EXHIBIT A
Agreement and Plan of Merger and Reorganization
Execution Copy
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
SAPIENS INTERNATIONAL CORPORATION N.V.,
WISDOM MERGER SUB, INC.
and
NESS TECHNOLOGIES, INC.
Dated as of September 17, 2000
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................2
SECTION 1.01 Certain Defined Terms.......................................................................2
ARTICLE II THE MERGER.............................................................................................6
SECTION 2.01 The Merger..................................................................................6
SECTION 2.02 Closing.....................................................................................6
SECTION 2.03 Effective Time..............................................................................7
SECTION 2.04 Effect of the Merger........................................................................7
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and Officers of Surviving Corporation.......7
SECTION 2.06 Domestication of Parent.....................................................................7
SECTION 2.07 Directors and Officers of Parent Following the Merger.......................................8
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES....................................................8
SECTION 3.01 Conversion of Shares........................................................................8
SECTION 3.02 Exchange of Shares Other than Dissenting Shares and Treasury Shares.........................9
SECTION 3.03 Stock Transfer Books.......................................................................11
SECTION 3.04 No Fractional Share Certificates...........................................................11
SECTION 3.05 Options to Purchase Company Common Stock...................................................11
SECTION 3.06 Certain Adjustments........................................................................12
SECTION 3.07 Dissenters'Rights..........................................................................13
SECTION 3.08 Lost, Stolen or Destroyed Certificates.....................................................13
SECTION 3.09 Taking of Necessary Action; Further Action.................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY.............................................................14
SECTION 4.01 Organization and Qualification; Subsidiaries...............................................14
SECTION 4.02 Certificate of Incorporation and Bylaws; Records...........................................14
SECTION 4.03 Capitalization ............................................................................14
SECTION 4.04 Authority Relative to This Agreement.......................................................16
SECTION 4.05 No Conflict; Required Filings and Consents.................................................16
SECTION 4.06 Permits; Compliance with Laws..............................................................17
SECTION 4.07 Financial Statements.......................................................................17
SECTION 4.08 Absence of Certain Changes or Events.......................................................18
SECTION 4.09 Employee Benefit Plans; Labor Matters......................................................19
SECTION 4.10 Pooling; Certain Tax Matters...............................................................21
SECTION 4.11 Contracts..................................................................................22
SECTION 4.12 Litigation.................................................................................23
SECTION 4.13 Environmental Matters......................................................................23
SECTION 4.14 Intellectual Property......................................................................24
SECTION 4.15 Taxes......................................................................................25
SECTION 4.16 Insurance..................................................................................26
SECTION 4.17 Properties.................................................................................26
SECTION 4.18 Affiliates.................................................................................27
SECTION 4.19 Opinion of Financial Advisor...............................................................27
SECTION 4.20 Brokers....................................................................................27
SECTION 4.21 Certain Business Practices.................................................................27
SECTION 4.22 Business Activity Restriction..............................................................27
SECTION 4.23 Affiliate Transactions.....................................................................28
SECTION 4.24 Key Customers and Vendors..................................................................28
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................................................28
SECTION 5.01 Organization and Qualification; Subsidiaries...............................................28
SECTION 5.02 Articles of Association and Bylaws; Records................................................29
SECTION 5.03 Capitalization.............................................................................29
SECTION 5.04 Authority Relative to This Agreement.......................................................30
SECTION 5.05 No Conflict; Required Filings and Consents.................................................31
SECTION 5.06 Permits; Compliance with Laws..............................................................31
SECTION 5.07 Absence of Certain Changes or Events.......................................................32
SECTION 5.08 SEC Filings; Financial Statements..........................................................33
SECTION 5.09 Employee Benefit Plans; Labor Matters......................................................34
SECTION 5.10 Pooling; Certain Tax Matters...............................................................36
SECTION 5.11 Contracts..................................................................................37
SECTION 5.12 Litigation.................................................................................38
SECTION 5.13 Environmental Matters......................................................................38
SECTION 5.14 Intellectual Property......................................................................38
SECTION 5.15 Taxes......................................................................................40
SECTION 5.16 Insurance..................................................................................41
SECTION 5.17 Properties.................................................................................41
SECTION 5.18 Affiliates.................................................................................41
SECTION 5.19 Brokers....................................................................................41
SECTION 5.20 Business Activity Restriction..............................................................42
SECTION 5.21 Opinion of Financial Advisor...............................................................42
SECTION 5.22 Certain Business Practices.................................................................42
SECTION 5.23 No Prior Activities........................................................................42
SECTION 5.24 Affiliate Transactions.....................................................................42
ARTICLE VI COVENANTS.............................................................................................42
SECTION 6.01 Conduct of Company Pending the Closing.....................................................42
SECTION 6.02 Conduct of Parent and Merger Sub Pending the Closing.......................................45
SECTION 6.03 Notices of Certain Events..................................................................48
SECTION 6.04 Access to Information; Confidentiality.....................................................48
SECTION 6.05 No Solicitation of Transactions............................................................48
SECTION 6.06 Tax-Free Transaction; Pooling; Affiliate Letters...........................................50
SECTION 6.07 Control of Operations......................................................................51
SECTION 6.08 Further Action; Consents; Filings..........................................................51
SECTION 6.09 Additional Reports.........................................................................51
SECTION 6.10 Registration Rights........................................................................52
ARTICLE VII ADDITIONAL AGREEMENTS................................................................................52
SECTION 7.01 Registration Statement; Joint Proxy Statement..............................................52
SECTION 7.02 Stockholders'Meetings......................................................................54
SECTION 7.03 Directors'and Officers'Indemnification and Insurance.......................................55
SECTION 7.04 Public Announcements.......................................................................56
SECTION 7.05 NNM Listing ...............................................................................56
SECTION 7.06 Blue Sky ..................................................................................56
SECTION 7.07 Company Stock Options/Registration Statements on Form S-8..................................56
SECTION 7.08 Employee Agreements........................................................................56
ARTICLE VIII CONDITIONS TO THE MERGER............................................................................56
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate the Merger.......................56
SECTION 8.02 Conditions to the Obligations of Company...................................................58
SECTION 8.03 Conditions to the Obligations of Parent....................................................59
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.....................................................................60
SECTION 9.01 Termination ...............................................................................60
SECTION 9.02 Effect of Termination......................................................................62
SECTION 9.03 Amendment .................................................................................63
SECTION 9.04 Waiver ....................................................................................63
SECTION 9.05 Termination Fee; Expenses..................................................................63
ARTICLE X GENERAL PROVISIONS.....................................................................................64
SECTION 10.01 Non-Survival of Representations and Warranties...........................................64
SECTION 10.02 Notices .................................................................................64
SECTION 10.03 Severability ............................................................................66
SECTION 10.04 Assignment; Binding Effect; Benefit......................................................66
SECTION 10.05 Incorporation of Exhibits................................................................66
SECTION 10.06 Governing Law ...........................................................................67
SECTION 10.07 Jurisdiction; Waiver of Jury Trial.......................................................67
SECTION 10.08 Headings; Interpretation.................................................................67
SECTION 10.09 Counterparts ............................................................................67
SECTION 10.10 Entire Agreement.........................................................................67
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ANNEXES
ANNEX A Company Voting Agreement
ANNEX B Parent Voting Agreement
ANNEX C Certificate of Domestication
ANNEX D Certificate of Incorporation
ANNEX E Bylaws
ANNEX F Parent Affiliate Letter
ANNEX G Company Affiliate Letter
ANNEX H Articles Amendment
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of
September 17, 2000 (as amended, supplemented or otherwise modified from
time to time, this "AGREEMENT"), among Sapiens International Corporation
N.V., a Netherlands Antilles corporation ("PARENT"), Ness Technologies,
Inc., a Delaware corporation ("COMPANY"), and Wisdom Merger Sub, Inc., a
Delaware corporation and a direct wholly owned Subsidiary of Parent
("MERGER SUB"):
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and Company have
determined and declared that it is advisable and in the best interests of
their respective companies and stockholders to enter into a business
combination by means of the merger of Merger Sub with and into Company (the
"MERGER") and have approved and adopted this Agreement;
WHEREAS, concurrently with the execution of this Agreement and as
an inducement to Parent to enter into this Agreement, certain stockholders
of Company have entered into a voting agreement ("COMPANY VOTING
AGREEMENT") in the form attached hereto as Annex A;
WHEREAS, concurrently with the execution of this Agreement and as
an inducement to Company to enter into this Agreement, certain stockholders
of Parent have entered into a voting agreement ("PARENT VOTING AGREEMENT")
in the form attached hereto as Annex B;
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and that this Agreement shall be, and hereby is, adopted as a plan
of reorganization for purposes of Section 368 of the Code;
WHEREAS, for financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests" under United States
generally accepted accounting principles ("U. S. GAAP") and the accounting
standards of the United States Securities and Exchange Commission (the "SEC");
and
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable
to the singular and plural forms of the terms defined):
"AFFILIATE" shall mean, with respect to any Person, any other
Person that controls, is controlled by or is under common control with the
first Person.
"BLUE SKY LAWS" shall mean United States state securities or "blue
sky" laws.
"BUSINESS DAY" shall mean any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks are
not required or authorized by law or executive order to close in the City
of New York.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY INTELLECTUAL PROPERTY" shall mean all Intellectual
Property that is currently owned or used in Company's business or the
business of any Company Subsidiary as conducted as of the date of Closing.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Company and the Company Subsidiaries that,
individually or in the aggregate (taking into account all other such
changes or effects), is, or is reasonably likely to be, materially adverse
to the business, assets, liabilities, financial condition or results of
operations of Company and the Company Subsidiaries, taken as a whole;
provided, however, that any such effect (i) resulting from any change in
economic conditions generally or in the industries or markets in which
Company or the Company Subsidiaries participate or (ii) that Company can
demonstrate resulted directly from the public announcement of the
transactions contemplated hereby shall not be considered when determining
whether or not a Company Material Adverse Effect has occurred.
"COMPANY STOCK PLAN" shall mean the Company 1999 Share Option
Plan.
"COMPETING TRANSACTION" shall mean any of the following involving
Company or Parent, as the case may be (other than the Merger):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, transfer or other
disposition of 20% or more of the assets of such party and its
subsidiaries, taken as a whole, in a single transaction or series of
related transactions;
(iii) any tender offer or exchange offer being commenced for
20% or more of the outstanding voting securities of such party or the
filing of a registration statement under the Securities Act in
connection therewith; or
(iv) any Person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) having been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the outstanding voting securities of such
party; or
(v) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
"CONFIDENTIALITY AGREEMENT" shall mean the non-disclosure
agreement, dated as of July 2, 2000, between Parent and Company.
"DELAWARE LAW" shall mean the General Corporation Law of the State
of Delaware.
"$" shall mean United States Dollars.
"ENCUMBRANCES" shall mean all claims, security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal,
preemptive rights, mortgages, hypothecations, prior assignments, title
retention agreements, indentures, security agreements or any other
encumbrance of any kind.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to pollution
or protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or
issued pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, 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 such 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 Merger, the
preparation, printing, filing and mailing of the Registration Statement (as
defined in Section 7.1) and the Joint Proxy Statement (as defined in
Section 7.1), the solicitation of stockholder approvals, the filing of HSR
Act notice, if any, obtaining relevant approvals from Israeli governmental
entities, including the Office of the Chief Scientist, the Antitrust
Authority and the Tax Authority, and all other matters related to the
transactions contemplated hereby and the closing of the Merger.
"FINAL AVERAGE CLOSING PRICE" shall mean the average closing price
of Parent Common Shares on the NNM for the ten (10) trading days ending
three (3) Business Days prior to the date of the Closing.
"GOVERNMENTAL ENTITY" shall mean any United States Federal, state
or local or any Israeli or other foreign governmental, regulatory or
administrative authority, agency or commission or any court, tribunal or
arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
any Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials, friable
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or substance defined or regulated as toxic or hazardous
or as a pollutant or contaminant or waste under any applicable
Environmental Law.
"HSR ACT" shall mean Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"INTELLECTUAL PROPERTY" shall mean all United States, foreign and
international: patents; trademarks, service marks and trade names
(including without limitation all goodwill pertaining thereto), designs,
logos, slogans, trade dress and Internet domain names; copyrights; sui
generis database rights; ideas, inventions, technology, know-how, show-how,
trade secrets, systems, processes, works of authorship, databases, mask
works, content, graphics, statistical models, formulae, algorithms,
methodologies, modules, computer programs, computer software, source and
object code of such software, technical documentation, business methods,
work product, intellectual and industrial property licenses; and all
registrations and applications relating to any of the foregoing and all
other tangible or intangible information or materials of like nature.
"IRS" shall mean the United States Internal Revenue Service.
"KNOWLEDGE OF COMPANY" shall mean that any officer or director of
Company is actually aware of a fact or other matter, or should have been
aware of a fact or other matter based upon due inquiry and investigation.
"KNOWLEDGE OF PARENT" shall mean that any officer or director of
Parent is actually aware of a fact or other matter, or should have been
aware of a fact or other matter based upon due inquiry and investigation.
"LAW" shall mean any United States federal, state or local, or any
non-U.S., statute, law, ordinance, regulation, rule, code, order, judgment,
decree, other requirement or rule of law of any other jurisdiction and any
other similar act or law.
"NNM" shall mean The Nasdaq National Market.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
"PARENT INTELLECTUAL PROPERTY" shall mean all Intellectual
Property that is currently owned or used in Parent's business or the
business of any Parent Subsidiary as conducted as of the date of Closing.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Parent and the Parent Subsidiaries that,
individually or in the aggregate (taking into account all other such
changes or effects), is, or is reasonably likely to be, materially adverse
to the business, assets, liabilities, financial condition or results of
operations of Parent and the Parent Subsidiaries, taken as a whole;
provided, however, that (i) any such effect resulting from any change in
economic conditions generally or in the industries or markets in which
Parent or the Parent Subsidiaries participate, (ii) any fluctuations in the
market price of Parent Common Stock and (iii) any such effect that Parent
can demonstrate resulted directly from the public announcement of the
transactions contemplated hereby shall not be considered when determining
whether or not a Parent Material Effect has occurred.
"PARENT STOCK PLAN" shall mean the Parent 1992 Stock Option and
Incentive Plan.
"PARENT WARRANT" shall mean a warrant to purchase Parent Common
Shares.
"PERMITTED ENCUMBRANCES" shall mean (i) liens for Taxes,
assessments and other governmental charges not yet due and payable, (ii)
immaterial unfiled mechanics', workmen's, repairmen's, warehousemen's,
carriers' or other like liens arising or incurred in the ordinary course of
business which are not yet due and payable and (iii) equipment leases with
third parties entered into in the ordinary course of business.
"PERSON" shall mean 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.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, 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, a
majority 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.
"TAX" shall mean (i) 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) imposed by any Governmental Entity or other taxing
authority ("TAXING AUTHORITY"), including, without limitation, taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross or net 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 customers' duties,
tariffs and similar charges; (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, combined, consolidated or unitary group for any taxable period;
and (iii) any liability for the payment of amounts of the type described in
(i) or (ii) as a result of being a transferee of, or a successor in
interest to, any Person or as a result of an express or implied obligation
to indemnify any Person.
"TAX RETURN" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax
reports or return and information report or return) required to be filed
with respect to any Taxes.
"U.S. GAAP" shall mean United States generally accepted accounting
principles.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware
Law, at the Effective Time (as defined in Section 2.03), Merger Sub shall
be merged with and into Company. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and Company shall continue as
the surviving corporation of the Merger as a wholly owned Subsidiary of
Parent (the "SURVIVING CORPORATION"). Upon consummation of the Merger, the
name of Parent shall be changed to "Ness Technologies, Inc." or such other
name as shall be mutually agreed upon by the parties.
SECTION 2.02 Closing. Unless this Agreement shall have been
terminated and the Merger herein contemplated shall have been abandoned
pursuant to Section 9.01 and subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the consummation of the Merger shall
take place as promptly as practicable (and in any event within three (3)
Business Days) after satisfaction or waiver of the conditions set forth in
Article VIII (other than those conditions that by their nature are to be
fulfilled at the Closing, but subject to the fulfillment or waiver (to the
extent permitted) of such conditions), at a closing (the "CLOSING") to
be held at the offices of Brobeck, Phleger & Harrison LLP, 1633 Broadway,
47th Floor, New York, New York 10019, unless another date, time or place is
agreed to by Parent and Company.
SECTION 2.03 Effective Time. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing a certificate of
merger in such form as is required by the applicable provisions of Delaware
law (the "CERTIFICATE OF MERGER") with the Secretary of State of the State
of Delaware executed in accordance with the relevant provisions of Delaware
Law (the date and time of such filing, or, if mutually agreed to by the
parties, such later date and time as may be set forth therein, being the
"EFFECTIVE Time").
SECTION 2.04 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all
the property, rights, privileges, powers and franchises of Company and
Merger Sub shall vest in Company as the Surviving Corporation, and all
debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of Company as the Surviving Corporation.
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation. Unless otherwise agreed by Parent and
Company before the Effective Time, at the Effective Time:
(a) subject to the requirements of Section 7.03(a), the
Certificate of Incorporation and the bylaws of Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and the bylaws of the Surviving Corporation, until thereafter
amended as provided by Law and such Certificate of Incorporation or bylaws;
provided, however, that Article I of the Certificate of Incorporation of
the Surviving Corporation shall be amended to change the name of the
Surviving Corporation to such name as Company and Parent may agree upon
prior to the Effective Time;
(b) the officers of the Surviving Corporation shall be designated
by the board of directors of Parent at the Effective Time, or as may
otherwise be agreed by Company and Parent prior to the Effective Time, in
each case until their successors are elected or appointed and qualified or
until their resignation or removal; and
(c) the directors of the Surviving Corporation shall be designated
by the board of directors of Parent at the Effective Time, or as may
otherwise be agreed by Company and Parent prior to the Effective Time, in
each case until their successors are elected or appointed and qualified or
until their resignation or removal.
SECTION 2.06 Domestication of Parent. Prior to the Closing, Parent
shall take all steps as may be required under Netherlands Antilles and
Delaware law to become incorporated in Delaware by, among other things,
filing a Certificate of Domestication and a Certificate of Incorporation,
substantially in the forms of Annex C and Annex D hereto, respectively,
with the Secretary of State of the State of Delaware. Parent shall also
adopt bylaws substantially in the form of Annex E. Parent shall also take
steps to change the seat of the corporation from the Netherlands Antilles
to Delaware; however, removal of the seat of the Corporation from the
Netherlands Antilles shall not be a condition to Closing. All
representations, warranties and covenants and references to Parent and
Parent Common Shares contained in this Agreement shall be deemed to be
modified, as appropriate, to reflect the domestication of Parent in
Delaware, as and when the domestication shall be effective.
SECTION 2.07 Directors and Officers of Parent Following the
Merger. Parent shall take all steps as may be necessary to cause the board
of directors and senior management of Parent to be reconstituted, as of the
Effective Time, to consist of the persons identified on Schedules I and II
hereto, respectively, provided that if, for any reason, any of the persons
identified in Schedules I or II are incapable of serving in the positions
indicated, such persons shall be replaced by such persons as shall be
mutually agreed upon by Parent and Company. Without limiting the generality
of the foregoing, Parent shall, if required under Parent's Articles of
Association or other documents, or applicable Law, solicit, pursuant to the
Joint Proxy Statement (as defined in Section 7.01(a)), the approval of
Parent's stockholders to the election to Parent's board of directors of the
persons identified on Schedule I.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Shares. At the Effective Time, by
virtue of the Merger, and without any action on the part of Parent, Merger
Sub, Company or the holders of any of the following securities:
(a) Each share of common stock, $.01 par value, of Company
("COMPANY COMMON STOCK") issued and outstanding immediately before the
Effective Time (excluding (i) shares of Company Common Stock, if any, held
by Persons who have not voted such shares for approval of the Merger and
with respect to which such Persons shall have perfected dissenters' rights
in accordance with Delaware Law ("COMMON DISSENTING SHARES"), (ii) those
held in the treasury of Company, and (iii) those owned by any wholly owned
Subsidiary of Company) and all rights in respect thereof, shall, forthwith
cease to exist in accordance with Delaware law and be exchanged for 2.10
(the "EXCHANGE RATIO") common shares of Parent ("PARENT COMMON SHARES")
(and cash in lieu of fractional shares pursuant to Section 3.04).
(b) Each share of (i) Class B Preferred Stock, $.01 par value, of
Company ("CLASS B PREFERRED STOCK") and (ii) Class C Preferred Stock, $.01
par value, of Company ("CLASS C PREFERRED STOCK" and, together with the
Class B Preferred Stock, the "COMPANY PREFERRED STOCK") issued and
outstanding immediately before the Effective Time (excluding (i) shares of
Company Preferred Stock, if any, held by Persons who have not voted such
shares for approval of the Merger and with respect to which such Persons
shall have perfected dissenters' rights in accordance with Delaware Law
("PREFERRED DISSENTING SHARES" and, together with Common Dissenting Shares,
"DISSENTING SHARES"), (ii) those held in the treasury of Company, and (iii)
those owned by any wholly owned Subsidiary of Company), and all rights in
respect thereof (including, without limitation, any rights to accrued but
unpaid dividends), shall forthwith cease to exist in accordance with
Delaware law and be exchanged for 2.10 Parent Common Shares (and cash in
lieu of fractional shares pursuant to Section 3.04).
(c) Each share of Company Common Stock or Company Preferred Stock
held in the treasury of Company or owned by any wholly owned Subsidiary of
Company immediately prior to the Effective Time shall be canceled and
retired and no shares of stock or other securities of Parent, the Surviving
Corporation or any other corporation shall be issuable, and no payment of
other consideration shall be made, with respect thereto.
(d) Each issued and outstanding share of capital stock of Merger
Sub shall be converted into and become one fully paid and nonassessable
share of common stock of the Surviving Corporation. From and after the
Effective Time, each outstanding certificate theretofore representing
shares of Merger Sub common stock shall be deemed for all purposes to
evidence ownership of and to represent the number of shares of Surviving
Corporation common stock into which such shares of Merger Sub common stock
shall have been converted. Promptly after the Effective Time, the Surviving
Corporation shall issue to Parent a stock certificate representing 100
shares of Surviving Corporation common stock in exchange for the
certificate that formerly represented shares of Merger Sub common stock,
which shall be surrendered by Parent and canceled.
SECTION 3.02 Exchange of Shares Other than Dissenting Shares and
Treasury Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall enter
into an agreement with a bank or trust company reasonably acceptable to
Company to act as exchange agent for the Merger (the "EXCHANGE AGENT") as
may be designated by Parent.
(b) Parent to Provide Common Stock and Cash. Following the
Effective Time, Parent shall make available to the Exchange Agent for the
benefit of the holders of Company Common Stock and Company Preferred Stock:
(i) Certificates of Parent Common Shares ("PARENT CERTIFICATES")
representing the number of whole Parent Common Shares issuable pursuant to
Section 3.01(a) in exchange for shares of Company Common Stock and Company
Preferred Stock outstanding immediately prior to the Effective Time; (ii)
other evidences of the ownership of the underlying Parent Common Shares;
and (iii) sufficient funds to permit payment in lieu of fractional shares
pursuant to Section 3.04.
(c) Exchange Procedures. The Exchange Agent shall mail to each
holder of record of certificates of Company Common Stock and Company
Preferred Stock ("COMPANY CERTIFICATES"), whose shares were converted into
the right to receive Parent Common Shares (and cash in lieu of fractional
shares pursuant to Section 3.04) promptly after the Effective Time: (i) a
form letter of transmittal in form and substance reasonably satisfactory to
Company (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon receipt of
the Company Certificates by the Exchange Agent, and shall be in such form
and have such other provisions as Parent may reasonably specify); and (ii)
instructions for use in effecting the surrender of the Company Certificates
in exchange for Parent Certificates (and cash in lieu of fractional
shares). Upon surrender of a Company Certificate for cancellation
to the Exchange Agent or to such other agent or agents as may be appointed
by Parent, together with such letter of transmittal and Stockholder
Representation Letter, duly completed and validly executed, and such other
documents as may be reasonably required by the Exchange Agent, the holder
of such Company Certificate shall be entitled to receive in exchange
therefor a Parent Certificate representing the number of whole Parent
Common Shares that such holder has the right to receive pursuant to this
Article III and payment of cash in lieu of fractional shares which such
holder has the right to receive pursuant to Section 3.04, and the Company
Certificate so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Company Certificate that, prior to the
Effective Time, represented shares of Company Common Stock or Company
Preferred Stock will be deemed from and after the Effective Time to
evidence the right to receive the number of full Parent Common Shares into
which such shares of Company Common Stock or Company Preferred Stock, as
the case may be, shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 3.04. Notwithstanding any other provision of this
Agreement, no interest will be paid or will accrue on any cash payable to
holders of Company Certificates pursuant to the provisions of this Article
III.
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Shares with a record
date after the Effective Time will be paid to the holder of any
unsurrendered Company Certificate with respect to the Parent Common Shares
represented thereby until the holder of record of such Company Certificate
shall surrender such Company Certificate and any underlying Shares. Subject
to the effect of applicable escheat or similar laws, following surrender of
any such Company Certificate, there shall be paid to the record holder of
the Parent Certificates issued in exchange therefor, without interest, at
the time of such surrender, the amount of any such dividends or other
distributions with a record date after the Effective Time theretofore
payable (but for the provisions of this Section 3.02(d)) with respect to
such Parent Common Shares.
(e) Transfer of Ownership. If any Parent Certificate is to be
issued in a name, or cash in lieu of fractional shares paid to a Person,
other than that in which the Company Certificate surrendered in exchange
therefor is registered, it will be a condition of the issuance and/or
payment thereof that the Company Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a Parent Certificate for Parent Common Shares in any name other
than that of the registered holder of the Company Certificate surrendered,
or established to the satisfaction of Parent or any agent designated by it
that such tax has been paid or is not payable.
(f) Termination of Exchange Agent Funding. Any portion of funds
(including any interest earned thereon) or Parent Certificates held by the
Exchange Agent which have not been delivered to holders of Company
Certificates pursuant to this Article III within six (6) months after the
Effective Time shall promptly be paid or delivered, as appropriate, to
Parent, and thereafter holders of Company Certificates who have not
theretofore complied with the exchange procedures set forth in and
contemplated by this Section 3.02 shall thereafter look only to Parent
(subject to abandoned property, escheat and similar laws) only as general
creditors thereof for their claim for Parent Common Shares, any cash in
lieu of fractional Parent Common Shares and any dividends or distributions
(with a record date after the Effective Time) with respect to Parent Common
Shares to which they are entitled.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to any Person in respect of any Parent Common
Shares or cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
SECTION 3.03 Stock Transfer Books. As of the Effective Time, the
stock transfer books of Company shall each be closed, and there shall be no
further registration of transfers of shares of Company Common Stock or
Company Preferred Stock thereafter on the records of any such stock
transfer books. In the event of a transfer of ownership of shares of
Company Common Stock or Company Preferred Stock that is not registered in
the stock transfer records of Company at the Effective Time, a certificate
or certificates representing the number of full Parent Common Shares into
which such shares of Company Common Stock or Company Preferred Stock, as
the case may be, shall have been converted shall be issued to the
transferee together with a cash payment in lieu of fractional shares, if
any, in accordance with Section 3.04 hereof, and a cash payment in the
amount of dividends, if any, in accordance with Section 3.02(d) hereof, if
the certificate or certificates representing such shares of Company Common
Stock or Company Preferred Stock, as the case may be, is or are surrendered
as provided in Section 3.02(c) hereof, accompanied by all documents
required to evidence and effect such transfer and by evidence of payment of
any applicable stock transfer tax.
SECTION 3.04 No Fractional Share Certificates. No scrip or
fractional share Parent Certificate shall be issued upon the surrender for
exchange of Company Certificates, and an outstanding fractional share
interest shall not entitle the owner thereof to vote, to receive dividends
or to any rights of a stockholder of Parent or of Surviving Corporation
with respect to such fractional share interest. As promptly as practicable
following the Effective Time, Parent shall deposit with the Exchange Agent
an amount in cash sufficient for the Exchange Agent to pay each holder of
Company Common Stock or Company Preferred Stock an amount in cash, rounded
to the nearest whole cent, equal to the product obtained by multiplying (i)
the fractional share interest to which such holder would otherwise be
entitled (after taking into account all shares of Company Common Stock or
Company Preferred Stock held at the Effective Time by such holder) by (ii)
the Final Average Closing Price. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Company Common Stock or Company Preferred Stock with respect to any
fractional share interests, the Exchange Agent shall make available such
amounts, net of any required withholding taxes, to such holders of Company
Common Stock or Company Preferred Stock, subject to and in accordance with
the terms of Section 3.02 hereof.
SECTION 3.05 Options to Purchase Company Common Stock.
(a) At the Effective Time, the Company Stock Plan and each
option granted by Company to purchase shares of Company Common Stock
pursuant to the Company Stock Plan or otherwise listed on Schedule 3.05 of
the Company Disclosure Schedule ("COMPANY STOCK OPTIONS") which is
outstanding and unexercised immediately prior to the Effective Time, and
each warrant to purchase shares of Company Common Stock ("COMPANY
WARRANTS") which is outstanding and unexercised immediately prior to the
Effective Time, shall be assumed by Parent and shall be automatically
converted into an option or warrant, as the case may be, to purchase Parent
Common Shares in such number and at such exercise price as provided below
and otherwise having the same terms and conditions as in effect immediately
prior to the Effective Time (except to the extent that such terms,
conditions and restrictions are automatically altered in accordance with
their terms as a result of the Merger contemplated hereby and except that
all references in each such Company Stock Option or Company Warrant to
Company shall be deemed to refer to Parent):
(i) the number of Parent Common Shares to be subject to the
new option or warrant, as the case may be, shall be equal to the
product of (x) the number of shares of Company Common Stock
subject to the original Company Stock Option or Company Warrant
immediately prior to the Effective Time and (y) the Exchange
Ratio;
(ii) the exercise price per share of Parent Common Shares
under the new option or warrant shall be equal to (x) the exercise
price per share of Company Common Stock in effect under the
original Company Stock Option or Company Warrant immediately prior
to the Effective Time divided by (y) the Exchange Ratio; and
(iii) in effecting such assumption and conversion, the
aggregate number of Parent Common Shares to be subject to each
assumed Company Stock Option or Company Warrant will be rounded
down, if necessary, to the next whole share and the aggregate
exercise price shall be rounded up, if necessary, to the next
whole cent.
(b) The adjustments provided herein with respect to any options
that are "incentive stock options" (as defined in Section 422 of the Code)
shall be effected in a manner consistent with the requirements of Section
424(a) of the Code.
(c) Prior to the Effective Time, Company shall take all actions
required to be taken by it to implement the provisions of this Section
3.05, including reasonable efforts to obtain any consents required to
effect the rollover of Company Stock Options which have terms that do not
automatically provide for such rollover and, except as set forth on
Schedule 3.05(c) of the Company Disclosure Schedule, no further action or
consent shall be required on behalf of Company or any holder of a Company
Stock Option or Company Warrant. Without limitation of the previous
sentence, except as set forth on Schedule 3.05(c) of the Company Disclosure
Schedule, following the Effective Time, no holder of a Company Stock Option
or a Company Warrant shall have any rights to acquire Company Common Stock
and no Person shall have any rights to acquire shares of any Company
Subsidiary. Prior to the Effective Time, Parent shall take all actions
required to be taken by it prior to the Effective Time to implement the
provisions of this Section 3.05.
SECTION 3.06 Certain Adjustments. If between the date of this
Agreement and the Effective Time, the outstanding Parent Common Shares,
Company Common Stock or Company Preferred Stock shall be changed into a
different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any
dividend payable in stock or other securities shall be declared thereon
with a record date within such period, then each Exchange Ratio established
pursuant to the provisions of Section 3.01 shall be adjusted accordingly to
provide to Parent and Company the same economic effect as contemplated by
this Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange or dividend.
SECTION 3.07 Dissenters' Rights. Any Dissenting Shares shall not
be converted into, or be exchangeable for, the right to receive Parent
Common Shares but shall instead be converted into the right to receive such
consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to Delaware Law unless and until such holder
shall have failed to perfect or shall have effectively withdrawn or lost
his right of appraisal and payment, as the case may be. Company shall give
Parent prompt notice of any Dissenting Shares (and shall also give Parent
prompt notice of any withdrawals of such demands for appraisal rights) and
Parent shall have the right to direct all negotiations and proceedings with
respect to such demands. Neither Company nor the Surviving Corporation
shall, except with the prior written consent of Parent, voluntarily make
any payments with respect to, or settle or offer to settle, any such demand
for appraisal rights and any such payment will be made by Company out of
funds of Company. If, after the Effective Time, any Dissenting Shares shall
lose their status as Dissenting Shares, Parent shall issue and deliver,
upon surrender by such stockholder of certificate or certificates
representing shares of Company Capital Stock, the number of Parent Common
Shares to which such stockholder would otherwise be entitled pursuant to
this Article III (and cash in lieu of fractional shares pursuant to Section
3.04).
SECTION 3.08 Lost, Stolen or Destroyed Certificates. In the event
any Company Certificates shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Company Certificates, upon the making of an affidavit of that fact by the
holder thereof, such Parent Common Shares (and cash in lieu of fractional
shares) as may be required pursuant to Section 3.01, provided, however,
that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Company Certificates to indemnify Parent against any claim that may be made
against Parent, the Surviving Corporation or the Exchange Agent with
respect to the Company Certificates alleged to have been lost, stolen or
destroyed.
SECTION 3.09 Taking of Necessary Action; Further Action. If, at
any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Company, the
officers and directors of Company are fully authorized in the name of their
corporation or otherwise to take, and will use good faith efforts to take,
all such lawful and necessary action, so long as such action is not
inconsistent with this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Merger Sub,
subject to the exceptions specifically disclosed in writing in the Company
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article IV, that:
SECTION 4.01 Organization and Qualification; Subsidiaries.
(a) Each of Company and each directly and indirectly owned
Subsidiary of Company (the "COMPANY 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 to
own, lease and operate its properties and to carry on its business as it is
now being conducted. Company and each Company 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 could not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) Schedule 4.01 of the Company Disclosure Schedule sets forth,
as of the date of this Agreement, a true and complete list of each Company
Subsidiary, together with the jurisdiction of incorporation or organization
of each Company Subsidiary and the percentage of each Company Subsidiary's
outstanding capital stock or other equity interests owned by Company or
another Company Subsidiary. Except as set forth in Schedule 4.01 of the
Company Disclosure Schedule, neither Company nor any Company Subsidiary
owns, directly or indirectly, an equity interest in any partnership or
joint venture arrangement or other business entity that is material to the
business, assets, liabilities, financial condition or results of operations
of Company and the Company Subsidiaries, taken as a whole or that exceeds
10% of the equity of such entity.
SECTION 4.02 Certificate of Incorporation and Bylaws; Records. The
copies of Company's Certificate of Incorporation and bylaws previously
provided to Parent by Company are true, complete and correct copies
thereof. Such Certificate of Incorporation and bylaws are in full force and
effect. Company is not in violation of any of the provisions of its
Certificate of Incorporation or bylaws.
Each Company Subsidiary has properly filed all reports,
resolutions and other documents that are required under applicable law to
be filed with or delivered to the Israeli Registrar of Companies, except
where the failure to file or deliver such reports, resolutions and other
documents would not have a Company Material Adverse Effect.
SECTION 4.03 Capitalization. The authorized capital stock of
Company consists of 60,000,000 shares of Company Common Stock and
11,000,000 shares of Company Preferred Stock, of which 4,676,986 shares
have been designated as Class B Preferred Stock and 3,500,000 have been
designated as Class C Preferred Stock. As of the date hereof, (i)
11,466,233 shares of Company Common Stock are issued and outstanding, all
of which are validly issued, fully paid and nonassessable, (ii) no shares
of Company Common Stock are held in the treasury of Company, (iii) no
shares of Company Common Stock are held by Company Subsidiaries, (iv)
7,675,976 and 8,029,640 shares of Company Common Stock are reserved for
future issuance pursuant to Company Stock Options and Company Preferred
Stock outstanding on the date hereof, respectively, (v) no Company Warrants
are outstanding, (vi) 4,676,986 shares of Class B Preferred Stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable, and (vii) 3,352,654 shares of Class C Preferred Stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable. Schedule 4.03 of the Company Disclosure Schedule sets forth
separately for each class and type of security, a complete list of all
Company Common Stock, Company Stock Options, Company Warrants, Company
Preferred Stock or other rights to acquire Company Common Stock or any
security convertible or exchangeable or exercisable for any such securities
or any other rights outstanding as of the date of this Agreement, including
the name of the holder and the number of shares of Company Common Stock or
Company Preferred Stock held and the exercise price of outstanding options.
Except as set forth in Schedule 4.03(a) of the Company Disclosure Schedule,
there are no options, warrants, calls, pre-emptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character to
which Company or any Company Subsidiary is a party or by which Company or
any Company Subsidiary is bound relating to the issued or unissued capital
stock of Company or any Company Subsidiary or obligating Company or any
Company Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, Company or any Company Subsidiary or securities
convertible into or exchangeable for such shares or equity interests. All
shares of Company Common Stock subject to issuance as aforesaid, upon
issuance prior to the Effective Time 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. All outstanding
shares of Company Common Stock and Company Preferred Stock have been issued
in accordance with applicable securities laws or valid exemptions
therefrom. There are no outstanding contractual obligations of Company or
any Company Subsidiary to repurchase, redeem or otherwise acquire any
shares of Company Common Stock, Company Preferred Stock or Company Stock
Option, or any capital stock or options to purchase capital stock of any
Company Subsidiary. Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid and nonassessable
and all of which were issued in accordance with applicable securities laws
or valid exemptions therefrom, and each such share owned by Company or
another Company Subsidiary is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Company's or such other Company Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever. Except as set
forth on Schedule 4.03(b) of the Company Disclosure Schedule, all
outstanding shares of capital stock of each Company Subsidiary is owned,
directly or indirectly, by the Company. There are no significant
outstanding contractual obligations of Company or any Company Subsidiary to
provide funds to, or make any significant investment (in the form of a
loan, capital contribution or otherwise) in, any Company Subsidiary or any
other Person. In addition, there are no agreements or trusts or other
agreements or understandings to which the Company or any Company Subsidiary
is a party with respect to the voting or disposition of the Company Common
Stock and the Company is not aware of any such agreements among its
shareholders other than the Company Voting Agreement and the agreements set
forth on Schedule 4.03(c) of the Company Disclosure Schedule. The holders
of Company Preferred Stock shall not, at the Effective Time, be entitled to
any accrued, but unpaid, dividends as a result of the transactions
contemplated hereby. Except as set forth in Schedule 4.03(d) of the Company
Disclosure Schedule, there are no agreements, undertakings or arrangements
granting any person the right to require Company or any Company Subsidiary
to register or to allow such person to participate in any registration of
any securities of Company or any Company Subsidiary. Less than thirty-five
(35) shareholders of Company are residents of Israel.
SECTION 4.04 Authority Relative to This Agreement. Company has all
necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Company and the consummation by Company 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 Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval
of this Agreement by the holders of a majority of the outstanding shares of
Company Common Stock and Company Preferred Stock entitled to vote with
respect thereto at the Company Stockholders' Meeting (as defined in Section
7.01), and the filing and recordation of the Certificate of Merger as
required by Delaware Law). This Agreement has been duly executed and
delivered by Company and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes the legal, valid and
binding obligation of Company, enforceable against Company in accordance
with their terms, except to the extent that enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
by principles of equity regarding the availability of remedies.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Company do
not, and the performance by Company of its obligations hereunder, and the
consummation of the Merger will not, (i) conflict with or violate any
provision of the Certificate of Incorporation or bylaws of Company or any
equivalent organizational documents of any Company Subsidiary, (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 Company or any Company Subsidiary or by which any
property or asset of Company or any Company Subsidiary is bound or affected
or (iii) result in any breach of or constitute a default (or an event which
with the giving of notice or lapse of time or both could reasonably be
expected to 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 Company
or any Company Subsidiary pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except in the case of (ii) and (iii) above as
would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect or a material adverse effect on Company's
ability to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by Company do
not, and the performance by Company of its obligations hereunder and the
consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by Company with or notification by
Company to, any Governmental Entity, except pursuant to applicable
requirements of the Securities Act, Blue Sky Laws, the premerger
notification requirements of the HSR Act, if any, the requirements of the
Israel Restrictive Trade Practices, 1988, if any, filings under other
competition or foreign investment laws, if any, the consent of the Office
of the Chief Scientist of the Israeli Ministry of Industry and Trade, and
the filing and recordation of the Certificate of Merger as required by
Delaware Law.
SECTION 4.06 Permits; Compliance with Laws. Company and the
Company Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, approvals and orders of any Governmental Entity necessary for
Company or any Company Subsidiary to own, lease and operate its properties
and assets or otherwise to carry on its business as it is now being
conducted, other than those, the failure of which to possess, could not
reasonably be expected to have, individually, or in the aggregate, a
Company Material Adverse Effect (collectively, the "COMPANY PERMITS"), and,
as of the date of this Agreement, none of the Company Permits has been
suspended or cancelled nor is any such suspension or cancellation pending
or, to the Knowledge of Company, threatened which, in either instance,
would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Neither Company nor any Company Subsidiary
is in conflict with, or in default or violation of, (i) any Law applicable
to Company or any Company Subsidiary or by which any property or asset of
Company or any Company Subsidiary is bound or affected, except for such
conflicts, defaults or violations which would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect, or (ii) any Company Permits, except for such conflicts, defaults or
violations that could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. Schedule 4.06 of the
Company Disclosure Schedule sets forth, as of the date of this Agreement,
all actions, proceedings, to the Knowledge of Company investigations or
surveys pending or, to the Knowledge of Company, threatened against Company
or any Company Subsidiary that could reasonably be expected to result in
the suspension or cancellation of any Company Permit. Since January 1,
2000, neither Company nor any Company Subsidiary has received from any
Governmental Entity any written notification with respect to possible
conflicts, defaults or violations of Laws, except for any such notice with
respect to possible conflicts, defaults or violations which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
SECTION 4.07 Financial Statements.
(a) Schedule 4.07 of the Company Disclosure Schedule includes
copies of (i) the audited consolidated balance sheet of the Company at
December 31, 1999, together with the related consolidated statements of
operations, stockholders' equity and cash flows for the year ended December
31, 1999 and the notes thereto, and (ii) the unaudited consolidated balance
sheet of the Company at June 30, 2000, together with the related statements
of operations, stockholders' equity and cash flows for the six-month period
ended June 30, 2000 (collectively, the "COMPANY FINANCIAL STATEMENTS"). The
Company Financial Statements were prepared in accordance with U.S. GAAP
(except, in the case of unaudited financial statements, for the absence of
footnotes and subject to normal year end adjustments, which adjustments are
not material) applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each
presented fairly and accurately the consolidated financial position of
Company and the Company Subsidiaries as at the respective dates thereof,
and their consolidated results of operations, stockholders' equity and cash
flows for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal and
recurring immaterial year-end adjustments).
(b) Except as and to the extent set forth or reserved against on
the consolidated balance sheet of Company and the Company Subsidiaries as
of June 30, 2000, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except for (i) liabilities or obligations which
would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect, or (ii) liabilities or obligations which
were incurred in the ordinary course of business consistent with past
practice since June 30, 2000.
SECTION 4.08 Absence of Certain Changes or Events.
(a) Except as otherwise set forth on Schedule 4.08 of the Company
Disclosure Schedule, since June 30, 2000 and prior to the date hereof,
there has not been (i) any event that could reasonably be expected to
prevent or materially delay the performance of Company's obligations
pursuant to this Agreement and the consummation of the Merger by Company,
(ii) any material change by Company in its accounting methods, principles
or practices, (iii) any declaration, setting aside or payment of any
dividend or distribution in respect of the shares of Company Common Stock
or Company Preferred Stock or any redemption, purchase or other acquisition
of any of Company's securities, (iv) except in the ordinary course of
business consistent with past practice, any increase in the compensation or
benefits maintained by the Company, or establishment of any new bonus,
insurance, severance, change in control, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation,
the granting of stock options, stock appreciation rights, performance
awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to
become payable to any executive officers of Company or any Company
Subsidiary, (v) any issuance or sale of any stock, notes, bonds or other
securities other than pursuant to the exercise of outstanding securities,
or entering into any agreement with respect thereto, (vi) any amendment to
the Company's Certificate of Incorporation or bylaws, (vii) other than in
the ordinary course of business, any (x) purchase, sale, assignment or
transfer of any material assets (it being understood that the purchase of a
business or of any equity or other ownership interest in any entity shall
not be deemed to occur in the ordinary course of business), (y) mortgage,
pledge or the institution of any lien, encumbrance or charge on any
material assets or properties, tangible or intangible, except for liens for
Taxes not yet delinquent and such other liens, encumbrances or charges
which do not, individually or in the aggregate, have a Company Material
Adverse Effect, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, or (viii) any entering into
any transaction of a material nature other than in the ordinary course of
business, consistent with past practices.
(b) Except as otherwise set forth on Schedule 4.08 of the Company
Disclosure Schedule, since June 30, 2000, Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course
consistent with past practice and, since such date, there has not been (i)
any Company Material Adverse Effect, (ii) any incurrence of any damage,
destruction or similar loss, whether or not covered by insurance,
materially affecting the business or properties of Company or any Company
Subsidiary, (iii) any incurrence of any material liability (absolute or
contingent), except for current liabilities and obligations incurred in the
ordinary course of business, consistent with past practice, or (iv) any
impairment, modification or event, or notice of any pending or threatened
impairment, modification or event which could be reasonably expected to
result in a loss, impairment, or diminution in value on a going forward
basis of the Company's contractual and business relationships with any of
the customers, vendors and suppliers, whose names are set forth on Schedule
4.24 of the Company Disclosure Schedule, other than any impairment
modification or event which could not reasonably be expected to result in a
loss of the Company's relationship with such customer, vendor or supplier
or a loss of a material amount of business or a material change in profit
margins with respect to such customer, vendor or supplier.
SECTION 4.09 Employee Benefit Plans; Labor Matters.
(a) The term "Company Benefit Plans" shall mean all employee
benefit and compensation plans, programs, policies, arrangements and
contracts (including, without limitation, any "employee benefit plan", as
defined in Section 3(3) of ERISA) covering current or former employees or
current or former directors of Company or any Company Subsidiary and which
are maintained, sponsored or contributed to, or required to be contributed
to, by Company or any Company Subsidiary or to which Company or any Company
Subsidiary is a party. Company has delivered or made available to Parent
upon request a true, complete and correct copy of each (i) material Company
Benefit Plan and the most recent summary plan description related to such
Company Benefit Plan, if a summary plan description is required therefor
and (ii) each trust agreement or other funding arrangement relating to such
material Company Benefit Plan. Neither Company nor any Company Affiliate
has any express or implied commitment, whether legally enforceable or not,
to modify, change or terminate any Company Benefit Plan, other than with
respect to a modification, change or termination required by ERISA, the
Code or applicable local Law.
(b) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable laws,
including, without limitation, ERISA and the Code, if applicable, and all
contributions required to be made under the terms of any of the Company
Benefit Plans have been timely made or have been reflected on the most
recent consolidated balance sheet. With respect to the Company Benefit
Plans, no event has occurred and, to the Knowledge of Company, there exists
no condition or set of circumstances in connection with which Company or
any Company ERISA Affiliate could be subject to any material liability
(other than for routine claims for benefits) under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law.
(c) Company hereby represents that: (i) each Company Benefit Plan
which is intended to be qualified under Section 401(a) of the Code or
Section 401(k) of the Code has received or is currently awaiting receipt of
a favorable determination letter from the IRS as to its qualified status
under the Code, and each trust established in connection with any Company
which is intended to be exempt from United States federal income taxation
under Section 501(a) of the Code has received a determination letter from
the IRS that it is so exempt, and to the Knowledge of Company no fact or
event has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any such Company Benefit Plan
or the exempt status of any such trust; (ii) there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of
the Code) with respect to any Company Benefit Plan which could result in
material liability to Company; (iii) each Company Benefit Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms. No suit, administrative proceeding, action or
other litigation has been brought (other than routine benefit claims), or
to the Knowledge of Company is threatened in writing, against or with
respect to any such Company Benefit Plan, including any audit or inquiry by
the Internal Revenue Service or United States Department of Labor or any
comparable Governmental Entity.
(d) No Company Benefit Plan or employee benefit plan maintained by
a trade or business (whether or not incorporated) treated as a single
employer with the Company (a "COMPANY ERISA AFFILIATE") under Section
414(a), (b), (m) or (o) of the Code is a multiemployer pension plan (as
defined in Section 3(37) of ERISA) or other pension plan subject to Title
IV of ERISA or Part 3 of Title I of ERISA or Section 412 of the Code, and
neither the Company nor any Company ERISA Affiliate has sponsored or
contributed to or been required to contribute to a multiemployer pension
plan or other pension plan subject to Title IV of ERISA. No material
liability under Title IV of ERISA has been incurred by Company or any
Company ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Company or any Company
ERISA Affiliate of incurring or being subject (whether primarily, jointly
or secondarily) to a material liability thereunder. None of the assets of
Company or any Company ERISA Affiliate is, or may reasonably be expected to
become, the subject of any lien arising under ERISA or Section 412(n) of
the Code.
(e) Company has scheduled on Schedule 4.09(e) of the Company
Disclosure Schedule and has delivered to Parent true, complete and correct
copies of (i) all employment agreements with the ten (10) most
highly-compensated employees of Company, and with the Chief Executive
Officer of each Company Subsidiary and (ii) all material severance plans,
agreements, programs and policies of Company and each Company Subsidiary
with or relating to their respective employees, directors or consultants.
No payment or benefit which will be made by Company or any Company
Subsidiary under any Company Benefit Plan or other arrangement will
constitute an excess parachute payment under Code Section 280G(b)(1), and
the consummation of the transactions contemplated by this Agreement will
not individually or in conjunction with any other possible event (including
termination of employment) (i) entitle any current or former employee or
other service provider of Company or any Company Subsidiary to severance
benefits or any other payment, compensation or benefit (including
forgiveness of indebtedness), except as expressly provided by this
Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation or benefit due any such employee or service
provider or trigger any other material liability of Company pursuant to any
Company Benefit Plan. The transactions contemplated by this Agreement will
not result in the accelerated vesting of Company Stock Options or Company
Warrants or be considered a "change of control" for purposes of any change
of control provision contained in any employment agreement listed on
Schedule 4.09(e) of the Company Disclosure Schedule.
(f) Neither Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to Persons
employed by Company or any Company Subsidiary and no collective bargaining
agreement is being negotiated by Company or any Company Subsidiary. As of
the date of this Agreement, there is no labor dispute, strike or work
stoppage against Company or any Company Subsidiary pending or, to the
Knowledge of Company, threatened in writing which may interfere with the
respective business activities of Company or any Company Subsidiary. As of
the date of this Agreement, to the Knowledge of Company, none of Company,
any Company Subsidiary, or any of their respective representatives or
employees has committed any unfair labor practice in connection with the
operation of the respective businesses of Company or any Company
Subsidiary, and there is no charge or complaint against Company or any
Company Subsidiary by the National Labor Relations Board or any comparable
Governmental Entity or works council pending or threatened in writing.
(g) Except as required by Law, no Company Benefit Plan provides
retiree or post-employment, medical, disability or life insurance benefits
to any Person.
(h) With respect to each Company Benefit Plan that is not subject
to United States law (each, a "COMPANY FOREIGN BENEFIT PLAN");
(i) all employer and employee contributions to each Company
Foreign Benefit Plan required by law or by the terms of such Company
Foreign Benefit Plan have been made, or, if applicable, accrued, in
accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded Company
Foreign Benefit Plan, the liability of each insurer of any Company
Foreign Benefit Plan funded through insurance or the book reserve
established for any Company Foreign Benefit Plan, together with the
accrued contributions, is sufficient to procure or provide for the
accrued benefit obligations, as of the Effective Time, with respect to
all current and former participants in such plan according to the
actuarial assumptions and valuations most recently used to determine
employer contributions to such Company Foreign Benefit Plan and no
transaction contemplated by this Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and
(iii) each Company Foreign Benefit Plan required to be registered
has been registered and has been maintained in good standing with
applicable regulatory authorities.
SECTION 4.10 Pooling; Certain Tax Matters. Neither Company nor, to
the Knowledge of Company, any of its Affiliates has taken or agreed to take
any action (other than actions contemplated by this Agreement) that could
reasonably be expected to prevent (a) the Merger from being treated for
accounting purposes as a "pooling of interests" in accordance with U.S.
GAAP and the accounting standards of the SEC or (b) the Merger from
constituting a "reorganization" under Section 368 of the Code. Company is
not aware of any agreement or plan to which Company or any of its
Affiliates is a party or other circumstances relating to Company or any of
its Affiliates that could reasonably be expected to prevent the Merger from
being so treated as a "pooling of interests" or from so qualifying as a
reorganization under Section 368 of the Code.
SECTION 4.11 Contracts.
(a) Except for the contracts and agreements described in
Schedule 4.11 of the Company Disclosure Schedule (collectively, the
"COMPANY MATERIAL CONTRACTS"), neither Company nor the Company Subsidiaries
is a party to or bound by the following contracts (which for purposes of
this Agreement shall be deemed Company Material Contracts):
(i) any distribution or software manufacturer's representative
contract that represents ten percent (10%) or more of Company's
consolidated annual revenues;
(ii) any contract for the provision of software, outsourcing or
consulting services or computer hardware, including contracts billed
on time plus materials and fixed-price contracts involving in the case
of any such contact more than $3,000,000 per annum;
(iii) any contract related to the provision of services to
early-stage entities in consideration for, among other things, equity
interests in such entities, along with any subscription or other
agreements with respect to investments in such entities and
instruments or securities evidencing such equity interests, including
any warrants or options;
(iv) any hedging arrangements, including any puts or call options;
(v) any trust indenture, mortgage, promissory note, loan agreement
or other contract for the borrowing of money, any currency exchange,
commodities or other hedging arrangement or any leasing transaction of
the type required to be capitalized in accordance with US GAAP;
(vi) any contract for capital expenditures in excess of $3,000,000 in
the aggregate;
(vii) any contract limiting in any material respect the freedom of
the Company or any Company Subsidiary to engage in any line of
business or to compete with any other Person;
(viii) any contract pursuant to which the Company or any Company
Subsidiary is a lessor of any machinery, equipment, motor vehicles,
office furniture, fixtures or other personal property involving in the
case of any such contract more than $3,000,000 in any calendar year;
(ix) any contract with any Person (other than the Company or any
Company Subsidiary) with whom the Company or any Company Subsidiary
does not deal at arm's length within the meaning of the Code;
(x) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect
to, the obligations, liabilities (whether accrued, absolute,
contingent or otherwise) or indebtedness of any other Person; or
(xi) any agreement relating to the acquisition of a business for
aggregate consideration in excess of $1,000,000 entered into in the
last three years.
(b) Company and each Company Subsidiary has performed all of the
material obligations required to be performed by it and is entitled to all
benefits under, and to the Knowledge of Company, is not alleged to be in
default in respect of any Company Material Contract. Each of the Company
Material Contracts is in full force and effect, unamended, and there exists
no default or event of default or event, occurrence, condition or act, with
respect to Company or any Company Subsidiary or to the Knowledge of Company
with respect to the other contracting party, which, with the giving of
notice, the lapse of the time or the happening of any other event or
conditions, would become a default or event of default under any Company
Material Contract. True, correct and complete copies of all Company
Material Contracts have been delivered or made available to Parent.
SECTION 4.12 Litigation. Except as set forth on Schedule 4.12 to
Company Disclosure Schedule, there is no suit, claim, action, proceeding
or, to the Knowledge of Company, investigation pending or, to the Knowledge
of Company, threatened against Company or any Company Subsidiary that could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect or materially interfere with Company's ability to
consummate the transactions contemplated herein, including, without
limitation, any pending or threatened class action suit. Neither Company
nor any Company Subsidiary is subject to any outstanding order, writ,
injunction or decree which could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or
materially interfere with Company's ability to consummate the transactions
contemplated herein.
SECTION 4.13 Environmental Matters. Except as could not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (i) Company and the Company Subsidiaries are in compliance
with all applicable Environmental Laws and all Company Permits required by
Environmental Laws; (ii) all past noncompliance of Company or any Company
Subsidiary with Environmental Laws or Environmental Permits has been
resolved without any pending, ongoing or future obligation, cost or
liability; and (iii) neither Company nor any Company Subsidiary has
released nor to the Knowledge of Company has any other Person released a
Hazardous Material at, or transported a Hazardous Material to or from, any
real property currently or formerly owned, leased or occupied by Company or
any Company Subsidiary, in violation of or under circumstances that could
result in liability under any Environmental Law.
SECTION 4.14 Intellectual Property.
(a) The Company Intellectual Property is: (i) owned solely and
exclusively by Company or a Company Subsidiary, free and clear of any and
all mortgages, pledges, liens, security interests, conditional sale
agreements or encumbrances, of any kind; or (ii) rightfully used or
otherwise enjoyed by Company or its Subsidiaries pursuant to one or more
license agreements, each of which such license agreements are, to the
Knowledge of Company and each Company Subsidiary, valid and enforceable.
(b) Except as would not have a Company Material Adverse Effect,
all intellectual property registrations included in the Company
Intellectual Property have been duly maintained, are in full force and
effect and have not been cancelled, expired (except in accordance with the
terms of any such registration) or abandoned.
(c) No action is currently pending which asserts that Company or
any Company Subsidiary is infringing, misappropriating, diluting or
otherwise violating any Intellectual Property of any Person. Neither
Company nor any Company Subsidiary has received notice from any Person
within the past twelve (12) months asserting that Company or any Company
Subsidiary is infringing, misappropriating, diluting or otherwise violating
any Intellectual Property of any such Person. No action is currently
pending which asserts that any Person is infringing, misappropriating,
diluting or otherwise violating any Company Intellectual Property. Neither
Company nor any Company Subsidiary has asserted any claim of infringement,
misappropriation, dilution or other violation of Company Intellectual
Property against any Person within the past twelve (12) months. To the
actual knowledge of Company, neither Company nor any Company Subsidiary is,
in any material respect, infringing, misappropriating, diluting or
otherwise violating any Intellectual Property of any Person.
(d) No action is currently pending, or to the Knowledge of Company
threatened, which asserts a challenge to the validity, use or
enforceability of any Company Intellectual Property.
(e) To the Knowledge of Company, all material agreements granting
or obtaining any right to use or practice any rights under any Intellectual
Property (collectively, "LICENSE AGREEMENTS") to which Company or any
Company Subsidiary is a party or otherwise bound are valid and binding
obligations of the Company or Company Subsidiaries, enforceable in
accordance with their terms, and there exists no event or condition which
will result in a violation or breach of, or constitute a default by the
Company or Company Subsidiaries or, to the Knowledge of Company, the other
party thereto, under any such material License Agreement.
(f) The Company and each of the Company Subsidiaries takes
reasonable measures to protect the confidentiality of trade secrets. To the
Knowledge of Company, no trade secret of the Company or any Company
Subsidiaries has been disclosed or authorized to be disclosed to any Person
other than pursuant to a written nondisclosure agreement that provides
commercially reasonable protections for Company and the applicable Company
Subsidiaries' proprietary interests in and to such trade secrets.
(g) Except as would not have a Company Material Adverse Effect,
the consummation of the transactions contemplated hereby will not result in
the loss or impairment of the Company's or any Company Subsidiaries' rights
to own, use, or to bring any action for the infringement of, any of the
Company Intellectual Property, nor will such consummation require the
consent of any Person in respect of any Company Intellectual Property.
(h) Except as would not have a Company Material Adverse Effect,
all software programs utilized in the current business of Company or a
Company Subsidiary are "Year 2000 Compliant", meaning that each of the
aforementioned software programs, when used in combination with software
systems designed by the Company: (i) correctly and unambiguously handles
and processes date information before, during and after January 1, 2000;
(ii) correctly processes functions that are programmed to commence and/or
end on a particular date, including, without limitation, month-end,
year-end, and leap year dates and any combination thereof, irrespective of
a change in the century identifier; (iii) functions accurately and without
interruption before, during and after January 1, 2000 without any change in
operations and/or parameters associated with the advent of the new century;
(iv) responds to two-digit date input in a way that resolves the ambiguity
as to the century in a disclosed, defined and predetermined manner; and (v)
stores and provides the output of date information in a way that is
unambiguous as to the century.
SECTION 4.15 Taxes.
(a) Company and each of the Company Subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of
which Company or any Company Subsidiary is or has been a member, have
properly completed and timely filed all Tax Returns required to be filed by
them and have paid all Taxes required to be shown as due thereon. Company
has provided adequate accruals in accordance with generally accepted
accounting principles in its June 30, 2000 balance sheet (the "COMPANY JUNE
2000 BALANCE SHEET") for any Taxes that have not been paid, whether or not
shown as being due on any Tax Returns. Company and the Company Subsidiaries
have no material liability for unpaid Taxes accruing after June 30, 2000
except for Taxes incurred in the ordinary course of business subsequent to
June 30, 2000.
(b) There is (i) no material claim for Taxes that is a lien
against the property of Company or any Company Subsidiary or is being
asserted against Company or any Company Subsidiary other than liens for
Taxes not yet due and payable, (ii) no audit of any Tax Return of Company
or any Company Subsidiary being conducted by a Taxing Authority; and (iii)
no extension of the statute of limitations on the assessment of any Taxes
granted by Company or any Company Subsidiary and currently in effect.
(c) There has been no prior change in ownership of Company or any
Company Subsidiary that has caused the utilization of any losses of such
entities to be limited pursuant to Section 382 of the Code, and any loss
carryovers reflected on the Company June 2000 Balance Sheet are properly
computed and reflected.
(d) Company and the Company Subsidiaries have not been and will
not be required to include any material adjustment in taxable income for
any Tax period (or portion thereof) pursuant to Section 481 or 263A of the
Code or any comparable provision under state or foreign Tax laws as a
result of transactions, events or accounting methods employed prior to the
Merger.
(e) Neither Company nor any Company Subsidiary has filed or will
file any consent to have the provisions of Section 341(f)(2) of the Code
(or comparable provisions of any state Tax laws) apply to Company or any
Company Subsidiary.
(f) Neither Company nor any Company Subsidiary is a party to any
Tax sharing or Tax allocation agreement nor does Company or any Company
Subsidiary have any liability or potential liability to another party under
any such agreement.
(g) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 or comparable provisions of state, local or
foreign law to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return.
(h) Neither Company nor any Company Subsidiary has ever been a
member of a consolidated, combined or unitary group of which Company was
not the ultimate parent corporation.
(i) Company and each Company Subsidiary has in its possession
receipts for any Taxes paid to any non-U.S. Taxing Authority. Neither
Company nor any Company Subsidiary has ever been a "personal holding
company" within the meaning of Section 542 of the Code or a "United States
real property holding corporation" within the meaning of Section 897 of the
Code.
SECTION 4.16 Insurance. Company and each Company Subsidiary is
presently insured, and during each of the past three (3) calendar years has
been insured, against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured,
including professional liability insurance. The policies of fire, theft,
liability, professional liability and other insurance maintained with
respect to the assets or businesses of Company and Company Subsidiaries
provide, in the good faith judgment of the Company's management, reasonably
adequate coverage against loss. Company has heretofore furnished to Parent
a complete and correct list as of the date hereof of all insurance policies
maintained by Company or the Company Subsidiaries, and has made available
to Parent complete and correct copies of all such policies, together with
all riders and amendments thereto. All such policies are in full force and
effect and all premiums due thereon have been paid to the date hereof.
Company and the Company Subsidiaries have complied in all material respects
with the terms of such policies.
SECTION 4.17 Properties. Company and the Company Subsidiaries have
good and valid title, free and clear of all Encumbrances, except for
Permitted Encumbrances, to all their material properties and assets,
whether tangible or intangible, real, personal or mixed, reflected in the
Company's consolidated financial statements for the period ended June 30,
2000 as being owned by Company and the Company Subsidiaries as of the date
thereof, other than (i) any properties or assets that have been sold or
otherwise disposed of in the ordinary course of business since the date of
such financial statements, (ii) liens disclosed in the notes to such
financial statements and (iii) liens arising in the ordinary course of
business after the date of such financial statements. All buildings, and
all fixtures, equipment and other property and assets that are material to
its business on a consolidated basis, held under leases or sub-leases by
Company or any Company Subsidiary are held under valid instruments
enforceable in accordance with their respective terms, subject to
applicable laws of bankruptcy, insolvency or similar laws relating to
creditors' rights generally and to general principles of equity (whether
applied in a proceeding in law or equity). Substantially all of Company's
and the Company Subsidiaries' equipment in regular use has been reasonably
maintained and is in serviceable condition, reasonable wear and tear
excepted.
SECTION 4.18 Affiliates. Schedule 4.18 of the Company Disclosure
Schedule sets forth the names and addresses of each Person who is, in
Company's reasonable judgment, an affiliate (as such term is used in Rule
145 under the Securities Act or under applicable SEC accounting releases
with respect to pooling of interests accounting treatment) of Company.
SECTION 4.19 Opinion of Financial Advisor. Salomon Smith Barney
("COMPANY FINANCIAL ADVISOR") has delivered to the board of directors of
Company its opinion to the effect that the Exchange Ratio to be received by
the holders of shares of Company Common Stock is fair to such holders from
a financial point of view.
SECTION 4.20 Brokers. No broker, finder or investment banker
(other than Company Financial Advisor) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of Company.
SECTION 4.21 Certain Business Practices. Neither Company nor any
Company Subsidiary nor any directors, officers, agents or employees of
Company or any Company Subsidiary (in their capacities as such) has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
SECTION 4.22 Business Activity Restriction. Subject to territorial
limitations contained in any license or distribution agreements, Company
has not entered into any agreement under which Company is restricted, in
any material respect, from selling, licensing or otherwise distributing any
of its technology or products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area,
during any period of time that the relevant licensing agreement is in
effect or in any segment of the market or line of business.
SECTION 4.23 Affiliate Transactions. Except as set forth on
Schedule 4.23 of the Company Disclosure Schedule, neither the Company nor
any Company Subsidiary is a party to any agreement with or has any material
interest in any property (whether real or personal, tangible or intangible)
of any of its affiliates, shareholders, employees, officers, or directors
or any entities affiliated with any such persons or any family members of
any such persons, nor are there any agreements or understandings for the
provision, directly or indirectly, of material services by and between the
Company and any Company Subsidiary, on the one hand, and any of its
affiliates, shareholders, employees, associates, officers, directors or any
entities affiliated with any such persons or any family members of any such
persons (other than inter-company arrangements between the Company and
Company Subsidiaries and among Company Subsidiaries and services provided
in their capacity as employees, officers and directors).
SECTION 4.24 Key Customers and Vendors. Set forth on Schedule 4.24
of the Company Disclosure Schedule is a list of Company's top ten customers
in terms of revenues for 1999 and Company's top four software vendor
relationships in terms of fees or royalties paid in 1999.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants to
Company, subject to the exceptions specifically disclosed in the Parent
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article V, that:
SECTION 5.01 Organization and Qualification; Subsidiaries.
(a) Parent and each directly and indirectly owned Subsidiary of
Parent (the "PARENT SUBSIDIARIES"), including Merger Sub, 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 to own, lease and operate its properties and to carry on its
business as it is now being conducted. Parent and each Parent Subsidiary,
including Merger Sub, 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
could not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect.
(b) Schedule 5.01 of the Parent Disclosure Schedule sets forth, as
of the date of this Agreement, a true and complete list of each Parent
Subsidiary, together with the jurisdiction of incorporation or organization
of each Parent Subsidiary and the percentage of each Parent Subsidiary's
outstanding capital stock or other equity interests owned by Parent or
another Parent Subsidiary. Except as set forth in Schedule 5.01 of the
Parent Disclosure Schedule, neither Parent nor any Parent Subsidiary owns,
directly or indirectly, an equity interest in any partnership or joint
venture arrangement or other business entity that is material to the
business, assets, liabilities, financial condition or results of operations
of Parent and the Parent Subsidiaries, taken as a whole or that exceeds 10%
of the equity of such equity.
SECTION 5.02 Articles of Association and Bylaws; Records. The
copies of each of Parent's and Merger Sub's Articles of Association or
Certificate of Incorporation, as the case may be, and bylaws or comparable
charter documents previously provided to Company by Parent are true,
complete and correct copies thereof. Such Articles of Association or
Certificate of Incorporation, as the case may be, and bylaws or comparable
charter documents are in full force and effect. Parent is not in violation
of any of the provisions of its certificate of incorporation, bylaws or
comparable charter documents.
Each Parent Subsidiary has properly filed all reports, resolutions
and other documents that are required under applicable law to be filed with
or delivered to Governmental Entity, except where the failure to file or
deliver such reports, resolutions and other documents would not have a
Parent Material Adverse Effect.
SECTION 5.03 Capitalization.
(a) The authorized capital stock of Parent consists of 40,000,000
Parent Common Shares, 5,000,000 shares of preferred stock ("PARENT
PREFERRED SHARES") and 100,000 shares of 10% cumulative convertible
preferred shares ("PARENT 10% PREFERRED - SERIES A Shares"). As of August
31, 2000 (i) 22,913,194 Parent Common Shares were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) 213,000
Parent Common Shares are held in the treasury of Parent, (iii) no Parent
Common Shares are held by the Parent Subsidiaries, (iv) 5,322,325 Parent
Common Shares were reserved for future issuance pursuant to outstanding
options ("PARENT STOCK OPTIONS"), (v) 608,370 Parent Common Shares were
reserved for issuance pursuant to outstanding Parent Warrants (vi) 216,563
were reserved for issuance upon conversion of Parent's 5% Subordinated
Convertible Notes due 2003 (the "PARENT NOTES"), and (vii) no Parent
Preferred Shares or Parent 10% Preferred - Series A Shares are issued and
outstanding. Between August 31, 2000 and the date of this Agreement, Parent
has not issued any Parent Stock Options, Parent Common Shares, Parent
Preferred Shares or any other securities, other than Parent Common Shares
issued upon exercise of Parent Stock Options which were outstanding as of
August 31, 2000. Except for the Parent Warrants, Parent Notes and Parent
Common Shares issuable pursuant to the Parent Stock Plan, and except as set
forth on Schedule 5.03(a) of the Parent Disclosure Schedule, there are no
options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character to which
Parent is a party or by which Parent is bound relating to the issued or
unissued capital stock of Parent or any Parent Subsidiary or obligating
Parent or any Parent Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, Parent or any Parent Subsidiary or
securities convertible into or exchangeable for such shares or equity
interests. All Parent Common Shares subject to issuance as aforesaid, upon
issuance prior to the Effective Time 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. All outstanding
Parent Common Shares have been issued in accordance with applicable
securities laws or valid exemptions therefrom. There are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase,
redeem or otherwise acquire any Parent Common Shares or Parent Stock
Options, or any capital stock or options to purchase capital stock of any
Parent Subsidiary, except as set forth on Schedule 5.03(a) 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 all of which were issued in accordance with applicable securities laws
or valid exemptions therefrom, 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 as set
forth on Schedule 5.03(a) of the Parent Disclosure Schedule, all
outstanding shares of capital stock of each Parent Subsidiary is owned,
directly or indirectly, by Parent. There are no significant outstanding
contractual obligations of Parent or any Parent Subsidiary to provide funds
to, or make any significant investment (in the form of a loan, capital
contribution or otherwise) in, any Parent Subsidiary or any other Person.
In addition, there are no agreements or trusts or other agreements or
understandings to which Parent or any Parent Subsidiary is a party with
respect to the voting or disposition of Parent Common Shares and Parent is
not aware of any such agreement among its shareholders other than the
Parent Voting Agreement and the agreements set forth on Schedule 5.03(a) of
the Parent Disclosure Schedule. All such agreements relating to Parent
Common Shares shall have been terminated effective as of the Effective
Time. Except as set forth on Schedule 5.03(a) of the Parent Disclosure
Schedule, there are no agreements, undertakings or arrangements granting
any person the right to require Parent or any Parent Subsidiary to register
or to allow such person to participate in any registration of any
securities of Parent or any Parent Subsidiary.
(b) All of the Parent Common Shares to be issued (i) in connection
with the Merger, when issued in accordance with this Agreement, and (ii)
upon the conversion of any Company Stock Option or Company Warrant into an
option or warrant, as the case may be, to purchase Parent Common Shares in
accordance with Section 3.05, when issued upon exercise thereof following
the Effective Time, will be validly issued, fully paid and nonassessable
and will not be subject to preemptive rights or similar contractual rights
granted by Parent.
SECTION 5.04 Authority Relative to This Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by each of Parent and Merger Sub and the consummation by
Parent and Merger Sub 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 or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby (other than the consent of Parent as sole stockholder of Merger Sub
and the approval of the Share Issuance (as defined in Section 7.01) by the
requisite vote of stockholders of Parent at the Parent Stockholders'
Meeting (as defined in Section 7.01), the Domestication (as defined in
Section 7.01) and the filing and recordation of the Certificate of Merger
as required by Delaware Law). This Agreement has been duly executed and
delivered by each of Parent and Merger Sub, and, assuming the due
authorization, execution and delivery by Company, each such agreement
constitutes a legal, valid and binding obligation of Parent and/or Merger
Sub, as the case may be, enforceable against Parent and Merger Sub in
accordance with its terms, except to the extent that enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by principles of equity regarding the availability of remedies.
SECTION 5.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i)
conflict with or violate any provision of the Articles of Association or
bylaws of Parent or any equivalent organizational documents of any Parent
Subsidiary, (ii) assuming that all consents, approvals, authorizations and
permits described in Section 5.05(b) have been obtained and all filings and
notifications described in Section 5.05(b) have been made, conflict with or
violate any Law applicable to Parent or any other Parent Subsidiary or by
which any property or asset of Parent or any Parent Subsidiary is bound or
affected or (iii) result in any breach of or constitute a default (or an
event which with the giving of notice or lapse of time or both could
reasonably be expected to 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 or any Parent Subsidiary pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation, except in the case of (ii) and (iii)
above as would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect or a material adverse
effect on Parent's ability to consummate the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder, and the consummation of the Merger will not, require
any consent, approval, authorization or permit of, or filing by Parent with
or notification by Parent to, any Governmental Entity, except pursuant to
applicable requirements of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules and regulations of the NNM, the premerger notification
requirements of the HSR Act, if any, the requirements of the Israel
Restrictive Trade Practices, 1988, if any, filings under other competition
or foreign antitrust laws, if any, filings pursuant to the rules and
regulations of the NNM pertaining to the listing of Parent Common Shares,
the consent of the Office of the Chief Scientist of the Israeli Ministry of
Industry and Trade, filings and/or approvals under Netherlands Antilles
laws in connection with the seat transfer, filings of documents as may be
required under Delaware Law to effect the Domestication (as defined in
Section 7.01(a)) and the change in Parent's name, and the filing and
recordation of the Certificate of Merger as required by Delaware Law.
SECTION 5.06 Permits; Compliance with Laws. Parent and the Parent
Subsidiaries are in possession of all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, approvals
and orders of any Governmental Entity necessary for Parent or any Parent
Subsidiary to own, lease and operate its properties and assets
or otherwise to carry on its business as it is now being conducted, other
than those, the failure of which to possess, could not reasonably be
expected to have, individually, or in the aggregate, a Parent Material
Adverse Effect (collectively, the "PARENT PERMITS"), and, as of the date of
this Agreement, none of the Parent Permits has been suspended or cancelled
nor is any such suspension or cancellation pending or, to the Knowledge of
Parent, threatened in writing which could reasonably be expected to have a
Parent Material Adverse Effect. Neither Parent nor any Parent Subsidiary is
in conflict with, or in default or violation of, (i) any Law applicable to
Parent or any Parent Subsidiary or by which any property or asset of Parent
or any Parent Subsidiary is bound or affected, except for such conflicts,
defaults or violations which could not reasonably be expected to have a
Parent Material Adverse Effect, or (ii) any Parent Permits, except for such
conflicts, defaults or violations that could not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Schedule 5.06 of the Parent Disclosure Schedule sets forth, as of the date
of this Agreement, all actions, proceedings, to the Knowledge of Parent,
investigations or surveys pending or, to the Knowledge of Parent,
threatened in writing against Parent or any Parent Subsidiary that could
reasonably be expected to result in the suspension or cancellation of any
material Parent Permit. Since January 1, 2000, neither Parent nor any
Parent Subsidiary has received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of
Law, except for any such notice with respect to possible conflicts,
defaults, or violations which could not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 5.07 Absence of Certain Changes or Events.
(a) Except as otherwise set forth on Schedule 5.07 of the Parent
Disclosure Schedule, since June 30, 2000 and prior to the date hereof,
there has not been (i) any event that could reasonably be expected to
prevent or materially delay the performance of Parent's obligations
pursuant to this Agreement and the consummation of the Merger by Parent,
(ii) any material change by Parent in its accounting methods, principles or
practices, (iii) any declaration, setting aside or payment of any dividend
or distribution in respect of the Parent Common Shares or any redemption,
purchase or other acquisition of any of Parent's securities, (iv) except in
the ordinary course of business consistent with past practice, any increase
in the compensation or benefits or establishment of any new bonus,
insurance, severance, change in control, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation,
the granting of stock options, stock appreciation rights, performance
awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to
become payable to any executive officers of Parent or any Parent
Subsidiary, (v) any issuance or sale of any stock, notes, bonds or other
securities other than pursuant to the exercise of outstanding securities,
or entering into any agreement with respect thereto, (vi) any amendment to
the Parent's Articles of Association, bylaws or comparable charter
documents, (vii) other than in the ordinary course of business, any (x)
purchase, sale, assignment or transfer of any material assets (it being
understood that the purchase of a business or of any equity or other
ownership interest in any entity shall not be deemed to occur in the
ordinary course of business), (y) mortgage, pledge or the institution of
any lien, encumbrance or charge on any material assets or properties,
tangible or intangible, except for liens for Taxes not yet delinquent and
such other liens, encumbrances or charges which do not, individually or in
the aggregate, have a Parent Material Adverse Effect, or (z) waiver of any
rights of material value or cancellation or any material debts or claims,
or (viii) any entering into any transaction of a material nature other than
in the ordinary course of business, consistent with past practices.
(b) Except as otherwise set forth on Schedule 5.07 of the Parent
Disclosure Schedule, since June 30, 2000, Parent and the Parent
Subsidiaries have conducted their businesses only in the ordinary course
consistent with past practice and, since such date, there has not been (i)
any Parent Material Adverse Effect, (ii) any incurrence of any damage,
destruction or similar loss, whether or not covered by insurance,
materially affecting the business or properties of Parent or any Parent
Subsidiary, (iii) any incurrence of any material liability (absolute or
contingent), except for current liabilities and obligations incurred in the
ordinary course of business, consistent with past practice, or (iv) any
impairment, modification or event, or notice of any pending or threatened
impairment, modification or event which could be reasonably expected to
result in a loss, impairment, or diminution in value on a going forward
basis of Parent's contractual and business relationships with any of the
customers, vendors and suppliers, whose names are set forth on Schedule
5.07(b) of the Parent Disclosure Schedule, other than any impairment
modification or event which could not reasonably be expected to result in a
loss of Parent's relationship with such customer, vendor or supplier or a
loss of a material amount of business or a material change in profit
margins with respect to such customer, vendor or supplier.
SECTION 5.08 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports, statements and documents
required to be filed by it (A) with the SEC and the NNM since March 2, 1998
(collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Closing,
the "PARENT REPORTS") and (B) with any other Governmental Entities. Each
Parent Report (i) was prepared in accordance with the requirements of the
Securities Act, the Exchange Act or the NNM, as the case may be, and (ii)
did not at the time it was filed 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. Each form,
report, statement and document referred to in clause (B) of this paragraph
was prepared in all material respects in accordance with the requirements
of applicable Law. No Parent Subsidiary is subject to the periodic
reporting requirements of the Exchange Act or required to file any form,
report or other document with the SEC, the NNM, any other stock exchange or
any other comparable Governmental Entity.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Parent Reports was, and, in
the case of reports filed after the date hereof (the "SUBSEQUENT REPORTS")
will be, prepared in accordance with U.S. GAAP (except, in the case of
unaudited financial statements, for the absence of footnotes and subject to
normal year end adjustments, which adjustments are not material) applied on
a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented, and in the case of
Subsequent Reports, will present, fairly and accurately the consolidated
financial position of Parent and the Parent Subsidiaries as at the
respective dates thereof, and their consolidated results of operations,
stockholders' equity and cash flows for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved against on
the consolidated balance sheet of Parent and the Parent Subsidiaries as of
June 30, 2000 as reported in the Parent Reports, neither Parent nor any
Parent Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), except for (i) liabilities or
obligations which would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect, or (ii) liabilities
or obligations which were incurred in the ordinary course of business
consistent with past practice since June 30, 2000.
SECTION 5.09 Employee Benefit Plans; Labor Matters.
(a) The term "Parent Benefit Plans" means all employee benefit and
compensation plans, programs, policies, arrangements and contracts
(including, without limitation, any "employee benefit plan" as defined in
Section 3(3) of ERISA) covering current or former employees or current or
former directors of Parent or any Parent Subsidiary and which are
maintained, sponsored or contributed to, or required to be contributed to,
by Parent or any Parent Subsidiary or to which Parent or any Parent
Subsidiary is a party. Parent has delivered or made available to Company
upon request a true, complete and correct copy of (i) each material Parent
Benefit Plan and the most recent summary plan description related to such
Parent Benefit Plan, if a summary plan description is required therefor,
(ii) each trust agreement or other funding arrangement relating to such
material Parent Benefit Plan, (iii) the most recent annual report (Form
5500) filed with the IRS with respect to such material Parent Benefit Plan,
(iv) the most recent actuarial report or financial statement relating to
such material Parent Benefit Plan and (v) the most recent determination
letter issued by the IRS with respect to such material Parent Benefit Plan,
if intended to be qualified under Section 401(a) of the Code. Neither
Parent nor any Parent Affiliate has any express or implied commitment,
whether legally enforceable or not, to modify, change or terminate any
Parent Benefit Plan, other than with respect to a modification, change or
termination required by ERISA, the Code or applicable local Law.
(b) Each Parent Benefit Plan has been administered in all material
respects in accordance with its terms and all applicable laws, including,
without limitation, ERISA and the Code, if applicable, and all
contributions required to be made under the terms of any of the Parent
Benefit Plans have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the
Parent Reports. With respect to the Parent Benefit Plans, no event has
occurred and, to the Knowledge of Parent, there exists no condition or set
of circumstances in connection with which Parent or any Parent ERISA
Affiliate could be subject to any material liability (other than for
routine claims for benefits) under the terms of such Parent Benefit Plans,
ERISA, the Code or any other applicable Law.
(c) Parent hereby represents that: (i) each Parent Benefit Plan
which is intended to be qualified under Section 401(a) of the Code or
Section 401(k) of the Code has received or is currently awaiting receipt of
a favorable determination letter from the IRS as to its qualified status
under the Code, and each trust established in connection with any Parent
which is intended to be exempt from United States federal income taxation
under Section 501(a) of the Code has received a determination letter from
the IRS that it is so exempt, and to the Knowledge of Parent no fact or
event has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any such Parent Benefit Plan or
the exempt status of any such trust; (ii) there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of
the Code) with respect to any Parent Benefit Plan which could result in a
material liability to Parent; (iii) each Parent Benefit Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms. No suit, administrative proceeding, action or
other litigation has been brought (other than routine benefit claims), or
to the Knowledge of Parent is threatened in writing, against or with
respect to any such Parent Benefit Plan, including any audit or inquiry by
the Internal Revenue Service or United States Department of Labor or any
comparable Governmental Entity.
(d) No Parent Benefit Plan or employee benefit plan maintained by
any trade or business (whether or not incorporated) treated as a single
employer with Parent (a "PARENT ERISA AFFILIATE") under section 4.14(a),
(b), (m) or (o) of the Code is a multiemployer pension plan (as defined in
Section 3(37) of ERISA) or other pension plan subject to Title IV of ERISA
or Part 3 of Title I of ERISA or Section 412 of the Code, and neither the
Parent nor any Parent ERISA Affiliate has sponsored or contributed to or
been required to contribute to a multiemployer pension plan or other
pension plan subject to Title IV of ERISA. No material liability under
Title IV of ERISA has been incurred by Parent or any Parent ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents
a material risk to Parent or any Parent ERISA Affiliate of incurring or
being subject (whether primarily, jointly or secondarily) to a material
liability thereunder. None of the assets of Parent or any Parent ERISA
Affiliate is, or may reasonably be expected to become, the subject of any
lien arising under ERISA or Section 412(n) of the Code.
(e) Parent has scheduled on Schedule 5.09(e) of the Parent
Disclosure Schedule and has delivered to Company true, complete and correct
copies of (i) all employment agreements with the ten (10) most
highly-compensated employees of Parent, and with the Chief Executive
Officer of each Parent Subsidiary and (ii) all material severance plans,
agreements, programs and policies of Parent and each Parent Subsidiary with
or relating to their respective employees, directors or consultants. Except
as set forth in Schedule 5.09(e) of the Parent Disclosure Schedule, which
discloses the Parent's estimate of excess parachute payments based on
assumptions described therein, no payment or benefit which will be made by
Parent or any Parent Subsidiary under any Parent Benefit Plan or other
arrangement will constitute an excess parachute payment under Code Section
280G(b)(1), and the consummation of the transactions contemplated by this
Agreement will not individually or in conjunction with any other possible
event (including termination of employment) (i) entitle any current or
former employee or other service provider of Parent or any Parent
Subsidiary to severance benefits or any other payment, compensation or
benefit (including forgiveness of indebtedness), except as expressly
provided by this Agreement, or (ii) accelerate the time of payment or
vesting, increase the amount of compensation or benefit due any such
employee or service provider, or trigger any other material liability of
Parent pursuant to any Parent Benefit Plan. Except as set forth on Schedule
5.09(e) to Parent Disclosure Schedule, the transactions contemplated by
this Agreement will not result in the accelerated vesting of Parent Stock
Options or Parent Warrants.
(f) Neither Parent nor any Parent Subsidiary is a party to any
collective bargaining or other labor union contract applicable to Persons
employed by Parent or any Parent Subsidiary and no collective bargaining
agreement is being negotiated by Parent or any Parent Subsidiary. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Parent or any Parent Subsidiary pending or, to the Knowledge of
Parent, threatened in writing which may interfere with the respective
business activities of Parent or any Parent Subsidiary. As of the date of
this Agreement, to the Knowledge of Parent, none of Parent, any Parent
Subsidiary, or any of their respective representatives or employees has
committed any unfair labor practice in connection with the operation of the
respective businesses of Parent or any Parent Subsidiary, and there is no
charge or complaint against Parent or any Parent Subsidiary by the National
Labor Relations Board or any comparable Governmental Entity or works
council pending or threatened in writing.
(g) Except as required by Law, no Parent Benefit Plan provides
retiree or post-employment medical, disability or life insurance benefits
to any Person.
(h) With respect to each Parent Benefit Plan that is not subject
to United States law (each, a "PARENT FOREIGN BENEFIT PLAN");
(i) all employer and employee contributions to each Parent
Foreign Benefit Plan required by law or by the terms of such
Parent Foreign Benefit Plan have been made, or, if applicable,
accrued, in accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded
Parent Foreign Benefit Plan, the liability of each insurer for any
Parent Foreign Benefit Plan funded through insurance or the book
reserve established for any Parent Foreign Benefit Plan, together
with any accrued contributions, is sufficient to procure or
provide for the accrued benefit obligations, as of the Effective
Time, with respect to all current and former participants in such
plan according to the actuarial assumptions and valuations most
recently used to determine employer contributions to such Parent
Foreign Benefit Plan and no transaction contemplated by this
Agreement shall cause such assets or insurance obligations to be
less than such benefit obligations; and
(iii) each Parent Foreign Benefit Plan required to be
registered has been registered and has been maintained in good
standing with applicable regulatory authorities.
SECTION 5.10 Pooling; Certain Tax Matters. Neither Parent nor, to
the Knowledge of Parent, any of its Affiliates has taken or agreed to take
any action (other than actions contemplated by this Agreement) that could
reasonably be expected to prevent (a) the Merger from being treated for
accounting purposes as a "pooling of interests" in accordance with U.S.
GAAP and the accounting standards of the SEC or (b) the Merger from
constituting a "reorganization" under Section 368 of the Code. Parent is
not aware of any agreement or plan to which Parent or any of its Affiliates
is a party or other circumstances relating to Parent or any of its
Affiliates that could reasonably be expected to prevent the Merger from
being so treated as a "pooling of interests" or from so qualifying as a
reorganization under Section 368 of the Code.
SECTION 5.11 Contracts.
(a) Except for the contracts and agreements described in Schedule
5.11 of the Parent Disclosure Schedule (collectively, the "PARENT MATERIAL
CONTRACTS"), neither Parent nor the Parent Subsidiaries is a party to or
bound by the following contracts (which for purposes of this Agreement
shall be deemed Parent Material Contracts):
(i) any distribution or software manufacturer's
representative contract that represents ten percent (10%) or more
of Parent's combined annual revenues;
(ii) any contract for the provision of software, outsourcing
or consulting services or computer hardware, including contracts
billed on time plus materials and fixed-price contracts involving
in the case of any such contact more than $3,000,000 per annum;
(iii) any contract related to the provision of services to
early-stage entities in consideration for, among other things,
equity interests in such entities, along with any subscription or
agreements with respect to investments in such entities and
instruments or securities evidencing such equity interests,
including any warrants or options;
(iv) any hedging arrangements, including any puts or call
options;
(v) any trust indenture, mortgage, promissory note, loan
agreement or other contract for the borrowing of money, any
currency exchange, commodities or other hedging arrangement or any
leasing transaction of the type required to be capitalized in
accordance with US GAAP;
(vi) any contract for capital expenditures in excess of
$3,000,000 in the aggregate;
(vii) any contract limiting in any material respects the
freedom of the Parent or any Parent Subsidiary to engage in any
line of business or to compete with any other Person;
(viii) any contract pursuant to which the Parent or any
Parent Subsidiary is a lessor of any machinery, equipment, motor
vehicles, office furniture, fixtures or other personal property
involving in the case of any such contract more than $3,000,000 in
any calendar year;
(ix) any contract with any Person (other than the Parent or
any Parent Subsidiary) with whom the Parent or any Parent
Subsidiary does not deal at arm's length within the meaning of the
Code;
(x) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with
respect to, the obligations, liabilities (whether accrued,
absolute, contingent or otherwise) or indebtedness of any other
Person; or
(xi) any agreement relating to the acquisition of a business
for aggregate consideration in excess of $1,000,000 entered into
in the last three years.
(b) Parent and each Parent Subsidiary has performed all of the
material obligations required to be performed by it and is entitled to all
benefits under, and to the Knowledge of Parent, is not alleged to be in
default in respect of any Parent Material Contract. Each of the Parent
Material Contracts is in full force and effect, unamended, and there exists
no default or event of default or event, occurrence, condition or act, with
respect to Parent or any Parent Subsidiary or to the Knowledge of Parent
with respect to the other contracting party, which, with the giving of
notice, the lapse of the time or the happening of any other event or
conditions, would become a default or event of default under any Parent
Material Contract. True, correct and complete copies of all Parent Material
Contracts have been delivered or made available to Company.
SECTION 5.12 Litigation. There is no suit, claim, action,
proceeding or, to the Knowledge of Parent, investigation pending or, to the
Knowledge of Parent, threatened against Parent or any Parent Subsidiary
that could reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect or materially interfere with
Parent's ability to consummate the transactions contemplated herein,
including, without limitation, any pending or threatened class action suit.
Neither Parent nor any Parent Subsidiary is subject to any outstanding
order, writ, injunction or decree which could reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect or
materially interfere with Parent's ability to consummate the transactions
contemplated herein.
SECTION 5.13 Environmental Matters. Except as could not reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect, (i) Parent and the Parent Subsidiaries are in compliance
with all applicable Environmental Laws and all Parent Permits required by
Environmental Laws; (ii) all past noncompliance of Parent or any Parent
Subsidiary with Environmental Laws or Environmental Permits has been
resolved without any pending, ongoing or future obligation, cost or
liability; and (iii) neither Parent nor any Parent Subsidiary nor to the
Knowledge of Parent has any other Person released a Hazardous Material at,
or transported a Hazardous Material to or from, any real property currently
or formerly owned, leased or occupied by Parent or any Parent Subsidiary,
in violation of or under circumstances that could result in liability under
any Environmental Law.
SECTION 5.14 Intellectual Property.
(a) Except as provided in Schedule 5.14(a) of the Parent
Disclosure Schedule, the Parent Intellectual Property is: (i) owned solely
and exclusively by Parent or a Parent Subsidiary, free and clear of any and
all mortgages, pledges, liens, security interests, conditional sale
agreements or encumbrances, of any kind; or (ii) rightfully used or
otherwise enjoyed by Parent or its Subsidiaries pursuant to one or more
license agreements, each of which such license agreements are, to the
Knowledge of Parent and each Parent Subsidiary, valid and enforceable.
(b) Except as would not have a Parent Material Adverse Effect, all
intellectual property registrations included in the Parent Intellectual
Property have been duly maintained, are in full force and effect and have
not been cancelled, expired (except in accordance with the terms of any
such registration) or abandoned.
(c) No action is currently pending which asserts that Parent or
any Parent Subsidiary is infringing, misappropriating, diluting or
otherwise violating any Intellectual Property of any Person. Neither Parent
nor any Parent Subsidiary has received written notice from any Person
within the past twelve (12) months asserting that Parent or any Parent
Subsidiary is infringing, misappropriating, diluting or otherwise violating
any Intellectual Property of any such Person. No action is currently
pending which asserts that any Person is infringing, misappropriating,
diluting or otherwise violating any Parent Intellectual Property. Neither
Parent nor any Parent Subsidiary has asserted any claim of infringement,
misappropriation, dilution or other violation against any Person within the
past twelve (12) months. To the actual knowledge of Parent, neither Parent
nor any Parent Subsidiary is, in any material respect, infringing,
misappropriating, diluting or otherwise violating any Intellectual Property
of any Person.
(d) No action is currently pending, or to the Knowledge of Parent
threatened, which asserts a challenge to the validity, use or
enforceability of any Parent Intellectual Property.
(e) To the Knowledge of Company, all material License Agreements
to which Parent or any Parent Subsidiary is a party or otherwise bound are
valid and binding obligations of Parent or Parent Subsidiaries, enforceable
in accordance with their terms, and there exists no event or condition
which will result in a violation or breach of, or constitute a default by
Parent or Parent Subsidiaries or, to the Knowledge of Parent, the other
party thereto, under any such material License Agreement.
(f) Parent and each of the Parent Subsidiaries takes reasonable
measures to protect the confidentiality of trade secrets. To the knowledge
of Parent, no trade secret of Parent or any Parent Subsidiaries has been
disclosed or authorized to be disclosed to any Person other than pursuant
to a written nondisclosure agreement that provides commercially reasonable
protections for Parent and the applicable Parent Subsidiaries' proprietary
interests in and to such trade secrets.
(g) Except as would not have a Parent Material Adverse Effect or
as provided in Schedule 5.14(g) of the Parent Disclosure Schedule, the
consummation of the transactions contemplated hereby will not result in the
loss or impairment of the Parent's or any Parent Subsidiaries' rights to
own, use, or to bring any action for the infringement of, any of the Parent
Intellectual Property, nor will such consummation require the consent of
any Person in respect of any Parent Intellectual Property.
(h) Except as would not have a Parent Material Adverse Effect, all
software programs that are utilized in the current business of Parent or a
Parent Subsidiary are Year 2000 Compliant.
SECTION 5.15 Taxes.
(a) Parent and each of the Parent Subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of
which Parent or any Parent Subsidiary is or has been a member, have
properly completed and timely filed all Tax Returns required to be filed by
them and have paid all Taxes required to be shown as due thereon. Parent
has provided adequate accruals in accordance with generally accepted
accounting principles in its June 30, 2000 balance sheet contained in the
Parent Reports (the "PARENT JUNE 2000 BALANCE SHEET") for any Taxes that
have not been paid, whether or not shown as being due on any Tax Returns.
Parent and the Parent Subsidiaries have no material liability for unpaid
Taxes accruing after June 30, 2000 except for Taxes incurred in the
ordinary course of business subsequent to June 30, 2000.
(b) There is (i) no material claim for Taxes that is a lien
against the property of Parent or any Parent Subsidiary or is being
asserted against Parent or any Parent Subsidiary other than liens for Taxes
not yet due and payable, (ii) no audit of any Tax Return of Parent or any
Parent Subsidiary being conducted by a Taxing Authority; and (iii) no
extension of the statute of limitations on the assessment of any Taxes
granted by Parent or any Parent Subsidiary and currently in effect.
(c) There has been no prior change in ownership of Parent or any
Parent Subsidiary that has caused the utilization of any losses of such
entities to be limited pursuant to Section 382 of the Code, and any loss
carryovers reflected on the Parent June 2000 Balance Sheet are properly
computed and reflected.
(d) Parent and the Parent Subsidiaries have not been and will not
be required to include any material adjustment in taxable income for any
Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger.
(e) Neither Parent nor any Parent Subsidiary has filed or will
file any consent to have the provisions of Section 341(f)(2) of the Code
(or comparable provisions of any state Tax laws) apply to Parent or any
Parent Subsidiary.
(f) Neither Parent nor any Parent Subsidiary is a party to any Tax
sharing or Tax allocation agreement nor does Parent or any Parent
Subsidiary have any liability or potential liability to another party under
any such agreement.
(g) Neither Parent nor any Parent Subsidiary has filed any
disclosures under Section 6662 or comparable provisions of state, local or
foreign law to prevent the imposition of penalties with respect to any Tax
reporting position taken on any Tax Return.
(h) Neither Parent nor any Parent Subsidiary has ever been a
member of a consolidated, combined or unitary group of which Parent was not
the ultimate parent corporation.
(i) Parent and each Parent Subsidiary has in its possession
receipts for any Taxes paid to any non-U.S. Taxing Authority. Neither
Parent nor any Parent Subsidiary has ever been a "personal holding Parent"
within the meaning of Section 542 of the Code or a "United States real
property holding corporation" within the meaning of Section 897 of the
Code.
SECTION 5.16 Insurance. Parent and each Parent Subsidiary is
presently insured, and during each of the past three (3) calendar years has
been insured, against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured,
including professional liability insurance. The policies of fire, theft,
liability, professional liability and other insurance maintained with
respect to the assets or businesses of Parent and Parent Subsidiaries
provide, in the good faith judgment of the Parent's management, reasonably
adequate coverage against loss. Parent has heretofore furnished to Company
a complete and correct list as of the date hereof of all insurance policies
maintained by Parent or the Parent Subsidiaries, and has made available to
Company complete and correct copies of all such policies, together with all
riders and amendments thereto. All such policies are in full force and
effect and all premiums due thereon have been paid to the date hereof.
Parent and the Parent Subsidiaries have complied in all material respects
with the terms of such policies.
SECTION 5.17 Properties. Parent and the Parent Subsidiaries have
good and valid title, free and clear of all Encumbrances, except for
Permitted Encumbrances, to all their material properties and assets,
whether tangible or intangible, real, personal or mixed, reflected in the
Parent's consolidated financial statements contained in the Parent's
submission to the SEC on Form 6-K for the period ended June 30, 2000 as
being owned by Parent and the Parent Subsidiaries as of the date thereof,
other than (i) any properties or assets that have been sold or otherwise
disposed of in the ordinary course of business since the date of such
financial statements, (ii) liens disclosed in the notes to such financial
statements and (iii) liens arising in the ordinary course of business after
the date of such financial statements. All buildings, and all fixtures,
equipment and other property and assets that are material to its business
on a consolidated basis, held under leases or sub-leases by Parent or any
Parent Subsidiary are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable laws of
bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a
proceeding in law or equity). Substantially all of Parent's and the Parent
Subsidiaries' equipment in regular use has been reasonably maintained and
is in serviceable condition, reasonable wear and tear excepted.
SECTION 5.18 Affiliates. Schedule 5.18 of the Parent Disclosure
Schedule sets forth the names and addresses of each Person who is, in
Parent's reasonable judgment, an affiliate (as such term is used in rule
145 under the Securities Act or under applicable SEC accounting releases
with respect to pooling of interests accounting treatment) of Parent.
SECTION 5.19 Brokers. No broker, finder or investment banker
(other than Lehman Brothers ("PARENT FINANCIAL ADVISOR")) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Merger based upon arrangements made by or on behalf of Parent.
SECTION 5.20 Business Activity Restriction. Parent has not entered
into any agreement under which Parent is restricted from selling, licensing
or otherwise distributing any of its technology or products to, or
providing services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time or in any
segment of the market or line of business.
SECTION 5.21 Opinion of Financial Advisor. The Parent Financial
Advisor has delivered to the board of directors of Parent its opinion to
the effect that the Exchange Ratio is fair to Parent from a financial point
of view.
SECTION 5.22 Certain Business Practices. Neither Parent nor any
Parent Subsidiary nor any directors, officers, agents or employees of
Parent or any Parent Subsidiary (in their capacities as such) has (i) used
any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
SECTION 5.23 No Prior Activities. Except for liabilities incurred
in connection with its incorporation or organization, and consummation of
this Agreement and the transactions contemplated hereby, Merger Sub has not
incurred any liabilities, and has not engaged in any business or activities
of any type or kind whatsoever or entered into any agreements or
arrangements with any Person or entity. Merger Sub is a wholly owned
Subsidiary of Parent.
SECTION 5.24 Affiliate Transactions. Except as set forth on
Schedule 5.24 of the Parent Disclosure Schedule, neither Parent nor any
Parent Subsidiary is a party to any agreement with or has any interest in
any material property (whether real or personal, tangible or intangible) of
any of its affiliates, shareholders, employees, officers, or directors or
any entities affiliated with any such persons or any family members of any
such persons, nor are there any agreements or understandings for the
provision, directly or indirectly, of material services by and between
Parent and any Parent Subsidiary, on the one hand, and any of its
affiliates, shareholders, employees, associates, officers, directors or any
entities affiliated with any such persons or any family members of any such
persons (other than inter-company arrangements between the Parent and
Parent Subsidiaries and among Parent Subsidiaries and services provided in
their capacity as employees, officers and directors).
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Company Pending the Closing. Company
agrees that, between the date of this Agreement and the Effective Time,
unless otherwise set forth on Schedule 6.01 of the Company Disclosure
Schedule or Parent shall otherwise agree in writing, (x) the respective
businesses of Company and the Company Subsidiaries shall be conducted only
in, and Company and the Company Subsidiaries shall not take any action
except in, the ordinary course of business consistent with past practice
and (y) Company shall use its reasonable efforts to keep available the
services of such of the current officers, significant employees and
consultants of Company and the Company Subsidiaries and to preserve the
current relationships of Company and the Company Subsidiaries with such of
the corporate partners, customers, suppliers and other Persons with which
Company or any Company Subsidiary has significant business relations in
order to preserve substantially intact its business organization. Without
limitation, neither Company nor any Company Subsidiary shall, between the
date of this Agreement and the Effective Time, directly or indirectly, do,
or agree to do, any of the following without the prior written consent of
Parent, which consent shall not be unreasonably withheld:
(a) amend or otherwise change its Certificate of Incorporation
or bylaws or equivalent organizational documents;
(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 capital stock of Company or any
Company Subsidiary of any class, 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 Company
or any Company Subsidiary, other than the issuance of shares of
Company Common Stock pursuant to the exercise of stock options,
warrants or convertible securities therefor outstanding as of the
date hereof or expressly permitted by this Agreement, or grants of
Company Stock Options to purchase up to an aggregate of 200,000
shares of Company Common Stock with an exercise price equal to or
greater than fair market value at the time of such grant (which
shall be determined with reference to the fair market value of
Parent Shares which such options will be entitled to receive upon
exercise), or (ii) any material property or assets of Company or
any Company Subsidiary except (A) transactions pursuant to
existing contracts and (B) dispositions, leases or licenses of
inventory in the ordinary course of business consistent with past
practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in
any corporation, partnership, other business organization or
Person or any division thereof, other than the purchase of assets
in the ordinary course of business consistent with past practice
(it being understood that the purchase of a business or of any
equity or other ownership interest in any entity shall not be
deemed to occur in the ordinary course of business); (ii) incur
any indebtedness for borrowed money (other than indebtedness with
respect to working capital in amounts consistent with past
practice) or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person (other than a Company Subsidiary)
for borrowed money or make any loans or advances material to the
business, assets, liabilities, financial condition or results of
operations of Company and the Company Subsidiaries, taken as a
whole; (iii) terminate, cancel or request any material change in,
or agree to any material change in, any Company Material Contract
other than in the ordinary course of business consistent with past
practice; (iv) waive any rights of material value or cancel any
material debts or claims; (v) make or authorize any capital
expenditure, other than capital expenditures in the ordinary
course of business consistent with past practice that have been
budgeted for fiscal year 2000 and disclosed in writing to Parent
and that are not, in the aggregate, in excess of $500,000 for
Company and the Company Subsidiaries taken as a whole; or (vi)
enter into or amend any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under
this Section 6.01(c);
(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 that any Company
Subsidiary may pay dividends or make other distributions to
Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock except repurchases of unvested shares at cost in
connection with the termination of the employment relationship
with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(f) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under
the Company Stock Plan or authorize cash payments in exchange for
any Company Stock Options granted under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Company Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of any
Company Subsidiary, except repurchases of unvested shares at cost
in connection with the termination of the employment relationship
with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(h) increase the compensation payable or to become payable
to its directors, officers, consultants or employees, grant any
rights to severance or termination pay to, or enter into any
employment, severance or other agreement which provides benefits
upon a change in control of Company that would be triggered by the
Merger with, any director, officer, consultant or other employee
of Company or any Company Subsidiary who is not currently entitled
to such benefits from the Merger, establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance, change
in control or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer, consultant
or employee of Company or any Company Subsidiary, except to the
extent required by applicable Law or the terms of a collective
bargaining agreement, or enter into or amend any contract,
agreement, commitment or arrangement between Company or any
Company Subsidiary and any of Company's directors, officers,
consultants or employees, except as may be required by Law or for
increases in compensation paid to Persons who are not directors or
officers of Company in the ordinary course of business consistent
with past practice;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction
of claims, liabilities or obligations (A) in the ordinary course
of business and consistent with past practice or (B) claims,
liabilities or obligations reflected on the June 2000 Balance
Sheet or (C) as otherwise set forth on Schedule 6.01 of the
Company Disclosure Schedule;
(j) except as required by any Governmental Entity, make any
material change with respect to Company's accounting policies,
principles, methods or procedures, including, without limitation,
revenue recognition policies, other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any
material Tax liability;
(l) enter into any transaction of a material nature other
that in the ordinary course of business, consistent with past
practice; or
(m) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing or to
take any action which would make any of the representations or
warranties of Company contained in this Agreement untrue or
incorrect or prevent Company from performing or cause Company not
to perform its covenants hereunder or result in any of the
conditions to the Merger set forth herein not being satisfied.
SECTION 6.02 Conduct of Parent and Merger Sub Pending the Closing.
Each of Parent and Merger Sub agrees that, between the date of this
Agreement and the Effective Time, unless otherwise set forth on Schedule
6.02 of the Parent Disclosure Schedule or Company shall otherwise agree in
writing, (x) the respective businesses of Parent and the Parent
Subsidiaries shall be conducted only in, and Parent and the Parent
Subsidiaries shall not take any action except in, the ordinary course of
business consistent with past practice and (y) Parent shall use its
reasonable efforts to keep available the services of such of the current
officers, significant employees and consultants of Parent and the Parent
Subsidiaries and to preserve the current relationships of Parent and the
Parent Subsidiaries with such of the corporate partners, customers,
suppliers and other Persons with which Parent or any Parent Subsidiary has
significant business relations in order to preserve substantially intact
its business organization. Without limitation, neither Parent nor any
Parent Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Company which consent shall
not be unreasonably withheld:
(a) amend or otherwise change its Articles of Association or
bylaws or equivalent organizational documents (other than as required under
the Agreement);
(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 capital stock of Parent or any Parent Subsidiary of any class, 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 Parent
or any Parent Subsidiary, other than the issuance of Parent Common Shares
pursuant to the exercise of stock options, warrants or convertible
securities therefor outstanding as of the date hereof or expressly
permitted by this Agreement, or grants of Parent Stock Options to purchase
up to an aggregate of 400,000 Parent Common Shares with an exercise price
equal to or greater than fair market value at the time of such grant or
(ii) any material property or assets of Parent or any Parent Subsidiary
except (A) transactions pursuant to existing contracts and (B)
dispositions, leases or licenses of inventory in the ordinary course of
business consistent with past practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or Person or any
division thereof, other than the purchase of assets in the ordinary course
of business consistent with past practice (it being understood that the
purchase of a business or of any equity or other ownership interest in any
entity shall not be deemed to occur in the ordinary course of business);
(ii) incur any indebtedness for borrowed money (other than indebtedness
with respect to working capital in amounts consistent with past practice)
or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person
(other than a Parent Subsidiary) for borrowed money or make any loans or
advances material to the business, assets, liabilities, financial condition
or results of operations of Parent and the Parent Subsidiaries, taken as a
whole; (iii) terminate, cancel or request any material change in, or agree
to any material change in, any Parent Material Contract other than in the
ordinary course of business consistent with past practice; (iv) waive any
rights of material value or cancel any material debts or claims; (v) make
or authorize any capital expenditure, other than capital expenditures in
the ordinary course of business consistent with past practice that have
been budgeted for fiscal year 2000 and disclosed in writing to Parent and
that are not, in the aggregate, in excess of $500,000 for Parent and the
Parent Subsidiaries taken as a whole; or (vi) enter into or amend any
contract, agreement, commitment or arrangement that, if fully performed,
would not be permitted under this Section 6.02(c);
(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 that any Parent Subsidiary may pay
dividends or make other distributions to Parent or any other Parent
Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option
or purchase agreements in effect on the date hereof;
(f) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under the Parent
Stock Plans or authorize cash payments in exchange for any Parent Stock
Options granted under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise acquire,
or permit any Parent Subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of any Parent Subsidiary, except
repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option
or purchase agreements in effect on the date hereof;
(h) increase the compensation payable or to become payable to its
directors, officers, consultants or employees, grant any rights to
severance or termination pay to, or enter into any employment, severance or
other agreement which provides benefits upon a change in control of Parent
that would be triggered by the Merger with, any director, officer,
consultant or other employee of Parent or any Parent Subsidiary who is not
currently entitled to such benefits from the Merger, establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance, change in
control or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer, consultant or employee of Parent or
any Parent Subsidiary, except to the extent required by applicable Law or
the terms of a collective bargaining agreement, or enter into or amend any
contract, agreement, commitment or arrangement between Parent or any Parent
Subsidiary and any of Parent's directors, officers, consultants or
employees, except as may be required by Law or for increases in
compensation paid to Persons who are not directors or officers of Parent in
the ordinary course of business consistent with past practice;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of claims,
liabilities or obligations (A) in the ordinary course of business and
consistent with past practice or (B) claims, liabilities or obligations
reflected on the June 2000 Balance Sheet or (C) as otherwise set forth on
Schedule 6.02 of the Parent Disclosure Schedule;
(j) except as required by any Governmental Entity, make any material
change with respect to Parent's accounting policies, principles, methods or
procedures, including, without limitation, revenue recognition policies, other
than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any material
Tax liability;
(l) enter into any transaction of a material nature other than in
the ordinary course of business, consistent with past practice; or
(m) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of Parent
contained in this Agreement untrue or incorrect or prevent Parent from
performing or cause Parent not to perform its covenants hereunder or result
in any of the conditions to the Merger set forth herein not being
satisfied.
SECTION 6.03 Notices of Certain Events. Each of Parent and 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 Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger;
(iii) any actions, suits, claims, investigations or proceedings commenced
or, to the Knowledge of Company or the Knowledge of Parent, as the case may
be, threatened in writing against, relating to or involving or otherwise
affecting Parent or the Parent Subsidiaries or Company or the Company
Subsidiaries, respectively, which, if pending on the date hereof, would
have been required to have been disclosed in this Agreement, or that relate
to the consummation of the Merger; (iv) the occurrence of a default or
event that, with the giving of notice or lapse of time or both, will become
a default under any Company Material Contract and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect or a
Company Material Adverse Effect, respectively, or to delay or impede the
ability of either Parent or Company, respectively, to perform their
respective obligations pursuant to this Agreement and to effect the
consummation of the Merger.
SECTION 6.04 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement
or similar agreement or arrangement to which Parent or Company or any of
the Parent Subsidiaries or the Company Subsidiaries is a party or pursuant
to 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,
Parent and Company shall (and shall cause the Parent Subsidiaries and
Company Subsidiaries, respectively, to) (i) provide to the other (and its
officers, directors, employees, accountants, consultants, legal counsel,
agents and other representatives (collectively, "REPRESENTATIVES")) access
at reasonable times upon prior notice to its and its subsidiaries'
officers, employees, agents, properties, offices and other facilities and
to the books and records thereof, and (ii) furnish promptly such
information concerning its and its subsidiaries' business, properties,
contracts, assets, liabilities and personnel as the other party or its
Representatives may reasonably request. No investigation conducted pursuant
to this Section 6.04 shall affect or be deemed to modify any representation
or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement with respect to the
information disclosed pursuant to this Agreement.
SECTION 6.05 No Solicitation of Transactions.
(a) Company shall not, directly or indirectly, and shall cause its
Representatives not to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing nonpublic information), any
inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) that constitutes, or
may reasonably be expected to lead to, any Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any Person in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or permit any
of Company's Representatives or Subsidiaries, or any Representative
retained by Company's Subsidiaries, to take any such action; provided,
however, that nothing contained in this Section 6.05(a) shall prohibit
Company, prior to receipt of the approval by the stockholders of Company of
this Agreement and the Merger, from providing information (subject to a
customary confidentiality agreement) in connection with, and negotiating,
another unsolicited, bona fide written proposal regarding a Competing
Transaction provided that (x) the Company's board of directors shall have
concluded in good faith, after considering applicable Law and the advice of
independent outside counsel, that such action is necessary to comply with
the Company's board of directors' fiduciary duties to the Company's
stockholders under applicable law, and (y) Company's board of directors
shall have determined in good faith that such Competing Transaction
presents a reasonable possibility of resulting in a Company Superior
Proposal (as hereinafter defined). Company shall notify Parent promptly if
any proposal or offer, or any inquiry or contact with any Person with
respect thereto, regarding a Competing Transaction is made, such notice to
include the identity of the Person making such proposal, offer, inquiry or
contact, and the terms of such Competing Transaction. Company immediately
shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a
Competing Transaction. Company shall not release any third party from, or
waive any provision of, any confidentiality or standstill agreement to
which it is a party as of the date hereof. For purposes of this Agreement,
"COMPANY SUPERIOR PROPOSAL" means any bona fide Competing Transaction for
or in respect of at least a majority of the outstanding shares of Company
common stock on terms that the Board of Directors of the Company determines
in its good faith judgment (after consultation with a financial advisor of
nationally recognized reputation, taking into account all the terms and
conditions of the Competing Transaction, including any break-up fees,
expense reimbursement provisions and conditions to consummation) are more
favorable to all of the Company's stockholders than the Merger.
(b) Parent shall not, directly or indirectly, and shall cause its
Representatives not to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing nonpublic information), any
inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) that constitutes, or
may reasonably be expected to lead to, any Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any Person in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or permit any
of Parent's Representatives or subsidiaries, or any Representative retained
by Parent's subsidiaries, to take any such action; provided, however, that
nothing contained in this Section 6.05(b) shall prohibit Parent, prior to
receipt of the approval by the stockholders of Parent of the issuance of
Parent Common Shares pursuant to this Agreement and the Merger, from
providing information (subject to a customary confidentiality agreement) in
connection with, and negotiating, another unsolicited, bona fide written
proposal regarding a Competing Transaction provided that (x) Parent's board
of directors shall have concluded in good faith, after considering
applicable Law and the advice of independent outside counsel, that such
action is necessary to comply with the Company's Parent's board of
directors' fiduciary duties to Parent's stockholders under applicable law
(applying principles of Delaware or Netherlands Antilles law), and (y)
Parent's board of directors shall have determined good faith that such
Competing Transaction presents a reasonable possibility of resulting in a
Parent Superior Proposal (as hereinafter defined). Parent shall notify
Company promptly if any proposal or offer, or any inquiry or contact with
any Person with respect thereto, regarding a Competing Transaction is made,
such notice to include the identity of the Person making such proposal,
offer, inquiry or contact, and the terms of such Competing Transaction.
Parent immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with
respect to a Competing Transaction. Parent shall not release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party as of the date hereof. For purposes of
this Agreement, "PARENT SUPERIOR PROPOSAL" means any bona fide Competing
Transaction for or in respect of at least a majority of the outstanding
shares of Parent common stock on terms that the Board of Directors of
Parent determines in its good faith judgment (after consultation with a
financial advisor, taking into account all the terms and conditions of the
Competing Transaction, including any break-up fees, expense reimbursement
provisions and conditions to consummation) are more favorable to all of
Parent stockholders than the Merger.
SECTION 6.06 Tax-Free Transaction; Pooling; Affiliate Letters.
(a) From and after the date of this Agreement, each party hereto
shall use all reasonable efforts to cause the Merger to qualify, and shall
not knowingly take any actions or cause any actions to be taken which could
reasonably be expected to prevent the Merger from qualifying (a) as a
"reorganization" under Section 368(a) of the Code or (b) for financial
accounting purposes as a "pooling of interests" in accordance with U.S.
GAAP and the accounting standards of the SEC.
(b) Each of Company, Parent and Merger Sub shall execute and
deliver to the other a certificate, in form reasonably acceptable to
Company and Parent, as the case may be, signed by an officer of Company,
Parent or Merger Sub, as the case may be, setting forth factual
representations and covenants that will serve as a basis for the tax
opinion required under Section 8.02(d) hereof.
(c) Each of Parent and the Company shall use its reasonable best
efforts to cause each person who has been identified as an "affiliate" of
it to deliver, as promptly as practicable after the date hereof (if it has
not previously done so), a signed agreement to Parent in the case of
affiliates of Parent, substantially in the form attached as Annex F, and in
the case of affiliates of the Company, substantially in the form attached
as Annex G.
(d) Shares of Parent Common Stock and shares of Company Common
Stock beneficially owned by each such "affiliate" of Parent or Company who
has not provided a signed agreement in accordance with Section 6.06(c)
shall not be transferable during any period prior to and after the
Effective Time if, as a result of this transfer during any such period,
taking into account the nature, extent and timing of this transfer and
similar transfers by all other "affiliates" of Parent and the Company, this
transfer will, in the reasonable judgment of accountants of Parent,
interfere with, or prevent the Merger from being accounted for, as a
"pooling of interests" under U.S. GAAP and/or the rules and regulations of
the SEC. Neither Parent nor the Company shall register, or allow its
transfer agent to register, on its books any transfer of any shares of
Parent Common Stock or Company Common Stock of any affiliate of Parent or
the Company who has not provided a signed agreement in accordance with
Section 6.06(c). The restrictions on the transferability of shares held by
Persons who execute an agreement pursuant to Section 6.06(c) shall be
provided in those agreements.
SECTION 6.07 Control of Operations. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control
or direct the operations of Company and the Company Subsidiaries prior to
the Effective Time. Prior to the Effective Time, Company shall exercise,
consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
SECTION 6.08 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 Merger, (ii) obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or
Company or any of their respective subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Merger and (iii) make all necessary filings, and
thereafter make any other required or appropriate submissions, with respect
to this Agreement and the Merger required under (A) the rules and
regulations of the NNM, (B) the Securities Act, the Exchange Act and any
other applicable United States federal or state securities Laws, (C) the
HSR Act, if any, and (D) any other applicable Law. The parties hereto shall
cooperate and consult with each other in connection with the making of all
such filings, including by providing copies of all such documents to the
nonfiling parties and their advisors prior to filing, and none of the
parties shall file any such document if any of the other parties shall have
reasonably objected to the filing of such document. No party shall consent
to any voluntary extension of any statutory deadline or waiting period or
to any voluntary delay of the consummation of the Merger at the behest of
any Governmental Entity without the consent and agreement of the other
parties hereto, which consent shall not be unreasonably withheld or
delayed.
(b) Each of Company and Parent will give (or will cause their
respective subsidiaries to give) any notices to third Persons, and use, and
cause their respective subsidiaries to use, reasonable efforts to obtain
any consents from third Persons necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
SECTION 6.09 Additional Reports. Parent shall furnish to Company
copies of any reports of the type referred to in Section 5.08 which it
files with the SEC on or after the date hereof, and Parent covenants and
warrants that as of the respective dates thereof, such reports will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any consolidated interim financial statements included in such
reports (including any related notes and schedules) will fairly and
accurately present the financial position of Parent and its consolidated
subsidiaries as of the dates thereof and the results of operations and
changes in financial position or other information including therein for
the periods or as of the date then ended (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments, which adjustments
are not material), in each case in accordance with past practice and U.S.
GAAP (except for the absence of footnotes) consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
Company shall provide to Parent (x) no later than November 25, 2000, copies
of its 3rd quarter financial statements and (y) no later than March 15,
2001, its year-end financial statements, all of which shall be prepared in
accordance with U.S. GAAP (except, in the case of unaudited financial
statements, for the absence of footnotes and subject to normal and
recurring year-end adjustments, which adjustments are not material)
consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto) and shall fairly and accurately present the
consolidated financial position of Company and the Company Subsidiaries as
at the respective dates thereof, and their consolidated results of
operations, stockholders' equity and 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
adjustments are not material).
SECTION 6.10 Registration Rights. Prior to the Effective Time,
Parent shall offer to enter into a registration rights agreement with each
Person who is, in Company's and Parent's reasonable judgment, an affiliate
(as such term is used in Rule 145 under the Securities Act) of Company or
Parent, which agreement shall provide for registration rights substantially
as set forth on Schedule III hereto with respect to any Parent Common
Shares to be owned by such Person upon the Effective Time, and shall
contain other customary terms, provided that such offer and the grant of
registration rights pursuant thereto shall not adversely affect the ability
of Kost, Forrer & Gabbay to deliver the advice described in Section 8.01(i)
hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Joint Proxy Statement.
(a) As promptly as reasonably practicable after the execution of
this Agreement, Company and Parent shall prepare and file with the SEC a
document or documents that will constitute (i) the prospectus forming part
of the registration statement on Form F-4 or Form S-4, as applicable, of
Parent (together with all amendments thereto, the "REGISTRATION
STATEMENT"), in connection with the registration under the Securities Act
of Parent Common Stock to be issued to Company's stockholders pursuant to
the Merger and (ii) the joint proxy statement with respect to the Merger
relating to the special meetings of Company's stockholders to be held to
consider approval of this Agreement and the Merger (the "COMPANY
STOCKHOLDERS' MEETING") and of Parent's stockholders to be held to
consider, (i) adoption of an amendment to Parent's Articles of Association
(a copy of which is attached as Annex H), among other things, to effect the
name change (as set forth in Section 2.01), increase the number of
authorized shares of Parent common stock and provide for independent Board
representation (the "ARTICLES AMENDMENT"), (ii) approval of the issuance of
Parent Common Shares ("SHARE ISSUANCE") to Company's stockholders pursuant
to the Merger, (iii) the approval of the domestication ("DOMESTICATION") of
Parent in Delaware and (iv) adoption and/or approval of the reconstitution
of Parent's board of directors, including, without limitation, the election
of the persons identified on Schedule I to such board, as set forth in
Section 2.07 (the "BOARD RECONSTITUTION") (the "PARENT STOCKHOLDERS'
MEETING") (together with any amendments thereto, the "JOINT PROXY
STATEMENT"). Each of the parties hereto shall use all reasonable efforts to
cause the Registration Statement to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the
Registration Statement, the parties hereto shall take all action reasonably
required under any applicable Laws in connection with the issuance of
shares of Parent Common Stock pursuant to the Merger. Parent or Company, as
the case may be, shall furnish all information concerning Parent or Company
as the other party may reasonably request in connection with such actions
and the preparation of the Registration Statement and the Joint Proxy
Statement. Each of Parent and Company shall notify the other of the receipt
of any comments from the SEC on the Registration Statement and the Joint
Proxy Statement and of any requests by the SEC for any amendments or
supplements thereto or for additional information and shall provide to each
other promptly copies of all correspondence between Parent, Company or any
of their representatives and advisors and the SEC. As promptly as
practicable after the effective date of the Registration Statement, the
Joint Proxy Statement shall be mailed to the stockholders of Company and of
Parent. Each of the parties hereto shall cause the Joint Proxy Statement to
comply as to form and substance as to such party in all material respects
with the applicable requirements of (i) the Exchange Act, (ii) the
Securities Act, and (iii) the rules and regulations of the NNM.
(b) No amendment or supplement to the Joint Proxy Statement or the
Registration Statement shall be made without the approval of Parent and
Company, which approval shall not be unreasonably withheld or delayed. Each
of the parties hereto shall advise the other parties hereto, promptly after
it receives notice thereof, of the time when the 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 the
Parent Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, or of any request by the SEC for amendment of the
Joint Proxy Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(c) The Joint Proxy Statement shall include (i) with respect to
Company and its stockholders, (x) the approval of the Merger and the
recommendation of the board of directors of Company to Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger unless a withdrawal of such recommendation is required following
receipt by Company of a Company Superior Proposal, and (y) if required
under the Securities Act or other applicable Law, the opinion of Company
Financial Advisor, and (ii) with respect to Parent and its stockholders,
(x) the approval of the Articles Amendment, the Share Issuance, the
Domestication and the Board Reconstitution, and the recommendation of the
board of directors of Parent to Parent's stockholders that they vote in
favor of approval of the Articles Amendment, the Share Issuance, the
Domestication and the Board Reconstitution unless a withdrawal of such
recommendation is required following receipt by Parent of a Parent Superior
Proposal and (y) the opinion of Parent Financial Advisor. Any change in
recommendation shall not relieve a party from its obligations to call a
shareholders meeting and to present the matters contemplated herein for a
vote.
(d) Company shall use its reasonable best efforts to ensure that
none of the information supplied by Company for inclusion or incorporation
by reference in the Registration Statement or the Joint Proxy Statement
shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (A) in the case of the Joint Proxy Statement, the
date it or any amendments or supplements thereto are mailed to stockholders
of Company and Parent, at the time of the Company Stockholders' Meeting, at
the time of the Parent Stockholders' Meeting and at the Effective Time and
(B) in the case of the Registration Statement, when it becomes effective
under the Securities Act and at 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, in
light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event or circumstance relating to
Company or any Company Subsidiary, or their respective officers or
directors, should be discovered by Company that should be set forth in an
amendment or a supplement to the Registration Statement or the Joint Proxy
Statement, Company shall promptly inform Parent. All documents that Parent
is responsible for filing with the SEC in connection with the Merger will
comply as to form in all material respects with the applicable requirements
of the rules and regulations of the Securities Act and, to the extent
applicable, the Exchange Act.
(e) Parent shall use its reasonable best efforts to ensure that
none of the information supplied by Parent for inclusion or incorporation
by reference in the Registration Statement or the Joint Proxy Statement
shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (A) in the case of the Joint Proxy Statement, the
date it or any amendments or supplements thereto are mailed to stockholders
of Company and Parent, at the time of the Company Stockholders' Meeting, at
the time of the Parent Stockholders' Meeting and at the Effective Time and
(B) in the case of the Registration Statement, when it becomes effective
under the Securities Act and at 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, in
light of the circumstances under which they are made, not misleading. If,
at any time prior to the Effective Time, 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 Registration Statement or the Joint Proxy
Statement, Parent shall promptly inform Company. All documents that Parent
is responsible for filing with the SEC in connection with the Merger will
comply as to form in all material respects with the applicable requirements
of the rules and regulations of the Securities Act and the Exchange Act.
(f) Parent and the Company shall provide all information required
for inclusion in the Joint Proxy Statement under applicable securities and
other laws, including audited financial statements of Parent, the Company
or any of their respective subsidiaries.
SECTION 7.02 Stockholders' Meetings. Company shall call and hold
the Company Stockholders' Meeting, and Parent shall call and hold the
Parent Stockholders' Meeting, as promptly as practicable after the date
hereof for the purpose of voting upon the approval of this Agreement and
the Merger or the Share Issuance, as the case may be, pursuant to the Joint
Proxy Statement, and Company and Parent shall use all reasonable efforts to
hold the Company Stockholders' Meeting and the Parent Stockholders' Meeting
on the same date and as soon as practicable after the date on which the
Registration Statement becomes effective. Except as otherwise contemplated
by this Agreement, Company shall use all reasonable efforts to solicit from
its stockholders proxies in favor of the approval of this Agreement and the
Merger pursuant to the Joint Proxy Statement and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by Delaware Law to obtain such approval. Except as otherwise
contemplated by this Agreement, Parent shall use all reasonable efforts to
solicit from its stockholders proxies in favor of the Articles Amendment,
the Share Issuance and the Domestication pursuant to the Joint Proxy
Statement and shall take all other action necessary or advisable to secure
the vote or consent of stockholders required by the applicable stock
exchange requirements to obtain such approval. Each of the parties hereto
shall use take all other action necessary or, in the opinion of the other
parties hereto, advisable to promptly and expeditiously secure any vote or
consent of stockholders required by applicable Law and such party's
Articles of Association or Certificate of Incorporation, as the case may
be, and Memorandum of Association or bylaws, as the case may be, to effect
the Merger.
SECTION 7.03 Directors' and Officers' Indemnification and
Insurance.
(a) The provisions with respect to immunities and indemnification
that are set forth in the Certificate of Incorporation and bylaws of the
Surviving Corporation shall not be amended, repealed or otherwise modified
for a period of six (6) years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at or at
any time prior to the Effective Time were directors, officers, employees or
agents of Company.
(b) From and after the Effective Time, Parent and the Surviving
Corporation shall indemnify and hold harmless (i) each present and former
director and officer of Company and the Company Subsidiaries (the "COMPANY
INDEMNIFIED PARTIES"), and (ii) each present and former director and
officer of Parent and Parent Subsidiaries (the "PARENT INDEMNIFIED
PARTIES"), against any costs or expenses (including reasonable attorneys'
fees and disbursements), judgments, fines, losses, claims, damages or
liabilities (collectively, "COSTS") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
relating to their service as such an officer or director existing or
occurring at or prior to the Effective Time, whether asserted or claimed
prior to, at or after the Effective Time, to the fullest extent that
Company, Parent or Surviving Corporation, as applicable, would have been
permitted under applicable Law and its charter documents (each as in effect
on the date hereof) to indemnify such Indemnified Parties. The provisions
of this Section 7.03(b) shall not apply to any claims brought by
shareholders of the Company in their capacity as such.
(c) For a period of six (6) years after the Effective Time, Parent
shall maintain in effect such directors' and officers' liability insurance
policies as the Board of Directors of Parent deems appropriate, which
policies shall also cover former directors and officers.
SECTION 7.04 Public Announcements. The initial press release
concerning the Merger to be released in connection with the execution and
delivery of this Agreement shall be a joint press release and, thereafter,
Parent and Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this
Agreement or the Merger and shall not issue any such press release or make
any such public statement without the prior approval of the other, except
to the extent required by applicable Law or the requirements of the rules
and regulations of the NNM, 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 7.05 NNM Listing. Prior to the Effective Time, Parent
shall file with the NNM a Notification Form for Listing of Additional
Shares with respect to the Parent Common Shares issued or issuable in
connection with the Merger and shall use all reasonable efforts to have
such Parent Common Shares approved for quotation on the NNM.
SECTION 7.06 Blue Sky. Parent shall use all reasonable efforts to
obtain prior to the Effective Time all necessary permits and approvals
required under Blue Sky Laws to permit the distribution of the Parent
Common Shares to be issued in accordance with the provisions of this
Agreement.
SECTION 7.07 Company Stock Options/Registration Statements on Form
S-8. Parent shall reserve for issuance the number of Parent Common Shares
that will be issuable upon exercise of Company Stock Options and Company
Warrants assumed pursuant to Section 3.05 hereof. As soon as practicable
following the Effective Time, Parent shall file with the SEC one or more
registration statements on Form S-8 for the Parent Common Shares issuable
with respect to Company Stock Options and will maintain the effectiveness
of such registration statements for so long as any of such options or other
rights remain outstanding.
SECTION 7.08 Employee Agreements. Parent shall, and shall cause
the Surviving Corporation to, honor following the Effective Time all
employment agreements disclosed to Parent on the Company Disclosure
Schedule that remain in effect immediately prior to the Effective Time.
Parent and the Company agree that, except as expressly contemplated by this
Agreement, the validity and enforceability of employment agreements
maintained by Parent and disclosed to Company on the Parent Disclosure
Schedule in respect of officers and employees of Parent shall not be
affected by the Merger and shall continue to be honored in accordance with
their terms following the Effective Time.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger. The obligations of the parties hereto to consummate
the Merger are subject to the satisfaction or, if permitted by applicable
Law, waiver of the following conditions:
(a) this Agreement, the Merger and the other transactions
contemplated hereby shall have been duly approved by the requisite
vote of stockholders of Company in accordance with Delaware Law
and the Certificate of Incorporation and any other documents of
Company, and by the requisite vote of stockholders of Parent in
accordance with the rules of the NNM, applicable Law and the
Articles of Association and any other documents of Parent;
(b) no order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or Governmental
Entity which prohibits or prevents the consummation of the Merger
which has not been vacated, dismissed or withdrawn prior to the
Effective Time. Company and Parent shall use their reasonable best
efforts to have any of the foregoing vacated, dismissed or
withdrawn by the Effective Time;
(c) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the 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;
(d) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act or
any other applicable competition, merger control or similar Law
shall have expired or been terminated;
(e) all consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been
obtained from all Governmental Entities, except where the failure
to obtain any such consent, approval or authorization could not
reasonably be expected to result in a Parent Material Adverse
Effect or a Company Material Adverse Effect;
(f) the Domestication, including the shareholder approval
thereof, shall be effective;
(g) the amendment of the Parent Articles of Association
contemplated by Section 7.01(a) hereof shall be effective;
(h) the Parent Common Shares to be issued in the Merger
shall have been authorized for listing on the NNM, subject to
notice of issuance;
(i) Parent shall have been advised in writing by Kost,
Forrer & Gabbay, a member of Ernst & Young International, as of
the date upon which the Effective Time is to occur, in a form and
in substance reasonably acceptable to Parent, that the Merger can
properly be accounted for as a "pooling of interests" business
combination in accordance with U.S. GAAP and the accounting
standards of the SEC;
(j) the consent of the Office of the Chief Scientist of the
Israeli Ministry of Industry and Trade to the Merger shall have been
obtained;
(k) an exemption shall have been obtained from the Israel
Securities Authority from any prospectus requirement of the Israel
Securities Law - 1968 with respect to the exchange of Company
Stock Options for Parent Stock Options or, in the election of
Parent in its discretion, Parent may comply with the prospectus
requirements of such law;
(l) an Israeli Income Tax Authorities ruling shall have been
obtained providing that the roll over of Company Stock Options
that are subject to Section 102 of the Israeli Income Tax
Ordinance - 1961 into Parent Stock Options pursuant to the terms
of this Agreement is permitted and shall not be a tax event; and
(m) either (i) the consent of the Commissioner of
Restrictive Trade Practices in Israel to the Merger shall have
been obtained on terms that, if complied with, would not result in
a Company Material Adverse Effect or a Parent Material Adverse
Effect or (ii) the waiting period for approval of the Merger under
the Israel Restrictive Trade Practices Law 1988 shall have
expired.
SECTION 8.02 Conditions to the Obligations of Company. The
obligations of Company to consummate the Merger, or to permit the
consummation of the Merger 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 and
Merger Sub contained in this Agreement shall be true, complete and
correct both when made and on 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, complete and correct as of such certain
date), except, in each case (i) for changes contemplated by this
Agreement and (ii) when such representations and warranties are
read without reference to materiality, where the failure to be
true, complete and correct, individually or in the aggregate, has
not had and will not, solely with the passage of time, result in a
Parent Material Adverse Effect, and Company shall have received a
certificate of an officer of Parent to such effect;
(b) Parent and Merger Sub shall have performed or complied
in all material respects with all covenants required by this
Agreement to be performed or complied with by them on or prior to
the Effective Time and Company shall have received certificates of
an officer of Parent and an officer of Merger Sub to that effect;
(c) Company shall have been provided with a certificate
executed on behalf of Parent by an authorized officer certifying
that the conditions set forth in Section 8.02(a) and (b) shall
have been fulfilled; and
(d) Company shall have obtained an opinion from Company's
legal counsel in form and substance reasonably satisfactory to
Company substantially to the effect that if the Merger is
consummated in accordance with the provisions of this Agreement,
under current law, for United States federal income tax purposes,
the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code, provided, that if Company is unable to
obtain such an opinion from its legal counsel, this condition
shall be deemed to be satisfied if Parent's legal counsel delivers
an opinion to Company to the same effect.
SECTION 8.03 Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Merger are subject to the
satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Company
contained in this Agreement shall be true, complete and correct both when
made and on 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, complete and correct
as of such certain date), except, in each case (i) for changes contemplated
by this Agreement and (ii) when such representations and warranties are
read without reference to materiality, where the failure to be true,
complete and correct, individually or in the aggregate, has not had and
will not, solely with the passage of time, result in a Company Material
Adverse Effect, and Parent shall have received a certificate of an officer
of Company to such effect;
(b) Company shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Parent shall have
received a certificate of an officer of Company to that effect;
(c) Parent shall have been provided with a certificate executed on
behalf of Company by an authorized officer certifying that the conditions
set forth in Section 8.03(a) and (b) shall have been fulfilled;
(d) Effective as of the Effective Time, all agreements between
Company and its stockholders regarding, among other things, voting or
disposition of Company Common Stock, registration rights, information
rights and other covenants and undertakings of the Company, shall (i) have
been terminated or (ii) impose no continuing obligations on Company or
Parent in accordance with their terms or by operation of law;
(e) Effective as of the Effective Time, and after giving effect to
Parent's assumption of all Company Stock Options and Company Warrants in
accordance with the provisions of Section 3.05, there shall be no options,
warrants and other rights to purchase any securities of the Company or any
Company Subsidiary outstanding, except as set forth on Schedule 3.05(c) of
the Company Disclosure Schedule;
(f) Parent shall have received a report, dated as of the date on
which the domestication of Parent (as described in Section 2.06 of this
Agreement) occurs, from a "Big Five" accounting firm with respect to
Parent's "all earnings and profits amount" (as defined in Treas. Reg.
Section 1.367(b)-2(d) for purposes of the computation required by Treas.
Reg. Section 1.367(b)-3) that enables Parent reasonably to conclude that
the "all earnings and profits amount" that may be includible as a result of
such domestication by United States persons that are shareholders of Parent
should not have substantially adverse United States federal income tax
consequences to such persons.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption and approval of this Agreement, as
follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall
not have occurred on or before April 30, 2001; provided, however,
that the right to terminate this Agreement under this Section
9.01(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 Company, if any Governmental Order,
writ, injunction or decree preventing the consummation of the
Merger shall have been entered by any court of competent
jurisdiction and shall have become final and nonappealable;
(d) by Parent, if (i) the board of directors of Company
withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Parent or its
stockholders or shall have resolved to do so, (ii) the board of
directors of Company shall have recommended to the stockholders of
Company a Competing Transaction or shall have resolved to do so,
(iii) a Competing Transaction constituting a tender offer or an
exchange offer shall have been commenced and the board of
directors of Company shall have failed to recommend against
acceptance of such by its stockholders (including by taking no
position, or indicating its inability to take a position, with
respect to the acceptance of a Competing Transaction) within ten
(10) business days of the commencement thereof, (iv) the board of
directors of Company shall have failed to reconfirm its approval
and recommendation of this Agreement and the transactions
contemplated hereby within seven (7) days following (A) Company's
receipt of a request for reconfirmation from Parent after
Company's receipt of a proposal with respect to a Competing
Transaction, or (B) following receipt of a reasonable request
therefor from Parent at any time thereafter, or (v) the board of
directors of Company resolves to take any of the actions described
above;
(e) by Company, if (i) the board of directors of Parent
withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Company or its
stockholders or shall have resolved to do so, (ii) the board of
directors of Parent shall have recommended to the stockholders of
Parent a Competing Transaction or shall have resolved to do so,
(iii) a Competing Transaction constituting a tender offer or an
exchange offer shall have been commenced and the board of
directors of Parent shall have failed to recommend against
acceptance of such by its stockholders (including by taking no
position, or indicating its inability to take a position, with
respect to the acceptance of a Competing Transaction) within ten
(10) business days of the commencement thereof, (iv) the board of
directors of Parent shall have failed to reconfirm its approval
and recommendation of this Agreement and the transactions
contemplated hereby within seven (7) business days following (A)
Parent's receipt of a request for reconfirmation from Company
after Parent's receipt of a proposal with respect to a Competing
Transaction, or (B) following receipt of a reasonable request
therefor from Company at any time thereafter, or (v) the board of
directors of Parent resolves to take any of the actions described
above;
(f) by Parent or Company, if this Agreement and the Merger
is brought to a vote and shall fail to receive the requisite votes
for approval at the Company Stockholders' Meeting or any
adjournment or postponement thereof (provided, that the right to
terminate this Agreement under this paragraph (f) shall not be
available to Company where the failure to obtain such stockholder
approval shall have been caused by the action or failure to act of
Company and such action or failure constitutes a breach by Company
of this Agreement);
(g) by Company or Parent, if the Articles Amendment, Share
Issuance, and Domestication shall fail to receive the requisite
votes for approval at the Parent Stockholders' Meeting or any
adjournment or postponement thereof (provided, that the right to
terminate this Agreement under this paragraph (g) shall not be
available to Parent where the failure to obtain such stockholder
approval shall have been caused by the action or failure to act of
Parent and such action or failure constitutes a breach by Parent
of this Agreement);
(h) by Parent, fifteen (15) days after receipt by Company of
a written notice from Parent of a breach of any representation,
warranty, covenant or agreement on the part of Company set forth
in this Agreement, or if any representation or warranty of Company
shall have become untrue, incomplete or incorrect, in either case
such that the conditions set forth in Section 8.03 would not be
satisfied (a "TERMINATING COMPANY BREACH"); provided, however,
that if such Terminating Company Breach is cured by Company within
fifteen (15) days, Parent may not terminate this Agreement under
this Section 9.01(h);
(i) by Company, fifteen (15) days after receipt by Parent of
a written notice from Company of a breach of any representation,
warranty, covenant or agreement on the part of Parent or Merger
Sub set forth in this Agreement, or if any representation or
warranty of Parent or Merger Sub shall have become untrue,
incomplete or incorrect, in either case such that the conditions
set forth in Section 8.02 would not be satisfied (a "TERMINATING
PARENT BREACH"); provided, however, that if such Terminating
Parent Breach is cured by Parent within fifteen (15) days, Company
may not terminate this Agreement under this Section 9.01(i);
(j) by Parent, if (i) the board of directors of Parent
authorizes Parent, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Parent Superior Proposal and Parent
notifies the Company in writing that it intends to enter into such
an agreement, attaching the most current version of such agreement
(or description of all material terms and conditions thereof) to
such notice, (ii) the Company does not make, within three Business
Days of receipt of Parent's written notification of its intention
to enter into a binding agreement for a Parent Superior Proposal,
an offer that the board of directors of Parent determines, in good
faith after consultation with its financial advisors, is at least
as favorable to the shareholders of Parent as the Parent Superior
Proposal, it being understood that Parent shall not enter into any
such binding agreement during such three-day period and (iii)
Parent prior to such termination pursuant to this clause (j) pays
to the Company in immediately available funds the fees required to
be paid pursuant to Section 9.05(c), provided, that Parent shall
not be permitted to terminate this Agreement pursuant to this
Section 9.01(j) if such Parent Superior Proposal is attributable
to a violation by Parent of its obligations under Section 6.05 and
such Parent Superior Proposal did not otherwise result from a
breach of any of Parent's obligations under this Agreement; or
(k) by Company, if (i) the board of directors of Company
authorizes Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Company Superior Proposal and
Company notifies Parent in writing that it intends to enter into
such an agreement, attaching the most current version of such
agreement (or description of all material terms and conditions
thereof) to such notice, (ii) Parent does not make, within three
Business Days of receipt of Company's written notification of its
intention to enter into a binding agreement for a Company Superior
Proposal, an offer that the board of directors of Company
determines, in good faith after consultation with its financial
advisors, is at least as favorable to the shareholders of Company
as the Company Superior Proposal, it being understood that Company
shall not enter into any such binding agreement during such
three-day period and (iii) Company prior to such termination
pursuant to this clause (k) pays to Parent in immediately
available funds the fees required to be paid pursuant to Section
9.05(b), provided, that Company shall not be permitted to
terminate this Agreement pursuant to this Section 9.01(k) if such
Company Superior Proposal is attributable to a violation by
Company of its obligations under Section 6.05 and such Company
Superior Proposal did not otherwise result from a breach of any of
Company's obligations under this Agreement;
The right of any party hereto to terminate this Agreement pursuant
to this Section 9.01 will remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto,
any Person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the
execution of this Agreement.
SECTION 9.02 Effect of Termination. Except as provided in Section
9.05, in the event of termination of this Agreement pursuant to Section
9.01, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of any party hereto or any of
its Affiliates or any of its or their officers or directors, and all rights
and obligations of each party hereto shall cease; 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.
SECTION 9.03 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective boards
of directors at any time prior to the Effective Time; provided, however,
that, after the approval of this Agreement by the stockholders of Company,
no amendment may be made that changes the amount or type of consideration
into which Company Common Stock or Company Preferred Stock will be
converted pursuant to this Agreement. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for or waive compliance with 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 by
the other party with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
SECTION 9.05 Termination Fee; Expenses.
(a) Except as set forth in this Section 9.05, all Expenses
incurred in connection with this Agreement and the Merger shall be paid by
the party incurring such Expenses, whether or not the Merger is
consummated, except that Parent and Company each shall pay one-half of all
Expenses incurred solely for printing, filing and mailing the Registration
Statement and the Joint Proxy Statement and all other SEC and other
regulatory filing fees incurred in connection with the Registration
Statement and any fees required to be paid under the HSR Act.
(b) Without limiting any other remedies available to Parent for an
intentional breach of this Agreement, in the event that (i) Parent shall
terminate this Agreement pursuant to Section 9.01(d) or due to a
Terminating Company Breach of any covenant or agreement contained in this
Agreement pursuant to Section 9.01(h) (but only if such Terminating Company
Breach arises out of the bad faith or willful misconduct of Company), (ii)
Parent or Company shall terminate this Agreement pursuant to Section
9.01(f) or due to a Terminating Company Breach of any representation or
warranty contained in this Agreement pursuant to Section 9.01(h), and (A)
within ninety (90) days after such termination, Company shall enter into a
definitive agreement with respect to any Competing Transaction or any
Competing Transaction involving Company shall be consummated within one
hundred eighty (180) days after such termination, and (B) in the case of a
termination pursuant to Section 9.01(f), prior to the Shareholder Meeting,
there shall have been publicly announced a Competing Transaction; or (iii)
Company shall terminate this Agreement pursuant to Section 9.01(k), then
Company shall pay to Parent (the "COMPANY TERMINATION FEE") a sum equal to
all of Parent's Expenses up to $750,000 and an additional amount equal to
$3,000,000. Notwithstanding the foregoing, no fee shall be paid pursuant to
this Section 9.05(b) if Parent shall be in material breach of its
obligations hereunder. Any Company Termination Fee shall be paid in same
day funds within three (3) Business Days of the date of termination.
(c) Without limiting any other remedies available to Company for
an intentional breach of this Agreement, in the event that (i) Company
shall terminate this Agreement pursuant to Section 9.01(e) or due to a
Terminating Parent Breach of any covenant or agreement contained in this
Agreement pursuant to Section 9.01(i) (but only if such Terminating Parent
Breach arises out of the bad faith or willful misconduct of Parent), (ii)
Company or Parent shall terminate this Agreement pursuant to Section
9.01(g) or due to a Terminating Parent Breach of any representation or
warranty contained in this Agreement pursuant to Section 9.01(i), and (A)
within ninety (90) days after such termination, Parent shall enter into a
definitive agreement with respect to any Competing Transaction or any
Competing Transaction involving Parent shall be consummated within one
hundred eighty (180) days after such termination, and (B) in the case of a
termination pursuant to Section 9.01(f), prior to the Shareholder Meeting,
there shall have been publicly announced a Competing Transaction; then
Parent shall pay to Company (the "PARENT TERMINATION FEE") a sum equal to
all of Company's Expenses up to $750,000 and an additional amount equal to
$3,000,000. Notwithstanding the foregoing, no fee shall be paid pursuant to
this Section 9.05(c) if Company shall be in material breach of its
obligations hereunder. Any Parent Termination Fee shall be paid in same day
funds within three (3) Business Days of the date of termination.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be. This Section 10.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 10.02 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 a nationally 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 10.02):
(a) if to Company:
Ness Technologies, Inc.
Ness Bldg. 4
P.O.B. 58182
Kiryat Atidim
Tel Aviv, 61580
Israel
Attention: Yaron Polak, President and
Chief Executive Officer
Facsimile: 972-3-766-6819
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Richard Gilden, Esq.
Facsimile: (212) 586-7878
(b) if to Parent or Merger Sub:
Sapiens International Corporation N.V.
c/o Kaya, Richard J.
Beaujon, Z/N
P.O. Box 837 Willemstad
Curacao, Netherlands Antilles
Attention: General Counsel
Facsimile: 5999-736-6161
and
Sapiens International Corporation N.V.
Yitzhak Rabin Science Park
P.O. Box 2211
Rehovot, 76120
Israel
Attention: General Counsel
Facsimile: 972-8-938-2730
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: David J. Friedman, Esq.
David Goldschmidt, Esq.
Facsimile: (212) 735-2000
and
Meitar, Liquornik, Geva & Co.
16 Abba Hillel Silver Rd.
Ramat Gan
52506
Israel
Attention: Dan Shamgar, Advocate
Facsimile: 972-3-610-3111
SECTION 10.03 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 Merger 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 Merger may be consummated as originally contemplated
to the fullest extent possible.
SECTION 10.04 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties hereto.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in
this Agreement to the contrary, other than Section 7.03, nothing in this
Agreement, expressed or implied, is intended to confer on any Person other
than the parties hereto or their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Annexes attached hereto
and referred to herein are hereby incorporated herein and made a part of
this Agreement for all purposes as if fully set forth herein. Parent and
Company acknowledge that the Parent Disclosure Schedule and the Company
Disclosure Schedule (i) are qualified in their entirety by reference to
specific provisions of this Agreement and (ii) are not intended to
constitute and shall not be construed as indicating that such matter is
required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to Parent or
Company, as the case may be, except to the extent required by this
Agreement and by applicable law.
SECTION 10.06 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE
APPLICATION OF ANY LAW OTHER THAN THAT OF THE STATE OF NEW YORK.
SECTION 10.07 Jurisdiction; Waiver of Jury Trial. Each party
hereto irrevocably consents to the exclusive jurisdiction of any court
located within the State of New York, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein,
agrees that process may be served upon them in any manner authorized by the
laws of the State of New York for such persons and waives and covenants not
to assert or plead any objection which they might otherwise have to such
jurisdiction and such process. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
HEREOF.
SECTION 10.08 Headings; Interpretation. 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. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
SECTION 10.09 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.
SECTION 10.10 Entire Agreement. This Agreement (including the
Exhibits, the Parent Disclosure Schedule and the Company Disclosure
Schedule) and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede
all prior agreements and understandings among the parties with respect
thereto.
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.
SAPIENS INTERNATIONAL CORPORATION N.V.
By: /s/ Dani Falk
-------------------------
Name: Dani Falk
Title: President and Chief Executive
Officer
WISDOM MERGER SUB, INC.
By: /s/ Steve Kronengold
-------------------------
Name: Steve Kronengold
Title: Vice President and Secretary
NESS TECHNOLOGIES, INC.
By: /s/ Yaron Polak, /s/ Raviv Zoller
-----------------------------------
Name: Yaron Polak, Raviv Zoller
Title: Chief Executive Officer, Chief
Financial Officer
Schedule I
Officers of Parent
Yaron Polak will serve as the President and Chief Executive
Officer of Parent, and Dani Falk will serve as the President of Parent's
international operations. Other members of senior management shall be
appointed by Mr. Polak, subject to the approval of Parent's board of
directors or the executive committee thereof.
Schedule II
Directors of Parent
Aharon Fogel (Chairman)*
Morris Wolfson*
Dr. Henry Kressel*
Dr. Frank Brochin
Yaron Polak*
Ron Zukerman
Dan Falk*
Tzvi Misinai or Shai Sole, as may be designated by Meister Software One
additional director to be designated by Company Three independent
directors, to be mutually agreed upon by Parent and Company
The Board shall include Parent's corporate director for so long as required
to comply with applicable Netherlands Antilles' Law.
The executive committee of the board of directors shall be comprised of
those persons with an asterisk next to their names in the above list.
Schedule III
Terms of Registration Rights Agreement
Up to two demand registrations on Form S-3, if requested by holders of at
least 50% of the total number of shares subject to registration rights.
Unlimited "piggy-back" rights in appropriate offerings (subject to priority
for Parent and pro-rata cutback at the underwriters' discretion).
Rights will apply to each holder until all Parent Common Shares held by
such Person may be sold freely under United States securities laws within a
three-month period.
ANNEX A
COMPANY VOTING AGREEMENT
This COMPANY VOTING AGREEMENT (this "AGREEMENT") is made and
entered into as of September 17, 2000 between Sapiens International
Corporation N.V., a Netherlands Antilles corporation ("PARENT"), and the
undersigned stockholders (each a "STOCKHOLDER" and collectively the
"STOCKHOLDERS") of Ness Technologies, Inc., a Delaware corporation
("COMPANY"). Capitalized terms used and not otherwise defined herein shall
have the respective meanings set forth in the Merger Agreement described
below.
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger and
Reorganization dated as of September 17, 2000 by and among Parent, Wisdom
Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), and Company (such agreement as it may be amended is
hereinafter referred to as the "MERGER AGREEMENT"), Parent has agreed to
acquire the outstanding securities of Company pursuant to a merger of
Merger Sub with and into Company in which outstanding shares of capital
stock of Company will be converted into shares of common stock of Parent as
set forth in the Merger Agreement (the "TRANSACTION");
WHEREAS, in order to induce Parent to enter into the Merger
Agreement and consummate the Transaction, Company has agreed to use its
reasonable efforts to cause certain stockholders of Company to execute and
deliver to Parent a Voting Agreement upon the terms set forth herein; and
WHEREAS, each Stockholder is or may become the owner of shares of
capital stock of Company (the "SHARES").
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Retain Shares.
1.1. Transfer and Encumbrance. Each Stockholder represents and
warrants to Parent that (i) such Stockholder is a record or beneficial
owner of the Shares, with power to vote the Shares or cause the Shares to
be voted; (ii) the Shares set forth on the signature page hereto constitute
such Stockholder's entire interest in the outstanding capital stock and
voting securities of Company, other than Shares that are held by others and
are subject to similar voting agreements or shares that are subject to
employee stock options; and (iii) such Stockholder's address is accurately
set forth on the signature page hereto.
1.2. New Shares. Each Stockholder agrees that any shares of
capital stock or voting securities of Company ("NEW SHARES") that such
Stockholder purchases or with respect to which Stockholder otherwise
acquires beneficial ownership after the date of this Agreement and prior to
the Expiration Date (as hereinafter defined) shall be subject to the terms
and conditions of this Agreement to the same extent as if they constituted
Shares. As used herein, the term "EXPIRATION DATE" shall mean the earlier
to occur of (i) the Effective Time or (ii) termination of the Merger
Agreement in accordance with the terms thereof.
2. Agreement to Vote Shares and Take Certain Other Action. Prior
to the Expiration Date, at every meeting of the stockholders of Company at
which any of the following matters is considered or voted upon, and at
every adjournment or postponement thereof, and on every action or approval
by written consent of the stockholders of Company with respect to any of
the following matters, each Stockholder shall vote, or, using such
Stockholder's best efforts, and to the full extent legally permitted, cause
the holder of record to vote the Shares and any New Shares (except those
Shares or New Shares which are not voting securities), in favor of adoption
of the Merger Agreement and any proposal or action presented to a
stockholders vote which would, or could reasonably be expected to,
facilitate the Merger.
Prior to the Expiration Date, each Stockholder, as the holder of
voting stock of Company, shall be present, in person or by proxy, or, using
such Stockholder's best efforts and to the full extent legally permitted,
attempt to cause the holder of record to be present, in person or by proxy,
at all meetings of stockholders of Company at which any matter referred to
in this Section 2 is to be voted upon so that all Shares and New Shares are
counted for the purposes of determining the presence of a quorum at such
meetings.
Notwithstanding the foregoing, nothing in this Agreement shall
limit or restrict any Stockholder from (i) acting in his or her capacity as
a director or officer of Company, to the extent applicable, it being
understood that this Agreement shall apply to each Stockholder solely in
his or her capacity as a stockholder of Company or (ii) voting in his or
her sole discretion on any matter other than those matters referred to in
the first paragraph of this Section 2.
3. Irrevocable Proxy. Each Stockholder hereby agrees to timely
deliver to Parent a duly executed proxy in the form attached hereto as
Annex A (the "PROXY"), such Proxy to cover the issued and outstanding
Shares and all issued and outstanding New Shares in respect of which such
Stockholder is the record holder and is entitled to vote at each meeting of
the stockholders of Company (including, without limitation, each written
consent in lieu of a meeting) prior to the Expiration Date. In the event
that any Stockholder is unable to provide any such Proxy in a timely
manner, such Stockholder hereby grants Parent a power of attorney to
execute and deliver such Proxy for and on behalf of such Stockholder, such
power of attorney, which being coupled with an interest, shall survive any
death, disability, bankruptcy, or any other such impediment of such
Stockholder. Upon the execution of this Agreement by each Stockholder, such
Stockholder hereby revokes any and all prior proxies or powers of attorney
given by such Stockholder with respect to voting of the Shares on the
matters referred to in Section 2 and agrees not to grant any subsequent
proxies or powers of attorney with respect to the voting of the Shares on
the matters referred to in Section 2 until after the Expiration Date.
4. Representations, Warranties and Covenants of Stockholder. Each
Stockholder hereby represents, warrants and covenants to Parent as follows:
(a) Such Stockholder has full power and legal capacity to execute
and deliver this Agreement and to perform his or her obligations hereunder.
This Agreement has been duly and validly executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its
terms, except as may be limited by (i) the effect of bankruptcy,
insolvency, conservatorship, arrangement, moratorium or other laws
affecting or relating to the rights of creditors generally, or (ii) the
rules governing the availability of specific performance, injunctive relief
or other equitable remedies and general principles of equity, regardless of
whether considered in a proceeding in equity or at law. The execution and
delivery of this Agreement by such Stockholder does not, and the
performance of such Stockholder's obligations hereunder will not, result in
any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
right to terminate, amend, accelerate or cancel any right or obligation
under, or result in the creation of any lien or encumbrance on any Shares
or New Shares pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which such Stockholder is a party or by which such
Stockholder or the Shares or New Shares are or will be bound or affected.
(b) Such Stockholder has read Section 6.05 of the Merger Agreement
and understands the Company's restrictions thereunder.
(c) Such Stockholder agrees not to transfer, sell, exchange,
pledge or otherwise dispose of or encumber any of the Shares, or make any
offer or agreement relating thereto, at any time prior to the Expiration
Date other than to a transferee that agrees to be bound by the terms of
this voting agreement and the proxy attached hereto; provided, however,
that notwithstanding the foregoing, Nesstech LLC ("Nesstech") may
distribute Shares to its members, after providing prior notice thereof to
Parent and Company, so long as such distribution will not (i) cause any of
the conditions to the consummation of the Merger set forth in Article VIII
of the Merger Agreement to not be satisfied, as determined by Parent and
Company in their reasonable discretion, or (ii) interfere with the ability
of Nesstech to have such Shares voted as contemplated in Section 2 hereof.
Each Stockholder understands and agrees that if such Stockholder attempts
to transfer, vote or provide any other person with the authority to vote
any of the Shares other than in compliance with this Agreement, Company
shall not, and each Stockholder hereby unconditionally and irrevocably
instructs Company to not, permit any such transfer on its books and
records, issue a new certificate representing any of the Shares or record
such vote unless and until such Stockholder shall have complied with the
terms of this Agreement.
(d) Such Stockholder waives, as of the Effective Time, any claims
it may have in its capacity as a stockholder and has no knowledge of any
pending or threatened claims against the Company by any other security
holder of the Company.
(e) Such Stockholder will take all actions to terminate, as of the
Effective Time, all agreements contemplated by Section 8.3(d) of the Merger
Agreement to be terminated as of the Effective Time.
5. Additional Documents. Each Stockholder hereby covenants and agrees
to execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent, to carry out the purpose and intent of this
Agreement.
6. Consent and Waiver. Each Stockholder hereby gives any consents
or waivers that are reasonably required for the consummation of the
Transaction under the terms of any agreement to which such Stockholder is a
party or pursuant to any rights such Stockholder may have provided,
however, that such Stockholder shall not be required by this Section 6 to
give any consent or waiver in his capacity as a director or officer of
Company.
7. Termination. This Agreement and the Proxy delivered in
connection herewith and all obligations of each Stockholder hereunder and
thereunder, shall terminate and shall have no further force or effect as of
the Expiration Date.
8. Miscellaneous.
8.1. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
8.2. Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement
nor any of the rights, interests or obligations of the parties hereto may
be assigned by either of the parties without the prior written consent of
the other. This Agreement is intended to bind each Stockholder solely as a
securityholder of Company only with respect to the specific matters set
forth herein.
8.3. Amendment and Modification. This Agreement may not be modified,
amended, altered or supplemented except by the execution and delivery of a
written agreement executed by the parties hereto.
8.4. Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be
no adequate remedy at law for a violation of any of the covenants or
agreements of each Stockholder set forth herein. Therefore, it is agreed
that, in addition to any other remedies that may be available to Parent
upon any such violation, Parent shall have the right to enforce such
covenants and agreements by specific performance, injunctive relief or by
any other means available to Parent at law or in equity and each
Stockholder hereby waives any and all defenses which could exist in its
favor in connection with such enforcement and waives any requirement for
the security or posting of any bond in connection with such enforcement.
8.5. Notices. All notices, requests, demands or other
communications that are required or may be given pursuant to the terms of
this Agreement shall be in writing and shall be deemed to have been duly
given (a) when delivered, if delivered by hand, (b) one business day after
transmitted, if transmitted by a nationally recognized overnight courier
service, (c) when telecopied, if telecopied (which is confirmed), or (d)
three business days after mailing, if mailed by registered or certified
mail (return receipt requested), to the parties at the following addresses:
(a) If to any Stockholder, at the address set forth below such
Stockholder's signature at the end hereof.
(b) if to Parent, to:
Sapiens International Corporation N.V.
c/o Kaya, Richard J.
Beaujon, Z/N
P.O. Box 837 Willenstad
Curacau, Netherlands Antilles
Attention: General Counsel
Facsimile No.: 5999-736-6161
and
Sapiens International Corporation N.V.
Yitzhak Rabin Science Park
P.O. Box 2211
Rehovot, 76120
Israel
Attention: General Counsel
Facsimile: 972-8-938-2730
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: David J. Friedman, Esq.
David Goldschmidt, Esq.
Facsimile No.: (212) 735-2000
or to such other address as any party hereto may designate for itself by
notice given as herein provided.
8.6. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York without
giving effect to the principles of conflicts or choice of law rules of any
jurisdiction.
8.7. Entire Agreement. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
8.8. Counterpart. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
8.9. Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
SAPIENS INTERNATIONAL STOCKHOLDER
CORPORATION N.V.
By:
---------------------------------- ----------------------------------
Name: (Signature)
-------------------------------
Title:
------------------------------
----------------------------------
(Print Name of Stockholder)
----------------------------------
(Print Street Address)
----------------------------------
(Print City, State and Zip)
----------------------------------
(Print Telephone Number)
Total Number of Shares of Company Common Stock owned directly on the date
hereof:
Common Stock:
------------------------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
STOCKHOLDER
------------------------------------
(Signature)
------------------------------------
(Print Name of Stockholder)
------------------------------------
(Print Street Address)
------------------------------------
(Print City, State and Zip)
------------------------------------
(Print Telephone Number)
Total Number of Shares of Company Common Stock owned directly on the date
hereof:
Common Stock:
-------------------------------
STOCKHOLDER
------------------------------------
(Signature)
------------------------------------
(Print Name of Stockholder)
------------------------------------
(Print Street Address)
------------------------------------
(Print City, State and Zip)
------------------------------------
(Print Telephone Number)
Total Number of Shares of Company Common Stock owned directly on the date
hereof:
Common Stock:
------------------------
ANNEX A
IRREVOCABLE PROXY
TO VOTE STOCK OF
NESS TECHNOLOGIES, INC.
The undersigned stockholder of Ness Technologies, Inc., a Delaware
corporation ("COMPANY"), hereby irrevocably appoints the members of the
Board of Directors of Sapiens International Corporation N.V., a Netherlands
Antilles corporation ("PARENT"), and each of them, or any other designee of
Parent, as the sole and exclusive attorneys and proxies of the undersigned,
with full power of substitution and resubstitution, to vote and exercise
all voting rights (to the full extent that the undersigned is entitled to
do so) with respect to all of the issued and outstanding shares of capital
stock of Company that now are owned of record by the undersigned,
(collectively, the "SHARES") in accordance with the terms of this
Irrevocable Proxy. The Shares owned of record by the undersigned
stockholder of Company as of the date of this Irrevocable Proxy are listed
on the final page of this Irrevocable Proxy. Upon the undersigned's
execution of this Irrevocable Proxy, any and all prior proxies given by the
undersigned with respect to the voting of any Shares on the matters
referred to in the third full paragraph of this Irrevocable Proxy are
hereby revoked and the undersigned agrees not to grant any subsequent
proxies with respect to such matters until after the Expiration Date (as
defined below).
This Irrevocable Proxy is irrevocable, is coupled with an
interest, and is granted in consideration of Parent entering into that
certain Agreement and Plan of Merger and Reorganization (the "MERGER
AGREEMENT") by and among Parent, Wisdom Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and
Company, which Merger Agreement provides for the merger of Merger Sub with
and into Company (the "MERGER"). As used herein, the term "EXPIRATION DATE"
shall mean the earlier to occur of (i) such date and time as the Merger
shall become effective in accordance with the terms and provisions of the
Merger Agreement, and (ii) the date of termination of the Merger Agreement.
The attorneys and proxies named above, and each of them are hereby
authorized and empowered by the undersigned, at any time prior to the
Expiration Date, to act as the undersigned's attorney and proxy to vote the
Shares, and to exercise all voting rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and
deliver written consents), at every annual, special or adjourned meeting of
the stockholders of Company and in every written consent in lieu of such
meeting, in favor of adoption of the Merger Agreement and any proposal or
action which would, or could reasonably be expected to, facilitate the
Merger.
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The
undersigned stockholder may vote the Shares on all other matters.
All authority herein conferred shall survive the death or
incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
[Signature Page Follows]
This Irrevocable Proxy is coupled with an interest as aforesaid
and is irrevocable.
Dated: September __, 2000
------------------------------------
(Signature of Stockholder)
------------------------------------
(Print Name of Stockholder)
Shares owned of record:
------------------ shares of
Company Common Stock
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
ANNEX A
IRREVOCABLE PROXY
TO VOTE STOCK OF
SAPIENS INTERNATIONAL CORPORATION N.V.
The undersigned stockholder of Sapiens International Corporation
N.V., a Netherlands Antilles corporation ("PARENT"), hereby irrevocably
appoints the members of the Board of Directors of Ness Technologies, Inc.,
a Delaware corporation ("COMPANY"), and each of them, or any other designee
of Company as the sole and exclusive attorneys and proxies of the
undersigned, with full power of substitution and resubstitution, to vote
and exercise all voting rights (to the full extent that the undersigned is
entitled to do so) with respect to all of the issued and outstanding shares
of capital stock of Parent that now are owned of record by the undersigned
(collectively, the "SHARES"), in accordance with the terms of this
Irrevocable Proxy. The Shares owned of record by the undersigned
stockholder of Parent as of the date of this Irrevocable Proxy are listed
on the final page of this Irrevocable Proxy. Upon the undersigned's
execution of this Irrevocable Proxy, any and all prior proxies given by the
undersigned with respect to the voting of any Shares on the matters
referred to in the third full paragraph of this Irrevocable Proxy are
hereby revoked and the undersigned agrees not to grant any subsequent
proxies with respect to such matters until after the Expiration Date (as
defined below).
This Irrevocable Proxy is irrevocable, is coupled with an
interest, and is granted in consideration of Company entering into that
certain Agreement and Plan of Merger and Reorganization (the "MERGER
AGREEMENT") by and among Parent, Wisdom Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and
Company, which Merger Agreement provides for the merger of Merger Sub with
and into Company (the "MERGER"). As used herein, the term "EXPIRATION DATE"
shall mean the earlier to occur of (i) such date and time as the Merger
shall become effective in accordance with the terms and provisions of the
Merger Agreement, and (ii) the date of termination of the Merger Agreement.
The attorneys and proxies named above, and each of them are hereby
authorized and empowered by the undersigned, at any time prior to the
Expiration Date, to act as the undersigned's attorney and proxy to vote the
Shares, and to exercise all voting rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and
deliver written consents), at every annual, special or adjourned meeting of
the stockholders of Parent and in every written consent in lieu of such
meeting, in favor of adoption of the Merger Agreement and any proposal or
action which would, or could reasonably be expected to, facilitate the
Merger.
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The
undersigned stockholder may vote the Shares on all other matters.
All authority herein conferred shall survive the death or
incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
[Signature Page Follows]
This Irrevocable Proxy is coupled with an interest as aforesaid
and is irrevocable.
Dated: September __, 2000
----------------------------------------
(Signature of Stockholder)
----------------------------------------
(Print Name of Stockholder)
Shares owned of record:
---------------------------shares of
Parent Common Stock
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
ANNEX B
PARENT VOTING AGREEMENT
This PARENT VOTING AGREEMENT (this "AGREEMENT") is made and
entered into as of September 17, 2000 between Ness Technologies, Inc., a
Delaware corporation ("COMPANY"), and the undersigned stockholders (each a
"STOCKHOLDER" and collectively the "STOCKHOLDERS") of Sapiens International
Corporation N.V., a Netherlands Antilles corporation ("PARENT").
Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Merger Agreement described below.
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger and
Reorganization dated as of September 17, 2000 by and among Parent, Wisdom
Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), and Company (such agreement as it may be amended is
hereinafter referred to as the "MERGER AGREEMENT"), Parent has agreed to
acquire the outstanding securities of Company pursuant to a merger of
Merger Sub with and into Company in which outstanding shares of capital
stock of Company will be converted into shares of common stock of Parent as
set forth in the Merger Agreement (the "TRANSACTION");
WHEREAS, in order to induce Company to enter into the Merger
Agreement and consummate the Transaction, Parent has agreed to use its
reasonable efforts to cause certain stockholders of Parent to execute and
deliver to Company a Voting Agreement upon the terms set forth herein; and
WHEREAS, each Stockholder is or may become the owner of shares of
capital stock of Parent (the "SHARES").
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Retain Shares.
1.1. Transfer and Encumbrance. Each Stockholder represents and
warrants to Company that (i) such Stockholder is a record or beneficial
owner of the Shares with power to vote the Shares or cause the Shares to be
voted; (ii) the Shares set forth on the signature page hereto constitute
such Stockholder's entire interest in the outstanding capital stock and
voting securities of Parent other than Shares that are held by others and
are subject to similar voting agreements or shares that are subject to
employee stock options; and (iii) such Stockholder's address is accurately
set forth on the signature page hereto.
1.2. New Shares. Each Stockholder agrees that any shares of
capital stock or voting securities of Parent ("NEW SHARES") that such
Stockholder purchases or with respect to which Stockholder otherwise
acquires beneficial ownership after the date of this Agreement and prior to
the Expiration Date (as hereinafter defined) shall be subject to the terms
and conditions of this Agreement to the same extent as if they constituted
Shares. As used herein, the term "EXPIRATION DATE" shall mean the earlier
to occur of (i) the Effective Time or (ii) termination of the Merger
Agreement in accordance with the terms thereof.
2. Agreement to Vote Shares and Take Certain Other Action. Prior
to the Expiration Date, at every meeting of the stockholders of Parent at
which any of the following matters is considered or voted upon, and at
every adjournment or postponement thereof, and on every action or approval
by written consent of the stockholders of Parent with respect to any of the
following matters, each Stockholder shall vote, or, using such
Stockholder's best efforts, and to the full extent legally permitted, cause
the holder of record to vote the Shares and any New Shares (except those
Shares or New Shares which are not voting securities), in favor of adoption
of the Articles Amendment, the Share Issuance and the Domestication of
Parent and any proposal or action presented to a stockholder vote which
would, or could reasonably be expected to, facilitate the Merger.
Prior to the Expiration Date, each Stockholder, as the holder of
voting stock of Parent, shall be present, in person or by proxy, or, using
such Stockholder's best efforts and to the full extent legally permitted,
attempt to cause the holder of record to be present, in person or by proxy,
at all meetings of stockholders of Parent at which any matter referred to
in this Section 2 is to be voted upon so that all Shares and New Shares are
counted for the purposes of determining the presence of a quorum at such
meetings.
Notwithstanding the foregoing, nothing in this Agreement shall
limit or restrict any Stockholder from (i) acting in his or her capacity as
a director or officer of Parent, to the extent applicable, it being
understood that this Agreement shall apply to each Stockholder solely in
his or her capacity as a stockholder of Parent or (ii) voting in his or her
sole discretion on any matter other than those matters referred to in the
first paragraph of this Section 2.
3. Irrevocable Proxy. Each Stockholder hereby agrees to timely
deliver to Company a duly executed proxy in the form attached hereto as
Annex A (the "PROXY"), such Proxy to cover the issued and outstanding
Shares and all issued and outstanding New Shares in respect of which such
Stockholder is the record holder and is entitled to vote at each meeting of
the stockholders of Parent (including, without limitation, each written
consent in lieu of a meeting) prior to the Expiration Date. In the event
that any Stockholder is unable to provide any such Proxy in a timely
manner, such Stockholder hereby grants Company a power of attorney to
execute and deliver such Proxy for and on behalf of such Stockholder, such
power of attorney, which being coupled with an interest, shall survive any
death, disability, bankruptcy, or any other such impediment of such
Stockholder. Upon the execution of this Agreement by each Stockholder, such
Stockholder hereby revokes any and all prior proxies or powers of attorney
given by such Stockholder with respect to voting of the Shares on the
matters referred to in Section 2 and agrees not to grant any subsequent
proxies or powers of attorney with respect to the voting of the Shares on
the matters referred to in Section 2 until after the Expiration Date.
4. Representations, Warranties and Covenants of Stockholder. Each
Stockholder hereby represents, warrants and covenants to Company as follows:
(a) Such Stockholder has full power and legal capacity to execute
and deliver this Agreement and to perform his or her obligations hereunder.
This Agreement has been duly and validly executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its
terms, except as may be limited by (i) the effect of bankruptcy,
insolvency, conservatorship, arrangement, moratorium or other laws
affecting or relating to the rights of creditors generally, or (ii) the
rules governing the availability of specific performance, injunctive relief
or other equitable remedies and general principles of equity, regardless of
whether considered in a proceeding in equity or at law. The execution and
delivery of this Agreement by such Stockholder does not, and the
performance of such Stockholder's obligations hereunder will not, result in
any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
right to terminate, amend, accelerate or cancel any right or obligation
under, or result in the creation of any lien or encumbrance on any Shares
or New Shares pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which such Stockholder is a party or by which such
Stockholder or the Shares or New Shares are or will be bound or affected.
(b) Each Stockholder has read Section 6.05 of the Merger Agreement
and understands the Parent's restrictions thereunder.
(c) Each Stockholder agrees not to transfer, sell, exchange,
pledge or otherwise dispose of or encumber any of the Shares, or make any
offer or agreement relating thereto, at any time prior to the Expiration
Date other than to a transferee that agrees to be bound by the terms of
this voting agreement and the proxy attached hereto. Each Stockholder
understands and agrees that if such Stockholder attempts to transfer, vote
or provide any other person with the authority to vote any of the Shares
other than in compliance with this Agreement, Parent shall not, and each
Stockholder hereby unconditionally and irrevocably instructs Parent to not,
permit any such transfer on its books and records, issue a new certificate
representing any of the Shares or record such vote unless and until such
Stockholder shall have complied with the terms of this Agreement.
5. Additional Documents. Each Stockholder hereby covenants and agrees
to execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Company, to carry out the purpose and intent of this
Agreement.
6. Consent and Waiver. Each Stockholder hereby gives any consents
or waivers that are reasonably required for the consummation of the
Transaction under the terms of any agreement to which such Stockholder is a
party or pursuant to any rights such Stockholder may have provided,
however, that such Stockholder shall not be required by this Section 6 to
give any consent or waiver in his capacity as a director or officer of
Parent.
7. Termination. This Agreement and the Proxy delivered in
connection herewith and all obligations of each Stockholder hereunder and
thereunder, shall terminate and shall have no further force or effect as of
the Expiration Date.
8. Miscellaneous.
8.1. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
8.2. Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement
nor any of the rights, interests or obligations of the parties hereto may
be assigned by either of the parties without the prior written consent of
the other. This Agreement is intended to bind each Stockholder solely as a
securityholder of Parent only with respect to the specific matters set
forth herein.
8.3. Amendment and Modification. This Agreement may not be modified,
amended, altered or supplemented except by the execution and delivery of a
written agreement executed by the parties hereto.
8.4. Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Company will be irreparably harmed and that there will be
no adequate remedy at law for a violation of any of the covenants or
agreements of each Stockholder set forth herein. Therefore, it is agreed
that, in addition to any other remedies that may be available to Company
upon any such violation, Company shall have the right to enforce such
covenants and agreements by specific performance, injunctive relief or by
any other means available to Company at law or in equity and each
Stockholder hereby waives any and all defenses which could exist in its
favor in connection with such enforcement and waives any requirement for
the security or posting of any bond in connection with such enforcement.
8.5. Notices. All notices, requests, demands or other
communications that are required or may be given pursuant to the terms of
this Agreement shall be in writing and shall be deemed to have been duly
given (a) when delivered, if delivered by hand, (b) one business day after
transmitted, if transmitted by a nationally recognized overnight courier
service, (c) when telecopied, if telecopied (which is confirmed), or (d)
three business days after mailing, if mailed by registered or certified
mail (return receipt requested), to the parties at the following addresses:
(a) If to any Stockholder, at the address set forth below such
Stockholder's signature at the end hereof.
(b) if to Company, to:
Ness Technologies, Inc.
Ness Bldg. 4
P.O.B. 58182
Kiryat Atidim
Tel Aviv, 61580
Israel
Attention: Yaron Polak, President and Chief Executive Officer
Facsimile No.: 972-3-766-6819
Telephone No.: 972-3-766-6810
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Richard Gilden, Esq.
Facsimile No.: 212-586-7878
Telephone No.: 212-581-1600
or to such other address as any party hereto may designate for itself by
notice given as herein provided.
8.6. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York without
giving effect to the principles of conflicts or choice of law rules of any
jurisdiction.
8.7. Entire Agreement. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
8.8. Counterpart. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
8.9. Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
NESS TECHNOLOGIES, INC. STOCKHOLDER
By:
------------------------------- ----------------------------------------
(Signature)
Name:
----------------------------- ----------------------------------------
(Print Name of Stockholder)
Title:
---------------------------- ----------------------------------------
(Print Street Address)
----------------------------------------
(Print City, State and Zip)
----------------------------------------
(Print Telephone Number)
Total Number of Shares of Parent Common Stock owned directly on the date
hereof:
Common Stock:
---------------------
State of Residence:
---------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
STOCKHOLDER
----------------------------------------
(Signature)
----------------------------------------
(Print Name of Stockholder)
----------------------------------------
(Print Street Address)
----------------------------------------
(Print City, State and Zip)
----------------------------------------
(Print Telephone Number)
Total Number of Shares of Company Common Stock owned directly on the date
hereof:
Common Stock:
---------------------
State of Residence:
---------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
STOCKHOLDER
----------------------------------------
(Signature)
----------------------------------------
(Print Name of Stockholder)
----------------------------------------
(Print Street Address)
----------------------------------------
(Print City, State and Zip)
----------------------------------------
(Print Telephone Number)
Total Number of Shares of Company Common Stock owned directly on the date
hereof:
Common Stock:
---------------------
State of Residence:
---------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
ANNEX C
CERTIFICATE OF DOMESTICATION
OF
SAPIENS INTERNATIONAL CORPORATION N.V.
Sapiens International Corporation N.V. (the "Corporation"), a
corporation organized and existing under the laws of the Netherlands Antilles
does hereby certify as follows:
FIRST: The Corporation was first formed on _________ as a Netherlands
Antilles company.
SECOND: The name of the Corporation immediately prior to the filing of
this Certificate of Domestication was Sapiens International Corporation N.V.
THIRD: The name of the Corporation under which it is filing a
Certificate of Incorporation is Sapiens International Corporation N.V.
FOURTH: The principal place of business of the corporation immediately
prior to the filing of this Certificate of Domestication was _____________.
FIFTH: A Certificate of Incorporation of Sapiens International
Corporation N.V. is being filed contemporaneously with this Certificate of
Domestication.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Domestication to be signed by __________ , its ___________ , who is
authorized to sign this Certificate of Domestication on behalf of the
Corporation, this __ day of _________, 2000.
SAPIENS INTERNATIONAL CORPORATION N.V.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ANNEX D
CERTIFICATE OF INCORPORATION
OF
SAPIENS INTERNATIONAL CORPORATION N.V.
FIRST: The name of the Corporation is Sapiens International
Corporation N.V. (the "Corporation").
SECOND: The registered office of the Corporation in the
State of Delaware is located at 1209 Orange Street, City of Wilmington,
County of New Castle 19801. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is, subject to the
limitations set forth in the Articles of Association of the Company, if
any, which may be in effect from time to time if the Company is also
incorporated under the laws of another jurisdiction, to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of
the Delaware Code (the "GCL").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 105,000,0000, consisting of
100,000,000 common shares with a par value equal to One Dutch Guilder
currency of The Netherlands (Hf. 1.00) and 5,000,000 preferred shares with
a par value equal to One Dutch Guilder currency of The Netherlands (Hf.
1.00), which may be issued in separate series. From and after the day on
which the Corporation shall cease to be incorporated under the laws of the
Netherlands Antilles, the par value of the common shares and the preferred
shares will be referred to as U.S. dollars based on the spot exchange rate
in New York, New York at the close of business on the trading day
immediately preceding such date. The spot exchange rate in New York, New
York on the trading day immediately preceding the date of this Certificate
of Incorporation was ________U.S. dollars for one Dutch Guilder.
FIFTH: Preferred shares may be issued from time to time in
one or more series or classes on such terms and conditions as may be
determined by the affirmative vote of a majority of the members of the
Board of Directors, after considering the interests of the holders of
Common Shares.
Prior to the issuance of any series or class of Preferred
Shares the Board of Directors shall specify:
(a) the distinctive designation of such series or class and the
number of Preferred shares to constitute such series or class;
provided the Board of Directors may increase or decrease at a later
date the number of Preferred Shares that can be issued in any
specific series or class; provided further that, in the event of a
decrease, the number that may be issued shall not be lower than the
issued outstanding Preferred Shares of such series or class;
(b) whether the Preferred Shares of such series or class be entitled
to annual dividends and, if so, the annual dividend rate with respect
to Preferred Shares of such series or class, which shall be based on
the consideration paid on issuance of such shares and which may be a
fixed rate or a rate that fluctuates on dividend adjustment dates set
under a formula or procedure determined by the Board of Directors
prior to issuance;
(c) whether such dividends, if any, shall be payable annually or in
installments out of funds legally available therefor;
(d) the rights, if any, of the holders or Preferred Shares of such
series or class to vote on issues before an annual or special general
meeting of Shareholders or special class meeting; provided, however,
that at all times shares representing at least twenty percent (20%)
of the authorized capital of the Company shall be issued and held by
third parties in the form of shares with full voting rights;
(e) the rights, if any, of the holders of Preferred Shares of such
series or class to convert Preferred Shares of such series or class
into shares of any other series or class of Preferred Shares or into
Common Shares, provided that Preferred Shares of any series or class
shall not be convertible into Preferred Shares of any series or class
senior thereto without the consent of sixty six percent (66%) of the
holders of the relevant senior series or class voting in a separate
special class meeting;
(f) the rights, if any, of the Company to redeem Preferred Shares of
such series or class (in which case the directors shall specify the
date on or after which the Preferred Shares of such series or class
may be called for redemption by the Company and the consideration to
be paid therefor, or the manner by which such consideration shall be
calculated) and the rights, if any, of holders of such shares to
require the Company to purchase such shares, and the provisions, if
any, of any sinking fund or other arrangement to be used in
connection with such redemption or purchase; and
(g) any other terms and conditions of such series or class which are
not inconsistent with the laws and organizational documents then
applicable to the Corporation.
Preferred Shares of all series and classes shall rank senior to the Common
Shares with respect to dividends and liquidation preferences. Any series or
class of Preferred Shares may be ranked by the Board of Directors to
dividend and liquidation preferences, provided that no series or class
issued after any other series or class shall rank prior to or on parity
with such other series or class as to such preferences without the consent
of sixty six percent (66%) of holders of the relevant senior series or
class voting in a separate special class meeting.
Upon liquidation of the Company, the holders of shares of any series or
class of Preferred Shares shall be entitled to receive, before any
distribution is made to the holders of Common Shares and of any other
series or class of Preferred Shares ranking junior to such series or class
as to liquidation preference, pro rata with any distribution made to
holders of any series or class or Preferred Shares ranking on parity with
such series or class of Preferred Shares and after any distribution is made
to any series or class of Preferred Shares raking senior to such Preferred
Shares, the amount of the liquidation preference of such shares which shall
not exceed the sum of:
(a) the amount paid for such Preferred Shares on issuance, plus
(b) all accumulated and unpaid dividends on such Preferred Shares to the
date fixed for distribution.
SIXTH: The name and mailing address of the Sole Incorporator is
as follows:
Name Address
SEVENTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the
Corporation, and for further definition, limitation and regulation of the
powers of the Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(2) Subject to the limitations set forth in the Articles of
Association of the Company, if any, which may be in effect from time
to time if the Company is also incorporated under the laws of another
jurisdiction, the directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
(4) No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the GCL or (iv) for any transaction
from which the director derived an improper personal benefit. Any
repeal or modification of this Article SEVENTH by the stockholders of
the Corporation shall not adversely affect any right or protection of
a director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to
such repeal or modification.
(5) In addition to the powers and authority hereinbefore or
by statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the GCL, this Certificate of
Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid
if such By-Laws had not been adopted.
EIGHTH: The names and mailing addresses of the persons who
are to serve as directors until the next annual meeting of stockholders or
until their successors are elected and qualified are:
Name Address
THE UNDERSIGNED, for purpose of domesticating a corporation
pursuant to Section 388 of the GCL, does hereby make this Certificate,
hereby declaring and certifying that this is my act and deed and the facts
herein stated are true, and accordingly have hereunto set my hand this___
day of_______, 2000.
---------------------------------
ANNEX E
BY-LAWS
OF
SAPIENS INTERNATIONAL CORPORATION N.V.
A Delaware Corporation
Effective __________, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
OFFICES
<S> <C>
Section 1. Registered Office.............................................................................1
Section 2. Other Offices.................................................................................1
<CAPTION>
ARTICLE II
MEETINGS OF STOCKHOLDERS
<S> <C>
Section 1. Place of Meetings.............................................................................1
Section 2. Annual Meetings...............................................................................1
Section 3. Special Meetings..............................................................................1
Section 4. Quorum........................................................................................2
Section 5. Proxies.......................................................................................2
Section 6. Voting........................................................................................3
Section 7. List of Stockholders Entitled to Vote.........................................................3
Section 8. Stock Ledger..................................................................................3
Section 9. Record Date...................................................................................3
Section 10. Inspectors of Election.......................................................................4
<CAPTION>
ARTICLE III
DIRECTORS
<S> <C>
Section 1. Number and Election of Directors..............................................................4
Section 2. Vacancies.....................................................................................4
Section 3. Duties and Powers.............................................................................4
Section 4. Organization..................................................................................4
Section 5. Resignations and Removals of Directors........................................................5
Section 6. Meetings......................................................................................5
Section 7. Quorum........................................................................................5
Section 8. Actions of Board..............................................................................5
Section 9. Meetings by Means of Conference Telephone.....................................................5
Section 10. Committees...................................................................................6
Section 11. Executive Committee..........................................................................6
Section 12. Compensation.................................................................................6
Section 13. Interested Directors.........................................................................7
<CAPTION>
ARTICLE IV
OFFICERS
<S> <C>
Section 1. General.......................................................................................7
Section 2. Election......................................................................................7
Section 3. Voting Securities Owned by the Corporation....................................................7
Section 4. Chairman of the Board of Directors............................................................8
Section 5. Chief Executive Officer.......................................................................8
Section 6. President.....................................................................................8
Section 7. Vice Presidents...............................................................................8
Section 8. Secretary.....................................................................................9
Section 9. Treasurer.....................................................................................9
Section 10. Assistant Secretaries........................................................................9
Section 11. Assistant Treasurers........................................................................10
Section 12. Other Officers..............................................................................10
<CAPTION>
ARTICLE V
STOCK
<S> <C>
Section 1. Form of Certificates.........................................................................10
Section 2. Signatures...................................................................................10
Section 3. Lost, Destroyed, Stolen or Mutilated Certificates............................................10
Section 4. Transfers....................................................................................11
Section 5. Transfer and Registry Agents.................................................................11
Section 6. Beneficial Owners............................................................................11
<CAPTION>
ARTICLE VI
NOTICES
<S> <C>
Section 1. Notices......................................................................................11
Section 2. Waivers of Notice............................................................................11
<CAPTION>
ARTICLE VII
GENERAL PROVISIONS
<S> <C>
Section 1. Dividends....................................................................................12
Section 2. Disbursements................................................................................12
Section 3. Fiscal Year..................................................................................12
Section 4. Corporate Seal...............................................................................12
<CAPTION>
ARTICLE VIII
INDEMNIFICATION
<S> <C>
Section 1. Power to Indemnify in Actions, Suits or Proceedings Other than Those by or
in the Right of the Corporation............................................................12
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of
the Corporation............................................................................13
Section 3. Authorization of Indemnification.............................................................13
Section 4. Good Faith Defined...........................................................................13
Section 5. Indemnification by a Court...................................................................14
Section 6. Expenses Payable in Advance..................................................................14
Section 7. Non-exclusivity of Indemnification and Advancement of Expenses...............................14
Section 8. Insurance....................................................................................14
Section 9. Certain Definitions..........................................................................15
Section 10. Survival of Indemnification and Advancement of Expenses.....................................15
Section 11. Limitation on Indemnification...............................................................15
Section 12. Indemnification of Employees and Agents.....................................................15
<CAPTION>
ARTICLE IX
AMENDMENTS
<S> <C>
Section 1. Amendments...................................................................................16
Section 2. Entire Board of Directors....................................................................16
</TABLE>
BY-LAWS
OF
SAPIENS INTERNATIONAL CORPORATION N.V.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the
Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders
shall be held on such date and at such time as shall be designated from
time to time by the Board of Directors and stated in the notice of the
meeting, at which meetings the stockholders shall elect directors, and
transact such other business as may properly be brought before the meeting.
Written notice of the annual meeting stating the place, date and hour of
the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or
by the certificate of incorporation of the Corporation, as amended and
restated from time to time (the "Certificate of Incorporation"), special
meetings of stockholders, for any purpose or purposes, may be called by
either (i) the Chairman of the Board of Directors, (ii) the Co-Chairman or
(iii) the Board of Directors in accordance with the provisions of the
Certificate of Incorporation in effect as of the date hereof. Such request
shall state the purpose or purposes of the proposed meeting. At a special
meeting of the stockholders, only such business shall be conducted as shall
be specified in the notice of meeting (or any supplement thereto) given by
or at the direction of the Board of Directors. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise required by law or by the
Certificate of Incorporation, the holders of a majority of the capital
stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings
of the stockholders for the transaction of business. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave
less than a quorum. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder entitled to vote at the meeting not less than ten
nor more than sixty days before the date of the meeting.
Section 5. Proxies. Any stockholder entitled to vote may do so in
person or by his or her proxy appointed by an instrument in writing or by
electronic proxy subscribed by such stockholder or by his or her attorney
thereunto authorized, delivered to the Secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from
its date, unless said proxy provides for a longer period. Without limiting
the manner in which a stockholder may authorize another person or persons
to act for him or her as proxy, either of the following shall constitute a
valid means by which a stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another
person or persons to act for him or her as proxy. Execution may be
accomplished by the stockholder or his or her authorized officer,
director, employee or agent signing such writing or causing his or her
signature to be affixed to such writing by any reasonable means,
including, but not limited to, by facsimile signature.
(ii) A stockholder may authorize another person or persons to act
for him or her as proxy by transmitting or authorizing the
transmission of a telegram or other means of electronic transmission
to the person who will be the holder of the proxy or to a proxy
solicitation firm, proxy support service organization or like agent
duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram or other
means of electronic transmission must either set forth or be submitted
with information from which it can be determined that the telegram or
other electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission authorizing another person or persons to act as
proxy for a stockholder may be substituted or used in lieu of the original
writing or transmission for any and all purposes for which the original
writing or transmission could be used; provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of
the entire original writing or transmission.
Section 6. Voting. At all meetings of the stockholders at which a
quorum is present, except as otherwise required by law, the Certificate of
Incorporation or these By-Laws, any question brought before any meeting of
stockholders shall be decided by the affirmative vote of the holders of a
majority of the total number of votes cast on such question. The Board of
Directors, in its discretion, or the officer of the Corporation presiding
at a meeting of stockholders, in his or her discretion, may require that
any votes cast at such meeting shall be cast by written ballot.
Section 7. List of Stockholders Entitled to Vote. The officer of
the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the
books of the Corporation, or to vote in person or by proxy at any meeting
of stockholders.
Section 9. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board
of Directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the
Board of Directors and which record date: (1) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, shall not be more than sixty nor less than ten days
before the date of such meeting; and (2) in the case of any other action,
shall not be more than sixty days prior to such other action. If no record
date is fixed: (1) the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; and (2) the record date for determining
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date
for the adjourned meeting.
Section 10. Inspectors of Election. In advance of any meeting of
stockholders, the Board by resolution or the Chairman or President shall
appoint one or more inspectors of election to act at the meeting and make a
written report thereof. One or more other persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is present, ready and willing to act at a meeting of
stockholders, the Chairman of the meeting shall appoint one or more
inspectors to act at the meeting. Unless otherwise required by law,
inspectors may be officers, employees or agents of the Corporation. Each
inspector, before entering upon the discharge of his or her duties, shall
take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector shall have the duties prescribed by law and shall take charge of
the polls and, when the vote is completed, shall make a certificate of the
result of the vote taken and of such other facts as may be required by law.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The directors shall
be elected by a plurality (or for so long as the Corporation is also
incorporated under the laws of the Netherlands Antilles, a majority) of the
votes cast, in person or by proxy, by the shareholders entitled to vote.
The number of persons constituting the whole Board of Directors shall not
be less than three (3) nor more than twenty-four (24), as fixed from time
to time by the Board of Directors (or for so long as the Corporation is
also incorporated under the laws of the Netherlands Antilles, by the
Shareholders). Any vacancies may be filled by the Board of Directors (or
for so long as the Corporation is also incorporated under the laws of the
Netherlands Antilles, by the Shareholders).
Section 2. Vacancies. The filling of any vacancy on the Board of
Directors that results from an increase in the number of directors shall be
governed by these By-Laws. Whenever the holders of any one or more class or
classes or series of preferred stock of the Corporation shall have the
right, voting separately as a class, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall also be governed
by the Certificate of Incorporation.
Section 3. Duties and Powers. The business of the Corporation
shall be managed by or under the direction of the Board of Directors which
may exercise all such powers of the Corporation and do all such lawful acts
and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws required to be exercised or done by the stockholders.
Section 4. Organization. At each meeting of the Board of
Directors, the Chairman of the Board of Directors, or, in his or her
absence, a director chosen by a majority of the directors present, shall
act as Chairman. The Secretary of the Corporation shall act as Secretary at
each meeting of the Board of Directors. In case the Secretary shall be
absent from any meeting of the Board of Directors, an Assistant Secretary
shall perform the duties of Secretary at such meeting; and in the absence
from any such meeting of the Secretary and all the Assistant Secretaries,
the Chairman of the meeting may appoint any person to act as Secretary of
the meeting.
Section 5. Resignations and Removals of Directors. Any director of
the Corporation may resign at any time, by giving written notice to the
Chairman of the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time therein
specified or, if no time is specified, immediately; and, unless otherwise
specified in such notice, the acceptance of such resignation shall not be
necessary to make it effective. Except as otherwise required by law and
subject to the rights, if any, of the holders of shares of preferred stock
then outstanding, any director or the entire Board of Directors may be
removed from office at any time, but only for cause, and only by the
affirmative vote of the holders of at least a majority in voting power of
the issued and outstanding capital stock of the Corporation entitled to
vote in the election of directors.
Section 6. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State
of Delaware. Regular meetings of the Board of Directors may be held at such
time and at such place as may from time to time be determined by the Board
of Directors and, unless required by resolution of the Board of Directors,
without notice. Special meetings of the Board of Directors may be called by
the Chairman or Co-Chairman of the Board of Directors. Notice thereof
stating the place, date and hour of the meeting shall be given to each
director either by mail not less than ninety-six (96) hours before the date
of the meeting, by written notice mailed to each director, or not later
than the calendar day immediately preceding the date of such meeting, by
personal delivery, or by telephone call or by sending a telegram, cable or
telefax to each director.
Section 7. Quorum. Except as may be otherwise required by law, the
Certificate of Incorporation or these By-Laws, at all meetings of the Board
of Directors, a majority of the entire Board of Directors shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present.
Section 8. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
Section 9. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws,
members of the Board of Directors of the Corporation, or any committee
designated by the Board of Directors, may participate in a meeting of the
Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 9 shall constitute presence in person at
such meeting.
Section 10. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or
more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of any such committee. In the absence
or disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member. Any committee, to the extent permitted by law and provided in the
resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation. Each committee shall keep regular
minutes and report to the Board of Directors when required.
Section 11. Executive Committee. The Board of Directors by
resolution adopted by a majority of the entire Board of Directors may
appoint an Executive Committee (and may discontinue the same at any time)
to consist of one or more directors of the Corporation to hold office at
the pleasure of the Board of Directors. The Executive Committee shall,
subject to the provisions laid down in these By-Laws, have may execute all
powers and authority delegated to it by the Board of Directors regarding
the management of the business and affairs of the Corporation.
The Executive Committee shall not have the power or authority to:
(a) recommend to the shareholders to amend the By-Laws;
(b) recommend to the shareholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets;
(c) recommend to the shareholders the dissolution and liquidation of the
Corporation;
(d) amend the Bylaws;
(e) declare interim dividends; or
(f) authorize the issuance of shares;
for as much as such powers are within the authority of the entire Board of
Directors or the General Meeting of Shareholders.
Section 12. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary, or such other emoluments as the Board of
Directors shall from time to time determine. No such payment shall preclude
any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
Section 13. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or
transaction, or solely because such person's or their votes are counted for
such purpose if (i) the material facts as to such person's or their
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
or (ii) the material facts as to such person's or their relationship or
interest and as to the contract or transaction are disclosed or are known
to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall include a President, a Secretary
and a Treasurer. The Board of Directors, in its discretion, may also choose
a Chairman of the Board of Directors (who must be a director), and one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these
By-Laws. The officers of the Corporation need not be stockholders of the
Corporation nor, except in the case of the Chairman of the Board of
Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect the officers of
the Corporation who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority
of the Board of Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors. The salaries of all
officers of the Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the President or any
Vice President and any such officer may, in the name of and on behalf of
the Corporation, take all such action as any such officer may deem
advisable to vote in person or by proxy at any meeting of security holders
of any corporation in which the Corporation may own securities and at any
such meeting shall possess and may exercise any and all rights and power
incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the
signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all
contracts, certificates and other instruments of the Corporation which may
be authorized by the Board of Directors. During the absence or disability
of the President, the Chairman of the Board of Directors shall exercise all
the powers and discharge all the duties of the President. The Chairman of
the Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him or
her by these By-Laws or by the Board of Directors.
Section 5. Chief Executive Officer. The Chief Executive Officer
shall, subject to the control of the Board of Directors and, if there be
one, the Chairman of the Board of Directors, have general supervision of
the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. In the event
no President is appointed, the Chief Executive Officer shall act as the
President, possess the same power as the President and may sign as the
President. During the absence or disability of the President, the Chief
Executive Officer shall exercise all the powers and discharge all the
duties of the President. Except where by law the signature of the President
is required, the Chief Executive Officer and shall possess the same power
as the President to sign all contracts, certificates and other instruments
of the Corporation which may be authorized by the Board of Directors shall
possess the same power as the President. The Chief Executive Officer shall
also perform such other duties and may exercise such other powers as from
time to time may be assigned to him or her by these By-Laws or by the Board
of Directors.
Section 6. President. The President, if there be one, shall,
subject to the control of the Board of Directors, the Chief Executive
Officer and, if there be one, the Chairman of the Board of Directors, be
responsible for the day-to-day operations of the business of the
Corporation. The President shall execute all bonds, mortgages, contracts
and other instruments of the Corporation requiring a seal, under the seal
of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except that the other officers of the
Corporation may sign and execute documents when so authorized by these
By-Laws, the Board of Directors or the President. The President shall also
perform such other duties and may exercise such other powers as from time
to time may be assigned to him or her by these By-Laws or by the Board of
Directors.
Section 7. Vice Presidents. At the request of the President or in
his or her absence or in the event of his or her inability or refusal to
act (and if there be no Chairman of the Board of Directors), the Vice
President or the Vice Presidents if there is more than one (in the order
designated by the Board of Directors) shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each Vice President shall
perform such other duties and have such other powers as the Board of
Directors from time to time may prescribe. If there be no Chairman of the
Board of Directors and no Vice President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the
President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President.
Section 8. Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or President, under whose supervision the Secretary
shall be. If the Secretary shall be unable or shall refuse to cause to be
given notice of all meetings of the stockholders and special meetings of
the Board of Directors, and if there be no Assistant Secretary, then either
the Board of Directors or the President may choose another officer to cause
such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secretary, if there be
one, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by the signature of the Secretary
or by the signature of any such Assistant Secretary. The Board of Directors
may give general authority to any other officer to affix the seal of the
Corporation and to attest the affixing by his or her signature. The
Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are
properly kept or filed, as the case may be.
Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Corporation in such depositories as may be designated by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office of Treasurer and for
the restoration to the Corporation, in case of the Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Treasurer's
possession or under control of the Treasurer belonging to the Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall
perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of his or her disability or refusal to act, shall
perform the duties of the Secretary, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if there
be any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act,
shall perform the duties of the Treasurer, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of the office of Assistant Treasurer and
for the restoration to the Corporation, in case of the Assistant
Treasurer's death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in the
Assistant Treasurer's possession or under control of the Assistant
Treasurer belonging to the Corporation.
Section 12. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board
of Directors may delegate to any other officer of the Corporation the power
to choose such other officers and to prescribe their respective duties and
powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of
the Corporation, (i) by the Chairman of the Board of Directors, the
President or a Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by such holder of stock in the
Corporation.
Section 2. Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
Section 3. Lost, Destroyed, Stolen or Mutilated Certificates. The
Board of Directors may direct a new certificate to be issued in place of
any certificate theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or such person's legal representative, to advertise the same
in such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws.
Transfers of stock shall be made on the books of the Corporation only by
the person named in the certificate or by such person's attorney lawfully
constituted in writing and upon the surrender of the certificate therefor,
properly endorsed for transfer and payment of all necessary transfer taxes;
provided, however, that such surrender and endorsement or payment of taxes
shall not be required in any case in which the officers of the Corporation
shall determine to waive such requirement. Every certificate exchanged,
returned or surrendered to the Corporation shall be marked "Cancelled,"
with the date of cancellation, by the Secretary or Assistant Secretary of
the Corporation or the transfer agent thereof. No transfer of stock shall
be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing
from and to whom transferred.
Section 5. Transfer and Registry Agents. The Corporation may from
time to time maintain one or more transfer offices or agencies and registry
offices or agencies at such place or places as may be determined from time
to time by the Board of Directors.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law,
the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at
such person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, facsimile, telex or
cable.
Section 2. Waivers of Notice.
(a) Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed,
by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance
of a person at a meeting, present by person or represented by proxy, shall
constitute a waiver of notice of such meeting, except where the person
attends the meeting for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting is
not lawfully called or convened.
(b) Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors
or members of a committee of directors need be specified in any written
waiver of notice unless so required by law, the Certificate of
Incorporation or these By-Laws.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Subject to the requirements of the GCL and
the provisions of the Certificate of Incorporation, dividends upon the
capital stock of the Corporation may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors, and may be
paid in cash, in property, or in shares of the Corporation's capital stock.
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to
time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall
be the calendar year.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other than Those by or in the Right of the Corporation. Subject to Section
3 of this Article VIII, the Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was a director or officer
of the Corporation serving at the request of the Corporation as a director
or officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action
or proceeding, such person had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that such
person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by
or in the Right of the Corporation. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by such person
in connection with the defense or settlement of such action or suit if such
person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation; except
that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination
that indemnification of the director or officer is proper in the
circumstances because such person has met the applicable standard of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the
case may be. Such determination shall be made (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written
opinion, or (iii) by the stockholders. To the extent, however, that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding described above, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith, without the
necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have
acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation, or, with
respect to any criminal action or proceeding, to have had no reasonable
cause to believe his or her conduct was unlawful, if such person's action
is based on the records or books of account of the Corporation or another
enterprise, or on information supplied to such person by the officers of
the Corporation or another enterprise in the course of their duties, or on
the advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser
or other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall
mean any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee
or agent. The provisions of this Section 4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Section
1 or 2 of this Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director or officer may apply to the Court of Chancery of the State of
Delaware or any other court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under
Sections 1 and 2 of this Article VIII. The basis of such indemnification by
a court shall be a determination by such court that indemnification of the
director or officer is proper in the circumstances because such person has
met the applicable standards of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be. Neither a contrary determination in the
specific case under Section 3 of this Article VIII nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director or officer seeking indemnification has not
met any applicable standard of conduct. Notice of any application for
indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall
also be entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized in this Article
VIII.
Section 7. Non-exclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Certificate of Incorporation or any
By-Law, agreement, contract, vote of stockholders or disinterested
directors or pursuant to the direction (howsoever embodied) of any court of
competent jurisdiction or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to
the fullest extent permitted by law. The provisions of this Article VIII
shall not be deemed to preclude the indemnification of any person who is
not specified in Section 1 or 2 of this Article VIII but whom the
Corporation has the power or obligation to indemnify under the provisions
of the GCL, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of
the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or
arising out of such person's status as such, whether or not the Corporation
would have the power or the obligation to indemnify such person against
such liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify
its directors or officers, so that any person who is or was a director or
officer of such constituent corporation, or is or was a director or officer
of such constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, shall stand in the same position under the provisions of
this Article VIII with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII,
references to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in
good faith and in a manner such person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article VIII to the contrary, except for
proceedings to enforce rights to indemnification (which shall be governed
by Section 5 hereof), the Corporation shall not be obligated to indemnify
any director or officer (or his or her heirs, executors or personal or
legal representatives) or advance expenses in connection with a proceeding
(or part thereof) initiated by such person unless such proceeding (or part
thereof) was authorized or consented to by the Board of Directors of the
Corporation.
Section 12. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those
conferred in this Article VIII to directors and officers of the
Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the Board of
Directors or by the stockholders as provided in the Certificate of
Incorporation.
Section 2. Entire Board of Directors. As used in this Article IX
and in these By-Laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there
were no vacancies.
ANNEX F
PARENT AFFILIATE LETTER
September __, 2000
Sapiens International Corporation N.V.
Yitzhak Rabin Science Park
P.O. Box 2211
Rehovot, 76120
Israel
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization, dated as of September 17, 2000 (the "MERGER AGREEMENT"), by
and among SAPIENS INTERNATIONAL CORPORATION N.V., a Netherlands Antilles
corporation ("PARENT"), WISDOM MERGER SUB, INC., a Delaware corporation and
a wholly owned subsidiary of Parent ("MERGER SUB"), and NESS TECHNOLOGIES,
INC., a Delaware corporation ("COMPANY"), Parent has agreed to acquire
Company through the merger of Merger Sub with and into Company (the
"TRANSACTION"). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Merger Agreement.
The undersigned has been advised that as of the date hereof the
undersigned may be deemed to be (but does not hereby admit to be) an
"affiliate" of Parent, as the term "affiliate" is (i) defined for purposes
of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the
"RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"SEC") promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and/or (ii) used in and for purposes of Accounting
Series Releases 130, 135 and 146 and Staff Accounting Bulletin Two, as
amended, of the SEC.
The undersigned understands that the representations, warranties
and covenants set forth herein will be relied upon by Parent, other
stockholders of Parent, Merger Sub, Company and their respective counsel
and accounting firms. Except to the extent written notification to the
contrary is received by Parent from the undersigned prior to the
consummation of the Transaction, the representations and warranties
contained herein shall be accurate at all times from the date hereof
through the Effective Time.
The undersigned hereby represents and warrants to and agrees with
Parent:
1. The undersigned has power and authority to execute and deliver
this letter agreement and to make the representations and warranties set
forth herein and to perform his or her obligations hereunder;
2. The undersigned has carefully read this letter agreement and
the Merger Agreement and, to the extent the undersigned felt necessary,
discussed the requirements of such documents and other applicable
limitations upon his or her ability to sell, transfer, pledge or otherwise
dispose of Parent Common Stock with his or her counsel or counsel for the
Parent;
3. The undersigned is the owner of the number of shares of Parent
Common Stock (the "SHARES") set forth on the signature page hereto and did
not acquire any of the Shares in contemplation of the Transaction. The
Shares constitute the undersigned's entire interest in Parent's capital
stock, excluding stock options held by the undersigned.
4. The undersigned will not make any sale, transfer, pledge or
other disposition of Parent Common Stock (i) in violation of the Securities
Act or the Rules and Regulations or (ii) to a transferee that has not
agreed in writing to be bound hereby;
5. Except as set forth below, during the 30-day period immediately
preceding the Effective Time, the undersigned has not engaged and will not
engage, and after the Effective Time until such time as results covering at
least thirty (30) days of combined operations of the Company and Parent
have been published by Parent, in the form of a quarterly earnings report,
an effective registration statement filed with the SEC, a report to the
SEC, or any other public filing or announcement which includes such
combined results of operations (the period commencing 30 days prior to the
Effective Time and ending on the date of the publication of the
post-Transaction financial results is referred to herein as the "POOLING
PERIOD"), the undersigned will not, except as may be permitted under
Commission Accounting Series Release No. 135 or Staff Accounting Bulletin
Nos. 65 and 76, Topic 2E, engage in any sale, transfer, or other
disposition of, or reduce the undersigned's risk in respect of any Parent
Common Stock.
6. As promptly as practicable after the Effective Time, Parent
will publish results covering at least thirty (30) days of combined
operations of the Company and Parent in the form of a quarterly earnings
report, an effective registration statement filed with the SEC, a report to
the SEC, or any other public filing or announcement which includes such
combined results of operations; provided, however, that Parent will under
no circumstance be obligated to publish such results earlier than that time
at which Parent publishes results for its first full fiscal quarter during
which such thirty (30) days of combined operations occurs.
7. This Parent Affiliate Agreement shall terminate upon the
termination of the Merger Agreement.
8. This Parent Affiliate Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of New York without giving effect to the principles of conflicts of laws
thereof and may be executed in counterparts.
[Signature Page Follows]
Very truly yours,
----------------------------------------
(signature)
----------------------------------------
(print name)
Number of Shares beneficially owned
as of the date hereof:
----------------------------------------
Accepted as of September ___, 2000
SAPIENS INTERNATIONAL CORPORATION N.V.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SIGNATURE PAGE FOR COMPANY AFFILIATE AGREEMENT
ANNEX G
COMPANY AFFILIATE LETTER
September __, 2000
Sapiens International Corporation N.V.
Yitzhak Rabin Science Park
P.O. Box 2211
Rehovot, 76120
Israel
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger and
Reorganization, dated as of September 17, 2000 (the "MERGER AGREEMENT"), by
and among SAPIENS INTERNATIONAL CORPORATION N.V., a Netherlands Antilles
corporation ("PARENT"), WISDOM MERGER SUB, INC., a Delaware corporation and
a wholly owned subsidiary of Parent ("MERGER SUB"), and NESS TECHNOLOGIES,
INC., a Delaware corporation ("COMPANY"), Parent has agreed to acquire
Company through the merger of Merger Sub with and into Company (the
"TRANSACTION"). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Merger Agreement.
The undersigned has been advised that as of the date hereof the
undersigned may be deemed to be (but does not hereby admit to be) an
"affiliate" of Company, as the term "affiliate" is (i) defined for purposes
of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the
"RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"SEC") promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and/or (ii) used in and for purposes of Accounting
Series Releases 130, 135 and 146 and Staff Accounting Bulletin Two, as
amended, of the SEC.
The undersigned understands that the representations, warranties
and covenants set forth herein will be relied upon by Parent, other
stockholders of Parent, Merger Sub, Company and their respective counsel
and accounting firms. Except to the extent written notification to the
contrary is received by Parent from the undersigned prior to the
consummation of the Transaction, the representations and warranties
contained herein shall be accurate at all times from the date hereof
through the Effective Time.
The undersigned hereby represents and warrants to and agrees with
Parent that in the event the undersigned receives any shares of Parent
Common Stock as a result of the Transaction or as a result of the exercise
of options to purchase shares of the Company Common Stock that have been
converted into options to purchase Parent Common Stock:
1. The undersigned has power and authority to execute and deliver
this letter agreement and to make the representations and warranties set
forth herein and to perform his or her obligations hereunder;
2. The undersigned has carefully read this letter agreement and
the Merger Agreement and, to the extent the undersigned felt necessary,
discussed the requirements of such documents and other applicable
limitations upon his or her ability to sell, transfer, pledge or otherwise
dispose of Parent Common Stock with his or her counsel or counsel for the
Company;
3. The undersigned is the owner of the number of shares of Company
Common Stock (the "SHARES") set forth on the signature page hereto and did
not acquire any of the Shares in contemplation of the Transaction. The
Shares constitute the undersigned's entire interest in Company's capital
stock, excluding stock options held by the undersigned.
4. The undersigned will not make any sale, transfer, pledge or
other disposition of Parent Common Stock (i) in violation of the Securities
Act or the Rules and Regulations or (ii) to a transferee that has not
agreed in writing to be bound hereby;
5. The undersigned has been advised that the issuance of Parent
Common Stock to the undersigned in connection with the Transaction has been
or will be registered with the SEC under the Securities Act on a
Registration Statement on Form F-4 or on Form S-4, as appropriate. However,
the undersigned has also been advised that, since at the time the
Transaction was or will be submitted for a vote of the stockholders of the
Company the undersigned may be deemed to be or have been an affiliate of
the Company and the distribution by the undersigned of any Parent Common
Stock has not been registered under the Securities Act, the undersigned may
not sell, transfer, or otherwise dispose of Parent Common Stock issued to
him or her in the Transaction unless (i) such sale, transfer, or other
disposition has been registered under the Securities Act, (ii) such sale,
transfer, or other disposition is made in conformity with the volume and
other limitations of Rule 145 (as such rule may be hereafter amended)
promulgated by the SEC under the Securities 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 Securities Act;
6. The undersigned understands that, except as provided in the
Merger Agreement, Parent is under no obligation to register the sale,
transfer, or other disposition of Parent Common Stock by the undersigned or
on his or her behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available;
7. The undersigned also understands that Parent may impose stop
transfer instructions or elect to not permit the transfer of shares of
Parent Common Stock or the issuance of a new certificate representing such
shares and that there will be placed on the certificates for Parent Common
Stock issued to him or her, or any substitutions therefor, a legend stating
in substance:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, APPLIES. THE SECURITIES EVIDENCED BY THIS
CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR EXEMPTION FROM
SUCH REGISTRATION AND ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED SEPTEMBER __, 2000 BETWEEN THE REGISTERED HOLDER
HEREOF AND SAPIENS INTERNATIONAL CORPORATION N.V., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF SAPIENS
INTERNATIONAL CORPORATION N.V.;
8. The undersigned also understands that, unless the sale,
transfer, or other disposition by him or her of Parent Common Stock issued
to him or her has been registered under the Securities Act or is a sale
made in conformity with the provisions of Rule 145, Parent reserves the
right to put on the certificates issued to any transferee of the
undersigned a legend stating in substance:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES,
AND WERE NOT ACQUIRED BY THE HOLDER WITH A VIEW TO TRANSFER, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF, UNLESS SUCH SALE,
TRANSFER, OR OTHER DISPOSAL IS MADE IN CONNECTION WITH AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT, THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE
SECURITIES LAWS;
9. Any other provisions of this letter agreement to the contrary
notwithstanding, except as set forth below, during the 30-day period
immediately preceding the Effective Time, the undersigned has not engaged
and will not engage, and after the Effective Time until such time as
results covering at least thirty (30) days of combined operations of the
Company and Parent have been published by Parent, in the form of a
quarterly earnings report, an effective registration statement filed with
the SEC, a report to the SEC, or any other public filing or announcement
which includes such combined results of operations (the period commencing
30 days prior to the Effective Time and ending on the date of the
publication of the post-Transaction financial results is referred to herein
as the "POOLING PERIOD"), the undersigned will not, except as may be
permitted under Commission Accounting Series Release No. 135 or Staff
Accounting Bulletin Nos. 65 and 76, Topic 2E, engage in any sale, transfer,
or other disposition of, or reduce the undersigned's risk in respect of,
any of the following:
a. any shares of Parent Common Stock which the
undersigned may acquire in connection with the Transaction or as a
result of the exercise of options to purchase shares of Company Common
Stock that have been converted into options to purchase Parent Common
Stock, or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor (all such shares and other
securities being referred to herein, collectively, as "RESTRICTED
SECURITIES"), or any option, right or other interest with respect to
any Restricted Securities;
b. the shares of Company Common Stock and options or warrants
to purchase Company Common Stock beneficially owned by the undersigned
(provided that the undersigned may exercise such options); or
c. any shares of Company Common Stock or any other equity
securities of the Company which the undersigned purchases or otherwise
acquires after the execution of this letter agreement.
10. As promptly as practicable after the Effective Time, Parent
will publish results covering at least thirty (30) days of combined
operations of the Company and Parent in the form of a quarterly earnings
report, an effective registration statement filed with the SEC, a report to
the SEC, or any other public filing or announcement which includes such
combined results of operations; provided, however, that Parent will under
no circumstance be obligated to publish such results earlier than that time
at which Parent publishes results for its first full fiscal quarter during
which such thirty (30) days of combined operations occurs.
11. This Company Affiliate Agreement shall terminate upon the
termination of the Merger Agreement.
12. This Company Affiliate Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of New York without giving effect to the principles of conflicts of laws
thereof and may be executed in counterparts.
[Signature Page Follows]
Very truly yours,
-----------------------------------------
(signature)
-----------------------------------------
(print name)
Number of Shares beneficially owned
as of the date hereof:
----------------------
Accepted as of September ___, 2000
SAPIENS INTERNATIONAL CORPORATION N.V.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SIGNATURE PAGE FOR COMPANY AFFILIATE AGREEMENT
ANNEX H
Annex H to Merger Agreement pursuant to Section 7.01 thereof - Amendment to
Parent Articles of Association
I Change of Name
Articles 1.1 of the Articles of Association shall be amended to read as
follows:
"1.1 The Company shall bear the name "NESS TECHNOLOGIES, INC."(1)
II. Increase of Share Capital
Articles 4.1 of the Articles of Association shall be amended to read as
follows:
"4.1 The authorized capital of the Company shall be 105,000,000 GUILDERS
Currency of the Netherlands (Hf.105,000,000) divided into (a)
100,000,000 common shares with a par value of One Dutch Guilder
Currency of The Netherlands (Hf. 1.00) each (the "Common Shares")
and (b) 5,000,000 preferred shares with a par value of One Dutch
Guilder Currency of The Netherlands (Hf. 1.00) each, which may be
issued in separate series (the "Preferred Shares")."
III. Removal of Provisions Pertaining to the 10% Preferred -- Series A Shares
All provisions pertaining to the 10% Preferred -- Series A Shares shall be
omitted from the Articles of Association.
--------
(1) Applicable only if the company is a Netherlands Antilles company
immediately prior to the merger.
