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Exhibit 2.1
AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF MERGER
(this “Agreement”), dated as of April 30, 2008, by
and among Micro Focus (US), Inc., a Delaware corporation
(“Parent”), MF Merger Sub, Inc., a Delaware corporation
and wholly owned Subsidiary of Parent (“Newco”), and
NetManage, Inc., a Delaware corporation (the
“Company”). Certain other capitalized terms used in
this Agreement are defined in Section 7.
WHEREAS, each of Parent and
the Company has determined that it is in its best interests for
Parent to acquire the Company, upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the board of
directors of each of Parent, Newco and the Company has approved
this Agreement, the Merger and the other transactions contemplated
by this Agreement;
WHEREAS, concurrently with
the execution of this Agreement, and as a condition and inducement
to Parent’s willingness to enter into this Agreement, certain
stockholders of the Company are entering into voting agreements
with Parent; and
WHEREAS, Parent, Newco and
the Company desire to make certain representations, warranties,
covenants and agreements in connection with the Merger.
NOW, THEREFORE, in
consideration of the foregoing and the mutual representations,
warranties, covenants and agreements set forth herein, Parent,
Newco and the Company hereby agree as follows:
1. THE
MERGER.
1.1 The Merger.
Subject to the terms and conditions of this Agreement, at the
Effective Time, the Company and Newco shall consummate a merger
(the “Merger”) in which Newco shall be merged with and
into the Company and the separate corporate existence of Newco
shall thereupon cease, and Company shall be, and is herein
sometimes referred to as, the “Surviving
Corporation.”
1.2 Effective Time. On
the Closing Date, a properly executed certificate of merger
conforming to the requirements of Section 251 of the DGCL
shall be filed with the Secretary of State of the State of Delaware
(the “Certificate of Merger”), and the parties hereto
shall take such other reasonable and further actions as may be
required by Law to make the Merger effective. The Merger shall
become effective at the time such Certificate of Merger is filed
with and accepted by the Secretary of State of the State of
Delaware or at such later time as specified in such Certificate of
Merger (the “Effective Time”).
1.3 Effects of the
Merger. Upon the Effective Time, the separate existence of
Newco shall cease and Company, as the Surviving Corporation
(i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the
Effective Time, (ii) shall be subject to all actions
previously taken by its and Newco’s Board of Directors,
(iii) shall succeed, without other transfer, to all of the
assets, rights, powers and property of Newco in the manner more
fully set forth in Section 259 of the DGCL, (iv) shall
continue to be subject to all of the debts, liabilities and
obligations of Company as constituted immediately prior to the
Effective Date of the Merger, and (v) shall succeed, without
other transfer, to all of the debts, liabilities and obligations of
Newco in the same manner as if Company had itself incurred them,
all as more fully provided under the applicable provisions of the
DGCL.
1.4 Closing. The
closing of the Merger (the “Closing”) shall take place
(a) at the offices of Kirkland & Ellis, 555
California Street, San Francisco, California 94104, on the date
which is most promptly practicable following the date of the
satisfaction or waiver (to the extent permitted by applicable Law)
of all of the conditions set forth in Article 5 (other than those
conditions that by their nature are to be satisfied at the Closing,
but subject to the
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satisfaction or waiver of those
conditions at such time), but in no event later than the fifth
(5th) business day following such date or (b) at such
other place, time and date and in such other manner as Parent and
the Company may agree. The date on which the Closing takes place is
referred to herein as the “Closing Date”.
1.5 Certificate of
Incorporation and Bylaws; Directors and Officers. Unless
otherwise determined by Parent and Company prior to the Effective
Time:
(a) the Certificate of
Incorporation of Newco as in effect immediately prior to the
Effective Time shall continue in full force and effect as the
Certificate of Incorporation of the Surviving Corporation until
duly amended in accordance with the provisions thereof and
applicable law;
(b) the Bylaws of Newco as in
effect immediately prior to the Effective Time shall continue in
full force and effect as the Bylaws of the Surviving Corporation
until duly amended in accordance with the provisions thereof and
applicable law; and
(c) the directors and
officers of Newco immediately prior to the Effective Time shall be
the directors and officers of the Surviving Corporation until their
successors shall have been duly elected and qualified or until as
otherwise provided by law, the Certificate of Incorporation of the
Surviving Corporation or the Bylaws of the Surviving
Corporation.
1.6 Share Consideration
for the Merger; Conversion or Cancellation of Shares in the
Merger. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Newco, the Company, the
Surviving Corporation or the holders of any outstanding shares of
the Company’s Common Stock (collectively, the
“Shares,” and each, a “Share”), each Share
shall be treated as follows:
(a) Each Share issued and
outstanding immediately prior to the Effective Time (other than
those Shares which are Dissenting Shares and shares owned by
Parent, Newco or any direct or indirect wholly-owned Subsidiary of
Parent (collectively, “Parent Companies”) or by the
Company or any of the Company’s direct or indirect
wholly-owned Subsidiaries), shall be cancelled and extinguished and
converted into the right to receive from Parent, pursuant to
Section 1.8, an amount equal to the Per Share Merger
Consideration, payable to the holder thereof without interest
thereon, upon the surrender of the certificate formerly
representing such Share.
(b) Each Share issued and
outstanding and owned by the Parent Companies or the Company or any
of the Company’s direct or indirect wholly-owned Subsidiaries
shall immediately prior to the Effective Time cease to be
outstanding, be cancelled and retired, without payment of any
consideration therefor, and shall cease to exist.
(c) Each share of common
stock of Newco issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving
Corporation.
1.7 Stock
Options.
(a) Prior to the Effective
Time, the Board of Directors shall adopt such resolutions and take
such other actions as are required to approve and effect the
matters contemplated by this Section 1.7. The Company shall
use its best efforts to obtain any necessary consents of the
holders of Options (as defined below) to effect this
Section 1.7.
(b) The Company shall take
all necessary steps to ensure that each option to acquire shares of
capital stock of the Company (“Option”) that has been
granted under the Company’s 1992 Stock Option Plan, 1993
Non-Employee Directors Stock Option Plan and the 1999 Non-Statutory
Stock Option Plan (each, as amended and in effect on the date
hereof, the “Option Plans”), or otherwise, and is
outstanding as of immediately prior to the Effective Time, will
(i) become fully exercisable or “vested” for a
period of at least 10 days prior to the Effective Time, contingent
upon the occurrence of the Effective Time, with respect
to
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the 1999 Non-Statutory Stock
Option Plan and (ii) with respect to the other Option Plans or
other Option-related agreements, at the Effective Time to the
extent unexercised, automatically shall be cancelled and converted
into the right to receive, upon compliance with the provisions
noted below, a lump sum cash payment in an amount equal to the
product of the following:
(i) the excess, if any, of
the Per Share Merger Consideration payable per Share over the per
share exercise price of each Share subject to such Option,
multiplied by
(ii) the number of shares of
Capital Stock covered by such Option, and in each case less
applicable Taxes to be withheld (any payment made pursuant to this
Section 1.7 to the holder of any Option shall be reduced by
any income or employment Tax withholding required under
(x) the Code, (y) any applicable state, local or foreign
Tax laws and (z) any other applicable Laws, and, to the extent
that any amounts are so withheld, those amounts shall be treated as
having been paid to the holder of that Option for all purposes
under this Agreement).
(c) If, in accordance with
Section 1.7(b)(i), the Per Share Merger Consideration payable
per Share is less than the per share exercise price of any Option,
then any such Option shall automatically be cancelled without any
consideration as of the Effective Time.
(d) As of the Effective Time,
each of the Option Plans and any other plan, program or arrangement
providing for the issuance or grant of any other interest in
respect of securities or rights to acquire securities of the
Company shall be terminated and cancelled (without any liability on
the part of Parent or the Surviving Corporation other than as
expressly set forth in this Section 1.7).
(e) No party to this
Agreement shall be liable to any holder of any Option for any cash
delivered to a public official pursuant to and in accordance with
any abandoned property, escheat or similar Law.
(f) The Company and the Board
of Directors shall take any and all actions (including, but not
limited to, giving requisite notices to, and using their best
efforts to obtain all necessary consents from, holders of Options
advising them of such cancellations and any rights pursuant to this
Section 1.7) as are necessary to (i) fully advise holders
of Options of their rights under the Option Plans or otherwise and
the Options in connection with the Merger, and (ii) effectuate
the provisions of this Section 1.7 under the terms of the
Option Plans or other Option-related agreements. From and after the
Effective Time, other than as expressly set forth in this
Section 1.7, no holder of an Option shall have any rights in
respect thereof other than to receive payment (if any) for the
Options as set forth in this Section 1.7, and neither Parent
nor the Surviving Corporation shall have any liability or
obligation under any of the Option Plans or, other than the
obligation to make any required payment set forth in this
Section 1.7, with respect to the Options.
(g) Any payment to be made to
a holder of any Option in accordance with this Section 1.7
shall be made by the Surviving Corporation and, as a prerequisite
to receiving any consideration pursuant to this Section 1.7,
each holder of an Option shall be required to execute a written
acknowledgment to the effect that (i) the payment of such
consideration, if any, will satisfy in full the Company’s
obligation to such person pursuant to such Option and
(ii) subject to the payment of the such Consideration, if any,
such Option held by such holder shall, without any action on the
part of the Company or the holder, be deemed terminated, canceled,
void and of no further force and effect as between the Company and
the holder and neither party shall have any further rights or
obligations with respect thereto. Such written acknowledgment shall
be substantially in the form attached hereto as Exhibit 1.7. Until
the provisions of this Section 1.7 are satisfied by the holder
of each Option, such Option shall represent for all purposes after
the Effective Time only the right to receive the payments, if any,
without interest, from the Surviving Corporation pursuant to this
Section 1.7.
(h) The Company shall take
all necessary action to provide that the Company’s 1993
Employee Stock Purchase Plan (the “ESPP”) and all
options or other rights to purchase Shares granted under the ESPP
shall be terminated effective as of the date of this Agreement and
no participant in the ESPP shall thereafter be granted any rights
thereunder to acquire any equity securities of the Company, the
Surviving Corporation,
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Parent or any Subsidiary of
any of the foregoing. The Company shall refund the payroll
deductions, if any, credited to each participant’s account
under the ESPP, without interest, in accordance with the terms of
the ESPP.
1.8 Payment for Securities
in the Merger. The manner of making payment for Shares in the
Merger shall be as follows:
(a) Prior to the Effective
Time, Parent shall designate a reputable bank or trust company or
other entity reasonably acceptable to the Company to act as paying
agent for the holders of Shares in connection with the Merger (the
“Paying Agent”), and to receive the funds to which the
holders of Shares will become entitled pursuant to
Section 1.6(a). Promptly following the Effective Time, Parent
or Newco shall deposit, or Parent or Newco shall otherwise take all
steps necessary to cause to be deposited into the Payment Fund (as
defined below), by wire transfer of immediately available funds, in
trust with the Paying Agent for the benefit of the holders of
Shares, cash in an aggregate amount equal to (i) the product
of (A) the number of Shares issued and outstanding immediately
prior to the Effective Time and entitled to receive the Per Share
Merger Consideration in accordance with Section 1.6(a) and
(B) the Per Share Merger Consideration less the Company Cash
Deposit (as defined below), in each case required to be deposited
into the Payment Fund pursuant to this Section 1.8(a) (such
difference, the “Parent Total Merger Consideration”).
Promptly following the Effective Time and substantially
concurrently with the Parent or Newco’s deposit of the Parent
Total Merger Consideration, the Company shall deposit, or the
Company shall otherwise take all steps necessary to cause to be
deposited, in trust for the benefit of the holders of Shares, such
amount of cash as Parent shall reasonably request (the amount to be
deposited by the Company is referred to herein as the
“Company Cash Deposit” and together with the Parent
Total Merger Consideration, the “Payment Fund”) with
the Paying Agent for deposit into the Payment Fund. Without
limiting the Company’s obligations set forth in the preceding
sentence, the Company shall, as of the Effective Time, the Company
shall retain sufficient freely available cash (after payment of the
Company Cash Deposit) to pay the aggregate amount to be paid to the
holders of Options pursuant to Section 1.7. The Paying Agent
shall, pursuant to irrevocable instructions, make the payments
contemplated by Sections 1.6(a) out of the Payment Fund in
accordance with the provisions of Section 1.8(c).
(b) The Paying Agent shall
invest the Payment Fund as directed by Parent or Newco in
(i) investment grade money market instruments,
(ii) direct obligations of the United States of America,
(iii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of
principal and interest, (iv) commercial paper rated the
highest quality by either Moody’s Investors Services, Inc. or
Standard & Poor’s Corporation, or
(v) certificates of deposit, bank repurchase agreements or
bankers’ acceptances of commercial banks with capital
exceeding $1 billion, in each case having maturities not to exceed
thirty (30) days and as designated by Parent, with any
interest earned thereon being payable to Parent. Parent shall cause
the Payment Fund to be promptly replenished to the extent of any
losses incurred and not offset by earnings or gains as a result of
the aforementioned investments. All earnings and gains thereon
shall inure to the benefit of Parent. If for any reason (including
losses) the Payment Fund is inadequate to pay the amounts to which
holders of Shares shall be entitled under Section 1.6(a) and
this Section 1.8, Parent shall in any event be liable for
payment thereof. The Payment Fund shall not be used for any purpose
except as expressly provided in this Agreement.
(c) As soon as reasonably
practicable after the Effective Time, the Paying Agent shall mail
to each holder of record (other than holders of certificates
representing Dissenting Shares or Shares referred to in
Section 1.6(b)) of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
Shares (the “Certificates”) (other than holders owning
Dissenting Shares), (i) a notice and letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent, and shall be in
such form and have such other provisions as Parent may reasonably
specify), and (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. Upon surrender
of Certificates, if any, for cancellation to the Paying Agent,
together with such letter of transmittal duly executed and properly
completed, and any
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other required documents, the
holder of such Certificates shall be entitled to receive for each
Share represented by such Certificates the Per Share Merger
Consideration, without any interest thereon, less any required
withholding of taxes, and the Certificates so surrendered shall
forthwith be cancelled.
(d) If payment is to be made
to a Person other than the Person in whose name a Certificate so
surrendered is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the Person
requesting such payment shall pay to the Paying Agent any transfer
or other taxes required by reason of the payment to a Person other
than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has
been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 1.8, each Certificate
(other than certificates representing Dissenting Shares or Shares
referred to in Section 1.6(b)) shall represent for all
purposes only the right to receive, for each Share represented
thereby, the Per Share Merger Consideration, and shall not evidence
any interest in, or any right to exercise the rights of a
shareholder or other equityholder of, the Company or the Surviving
Corporation.
(e) Any portion of the
Payment Fund made available to the Paying Agent which remains
unclaimed by the former shareholders for one year after the
Effective Time shall be delivered to Parent, and any former
shareholders shall thereafter look only to Parent for payment of
any amounts to which such holders are entitled pursuant to this
Section 1.8, in each case, without any interest thereon and
subject to any taxes required to be withheld.
(f) Neither the Paying Agent
nor any party to this Agreement shall be liable to any shareholder
for any Merger Consideration or cash delivered to a public official
pursuant to and in accordance with any abandoned property, escheat
or similar Law.
(g) The Paying Agent shall be
entitled to deduct and withhold from the amounts otherwise payable
pursuant to this Agreement to any former holder of Shares such
amounts as Parent and the Surviving Corporation reasonably and in
good faith determine are required to be deducted and withheld with
respect to the making of such payment under the Code, or any social
security, FICA or Medicare tax Law or any other provision of
federal, state, local or foreign tax Law. To the extent that
amounts are so withheld by the Paying Agent, such withheld amounts
shall be (i) treated for all purposes of this Agreement as
having been paid to the former holder of Shares, in respect of
which such deduction and withholding was made by the Paying Agent,
and (ii) deposited on behalf of such former holder with the
appropriate tax authorities.
1.9 Appraisal
Rights.
(a) Notwithstanding anything
to the contrary contained in this Agreement, to the extent that the
provisions of Section 262 of the DGCL are or prior to the
Effective Time may become applicable to the Merger, any shares of
Company capital stock that, as of the Effective Time, are held by
holders who have as of the Effective Time preserved appraisal
rights under Section 262 of the DGCL with respect to such
shares (“Dissenting Shares”) shall not be converted
into or represent the right to receive Merger Consideration in
accordance with Section 1.8, and the holder or holders of such
shares shall be entitled only to such rights as may be provided to
such holder or holders pursuant to Section 262 of the DGCL;
provided, however, that if such appraisal rights shall not be
perfected or the holders of such shares shall otherwise lose their
appraisal rights with respect to such shares, then, as of the later
of the Effective Time or the time of the failure to perfect such
status or the loss of such rights, such shares shall automatically
be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing
such shares) the Merger Consideration in accordance with
Section 1.8.
(b) Company shall give Parent
(i) prompt notice of any written demand received by Company
prior to the Effective Time to require Company to purchase shares
of Company capital stock pursuant to Section 262 of the DGCL
and of any other demand, notice or instrument delivered to Company
prior to the Effective Time pursuant to the DGCL, and (ii) the
opportunity to participate in all negotiations and
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proceedings with respect to
any such demand, notice or instrument. Company shall not make any
payment or settlement offer prior to the Effective Time with
respect to any such demand unless Parent shall have consented in
writing to such payment or settlement offer.
1.10 No Further Rights or
Transfers. Except for the surrender of the Certificates
representing the Shares in exchange for the right to receive the
Per Share Merger Consideration with respect to each Share or the
perfection of appraisal rights with respect to the Dissenting
Shares, at and after the Effective Time, a holder of Shares shall
cease to have any rights as a shareholder of the Company, and no
transfer of Shares shall thereafter be made on the stock transfer
books of the Company.
1.11 Certain Company
Actions. Prior to the Effective Time, the Company shall take
all such steps as may be required (to the extent permitted under
applicable Law) to cause any dispositions of Shares (including
derivative securities with respect to Shares) resulting from the
transactions contemplated by Section 1 of this Agreement by
each individual who is subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) with respect to the
Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act.
2. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY. The Company hereby makes the representations and
warranties in this Section 2 to Parent and Newco, except as
qualified or supplemented by the corresponding sections in the
Company Disclosure Schedule delivered to Parent prior to the
execution of this Agreement and attached hereto:
2.1 Corporate Organization
and Qualification. The Company is a corporation, duly
incorporated, validly existing and in good standing under the Laws
of the State of Delaware and is qualified and in good standing as a
foreign corporation in each jurisdiction where the properties
owned, leased or operated or the business conducted by it require
such qualification, except where failure to so qualify or be in
good standing would not have a Company Material Adverse Effect.
Each of the Subsidiaries of the Company is duly organized, validly
existing and in good standing under the Laws of its respective
jurisdiction of organization and is qualified and in good standing
as a foreign corporation in each jurisdiction where the properties
owned, leased or operated or the business conducted by it require
such qualification, except where failure to so qualify or be in
good standing would not have a Company Material Adverse Effect. The
Company has all requisite corporate power and authority to own its
properties and to carry on its business as it is now being
conducted. Each of the Subsidiaries of the Company has all
requisite power and authority to own its properties and to carry on
its business as it is now being conducted. The Company has
previously made available to Parent complete and correct copies of
the Company Certificate of Incorporation (the “Company
Certificate of Incorporation”) and bylaws as in effect on the
date hereof (the “Company Bylaws”), and the certificate
of incorporation and bylaws (or other comparable organizational
documents) of each of its Subsidiaries (the “Subsidiary
Organizational Documents”).
2.2 Capitalization;
Subsidiaries. (a) The authorized capital stock of the
Company consists of 37,000,000 shares, 36,000,000 shares of which
are designated as Common Stock, 1,000,000 shares of which are
designated as Series A Preferred Stock, par value $0.01 per share
(the “Preferred Stock”, together with the Common Stock
are collectively referred to herein as the “Capital
Stock”). As of the date of this Agreement, 9,630,077 shares
of Common Stock were issued and outstanding, and no shares of
Preferred Stock were issued and outstanding, and as of the Closing
Date, no more than 11,237,028 shares of Common Stock plus any
shares of Common Stock issuable pursuant to the Merit Options and
no shares of Preferred Stock shall be issued and outstanding. Other
than the foregoing, there are no other shares of a class or series
of Capital Stock of the Company or any Subsidiary thereof
authorized or outstanding. All of the issued and outstanding shares
of Capital Stock have been duly authorized and validly issued and
are fully paid and nonassessable, and are free of preemptive
rights. All of the issued and outstanding shares of Capital Stock
were issued in compliance with any preemptive rights and any other
statutory or contractual rights of any shareholders of the Company
and in compliance with all applicable securities Laws. As of the
date hereof, 1,606,951 shares of Common Stock are reserved for
issuance upon the exercise of outstanding Options granted pursuant
to the Option Plans, and no shares of Common Stock are
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reserved for issuance upon the exercise
of outstanding Options granted outside of the Option Plans and no
shares of Common Stock are reserved for issuance upon the exercise
of any warrants or similar rights. Section 2.2 of the Company
Disclosure Schedule sets forth a correct, true and complete list of
each Person who, as of the close of business on the date of this
Agreement, held an Option under any of the Option Plans or
otherwise, indicating with respect to each Option then outstanding,
the number of Shares subject to such Option, the grant date and
exercise price of such Option, and the vesting schedule and
expiration of such Option. The only security issuable upon exercise
of outstanding Options is Common Stock. There are not as of the
date hereof, and at the Effective Time there will not be, any
subscriptions, outstanding or authorized options, warrants,
convertible securities, calls, rights (including preemptive
rights), commitments or any other agreements of any character to
which the Company or any of its Subsidiaries is a party, or by
which it may be bound, requiring it to issue, transfer, sell,
purchase, redeem or acquire any shares of its capital stock or any
securities or rights convertible into, exercisable or exchangeable
for, or evidencing the right to subscribe for, any shares of its
capital stock, or requiring it to give any Person the right to
receive any benefit or rights similar to any rights enjoyed by or
accruing to the holders of its shares of capital stock or any
rights to participate in the equity or net income of the Company or
any of its Subsidiaries. There are no shareholders’
agreements, voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party or by which
it is bound or, to the knowledge of the Company, between or among
shareholders, in each case with respect to the transfer or voting
of any capital stock of the Company or any of its
Subsidiaries.
(b) Section 2.2(b) of
the Company Disclosure Schedule sets forth a true and complete list
of the names, jurisdictions of organization, and jurisdictions of
qualification as a foreign entity of each of the Company’s
Subsidiaries.
(c) All outstanding shares of
capital stock or other equity interests of the Company’s
Subsidiaries are owned by the Company or a direct or indirect
wholly-owned Subsidiary of the Company free and clear of all Liens,
other than Permitted Liens. Other than the Subsidiaries, there are
no other corporations, joint ventures, associations or other
entities in which the Company or any of its Subsidiaries owns, of
record or beneficially, any direct or indirect equity or other
interest or any right (contingent or otherwise) to acquire the
same. Other than the Subsidiaries, neither the Company nor any of
its Subsidiaries is a member of (nor is any part of its business
conducted through) any partnership nor is the Company or any of its
Subsidiaries a participant in any joint venture or similar
arrangement.
2.3 Authority Relative to
This Agreement. Subject to the receipt of stockholder approval
with respect to the transactions contemplated hereby, the Company
has the requisite corporate power and authority to execute and
deliver this Agreement and each instrument required hereby to be
executed and delivered by it at the Closing, to perform its
obligations hereunder or thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement and
each instrument required hereby to be executed and delivered by the
Company at the Closing and the consummation by the Company of the
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors and no other corporate
proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions contemplated
hereby, other than the approval of the Merger and the adoption of
this Agreement by holders of the Shares in accordance with the DGCL
and the Company Certificate of Incorporation. This Agreement has
been duly and validly executed and delivered by the Company and,
assuming that this Agreement constitutes the legal, valid and
binding agreement of Parent and Newco, constitutes the legal, valid
and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that such
enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter
in effect relating to creditors’ rights generally, and
(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
Law).
2.4 Consents and
Approvals; No Violation.
(a) Neither the execution and
delivery by the Company of this Agreement and of each instrument
required hereby to be executed and delivered by the Company at the
Closing, nor the performance of its
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obligations hereunder or
thereunder, nor the consummation by the Company of the transactions
contemplated hereby or thereby, will:
(i) conflict with or result
in any breach of any provision of the Company Certificate of
Incorporation or Company By-Laws or the respective Subsidiary
Organizational Documents of any of the Company’s
Subsidiaries;
(ii) require any consent,
approval, authorization or permit of, or filing with or
notification to, any governmental authority, except
(A) pursuant to the applicable requirements of the Exchange
Act, (B) the filing of the Certificate of Merger pursuant to
the DGCL and appropriate documents with the relevant authorities of
other states in which the Company or any of its Subsidiaries is
authorized to do business, (C) such filings as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR
Act”) and foreign merger control laws, or (D) where the
failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not, individually or
in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, or adversely affect or materially delay the
consummation of the transactions contemplated hereby;
(iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration or Lien) under any of the terms,
conditions or provisions of any note, license, agreement or other
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of its or their assets may
be bound, except for such violations, breaches and defaults (or
rights of termination, cancellation or acceleration or Lien) as to
which requisite waivers or consents have been obtained by the
Company or the failure of which to obtain would not, individually
or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect; or
(iv) assuming that the
consents, approvals, authorizations or permits and filings or
notifications referred to in this Section 2.4 are duly and
timely obtained or made and the approval of the Merger and the
adoption of this Agreement by the Company’s shareholders have
been obtained, violate any Law applicable to the Company or any of
its Subsidiaries, or to any of their respective assets, the
violation of which, individually or in the aggregate, would be
expected to have a Company Material Adverse Effect.
(b) The only votes of the
holders of any class or series of the Company’s or its
Subsidiaries’ securities necessary to approve this Agreement,
the Merger and the other transactions contemplated hereby are the
affirmative vote of the holders of a majority of the outstanding
voting power of the Common Stock (“Company Shareholder
Approval”).
2.5 SEC Reports; Financial
Statements.
(a) The Company has filed all
forms, reports and documents required to be filed by it with the
SEC since January 1, 2004, pursuant to the federal securities
Laws and the SEC rules and regulations thereunder (collectively,
the “Company SEC Reports”), all of which, as of their
respective dates (or if subsequently amended or superseded by a
Company SEC Report, then as of the date of such subsequent filing),
complied in all material respects with all applicable requirements
of the Exchange Act and the Securities Act of 1933, as amended (the
“Securities Act”), as the case may be. None of the
Company SEC Reports, including, without limitation, any financial
statements or schedules included therein, as of their respective
dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading.
(b) The consolidated balance
sheets and the related consolidated statements of income and cash
flows (including the related notes thereto) of the Company included
in the Company SEC Reports, as of their respective dates,
(i) complied in all material respects with applicable
accounting requirements and the published rules and regulations of
the SEC with respect thereto, (ii) were prepared in accordance
with the books and records of the Company and with United States
generally accepted accounting principles
8
(“GAAP”) applied
on a basis consistent with prior periods (except as otherwise noted
therein and, subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments and the lack
of footnotes), and (iii) presented fairly, in all material
respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for
the periods presented therein (subject, in the case of any
unaudited interim financial statements, to normal year-end
adjustments), all in accordance with GAAP.
2.6 Absence of Certain
Changes or Events. As of the date of this Agreement, since
December 31, 2007, the Company has not suffered any Company
Material Adverse Effect, and to the knowledge of the Company, no
fact, condition or circumstance exists that would reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
2.7 Litigation. There
are no Actions, pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any
property or asset of the Company or any of its Subsidiaries and, to
the knowledge of the Company, there is no basis for any such
Action(s).
2.8 Absence of Undisclosed
Liabilities. Except for obligations required to be incurred in
connection with the transactions contemplated hereby, neither the
Company nor any of its Subsidiaries has any material liabilities or
obligations of any nature (whether accrued, absolute or contingent,
asserted or unasserted, due or to become due), other than
liabilities and obligations (i) reflected on the balance sheet
included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2007, or (ii) incurred after such
date in the ordinary course of business consistent with past
practice and immaterial in amount.
2.9 Proxy Statement.
The Proxy Statement and other materials distributed to the
Company’s shareholders in connection with the Merger,
including any amendments or supplements thereto, will comply in all
material respects with applicable federal securities Laws, and the
Proxy Statement and any other proxy materials will not, (a) at
the time that it or any amendment or supplement thereto is mailed
to the Company’s shareholders, (b) at the time of the
Shareholders Meeting or (c) at the Effective Time, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is
made by the Company with respect to information that is supplied in
writing by Newco or Parent expressly for inclusion in the Proxy
Statement.
2.10 Taxes.
(a) Tax Returns.
(i) The Company and each of
its Subsidiaries have duly, timely and properly filed all material
federal, state, local and foreign tax returns (including, but not
limited to, income, franchise, sales, payroll, employee withholding
and social security and unemployment) which were or (in the case of
returns not yet due but due on or before the date of the Closing,
taking into account any valid extension of the time for filing)
will be required to be filed with the appropriate taxing authority.
All such tax returns accurately reflect in all material respects
all liabilities for taxes for the periods covered thereby, and the
Company and its Subsidiaries have paid or accrued on their
respective balance sheets, or caused to be paid or accrued on their
respective balance sheets, all material taxes for all periods or
portions thereof ending on or prior to the date of such balance
sheets (whether or not shown on any tax return), including interest
and penalties and withholding amounts owed by the Company or any
such Subsidiary, other than amounts being contested in good faith
for which appropriate reserves have been included on the balance
sheet of the appropriate Person. Without limiting the generality of
the foregoing, the accruals and reserves for current taxes
reflected in the financial statements included in the Company SEC
Reports are adequate in all material respects to cover all taxes
accruable through the respective dates thereof (including interest
and penalties, if any, thereon) in accordance with GAAP
consistently applied.
9
(ii) Neither the Company nor
any of its Subsidiaries has received written notice of any material
claim made by a governmental authority in a jurisdiction where the
Company or such Subsidiary, as the case may be, does not file tax
returns that the Company or such Subsidiary is or may be subject to
taxation by that jurisdiction.
(iii) No unpaid tax
deficiencies have been proposed or assessed in writing against the
Company or any of its Subsidiaries and no material tax
deficiencies, whether paid or unpaid, have been proposed or
assessed in writing against the Company or any of its Subsidiaries
since January 1, 2002.
(iv) Neither the Company nor
any of its Subsidiaries is liable for any taxes attributable to any
other Person (other than any entity that is included in the
Company’s consolidated financial statements most recently
filed by the Company with the SEC contained in the 2006 Form 10-K)
under any Law, whether by reason of being a member of another
affiliated group, being a party to a tax sharing agreement, as a
transferee or successor, or otherwise. Neither the Company nor any
of its Subsidiaries is a party to any material tax sharing, tax
indemnity or other agreement or arrangement with any entity not
included in the Company’s consolidated financial statements
most recently filed by the Company with the SEC contained in the
2006 Form 10-K. No Person (other than any entity that is included
in the Company’s consolidated financial statements most
recently filed by the Company with the SEC contained in the 2006
Form 10-K) has any right of claim, reimbursement, allocation or
sharing against any tax refunds received or due to be received by
the Company.
(b) Audits. Neither the
Company nor any of its Subsidiaries has consented to any extension
of time with respect to a tax assessment or deficiency that, as of
the date of this Agreement, remains in effect, or has waived any
statute of limitations in respect of taxes. In addition,
(i) none of the federal income tax returns of the Company or
any of its Subsidiaries has been examined by the Internal Revenue
Service during the last six (6) taxable years, (ii) no
tax audit, examinations or other administrative or judicial
proceedings are pending or being conducted, or, to the knowledge of
the Company, threatened, with respect to any taxes due from or with
respect to or attributable to the Company or any Subsidiary of the
Company or any tax return filed by or with respect to the Company
or any Subsidiary of the Company, and (iii) no written
notification of an intent to audit, to examine or to initiate
administrative or judicial proceedings has been received by the
Company or by any of its Subsidiaries.
(c) Liens. There are no tax
Liens upon any property or assets of the Company or any of its
Subsidiaries, except for Liens for current taxes not yet due and
payable and Permitted Liens.
(d) Withholding Taxes. The
Company and each of its Subsidiaries has properly withheld and
timely paid in all material respects all taxes which it was
required to withhold and pay in connection with or relating to
salaries, compensation and other amounts paid or owing to its
employees, consultants, creditors, shareholders, independent
contractors or other third parties. All material Forms W-2 and 1099
required to be filed with respect thereto have been timely and
properly filed.
(e) Other
Representations.
(i) There is no contract,
agreement, plan or arrangement to which the Company or any of its
Subsidiaries is a party, or to which the Company or any of its
Subsidiaries is bound, including, but not limited to, the
provisions of this Agreement, covering any Person that,
individually or collectively, has resulted or would result in the
payment of any “excess parachute payment” within the
meaning of Section 280G of the Code or any similar provision
of foreign, state or local Law.
(ii) Neither the Company nor
any of its Subsidiaries (A) is a party to or bound by any
closing agreement or offer in compromise with any taxing authority
or (B) has been or will be required to include any material
adjustment in taxable income for any tax period (or portion
thereof) pursuant to Section 481 or Section 263A of the
Code or any similar provision of foreign, state or local Law as a
result of the transactions, events or accounting methods employed
as of or prior to the Closing.
(iii) None of the assets of
the Company or any of its Subsidiaries is (A) “tax
exempt use property” within the meaning of
Section 168(h) of the Code, (B) subject to any lease made
pursuant to
10
Section 168(f)
(8) of the Internal Revenue Code of 1954 or (C) directly
or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code.
(iv) The Company and each of
its Subsidiaries have disclosed on their federal income tax returns
all positions taken therein that, to the knowledge of the Company,
(A) constitute a reportable tax shelter transaction or any
other tax shelter transaction within the meaning of
Section 6011 of the Code or (B), would give rise to a
substantial understatement of federal income tax within the meaning
of Section 6662 of the Code.
(v) There are no powers of
attorney or other authorizations in effect that grant to any Person
the authority to represent the Company or any of its Subsidiaries
in connection with any tax matter or proceeding.
2.11 Employee Benefit
Plans; Labor Matters.
(a) Employee Benefit
Plans.
(i) Section 2.11(a)(i)
of the Company Disclosure Schedule sets forth a list of all Company
Plans. The Company and the Subsidiaries have performed all material
obligations required to be performed by them under and are not in
any material respect in default under or in violation of, and to
the knowledge of the Company, there is no material default or
violation by any party to, any Company Plan. No Action is pending
or, to the knowledge of the Company, threatened with respect to any
Company Plan (other than claims for benefits in the ordinary
course) and, to the knowledge of the Company, no fact or event
exists that are reasonably likely to give rise to any such Action
which would result in material liability.
(ii) All contributions
required to be made to each Company Plan under the terms thereof,
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), the Code, or any other applicable Law are
not delinquent in any material respect.
(iii) There has been no
“reportable event,” as that term is defined in
Section 4043 of ERISA and the regulations thereunder, with
respect to any of the Company Plans which would require the giving
of notice, or any event requiring notice to be provided, under
Section 4063(a) of ERISA.
(iv) To the knowledge of the
Company, there has been no violation of ERISA that would reasonably
be expected to result in a material liability with respect to the
filing of applicable returns, reports, documents or notices
regarding any of the Employee Benefit Plans with the Secretary of
Labor or the Secretary of the Treasury or the furnishing of such
notices or documents to the participants or beneficiaries of the
Employee Benefit Plans.
(v) No Action is pending or
has been asserted or instituted against any Employee Benefit Plan
or its assets or against the Company, or, to the knowledge of the
Company, against any plan administrator or fiduciary of any
Employee Benefit Plan, with respect to the operation of any such
Employee Benefit Plan (other than routine, uncontested benefit
claims). To the knowledge of the Company, the Company has not
engaged in a nonexempt prohibited transaction described in Sections
406 of ERISA or 4975 of the Code.
(vi) Neither the Company nor
any Subsidiary maintains, contributes to or is obligated to
contribute to (or within the past three (3) years has
maintained, contributed to or been obligated to contribute to) any
Pension Plan that is subject to Title IV of ERISA or
Section 412 of the Code.
(vii) There will be no
material liability of the Company or any Subsidiary thereof
(A) with respect to any Pension Plan that has previously been
terminated or (B) under any insurance policy or similar
arrangement procured in connection with such Pension Plan in the
nature of a retroactive rate adjustment, loss sharing arrangement,
or other liability arising wholly or partially out of events
occurring at or prior to the Effective Time.
11
(b) Labor Matters. Neither
the Company nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contracts. There is no
labor union or organizing activity pending or, to the knowledge of
the Company, threatened, with respect to the Company, any of its
Subsidiaries or their respective businesses. There is no pending
or, to the knowledge of the Company, threatened labor dispute,
strike or work stoppage against the Company or any of its
Subsidiaries which would interfere with the respective business
activities of the Company or its Subsidiaries. To the knowledge of
the Company, as of the date of this Agreement, no Key Employee or
significant group of employees plans to terminate employment with
the Company or any Subsidiary during the next twelve
(12) months.
2.12 Environmental Laws
and Regulations. To the Company’s knowledge, the Company
and each of its Subsidiaries and their respective properties are in
compliance in all material respects with all applicable federal,
state, local and foreign Laws and regulations relating to
environmental pollution or protection of human health and the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. § 9601 et seq., and any amendments thereto, the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq., and any amendments thereto, the Hazardous Materials
Transportation Act, 49 U.S.C. § 1801 et seq., (collectively,
“Environmental Laws”). The Company and each of its
Subsidiaries and their respective properties are in compliance in
all material respects with required standards of conduct with
respect to Hazardous Materials. Neither the Company nor any of its
Subsidiaries has received within the period of three (3) years
prior to the Effective Time written notice of, or, to the knowledge
of the Company, is the subject of, any action, cause of action,
claim, investigation, demand or notice by any Person alleging
material liability under or noncompliance in any material respect
with any Environmental Law or advising it that it is or may be
responsible, or potentially responsible, for material response
costs with respect to a release or threatened release of any
Hazardous Materials. To the knowledge of the Company, neither the
Company nor any of its Subsidiaries nor anyone acting on their
behalf in the course of so acting, has used, generated, stored,
released, manufactured, processed, treated, transported or disposed
of any Hazardous Materials on, beneath or about any premises owned
or used by the Company or any of its Subsidiaries at any time,
except for Hazardous Materials that were and are used, generated,
stored, released, manufactured, processed, treated, transported and
disposed of in the ordinary course of business in material
compliance with all applicable Environmental Laws. To the knowledge
of the Company, neither the Company nor any of its Subsidiaries has
caused or is aware of any release or threat of release of any
Hazardous Materials on, beneath or about any premises owned or used
by the Company or any of its Subsidiaries at any time.
2.13 Intellectual
Property.
(a) Section 2.13(a) of
the Company Disclosure Schedule sets forth true, complete and
correct lists of the following Intellectual Property, both U.S. and
foreign, that are owned or claimed by the Company or any Subsidiary
of the Company as of the date of this Agreement along with the
jurisdiction in which each such item of Intellectual Property has
been registered or filed and the applicable registration,
application or serial number or similar identifier:
(i) all patents and pending
patent applications, including any and all extensions,
continuations, continuations-in-part, divisions, reissues,
reexaminations, substitutes, renewals, and foreign counterparts
thereof;
(ii) all trademark
registrations and pending trademark registration applications;
and
(iii) all copyright
registrations and pending copyright registration
applications.
For purposes of this
Agreement, the “Company’s Registered Intellectual
Property” shall mean the above categories (i), (ii) and
(iii), collectively.
(b) All of the
Company’s Registered Intellectual Property is owned
collectively by the Company or a Subsidiary of the
Company.
(c) All of the
Company’s Registered Intellectual Property (excluding
applications) is subsisting, and, to the knowledge of the Company,
valid and in full force and effect (except with respect to
applications), and
12
has not expired or been
cancelled or abandoned. All necessary documents and certificates in
connection with such Company Registered Intellectual Property
(excluding applications) have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of
avoiding abandonment, prosecuting and maintaining of such Company
Registered Intellectual Property (excluding
applications).
(d) Except for actions of the
relevant jurisdiction’s patent and trademark office or other
government intellectual property office (“Office
Actions”), the Company has not received written notice of any
pending or threatened (and at no time within the two years prior to
the date of this Agreement has there been pending any) Action
before any court, governmental authority or arbitral tribunal in
any jurisdiction challenging the use, ownership, validity,
enforceability or registerability of any of the Company’s
Registered Intellectual Property. Rejections of pending
applications before a national patent, trademark or intellectual
property office shall not constitute such written notice. Except
for Office Actions, neither the Company nor any Subsidiary of the
Company is a party to any settlements, covenants not to sue,
consents, decrees, stipulations, judgments or orders resulting from
Actions which permit third parties to use any of the
Company’s Registered Intellectual Property.
(e) To the knowledge of the
Company, the Company and each of the Company’s Subsidiaries
owns, or has valid rights to use, all the Intellectual Property
used in the business of the Company or such Subsidiary, as
applicable, as currently conducted, including without limitation
the design, development, reproduction, manufacture, branding,
marketing, use, distribution, import, licensing, provision and sale
of Proprietary Products.
(f) To the knowledge of the
Company, the conduct of the business of the Company and each of the
Company’s Subsidiaries as currently conducted, including
without limitation the design, development, reproduction,
manufacture, branding, marketing, use, distribution, import,
licensing, provision and sale of Proprietary Products does not
infringe upon or misappropriate any Intellectual Property or other
proprietary right owned by any Person, violate any right to privacy
or publicity of any person, or constitute unfair competition or
unfair trade practices under the Laws of any jurisdiction where the
Company currently conducts business.
(g) To the knowledge of the
Company, no third party is misappropriating, infringing, diluting
(with respect to trademarks) or violating any Intellectual Property
owned by the Company or any of the Company’s Subsidiaries
(collectively, and including the Company’s Registered
Intellectual Property, the “Company Intellectual
Property”), and no Intellectual Property or other proprietary
right, misappropriation, infringement, trademark dilution or
violation Actions have been brought against any third party by the
Company or any Subsidiary of the Company.
(h) As of the date of this
Agreement, the Company has not received written notice of any
pending or threatened (and at no time within the two years prior to
the date of this Agreement has there been, to the knowledge of the
Company, pending any) Action alleging that the activities or the
conduct of the Company’s business or any Company
Subsidiary’s business dilutes (solely with respect to
trademark rights), misappropriates, infringes, violates or
constitutes the unauthorized use of, or will dilute (solely with
respect to trademark rights), misappropriate, infringe upon,
violate or constitute the unauthorized use of the Intellectual
Property of any third party (nor, to the knowledge of the Company
does there exist any basis therefor). Except for Office Actions
pertaining to Company’s Registered Intellectual Property,
neither the Company nor any of the Company’s Subsidiaries is
party to any settlement, covenant not to sue, consent, decree,
stipulation, judgment, or order resulting from any Action which
(i) restricts the Company’s or any such
Subsidiary’s rights to use any Intellectual Property,
(ii) restricts the Company’s or any such
Subsidiary’s business in order to accommodate a third
party’s Intellectual Property rights or (iii) requires
any future payment by the Company or any such
Subsidiary.
(i) Except as set forth in
Section 2.13(i) of the Company Disclosure Schedule, each
Person who is or has been employed by the Company at any time at or
prior to the date hereof, or is or has provided consulting services
to the Company at any time at or prior to the date hereof has
executed a Employee/
13
Contractor NDA, each
substantially in the forms attached to Section 2.13(i) of the
Company Disclosure Schedule; such schedule also indicates, with
respect to each current and former employee of the Company, which
version attached in Section 2.13(i) of the Company Disclosure
Schedule was executed. Except in the exercise of the
Company’s business judgment, other than under an appropriate
confidentiality or nondisclosure agreement or contractual provision
relating to confidentiality and nondisclosure, to the knowledge of
the Company, there has been no disclosure to any third party of
material confidential or proprietary information or trade secrets
of the Company or any Subsidiary of the Company related to any
product currently being marketed, sold, licensed or developed by
the Company or any Subsidiary of the Company (each such product, a
“Proprietary Product”). The current and former
employees of the Company and each Subsidiary set forth on
Section 2.13(i) of the Company Disclosure Schedule who have
made material contributions to the development of any Proprietary
Product (including without limitation all employees who have
designed, written, tested or worked on any software code contained
in any Proprietary Product) have signed an invention assignment
agreement or have performed such work on the software code in the
course of and within the scope of their employment. All consultants
and independent contractors currently or previously engaged by the
Company or its Subsidiaries who made contributions to the
development of any Proprietary Product (including without
limitation all consultants and independent contractors who have
designed, written, or modified any software code contained in any
Proprietary Product) have entered into a work-made-for-hire
agreement or have otherwise assigned to the Company or a Subsidiary
of the Company (or a third party that previously conducted any
business currently conducted by the Company and that has
subsequently assigned its rights in such Proprietary Product to the
Company) all of their right, title and interest (other than moral
rights, if any) in and to the portions of such Proprietary Product
developed by them in the course of their work for the Company or
any such Subsidiary. Other than the employees, consultants and
contractors referred to in this Section 2.13(i), no Person
currently makes any contribution to the development of any
components of any Proprietary Product owned by the
Company.
(j) Except for standard
licenses to end-user customers in the ordinary course of business,
Section 2.13(j) of the Company Disclosure Schedule lists all
contracts, licenses and agreements between the Company or any of
its Subsidiaries, on the one hand, and any other Person, on the
other hand, with respect to any Intellectual Property, including
any agreements with respect to the licensing and distribution
thereof.
(k) Neither the Company nor
any Subsidiary has granted nor is it obligated to grant access or a
license to any of the source code relating to any Proprietary
Product, where the Proprietary Product consists of a compiled
binary distribution of such source code (including, without
limitation, in any such case any conditional right to access or
under which the Company or any of its Subsidiaries has established
any escrow arrangement for the storage and conditional release of
any of its source code). Section 2.13(k) of the Company
Disclosure Schedule includes, with respect to any grant or
obligation to grant access or a license to source code listed
therein, a detailed description of such grant or obligation,
including the identification of source code to which it relates.
The source code for all Proprietary Products that include software
has been documented in a manner that is reasonably sufficient to
independently enable a programmer of reasonable skill, competence
and experience with the programming language in which the software
is programmed to understand, analyze, and interpret program logic,
correct errors and improve, enhance, modify and support the
respective Proprietary Product.
(l) Section 2.13(l) of
the Company Disclosure Schedule accurately identifies and describes
(i) each item of Open Source Code (defined below) that is
contained in any Proprietary Product or from which any part of any
Proprietary Product is derived, (ii) the applicable license
agreement for each such item of Open Source Code, and
(iii) the Proprietary Product(s) to which each such item of
Open Source Code relates. None of the Proprietary Products is
subject to the provisions of any contract or agreement which
conditions the distribution of such Proprietary Product on a
requirement that the Proprietary Product or any portion thereof be
licensed to the public generally for the purpose of making
modifications or derivative works, or on a requirement that such
Proprietary Product or any portion thereof be distributed without
charge to the public generally. For purposes of this Agreement,
“Open Source Code” means any software code that is
distributed as “open source software” or is otherwise
distributed or made generally available in source code
14
form under license terms that
permit modification and redistribution of such software in source
code form, including without limitation any software code that is
licensed under the GNU General Public License, GNU Lesser General
Public License, Mozilla License, Common Public License, Apache
License, BSD License, Artistic License, or Sun Community available
to the public generally under a license approved, as of the date
hereof, by the Open Source Initiative of San Francisco, California
as an Open Source License.
(m) To the knowledge of the
Company, neither the Company nor any Subsidiary of the Company has
any obligation to pay any third party any future royalties or other
fees for the continued use of Intellectual Property and will not
have any obligation to pay such royalties or other fees arising
from the consummation of the transactions contemplated by this
Agreement. Neither the Company nor any Subsidiary of the Company
has licensed any of its Intellectual Property to any Person on an
exclusive basis.
(n) To the knowledge of the
Company, neither the Company nor any Subsidiary of the Company is
in violation of any contract, agreement, license or other
instrument relating to Intellectual Property to which it is a party
or otherwise bound. The consummation by the Company of the
transactions contemplated hereby will not result in any violation,
loss or impairment of ownership by the Company or any Company
Subsidiary of, or impair or restrict the right of any of them to
use, any Intellectual Property that is material to the business of
the Company or any Subsidiary of the Company as currently
conducted, and will not require the consent of any governmental
authority or third party with respect to any such Intellectual
Property. Neither the Company nor any Subsidiary of the Company is
a party to any contract, agreement, license or other instrument
under which a third party would have or would be entitled to
receive a license or any other right to any Intellectual Property
of Parent or any of Parent’s affiliates as a result of the
consummation of the transactions contemplated by this Agreement nor
would the consummation of such transactions result in the
amendment, alteration or termination of any such license or other
right which exists on the date of this Agreement.
(o) Other than inbound
licenses for generally available commercial binary code-only
software product supplied under end user licenses, implied licenses
attendant to the sale or purchase of non-software products, and
outbound standard licenses to end-user customers in the ordinary
course of business, the contracts, licenses and agreements listed
in Section 2.13(o) of the Company Disclosure Schedule lists
all material contracts, licenses and agreements currently in effect
to which the Company or any of the Company’s Subsidiaries is
a party with respect to any Intellectual Property, including all
licenses of Intellectual Property granted to or by the Company or
its Subsidiaries. All such contracts, licenses and agreements are
in full force and effect, and neither the Company nor any
Subsidiary of the Company is in material breach of or has failed to
perform under, any of such contracts, licenses or agreements to
which it is party and, to the knowledge of the Company, no other
party to any such contract, license or agreement is in material
breach thereof or has failed to perform thereunder. The
consummation of the transactions contemplated by this Agreement,
will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts,
licenses, arrangements and agreements set forth in
Section 2.13(o). Following the Effective Time, the Surviving
Corporation will be permitted to exercise all of the
Company’s rights under such contracts, licenses and
agreements 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 Company or it Subsidiaries would otherwise be
required to pay.
(p) All Company Intellectual
Property will be fully transferable, alienable or licensable by the
Surviving Corporation and (assuming the authorization by Surviving
Corporation of the transfer thereof to Parent) Parent from and
after the Effective Time without restriction and without payment of
any kind to any third party other than requirements under
applicable laws to file documents with and pay fees to patent,
trademark, copyright and other governmental offices.
(q) To the knowledge of the
Company, no government funding, facilities of a university,
college, other educational institution or research center was used
in the development of any Company Intellectual Property. To the
knowledge of the Company, no current or former employee, consultant
or independent
15
contractor of the Company or
any Company Subsidiary, who was involved in, or who contributed to,
the creation or development of any Company Intellectual Property,
has performed services for the government, university, college, or
other educational institution or research ce
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