, which agreements shall be entered into by Parent and the Exchange
Agent in the context of the Share Exchange pursuant to ss.ss.52 and 183 et seq.
of the German Stock Corporation Law (Aktiengesetz).
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to the Obligations of Each Party to
Close. The obligations of the parties hereto to consummate the Transactions, or
to permit the consummation of the Transactions, are subject to the satisfaction
or, if permitted by applicable Law, waiver of the following conditions:
(a) the F-4 Registration Statement shall have been
declared effective by the SEC under the Securities Act and no stop
order suspending the effectiveness of the F-4 Registration Statement
shall have been issued by the SEC and no proceeding for that purpose
shall have been initiated by the SEC and not concluded or withdrawn;
(b) this Agreement shall have been adopted by the
requisite vote of stockholders of the Company in accordance with the
DGCL and the Company's Restated Certificate of Incorporation, which
adoption shall not have been amended in any respect, withdrawn or
otherwise rescinded;
(c) this Agreement shall have been approved by the
requisite vote of the stockholders of Parent in accordance with
applicable Law and the Articles of Association (Satzung) of Parent;
(d) no court of competent jurisdiction shall have
issued or entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued
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50
any order, which is then in effect and has the effect of making any of
the Transactions illegal or otherwise prohibiting the consummation of
any of them;
(e) any waiting period (and any extension thereof)
applicable to the consummation of the Transactions under the HSR Act
shall have expired or been terminated;
(f) each of Ernst & Young and PricewaterhouseCoopers,
as the independent public accountants of the Company and Parent,
respectively, shall have issued the "comfort" letters referred to in
Section 6.08(a) and the "pooling of interests" opinions referred to in
Section 6.08(b); and
(g) the Parent ADSs issuable to the Company's
stockholders, the Company Optionholders and the Company Warrantholders
in the Transactions shall have been approved for listing on NASDAQ,
subject to official notice of issuance.
SECTION 7.02. Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Transactions, or to permit the
consummation of the Transactions, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality
shall be true and correct at and as of the Effective Time as if made at
and as of the Effective Time (other than representations and warranties
which address matters only as of a certain date which shall be true and
correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all
material respects at and as of the Effective Time as if made at and as
of the Effective Time (other than representations and warranties which
address matters only as of a certain date which shall be true and
correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and Parent shall
have received a certificate of the Chairman or President and Executive
Vice President of Finance and Administration of the Company to such
effect;
(b) the Company shall have performed or complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the
Effective Time and Parent shall have received a certificate of the
Chairman or President and Executive Vice President of Finance and
Administration of the Company to that effect;
(c) except as set forth in Section 3.08 of the Company
Disclosure Schedule, no event or events shall have occurred or be
reasonably likely to occur which, individually or in the aggregate,
shall have had, or could reasonably be expected to have, a Company
Material Adverse Effect;
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51
(d) Parent shall have received a written opinion of
PricewaterhouseCoopers, tax advisor to Parent, based on representations
of the Company, on the one hand, and Parent and Merger Sub, on the
other hand, in the forms attached as Exhibits C and D, respectively,
and normal assumptions (including, without limitation, that all steps
necessary to effectuate the Share Exchange following the Effective Time
will be required by the terms of this Agreement and will be
substantially certain to occur and will be ministerial in nature), to
the effect that the Transactions will be treated for federal income tax
purposes as a reorganization within the meaning of section 368(a) of
the Code, dated the Effective Time, which opinion shall not have been
withdrawn or modified in any material respect;
(e) Thomas A. Wilson, Brian H. Hajost, Mark Paiewonsky
and Mike Guido shall have executed employment agreements with Parent in
form and substance satisfactory to Parent;
(f) (i) none of the holders of the Company's Series A
Preferred Stock shall have exercised a Change of Control Right of such
holder of Series A Preferred Stock as a "Series A Holder" (as defined
in the Series A Certificate of Designations as a result of a "Change of
Control" (as defined in the Series A Certificate of Designations) and
(ii) the holder of the Company's Series M Preferred Stock or Series M1
Preferred Stock shall not have exercised a Redemption Right of such
holder as (x) a holder of Series M Preferred Stock as a result of a
"Redemption Event" (as defined in the Series M Certificate of
Designations) or (y) a holder of Series M1 Preferred Stock as a result
of a "Redemption Event" (as defined in the Series M1 Certificate of
Designations);
(g) the Company shall have earned net income for the
quarter ending December 31, 1999 of at least $1.00;
(h) the holders of the warrants issued in connection
with the private placement of the Series K Convertible Preferred Stock
of the Company shall have agreed to terminate the Registration Rights
Agreement dated July 28, 1997 and the Company shall have terminated the
registration statement pursuant to Rule 415 under the Securities Act
that was filed with the SEC in satisfaction of the obligations of the
Company pursuant to said Registration Rights Agreement;
(i) the holders of the warrants issued in connection
with the private placement of the Series L Convertible Preferred Stock
of the Company shall have agreed to terminate the Registration Rights
Agreement dated December 8, 1997 and the Company shall have terminated
the registration statement pursuant to Rule 415 under the Securities
Act that was filed with the SEC in satisfaction of the obligations of
the Company pursuant to said Registration Rights Agreement;
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52
(j) the estate of Fred Kassner and Susan Kaufman shall
have agreed to terminate the Registration Rights Agreement dated
December 31, 1996; and
(k) the Company shall have filed with the Secretary of
State of the State of Delaware a certificate of elimination with
respect to the Company's Series D Preferred Stock, Series E Preferred
Stock, Series G Preferred Stock, Series H Preferred Stock, Series I
Preferred Stock, Series J Preferred Stock, Series K Preferred Stock and
Series L Preferred Stock.
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Transactions, or to permit the
consummation of the Transactions, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of
Parent contained in this Agreement that is qualified by materiality
shall be true and correct at and as of the Effective Time as if made at
and as of the Effective Time (other than representations
and warranties which address matters only as of a certain date which
shall be true and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true
and correct in all material respects at and as of the Effective Time as
if made at and as of the Effective Time (other than representations and
warranties which address matters only as of a certain date which shall
be true and correct in all material respects as of such certain date),
in each case except as contemplated or permitted by this Agreement, and
the Company shall have received a certificate of two Management Board
Members (Vorstandsmitglieder) of Parent to such effect;
(b) Parent shall have performed or complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the
Effective Time and the Company shall have received a certificate of two
Management Board Members (Vorstandsmitglieder) of Parent to that
effect;
(c) except as set forth in Section 4.07 of the Parent
Disclosure Schedule, no event or events shall have occurred or be
reasonably likely to occur which, individually or in the aggregate,
shall have had, or could reasonably be expected to have, a Parent
Material Adverse Effect; and
(d) the Company shall have received a written opinion
of Cooley Godward, LLP, counsel to the Company, based on
representations of the Company, on the one hand, and Parent and Merger
Sub, on the other hand, in the forms attached as Exhibits C and D,
respectively, and normal assumptions (including, without limitation,
that all steps necessary to effectuate the Share Exchange following the
Effective Time will be required by the terms of this Agreement and will
be substantially certain to occur and will be ministerial in nature),
to the effect that the
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53
Transactions will be treated for federal income tax purposes as a
reorganization within the meaning of section 368(a) of the Code, dated
the date of the Effective Time, which opinion shall not have been
withdrawn or modified in any material respect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
Transactions, as follows:
(a) by mutual written consent duly authorized by the Board
of Directors of the Company and the Management Board (Vorstand)
of the Parent;
(b) by either Parent or the Company, if the Effective Time
shall not have occurred on or before June 30, 2000; provided, however,
that the right to terminate this Agreement under this Section 8.01(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have caused, or resulted in, the
failure of the Effective Time to occur on or before such date;
(c) by either Parent or the Company, if any
Governmental Order, writ, injunction or decree preventing the
consummation of the Transactions shall have been entered by any court
of competent jurisdiction and shall have become final and
nonappealable;
(d) by Parent, if (i) in accordance with the proviso to
Section 6.03(b), the Board of Directors of the Company withdraws,
modifies or changes its recommendation of this Agreement and the
Transactions in a manner adverse to Parent or its stockholders or shall
have resolved to do so, or if the Board of Directors of the Company
shall have refused to reaffirm its recommendation of this Agreement and
the Transactions as promptly as practicable (but in any event within
three business days) after receipt of any request by Parent to do so,
(ii) the Board of Directors of the Company shall have recommended to
the stockholders of the Company a Competing Transaction or shall have
resolved to do so or (iii) a tender offer or exchange offer for 25
percent or more of the outstanding shares of any class or series of the
capital stock of the Company is commenced and the Board of Directors of
the Company fails to recommend against acceptance of such tender offer
or exchange offer by stockholders of the Company (including by taking
no position with respect to the acceptance of such tender offer or
exchange offer by the Company's stockholders);
(e) by Parent or the Company, (i) if this Agreement
shall fail to receive the requisite votes for adoption at the Company
Stockholders' Meeting or any
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54
adjournment or postponement thereof or (ii) if this Agreement shall
fail to receive the requisite votes for approval at the Parent
Stockholders' Meeting or any adjournment or postponement thereof;
(f) by Parent if (i) any holder of the Company's Series
A Preferred Stock has exercised a Change of Control Right of such
holder of Series A Preferred Stock as a "Series A Holder" (as defined
in the Series A Certificate of Designations) as a result of a "Change
of Control" (as defined in the Series A Certificate of Designations) or
(ii) the holder of the Company's Series M Preferred Stock or Series M1
Preferred Stock has exercised a Redemption Right of such holder as (x)
a holder of Series M Preferred Stock as a result of a "Redemption
Event" (as defined in the Series M Certificate of Designations) or (y)
a holder of Series M1 Preferred Stock as a result of a "Redemption
Event" (as defined in the Series M1 Certificate of Designations) and
the exercise of such Change of Control Right or Redemption Right, as
the case may be, is not withdrawn within 10 business days of its
exercise;
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue, in either case such that the conditions set forth
in Section 7.02 would not be satisfied (a "Terminating Company
Breach"); provided, however, that, if such Terminating Company Breach
is curable by the Company through the exercise of all reasonable
efforts and for so long as the Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this
Section 8.01(g); and provided further that the preceding proviso shall
not in any event be deemed to extend any date set forth in clause (b)
of this Section 8.01;
(h) by Parent, upon the breach of the Voting Agreement
or the Series M and Series M1 Agreement by any stockholder of the
Company who is a party thereto;
(i) by the Company, upon breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have
become untrue, in either case such that the conditions set forth in
Section 7.03 would not be satisfied (a "Terminating Parent Breach");
provided, however, that, if such Terminating Parent Breach is curable
by Parent through the exercise of all reasonable efforts and for so
long as Parent continues to exercise such reasonable efforts, the
Company may not terminate this Agreement under this Section 8.01(i);
and provided further that the preceding proviso shall not in any event
be deemed to extend any date set forth in clause (b) of this Section
8.01;
(j) by the Company, if the Board of Directors of the
Company shall, following receipt of advice of outside legal counsel
(who may be the Company's regularly engaged outside legal counsel) that
failure to so terminate would be inconsistent with its fiduciary duties
to the stockholders of the Company under
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55
applicable Law, in good faith have withdrawn, modified or changed its
recommendation of the adoption of this Agreement and the Transactions
in a manner adverse to Parent and, on or prior to such date, any person
(other than Parent) shall have made a public announcement or otherwise
communicated to the Company and its stockholders with respect to a
Competing Transaction that, as determined by the Board of Directors of
the Company in good faith after consultation with its outside legal
counsel (who may be its regularly engaged outside legal counsel) and
financial advisors, contains terms more favorable to the stockholders
of the Company than those provided for in the Transactions; provided,
however, that the Company may not terminate this Agreement pursuant to
this Section 8.01(j) until three business days have elapsed following
delivery to Parent of written notice of such determination of the Board
of Directors of the Company (which written notice shall inform Parent
of the material terms and conditions of the Competing Transaction);
provided further, that such termination under this Section 8.01(j)
shall not be effective until the Company has made payment to Parent of
the amounts required to be paid pursuant to Section 8.05(b);
(k) by either Parent or the Company, if this Agreement
shall not have been finally approved by the Supervisory Board
(Aufsichtsrat) of Parent on or prior to December 31, 1999; or
(l) by Parent, if the Merger Consideration shall exceed
1,330,000 Parent ADSs.
SECTION 8.02. Effect of Termination. Except as provided in
Section 9.01, in the event of termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Parent or the Company or any of their
respective officers or directors, and all rights and obligations of each party
hereto shall cease, subject to the remedies of the parties hereto set forth in
Section 8.05; provided, however, that nothing herein shall relieve any party
hereto from liability for the willful or intentional breach of any of its
representations and warranties or the willful or intentional breach of any of
its covenants or agreements set forth in this Agreement; provided further, that
the Confidentiality Agreement shall survive any termination of this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of the Board of Directors of the
Company and the Management Board (Vorstand) of Parent at any time prior to the
Effective Time; provided, however, that, after the adoption of this Agreement by
the stockholders of the Company, no amendment may be made, except such
amendments as have received the requisite stockholder approval and such
amendments as are permitted to be made without stockholder approval under the
DGCL. This Agreement may not be amended except by an instrument in writing
signed by both Parent and the Company.
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56
SECTION 8.04. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
SECTION 8.05. Fees and Expenses. (a) Except as set forth in
this Section 8.05, all expenses incurred in connection with this Agreement and
the Transactions shall be paid by the party incurring such Expenses, whether or
not the Transactions are consummated.
(b) The Company agrees that, if:
(i) the Company shall terminate this Agreement pursuant
to Section 8.01(j) and Parent shall not have materially breached this
Agreement,
(ii) Parent shall terminate this Agreement pursuant to
Section 8.01(d) and Parent shall not have materially breached this
Agreement, or
(iii) (A) Parent shall terminate this Agreement pursuant
to Section 8.01(e)(i), (B) at the time of such failure to so approve
this Agreement, there shall exist or have been proposed a Competing
Transaction that has been publicly announced or otherwise communicated
to the Company and its stockholders with respect to the Company, (C)
within 15 months thereafter, the Company shall enter into a definitive
agreement with respect to any Competing Transaction or any Competing
Transaction shall be consummated and (D) Parent shall not have
materially breached this Agreement,
then, in the case of (i), prior to such termination, in the case of (ii),
promptly after such termination, or, in the case of (iii), promptly after the
consummation of the Competing Transaction referred to in clause (C), the Company
shall pay to Parent an amount equal to $2,685,000 (the "Termination Fee") and
all of Parent's Expenses (as defined below); provided, however, that the Company
shall not be liable to reimburse Parent pursuant to this Section 8.05(b) for any
Expenses in excess of $1.2 million in the aggregate.
(c) (i) The Company agrees that, if Parent terminates
this Agreement pursuant to Section 8.01(g), the Company shall reimburse Parent
for Parent's Expenses incurred in connection with pursuing the Transactions and
(ii) Parent agrees that, if the Company terminates this Agreement pursuant to
Section 8.01(i), Parent shall reimburse the Company for the Company's Expenses
incurred in connection with pursuing the Transactions; provided, however, that
neither the Company nor the Parent shall be liable to reimburse the other
pursuant to this Section 8.05(c) for any amounts in excess of $1.2 million in
the aggregate. "Expenses", as used in this Agreement, shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel,
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accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the Transactions, the preparation, printing, filing and mailing of the
Registration Statement and the Proxy Statement, the solicitation of stockholder
approvals, the filing of the HSR Act notice and all other matters related to the
closing of the Transactions.
(d) Any payment required to be made pursuant to Section
8.05(a), (b) or (c) shall be made to the party entitled to receive such payment
not later than two business days after delivery to the other party of notice of
demand for payment and shall be made by wire transfer of immediately available
funds to an account designated by the party entitled to receive payment in the
notice of demand for payment delivered pursuant to this Section 8.05(d).
(e) In the event that the Company shall fail to pay the
Termination Fee, the amount of any such Termination Fee shall be increased to
include the costs and expenses actually incurred by Parent (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 8.05, together with interest on such
unpaid Termination Fee, commencing on the date that such Termination Fee
became due, at a rate equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in The City of New York, from time to time,
as such bank's base rate plus 5.00%.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties.
The representations and warranties of the Company and Parent contained in this
Agreement shall not survive the Effective Time. The agreements and the covenants
of the Company and Parent will survive the Effective Time indefinitely and the
agreements and covenants set forth in Sections 8.02 and 8.05 and this Article IX
shall survive termination of this Agreement pursuant to Section 8.01
indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid, return
receipt requested) or by an internationally recognized courier service to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
<PAGE>
58
(a) if to the Company:
TREEV, Inc.
500 Huntmar Park Drive
Herndon, Virginia 20170
USA
Attention: Julia A. Bowen, Esq.
Telecopier: +1 703 708-1558
with a copy to:
Cooley Godward, LLP
2002 Edmund Halley Drive
Suite 300
Reston, Virginia 20191
USA
Attention: Joe W. Conroy
Telecopier: +1 703 262 8100
(b) if to Parent:
CE Computer Equipment AG
Herforder Strasse 155A
33609 Bielefeld
Germany
Attention: Thomas Wenzke
Telecopier: + 49 521 931 8111
with a copy to:
Shearman & Sterling
199 Bishopsgate
London EC2M 3TY
United Kingdom
Attention: W. Jeffrey Lawrence
Telecopier: +44 171 920 9020
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, the following terms have the following meanings:
(a) "affiliate" of a specified person means a person
who directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with, such specified
person;
<PAGE>
59
(b) "beneficial owner" with respect to any shares of
capital stock means a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 promulgated under the
Exchange Act) beneficially owns, directly or indirectly, (ii) which
such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding, or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or
any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any such shares;
(c) "business day" means any day that is not a
Saturday, a Sunday or other day on which banks are required or
authorized to close in the City of New York, New York, USA or Frankfurt
am Main, Germany;
(d) "$" means United States Dollars;
(e) "Governmental Order" means any order, writ,
judgment, injunction, decree, stipulation, determination or award
entered by or with any Governmental Entity;
(f) "person" means an individual, corporation,
partnership, limited partnership, limited liability company, syndicate,
person (including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government;
and
(g) "subsidiary" or "subsidiaries" of any person means
any corporation, limited liability company, partnership, joint venture
or other legal entity of which such person (either alone or through or
together with any other subsidiary of such person) owns, directly or
indirectly, more than fifty percent of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
(h) "trading day" means a day on which the Neuer Markt
or NASDAQ is open for trading.
SECTION 9.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full
<PAGE>
60
force and effect so long as the economic or legal substance of the Transactions
is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Transactions may be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement and
the Confidentiality Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect thereto. This Agreement shall not be assigned by any of
the parties hereto (whether by operation of Law or otherwise), except that
Parent may assign all or any of its rights and obligations hereunder to any
affiliate of Parent; provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be
binding upon and shall inure solely to the benefit of, and be enforceable by,
the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Article II (the "Third Party Provisions"), nothing in this
Agreement, express or implied, is intended to or shall confer upon any person,
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities of any nature
whatsoever under or by reason of this Agreement. The Third Party Provisions are
intended to be for the benefit of the beneficiaries thereof and may be enforced
by such beneficiaries.
SECTION 9.07. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
SECTION 9.08. Governing Law. The capital contribution in kind
included in the Share Exchange shall be governed by and effected in accordance
with German law. In all other respects, this Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws thereof.
SECTION 9.09. Consent to Jurisdiction; Venue. (a) Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the state
courts of Delaware and to the jurisdiction of the United States District Court
for Delaware for the purpose of any action or proceeding arising out of or
relating to this Agreement, and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined exclusively in any Delaware state or federal court sitting in
Delaware. Each of the parties hereto agrees that a final judgment in any action
or proceeding shall be conclusive
<PAGE>
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Law.
(b) Each of the parties hereto irrevocably consents to
the service of any summons and complaint and any other process in any other
action or proceeding relating to the Transactions, on behalf of itself or its
property, by the personal delivery of copies of such process to such party.
Nothing in this Section 9.09 shall affect the right of any party hereto to serve
legal process in any other manner permitted by Law.
SECTION 9.10. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TREEV, INC.
By: /s/ Thomas A. Wilson
---------------------------------------
Name: Thomas A. Wilson
Title: President and Chief Executive
Officer
By: /s/ Brian H. Hajost
---------------------------------------
Name: Brian H. Hajost
Title: Executive Vice President
CE COMPUTER EQUIPMENT AG
By: /s/ Hans-Jurgen Brintrup
---------------------------------------
Name: Hans-Jurgen Brintrup
Title: Member of the Board of
Management
By: /s/ Thomas Wenzke
---------------------------------------
Name: Thomas Wenzke
Title: Member of the Board of
Management
<PAGE>
EXHIBIT A
LIST OF OFFICERS OF SURVIVING CORPORATION
Julia A. Bowen, Vice President & General Counsel
Anthony Cook, Vice President, Marketing
Thomas Giampa, Vice President, Development
Michael Guido, Executive Vice President, Sales
Brian H. Hajost, Executive Vice President, Finance & Corporate Development
Richard McMahon, Senior Vice President, Professional Services
Mark A. Paiewonsky, Vice President of Finance
Thomas Wenzke, Chief Administrative Officer
Thomas A. Wilson, President & Chief Executive Officer
<PAGE>
EXHIBIT B
LIST OF DIRECTORS OF SURVIVING CORPORATION
Jurgen Brintrup
Thomas Wenzke
<PAGE>
EXHIBIT C
FORM OF COMPANY TAX REPRESENTATION LETTER
[Company Letterhead]
As of [Closing Date], 2000
PricewaterhouseCoopers LLP Cooley Godward LLP
1177 Avenue of the Americas One Maritime Plaza
New York, NY 10036 San Francisco, CA 94111-3699
Ladies and Gentlemen:
In order to enable you to deliver an opinion in connection
with the proposed merger (the "Merger") of [Merger Sub] ("Merger Sub"), a
Delaware corporation, with and into TREEV, Inc., a Delaware corporation (the
"Company"), and related transactions, pursuant to which the Company will become
a wholly-owned subsidiary of CE Computer Equipment AG, a German corporation
("Parent"), as described in the Agreement and Plan of Merger between Parent and
the Company, dated as of November 19, 1999 (the "Merger Agreement"), the
undersigned officer of the Company hereby represents on behalf of the Company
that, to the best knowledge and belief of such officer, after due inquiry and
investigation, the following statements are true now and will continue to be
true as of the Effective Time (as defined in the Merger Agreement):
1. The fair market value of the Parent ordinary shares represented by
American Depositary Shares ("Parent ADSs") received by each Company
shareholder in the transactions described in the Merger Agreement (the
"Transactions"), will be approximately equal to the fair market value
of the shares of the Company Common Stock, Series A Preferred Stock,
Series M Preferred Stock and Series M1 Preferred Stock (collectively,
the "Company Stock") surrendered in exchange therefor. The formulas set
forth in the Merger Agreement for the exchange of Parent ADSs for
Company Stock, and the other terms of the Merger Agreement, are the
result of arm's- length bargaining.
2. Prior to and in connection with the Merger, (i) the Company has not
redeemed (and will not redeem) any Company Stock and has not made (and
will not make) any extraordinary distributions (as described in
Treasury Regulation Section 1.368-1T(e)) with respect thereto and (ii)
persons that are related to the Company within the meaning of Treasury
Regulation Section 1.368-1(e)(3) (determined without regard to Treasury
Regulation Section 1.368-1(e)(3)(i)(A)) have not acquired (and will not
acquire) Company Stock from any holder thereof except as set forth in
the Merger Agreement.
3. The Company does not have outstanding any warrants, options,
convertible securities, or any other type of right pursuant to which
any person could acquire stock (or other equity interest) in the
Company or vote (or restrict or otherwise control the
<PAGE>
C-2
vote of) Company Stock that, if exercised or converted, would affect
Parent's acquisition or retention of Control of the Company. For
purposes of this letter, "Control" means the direct ownership of stock
in the Company possessing at least 80% of the total combined voting
power of all classes of stock of the Company entitled to vote and at
least 80% of the total number of shares of each other class of stock of
the Company. For purposes of determining Control, a person will not be
considered to own shares of voting stock if rights to vote such shares
(or to restrict or otherwise control the voting of such shares) are
held by a third party (including a voting trust) other than an agent of
such person.
4. The Company has no plan or intention to issue additional shares of its
stock, or take any other action, that would result in Parent losing
Control of the Company.
5. The Company and its shareholders will pay separately their respective
expenses, if any, incurred in connection with the Transactions.
6. The Company is not an investment company as defined in sections
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as
amended (the "Code").
7. The fair market value of the assets of the Company exceed the sum of
its liabilities plus the amount of liabilities, if any, to which the
assets are subject.
8. The Company is not under the jurisdiction of a court in a case under
Title 11 of the United States Bankruptcy Code, or in a receivership,
foreclosure or similar proceeding in a Federal or state court within
the meaning of section 368(a)(3)(A) of the Code.
9. In connection with the Transactions, 100% of the total combined voting
power of all classes of stock of the Company entitled to vote and 100%
of the total number of shares of each other class of stock of the
Company will be exchanged solely for Parent ADSs which are entitled to
vote. For purposes of this representation, no cash or other property
has been furnished directly or indirectly by Merger Sub or Parent (or
anyone related to either of them within the meaning of Treasury
Regulation Section 1.368- 1(e)(3), or anyone acting on behalf of any of
them as an agent, in each case a "Related Party") in connection with
redemptions or purchases of Company Stock by the Company or
distributions by the Company to Company shareholders. In addition, no
liabilities of the Company shareholders will be assumed by Parent or
Merger Sub (or any Related Party), nor will any of the Company Stock be
subject to any liabilities.
10. Pursuant to the Merger, Merger Sub will merge with and into the
Company, and the Company will acquire all of the assets and liabilities
of Merger Sub. Following the Transactions, the Company will continue to
hold at least 90% of the fair market value of its net assets and at
least 70% of the fair market value of its gross assets held immediately
prior to the Merger, and at least 90% of the fair market value of the
net
<PAGE>
C-3
assets and at least 70% of the fair market value of the gross assets
of Merger Sub held immediately prior to the Merger. For purposes of
this representation, any amountspaid by the Company to dissenting
Company shareholders or to Company shareholders who receive cash or
other property in the Merger, amounts used by the Company to pay
reorganization expenses, and all redemptions and distributions or
other payments in respect of Company Stock (except for regular, normal
dividends) made by the Company in contemplation of the Merger will be
included as assets of the Company or Merger Sub, respectively,
immediately prior to the Merger.
11. Other than in the ordinary course of business, the Company has not
disposed of any of its assets (including any distributions of assets
with respect to, or in redemption of, stock) since January 1, 1998.
12. Other than shares of Company Stock or options to acquire Company Stock
issued as compensation to present or former service providers
(including, without limitation, employees or directors of the Company)
in the ordinary course of business, if any, no issuances of Company
Stock or rights to acquire Company Stock have occurred since July 1,
1999 other than pursuant to options, warrants or agreements outstanding
prior to July 1, 1999.
13. The liabilities of the Company have been incurred by the Company in the
ordinary course of business.
14. There is no intercorporate indebtedness existing between Parent and the
Company or between Merger Sub and the Company that was issued, acquired
or will be settled at a discount.
15. The documents listed in the attached Exhibit 1 represent the full and
complete agreement among Parent, Merger Sub and the Company regarding
the Transactions, and there are no other written or oral agreements
regarding the Transactions.
16. The Transactions will be consummated solely in compliance with the
material terms of the Merger Agreement. None of the material terms
and/or conditions therein has been waived or modified, and there is no
plan or intention to waive or to modify any such material term or
condition.
17. The payment of cash in lieu of fractional shares of Parent ADSs is
solely for the purpose of avoiding the expense and inconvenience of
issuing fractional shares and does not represent separately bargained
for consideration. The fractional share interests of each holder of
Parent ADSs will be aggregated, and no such holder will receive cash in
an amount equal to or greater than the value of one full share of
Parent ADSs. The total cash consideration that will be paid to Company
shareholders in lieu of fractional shares will not exceed 1% of the
total consideration that will be issued to the Company shareholders in
exchange for their shares. None of the cash to
<PAGE>
C-4
be paid in lieu of fractional shares will be provided, directly or
indirectly, by Parent, Merger Sub or the Company.
18. The Company has no plan to sell or otherwise dispose of any of its
assets or of any of the assets acquired from Merger Sub, except for
dispositions made in the ordinary course of business or transfers
described in Treasury Regulation Section 1.368-1(d) and Treasury
Regulation Section 1.368-2(k) or section 368(a)(2)(C) of the Code (in
which case the foregoing representation shall be deemed to apply to any
transferee).
19. Following the Merger, the Company will continue a significant line of
its historic business or use a significant portion of its historic
business assets in a business.
20. None of the Parent ADSs received by any shareholder-employee of the
Company in the Transactions will be separate consideration for, or
allocable to, past or future services. None of the compensation
received by any shareholder-employee of the Company is separate
consideration for, or allocable to, such shareholder-employee's shares
of Company Stock surrendered in the Transactions, and the compensation
paid to such shareholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
21. The Company's principal reasons for participating in the Transactions
are bona fide business purposes not related to taxes.
22. The undesigned officer is authorized to make the certifications
contained in this letter on behalf of the Company.
<PAGE>
C-5
It is understood that (i) your opinion will be based on the
representations set forth herein and on the statements contained in the
Merger Agreement (including all schedules and exhibits thereto) and
documents related thereto and (ii) your opinions will be subject to
certain limitations and qualifications including that they may not be
relied upon if any such representations are not accurate in all
material respects.
Very truly yours,
TREEV, Inc.
By:
-------------------------------------
Title:
-------------------------------------
<PAGE>
Exhibit 1
MERGER AGREEMENT DOCUMENTS
1. Agreement and Plan of Merger between CE Computer Equipment AG and
TREEV, Inc., dated as of November 19, 1999.
2. Voting and Registration Rights Agreement, dated as of November 19,
1999.
3. Series A Preferred Stock Agreement, dated as of [ ], 1999.
4. Series M Preferred Stock and Series M1 Preferred Stock Agreement, dated
as of November 19, 1999.
5. Voting Agreement dated as of November 19, 1999.
6. Exchange Agent Agreement between CE Computer Equipment AG and [Exchange
Agent], as agent, dated as of [ ].
<PAGE>
D-1
EXHIBIT D
FORM OF PARENT AND MERGER SUB TAX REPRESENTATION LETTER
[Parent Letterhead]
As of [Closing Date], 2000
PricewaterhouseCoopers LLP Cooley Godward LLP
1177 Avenue of the Americas One Maritime Plaza
New York, NY 10036 San Francisco, CA 94111-3699
Ladies and Gentlemen:
In order to enable you to deliver an opinion in connection
with the proposed merger (the "Merger") of [Merger Sub] ("Merger Sub"), a
Delaware corporation, with and into TREEV, Inc., a Delaware corporation (the
"Company"), and related transactions, pursuant to which the Company will become
a wholly-owned subsidiary of CE Computer Equipment AG, a German corporation
("Parent"), as described in the Agreement and Plan of Merger between Parent and
the Company, dated as of November 19, 1999 (the "Merger Agreement"), the
undersigned officers of Parent and Merger Sub hereby represent on behalf of
Parent and Merger Sub that, to the best knowledge and belief of such officers,
after due inquiry and investigation, the following statements are true now and
will continue to be true as of the Effective Time (as defined in the Merger
Agreement):
1. The fair market value of the Parent ordinary shares represented by
American Depositary Shares ("Parent ADSs") received by each Company
shareholder in the transactions, described in the Merger Agreement (the
"Transactions"), will be approximately equal to the fair market value
of the shares of the Company Common Stock, Series A Preferred Stock,
Series M Preferred Stock and Series M1 Preferred Stock (collectively,
the "Company Stock") surrendered in exchange therefor. The formulas set
forth in the Merger Agreement for the exchange of Parent ADSs for
Company Stock, and the other terms of the Merger Agreement, are the
result of arm's- length bargaining.
2. In connection with the Transactions, 100% of the total combined voting
power of all classes of stock of the Company entitled to vote and 100%
of the total number of shares of each other class of stock of the
Company will be exchanged solely for Parent ADSs which are entitled to
vote. For purposes of this representation, no cash or other property
has been furnished directly or indirectly by Merger Sub or Parent (or
anyone related to either of them within the meaning of Treasury
Regulation Section 1.368- 1(e)(3), or anyone acting on behalf of any of
them as an agent, in each case a "Related Party") in connection with
redemptions or purchases of Company Stock by the Company or
distributions by the Company to Company shareholders. In addition, no
liabilities of the Company shareholders will be assumed by Parent or
<PAGE>
D-2
Merger Sub (or any Related Party), nor will any of the Company Stock be
subject to any liabilities.
3. Pursuant to the Merger, Merger Sub will merge with and into the
Company, and the Company will acquire all of the assets and liabilities
of Merger Sub. Following the Transactions, Parent intends to cause the
Company to hold at least 90% of the fair market value of its net assets
and at least 70% of the fair market value of its gross assets held
immediately prior to the Merger, and at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of
the gross assets of Merger Sub held immediately prior to the Merger.
For purposes of this representation, any amounts paid by the Company or
Merger Sub to dissenters, amounts paid by the Company or Merger Sub to
Company shareholders who receive cash or other property, amounts used
by the Company or Merger Sub to pay reorganization expenses, and all
redemptions and distributions or other payments in respect of Company
Stock (except for regular, normal dividends) made by the Company in
contemplation of the Merger will be included as assets of the Company
or Merger Sub, respectively, immediately prior to the transaction.
4. Following the Transactions, members of Parent's "qualified group" (as
defined in Treasury Regulation Section 1.368-1(d)(4)) will continue a
significant line of the historic business of the Company or use a
significant portion of the Company's historic business assets in a
business.
5. Following the Transactions, Parent has no plan or intention to
liquidate the Company; to merge the Company with or into another
corporation; to cause the Company to sell or otherwise dispose of any
of its assets or of any of the assets acquired from Merger Sub, except
for dispositions made in the ordinary course of business or transfers
described in Treasury Regulation Section 1.368-1(d) and Treasury
Regulation Section 1.368-2(k) (in which case the foregoing
representation shall be deemed to apply to any transferee); to sell or
otherwise dispose of any Company Stock; or to contribute Company Stock
to any other entity, except for transfers described in section
368(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the
"Code") or Treasury Regulation Section 1.368-2(k) (in which case the
foregoing representations shall be deemed to apply to any transferee).
6. Parent has no plan or intention to reacquire any of its stock issued in
the Transactions. To the best of the knowledge of the management of
Parent, no person related to Parent within the meaning of Treasury
Regulation Section 1.368-1(e)(3) and no person acting as an
intermediary for Parent or such a related person has a plan or
intention to acquire any of the Parent ADSs issued in the Transactions.
7. Parent has no plan or intention to cause the Company to issue
additional shares of Company Stock that would result in Parent losing
Control of the Company. For purposes of this letter, "Control" means
the direct ownership of stock in the Company possessing at least 80% of
the total combined voting power of all classes of stock of
<PAGE>
D-3
the Company entitled to vote and at least 80% of the total number of
shares of each other class of stock of the Company. For purposes of
determining Control, a person will not be considered to own shares of
voting stock if rights to vote such shares (or to restrict or otherwise
control the voting of such shares) are held by a third party (including
a voting trust) other than an agent of such person.
8. The Exchange Agent (as defined in the Merger Agreement) has formed
Merger Sub on behalf of and as the agent of Parent and will participate
in the Transactions and otherwise effectuate the exchange of Parent
ADSs for Company Stock solely to facilitate Parent's compliance with
German corporate law regarding the issuance of shares.
9. Merger Sub was formed solely for the purpose of merging into the
Company, has not and does not own any assets, and has not been and is
not subject to any liabilities.
10. Prior to the Merger, the Exchange Agent will hold all of Merger Sub's
issued and outstanding common stock on behalf of and as the agent of
Parent.
11. No shares of Merger Sub will be used in consideration in the Merger or
otherwise issued to shareholders of the Company.
12. The exchange by the Exchange Agent of the Company Stock for Parent ADSs
will occur as soon as possible after the Merger.
13. Parent and Merger Sub will pay separately their respective expenses, if
any, incurred in connection with the Transactions.
14. None of Parent, Merger Sub, or any other direct or indirect subsidiary
of Parent beneficially owns, nor has owned during the past five years,
any shares of Company Stock.
15. With respect to each instance, if any, in which shares of Company Stock
have been purchased (a "Stock Purchase") by any person during the
period since January 1, 1999: (i) the Stock Purchase was not made by
such person as a representative of Parent; (ii) the purchase price paid
by such person pursuant to the Stock Purchase was not advanced, and
will not be reimbursed, either directly or indirectly, by Parent; (iii)
at no time was such person or any other party required or obligated to
surrender to Parent the Company Stock acquired in the Stock Purchase,
and neither such person nor any other party will be required to
surrender to Parent the Parent ADSs for which such shares of stock of
the Company will be exchanged in the Merger; and (iv) the Stock
Purchase was not a formal or informal condition to consummation of the
Merger.
16. Neither Parent nor Merger Sub is an investment company as defined in
sections 368(a)(2)(F)(iii) and (iv) of the Code.
<PAGE>
D-4
17. None of the Parent ADSs received by any shareholder-employee of the
Company in the Transactions will be separate consideration for, or
allocable to, past or future services. None of the compensation
received by any shareholder-employee of the Company is separate
consideration for, or allocable to, such shareholder-employee's shares
of Company Stock surrendered in the Transactions, and the compensation
paid to such shareholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
18. The documents listed in the attached Exhibit 1 represent the full and
complete agreement among Parent, Merger Sub and the Company regarding
the Transactions, and there are no other written or oral agreements
regarding the Transactions.
19. The Transactions will be consummated solely in compliance with the
material terms of the Merger Agreement; as of the date hereof, none of
the material terms and/or conditions therein has been waived or
modified, and there is no plan or intention to waive or to modify any
such material term or condition.
20. There is no intercorporate indebtedness existing between Parent and the
Company or between Merger Sub and the Company that was issued, acquired
or will be settled at a discount.
21. The payment of cash in lieu of fractional shares of Parent ADSs is
solely for the purposes of avoiding the expense and inconvenience of
issuing fractional shares and does not represent separately bargained
for consideration. The fractional share interests of each holder of
Parent ADSs will be aggregated, and no such holder will receive cash in
an amount equal to or greater than the value of one full share of
Parent ADSs. The total cash consideration that will be paid to Company
shareholders in lieu of fractional shares will not exceed 1% of the
total consideration that will be issued to the Company shareholders in
exchange for their shares. None of the cash to be paid in lieu of
fractional shares will be provided, directly or indirectly, by Parent,
Merger Sub or the Company.
22. Parent's principal reasons for participating in the Transactions are
bona fide business purposes not related to taxes.
23. The undesigned officers are authorized to make the certifications
contained in this letter on behalf of Parent and Merger Sub,
respectively.
<PAGE>
D-5
It is understood that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Merger Agreement (including all schedules and exhibits thereto) and
documents related thereto and (ii) your opinions will be subject to
certain limitations and qualifications including that they may not be
relied upon if any such representations are not accurate in all
material respects.
Very truly yours,
CE Computer Equipment AG
By:
---------------------------------------
Title:
Merger Sub
By:
---------------------------------------
Title:
<PAGE>
D-6
Exhibit 1
MERGER AGREEMENT DOCUMENTS
23. Agreement and Plan of Merger between CE Computer Equipment AG and
TREEV, Inc., dated as of November 19, 1999.
24. Voting and Registration Rights Agreement, dated as of November 19,
1999.
25. Series A Preferred Stock Agreement, dated as of [ ], 1999.
26. Series M Preferred Stock and Series M1 Preferred Stock Agreement, dated
as of November 19, 1999.
27. Voting Agreement dated as of November 19, 1999.
28. Exchange Agent Agreement between CE Computer Equipment AG and [Exchange
Agent], as agent, dated as of [ ].
<PAGE>
E-1
EXHIBIT E
FORM OF COMPANY AFFILIATE LETTER
TREEV, Inc.
500 Huntmar Park Drive
Herndon, Virginia 20170
USA
CE Computer Equipment AG
Herforder Strasse 155A
33609 Bielefeld
Germany
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of TREEV, Inc., a Delaware corporation
("Company"), as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of November 19, 1999 (the "Agreement"), between CE Computer Equipment AG, an
Aktiengesellschaft organized and existing under the laws of the Federal Republic
of Germany ("Parent"), and the Company, o, a Delaware corporation, shall be
merged with and into the Company (the "Merger"), and the stockholders of the
Company shall receive American Depositary Shares ("Parent ADSs") representing
ordinary shares, without par value, of Parent ("Parent Ordinary Shares"), in
exchange for shares of common stock, par value $.0001 per share, of the Company
(the "Company Common Stock").
As a result of the Merger, I may receive Parent ADSs in
exchange for shares (or upon exercise of options for shares or upon the exercise
by me of rights under certain option plans of the Company that become
exercisable upon the consummation of the Merger) owned by me of Company Common
Stock or Company Preferred Stock, warrants owned by me to acquire Company Common
Stock or employee stock options of the Company as the case may be (the Parent
ADSs together with the Parent Ordinary Shares are hereinafter collectively
referred to as the "Parent Securities").
I represent, warrant and covenant to Parent that in the event
I receive any Parent Securities as a result of the Merger:
A. I shall not make any sale, transfer or
other disposition of Parent Securities in violation of the Act or the
Rules and Regulations.
<PAGE>
E-2
B. I have carefully read this letter and the
Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of Parent Securities to the extent I felt necessary, with my
counsel or counsel for the Company.
C. I have been advised that the issuance of
Parent Securities to me pursuant to the Merger shall be registered with
the Securities and Exchange Commission (the "Commission") under the Act
on a Registration Statement on Form F-4. However, I have also been
advised that, since (a) at the time the Merger shall be submitted for a
vote of the stockholders of the Company, I may be deemed to be an
affiliate of the Company and (b) the distribution by me of Parent
Securities has not been registered under the Act, I may not sell,
transfer or otherwise dispose of Parent Securities issued to me in the
Merger unless (i) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer
or other disposition has been registered under the Act or (iii) in the
opinion of counsel reasonably acceptable to Parent, such sale, transfer
or other disposition is otherwise exempt from registration under the
Act.
D. I understand that, except as provided in
the Agreement [and in the Voting Agreement to which I am a party],
Parent is under no obligation to register the sale, transfer or other
disposition of Parent Securities by me or on my behalf under the Act or
to take any other action necessary in order to make compliance with an
exemption from such registration available.
E. I also understand that stop transfer
instructions will be given to Parent's transfer agents or the
depositary for the Parent ADSs with respect to Parent Securities issued
to me and that there will be placed on the certificates for Parent
Securities issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED BETWEEN THE REGISTERED HOLDER
HEREOF AND CE COMPUTER EQUIPMENT AG, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF CE
COMPUTER EQUIPMENT AG."
F. I also understand that, unless the sale or
transfer by me of Parent Securities has been registered under the Act
or is a sale made in conformity with the provisions of Rule 145, Parent
reserves the right to put the following legend on the certificates
issued to my transferee:
<PAGE>
E-3
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH
SECURITIES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SECURITIES HAVE BEEN ACQUIRED BY THE HOLDER NOT
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
G. I further represent to, and covenant with,
Parent that I will not sell, transfer or otherwise dispose of, or
execute any cashless exercise of stock options or warrants for, (i) any
Company Common Stock during the 30 days immediately preceding the
effective date of the Merger or (ii) any Parent Securities received by
me in the Merger or any other shares of the capital stock of Parent or
enter into any arrangement to reduce my risk relating to Company Common
Stock or such Parent Securities until after such time as results
covering at least 30 days of combined operations of Company and Parent
have been published by Parent, in the form of an effective registration
statement filed with the Commission, a report to the Commission on Form
20-F or 6-K, or any other public filing or announcement which includes
such combined results of operations. Parent shall notify the
"affiliates" of the publication of such results.
<PAGE>
E-4
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
-----------------------------------
Name:
Accepted this _______ day of
_______ , 2000, by
CE COMPUTER EQUIPMENT AG
By:
----------------------------------
Name:
Title:
TREEV, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
F-1
EXHIBIT F
FORM OF PARENT AFFILIATE LETTER
TREEV, Inc.
500 Huntmar Park Drive
Herndon, Virginia 20170
USA
CE Computer Equipment AG
Herforder Strasse 155A
33609 Bielefeld
Germany
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of CE Computer Equipment AG, an
Aktiengesellschaft organized and existing under the laws of the Federal Republic
of Germany ("Parent"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") under the United States Securities Act of 1933, as amended (the
"Act"), and/or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the Agreement
and Plan of Merger, dated as of November 19, 1999 (the "Agreement"), among
Parent and TREEV, Inc., a Delaware corporation (the "Company"), o, a Delaware
corporation, shall be merged with and into the Company (the "Merger") and the
stockholders of the Company shall receive American Depositary Shares
representing ordinary shares, without par value, of Parent ("Parent Ordinary
Shares"), in exchange for shares of common stock, par value $.0001 per share, of
the Company.
I represent to, and covenant with, Parent that I will not
sell, transfer or otherwise dispose of, or execute any cashless exercise of
stock options or warrants for, (i) any Parent Ordinary Shares during the 30 days
immediately preceding the effective date of the Merger or (ii) any other shares
of the capital stock of Parent or enter into any arrangement to reduce my risk
relating to Parent Ordinary Shares until after such time as results covering at
least 30 days of combined operations of the Company and Parent have been
published by Parent, in the form of an effective registration statement filed
with the Commission, a report to the Commission on Form 20-F or 6-K, or any
other public filing or announcement which includes such combined results of
operations. Parent shall notify the "affiliates" of the publication of such
results.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Parent as described in the first
paragraph of this letter, or as a waiver of
<PAGE>
F-2
any rights I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
Very truly yours,
-----------------------------------
Name:
Accepted this _______ day of
_______ , 2000, by
CE COMPUTER EQUIPMENT AG
By:
----------------------------------
Name:
Title:
TREEV, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
between
CE COMPUTER EQUIPMENT AG
and
TREEV, INC.
Dated as of November 19, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
THE MERGER
1.01. Formation of Merger Sub..........................................2
1.02. The Merger.......................................................2
1.03. Effective Time; Closing..........................................2
1.04. Effect of the Merger.............................................3
1.05. Certificate of Incorporation; Bylaws.............................3
1.06. Officers.........................................................3
1.07. Board of Directors...............................................3
ARTICLE II
SHARE EXCHANGE; CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES
2.01. The Share Exchange...............................................3
2.02. Conversion of Company Common Stock and Company
Preferred Stock..................................................4
2.03. Exchange of Shares of Company Common Stock and Company
Preferred Stock..................................................6
2.04. Treatment of the Company Stock Plans and the Company Warrants....9
2.05. Antidilution Protection For Exchange Ratio......................10
2.06. Treatment of Fractional Shares..................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization and Qualification; Subsidiaries....................11
3.02. Certificate of Incorporation and Bylaws.........................12
3.03. Capitalization..................................................12
3.04. Authority Relative to this Agreement............................13
3.05. No Conflict; Required Filings and Consents......................13
3.06. Permits; Compliance with Laws...................................14
3.07. SEC Filings; Financial Statements...............................15
3.08. Absence of Certain Changes or Events............................16
3.09. Absence of Litigation...........................................16
3.10. Employee Benefit Plans..........................................16
3.11. Labor Matters...................................................20
3.12. Real Property and Leases........................................21
3.13. Intellectual Property............................................21
3.14. Year 2000 Compliance............................................23
3.15. Taxes...........................................................24
3.16. Environmental Matters...........................................25
3.17. Material Contracts..............................................26
3.18. Insurance.......................................................28
<PAGE>
-ii-
Section Page
3.19. Receivables....................................................28
3.20. Brokers........................................................29
3.21. Accounting and Tax Matters.....................................29
3.22. Pooling Affiliates.............................................29
3.23. Vote Required..................................................30
3.24. State Takeover Statutes........................................30
3.25. Opinion of Financial Advisor...................................30
3.26. Board Approval.................................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.01. Organization and Qualification; Subsidiaries...................30
4.02. Organizational Documents.......................................31
4.03. Capitalization.................................................31
4.04. Authority Relative to this Agreement...........................32
4.05. No Conflict; Required Filings and Consents.....................32
4.06. Financial Information, Books and Records.......................33
4.07. Absence of Certain Changes or Events...........................34
4.08. Absence of Litigation..........................................34
4.09. Intellectual Property..........................................34
4.10. Parent Ordinary Shares.........................................35
4.11. Brokers........................................................35
4.12. Accounting and Tax Matters.....................................35
4.13. Pooling Affiliates.............................................35
4.14. Vote Required..................................................35
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by the Company Pending the Closing.........35
5.02. Conduct of Business by Parent Pending the Closing..............38
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Access to Information; Confidentiality.........................38
6.02. No Solicitation of Transactions................................39
6.03. Registration Statement and Proxy Statement.....................39
6.04. Stockholders' Meetings.........................................42
6.05. Further Action; Consents; Filings..............................43
6.06. Notices of Certain Events......................................44
6.07. Pooling Matters................................................45
<PAGE>
-iii-
Section Page
6.08. Letters of Accountants.........................................45
6.09. Plan of Reorganization.........................................45
6.10. Continuation of Benefits.......................................46
6.11. Pooling Affiliates.............................................46
6.12. Indemnification of Directors and Officers......................47
6.13. Public Announcements...........................................48
6.14. Stock Exchange Listings........................................48
6.15. Certain Obligations of Parent..................................48
ARTICLE VII
CLOSING CONDITIONS
7.01. Conditions to the Obligations of Each Party to Close...........49
7.02. Conditions to the Obligations of Parent........................50
7.03. Conditions to the Obligations of the Company...................51
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination....................................................52
8.02. Effect of Termination..........................................55
8.03. Amendment......................................................55
8.04. Waiver.........................................................55
8.05. Fees and Expenses..............................................55
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations and Warranties.................57
9.02. Notices........................................................57
9.03. Certain Definitions............................................58
9.04. Severability...................................................59
9.05. Entire Agreement; Assignment...................................59
9.06. Parties in Interest............................................59
9.07. Specific Performance...........................................60
9.08. Governing Law..................................................60
9.09. Consent to Jurisdiction; Venue.................................60
9.10. Headings.......................................................60
9.11. Counterparts...................................................60
<PAGE>
-iv-
EXHIBITS
EXHIBIT A List of officers of Surviving Corporation
EXHIBIT B List of directors of Surviving Corporation
EXHIBIT C Form of Company Tax Representation Letter
EXHIBIT D Form of Parent and Merger Sub Tax Representation Letter
EXHIBIT E Form of Company Affiliate Letter
EXHIBIT F Form of Parent Affiliate Letter
<PAGE>
Index of Defined Terms
Defined Term Section
- ------------ -------
$ Section 9.03(d)
1998 Company Balance Sheet Section 3.07(c)
1998 Parent Balance Sheet Section 4.06(b)
accumulated funding deficiency Section 3.10(e)
ADR Section 2.03(b)
affiliate Section 9.03(a)
Agreement Preamble
Banc of America Section 3.20
beneficial owner Section 9.03(b)
Blue Sky Laws Section 3.05(b)(i)
business day Section 9.03(c)
Certificate of Merger Section 1.03
Change of Control Right Section 6.06(b)
Closing Section 1.03
COBRA Section 3.10(a)
Code Recitals
Common Stock Exchange Ratio Section 2.02(e)
Company Preamble
Company Affiliate Letter Section 6.11(a)
Company Common Stock Recitals
Company Disclosure Schedule Section 3.01(b)
Company Material Adverse Effect Section 3.01(a)
Company Optionholder Section 2.04(a)
Company Permits Section 3.06
Company Preferred Stock Section 2.02
Company Reports Section 3.07(a)
Company Shares Trust Section 2.06(b)
Company Stockholder Approval Section 3.23
Company Stockholders' Meeting Section 6.03(a)(i)
Company Stock Option Section 2.04(a)
Company Stock Plans Section 3.03(vi)
Company Systems Section 3.14
Company Warrantholder Section 2.04(b)
Competing Transaction Section 6.02(a)(iii)
Confidentiality Agreement Section 6.01(b)
Determination Period Section 2.02(b)
DGCL Recitals
Effective Time Section 1.03
Encumbrance Section 6.05(c)
Environmental Laws Section 3.16(a)(ii)
Environmental Permits Section 3.16(b)(v)
ERISA Section 3.10(a)
-v-
<PAGE>
Index of Defined Terms (cont'd)
Defined Term Section
- ------------ -------
Ernst & Young Section 2.04(a)
Excess Shares Section 2.06(a)
Exchange Act Section 3.05(b)(i)
Exchange Agent Section 1.01
Exchange Fund Section 2.03(a)
Exon-Florio Provision Section 3.05(b)(i)
Expenses Section 8.05(c)(ii)
F-4 Registration Statement Section 6.03(a)(ii)
Governmental Entity Section 3.05(b)
Governmental Order Section 9.03(e)
Hazardous Substances Section 3.16(a)(i)
HSR Act Section 3.05(b)(i)
IAS GAAP Section 4.06(a)(iii)
Indemnified Parties Section 6.12(b)
Insurance Amount Section 6.12(c)
Intellectual Property Section 3.13(a)
IRS Section 3.10(a)
Law Section 3.05(a)(ii)
License Agreements Section 3.13(c)
Material Contracts Section 3.17(a)
Merger Recitals
Merger Consideration Section 2.01
Merger Sub Section 1.01
Merger Sub Common Stock Section 1.01
Multiemployer Plan Section 3.10(b)
Multiple Employer Plan Section 3.10(b)
NASDAQ Section 2.02(b)
Neuer Markt Section 2.02(b)
ODTC Section 3.05(b)
Offer Period Section 6.03(f)
Old Company Certificates Section 2.03(b)
Option and Warrant Exchange Section 2.04(b)
Option Exchange Section 2.04(b)
Parent Preamble
Parent ADSs Section 2.02(b)
Parent Affiliate Letter Section 6.11(b)
Parent Average Closing Price Section 2.02(b)
Parent Disclosure Schedule Section 4.01
Parent Financial Statements Section 4.06(a)(i)
Parent Interim Financial Statements Section 4.06(a)(ii)
Parent Material Adverse Effect Section 4.01
Parent Ordinary Shares Recitals
-vi-
<PAGE>
Index of Defined Terms (cont'd)
Defined Term Section
- ------------ -------
Parent Stockholder Approval Section 4.14
Parent Stockholders' Meeting Section 6.04(b)
Parent Stock Plan Section 4.03(iii)
Parent Subsidiaries Section 4.01
Parent Voting Agreement Recitals
PBO Section 3.10(e)
person Section 9.03(f)
Plans Section 3.10(a)
Pooling Affiliate Section 3.22
PricewaterhouseCoopers Section 2.04(a)
Proxy Statement Section 6.03(a)
Receivables Section 3.19
Redemption Event Section 6.06(b)
Redemption Right Section 6.06(b)
Representatives Section 6.01(a)(i)
Returns Section 3.15(b)(i)
SEC Recitals
Securities Act Section 3.05(b)(i)
Series A Certificate of Designations Section 6.06(b)
Series A Holder Section 6.06(b)
Series A Preferred Stock Section 2.02(b)
Series A Preferred Stock Exchange Ratio Section 2.02(b)
Series M and Series M1 Agreement Recitals
Series M Certificate of Designations Section 6.06(b)
Series M Preferred Stock Recitals
Series M Preferred Stock Exchange Ratio Section 2.02(c)
Series M1 Certificate of Designations Section 6.06(b)
Series M1 Preferred Stock Recitals
Series M1 Preferred Stock Exchange Ratio Section 2.02(d)
Share Exchange Section 2.01
Software Section 3.13(d)(vi)
Software Products Section 6.05(c)
Stockholders' Meetings Section 6.04(b)
subsidiary/subsidiaries Section 9.03(g)
Surviving Corporation Section 1.02
Surviving Corporation Common Stock Section 2.02(g)
Tax/Taxes Section 3.15(a)
Terminating Company Breach Section 8.01(g)
Terminating Parent Breach Section 8.01(i)
Termination Fee Section 8.05(b)
Third Party Provisions Section 9.06
Third Quarter 1999 Company Balance Sheet Section 3.10(e)
-vii-
<PAGE>
Index of Defined Terms (cont'd)
Defined Term Section
- ------------ -------
Trademarks Section 3.13(a)
Trade Secrets Section 3.13(a)
trading day Section 9.03(h)
Transactions Recitals
U.S. GAAP Section 2.03(f)
Voting Agreement Recitals
WARN Section 3.10(g)
Warrant Section 2.04(b)
Warrant Exchange Section 2.04(b)
Year 2000 Compliant Section 3.14
-viii-
<PAGE>
EXHIBIT 2
EXECUTION COPY
VOTING AND REGISTRATION RIGHTS AGREEMENT
VOTING AND REGISTRATION RIGHTS AGREEMENT, dated as of November 19, 1999
(this "Agreement"), among CE Computer Equipment AG, an Aktiengesellschaft
organized and existing under the laws of the Federal Republic of Germany (the
"Acquiror"), and each of the parties identified on Schedule A hereto
(individually a "Stockholder" and collectively the "Stockholders").
WHEREAS, TREEV, Inc., a Delaware corporation (the "Company") and the
Acquiror have contemporaneously with the execution of this Agreement, entered
into an Agreement and Plan of Merger dated as of November 19, 1999 (the "Merger
Agreement") which provides, among other things, that the Acquiror will cause to
be incorporated a Delaware corporation ("Merger Vehicle ");
WHEREAS, Merger Vehicle will be merged (the "Merger") with and into the
Company pursuant to the terms and conditions of the Merger Agreement;
WHEREAS, as an essential condition and inducement to the Acquiror to
enter into the Merger Agreement and in consideration therefor, the undersigned
Stockholders and the Acquiror have entered into this Agreement; and
WHEREAS, as of the date hereof, the Stockholders own of record and
beneficially the number of shares of common stock, par value $0.0001 per share,
of the Company (the "Company Common Stock") and the number of options to
purchase shares of Company Common Stock ("Options") and Warrants to purchase
Company Common Stock ("Warrants") set forth opposite their respective names on
Schedule A hereto and wish to enter into this Agreement with respect to such
shares of Company Common Stock and such Options and Warrants;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
VOTING OF SHARES
SECTION 1.01. Voting Agreement. Each Stockholder hereby
agrees, severally and not jointly, to: (a) appear, or cause the holder of record
on any applicable record date (the "Record Holder") to appear, for the purpose
of obtaining a quorum at any annual or special meeting of stockholders of the
Company and at any adjournment thereof at which matters relating to the Merger,
the Merger Agreement or any transaction contemplated by the Merger Agreement are
considered; (b) vote, or cause the Record Holder to vote, in
<PAGE>
person or by proxy or by written consent all the shares of Company Common Stock
or other equity securities of the Company owned by such Stockholder, or with
respect to which such Stockholder has or shares voting power or control, and all
the shares of Company Common Stock or other equity securities of the Company
which may, or with respect to which voting power or control may, hereafter be
acquired by such Stockholder pursuant to Options, Warrants or otherwise
(collectively, the "Shares") in favor of the Merger, the Merger Agreement and
the transactions contemplated by the Merger Agreement; and (c) vote, or cause
the Record Holder to vote, such Stockholder's Shares against any action,
proposal or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement, or which would result in any of the conditions to
the Company's obligations under the Merger Agreement not being fulfilled.
SECTION 1.02. Irrevocable Proxy. Concurrently with the
execution of this Agreement, each Stockholder agrees to deliver to the Acquiror
a proxy in the form attached hereto as Exhibit 1 (a "Proxy"), which shall be
irrevocable to the extent provided in Section 212 of the Delaware General
Corporation Law, covering the total number of Shares beneficially owned (as such
term is defined in Rule 13d-3 under the Exchange Act) by such Stockholder set
forth therein.
SECTION 1.03. No Ownership Interest. Nothing contained in this
Agreement will be deemed to vest in the Acquiror or Merger Vehicle any direct or
indirect ownership or incidence of ownership of or with respect to any Shares.
All rights, ownership and economic benefits of and relating to the Shares will
remain and belong to the Stockholders, and neither the Acquiror nor Merger
Vehicle will have any authority to manage, direct, superintend, restrict,
regulate, govern, or administer any of the policies or operations of the Company
or exercise any power or authority to direct the Stockholders in the voting or
control of any of their Shares, except as otherwise provided herein, in the
Merger Agreement or the performance of the Stockholders' duties or
responsibilities as stockholders of the Company.
SECTION 1.04. Evaluation of Investment. Each Stockholder, by
reason of his knowledge and experience in financial and business matters,
believes himself capable of evaluating the merits and risks of the investment in
American Depositary Shares ("Acquiror ADSs"), each representing one Ordinary
Share without par value of Acquiror ("Acquiror Shares") contemplated by the
Merger Agreement. Each Stockholder also acknowledges that he possesses all
information relating to the Acquiror, Merger Vehicle and the Company which he
deems relevant to an investment in the Acquiror ADSs should the Merger be
consummated. Each Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
SECTION 1.05. No Inconsistent Agreements. Each Stockholder
hereby represents, warrants and covenants that, except as contemplated by this
Agreement and the Merger Agreement, such Stockholder (a) has not entered, and
will not enter into, any agreement with respect to the voting of such
Stockholder's Shares and (b) has not granted, and will not grant, any proxy or
power of attorney which is inconsistent with this Agreement.
2
<PAGE>
ARTICLE II
COVENANTS OF THE STOCKHOLDERS
SECTION 2.01. No Disposition or Encumbrance of Shares. (a)
Each Stockholder hereby covenants and agrees, severally and not jointly, that
such Stockholder shall not, directly or indirectly, offer or otherwise agree to
sell, assign, transfer, exchange, or dispose of, or create or permit to exist
any security interest, lien, claim, pledge, option, right of first refusal,
agreement, limitation on such Stockholder's voting rights, charge or other
encumbrance of any nature whatsoever with respect to any Shares, Options or
Warrants owned directly or indirectly by such Stockholder or with respect to
which such Stockholder has the power of disposition, whether now or hereafter
acquired, to or for the benefit of or in favor of any other person (a
"Transferee") without the prior written consent of the Acquiror, unless the
Transferee agrees in writing to be bound by the terms of this Agreement with
respect to such Shares, Options or Warrants (provided nothing contained herein
will be deemed to restrict the exercise of Options or Warrants).
(b) Each Stockholder hereby agrees and consents to the entry
of stop transfer instructions by the Company against the transfer of any Shares
inconsistent with the terms of Section 2.01(a).
SECTION 2.02. No Solicitation. From the date hereof until the
termination of this Agreement, each Stockholder will not (whether directly or
indirectly through advisors, agents or other intermediaries) (a) solicit,
initiate, consider, encourage or accept any other proposals or offers from any
Person (as defined below), other than the Acquiror or Merger Vehicle, (i)
relating to any acquisition or purchase of all or any portion of the assets or
capital stock of the Company or any subsidiary of the Company (other than sales
of inventory in the ordinary course of business consistent with past practice),
(ii) to enter into any business combination with the Company or any subsidiary
of the Company, or (iii) to enter into any other extraordinary business
transaction involving or otherwise relating to the Company or any subsidiary of
the Company, or (b) participate in any discussions, conversations, negotiations
or other communications regarding, or furnish to any Person, other than the
Acquiror or Merger Vehicle, any information with respect to, or otherwise
cooperate in any way, assist or participate in, facilitate or encourage any
effort or attempt by any such other Person, to seek to do any of the foregoing.
Each Stockholder immediately shall cease and cause to be terminated all existing
discussions, conversations, negotiations and other communications with all
Persons other than the Acquiror or Merger Vehicle conducted heretofore with
respect to any of the foregoing. Each Stockholder shall notify the Acquiror
promptly if any such proposal or offer, or any inquiry or contact with any
Person with respect thereto, is made and shall, in any such notice to the
Acquiror, indicate in reasonable detail the identity of the Person making such
proposal, offer, inquiry or contact and the terms and conditions of such
proposal, offer, inquiry or contact, including without limitation a description
of any financial terms of such proposal, offer, inquiry or contact, if
applicable. For the purposes of this Agreement, the term "Person" means any
individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section
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13(d)(3) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants, severally and not jointly, to
the Acquiror as follows:
SECTION 3.01. Authority Relative to This Agreement. Such
Stockholder is legally competent to execute and deliver this Agreement, to
perform his obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by such Stockholder and, assuming the due authorization, execution and
delivery by the Acquiror and the other Stockholders, constitutes a legal, valid
and binding obligation of such Stockholder, enforceable against such Stockholder
in accordance with its terms.
SECTION 3.02. No Conflict. The execution and delivery of this
Agreement by such Stockholder does not, and the performance of this Agreement by
such Stockholder will not, result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance, on any of
the Shares, Options or Warrants pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Stockholder is a party or by which such
Stockholder or the Shares, Options or Warrants owned by him are bound or
affected.
SECTION 3.03. Title to the Shares, Options and Warrants. The
Shares, Options and Warrants owned by such Stockholder are owned free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on such Stockholder's voting rights, charges
and other encumbrances of any nature whatsoever, and such Stockholder has not
appointed or granted any proxy, which appointment or grant remains effective,
with respect to any Shares.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.01. Incidental Registration. (a) Whenever the
Acquiror proposes to register any Acquiror ADSs under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act") on a form and in a manner that would permit registration of
Registrable Securities (as hereinafter defined) for sale to the public under the
Securities Act, it will each such time give prompt written notice to all
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Stockholders holding Registrable Securities of its intention to do so,
describing such securities and specifying the form and manner and the other
relevant facts involved in such proposed registration (including without
limitation whether or not such registration will be in connection with an
underwritten offering of Acquiror ADSs and, if so, the identity of the managing
underwriter and whether such offering will be pursuant to a "best efforts" or
"firm commitment" underwriting if such disclosure is acceptable to the managing
underwriter). Upon the written request of any such Stockholder delivered to the
Acquiror within 30 days after such notice shall have been given to such
Stockholder (which request shall specify the Registrable Securities intended to
be disposed of by such Stockholder and the intended method of disposition
thereof), the Acquiror will use its reasonable best efforts to effect the
registration under the Securities Act, as expeditiously as is reasonable, of all
Registrable Securities that the Acquiror has been so requested to register by
the Stockholders, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered; provided, however, that:
(i) if, at any time after giving such written notice of
its intention to register any of such securities and prior to the
effective date of the registration statement filed in connection with
such registration, the Acquiror shall determine for any reason not to
register such securities, the Acquiror may, at its election, give
written notice of such determination to each Stockholder that has
requested to register Registrable Securities and thereupon the Acquiror
shall be relieved of its obligation to register any Registrable
Securities in connection with such registration;
(ii) if (A) the registration so proposed by the Acquiror
involves an underwritten offering of the securities so to be
registered, to be distributed by or through one or more underwriters of
recognized standing under underwriting terms appropriate for such a
transaction, and (B) the managing underwriter of such underwritten
offering shall advise the Acquiror that, in its judgment, the number of
Registrable Securities and any other securities proposed to be included
in such offering by the Acquiror should be limited due to market
conditions, then the Acquiror will promptly advise each such
Stockholder thereof and may require, by written notice to each such
Stockholder accompanying such advice, that, to the extent necessary to
meet such limitation, all Company Stockholders (as hereinafter defined)
proposing to sell Acquiror ADSs in such offering shall share pro rata
in the number of Acquiror ADSs to be excluded from such offering, such
pro rata sharing to be based on the respective numbers of Acquiror ADSs
as to which registration has been requested by such Company
Stockholders; provided, however, that in no event will the amount of
Acquiror ADSs to be sold by such Company Stockholders pursuant to such
registration statement after such reduction represent less than 20% of
the Acquiror ADSs included in such offering;
(iii) the Acquiror shall not be obligated to effect any
registration of Registrable Securities under this Section 4.01 that is
incidental to the registration of any of its securities in connection
with any merger, acquisition, exchange offer, dividend reinvestment
plan or stock option or other employee benefit plan; and
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(iv) notwithstanding any other provision of this
Agreement to the contrary, the Acquiror shall not be required to
register any Registrable Securities under this Agreement and shall have
no obligation under this Section 4.01 with respect to any requests made
by Stockholders after the first anniversary of the date of consummation
of the Merger.
For purposes of this Agreement, "Registrable Securities" shall mean Acquiror
ADSs which are issued to the Stockholders upon consummation of the Merger;
provided, however, that, as to any particular Registrable Securities that have
been issued, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of under such registration statement, (ii) a sale has been made in
reliance on and in accordance with Rule 144 under the Securities Act, (iii) they
shall have been otherwise transferred or disposed of, (iv) they shall no longer
be held by or for the benefit of the Stockholder to whom they were issued in the
Merger or (v) they shall have ceased to be outstanding.
(b) The Acquiror will pay all Registration Expenses in
connection with each registration of Registrable Securities effected by it
pursuant to this Section 4.01. For purposes of this Agreement, "Registration
Expenses" shall mean all out-of-pocket expenses incident to the Acquiror's
performance of or compliance with this Article IV, including without limitation
all registration and filing fees (including filing fees with respect to the
National Association of Securities Dealers, Inc.), all fees and expenses of
complying with state securities or "blue sky" laws (including reasonable fees
and disbursements of its independent public accountants, including the expenses
of any special audits and underwriters' counsel in connection with any "blue
sky" memorandum or survey), all printing expenses, all listing fees, all
registrars' and transfer agents' fees, and the fees and disbursements of counsel
for the Acquiror and "cold comfort" letters required by or incident to such
performance and compliance.
SECTION 4.02. Registration Procedures. (a) If and when the
Acquiror is required to use its reasonable best efforts to effect the
registration of any Registrable Securities under the Securities Act as provided
in Section 4.01, the Acquiror will as expeditiously as is reasonable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") on any appropriate form a registration
statement with respect to such Registrable Securities and use its
reasonable best efforts to cause such registration statement to become
effective;
(ii) prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities and other
securities covered by such registration statement until the earlier of
(A) such time as all such Registrable Securities and other securities
have been disposed of in accordance with
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the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement and (B) the expiration of
three months from the date such registration statement first becomes
effective;
(iii) furnish to each Stockholder selling such
Registrable Securities such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus), in conformity with
the requirements of the Securities Act, such documents incorporated by
reference in such registration statement or prospectus, and such other
documents, as such Stockholder may reasonably request in order to
facilitate the sale or disposition of such Registrable Securities;
(iv) use its reasonable best efforts to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or "blue sky" laws
of such jurisdictions as each Stockholder shall reasonably request, and
do any and all other acts and things that may be necessary to enable
such seller to consummate the disposition in such jurisdictions of such
Stockholder's Registrable Securities covered by such registration
statement, except that the Acquiror shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified, or to subject
itself to taxation in respect of doing business in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(v) furnish to each Stockholder selling Registrable
Securities a signed counterpart, addressed to such Stockholder, of (A)
an opinion of counsel for the Acquiror, dated the effective date of
such registration statement (or, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), and (B) a "cold comfort" letter signed by the
independent public accountants who have issued a report on the
Acquiror's financial statements included in such registration
statement, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and, in the
case of the accountants' letter, such other financial matters as such
sellers may reasonably request;
(vi) immediately notify each Stockholder selling
Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing or if it is necessary to amend or
supplement such prospectus to comply with law, and at the request of
any
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such Stockholder prepare and furnish to such Stockholder 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 Securities or securities, such prospectus shall not
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 in the light of the circumstances
then existing and shall otherwise comply in all material respects with
law and so that such prospectus, as amended or supplemented, will
comply with law;
(vii) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least 12 months,
beginning with the first month of the first fiscal quarter after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(viii) use its reasonable best efforts to list such securities
on each securities exchange on which Acquiror ADSs are then listed, if
such securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and provide a transfer
agent and registrar for such Registrable Securities not later than the
effective date of such registration statement; and
(ix) issue to any underwriter to which any Stockholder
may sell such Registrable Securities in connection with any such
registration (and to any direct or indirect transferee of any such
underwriter) certificates evidencing Acquiror ADSs.
The Acquiror may require each Stockholder selling Registrable Securities as to
which any registration is being effected to furnish the Acquiror with such
information regarding such Stockholder and the distribution of such securities
as the Acquiror may from time to time reasonably request in writing and as shall
be required by law or by the Commission in connection therewith.
(b) If any registration pursuant to Section 4.01 shall
be in connection with an underwritten public offering, each Stockholder holding
Registrable Securities agrees, if so required by the managing underwriters, not
to effect any public sale or distribution (including any sale pursuant to Rule
144 under the Securities Act) of Registrable Securities (other than as part of
such underwritten public offering) within 5 U.S. business days prior to the
effective date of the registration statement with respect to such underwritten
public offering or 180 days after the effective date of such registration
statement.
(c) The Acquiror agrees, if so required by the managing
underwriters in connection with an underwritten offering of Registrable
Securities pursuant to Section 4.01, not to effect any public sale or
distribution of any of its equity securities or securities convertible into or
exchangeable or exercisable for any of such equity securities during the 5 U.S.
business days prior to and the 180 days after the effective date of any
registration statement with respect to such underwritten public offering, except
as part of such
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underwritten offering or except in connection with a stock option plan, stock
purchase plan, savings or similar plan, or an acquisition, merger or exchange
offer.
(d) It is understood that in any underwritten offering
of Registrable Securities in addition to the shares (the "initial shares") the
underwriters have committed to purchase, the underwriting agreement may grant
the underwriters an option to purchase a number of additional shares (the
"option shares") equal to up to 15% of the initial shares (or such other maximum
amount as the National Association of Securities Dealers, Inc. may then permit),
solely to cover over-allotments. Acquiror ADSs proposed to be sold by the
Acquiror and the Company Stockholders shall be allocated between initial shares
and option shares as agreed or, in the absence of agreement, pursuant to Section
4.01(a)(ii). The number of initial shares and option shares to be sold by
requesting holders shall be allocated pro rata among all such Company
Stockholders on the basis of the relative number of Acquiror ADSs each such
holder has requested to be included and is permitted to include in such
registration. For purposes of this Agreement, the term "Company Stockholders"
shall mean, collectively, (i) the Series A Stockholders (as defined in the
Series A Preferred Voting and Registration Rights Agreement dated as of the date
hereof between the Acquiror and certain holders of Series A Cumulative
Convertible Preferred Stock of the Company), (ii) the Series M Stockholder (as
defined in the Series M Preferred Stock and Series M1 Preferred Stock Voting and
Registration Rights Agreement dated as of the date hereof between the Acquiror
and the holder of Series M Convertible Preferred Stock of the Company and Series
M1 Convertible Preferred Stock of the Company) and (iii) the Stockholders.
SECTION 4.03. Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act, the Acquiror will
give the Stockholders on whose behalf such Registrable Securities are to be so
registered and their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Acquiror with its officers and the independent public
accountants who have issued a report on its financial statements as shall be
necessary, in the opinion of such holders and such underwriters or their
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
SECTION 4.04. Indemnification. (a) In the event of any
registration of any equity securities of the Acquiror under the Securities Act,
the Acquiror will, and hereby does, indemnify and hold harmless, in the case of
any registration statement filed pursuant to Section 4.01, the Stockholder
selling any Registrable Securities covered by such registration statement, its
directors, officers, employees, agents, trustees, other fiduciaries, general and
limited partners (and directors, officers, employees and agents thereof and, if
such seller is a portfolio or investment fund, its investment advisors), each
other Person who participates as an underwriter in the offering or sale of such
securities, each officer and director of each such underwriter, each Person, if
any, who controls the Acquiror and is not a seller of any Registrable Securities
covered by such registration statement and each other Person, if any, who
controls such seller, such underwriter or any such non-selling controlling
Person within
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the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any losses, claims, damages, liabilities and expenses, joint or
several, to which such seller or any such director, officer, employee, agent,
trustee or other fiduciary or participating or controlling Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment or
supplement thereto, or any document incorporated by reference therein, or (ii)
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Acquiror will
reimburse such seller, and each such director, officer, employee, agent,
trustee, other fiduciary, underwriter and controlling Person for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding; provided,
however, that the Acquiror shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (i) an untrue statement or
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Acquiror for use in
the preparation thereof by such seller, underwriter or non-selling controlling
Person, as the case may be, or (ii) an untrue statement or omission made in any
preliminary prospectus but notified to such seller and underwriter prior to any
sale of Registrable Securities and subsequently corrected by the Acquiror in any
final prospectus, amendment or supplement made available to such seller or
underwriter but which final prospectus, amendment or supplement was not used by
such seller or underwriter in the sale of Registrable Securities that gave rise
to such loss, claim, damage, liability (or action or proceeding in respect
thereof). Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer,
employee, agent, trustee, other fiduciary, underwriter or controlling Person and
shall survive the transfer of such securities by such seller.
(b) The Acquiror may require, as a condition to
including any Registrable Securities in any registration statement filed
pursuant to Section 4.01, that the Acquiror shall have received an undertaking
satisfactory to it from (i) the prospective seller of such securities, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 4.04(a)) the Acquiror, each such underwriter of such
securities, each officer and director of each such underwriter and each other
Person, if any, who controls the Acquiror or any such underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and (ii) each such underwriter of such securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
4.04(a)) the Acquiror, each officer and director of the Acquiror, each
prospective seller, each officer and director or each prospective seller and
each other Person, if any, who controls the Acquiror or any such prospective
seller within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, with respect to any statement in or omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus included therein, or any amendment or supplement thereto, if such
statement or omission was made in reliance upon and in conformity with written
information furnished by such prospective seller or such underwriter, as the
case may be, to the Acquiror
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for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Acquiror or any such director, officer or
controlling Person and shall survive the transfer of such securities by such
seller.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding (including any
governmental investigation) involving a claim referred to in Section 4.04(a) or
(b), such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of such indemnifying party's obligations under the preceding
provisions of this Section 4.04, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim (in which case, the
indemnifying party shall not be liable for the fees and expenses of more than
one counsel for all sellers of Acquiror ADSs, or more than one counsel for the
underwriters in connection with any one action or separate but similar or
related actions), the indemnifying party will be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that such indemnifying party may wish with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of such indemnifying party's
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof.
SECTION 4.05. Contribution. (a) If the indemnification
provided for in Section 4.04 is unavailable to the indemnified parties in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party and the Acquiror shall contribute to the amounts paid or
payable by such indemnified parties as a result of such losses, claims, damages
or liabilities (i) as between the Acquiror and the Stockholders selling
Registrable Securities covered by a registration statement, on the one hand, and
the underwriters, on the other, in such proportion as is appropriate to reflect
the relative benefits received by the Acquiror and such Stockholders, on the one
hand, and the underwriters, on the other, from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Acquiror and such Stockholders, on the one hand, and
of the underwriters, on the other, in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations, and (ii) as between the
Acquiror, on the one hand, and each Stockholder selling Registrable Securities
covered by a registration statement, on the other, in such proportion as is
appropriate to reflect the relative fault of the Acquiror and of each such
Stockholder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Acquiror and such Stockholders, on the one hand, and the underwriters, on the
other, shall be deemed to be in
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the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Acquiror and such Stockholders bear to the total underwriting discounts and
commissions received by the underwriters. The relative fault of the Acquiror and
such Stockholders, on the one hand, and of the underwriters, on the other, shall
be determined by reference to, among other things, whether the untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Acquiror and such Stockholders or by the
underwriters. The relative fault of the Acquiror, on the one hand, and of each
such Stockholder, on the other, shall be determined by reference to, among other
things, whether the untrue statement of a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(b) The Acquiror and the Stockholders selling
Registrable Securities covered by a registration statement agree that it would
not be just and equitable if contribution pursuant to this Section 4.05 were
determined by pro rata allocation (even if the underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.05, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such underwriter has otherwise been required to pay by reason of such untrue
statement or omission, and no such Stockholder shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of such Stockholder were offered to the public exceeds
the amount of any damages that such Stockholder has otherwise been required to
pay by reason of such untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Each Stockholder's obligation to
contribute pursuant to this Section 4.05 is several in the proportion that the
proceeds of the offering received by such Stockholder bears to the total
proceeds of the offering received by all the Company Stockholders and not joint.
SECTION 4.06. Nominees of Beneficial Owners. In the event that
any Registrable Securities are held by a nominee for a Stockholder, the
Stockholder, as the beneficial owner thereof, may, at its election, be treated
as the holder of such Registrable Securities for purposes of any request or
other action by any Stockholder pursuant to this Agreement or any determination
of any number or percentage of shares of Registrable Securities held by any
Stockholder contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Acquiror may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
12
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Termination. This Agreement will terminate upon
the earliest to occur of (a) the termination of the Merger Agreement in
accordance with its terms or (b) the Effective Time; provided, however, that (i)
the provisions of Sections 4.01, 4.02, 4.03 and 4.06 will survive until the
first anniversary of the date of consummation of the Merger and (ii) the
provisions of Sections 4.04 and 4.05 will survive for the period of the relevant
statute of limitations from the date of the first registration statement filed
by the Acquiror which is subject to Section 4.01. Upon such termination, no
party will have any further obligations or liabilities hereunder, provided that
no such termination will relieve any party from liability for any breach of this
Agreement prior to such termination.
SECTION 5.02. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 5.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) the respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 5.03):
(a) if to a Stockholder:
to the address set forth on Schedule A hereto
with a copy to:
Cooley Godward, LLP
2002 Edmund Halley Drive
Suite 300
Reston, Virginia 20191
U.S.A.
Telecopy: + 1 703 262 8100
Attention: Sidney Smith
13
<PAGE>
(b) if to the Acquiror:
CE Computer Equipment AG
Herforder Strasse 155A
33609 Bielefeld
Germany
Telecopy: +49 521 931 8111
Attention: Thomas Wenzke
with a copy to:
Shearman & Sterling
199 Bishopsgate
London EC2M 3TY
United Kingdom
Telecopy: + 44 171 920 9020
Attention: W. Jeffrey Lawrence
SECTION 5.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 5.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 5.06. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
between the Acquiror, on the one hand, and the Stockholders, on the other hand,
with respect to the subject matter hereof.
SECTION 5.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Acquiror and each Stockholder (which consent may be granted or withheld in the
sole discretion of each of the parties hereto), except that the Acquiror may
assign this Agreement to an affiliate without the consent of any Stockholder;
provided, however that no such assignment shall relieve the Acquiror of its
obligations hereunder if such assignee does not perform such obligations.
14
<PAGE>
SECTION 5.08. No Third Party Beneficiaries. 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 or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 5.09. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of, each of
the parties hereto.
SECTION 5.10. Governing Law. This Agreement shall be governed
by the laws of the State of Delaware, excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the laws
of any jurisdiction other than the State of Delaware. All actions and
proceedings arising out of or related to this Agreement shall be heard and
determined in any Delaware state or federal court sitting in Delaware.
SECTION 5.11. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 5.12. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 5.13. Definitions. Capitalized terms used and not
defined herein will have the meaning set forth in the Merger Agreement.
SECTION 5.14. Obligations of Stockholders. The obligations of
the Stockholders hereunder will be "several" and not "joint" or "joint and
several." Without limiting the generality of the foregoing, under no
circumstances will any Stockholder have any liability or obligation with respect
to any misrepresentation or breach of covenant of any other Stockholder.
SECTION 5.15. Further Assurances. The Acquiror and each
Stockholder will execute and deliver all such further documents and instruments
and take all such further action as may be necessary in order to consummate the
transactions contemplated hereby.
SECTION 5.16. Waiver of Jury Trial. Each of the parties hereto
irrevocably and unconditionally waives all right to trial by jury in any action,
proceeding or counterclaim (whether based in contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of the parties
hereto in the negotiation, administration, performance and enforcement thereof.
15
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be duly executed as of the date first written above.
CE Computer Equipment AG
/s/ Hans-Jurgen Brintrup
----------------------------------------
Name: Hans-Jurgen Brintrup
Title: Member of the Board of Management
/s/ Thomas Wenzke
----------------------------------------
Name: Thomas Wenzke
Title: Member of the Board of Management
JAMES J. LETO
/s/ James J. Leto
----------------------------------------
ROBERT P. BERNARDI
/s/ Robert P. Bernardi
----------------------------------------
JOHN F. BURTON
/s/ John F. Burton
----------------------------------------
C. ALAN PEYSER
/s/ C. Alan Peyser
----------------------------------------
THOMAS A. WILSON
/s/ Thomas A. Wilson
----------------------------------------
MARK A. PAIEWONSKY
/s/ Mark A. Paiewonsky
----------------------------------------
RICHARD E. MCMAHON
/s/ Richard E. McMahon
----------------------------------------
16
<PAGE>
BRIAN H. HAJOST
/s/ Brian H. Hajost
----------------------------------------
HORACE T. ARDINGER, JR.
/s/ Horace T. Ardinger, Jr.
----------------------------------------
DOUGLAS ADKINS
/s/ Douglas Adkins
----------------------------------------
17
<PAGE>
<TABLE>
<CAPTION>
Schedule A
Shares of
Company
Common
Shares of Stock Subject
Stockholder Name Company to Warrants
Beneficial Owner and Address Common Stock and Options
- ---------------- ----------- ------------ -----------
<S> <C> <C> <C>
James J. Leto James J. Leto 124,687 568,992
3650 S.E. Torch Lake
Drive
Bellaire, MI 49615
Robert P. Bernardi Robert P. Bernardi 111,875 128,699
10607 Creamcup Ln
Great Falls, VA 22066
John F. Burton John F. Burton 0 42,328
1110 Harvey Road
McLean, VA 22101
C. Alan Peyser C. Alan Peyser 6,000 38,018
7 Arrowhead Terrace
Bethesda, MD 20817
Thomas A. Wilson Thomas A. Wilson 0 375,00
127 Dunedin Court
Cary, NC 27511
Mark A. Paiewonsky Mark A. Paiewonsky 0 65,000
1403 Earnshaw Court
Reston, VA 20190
Richard E. McMahon Richard E. McMahon 2,000 75,000
22 Glenhurst Court
North Potomac, MD
20878
Brian J. Hajost Brian J. Hajost 4,587 150,001
11287 Inglish Mill
Drive
Great Falls, VA 22066
</TABLE>
A - 1
<PAGE>
<TABLE>
<S> <C> <C> <C>
Horace T. Ardinger, Jr. Horace T. Ardinger, Jr. 4,031,094 165,500
1701 Elm Street
Suite 3000
Thanksgiving Tower
Dallas, TX 75201
Douglas Adkins Douglas Adkins 1,092,288 43,750
1701 Elm Street
Suite 3000
Thanksgiving Tower
Dallas, TX 75201
</TABLE>
A - 2
<PAGE>
Exhibit 1
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
A - 1
<PAGE>
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 STOCKHOLDER
By:
------------------------------------
Shares beneficially owned:
________ shares of Company common stock
2
<PAGE>
EXHIBIT 3
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 James J. Leto, STOCKHOLDER
By: /s/ James J. Leto
-----------------------------------
Shares beneficially owned:
693,679 shares of Company common stock
<PAGE>
EXHIBIT 4
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 Robert P. Bernardi, STOCKHOLDER
By: /s/ Robert P.Bernardi
--------------------------------------
Shares beneficially owned:
111,875 shares of Company common stock
128,699 options
<PAGE>
EXHIBIT 5
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 John F. Burton, STOCKHOLDER
By: /s/ John F. Burton
----------------------------------
Shares beneficially owned:
42,328 shares of Company common stock
<PAGE>
EXHIBIT 6
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 C. Alan Peyser, STOCKHOLDER
By: /s/ C. Alan Peyser
---------------------------------
Shares beneficially owned:
44,018 shares of Company common stock
<PAGE>
EXHIBIT 7
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 Thomas A. Wilson, STOCKHOLDER
By: /s/ Thomas A. Wilson
-----------------------------------
Shares beneficially owned:
375,000 shares of Company common stock
<PAGE>
EXHIBIT 8
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 Mark A. Paiewonsky, STOCKHOLDER
By: /s/ Mark A. Paiewonsky
----------------------------------
Shares beneficially owned:
65,000 shares of Company common stock
<PAGE>
EXHIBIT 9
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 Richard E. McMahon, STOCKHOLDER
By: /s/ Richard E. McMahon
----------------------------------
Shares beneficially owned:
78,768 shares of Company common stock
<PAGE>
EXHIBIT 10
Irrevocable Proxy
to Vote
TREEV, Inc. Stock
The undersigned stockholder (the "Stockholder") of TREEV, Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Thomas Wenzke, Peter Schmerler and Hans-Jurgen Brintrup, and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of common stock of the Company or other equity
securities that now are or hereafter may be beneficially owned by the
undersigned, or with respect to which the undersigned has or shares voting power
or control, and all the shares of common stock of the Company or other equity
securities of the Company which may, or with respect to which voting power or
control may, hereafter be acquired by the undersigned pursuant to options,
warrants or otherwise on or after the date hereof (collectively, the "Shares")
in accordance with the terms of this Irrevocable Proxy. The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon
the undersigned's execution of this Irrevocable Proxy, any and all prior proxies
given by the undersigned with respect to any Shares that are inconsistent with
this Irrevocable Proxy are hereby revoked and the undersigned agrees not to
grant any subsequent proxies with respect to the Shares that are inconsistent
with this Irrevocable Proxy until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law), is granted pursuant to the Voting and Registration
Rights Agreement dated as of November 19, 1999, by and among the Acquiror, the
undersigned and other stockholders of the Company (the "Voting Agreement"), and
is granted in consideration of the Acquiror entering into the Agreement and Plan
of Merger, dated as of November 19, 1999, between the Acquiror and the Company
(the "Merger Agreement"). The Merger Agreement provides for the merger of a
Delaware corporation with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) the termination of the Merger Agreement in accordance with its
terms and (ii) the Effective Time (as defined in the Voting Agreement). This
Irrevocable Proxy is intended to bind the undersigned stockholder as a
stockholder of the Company only with respect to the specific matters set forth
herein and shall not prohibit the undersigned stockholder from acting in
accordance with his or her fiduciary duties, if applicable, as an officer or
director of the Company.
The attorneys and proxies named above, and each of them, are hereby authorized
and empowered by the undersigned, at any time prior to the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the
<PAGE>
2
Company and in every written consent in lieu of such meeting in favor of
approval of the Merger and the Merger Agreement and in favor of any matter that
could reasonably be expected to facilitate the Merger. The attorneys and proxies
named above may not exercise this Irrevocable Proxy on any other matter except
as provided above. The undersigned Stockholder may vote the Shares on all other
matters.
Any obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.
This proxy is irrevocable (to the extent provided in Section 212 of the Delaware
General Corporation Law).
Dated: November 19, 1999 Brian H. Hajost, STOCKHOLDER
By: /s/ Brian H. Hajost
-----------------------------------
Shares beneficially owned:
154,588 shares of Company common stock
