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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 8, 2000
TREEV, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-11135
(State of incorporation or organization) (Commission File No.)
52-541590649
(IRS employer identification no.)
13900 Lincoln Park Drive
Herndon, Virginia 20171
(Address of principal executive offices)
(703) 478-2260
(Registrant's telephone number, including area code)
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<PAGE>
TREEV, INC.
INDEX
Information to be Included in the Report Page
Item 5. Other Events 1
Item 7. Exhibits 2
Signatures 3
<PAGE>
-2-
Item 5. Other Events.
As previously announced, TREEV, Inc., a Delaware corporation ("TREEV"),
entered into an agreement and plan of merger with CE Computer Equipment AG, a
German corporation ("CE"), on November 19, 1999 (the "Merger Agreement"). The
merger was conditioned on its being accounted for as a pooling of interests.
TREEV and CE have amended and restated the merger agreement as of May 8, 2000
(the "Amended and Restated Merger Agreement") to reflect that the parties no
longer intend to account for the merger as a pooling of interests and expect
that CE will account for the transaction as a purchase transaction. As
previously announced, CE will issue a total of 1,330,000 Ordinary Shares in the
form of American Depositary Shares (ADSs) in exchange for the outstanding shares
of TREEV Common Stock and Preferred Stock and for the outstanding warrants and
options for TREEV Common Stock.
The foregoing description of the Merger Agreement, the Amended and
Restated Merger Agreement and the transactions contemplated thereby do not
purport to be complete and are qualified in their entirety by reference to the
Merger Agreement, a copy of which was previously filed as Exhibit 2.1 to the
TREEV's Current Report on Form 8-K, dated November 19, 1999, and the Amended and
Restated Merger Agreement, dated May 8, 2000 attached hereto, each of which is
incorporated by reference herein. A copy of the press release, dated May 8,
2000, issued by TREEV and CE announcing the execution of the Amended and
Restated Merger Agreement is attached hereto as Exhibit 99.1 and is incorporated
by reference herein.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
2.1 Amended and Restated Agreement and Plan of Merger, dated as of May 8,
2000, by and between CE Computer Equipment AG and TREEV, Inc.
2.2 Agreement and Plan of Merger, dated as of November 19, 1999, by and
between CE Computer Equipment AG and TREEV, Inc. incorporated by
reference to Exhibit 2.1 to TREEV's Current Report on Form 8-K
relating to such Agreement and Plan of Merger filed December 3, 1999.
99.1 Joint Press Release of CE Computer Equipment AG and TREEV, Inc. dated
May 8, 2000, announcing the execution of the Amended and Restated
Merger Agreement.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TREEV, INC.
(Registrant)
By: /s/ Brian H. Hajost
Brian H. Hajost
Executive Vice President
Dated: May 9, 2000
LNDOCS01/158417 6
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
November 19, 1999 and amended and restated as of May 8, 2000 (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, Parent and the Company entered into an Agreement and
Plan of Merger dated as of November 19, 1999 (the "Original Merger Agreement")
and they now desire to amend and restate the Original Merger Agreement (it being
understood that all references herein to "this Agreement" refer to the Original
Merger Agreement as amended and restated hereby and that all references herein
to "the date hereof" or "the date of this Agreement" refer to November 19, 1999)
to reflect, among other things, that (i) the parties hereto no longer 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"), (ii) the approval of this Agreement by the stockholders of Parent
is not required and (iii) the Company's Series M Convertible Preferred Stock,
par value $.0001 per share (the "Series M Preferred Stock"), and the Company's
Series M1 Convertible Preferred Stock, par value $.0001 per share (the "Series M
1 Preferred Stock"), have been converted into common stock, par value $.0001 per
share, of the Company (the "Company Common Stock");
WHEREAS, certain holders of Company Common Stock have entered
into a Voting and Registration Rights Agreement with Parent, dated as of
November 19, 1999 and amended as of May 8, 2000, (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, 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"); and
<PAGE>
57
LNDOCS01/158417 6
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");
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").
<PAGE>
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 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 (or such later time as may be agreed
in writing by each of the parties hereto and specified in the Certificate of
Merger). 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
<PAGE>
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 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 6.14, such exchange shall be
effected in accordance with ss.ss. 203, 185 et seq. (including in particular
ss.187) of the German Stock Corporation Law (Aktiengesetz) by registering the
implementation of 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 Series A
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 Series A Cumulative Convertible
Preferred Stock, par value $.0001 per share, of the Company (the "Series A
Preferred Stock"), the outstanding Company Common Stock and Series A 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 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 ordinary
share, without par value, of Parent (the "Parent Ordinary Shares"), 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;
<PAGE>
(c) 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 (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 paragraph (b) 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;
(d) 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");
(e) 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; and
(f) in no event shall the number of Parent ADSs issuable in
connection with the Transactions exceed 1,330,000.
SECTION 2.03. Exchange of Shares of Company Common Stock and
Series A 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".
<PAGE>
(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 Series A 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 Series A 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 Series A Preferred Stock previously evidenced by such
Old Company Certificate shall have 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 canceled. 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 Series A
Preferred Stock. All Parent ADSs issued upon conversion of the Company Common
Stock and the Series A 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 Series A 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 Series A
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 canceled and exchanged for ADRs evidencing
Parent ADSs or cash, or both, in accordance with the procedures set forth in
this Article II.
<PAGE>
(f) 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.
(g) 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.
(h) 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.
(i) 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 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.
<PAGE>
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.
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 Series A 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 and the Series A Preferred Stock Exchange Ratio, as the case may be,
shall be appropriately adjusted to provide to the holders of Company Common
Stock and Series A Preferred Stock the same economic effect as contemplated
by this Agreement prior to such event.
<PAGE>
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 Series A
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 Series A 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 Series A 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 and Series
A Preferred 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:
<PAGE>
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.
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.
<PAGE>
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 preferred stock, par value $.0001 per share (the "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 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.
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).
<PAGE>
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.
(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
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.
<PAGE>
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, 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.
<PAGE>
(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.
(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.
<PAGE>
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 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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
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, 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;
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
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:
(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
<PAGE>
(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 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.
<PAGE>
(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.
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.
<PAGE>
SECTION 3.21. 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)
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.
SECTION 3.22. 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 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:
<PAGE>
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 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).
<PAGE>
SECTION 4.03. Capitalization. As of the date hereof, (i) the
stated capital of Parent is _3,857,145, (ii) the authorized capital of Parent is
_1,928,572.50 and (iii) Parent has conditional capital of _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, 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 the Supervisory Board
(Aufsichtsrat) of Parent and the filing of 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 6.14, 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).
<PAGE>
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, 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, the filing and recordation of the
Certificate of Merger as required by the DGCL, compliance with the German Stock
Corporation Law (Aktiengesetz), the filing of 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.
<PAGE>
(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.
<PAGE>
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 6.14,
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. 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) 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.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
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:
<PAGE>
(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;
<PAGE>
(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 (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;
(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
<PAGE>
(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.
(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.
<PAGE>
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 waive any provision of, any confidentiality or standstill agreement to
which the Company is a party.
<PAGE>
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.
(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.
<PAGE>
(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 material respects with the applicable requirements of NASDAQ, the DGCL,
the Securities Act and the Exchange Act.
<PAGE>
(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' Meeting. (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) The Company, subject to the exercise of its fiduciary
duties to its 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 the Company's Certificate of Incorporation and
Bylaws to consummate and make effective the Transactions.
<PAGE>
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 and (E) 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 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.
<PAGE>
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, 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 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).
SECTION 6.07. Letters of Accountants. 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.
<PAGE>
SECTION 6.08. 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 6.09. 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.
<PAGE>
SECTION 6.10. Company Affiliate Letters. 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, may be deemed affiliates of
the Company under Rule 145 of the Securities Act, including, without limitation,
all directors and officers of the Company, and the Company shall advise the
persons identified in such letter of the resale restrictions imposed by
applicable securities laws. 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 affiliates of the Company identified
in the above-referenced list. The Company shall also use all reasonable efforts
to obtain a Company Affiliate Letter as promptly as practicable from any person
who may be deemed to have become an affiliate of the Company under Rule 145 of
the Securities Act after the Company's delivery of the above-referenced list and
prior to the Effective Time. 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 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 an 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.
SECTION 6.11. 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 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).
<PAGE>
(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
6.11(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 6.11 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 6.12. 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 6.13. 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.
(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 6.14. 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.ss.203, 185 et seq. of the German
Stock Corporation Law (Aktiengesetz) be taken. Parent shall recommend to its
Supervisory Board (Aufsichtsrat) 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.183 et seq. of the German Stock Corporation Law
(Aktiengesetz).
<PAGE>
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) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued 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;
(d) any waiting period (and any extension thereof) applicable
to the consummation of the Transactions under the HSR Act shall have
expired or been terminated;
(e) 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 6.07;
and
(f) 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:
<PAGE>
(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;
(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) 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);
<PAGE>
(g) 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;
(h) 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;
(i) the estate of Fred Kassner and Susan Kaufman shall have
agreed to terminate the Registration Rights Agreement dated December
31, 1996; and
(j) 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;
<PAGE>
(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 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 October 31, 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;
<PAGE>
(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, if this Agreement shall fail to
receive the requisite votes for adoption at the Company Stockholders'
Meeting or any adjournment or postponement thereof;
(f) by Parent if 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) and
the exercise of such Change of Control Right 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 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;
<PAGE>
(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 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 approved by the Supervisory Board (Aufsichtsrat) of
Parent on or prior to May 31, 2000; 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.
<PAGE>
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.
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), (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.
<PAGE>
(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, 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>
(a) if to the Company:
TREEV, Inc.
13900 Lincoln Park Drive
3rd Floor
Herndon, Virginia 20171
USA
Attention: Julia A. Bowen, Esq.
Telecopier: +1 703 708-1558
with a copy to:
Cooley Godward, LLP
One Freedom Square - Reston Town Center
11951 Freedom Drive
Reston, Virginia 20190
USA
Attention: Joe W. Conroy
Telecopier: +1 703 456-8100
(b) if to Parent:
CE Computer Equipment AG
Herforder Stra(beta)e 155A
33609 Bielefeld
Germany
Attention: Thomas Wenzke
Telecopier: + 49 521 931 8111
with a copy to:
Shearman & Sterling
Broadgate West
9 Appold Street
London EC2A 2AP
United Kingdom
Attention: W. Jeffrey Lawrence
Telecopier: +44 20 7655 5500
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>
(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.
<PAGE>
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 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 and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law.
<PAGE>
(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.
<PAGE>
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>
LNDOCS01/158417 6 EXHIBIT A
LIST OF OFFICERS OF SURVIVING CORPORATION
Julia A. Bowen, Vice President & General Counsel
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>
LNDOCS01/158417 6 EXHIBIT B
LIST OF DIRECTORS OF SURVIVING CORPORATION
Jurgen Brintrup
Thomas Wenzke
<PAGE>
LNDOCS01/158417 6 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 Amended and Restated Agreement and Plan of
Merger between Parent and the Company, dated as of November 19, 1999 and amended
and restated as of May 8, 2000 (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 and Series A 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.
<PAGE>
C-5
LNDOCS01/158417 6
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 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.
<PAGE>
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 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 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 be paid in lieu of
fractional shares will be provided, directly or indirectly, by Parent,
Merger Sub or the Company.
<PAGE>
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 office is authorized to make the certifications
contained in this letter on behalf of the Company.
<PAGE>
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>
LNDOCS01/158417 6 Exhibit 1
MERGER AGREEMENT DOCUMENTS
Amended and Restated Agreement and Plan of Merger between CE Computer Equipment
AG and TREEV, Inc., dated as of November 19, 1999 and amended and
restated as of May 8, 2000.
Voting and Registration Rights Agreement, originally dated as of November 19,
1999 and amended as of May 8, 2000.
Series A Preferred Stock Agreement, dated as of [o], 2000.
Exchange Agent Agreement between CE Computer Equipment AG and [Exchange Agent],
as agent, dated as of [o], 2000.
<PAGE>
LNDOCS01/158417 6 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 Amended and Restated Agreement and Plan of
Merger between Parent and the Company, dated as of November 19, 1999 and amended
and restated as of May 8, 2000 (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 and Series
A 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.
<PAGE>
D-5
LNDOCS01/158417 6
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 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.
<PAGE>
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 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>
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>
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>
LNDOCS01/158417 6 Exhibit 1
MERGER AGREEMENT DOCUMENTS
1. Amended and Restated Agreement and Plan of Merger between CE Computer
Equipment AG and TREEV, Inc., dated as of November 19, 1999 and amended
and restated as of May 8, 2000.
2. Voting and Registration Rights Agreement, dated as of November 19, 1999
and amended as of May 8, 2000.
3. Series A Preferred Stock Agreement, dated as of [o], 2000.
4. Exchange Agent Agreement between CE Computer Equipment AG and
[Exchange Agent], as agent, dated as of [o], 2000.
<PAGE>
LNDOCS01/158417 6 EXHIBIT E
FORM OF COMPANY AFFILIATE LETTER
TREEV, Inc.
13900 Lincoln Park Drive
3rd Floor
Herndon, Virginia 20171
USA
CE Computer Equipment AG
Herforder Stra(beta)e 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 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"). Pursuant to the terms of the
Amended and Restated Agreement and Plan of Merger, dated as of November 19, 1999
and amended and restated as of May 8, 2000 (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 Series A 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-4
LNDOCS01/158417 6
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
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, as amended, 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>
"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."
<PAGE>
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>
LNDOCS01/158417 6 EXECUTION COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
between
CE COMPUTER EQUIPMENT AG
and
TREEV, INC.
Dated as of November 19, 1999
and Amended and Restated as of May 8, 2000
<PAGE>
LNDOCS01/158417 6
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 Series A Preferred Stock..........4
2.03. Exchange of Shares of Company Common Stock and Series A Preferred Stock..5
2.04. Treatment of the Company Stock Plans and the Company Warrants............7
2.05. Antidilution Protection For Exchange Ratio...............................8
2.06. Treatment of Fractional Shares...........................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization and Qualification; Subsidiaries.............................9
3.02. Certificate of Incorporation and Bylaws.................................10
3.03. Capitalization..........................................................10
3.04. Authority Relative to this Agreement....................................11
3.05. No Conflict; Required Filings and Consents..............................11
3.06. Permits; Compliance with Laws...........................................12
3.07. SEC Filings; Financial Statements.......................................13
3.08. Absence of Certain Changes or Events....................................14
3.09. Absence of Litigation...................................................14
3.10. Employee Benefit Plans..................................................14
3.11. Labor Matters...........................................................18
3.12. Real Property and Leases................................................19
3.13. Intellectual Property...................................................20
3.14. Year 2000 Compliance....................................................22
3.15. Taxes...................................................................22
3.16. Environmental Matters...................................................24
3.17. Material Contracts......................................................24
3.18. Insurance...............................................................26
3.19. Receivables.............................................................27
3.20. Brokers.................................................................27
3.21. Tax Matters.............................................................27
3.22. Affiliates..............................................................28
3.23. Vote Required...........................................................28
3.24. State Takeover Statutes.................................................28
3.25. Opinion of Financial Advisor............................................28
3.26. Board Approval..........................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OFPARENT
4.01. Organization and Qualification; Subsidiaries............................28
4.02. Organizational Documents................................................29
4.03. Capitalization..........................................................29
4.04. Authority Relative to this Agreement....................................30
4.05. No Conflict; Required Filings and Consents..............................30
4.06. Financial Information, Books and Records................................31
4.07. Absence of Certain Changes or Events....................................32
4.08. Absence of Litigation...................................................32
4.09. Intellectual Property...................................................32
4.10. Parent Ordinary Shares..................................................33
4.11. Brokers.................................................................33
4.12. Tax Matters.............................................................33
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by the Company Pending the Closing..................33
5.02. Conduct of Business by Parent Pending the Closing.......................36
ARTICLE VI ADDITIONAL AGREEMENTS
6.01. Access to Information; Confidentiality..................................36
6.02. No Solicitation of Transactions.........................................36
6.03. Registration Statement and Proxy Statement..............................37
6.04. Stockholders' Meeting...................................................40
6.05. Further Action; Consents; Filings.......................................40
6.06. Notices of Certain Events...............................................41
6.07. Letters of Accountants..................................................42
6.08. Plan of Reorganization..................................................42
6.09. Continuation of Benefits................................................43
6.10. Company Affiliate Letters...............................................43
6.11. Indemnification of Directors and Officers...............................44
6.12. Public Announcements....................................................45
6.13. Stock Exchange Listings.................................................45
6.14. Certain Obligations of Parent...........................................45
ARTICLE VII
CLOSING CONDITIONS
7.01. Conditions to the Obligations of Each Party to Close....................46
7.02. Conditions to the Obligations of Parent.................................46
7.03. Conditions to the Obligations of the Company............................48
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
8.01. Termination.............................................................49
8.02. Effect of Termination...................................................51
8.03. Amendment...............................................................51
8.04. Waiver..................................................................52
8.05. Fees and Expenses.......................................................52
ARTICLE IX GENERAL PROVISIONS
9.01. Non-Survival of Representations and Warranties..........................53
9.02. Notices.................................................................53
9.03. Certain Definitions.....................................................54
9.04. Severability............................................................55
9.05. Entire Agreement; Assignment............................................56
9.06. Parties in Interest.....................................................56
9.07. Specific Performance....................................................56
9.08. Governing Law...........................................................56
9.09. Consent to Jurisdiction; Venue..........................................56
9.10. Headings................................................................57
9.11. Counterparts............................................................57
<PAGE>
-iv-
Section Page
LNDOCS01/158417 6
<PAGE>
-v-
<PAGE>
-vi-
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
<PAGE>
-ix-
LNDOCS01/158417 6
$ 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(c)
Company Preamble
Company Affiliate Letter Section 6.10
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 3.03
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(v)
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
Draft Financial Statements Section 4.06(c)
Effective Time Section 1.03
Encumbrance Section 6.05(c)
Environmental Laws Section 3.16(a)(ii)
Environmental Permits Section 3.16(b)(v)
<PAGE>
Index of Defined Terms (cont'd)
Defined Term Section
ERISA Section 3.10(a)
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)
Expenses Section 8.05(c)
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)
Indemnified Parties Section 6.11(b)
Insurance Amount Section 6.11(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)
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(a)
Original Merger Agreement Recitals
Parent Preamble
Parent ADSs Section 2.02(b)
Parent Average Closing Price Section 2.02(b)
Parent Disclosure Schedule Section 4.01
Parent Financial Statements Section 4.06(a)
Parent Interim Financial Statements Section 4.06(a)
Parent Material Adverse Effect Section 4.01
Parent Ordinary Shares Section 2.02(b)
Parent Stock Plan Section 4.03(iii)
<PAGE>
Parent Subsidiaries Section 4.01
PBO Section 3.10(e)
person Section 9.03(f)
Plans Section 3.10(a)
PricewaterhouseCoopers Section 2.04(a)
Proxy Statement Section 6.03(a)
Receivables Section 3.19
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
Series A Preferred Stock Exchange Ratio Section 2.02(b)
Series M Preferred Stock Recitals
Series M1 Preferred Stock Recitals
Share Exchange Section 2.01
Software Section 3.13(d)(vi)
Software Products Section 6.05(c)
subsidiary/subsidiaries Section 9.03(g)
Surviving Corporation Section 1.02
Surviving Corporation Common Stock Section 2.02(d)
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)
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
[TREEV Logo] NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACTS:
CE Computer Equipment Aktiengesellschaft TREEV, Inc
Kerstin Kohl Brian Hajost
Manager, Investor Relations Executive Vice President
Phone: +49 (0) 521/9318-288 Finance and Corporate Development
Email: [email protected] Phone: (703) 904-3185
----------------
Email: [email protected]
TREEV AND CE COMPUTER EQUIPMENT AG AMEND AND
RESTATE MERGER AGREEMENT
BIELEFELD, GERMANY AND HERNDON, VIRGINIA, May 9, 2000 -- CE Computer Equipment
AG (Neuer Markt/Symbol: cee) and TREEV, Inc. (NASDAQ/NMS: TREV) today announced
that, following extensive review with their independent public accountants, they
have concluded that CE will not account for its pending acquisition of TREEV as
a pooling-of-interests under applicable U.S. accounting rules.
As previously announced, CE and TREEV entered into a merger agreement in
November 1999 which provided that CE would acquire TREEV in a transaction that
was conditional on its being accounted for as a pooling of interests. CE and
TREEV have amended and restated the merger agreement as of May 8, 2000 to
reflect that they no longer intend to account for the transaction as a pooling
of interests and expect that CE will account for the acquisition as a purchase
transaction. As previously announced, CE will issue a total of 1,330,000
Ordinary Shares in the form of American Depositary Shares (ADSs) in exchange for
the outstanding shares of TREEV Common Stock and Preferred Stock and for the
outstanding warrants and options for TREEV Common Stock.
The merger is subject to governmental and shareholder approvals and customary
closing conditions and is expected to be completed during the third quarter of
2000. Stockholders owning more than 33% of TREEV's common stock have agreed to
vote their shares in favor of the merger.
About CE Computer Equipment AG
For more than ten years, CE Computer Equipment AG has successfully developed and
distributed imaging and document management systems. In Europe, the enterprise
is among the leading providers in this sector which is the fastest growing
within the IT industry. Customers of CE Computer Equipment include banking
houses, savings banks and insurance companies, public utilities as well as
industrial and trading companies and public administration institutions with a
total of more than 1,500 installations. CE Computer Equipment currently employs
about 380 specialists group-wide. With headquarters in Bielefeld (Germany), CE
Computer Equipment also operates from branch offices in Munich, Stuttgart,
Ratingen, Berlin and Hanover. In addition, CE Computer Equipment is also
represented in Spain and is planning to establish further branch offices in
Great Britain, France, and Italy. The group comprises several subsidiaries
extending the range of CE Computer Equipment's services to the growth sectors of
messaging and health care.
For additional information about CE Computer Equipment's products and services,
please call Kerstin Kohl (+49 521 9318 288), or visit CE Computer Equipment's
Web site at www.ce-ag.com.
About TREEV
TREEV enables customers to extend their mission-critical application investments
by applying stored information content to business processes. TREEV's patented
technologies are exemplified by TREEV 2000(TM), its standards-based component
architecture consisting of eTREEV(TM) (document Web portal), DocuTREEV(TM)
(document management), DataTREEV(TM) (COLD/ERM), AutoTREEV(TM) (workflow) and
OmniTREEV(TM) (content management). Headquartered in Herndon, Virginia, TREEV
employs over 200 technology and services experts with over 2,000 customer
installations worldwide. For additional information about TREEV's products and
services, please call (800) 254-0994, or visit TREEV's Web site at
www.treev.com.
TREEV(R) is a registered trademark and eTREEV(TM), TREEV 2000(TM),
DocuTREEV(TM), DataTREEV(TM), AutoTREEV(TM) and OmniTREEV(TM) are trademarks of
TREEV, Inc. All other products and brand names are trademarks or registered
trademarks of their respective owners.
Statements made in this release that state beliefs or expectations of CE
Computer Equipment, TREEV, or other respective managements and which are not
historical facts or which apply prospectively are forward-looking statements. It
is important to note that the actual results and events could differ materially
from those contained in or implied by such forward-looking statements.
