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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 15, 1998.
NETMANAGE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22158 77-0252226
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10725 NORTH DE ANZA BOULEVARD, CUPERTINO, CALIFORNIA 95014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 973-7171
(Former name or former address, if changed since last report)
N/A
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ITEM 5. OTHER EVENTS
On June 15, 1998, NetManage, Inc. (the "Company") and FTP Software,
Inc. entered into an Agreement and Plan and Reorganization pursuant to which the
Company will acquire FTP Software, Inc. A copy of such Agreement and Plan and
Reorganization is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBIT.
99.1 Agreement and Plan and Reorganization dated as of June 15,
1998 by and among NetManage, Inc., Amanda Acquisition
Corp. and FTP Software, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NETMANAGE, INC.
/s/ Gary R. Anderson
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Gary R. Anderson, Chief Financial Officer and
Senior Vice President, Finance and Secretary
Date: June 17, 1998
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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99.1 Agreement and Plan and Reorganization dated as of June 15,
1998 by and among NetManage, Inc., Amanda Acquisition
Corp. and FTP Software, Inc.
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EXHIBIT 99.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NETMANAGE, INC.
AMANDA ACQUISITION CORP.
AND
FTP SOFTWARE, INC.
Dated as of June 15, 1998
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TABLE OF CONTENTS
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ARTICLE I THE MERGER.......................................................................... 2
1.1 The Merger.......................................................................... 2
1.2 Effective Time; Closing............................................................. 2
1.3 Effect of the Merger................................................................ 2
1.4 Articles of Organization; Bylaws.................................................... 2
1.5 Directors and Officers.............................................................. 3
1.6 Effect on Capital Stock............................................................. 3
1.7 Dissenting Shares................................................................... 5
1.8 Surrender of Certificates........................................................... 5
1.9 No Further Ownership Rights in Company Common Stock................................. 7
1.10 Lost, Stolen or Destroyed Certificates.............................................. 7
1.11 Tax Consequences and Accounting..................................................... 7
1.12 Taking of Necessary Action; Further Action.......................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY........................................... 8
2.1 Organization of Company............................................................. 8
2.2 Company Capital Structure........................................................... 8
2.3 Obligations With Respect to Capital Stock........................................... 9
2.4 Authority.......................................................................... 10
2.5 SEC Filings; Company Financial Statements.......................................... 11
2.6 Absence of Certain Changes or Events............................................... 12
2.7 Taxes.............................................................................. 12
2.8 Title to Properties; Absence of Liens and Encumbrances............................. 14
2.9 Intellectual Property.............................................................. 14
2.10 Compliance; Permits; Restrictions.................................................. 17
2.11 Litigation......................................................................... 18
2.12 GSA Audit.......................................................................... 18
2.13 Brokers' and Finders' Fees......................................................... 18
2.14 Employee Benefit Plans............................................................. 19
2.15 Environmental Matters.............................................................. 23
2.16 Agreements, Contracts and Commitments.............................................. 24
2.17 Statements; Proxy Statement/Prospectus............................................. 25
2.18 Board Approval..................................................................... 25
2.19 Fairness Opinion................................................................... 25
2.20 Certain Transactions and Agreements................................................ 26
2.21 Non-Applicability of Massachusetts Antitakeover Law................................ 26
2.22 Customs; Export Controls........................................................... 26
2.23 Pooling of Interests............................................................... 26
2.24 Company Common Stockholder Approval................................................ 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............................. 26
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TABLE OF CONTENTS
(CONTINUED)
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3.1 Organization of Parent and Merger Sub.............................................. 27
3.2 Parent and Merger Sub Capital Structure............................................ 27
3.3 Obligations With Respect to Capital Stock.......................................... 27
3.4 Authority.......................................................................... 28
3.5 SEC Filings; Parent Financial Statements........................................... 29
3.6 Absence of Certain Changes or Events............................................... 29
3.7 Statements; Proxy Statement/Prospectus............................................. 30
3.8 Valid Issuance..................................................................... 30
3.9 Board Approval..................................................................... 30
3.10 Merger Sub......................................................................... 30
3.11 Litigation......................................................................... 31
3.12 Brokers' and Finders' Fees......................................................... 31
3.13 Reservation of Shares.............................................................. 31
3.14 Intellectual Property.............................................................. 31
3.15 Compliance......................................................................... 31
3.16 Parent Common Stockholder Approval................................................. 32
3.17 Company Stock Ownership............................................................ 32
3.18 Pooling of Interests............................................................... 32
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................................ 32
4.1 Conduct of Business by the Company................................................. 32
4.2 Conduct of Business by Parent...................................................... 35
ARTICLE V ADDITIONAL AGREEMENTS.............................................................. 36
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board
Recommendations.................................................................... 36
5.2 Meetings of Parent and Company Stockholders........................................ 37
5.3 Confidentiality; Access to Information............................................. 39
5.4 No Solicitation.................................................................... 39
5.5 Public Disclosure.................................................................. 41
5.6 Reasonable Efforts; Notification................................................... 41
5.7 Third Party Consents............................................................... 42
5.8 Stock Options and Employee Benefits................................................ 42
5.9 Form S-8........................................................................... 43
5.10 Indemnification.................................................................... 43
5.11 Nasdaq Listing..................................................................... 44
5.12 Regulatory Filings; Reasonable Efforts............................................. 44
5.13 Affiliate Agreements............................................................... 44
5.14 Rights Agreement Amendment......................................................... 44
5.15 Reorganization Treatment........................................................... 45
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TABLE OF CONTENTS
(CONTINUED)
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5.16 Monthly Financial Statements....................................................... 45
ARTICLE VI CONDITIONS TO THE MERGER........................................................... 45
6.1 Conditions to Obligations of Each Party to Effect the Merger....................... 45
6.2 Additional Conditions to Obligations of the Company................................ 46
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.................. 46
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................................. 48
7.1 Termination........................................................................ 48
7.2 Notice of Termination; Effect of Termination....................................... 50
7.3 Fees and Expenses.................................................................. 50
7.4 Amendment.......................................................................... 51
7.5 Extension; Waiver.................................................................. 51
ARTICLE VIII GENERAL PROVISIONS................................................................. 51
8.1 Non-Survival of Representations and Warranties..................................... 51
8.2 Notices............................................................................ 51
8.3 Interpretation..................................................................... 52
8.4 Counterparts....................................................................... 53
8.5 Entire Agreement; Third Party Beneficiaries........................................ 54
8.6 Severability....................................................................... 54
8.7 Other Remedies..................................................................... 54
8.8 Governing Law...................................................................... 54
8.9 Rules of Construction.............................................................. 54
8.10 Assignment......................................................................... 55
8.11 Waiver of Jury Trial............................................................... 55
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
June 15, 1998, among NetManage, Inc., a Delaware corporation ("PARENT"), Amanda
Acquisition Corp., a Massachusetts corporation and a wholly-owned subsidiary of
Parent ("MERGER SUB"), and FTP Software, Inc., a Massachusetts corporation
("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Massachusetts Business
Corporation Law (the "MBCL"), Parent and Company intend to enter into a business
combination transaction.
B. The Board of Directors of the Company (i) has determined that the
Merger (as defined in Section 1.1) is fair to, and in the best interests of, the
Company and its stockholders, (ii) has approved this Agreement, the Merger and
the other transactions contemplated by this Agreement and (iii) has determined
to recommend that the stockholders of the Company adopt and approve this
Agreement and approve the Merger.
C. The Board of Directors of Parent (i) has determined that the issuance
of shares of Common Stock of the Parent in the Merger is fair to, and in the
best interests of, Parent and its stockholders, (ii) has approved this
Agreement, the Merger and the other transactions contemplated by this Agreement,
(iii) has approved an amendment of the Parent's Certificate of Incorporation to
increase the number of authorized shares of Common Stock of Parent from
75,000,000 to 125,000,000 (the "PARENT CERTIFICATE AMENDMENT") and (iv) has
determined to recommend that the stockholders of Parent adopt and approve the
issuance of shares of Common Stock of the Parent in the Merger and the Parent
Certificate Amendment.
D. The Board of Directors and sole stockholder of Merger Sub have
approved the Merger.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
employees of the Company have entered into Employment or Termination Agreements
in substantially the forms attached hereto as Exhibit A-1, A-2 and A-3.
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
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NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the MBCL, Merger Sub shall be merged with and into the
Company (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation. The Company
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "SURVIVING CORPORATION."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts in accordance with the relevant provisions of the MBCL (the
"ARTICLES OF MERGER") (the time of such filing (or such later time as may be
agreed in writing by the Company and Parent and specified in the Articles of
Merger) being the "EFFECTIVE TIME") as soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI. Unless the
context otherwise requires, the term "AGREEMENT" as used herein refers
collectively to this Agreement and Plan of Reorganization and the Articles of
Merger. The closing of the Merger (the "CLOSING") shall take place at the
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at a time
and date to be specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as the parties hereto agree
in writing (the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the MBCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all of the estate, property, rights, privileges, powers
and franchises of the Company and Merger Sub and all of their property, real,
personal and mixed, and all the debts on whatever account to any of them, as
well as stock subscriptions and other choses in action belonging to any of them,
shall be transferred to and vested in the Surviving Corporation without further
act or deed, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 Articles of Organization; Bylaws.
(a) The Articles of Organization of the Surviving Corporation
shall be amended and restated at and as of the Effective Time to read as did the
Articles of Organization of Merger Sub immediately prior to the Effective Time
(except that the name of the Surviving Corporation will remain
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unchanged). The purposes of the Surviving Corporation, the total number of
shares and the par value of each class of stock which the Surviving Corporation
is authorized to issue and the preferences, voting powers, qualifications and
special or relative rights or privileges of each class or series of stock which
the Surviving Corporation is authorized to issue shall be as set forth in the
Articles of Organization of Merger Sub as in effect immediately prior to the
Effective Time.
(b) The Bylaws of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the Bylaws of Merger Sub
immediately prior to the Effective Time (except that the name of the Surviving
Corporation will remain unchanged).
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Conversion of Company Common Stock. Each share of Common
Stock, $0.01 par value per share, of the Company (the "COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be canceled pursuant to Section 1.6(c) and any
Dissenting Shares (as defined in and to the extent provided in Section 1.7(a)),
will be canceled and extinguished and automatically converted (subject to
Sections 1.6(f) and (g)) into the right to receive 0.72767 shares of the Common
Stock, $0.01 par value per share, of Parent (the "PARENT COMMON STOCK") (subject
to adjustment as provided in Section 1.6(b), the "EXCHANGE RATIO") upon
surrender of the certificate representing such share of Company Common Stock in
the manner provided in Section 1.8 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if required) in
the manner provided in Section 1.10).
(b) Adjustment to Exchange Ratio. In the event that (i) the net
revenues of the Company determined in accordance with GAAP ("Net Revenues"), (A)
for the fiscal quarter ending June 30, 1998 ("COMPANY SECOND QUARTER REVENUES")
are less than $9,000,000 and/or (B) for the two months ending August 31, 1998
("COMPANY THIRD QUARTER REVENUES") are less than $4,900,000 (or, if the Closing
occurs prior to August 31, 1998, Net Revenues for the month ending July 31, 1998
are less than $2,450,000) and/or (ii) the cash and cash equivalents of the
Company on June 30, 1998 determined in accordance with GAAP are less than
$60,000,000, less any amounts paid as a result of Company employee terminations
to which Parent consents pursuant to Section 4.1(t) ("PERMITTED SEVERANCES"),
the Exchange Ratio shall be reduced to the amount obtained by dividing the
number of Adjusted Merger Shares (as defined below) by 34,024,336. "Adjusted
Merger Shares" shall mean a number of shares of Parent Common Stock equal to
24,758,452 minus a number of shares of Parent Common Stock obtained by dividing
(A) (x) the amount by which Company Second Quarter Revenues
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plus the excess, if any, of Company Third Quarter Revenues over $4,900,000 are
less than $9,000,000, plus (y) the amount by which Company Third Quarter
Revenues are less than $4,900,000 (or, if the Closing occurs prior to August 31,
1998, the amount by which Net Revenues for the month ending July 31, 1998 are
less than $2,450,000), plus (z) the amount by which the cash and cash
equivalents of the Company on June 30, 1998 determined in accordance with GAAP
are less than $60,000,000 less any amounts paid as a result of Permitted
Severances, by (B) the average of the closing prices for the Parent Common Stock
as reported on the Nasdaq National Market for the twenty trading days ending on
the date prior to the Closing Date.
(c) Cancellation of Parent-Owned Stock. Each share of Company
Common Stock held by the Company, Merger Sub or Parent immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
(d) Stock Options; Employee Stock Purchase Plans. At the
Effective Time, all options to purchase Company Common Stock then outstanding
(i) under the Company's (A) 1987 Stock Option Plan, (B) 1997 Employee Equity
Incentive Plan and (C) 1996 Executive Equity Incentive Plan, and (ii) as a
result of the Company's assumption of options originally granted under the
Firefox 1994 Share Option Scheme ("SCHEME OPTIONS") (the plans referred to in
subsections (i) and (ii) above are collectively referred to herein as the
"COMPANY STOCK OPTION PLANS") shall be deemed assumed by Parent in accordance
with Section 5.8 hereof. Rights outstanding under the Company's 1994 Employee
Stock Purchase Plan and Non-Qualified Stock Purchase Plan for Employees of
Certain Subsidiaries (the "ESPPS") shall be treated as set forth in Section 5.8.
(e) Capital Stock of Merger Sub. Each share of Common Stock,
$0.01 par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of Common Stock, $0.01
par value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(f) Other Adjustments to Exchange Ratio. The Exchange Ratio shall
be adjusted to fully reflect appropriately the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after the
date hereof and prior to the Effective Time.
(g) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall
receive from Parent an amount of cash (rounded up to the nearest whole cent)
equal to the product of (i) such fraction,
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multiplied by (ii) the average closing price of one share of Parent Common Stock
for the five (5) most recent days that Parent Common Stock has traded ending on
the trading day immediately prior to the Effective Time, as reported on The
Nasdaq National Market ("NASDAQ").
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, the shares of any holder of Company Common Stock who has demanded and
perfected appraisal rights for such shares in accordance with the MBCL and who,
as of the Effective Time, has not effectively withdrawn or lost such appraisal
rights ("DISSENTING SHARES"), shall not be converted into or represent a right
to receive Parent Common Stock pursuant to Section 1.6, but the holder thereof
shall only be entitled to such rights as are granted by the MBCL.
(b) Notwithstanding the provisions of subsection (a), if any
holder of shares of Company Common Stock who demands appraisal of such shares
under the MBCL shall effectively withdraw the right to appraisal pursuant to the
MBCL, then, as of the later of the Effective Time and the occurrence of such
event, such holder's shares shall automatically be converted into and represent
only the right to receive Parent Common Stock (and cash in lieu of fractional
shares) pursuant to Section 1.6, without interest thereon, upon surrender of the
certificate representing such shares.
(c) The Company shall give Parent (i) prompt notice of any
written demands for appraisal of any shares of Company Common Stock, withdrawals
of such demands, and any other instruments served pursuant to the MBCL and
received by the Company which relate to any such demand for appraisal and (ii)
the opportunity to participate in all negotiations and proceedings which take
place prior to the Effective Time with respect to demands for appraisal under
the MBCL. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands for appraisal
of Company Common Stock or offer to settle or settle any such demands.
1.8 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective
Time, Parent shall supply to the Exchange Agent for exchange in accordance with
this Article I, certificates evidencing the shares of Parent Common Stock
issuable pursuant to Section 1.6 in exchange for outstanding shares of Company
Common Stock, and cash in an amount sufficient for payment in lieu of fractional
shares pursuant to Section 1.6(f) and any dividends or distributions to which
holders of shares of Company Common Stock may be entitled pursuant to Section
1.8(d).
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(c) Exchange Procedures. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into shares of Parent Common
Stock pursuant to Section 1.6, cash in lieu of any fractional shares pursuant to
Section 1.6(g) and any dividends or other distributions pursuant to Section
1.8(d), (i) a letter of transmittal in customary form (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall
contain such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(g) and any dividends or other
distributions pursuant to Section 1.8(d). Upon surrender of Certificates for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holders of such Certificates shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of Parent Common
Stock into which their shares of Company Common Stock were converted at the
Effective Time, payment in lieu of fractional shares which such holders have the
right to receive pursuant to Section 1.6(g) and any dividends or distributions
payable pursuant to Section 1.8(d), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will be
deemed from and after the Effective Time, for all corporate purposes, subject to
Section 1.8(d) as to the payment of dividends, to evidence only the ownership of
the number of full shares of Parent Common Stock into which such shares of
Company Common Stock shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.6(g) and any dividends or distributions payable pursuant to
Section 1.8(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(g) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing shares
of Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
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 certificates
representing shares of Parent Common Stock in any name other
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than that of the registered holder of the Certificates 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) No Liability. Notwithstanding anything to the contrary in
this Section 1.8, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Sections 1.6(g) and 1.8(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to the
shares of Company Common Stock converted into shares of Parent Common Stock
pursuant to Section 1.6(a), and after the Effective Time, there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If after the Effective Time Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(g) and any dividends or distributions payable pursuant to Section 1.8(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.11 Tax Consequences and Accounting.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
1.12 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
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Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub, the officers and directors of the Company and Merger Sub will take all such
lawful and necessary action. Parent shall cause Merger Sub to perform all of its
obligations under or relating to this Agreement and the transactions
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Parent and Merger Sub, subject to
the exceptions specifically disclosed in writing in the disclosure letter and
referencing a specific Section of this Article II supplied by the Company to
Parent dated as of the date hereof and certified by a duly authorized officer of
the Company (the "COMPANY SCHEDULES"), as follows:
2.1 Organization of Company.
(a) The Company and each of its subsidiaries: (i) is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized; (ii) has
the corporate or other power and authority to own, lease and operate its assets
and property and to carry on its business as now being conducted; and (iii)
except as would not be material to the Company, is duly qualified or licensed to
do business in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary.
(b) The Company has delivered to Parent a true and complete list
of all of the Company's subsidiaries as of the date of this Agreement,
indicating the jurisdiction of organization of each subsidiary and the Company's
equity interest therein.
(c) The Company has delivered or made available to Parent a true
and correct copy of the Amended and Restated Articles of Organization, as
amended, and Amended and Restated Bylaws of the Company and similar governing
instruments of each of its subsidiaries, each as amended to date, and each such
instrument is in full force and effect. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Organization or bylaws or equivalent governing instruments.
2.2 Company Capital Structure. The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock, $0.01 par value per
share, of which there were 34,024,336 shares issued and outstanding as of the
date of this Agreement (excluding shares held in treasury of which there are
none), and 5,000,000 shares of Preferred Stock, $0.01 par value per share,
500,000 shares of which have been designated as Junior Preferred Stock, of which
no shares are issued or outstanding. All outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid and nonassessable, except
as set forth in the Company Schedules, and are not subject to preemptive rights
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<PAGE> 13
created by statute, the Articles of Organization or bylaws of the Company or any
agreement or document to which the Company is a party or by which it is bound.
The Company or a wholly-owned subsidiary of the Company owns all of the
outstanding shares of capital stock of each of its subsidiaries. As of the date
of this Agreement, Company had reserved an aggregate of 10,576,885 shares of
Company Common Stock, net of exercises, for issuance pursuant to the Company
Stock Option Plans and the ESPPs. As of the date of this Agreement, there were
options outstanding to purchase an aggregate of 6,146,598 shares of Company
Common Stock pursuant to the Company Stock Option Plans. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable. Section
2.2 of the Company Schedules contains a list for each person who held options to
acquire shares of Company Common Stock as of the date of this Agreement, the
name of the holder of such option, the exercise price of such option, the number
of shares as to which such option had vested at such date, the vesting schedule
for such option and whether the exercisability of such option will be
accelerated in any way by the transactions contemplated by this Agreement and
indicates the extent of acceleration, if any.
2.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 2.2 of this Agreement or Section 2.2 of the Company Schedules, there are
no equity securities, partnership interests or similar ownership interests of
any class of the Company's equity security, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for securities the Company owns free and clear of all claims
and encumbrances, directly or indirectly through one or more subsidiaries, as of
the date of this Agreement, there are no equity securities, partnership
interests or similar ownership interests of any class of equity security of any
subsidiary of the Company, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 2.2 of this Agreement, pursuant to the Rights Agreement (as
defined below) or as set forth in Section 2.2 of the Company Schedules, there
are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the Company or any
of its subsidiaries is a party or by which it is bound obligating the Company or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of the Company or any of
its subsidiaries or obligating the Company or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement. As of the date
of this Agreement, except as contemplated by this Agreement or the Rights
Agreement or the Company Schedules, there are no registration rights and there
is no voting trust, proxy, rights plan or other agreement or understanding to
which the Company is a party or by which it is bound with respect to any equity
security of any class of the Company or with respect to any equity security,
partnership interest or similar ownership interest of any class of any of its
subsidiaries. The Company has taken all necessary action so that no rights
authorized or granted under the Rights Agreement dated as of December 1, 1995
between the Company
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<PAGE> 14
and State Street Bank and Trust Company, as Rights Agent, as amended as of
November 7, 1996 and February 27, 1998 and June 15, 1998 (the "RIGHTS
AGREEMENT") shall become exercisable as a result of the execution of this
Agreement, the Merger or any other transactions contemplated hereby.
2.4 Authority.
(a) The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby and the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject in each case only to the
approval and adoption of this Agreement and the approval of the Merger by the
Company's stockholders and the filing of the Articles of Merger pursuant to the
MBCL. This Agreement has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by Parent and Merger Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.
The execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Articles of Organization or bylaws of the Company or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to obtaining
the approval and adoption of this Agreement and the approval of the Merger by
the Company's stockholders as contemplated in Section 5.2 and compliance with
the requirements set forth in Section 2.4(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which the Company or any of its subsidiaries or
any of their respective properties is bound or affected, or (iii) except as set
forth in Section 2.4 of the Company Schedules, result in any material breach of
or constitute a material default (or an event that with notice or lapse of time
or both would become a material default) under, or impair the Company's rights
or alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a material lien or encumbrance on any of the material
properties or assets of the Company or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, concession, or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective assets are bound or affected.
The Company Schedules list each consent, waiver and approval under any of the
Company's or any of its subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby, which, if individually or in the aggregate not obtained,
would result in a material loss of benefits to the Company or the Surviving
Corporation as a result of the Merger.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY"), is required to be obtained or made by the
Company or any of its subsidiaries in connection with the execution and delivery
of this Agreement
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<PAGE> 15
or the consummation of the Merger, except for (i) the filing of the Articles of
Merger with the Secretary of State of the Commonwealth of Massachusetts, (ii)
the filing of the Proxy Statement/Prospectus (as defined in Section 2.17) with
the Securities and Exchange Commission (the "SEC") in accordance with, and other
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and the
securities or antitrust laws of any foreign country, and (iv) such other
governmental consents, authorizations, filings, approvals and registrations
which if not obtained or made would not be material to the Company and its
subsidiaries, taken as a whole, or the Surviving Corporation or have a material
adverse effect on the ability of the parties hereto to consummate the Merger.
2.5 SEC Filings; Company Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by Company with the SEC since December 31, 1995 and has
made available to Parent such forms, reports and documents in the form filed
with the SEC. All such required forms, reports and documents (including those
that the Company may file subsequent to the date hereof) are referred to herein
as the "COMPANY SEC REPORTS." As of their respective dates, the Company SEC
Reports (i) were prepared in all material respects in accordance with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Reports and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of the
Company's subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports (the
"COMPANY FINANCIALS"), including each Company SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of operations and cash flows of the
Company and its subsidiaries for the periods indicated, except that the
unaudited interim financial statements may not contain footnotes and were or are
subject to normal and recurring year-end adjustments. The balance sheet of the
Company contained in Company SEC Reports as of March 31, 1998 is hereinafter
referred to as the "COMPANY BALANCE SHEET." Except as disclosed in the Company
Financials or Section 2.5(b) the Company Schedules, since the date of the
Company Balance Sheet
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<PAGE> 16
neither the Company nor any of its subsidiaries has incurred any liabilities
required under GAAP to be set forth on a balance sheet (absolute, accrued,
contingent or otherwise) which are, individually or in the aggregate, material
to the business, results of operations or financial condition of the Company and
its subsidiaries taken as a whole, except for liabilities incurred since the
date of the Company Balance Sheet in the ordinary course of business or
consistent with past practices or in connection with this Agreement.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be so filed, to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.6 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet, except as set forth in the Company Schedules, there has not been:
(i) any change in the financial condition, properties, assets, liabilities,
business or operations of the Company or any of its subsidiaries which change by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, is inconsistent with past trends and has had,
or can reasonably be expected to have a Material Adverse Effect (as defined in
Section 8.3(b)) on the Company; (ii) any material contingent liability incurred
by the Company or any of its subsidiaries as guarantor or surety with respect to
the obligations of others; (iii) any material obligation or liability incurred
by the Company or any of its subsidiaries other than in the ordinary course of
business; (iv) any purchase or sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Company or any of its subsidiaries other than
inventory in the ordinary course of business or in amounts that are not material
to the Company and its subsidiaries or their businesses considered as a whole;
(v) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of the
Company's or any of its non-wholly-owned subsidiaries' capital stock, or any
purchase, redemption or other acquisition by the Company of any of the Company's
capital stock or any other securities of the Company or its non- wholly-owned
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities; (vi) any split, combination or reclassification of
any of the Company's or any of its subsidiaries' capital stock; (vii) any
granting by the Company or any of its subsidiaries of any increase in
compensation or fringe benefits, any payment by the Company or any of its
subsidiaries of any bonus, or any granting by the Company or any of its
subsidiaries of any increase in severance or termination pay or any entry by the
Company or any of its subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement with any
employee of the Company or any of its subsidiaries the benefits of which are
contingent or the terms of which are materially altered upon the occurrence of a
transaction involving the Company of the nature contemplated hereby; (viii)
entry by the Company or any of its subsidiaries into any licensing or other
agreement with regard to the acquisition or disposition of any Intellectual
Property (as defined in Section 2.9), other than licenses in the ordinary course
of business, or any amendment or consent with respect to any licensing agreement
filed or required to be filed by the Company with the SEC; (ix) any material
change by the Company in its accounting methods, principles or practices, except
as required by concurrent changes in GAAP; or (x) any revaluation by the Company
of any of its assets, including,
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<PAGE> 17
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable other than in the ordinary course of business.
2.7 Taxes.
(a) For the purposes of this Agreement, "TAX" or "TAXES" refers
to any and all federal, state, local and foreign taxes, assessments and other
similar governmental charges, duties, impositions and liabilities relating to
taxes, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts.
(b) All material federal, state, local and foreign returns,
estimates, information statements and reports ("RETURNS") relating to Taxes
required to be filed with any tax authority by or on behalf of the Company and
each of its subsidiaries with respect to any taxable period ending on or before
the Closing Date if due on or before the Closing Date (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date if properly obtained), and (ii) have been, or will be when filed, prepared
in all material respects in compliance with all applicable legal requirements.
All amounts shown on the Tax Returns to be due on or before the Closing Date
have been or will be paid on or before the Closing Date.
(c) The accruals and reserves for Taxes reflected in the Company
Balance Sheet are adequate to cover all Taxes required to be accrued through the
date thereof in accordance with GAAP. Each of the Company's subsidiaries will
establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
the date of this Agreement through the Closing Date.
(d) Except as set forth in Section 2.7 of the Company Schedules,
(i) since January 1, 1995, no Tax Return of the Company or any of its
subsidiaries has been examined or audited by any applicable tax authority and
(ii) no extension or waiver (other than the normal extension occurring by reason
of an extension of time to file a Return) of the limitation period applicable to
any such Returns has been granted (by the Company or any other person), and no
such extension or waiver has been requested from the Company or any of its
subsidiaries.
(e) Except as set forth in Section 2.7 of the Company Schedules,
no claim or legal proceeding is pending or, to the knowledge of the Company, has
been threatened against or with respect to the Company or any of its
subsidiaries in respect of any material Tax, and there are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions to
tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by the Company or any of its
subsidiaries with respect to any material Tax (other than liabilities for Taxes
asserted under any such notice of deficiency or similar document which are being
contested in good faith by the Company or any of its subsidiaries and with
respect to which adequate reserves for payment have been
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<PAGE> 18
established). There are no liens for material Taxes upon any of the assets of
the Company or any of its subsidiaries except liens for current Taxes not yet
due and payable. None of the Company or any of its subsidiaries has entered into
or become bound by any agreement or consent pursuant to Section 341(f) of the
Code. None of Company or any of its subsidiaries has been, and none of Company
or any of its subsidiaries will be, required to include any adjustment in
taxable income for any tax period (or any portion thereof) pursuant to Section
481 or 263A of the Code or any comparable provision under state or foreign Tax
laws as the same are in effect as of the date of this Agreement as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(f) Except as set forth in Section 2.7 of the Company Schedules,
there is no agreement, plan, arrangement or other contract covering any employee
or independent contractor or former employee or independent contractor of the
Company or any of its subsidiaries that, considered individually or considered
collectively with any other such agreement, will, or could reasonably be
expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code as a
result of the transactions contemplated by this Agreement. Except as set forth
in Section 2.7 of the Company Schedules, none of Company or any of its
subsidiaries is a party to or bound by any tax indemnity agreement, tax sharing
agreement or tax allocation agreement.
(g) No person owns an interest in the Company with respect to
which withholding is required because Treasury Regulation Section 1.1445-2(c)(2)
is not applicable to the acquisition of such interest under Treasury Regulation
Section 1.897-1(c)(2)(iii)(B) (relating to substantial amounts of non-publicly
traded interests in publicly traded corporations).
2.8 Title to Properties; Absence of Liens and Encumbrances.
(a) Neither the Company nor any of its subsidiaries owns any real
property. The Company Schedules list all material real property leases to which
the Company or its subsidiaries are party and each amendment thereto. All such
current leases are, to the knowledge of the Company, in full force and effect.
(b) Each of the Company and its subsidiaries has good title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of their tangible properties and assets, real, personal and mixed, used or
held for use in their business, free and clear of any liens, pledges, charges,
claims, security interests or other similar encumbrances ("LIENS"), except as
reflected in the Company Financials and except for liens for Taxes not yet due
and payable and such Liens or other imperfections of title and encumbrances, if
any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
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<PAGE> 19
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights in, arising out of, or associated with: (i) all
United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof;
(ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyright registrations and applications
therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all trade names,
logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor throughout
the world; (vi) all databases and data collections and all rights
therein throughout the world; (vii) all moral and economic rights
of authors and inventors, however denominated, throughout the
world; (viii) all computer software including all source code,
object code, firmware, development tools, files, records and
data, all media on which any of the foregoing is recorded, all
Web addresses, sites and domain names; (ix) all documentation
related to any of the foregoing; and (x) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, the
Company or any of its wholly-owned subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications,
or other registrations or applications related to trademarks;
(iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is
the subject of an application, certificate, filing, registration
or other document issued, filed with, or recorded by any state,
government or other public legal authority.
(a) Section 2.9 of the Company Schedules lists all of the
Registered Intellectual Property owned by, or filed in the name of, the Company
and any of its subsidiaries (the "COMPANY REGISTERED INTELLECTUAL PROPERTY").
(b) Except as set forth in the Company Schedules, each material
item of Company Registered Intellectual Property is valid and subsisting, all
necessary registration, maintenance and renewal fees currently due in connection
with such Registered Intellectual Property have been made and all necessary
documents, recordations and certificates in connection with such Registered
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United
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<PAGE> 20
States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property.
(c) Except as set forth in the Company Schedules, the Company and
its subsidiaries own and have good and exclusive title (sufficient for the
conduct of their business as currently conducted) to, each material item of
Company Intellectual Property free and clear of any Lien, and the Company or its
subsidiaries are the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of the Company and its
subsidiaries, including the sale of any products or the provision of any
services by the Company or any of its subsidiaries.
(d) The Company or its subsidiaries own exclusively, and have
good title to, all copyrighted works that the Company expressly purports to own.
(e) To the extent that any material Intellectual Property has
been developed or created by a third party for the Company or any of its
subsidiaries that the Company purports to own, the Company and its subsidiaries
have a written agreement with such third party with respect thereto and Company
and its subsidiaries thereby either (i) have obtained ownership of, and are the
exclusive owner of, or (ii) have obtained a license (sufficient for the conduct
of their business as currently conducted) to all such third party's Intellectual
Property in such work, material or invention by operation of law or by valid
assignment to the fullest extent it is legally possible to do so.
(f) Except as set forth in the Company Schedules, neither the
Company nor any of its subsidiaries has transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is material
Company Intellectual Property, to any third party.
(g) Section 2.9 of the Company Schedules lists all material
contracts, licenses and agreements to which the Company or its subsidiaries are
a party (i) with respect to the Company Intellectual Property licensed or
transferred to any third party or (ii) pursuant to which a third party has
licensed or transferred any Intellectual Property to the Company or any of its
subsidiaries, except in each case for (A) any nonexclusive software license
granted by the Company or any of its subsidiaries to end-user customers where
the form of the license, excluding standard immaterial deviations, has been
provided to Parent's counsel or for standard "shrink-wrap" or "click-wrap"
licenses or similar widely available commercial end-user licenses for software
products and (B) non-exclusive reseller, distributor and OEM agreements entered
into in the ordinary course of business where the form of such agreement,
excluding standard immaterial deviations, has been provided to Parent's counsel.
Section 2.9 of the Company Schedules lists any material agreements pursuant to
which the Company or any of its subsidiaries have licensed Company Intellectual
Property or products to any third party that differs in any material respect
from its standard forms. Except as set forth in the Company Schedules, no person
who has licensed Intellectual Property to the Company or any of its subsidiaries
has ownership rights or license rights to improvements made by the Company or
any of its subsidiaries in such Intellectual Property.
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<PAGE> 21
(h) The contracts, licenses and agreements listed on Section 2.9
of the Company Schedules are, to the knowledge of the Company, in full force and
effect. The consummation of the transactions contemplated by this Agreement will
neither materially violate nor result in a material breach, modification,
cancellation, termination, or suspension of such contracts, licenses and
agreements. The Company and its subsidiaries are in material compliance with,
and have not materially breached any term of such contracts, licenses and
agreement and, to the knowledge of the Company, all other parties to such
contracts, licenses and agreements are in material compliance with, and have not
materially breached any term of, such contracts, licenses and agreements. Except
as set forth in the Company Schedules, following the Closing Date, the Company
will be permitted to exercise all of the Company's rights under the contracts,
licenses and agreements listed on Section 2.9 of the Company Schedules to the
same extent the Company and its subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees, royalties or
payments which the Company or its subsidiaries would otherwise be required to
pay.
(i) To the Company's knowledge, the operation of the business of
the Company as such business currently is conducted, including the Company's
design, development, manufacture, marketing and sale of the products or services
of the Company (including with respect to products currently under development)
has not and does not infringe or misappropriate the Intellectual Property of any
third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(j) The Company has not received notice from any third party that
the operation of the business of Company or its subsidiaries or any act, product
or service of the Company or its subsidiaries, infringes or misappropriates the
Intellectual Property of any third party or constitutes unfair competition or
trade practices under the laws of any jurisdiction.
(k) To the knowledge of the Company, no person has or is
infringing or misappropriating any Company Intellectual Property.
(l) The Company has taken reasonable steps to protect the
Company's rights in the Company's confidential information and trade secrets or
any trade secrets or confidential information of third parties provided to the
Company, and, without limiting the foregoing, the Company has and uses all
reasonable efforts to enforce a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in the
forms provided to Parent and all current employees and all current and former
contractors of the Company have executed such an agreement.
(m) Except as set forth in the Company Schedules, all of the
Company's products (including products currently under development) will record,
store, process, calculate and present calendar dates jointly and severally,
falling on and after (and if applicable, spans of time including) January 1,
2000, and will calculate any information dependent on or relating to such dates
in the same manner, and with the same functionality, data integrity and
performance, as the products record, store,
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<PAGE> 22
process, calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates (collectively,
"Year 2000 Compliant"). Except as set forth in the Company Schedules, the
Company's internal computer and technology products and systems are Year 2000
Compliant.
2.10 Compliance; Permits; Restrictions.
(a) Neither the Company nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which the Company or any of its subsidiaries or
any of their respective properties is bound or affected, or (ii) any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that (individually or in the aggregate) would
not cause the Company to lose any material benefit or incur any material
liability. Except as set forth in Section 2.10 of the Company Schedules, no
investigation or review by any Governmental Entity is pending or, to the
Company's knowledge, has been threatened in a writing delivered to the Company
against the Company or any of its subsidiaries, nor, to the Company's knowledge,
has any Governmental Entity indicated an intention to conduct an investigation
of the Company or any of its subsidiaries. There is no material agreement,
judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its subsidiaries, any acquisition of material property by the Company or any
of its subsidiaries or the conduct of business by the Company as currently
conducted.
(b) The Company and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from governmental authorities that are material to and required for the
operation of the business of the Company as currently conducted (collectively,
the "COMPANY PERMITS"). The Company and its subsidiaries are in compliance in
all material respects with the terms of the Company Permits.
2.11 Litigation. Except as disclosed in the Company Schedules, there are
no claims, suits, actions or proceedings pending or, to the knowledge of the
Company, threatened against, relating to or affecting the Company or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or which
would reasonably be expected, either singularly or in the aggregate with all
such claims, actions or proceedings, to have a material effect on the Company.
No Governmental Entity has at any time challenged or questioned in a writing
delivered to the Company the legal right of the Company to design, manufacture,
offer or sell any of its products in the present manner or style thereof.
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2.12 GSA Audit. Except as disclosed in the Company Schedules, the
Company has never been subject to an audit, compliance review, investigation or
like contract review by the GSA office of the Inspector General or other
Governmental Entity or agent thereof in connection with any government contract
(a "GOVERNMENT AUDIT"), to the Company's knowledge no Government Audit is
threatened and in the event of such Government Audit, to the knowledge of the
Company no basis exists for a finding of noncompliance with any material
provision of any government contract or a refund of any material amounts paid or
owed by any Governmental Entity pursuant to such government contract.
2.13 Brokers' and Finders' Fees. Except for fees payable to Cowen &
Company pursuant to an engagement letter dated January 12, 1998, a copy of which
has been provided to Parent, the Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
2.14 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"AFFILIATE" set forth in Section 2.14(a)(i) below (which definition shall apply
only to this Section 2.14), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with the Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement as to which the
Company or any affiliate of the Company may have any liability providing for
compensation, severance, retention termination pay, performance awards, stock or
stock-related awards, material fringe benefits or other material employee
benefits or remuneration of any kind, whether written or unwritten, funded or
unfunded, including without limitation, each "EMPLOYEE BENEFIT PLAN," within the
meaning of Section 3(3) of ERISA which is or has been in the past six years
maintained, contributed to, or required to be contributed to, by the Company or
any Affiliate for the benefit of any Employee, other than the International
Employee Plans;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of the Company or any Affiliate;
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(vi) "EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation, visa,
work permit or similar agreement or contract between the Company or any
Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "HIPAA" shall mean the Health Insurance Portability
and Accountability Act of 1996, as amended;
(x) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by the Company, whether
informally or formally, for the benefit of Employees outside the United States;
(xi) "IRS" shall mean the Internal Revenue Service; and
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
(b) Schedule. Section 2.14 of the Company Schedules contains an
accurate and complete list of each Company Employee Plan, International Employee
Plan and each Employee Agreement involving payments by the Company or any of its
subsidiaries of $50,000 or more per year (including all Employee Agreements with
officers, directors and key employees of the Company). The Company does not have
any plan or commitment to establish any new Company Employee Plan, to modify any
Company Employee Plan or Employee Agreement (except to the extent required by
law or to conform any such Company Employee Plan or Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to
Parent in writing, or as required by this Agreement), or to enter into any
Company Employee Plan or material Employee Agreement, nor does it have any
commitment to do any of the foregoing.
(c) Documents. The Company has provided or made available to
Parent: (i) correct and complete copies of all documents embodying each
International Employee Plan, Company Employee Plan and each Employee Agreement
including all amendments thereto and written interpretations thereto; (ii) the
three (3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the Code
in connection with each Company Employee Plan or related trust; (iii) if the
International Employee Plan or Company Employee Plan is funded, the most recent
annual and periodic accounting of the International Employee Plan or Company
Employee Plan assets; (iv) the most recent summary plan description together
with the summary of material modifications thereto, if any, required under ERISA
with respect to each Company Employee Plan; (v) the most recent IRS
determination, opinion, notification or advisory letter, and rulings relating to
each Company Employee Plan, if any and copies of all applications and
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correspondence to or from the IRS or the DOL with respect to any Company
Employee Plan; (vi) all material written agreements and contracts relating to
each International Employee Plan and Company Employee Plan, if any including,
but not limited to, administrative service agreements, group annuity contracts
and group insurance contracts; (vii) all communications material to any Employee
or Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to the Company; (viii) all COBRA and HIPAA forms and related notices; and (ix)
all registration statements and prospectuses prepared in connection with each
Company Employee Plan.
(d) Employee Plan Compliance. (i) The Company has performed in
all material respects all obligations required to be performed by it under, is
not in material default or violation of, and has no knowledge of any material
default or violation by any other party with respect to any Company Employee
Plan and International Employee Plan, and each Company Employee Plan and
International Employee Plan has been established and maintained in all material
respects in accordance with its terms and in material compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Company Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code has either received a favorable determination
letter from the IRS with respect to each such Plan as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a determination letter and make any amendments necessary to obtain a favorable
determination; (iii) to the Company's knowledge, no "PROHIBITED TRANSACTION,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Company Employee Plan; (iv) there are no actions, suits or claims
pending, or, to the knowledge of Company, threatened (other than routine claims
for benefits) against any Company Employee Plan or against the assets of any
Company Employee Plan; (v) each Company Employee Plan can be amended, terminated
or otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent, the Company or any of its Affiliates (other than
ordinary administration expenses typically incurred in a termination event);
(vi) there are no audits, inquiries or proceedings pending or, to the knowledge
of the Company, threatened by the IRS or DOL with respect to any Company
Employee Plan; and (vii) neither the Company nor any Affiliate is subject to any
material penalty or tax with respect to any Company Employee Plan under Section
402(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plans. Neither the Company nor any of its
subsidiaries now, nor have any of them ever, maintained, established, sponsored,
participated in, or contributed to, any employee pension benefit plan (within
the meaning of Section 3(2) of ERISA which is subject to Title IV of ERISA) or
Section 412 of the Code.
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(f) Multiemployer Plans. At no time has the Company contributed
to or been requested to contribute to any plan which is a multiemployer plan as
defined in Section 3(37) of ERISA.
(g) No Post-Employment Obligations. Except as set forth in the
Company Schedules, no Company Employee Plan or International Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable law, and the Company has
never represented, promised or contracted (whether in oral or written form) to
any Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by law.
(h) Neither the Company nor any Affiliate has, prior to the
Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA, HIPAA or any
similar provisions of state, federal or foreign law applicable to its Employees.
(i) Effect of Transaction. Except as set forth in the Company
Schedules, the execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Company
Employee Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(j) Employment Matters. The Company: (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all material amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii) except as set forth in the Company Schedules, is not liable for
any material arrears of wages or any material taxes or penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any material
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for Employees (other than routine payments to
be made in the normal course of business and consistent with past practice).
Except as set forth in Section 2.14 of the Company Schedules, there are no
pending or, to the knowledge of the Company, threatened claims or actions
against the Company under any worker's compensation policy or long-term
disability policy. To the Company's knowledge, no employee of the Company has
violated any employment contract, nondisclosure agreement or noncompetition
agreement by which such employee is bound due to such employee being employed by
the Company and disclosing to the Company or using trade secrets or proprietary
information of any other person or entity.
(k) Labor. No work stoppage or labor strike against the Company
is pending or, to the knowledge of the Company, threatened. The Company does not
know of any activities or
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<PAGE> 27
proceedings of any labor union to organize any Employees. Except as set forth in
Section 2.14 of the Company Schedules, there are no actions, suits, claims,
labor disputes or grievances pending, or, to the knowledge of the Company,
threatened relating to any labor, safety or discrimination matters involving any
Employee, including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to the Company. Neither
the Company nor any of its subsidiaries has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. The Company is
not presently, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to Employees and
no collective bargaining agreement is being negotiated by the Company.
(l) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent the Company or
Parent from terminating or amending any International Employee Plan at any time
for any reason.
(m) Change of Control Payments. Section 2.14(m) of the Company
Schedules sets forth each plan or agreement pursuant to which any amounts may
become payable (whether currently or in the future) to current or former
officers and directors of the Company as a result of or in connection with the
Merger.
(n) Employee Notices. Except as set forth in Section 2.14 of the
Company Schedules, the Company has not sent any notices or other communications
(written or oral) to current employees of the Company that purport to require
minimum notice or severance payments in the event of termination of employment
without cause.
2.15 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to the Company (in any individual case or in the aggregate), no
underground storage tanks and no amount of any substance that has been
designated by any Governmental Entity or by applicable federal, state or local
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
(a "HAZARDOUS MATERIAL"), are present, as a result of the actions of the Company
or any of its subsidiaries or any affiliate of the Company, or, to the Company's
knowledge, as a result of any actions of any third party or otherwise,
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in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that the Company or any of its subsidiaries has
at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in
a material liability to the Company (in any individual case or in the
aggregate), (i) neither the Company nor any of its subsidiaries has transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, and (ii) neither the Company nor any of its subsidiaries has
disposed of, transported, sold, used, released, exposed its employees or others
to or manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. The Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's and
its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses are currently
being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending or, to the
Company's knowledge, threatened by any Governmental Entity against the Company
or any of its subsidiaries concerning any the Company Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of the Company or any of
its subsidiaries. The Company is not aware of any fact or circumstance which
could involve the Company or any of its subsidiaries in any environmental
litigation or impose upon the Company any material environmental liability.
2.16 Agreements, Contracts and Commitments.
(a) Except as otherwise set forth in Section 2.9 or 2.16 of the
Company Schedules, neither the Company nor any of its subsidiaries is a party to
or is bound by:
(i) any agreement of indemnification or any
guaranty other than any agreement of indemnification entered into in connection
with the sale or license of software products or technology in the ordinary
course of business;
(ii) any agreement, contract or commitment
containing any covenant limiting in any respect the right of the Company or any
of its subsidiaries to engage in any line of business or to compete with any
person or granting any exclusive distribution rights;
(iii) any agreement, contract or commitment
relating to the disposition or acquisition by the Company or any of its
subsidiaries after the date of this Agreement of a material
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amount of assets not in the ordinary course of business or pursuant to which the
Company has any material ownership interest in any corporation, partnership,
joint venture or other business enterprise other than the Company's
subsidiaries;
(iv) any agreement, contract or commitment to
provide source code to any third party for any product or technology that is
material to the Company and its subsidiaries taken as a whole;
(v) any agreement, contract or commitment to
license any third party to manufacture or reproduce any the Company product,
service or technology except as a non-exclusive distributor, OEM or reseller (in
the standard forms previously provided to counsel for Parent) entered into in
the normal course of business;
(vi) any lease of personal property having a value
in excess of US$50,000 individually or US$100,000 in the aggregate;
(vii) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit in excess of US$50,000
individually or US$100,000 in the aggregate;
(viii) any dealer, distribution, joint marketing or
development agreement under which agreement payments have been made to or by the
Company since January 1, 1997 totaling at least $50,000 individually or (in the
case of multiple agreements with one party) in the aggregate; or
(ix) any joint venture contract or arrangement or
any other agreement that involves a sharing of profits with other persons.
2.17 Statements; Proxy Statement/Prospectus. The information supplied by
the Company for inclusion in the Registration Statement (as defined in Section
3.4(b)) shall not at the time the Registration Statement is filed with the SEC
and at the time it becomes effective under the Securities Act 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. The information
supplied by the Company for inclusion in the joint proxy statement/prospectus to
be sent to (a) the stockholders of Parent in connection with the meeting of
Parent's stockholders to consider the approval of the issuance of the shares of
Parent Common Stock in the Merger and the Parent Certificate Amendment (the
"PARENT STOCKHOLDERS' MEETING") and (b) the stockholders of the Company in
connection with the meeting of the Company's stockholders to consider the
approval and adoption of this Agreement and the approval of the Merger (the
"COMPANY STOCKHOLDERS' MEETING") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "PROXY STATEMENT/PROSPECTUS") shall
not, on the date the Proxy Statement/Prospectus is first mailed to Parent's
stockholders and the Company's stockholders or at the time of the Parent
Stockholders' Meeting or the Company Stockholders' Meeting, as the case may be,
contain any untrue
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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 false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Parent
Stockholders' Meeting and the Company Stockholders' Meeting which has become
false or misleading. The Proxy Statement/ Prospectus will comply as to form in
all material respects with the provisions of the Securities Act, the Exchange
Act and the rules and regulations of the SEC thereunder. If at any time prior to
the Effective Time any event relating to the Company or any of its affiliates,
officers or directors should be discovered by the Company which is required to
be set forth in an amendment to the Registration Statement or a supplement to
the Proxy Statement/Prospectus, the Company shall promptly inform Parent.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or Merger Sub which is
contained in any of the foregoing documents.
2.18 Board Approval. The Board of Directors of the Company has, as of
the date of this Agreement, (i) determined that the Merger is fair to, and in
the best interests of the Company and its stockholders, (ii) approved and
adopted this Agreement and the transactions contemplated hereby, and (iii)
resolved to recommend that the stockholders of the Company approve and adopt
this Agreement and approve the Merger.
2.19 Fairness Opinion. The Company's Board of Directors has received a
written opinion from Cowen &Company dated as of the date hereof, to the effect
that as of the date hereof, the Exchange Ratio is fair to the Company's
stockholders from a financial point of view and has delivered to Parent a copy
of such opinion.
2.20 Certain Transactions and Agreements. Except as set forth in the
Company SEC Reports, since December 31, 1997, no event has occurred that would
be required to be reported by the Company as a Certain Relationship or Related
Transaction pursuant to Item 404 of Regulation S-K promulgated by the SEC.
2.21 Non-Applicability of Massachusetts Antitakeover Law. The Board of
Directors of the Company has taken all actions so that any restrictions
contained in the Massachusetts General Laws purporting to restrict transactions
such as those contemplated by this Agreement, including Chapters 110C, 110D,
110E and 110F, will not be applicable to the Merger or the other transactions
contemplated hereby.
2.22 Customs; Export Controls. The Company has acted with reasonable
care to properly value and classify, in accordance with applicable tariff laws,
rules and regulations, all goods that the Company or any of its subsidiaries
import into the United States or into any other country (the "IMPORTED GOODS").
To the Company's knowledge, there are currently no material claims pending
against the Company by the U.S. Customs Service (or other foreign customs
authorities) relating to the valuation, classification or marking of the
Imported Goods. The Company has complied in all material respects with the
requirements of all U.S. government export controls in the sale of its products.
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2.23 Pooling of Interests. To its knowledge, based on consultation with
its independent accountants, neither the Company nor any of its directors,
officers or stockholders has taken any action which would interfere with (i)
Parent's ability to account for the Merger as a pooling of interests or (ii)
Parent's, Surviving Corporation's or the Company's ability to continue to
account for as a pooling of interests any past acquisition by the Company
currently accounted for as a pooling of interests.
2.24 Company Common Stockholder Approval. Adoption and approval of this
Agreement and approval of the Merger requires the affirmative vote of a majority
of the outstanding shares of Company Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, jointly and
severally, subject to the exceptions specifically disclosed in writing in the
disclosure letter and referencing a specific representation supplied by Parent
to the Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "PARENT SCHEDULES"), as follows:
3.1 Organization of Parent and Merger Sub.
(a) Each of Parent and Merger Sub: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized; (ii) has the corporate or other power and
authority to own, lease and operate its assets and property and to carry on its
business as now being conducted; and (iii) except as would not be material to
Parent, is duly qualified or licensed to do business in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary.
(b) Parent has delivered or made available to the Company a true
and correct copy of the Certificate of Incorporation and Bylaws of each of
Parent and Merger Sub, each as amended to date, and each such instrument is in
full force and effect. Neither Parent nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent governing instruments.
3.2 Parent and Merger Sub Capital Structure. The authorized capital
stock of Parent consists of 75,000,000 shares of Common Stock, of which there
were 44,206,595 shares issued and outstanding as of the date of this Agreement.
The authorized capital stock of Merger Sub consists of 1,000 shares of Common
Stock, $0.01 par value, all of which, as of the date hereof, are issued and
outstanding and are held by Parent. All outstanding shares of Parent Common
Stock and shares of Common Stock of Merger Sub are duly authorized, validly
issued, fully paid and nonassessable and are not subject to
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<PAGE> 32
preemptive rights created by statute, the charter documents or Bylaws of Parent
or Merger Sub or any agreement or document to which Parent or Merger Sub is a
party or by which either of them is bound.
3.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 3.2 or in the Parent Schedules, there are no equity securities,
partnership interests or similar ownership interests of any class of Parent's
equity security, or any securities exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except for
securities Parent owns free and clear of all claims and encumbrances, directly
or indirectly through one or more subsidiaries, as of the date of this
Agreement, there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of Parent
or any security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 3.2 or in
the Parent Schedules, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Parent or any of its subsidiaries is a party or by which it is bound
obligating Parent or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of the Parent or any of its
subsidiaries or obligating the Parent or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement. As of the date
of this Agreement, except as contemplated by this Agreement, there are no
registration rights and there is no voting trust, proxy, rights plan, or other
agreement or understanding to which the Parent is a party or by which it is
bound with respect to any equity security of any class of the Parent or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries.
3.4 Authority.
(a) Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, subject only to approval of the issuance of shares of Parent Common Stock
in the Merger and the Parent Certificate Amendment by Parent's stockholders and
the filing of the Articles of Merger pursuant to the MBCL. This Agreement has
been duly executed and delivered by each of Parent and Merger Sub and, assuming
the due authorization, execution and delivery by the Company, constitutes the
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms, except as enforceability may
be limited by bankruptcy and other similar laws and general principles of
equity. The execution and delivery of this Agreement by each of Parent and
Merger Sub does not, and the performance of this Agreement by each of Parent and
Merger Sub will not, (i) conflict with or violate the charter documents or
Bylaws of Parent or Merger Sub, (ii) subject to obtaining the approval of the
issuance of shares of Parent Common Stock in the Merger by Parent's stockholders
as
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contemplated in Section 5.2 and compliance with the requirements set forth in
Section 3.4(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent, any of its material subsidiaries as
defined in the Parent SEC Reports or Merger Sub or by which any of their
respective properties is bound or affected or (iii) result in any material
breach of or constitute a material default (or an event that with notice or
lapse of time or both would become a material default) under, or impair Parent's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a material lien or encumbrance on any of the material
properties or assets of Parent, any of its material subsidiaries as defined in
the Parent SEC Reports or Merger Sub pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise,
concession or other instrument or obligation to which Parent, any of its
material subsidiaries as defined in the Parent SEC Reports or Merger Sub is a
party or by which Parent, any of its material subsidiaries as defined in the
Parent SEC Reports or Merger Sub or any of their respective properties are bound
or affected.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained or made by Parent or any of its subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the Merger,
except for (i) the filing of a Form S-4 (or any similar successor form thereto)
Registration Statement (the "REGISTRATION STATEMENT"), including the Proxy
Statement/Prospectus, with the SEC in accordance with the Securities Act and the
Exchange Act, (ii) the filing of the Articles of Merger with the Secretary of
State of the Commonwealth of Massachusetts, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign and state securities (or related)
laws and the HSR Act and the securities or antitrust laws of any foreign
country, and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to Parent or
the Company or have a material adverse effect on the ability of the parties
hereto to consummate the Merger.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required to
be filed by Parent with the SEC since December 31, 1995, and has made available
to the Company such forms, reports and documents in the form filed with the SEC.
All such required forms, reports and documents (including those that Parent may
file subsequent to the date hereof) are referred to herein as the "PARENT SEC
REPORTS." As of their respective dates, the Parent SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Parent SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
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(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports (the
"PARENT FINANCIALS"), including any Parent SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of Parent and its subsidiaries as at the respective dates
thereof and the consolidated results of Parent's operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
may not contain footnotes and were or are subject to normal and recurring
year-end adjustments. The balance sheet of Parent contained in Parent SEC
Reports as of March 31, 1998, is hereinafter referred to as the "PARENT BALANCE
SHEET."
3.6 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet there has not been: (i) any Material Adverse Effect on Parent;
(ii) material change by Parent in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP; (iii) any
revaluation by Parent of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (iv) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Parent's or any of its
subsidiaries' capital stock; (v) any purchase, redemption or other acquisition
by Parent of any of Parent's capital stock or any other securities of Parent or
its subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of the pre-existing stock option or purchase
agreements; or (vi) any split, combination or reclassification of any of
Parent's or any of its subsidiaries' capital stock.
3.7 Statements; Proxy Statement/Prospectus. The information supplied by
Parent for inclusion in the Registration Statement, including the Proxy
Statement/Prospectus, shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act,
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. The information supplied by Parent for inclusion in the Proxy
Statement/Prospectus shall not, on the date the Proxy Statement/Prospectus is
first mailed to Parent's stockholders and the Company's stockholders or at the
time of the Parent Stockholders' Meeting or the Company Stockholders' Meeting,
as the case may be, 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 false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Parent Stockholders' Meeting and the Company
Stockholders' Meeting which has become false or misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
of the SEC thereunder. If at any time prior to the Effective Time, any event
relating to
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Parent or any of its affiliates, officers or directors should be discovered by
Parent which is required to be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement/Prospectus, Parent shall
promptly inform the Company. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by the
Company which is contained in any of the foregoing documents.
3.8 Valid Issuance. The Parent Common Stock to be issued in the Merger,
when issued in accordance with the provisions of this Agreement: (a) will be
validly issued, fully paid and non assessable; and (b) will not be subject to
any restrictions on resale under the Securities Act, other than restrictions
imposed by Rule 145 promulgated under the Securities Act and restrictions
imposed under the Affiliate Agreement signed by certain stockholders of the
Company.
3.9 Board Approval. The Board of Directors of Parent has, as of the date
of this Agreement, unanimously determined (i) that the issuance of shares of
Parent Common Stock in the Merger is fair to, and in the best interests of
Parent and its stockholders, (ii) to approve this Agreement, the Merger and the
Parent Certificate Amendment and the other transactions contemplated by this
Agreement, and (iii) to recommend that the stockholders of Parent approve the
issuance of shares of Parent Common Stock in the Merger and the Parent
Certificate Amendment. The Board of Directors of Merger Sub and the sole
stockholder of Merger Sub have approved the Merger.
3.10 Merger Sub. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement. As of the date
hereof and the Effective Time, except for obligations or liabilities incurred in
connection with its incorporation and the transactions contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, any obligations or liabilities or engaged in any business activities
of any kind or entered into any agreements or arrangements with any person.
3.11 Litigation. Except as disclosed in the Parent Schedules, there are
no claims, suits, actions or proceedings pending or, to the knowledge of Parent,
threatened against, relating to or affecting Parent or any of its subsidiaries,
before any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which would
reasonably be expected, either singularly or in the aggregate with all such
claims, actions or proceedings to have a material effect on Parent. No
Governmental Entity has at any time challenged or questioned in a writing
delivered to Parent the legal right of Parent to design, manufacture, offer or
sell any of its products in the present manner or style thereof.
3.12 Brokers' and Finders' Fees. Except for fees payable to CIBC
Oppenheimer & Co. pursuant to an engagement letter dated May 8, 1998, a copy of
which has been provided to the Company, Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
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3.13 Reservation of Shares. Parent has reserved a sufficient number of
shares of Parent Common Stock for issuance in the Merger and upon exercise of
all options granted under the Company Stock Option Plans.
3.14 Intellectual Property.
(a) To Parent's knowledge, the operation of the business of
Parent as such business currently is conducted, including Parent's design,
development, manufacture, marketing and sale of the products or services of
Parent (including with respect to products currently under development) has not
and does not infringe or misappropriate the Intellectual Property of any third
party or, to its knowledge, constitute unfair competition or trade practices
under the laws of any jurisdiction.
(b) Parent has not received notice from any third party that the
operation of the business of Parent or its subsidiaries or any act, product or
service of Parent or its subsidiaries, infringes or misappropriates the
Intellectual Property of any third party or constitutes unfair competition or
trade practices under the laws of any jurisdiction.
(c) To the knowledge of Parent, no person has or is infringing or
misappropriating any Parent Intellectual Property.
3.15 Compliance. Neither Parent nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to Parent or any of
its subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts, violations and
defaults that (individually or in the aggregate) would not cause Parent to lose
any material benefit or incur any material liability. Except as set forth in
Section 3.14 of the Parent Schedules, no investigation or review by any
Governmental Entity is pending or, to Parent's knowledge, has been threatened in
a writing delivered to Parent against Parent or any of its subsidiaries, nor, to
Parent's knowledge, has any Governmental Entity indicated an intention to
conduct an investigation of Parent or any of its subsidiaries. There is no
material agreement, judgment, injunction, order or decree binding upon Parent or
any of its subsidiaries which has or would reasonably be expected to have the
effect of prohibiting or materially impairing the transactions contemplated by
this Agreement.
3.16 Parent Common Stockholder Approval. Approval of the issuance of
shares of Parent Common Stock in the Merger requires the affirmative vote of a
majority of the outstanding shares of Parent Common Stock present in person or
represented by proxy at the Parent Stockholders Meeting and the approval of the
Parent Certificate Amendment (as defined in Section 5.2) requires the
affirmative vote of a majority of the outstanding shares of Parent Common Stock.
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3.17 Company Stock Ownership. Neither Parent nor any of its wholly-owned
subsidiaries nor to Parent's knowledge any officer or director of the Company or
any of its wholly-owned subsidiaries is the record or beneficial holder of any
shares of Company Common Stock.
3.18 Pooling of Interests. To its knowledge, based on consultation with
its independent accountants, neither Parent nor any of its directors, officers
or stockholders has taken any action which would interfere with Parent's ability
to account for the Merger as a pooling of interests.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, the Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing (which consent shall not be unreasonably withheld), carry on its
business in the usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and in material compliance with all applicable
laws and regulations, pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practices and policies to (i) preserve substantially intact its present business
organization, (ii) keep available the services of its present officers and
employees, (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has significant
business dealings and (iv) make reasonable efforts to retain and preserve the
value of all office equipment, fixtures, and other assets (other than inventory
held for sale) used in the conduct of the Company's business, except as
otherwise permitted by subsection (j) of this Section. In addition, the Company
will promptly notify Parent of any material event involving its business or
operations.
In addition, except as permitted or required by the terms of this
Agreement, and except as provided in Section 4.1 of the Company Schedules,
without the prior written consent of Parent (which consent shall not be
unreasonably withheld), during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, the Company shall not do any of the following
and shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
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(c) Sell or otherwise transfer any Company Intellectual Property,
enter into any license agreement with respect to the Company Intellectual
Property with any third party other than the Company's standard forms of
non-exclusive licenses, reseller, distribution or OEM agreements for the sale of
the Company's products or otherwise in the ordinary course of business, or
extend, amend or modify in any material adverse respect any rights to any
Company Intellectual Property or other proprietary rights, or enter into grants
to future patent rights;
(d) Buy any Intellectual Property of a third party or enter into
any license agreement with respect to the Intellectual Property of any third
party for an acquisition or licence, the price for which exceeds $50,000
individually or in the aggregate, other than "shrink wrap", "click wrap" and
similar widely available commercial end-user licenses;
(e) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend to its parent;
(f) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or its subsidiaries;
(g) Issue, deliver, sell, authorize, pledge or otherwise encumber
or propose any of the foregoing of, any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than the issuance, delivery and/or sale of (i)
shares of the Company Common Stock pursuant to the exercise of stock options
therefor outstanding as of the date of this Agreement, and (ii) shares of the
Company Common Stock issuable to participants in the ESPPs consistent with the
terms thereof;
(h) Cause, permit or propose any amendments to its Articles of
Organization, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(i) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of the Company or enter into any material joint ventures, strategic
partnerships or alliances;
(j) Sell, lease, license, encumber or otherwise dispose of any
properties or assets, except as permitted by Section 4.1(c) and except sales in
the ordinary course of business;
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(k) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company, enter into any agreement to maintain any financial statement condition
or enter into any arrangement having the economic effect of any of the
foregoing;
(l) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business with employees who are
terminable "at will"), pay any special bonus or special remuneration to any
director or employee in excess of $150,000 in the aggregate to persons and in
amounts proposed by the Company and reasonably agreed to by Parent (it being
understood that the Company shall have the right to pay such amount), or
increase the salaries or wage rates or fringe benefits (including rights to
severance or indemnification) of its directors, officers, employees or
consultants;
(m) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) other than
the payment, discharge or satisfaction in the ordinary course of business or in
accordance with applicable contractual requirements;
(n) Except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company or any
subsidiary thereof is a party or waive, release or assign any material rights or
claims thereunder;
(o) Enter into any contracts, agreements, or obligations relating
to the distribution, sale, license or marketing by third parties of the
Company's products or products licensed by the Company other than non-exclusive
agreements in the ordinary course of business;
(p) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(q) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes in an amount in excess of $50,000 in the
aggregate;
(r) Commence any litigation or settle any litigation for an
amount in excess of the greater of $50,000 in the aggregate or the amount
reserved in respect thereof in the Company Balance Sheet, as set forth in
Section 4.1(r) of the Company Schedules;
(s) Take any action that would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests
whether or not otherwise permitted by the provisions of this Article IV;
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(t) Terminate the employment of any employee of the Company other
than for cause; or
(u) Agree in writing or otherwise to take any of the actions
described in Section 4.1(a) through (t) above.
4.2 Conduct of Business by Parent. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and except as provided in Section 4.2 of the Parent
Schedules, without the prior written consent of the Company (which consent shall
not be unreasonably withheld), Parent shall not, and shall not permit any of its
subsidiaries to, do any of the following:
(a) take any action that would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests;
(b) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock, except that a wholly owned subsidiary of
Parent may declare and pay a dividend to Parent except for the Parent
Certificate Amendment;
(c) purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Parent or its subsidiaries, except
repurchases of unvested shares at cost in connection with termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(d) materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices; or
(e) agree in writing or otherwise to take any of the actions
described in Section 4.2(a) through (d) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings;
Board Recommendations.
(a) As promptly as practicable after the execution of this
Agreement, Parent and the Company will prepare, and file with the SEC, the Proxy
Statement/Prospectus and Parent will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Parent and the Company will respond to any comments of
the SEC, will use their respective commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and each of Parent and the Company will cause
the Proxy Statement/Prospectus to be mailed to their respective stockholders at
the earliest practicable time after the Registration Statement is declared
effective by the SEC. As promptly as practicable after the date of this
Agreement, each of Parent and the Company will prepare and file any other
filings required to be filed by it under the Exchange Act, the Securities Act or
any other Federal, foreign or Blue Sky or related laws relating to the Merger
and the transactions contemplated by this Agreement (the "OTHER FILINGS"). Each
of Parent and the Company will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of any
request by the SEC or its staff or any other government officials for amendments
or supplements to the Registration Statement, the Proxy Statement/Prospectus or
any Other Filing or for additional information and will supply the other with
copies of all correspondence between such party or any of its representatives,
on the one hand, and the SEC, or its staff or any other government officials, on
the other hand, with respect to the Registration Statement, the Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Parent and the
Company will cause all documents that it is responsible for filing with the SEC
or other regulatory authorities under this Section 5.1(a) to comply in all
material respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement/Prospectus,
the Registration Statement or any Other Filing, Parent or the Company, as the
case may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of Parent and the Company, as the case may be, such
amendment or supplement.
(b) The Proxy Statement/Prospectus will include the
recommendation of the Board of Directors of Parent in favor of approval of the
issuance of shares of Parent Common Stock in the Merger, the Parent Certificate
Amendment and, subject to Section 5.2(c), the recommendation of the Board of
Directors of the Company in favor of adoption and approval of this Agreement and
approval of the Merger.
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5.2 Meetings of Parent and Company Stockholders.
(a) Promptly after the date hereof, Parent and the Company will
take all action necessary in accordance with the laws of the respective states
in which they are organized and their respective charter documents and Bylaws to
convene the Parent Stockholders' Meeting and the Company Stockholders' Meeting
to be held as promptly as practicable, and in any event (to the extent
permissible under applicable law) within 45 days after the declaration of
effectiveness of the Registration Statement, for the purpose of voting on the
issuance of shares of Parent Common Stock in the Merger and approving the Parent
Certificate Amendment and voting upon this Agreement and the Merger,
respectively. Parent and the Company shall use their respective reasonable best
efforts to hold their respective stockholders' meeting on the same day and the
same time. Parent and the Company, subject to Section 5.2(c), will use their
commercially reasonable efforts to solicit from their respective stockholders
proxies in favor of approval of the issuance of shares of Parent Common Stock in
the Merger and the Parent Certificate Amendment and adoption and approval of
this Agreement and the approval of the Merger, respectively, and will take all
other action necessary or advisable to secure the vote or consent of their
respective stockholders required by the rules of Nasdaq, their respective
charter documents and Bylaws or the laws of the respective states in which they
are organized to obtain such approvals. Notwithstanding anything to the contrary
contained in this Agreement, Parent and the Company may adjourn or postpone the
Parent Stockholders' Meeting and the Company Stockholders' Meeting, as the case
may be, to the extent necessary to ensure that any necessary supplement or
amendment to the Prospectus/Proxy Statement is provided to Parent's stockholders
and the Company's stockholders in advance of a vote on the issuance of shares of
Parent Common Stock in the Merger and the Parent Certificate Amendment and the
Merger and this Agreement, respectively, or, if as of the time for which the
Parent Stockholders' Meeting and the Company Stockholders' Meeting is originally
scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Parent Common Stock or the Company Common Stock, as the
case may be, represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business at the Parent Stockholders' Meeting or the
Company Stockholders' Meeting. Parent and the Company shall ensure that the
Parent Stockholders' Meeting and the Company Stockholders' Meeting,
respectively, are duly called, noticed, convened, held and conducted, and
subject to Section 5.2(c) that all proxies solicited by the Parent and the
Company in connection with the Parent Stockholders' Meeting and the Company
Stockholders' Meeting, respectively, are solicited, in compliance with the laws
of the respective states in which Parent and the Company are organized, their
respective charter documents and Bylaws, the rules of Nasdaq and all other
applicable legal requirements. The Company's obligation to call, give notice of,
convene and hold the Company Stockholders' Meeting in accordance with this
Section 5.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to the Company of any
Acquisition Proposal, or by any withdrawal, amendment or modification of the
recommendation of the Board of Directors of the Company with respect to the
Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of the
Company shall unanimously recommend that the Company's stockholders vote in
favor of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement
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shall include a statement to the effect that the Board of Directors of the
Company has unanimously recommended that the Company's stockholders vote in
favor of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of the Company
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify in a manner adverse to Parent, the unanimous
recommendation of the Board of Directors of the Company that the Company's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the Board of
Directors shall be deemed to have been modified in a manner adverse to Parent if
said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of
Directors of the Company from withholding, withdrawing, amending or modifying
its unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
defined below) is made to the Company and is not withdrawn, (ii) neither the
Company nor any of its representatives shall have violated any of the
restrictions set forth in Section 5.4, and (iii) the Board of Directors of the
Company or any committee thereof concludes in good faith, after consultation
with its outside counsel, that, in light of such Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation is
required in order for the Board of Directors of the Company or any committee
thereof to comply with its fiduciary obligations to the Company's stockholders
under applicable law. Subject to applicable laws, nothing contained in this
Section 5.2 shall limit the Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of the
Board of Directors of the Company shall have been withdrawn, amended or
modified). For purposes of this Agreement "SUPERIOR OFFER" shall mean an
unsolicited, bona fide written offer made by a third party to consummate any of
the following transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than 50% of the equity interest in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by the
Company of assets (excluding inventory and used equipment sold in the ordinary
course of business) representing in excess of 50% of the fair market value of
the Company's business immediately prior to such sale; or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership or
a right to acquire beneficial ownership of shares representing in excess of 50%
of the voting power of the then outstanding shares of capital stock of the
Company, on terms that the Board of Directors of the Company determines, in its
reasonable judgment, after consultation with its financial advisor, to be more
favorable to the Company stockholders than the terms of the Merger; provided,
however, that any such offer shall not be deemed to be a "SUPERIOR OFFER" if any
financing required to consummate the transaction contemplated by such offer is
not committed.
(d) (i) The Board of Directors of Parent shall unanimously
recommend that Parent's stockholders vote in favor of the issuance of Parent
Common Stock in the Merger and the Parent Certificate Amendment (ii) the
Prospectus/Proxy Statement shall include a statement to the effect that the
Board of Directors of Parent has unanimously recommended that Parent's
stockholders vote in favor
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of the issuance of Parent Common Stock in the Merger and the Parent Certificate
Amendment; and (iii) neither the Board of Directors of Parent nor any committee
thereof shall withdraw, amend or modify, or propose or resolve to withdraw,
amend or modify, in a manner adverse to the Company, the unanimous
recommendation of the Board of Directors of Parent that Parent's stockholders
vote in favor of the issuance of Parent Common Stock in the Merger and the
Parent Certificate Amendment. For purposes of this Agreement, said
recommendation of Parent's Board of Directors shall be deemed to have been
modified in a manner adverse to the Company if said recommendation shall no
longer be unanimous.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that the Company and Parent have
previously executed a Confidentiality Agreement, dated as of April 17, 1998 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Access to Information. Each of Parent and the Company will
afford the other and the other's accountants, counsel and other representatives
reasonable access during normal business hours to its properties, books, records
and personnel during the period prior to the Effective Time to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel, as the other may
reasonably request. No information or knowledge obtained by Parent or the
Company in any investigation pursuant to this Section 5.3 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VII, the Company and
its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or could
reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) subject to Section 5.2(c), approve,
endorse or recommend any Acquisition Proposal or (v) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Transaction; provided,
however, that prior to the approval of this Agreement by the required vote of
the Company's stockholders, this Section 5.4(a) shall not prohibit the Company
from furnishing nonpublic information, regarding the Company and its
subsidiaries to, entering into a confidentiality agreement with or entering into
discussions or negotiations with, any person or group in response to a Superior
Offer submitted by
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such person or group (and not withdrawn) if (1) neither the Company nor any
representative of the Company and its subsidiaries shall have violated any of
the restrictions set forth in this Section 5.4, (2) the Board of Directors of
the Company concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Board of Directors of the
Company to comply with its fiduciary obligations to the Company's stockholders
under applicable law, (3) prior to furnishing any such nonpublic information to,
or entering into discussions or negotiations with, such person or group, the
Company gives Parent written notice of the identity of such person or group and
of the Company's intention to furnish nonpublic information to, or enter into
discussions with, such person or group and the Company receives from such person
or group an executed confidentiality agreement containing customary limitations
on the use and disclosure of all nonpublic written and oral information
furnished to such person or group by or on behalf of the Company, and (4)
contemporaneously with furnishing any such nonpublic information to such person
or group, the Company furnishes such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by the
Company to Parent). The Company and its subsidiaries will immediately cease any
and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding two sentences by any officer, director or employee of the
Company or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or any of its subsidiaries shall be
deemed to be a breach of this Section 5.4 by the Company. In addition to the
foregoing, the Company shall (i) provide Parent with at least 24 hours prior
notice of any meeting of the Company's Board of Directors at which the Company's
Board of Directors is reasonably expected to consider a Superior Offer and (ii)
provide Parent with at least two (2) days prior written notice of a meeting of
the Company's Board of Directors at which the Company's Board of Directors is
reasonably expected to recommend a Superior Offer to its stockholders and
together with such notice a copy of the definitive documentation relating to
such Superior Offer.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "GROUP" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 15% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "GROUP" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 15% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the stockholders of the Company immediately preceding such
transaction hold less than 85% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 25% of the
assets of the Company; or (C) any liquidation or dissolution of the Company.
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(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.4, the Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information
which the Company reasonably believes would lead to an Acquisition Proposal or
of any Acquisition Proposal, or any inquiry with respect to or which the Company
reasonably believes would lead to any Acquisition Proposal, the material terms
and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the person or group making any such request, Acquisition Proposal or
inquiry. The Company will keep Parent informed in all material respects of the
status and details (including material amendments or proposed amendments) of any
such request, Acquisition Proposal or inquiry.
5.5 Public Disclosure. Parent and the Company will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or (except as otherwise required by law) an Acquisition Proposal and, except as
may be required by law or any listing agreement with a national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation. The parties have agreed to the text of the
joint press release announcing the signing of this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all commercially reasonable acts necessary to cause the conditions
precedent set forth in Article VI to be satisfied, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iv) the defending of any
suits, claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, the Company and its Board of Directors shall, if any
state takeover statute or similar statute or regulation is or becomes applicable
to the Merger, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this Agreement
and the transactions contemplated hereby. Notwithstanding
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anything herein to the contrary, nothing in this Agreement shall be deemed to
require Parent or the Company or any subsidiary or affiliate thereof to agree to
any divestiture by itself or any of its affiliates of shares of capital stock or
of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement, in each case, such that the conditions set forth in
Section 6.3(a) or 6.3(b) would not be satisfied, provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.2(a) or 6.2(b) would not be satisfied, provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Parent and the Company will each use its commercially reasonable efforts
to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 Stock Options and Employee Benefits.
(a) Except as set forth in subsection (d) below, at the Effective
Time, each outstanding option to purchase shares of the Company Common Stock
(each a "THE COMPANY STOCK OPTION") under the Company Stock Option Plans,
whether or not exercisable, will be assumed by Parent. Each Company Stock Option
so assumed by Parent under this Agreement will continue to have, and be subject
to, the same terms and conditions set forth in the applicable Company Stock
Option Plan and option certificate immediately prior to the Effective Time
(including, without limitation, any repurchase rights or vesting provisions),
subject to the provisions of subsection (b) below in the case of Scheme Options
except that (i) each Company Stock Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of the Company
Common Stock that were issuable upon exercise of such Company Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock and
(ii) the per share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed
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Company Stock Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Stock
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded up to the nearest whole cent. Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of options assumed by Parent pursuant to
this Section. As soon as practicable after the Effective Time, Parent shall
deliver to each holder of a Company Stock Option an appropriate notice setting
forth such holder's rights pursuant thereto.
(b) Any such assumption and conversion of a Scheme Option shall
be subject to the written agreement of each holder of such Scheme Option to such
assumption. In the event that holder does not consent to such written agreement,
Scheme Options will become exercisable in full for a six-month period beginning
at the Effective Time for the same number of shares of Parent Common Stock as
calculated pursuant to subsection (a) above, at the same exercise price as
calculated pursuant to subsection (a) above. At the end of such six-month
period, any Scheme Options which have not been so converted and assumed or
exercised will terminate.
(c) It is intended that the Company Stock Options assumed by
Parent shall qualify following the Effective Time as incentive stock options as
defined in Section 422 of the Code to the extent the Company Stock Options
qualified as incentive stock options immediately prior to the Effective Time and
the provisions of this Section 5.8 shall be applied consistent with such intent.
(d) Rights outstanding under the ESPPs shall be treated in a
manner reasonably acceptable to Parent and the Company.
5.9 Form S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Stock Options within 5 days after the Effective Time and shall use its
reasonable efforts to maintain the effectiveness of such registration statement
thereafter for so long as any of such options or other rights remain
outstanding.
5.10 Indemnification.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
the Indemnified Parties (as defined below) and any indemnification provisions
under the Company's Articles of Organization or Bylaws as in effect on the date
hereof. The Articles of Organization and Bylaws of the Surviving Corporation and
its subsidiaries will contain provisions with respect to exculpation and
indemnification that are at least as favorable to the Indemnified Parties as
those contained in the Articles of Organization and Bylaws of the Company and
its subsidiaries as in effect on the date hereof, which provisions will not be
amended, repealed or otherwise modified for a period of four years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who, immediately prior to the Effective Time, were
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directors, officers, employees or agents of the Company and its subsidiaries,
unless such modification is required by law.
(b) For a period of four years after the Effective Time, Parent
will cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy (the "Indemnified Parties") on terms comparable to those applicable as of
the date of this Agreement to the current directors and officers of the Company;
provided, however, that in no event will Parent or the Surviving Corporation be
required to expend in excess of 125% of the annual premium currently paid by the
Company for such coverage (or such coverage as is available for 125% of such
annual premium); provided further, that if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the coverage available for such amount.
(c) This Section shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties. In the event that Parent or Surviving Corporation or any of their
successors or assigns (i) consolidates or merges into any other person or entity
and shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person or entity, then and in such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation (as the case may be) assume the obligations of Parent and
the Surviving Corporation set forth in this Section.
5.11 Nasdaq Listing. Parent agrees to authorize for listing on Nasdaq
the shares of Parent Common Stock issuable, and those required to be reserved
for issuance, in connection with the Merger and the assumption of the Company
Stock Options, upon official notice of issuance.
5.12 Regulatory Filings; Reasonable Efforts. As soon as is reasonably
practicable, the Company and Parent each shall file with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") Notification and Report Forms relating to
the transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties. The Company and Parent each shall promptly (a) supply the other with
any information which may be required in order to effectuate such filings and
(b) supply any additional information which reasonably may be required by the
FTC, the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate.
5.13 Affiliate Agreements. The Company shall use all reasonable efforts
to obtain and deliver to Parent at the Closing the Affiliate Agreements in the
form of Exhibit B-2, executed by the individuals identified on Exhibit B-1 and
Parent shall use all reasonable efforts to obtain the Affiliate Agreement
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in the form of Exhibit C, executed by persons who are in Parent's reasonable
judgment "affiliates" of Parent.
5.14 Rights Agreement Amendment. The Company shall use all reasonable
efforts to amend the Rights Agreement to prevent the execution of this
Agreement, the Merger or any transactions contemplated hereby from triggering
the exercisability of the rights authorized or granted thereunder.
5.15 Reorganization Treatment. None of Parent, Merger Sub or the Company
shall take any action which could reasonably be expected to cause the Merger to
fail to qualify prevent the Merger from qualifying, as a reorganization under
Section 368(a) of the Code.
5.16 Monthly Financial Statements. Parent and the Company shall supply
each other with a monthly unaudited consolidated statement of operations and
balance sheet within 15 days of the end of each calendar month.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Parent and the Company Stockholder Approval. The issuance of
shares of Parent Common Stock in the Merger and the Parent Certificate Amendment
shall have been duly approved by the requisite vote under applicable law and
rules of the National Association of Securities Dealers, Inc. by the
stockholders of Parent and this Agreement shall have been approved and adopted
and the Merger shall have been duly approved by the requisite vote under
applicable law by the stockholders of the Company.
(b) Registration Statement Effective; Proxy Statement/Prospectus.
The SEC shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement/Prospectus, shall have been
initiated or threatened by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods under the HSR Act relating to the transactions contemplated
hereby will have expired or terminated early and all material foreign antitrust
approvals required to be obtained prior to the Merger in connection with the
transactions contemplated hereby shall have been obtained.
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(d) Tax Opinions. Parent and the Company shall each have received
written opinions from their respective tax counsel (Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Ropes & Gray, respectively), in form and
substance reasonably satisfactory to each of them, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and such opinions shall not have been withdrawn. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
(e) Listing of Shares of Parent Common Stock. The shares of
Parent Common Stock to be issued in the Merger shall have been approved, upon
official notice of issuance, for quotation on the Nasdaq National Market.
6.2 Additional Conditions to Obligations of the Company. The obligation
of the Company to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct in all material respects as of the date of this Agreement
and (ii) shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on the Closing Date,
except (A) for changes contemplated by this Agreement, (B) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct in all material
respects as of such particular date) or (C) where the failure to be true and
correct would not have a Material Adverse Effect (it being understood that, for
purposes of determining the accuracy of such representations and warranties (x)
all qualifications based on the word "material" or similar phrases contained in
such representations and warranties shall be disregarded, and (y) any update of
or modification to the Parent Schedules made or purported to have been made
after the date of this Agreement shall be disregarded). The Company shall have
received a certificate with respect to the foregoing signed on behalf of Parent
by the Chief Executive Officer and Chief Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and the Company shall have received a certificate to such
effect signed on behalf of Parent by the Chief Executive Officer and Chief
Financial Officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement.
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6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and
warranty of the Company contained in this Agreement (i) shall have been true and
correct in all material respects as of the date of this Agreement and (ii) shall
be true and correct on in all material respects and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date except (A)
for changes contemplated by this Agreement, (B) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct in all material respects as of
such particular date) or (C) where the failure to be true and correct would not
have a Material Adverse Effect (it being understood that, for purposes of
determining the accuracy of such representations and warranties (x) all
qualifications based on the word "material" or similar phrases contained in such
representations and warranties shall be disregarded, and (y) any update of or
modification to the Company Schedules made or purported to have been made after
the date of this Agreement shall be disregarded). Parent shall have received a
certificate with respect to the foregoing signed on behalf of the Company by the
Chief Executive Officer and Chief Financial Officer of the Company.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to the Company shall have occurred since the date of this Agreement.
(d) Employment and Noncompetition Agreements. The persons set
forth on Exhibit C-1 hereto shall have entered into Employment and
Noncompetition Agreements substantially in the form attached hereto as Exhibit
C-2 and such agreements shall be in full force and effect.
(e) Consents. The Company shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements, contracts,
licenses or leases set forth on Schedule 6.3(e).
(f) Affiliate Agreements. The persons set forth on Exhibit B-1
hereto shall have entered into Company Affiliate Agreements substantially in the
form attached hereto as Exhibit B-2 and such agreements shall be in full force
and effect.
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(g) Dissenting Shares. Fewer than 2% of the outstanding shares of
Company Common Stock shall be Dissenting Shares.
(h) Amendment of Rights Agreement. The Rights Agreement shall
have been effectively amended by the parties thereto in order to prevent the
execution of this Agreement, the Merger or any other transactions contemplated
hereby from triggering the exercisability of the rights granted or authorized
thereunder.
(i) Opinion of Accountants. Parent shall have received letters
from each of Arthur Andersen LLP and Coopers & Lybrand L.L.P., respectively,
dated within two (2) business days prior to the effective date of the Proxy
Statement/Prospectus and dated as of the Closing Date, regarding that firm's
concurrence with Parent's management's and Company's management's conclusions as
to the appropriateness of pooling of interest accounting for the Merger under
Accounting Principles Board Opinion No. 16, if the Merger is consummated in
accordance with this Agreement.
(j) Opinion of Counsel. Parent, Coopers & Lybrand LLP and Arthur
Anderson LLP shall have received a reasoned opinion of counsel to the Company
with respect to the affiliate status of certain Company stockholders.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or, except as specified below, after the
requisite approvals of the stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated by October 31, 1998 for any reason; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Parent or the Company if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable;
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(d) by either Parent or the Company if the required approval of
the stockholders of the Company contemplated by this Agreement shall not have
been obtained by reason of the failure to obtain the required vote at the
Company Stockholders' Meeting or at any adjournment thereof (provided that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to the Company where the failure to obtain the Company stockholder
approval shall have been caused by the action or failure to act of the Company
and such action or failure to act constitutes a breach by the Company of this
Agreement);
(e) by either Parent or the Company if the required approval of
the stockholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at the Parent
Stockholders' Meeting or at any adjournment thereof (provided that the right to
terminate this Agreement under this Section 7.1(e) shall not be available to
Parent where the failure to obtain Parent stockholder approval shall have been
caused by the action or failure to act of Parent and such action or failure to
act constitutes a breach by Parent of this Agreement);
(f) by Parent or the Company (at any time prior to the adoption
and approval of this Agreement and the Merger by the required vote of the
stockholders of Parent and the Company) if a Triggering Event (as defined below)
shall have occurred; provided that the right of the Company under this Section
7.1(f) shall not be exercisable until the date that is one hundred twenty (120)
days after the date of this Agreement.
(g) by the Company, upon 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, in either case such that the conditions set forth in
Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of such
breach or as of the time such representation or warranty shall have become
untrue, provided that if such inaccuracy in Parent's representations and
warranties or breach by Parent is curable by Parent through the exercise of its
commercially reasonable efforts, then the Company may not terminate this
Agreement under this Section 7.1(g) for fifteen days after delivery of written
notice from the Company to Parent of such breach, provided Parent continues to
exercise commercially reasonable efforts to cure such breach throughout such
fifteen day period (it being understood that the Company may not terminate this
Agreement pursuant to this paragraph (g) if it shall have materially breached
this Agreement or if such breach by Parent is cured during such fifteen day
period); or
(h) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, provided, that if such
inaccuracy in the Company's representations and warranties or breach by the
Company is curable by the Company through the exercise of its commercially
reasonable efforts, then Parent may not terminate this Agreement under this
Section 7.1(h) for fifteen days after delivery of written notice from Parent to
the Company of such
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breach, provided the Company continues to exercise commercially reasonable
efforts to cure such breach throughout such fifteen day period (it being
understood that Parent may not terminate this Agreement pursuant to this
paragraph (h) if it shall have materially breached this Agreement or if such
breach by the Company is cured during such fifteen day period).
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be deemed
to have occurred if: (i) the Board of Directors of the Company or any committee
thereof shall for any reason have withdrawn or shall have amended or modified in
a manner adverse to Parent its unanimous recommendation in favor of the adoption
and approval of this Agreement or the approval of the Merger; (ii) the Company
shall have failed to include in the Proxy Statement/Prospectus the unanimous
recommendation of the Board of Directors of the Company in favor of the adoption
and approval of this Agreement and the approval of the Merger; (iii) the Board
of Directors of the Company fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of this Agreement and the approval of the
Merger within five (5) business days after Parent requests in writing that such
recommendation be reaffirmed at any time following the public announcement of an
Acquisition Proposal; (iv) the Board of Directors of the Company or any
committee thereof shall have approved or publicly recommended any Acquisition
Proposal; (v) the Company shall have entered into any letter of intent or
similar document or any agreement, contract or commitment accepting any
Acquisition Proposal; or (vi) a tender or exchange offer relating to securities
of the Company shall have been commenced by a Person unaffiliated with Parent
and the Company shall not have sent to its securityholders pursuant to Rule 14e-
2 promulgated under the Securities Act, within ten (10) business days after such
tender or exchange offer is first published, sent or given, a statement
disclosing that the Company recommends rejection of such tender or exchange
offer.
7.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (General Provisions), each of
which shall survive the termination of this Agreement, and (ii) nothing herein
shall relieve any party from liability for any willful breach of this Agreement.
No termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with its terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Proxy Statement/Prospectus
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(including any preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements thereto.
(b) Payments. In the event that this Agreement is terminated by
Parent pursuant to Section 7.1(d) or (f) or by the Company pursuant to Section
7.1(e), the Company or the Parent, as the case may be shall promptly, but in no
event later than two business days after the date of such termination, pay the
other party a fee equal to $3,100,000 in immediately available funds (the
"TERMINATION FEE"). The parties acknowledge that the agreements contained in
this Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the parties would not enter
into this Agreement; accordingly, if Parent or the Company, as the case may be,
fails promptly to pay the amounts due pursuant to this Section 7.3(b), and, in
order to obtain such payment, the other party commences a suit which results in
a judgment against the non-paying party for the amounts set forth in this
Section 7.3(b), the non-paying party shall pay to the other party its reasonable
costs and expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on the amounts set forth in this Section
7.3(b) at the prime rate of The Chase Manhattan Bank in effect on the date such
payment was required to be made.
(c) Payment of the amounts described in Section 7.3(b) shall not
be in lieu of damages incurred in the event of breach of this Agreement.
7.4 Amendment. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of Parent, Merger Sub and the Company.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of the Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive termination of this Agreement or the Effective Time shall so
survive.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by nationally
recognized overnight commercial delivery service, or sent via telecopy (receipt
confirmed) to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy numbers for a party as shall be specified by like
notice by such party):
(a) if to Parent or Merger Sub, to:
NetManage, Inc.
10725 North DeAnza Boulevard
Cupertino, California 95014
Attention: Zvi Alon, President
Telephone No.: (408) 973-7171
Telecopy No.: (408) 257-6405
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: David J. Segre, Esq.
Daniel R. Mitz, Esq.
Telephone No.: (650) 493-9300
Telecopy No.: (650) 493-6811
(b) if to the Company, to:
FTP Software, Inc.
2 High Street
North Andover, Massachusetts 01845
Attention: Glenn C. Hazard, President and Chief Executive
Officer
Telephone No.: (978) 685-4000
Telecopy No.: (978) 684-6116
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with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: David B. Walek, Esq.
Telephone No.: (617) 951-7388
Telecopy No.: (617) 951-7050
8.3 Interpretation.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "INCLUDE,"
"INCLUDES" and "INCLUDING" when used herein shall be deemed in each case to be
followed by the words "WITHOUT LIMITATION." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "THE BUSINESS OF" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition or results of operations of such entity and its subsidiaries taken as
a whole. A Material Adverse Effect shall be deemed to have occurred with respect
to the Company if, among other things: (i) Company Second Quarter Revenues
(together with the excess, if any, of (A) Company Third Quarter Revenues over
$3,500,000 (if the Closing occurs on or after August 31, 1998) or (B) Net
Revenues of the Company for the month ending July 31, 1998 over $1,750,000 (if
the Closing occurs prior to August 31, 1998)) are less than $7,500,000 or (ii)
Company Third Quarter Revenues are less than $3,500,000 (if the Closing occurs
on or after August 31, 1998) (or, if the Closing occurs prior to August 31,
1998, Net Revenues of the Company for the month ending July 31, 1998 are less
than $1,750,000) (each of (i) and (ii) a "COMPANY NET REVENUE THRESHOLD"). A
Material Adverse Effect shall be deemed to have occurred with respect to Parent
if, among other things, (A) Net Revenues of Parent for the fiscal quarter ending
June 30, 1998 (together with the excess, if any, of (1) Net Revenues of Parent
for the two months ending August 31, 1998 ("PARENT THIRD QUARTER REVENUES") over
$5,500,000 (if the Closing occurs on or after August 31, 1998) or (2) Net
Revenues of Parent for the month ending July 31, 1998 over $2,750,000 (if the
Closing occurs prior to August 31, 1998)) are less than $11,250,000 or (B)
Parent Third Quarter Revenues are less than $5,500,000 (if the Closing occurs on
or after August 31, 1998) (or, if the Closing occurs prior to August 31, 1998,
Net Revenues of Parent for the month ending July 31, 1998 are less than
$2,750,000) (each of (A) and (B), a "PARENT NET REVENUE THRESHOLD"). For
purposes of this Agreement, the determination of whether a Material Adverse
Effect with respect to the
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Company or Parent shall have occurred, in the event that each of the Company Net
Revenue Thresholds or Parent Net Revenue Thresholds, as the case may be, are
satisfied, shall not take into account the Net Revenues of the Company or the
Net Revenues of Parent, as the case may be, for such periods. However, for
avoidance of doubt, if the Company or Parent achieves the Company Net Revenue
Thresholds or Parent Net Revenue Threshold, as the case may be, a Material
Adverse Effect may occur if changes, events, violations, inaccuracies,
circumstances or effects other than a failure to meet each Company Net Revenue
Threshold or Parent Net Revenue Threshold, as the case may be, shall exist. In
addition, for purposes of this Agreement, if each of the Company Net Revenue
Thresholds or Parent Net Revenue Thresholds, as the case may be, are satisfied,
a Material Adverse Effect with respect to the Company or Parent, as the case may
be, shall not be deemed to have occurred if such change, event, violation,
inaccuracy, circumstance or effect is directly attributable and consistent with
trends affecting such party's business, results of operations and financial
condition on and as of March 31, 1998; provided, however, that in any dispute,
the party asserting that any of the foregoing is "directly attributable" to
trends affecting the Company's or Parent's business, results of operations or
financial condition on and as of March 31, 1998 shall have the burden of proof
of such assertion by a preponderance of the evidence.
(c) For purposes of this Agreement, the term "PERSON" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Schedules and the
Parent Schedules: (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as specifically provided in
Section 5.10 (which is intended to be for the Indemnified Parties and may be
enforced by each such person).
8.6 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with
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a valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof;
provided that issues involving the corporate governance of any of the parties
hereto shall be governed by their respective jurisdictions of incorporation.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction of
any state or federal court within the Northern District of California, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, other than issues involving the corporate
governance of any of the parties hereto, agrees that process may be served upon
them in any manner authorized by the laws of the State of California 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.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. 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.
8.11 Waiver of Jury Trial. EACH OF PARENT, THE COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
NETMANAGE, INC.
By: /s/ Zvi Alon
-------------------------------------
Title: President
-------------------------------------
FTP SOFTWARE, INC., a Massachusetts
corporation
[Seal] By: /s/ Glenn C. Hazard
-------------------------------------
President
By: /s/ James A. Tholen
-------------------------------------
Treasurer
AMANDA ACQUISITION CORP., a Massachusetts
corporation
[Seal] By: /s/ Zvi Alon
-------------------------------------
President
By: /s/ Gary R. Anderson
-------------------------------------
Treasurer
**** REORGANIZATION AGREEMENT ****
