EXECUTION COPY
AGREEMENT AND PLAN OF
MERGER
by and among
SYNTELLECT INC.
AMELIA ACQUISITION
CORPORATION
and
APROPOS TECHNOLOGY,
INC.
Dated as of September
26, 2005
TABLE OF CONTENTS
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ARTICLE 1
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THE MERGER
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1
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Section 1.1
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The Merger
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1
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Section 1.2
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Closing
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1
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Section 1.3
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Effective Time
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2
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Section 1.4
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Effects of the Merger
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2
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Section 1.5
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Articles of Incorporation; By-laws
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2
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Section 1.6
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Directors and Officers
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2
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ARTICLE 2
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CONVERSION OF SHARES; SHAREHOLDERS
MEETING
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3
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Section 2.1
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Conversion of Securities
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3
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Section 2.2
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Treatment of Company Stock Options
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3
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Section 2.3
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Dissenting Shares
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4
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Section 2.4
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Surrender of Shares; Stock Transfer
Books
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4
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Section 2.5
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Withholding Taxes
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6
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Section 2.6
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Further Action
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6
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ARTICLE 3
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REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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6
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Section 3.1
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Organization; Subsidiaries; Charter
Documents
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6
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Section 3.2
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Capitalization of the Company
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8
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Section 3.3
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Corporate Authorization; Board
Approval
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10
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Section 3.4
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Governmental Approvals
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10
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Section 3.5
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Non Contravention
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11
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Section 3.6
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Company SEC Documents
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11
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Section 3.7
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Financial Statements; No Undisclosed
Liabilities; Internal and Disclosure Controls
12
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Section 3.8
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Information in Disclosure Documents
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13
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Section 3.9
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Absence of Certain Changes
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13
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Section 3.10
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Insurance
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13
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Section 3.11
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Real Property; Title to Assets
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14
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Section 3.12
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Company Intellectual Property
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14
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Section 3.13
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Litigation
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19
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Section 3.14
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Taxes
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19
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-i-
TABLE OF CONTENTS
(continued)
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Section 3.15
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Employee Benefit Plans
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20
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Section 3.16
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Compliance with Laws; Permits
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23
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Section 3.17
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Environmental Matters
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23
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Section 3.18
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Company Material Contracts
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24
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Section 3.19
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Advisors’ Fees
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27
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Section 3.20
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Opinion of Financial Advisor
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27
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Section 3.21
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Takeover Statutes
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27
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Section 3.22
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Transactions with Affiliates
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27
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Section 3.23
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Labor Matters
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27
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Section 3.24
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Products
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28
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Section 3.25
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Performance of Services; Customer
Claims
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29
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Section 3.26
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Software Maintenance Contracts
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30
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Section 3.27
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Accounts Receivable
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30
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Section 3.28
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Customer Deposits
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30
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Section 3.29
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Prepaid Expenses
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30
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Section 3.30
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Powers of Attorney
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30
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Section 3.31
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Business Practices
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30
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Section 3.32
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Books and Records
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31
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Section 3.33
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Disclosure
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31
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Section 3.34
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No Further Representations and
Warranties
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31
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ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF PARENT AND
SUB
31
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Section 4.1
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Organization and Power
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31
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Section 4.2
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Corporate Authorization
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32
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Section 4.3
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Governmental Authorization
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32
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Section 4.4
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Non Contravention
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32
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Section 4.5
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Information Supplied
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33
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Section 4.6
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Sub
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33
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Section 4.7
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Share Ownership
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33
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ARTICLE 5
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COVENANTS
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33
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-ii-
TABLE OF CONTENTS
(continued)
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Section 5.1
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Interim Operations of the Company
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33
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Section 5.2
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Access to Information
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36
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Section 5.3
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Regulatory Matters
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36
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Section 5.4
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Employee Matters
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37
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Section 5.5
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No Solicitation
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37
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Section 5.6
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Shareholders Meeting
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40
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Section 5.7
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Additional Agreements
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40
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Section 5.8
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Publicity
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41
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Section 5.9
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Directors’ and Officers’ Insurance
and Indemnification
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41
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Section 5.10
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Proxy Statement; Information
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42
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Section 5.11
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Transfer Taxes
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43
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Section 5.12
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Company Warrants
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43
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Section 5.13
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Notice Obligations
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43
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Section 5.14
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Certain Litigation
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43
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Section 5.15
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Asset Purchase
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43
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Section 5.16
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Fee
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44
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ARTICLE 6
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CONDITIONS
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44
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Section 6.1
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Conditions to the Obligations of Each
Party
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44
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Section 6.2
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Conditions to the Obligations of Parent and
Sub
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44
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Section 6.3
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Conditions to the Obligations of the
Company
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45
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ARTICLE 7
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TERMINATION
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46
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Section 7.1
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Termination
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46
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Section 7.2
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Notice of Termination; Effect of
Termination
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47
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Section 7.3
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Expenses; Termination Fees
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47
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ARTICLE 8
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MISCELLANEOUS
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49
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Section 8.1
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Definitions
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49
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Section 8.2
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Amendment and Modification
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50
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Section 8.3
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Nonsurvival of Representations and
Warranties
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50
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Section 8.4
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Notices
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50
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Section 8.5
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Interpretation
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51
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-iii-
TABLE OF CONTENTS
(continued)
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Section 8.6
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Counterparts
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52
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Section 8.7
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Entire Agreement; No Third Party
Beneficiaries
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52
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Section 8.8
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Severability
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52
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Section 8.9
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Specific Performance
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52
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Section 8.10
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GOVERNING LAW
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53
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Section 8.11
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Assignment
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53
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Section 8.12
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Consent to Jurisdiction; Waiver of Jury
Trial
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53
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-iv-
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF MERGER
(this “ Agreement ”), is made and entered into
as of September 26, 2005, by and among SYNTELLECT INC., a
Delaware corporation (“ Parent ”), AMELIA
ACQUISITION CORPORATION, an Illinois corporation and a wholly-owned
subsidiary of Parent (“ Sub ”), and APROPOS
TECHNOLOGY, INC., an Illinois corporation (the “
Company ”).
WHEREAS, the Board of Directors of
the Company has unanimously (i) determined that the Merger,
including the consideration to be paid for each outstanding share
(collectively, the “ Shares ”) of Common Stock,
par value $.01 per share, of the Company (the “ Company
Common Stock ”) in the Merger is fair to, advisable and
in the best interests of the Company and its shareholders,
(ii) adopted and approved this Agreement and the Merger and
(iii) resolved to recommend approval of this Agreement and the
Merger by such shareholders;
WHEREAS, the Boards of Directors of
each of Parent and Sub has unanimously approved the Merger and
authorized Parent and Sub, respectively, to enter into the Merger
Agreement, and Parent, in its capacity as the sole shareholder of
Sub, has approved the Merger;
WHEREAS, as a condition and
inducement to Parent’s and Sub’s entering into this
Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement,
Parent and Sub are entering into a Voting Agreement (the “
Voting Agreement ”) with each Person identified in
Section 1 of the Company Disclosure Schedule (each, a
“ Shareholder ”) pursuant to which, among other
things, each Shareholder has agreed to vote the shares of Company
Common Stock then owned by such Shareholder in favor of the
approval of this Agreement and the Merger; and
WHEREAS, the Board of Directors of
the Company has approved in advance the transactions contemplated
by this Agreement and the Voting Agreement for purposes of the
provisions of the Illinois Business Corporations Act of 1983, as
amended (the “ IBCA ”).
NOW, THEREFORE, in consideration of
the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, the parties hereto agree
as follows:
ARTICLE 1
THE MERGER
Section 1.1
The Merger . Upon the terms and subject to the
conditions of this Agreement, and in accordance with the IBCA, at
the Effective Time, Sub shall be merged with and into the Company
(the “ Merger ”). As a result of the Merger, the
separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation of the Merger (the
“ Surviving Corporation ”) and a wholly-owned
subsidiary of Parent.
Section 1.2
Closing . Upon the terms and subject to the
conditions set forth in this Agreement, the closing of the Merger
(the “ Closing ”) shall take place at
10:00 a.m. on a date (the “ Closing Date ”)
which shall be the second business day after satisfaction
or
waiver of the conditions set forth
in Article VI, other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions, at the offices of
Clifford Chance US LLP, 31 West 52nd Street, New York, NY
10019 or at such other time, date or place as agreed by the parties
hereto.
Section 1.3
Effective Time . Upon the Closing, the parties hereto
shall cause the Merger to be consummated by filing articles of
merger (the “ Articles of Merger ”) with the
Secretary of State of the State of Illinois, in such form as
required by, and executed in accordance with the relevant
provisions of, the IBCA. The date and time of the filing of the
Articles of Merger with the Secretary of State of the State of
Illinois (or such later time as shall be agreed to by the parties
hereto and specified in the Articles of Merger) will be the “
Effective Time .”
Section 1.4
Effects of the Merger . The Merger shall have the
effects set forth in the applicable provisions of the IBCA,
including those described in Section 5/11.50. Without limiting
the generality of the foregoing, and subject thereto, at the
Effective Time, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities, and
franchises, as of a public or a private nature, of each of the
Company and Sub; and all property, real, personal, and mixed, and
all debts due on whatever account, including subscriptions to
shares, and all other choses in action, and all and every other
interest, of or belonging to or due to each of the Company and Sub,
shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and title to any
real estate, or any interest therein, vested in Company and Sub
shall not revert or be in any way impaired by reason of the
Merger.
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Section 1.5
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Articles of Incorporation;
By-laws .
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(a) At the
Effective Time and without any further action on the part of the
Company or Sub, the articles of incorporation of Sub as in effect
immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation until thereafter amended
as provided therein and under the IBCA; provided ,
however , that the name of the Surviving Corporation shall
be Apropos Technology, Inc.
(b) At the
Effective Time and without any further action on the part of the
Company or Sub, the by-laws of Sub, as in effect immediately prior
to the Effective Time shall be the by-laws of the Surviving
Corporation and thereafter may be amended or repealed in accordance
with their terms or the articles of incorporation of the Surviving
Corporation and as provided by Law.
Section 1.6
Directors and Officers . The directors and officers
of Sub immediately prior to the Effective Time shall be the initial
directors and officers of the Surviving Corporation, each to hold
office in accordance with the articles of incorporation and by-laws
of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed (as the case may be) and
qualified.
ARTICLE 2
CONVERSION OF SHARES;
SHAREHOLDERS MEETING
Section 2.1
Conversion of Securities . At the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any of the following
securities:
(a) Each Share
issued and outstanding immediately prior to the Effective Time
(other than any Shares to be cancelled pursuant to
Section 2.1(b), Shares owned by Sub or any other wholly-owned
Subsidiary of Parent or of the Company which shall remain
outstanding and any Dissenting Shares) shall be cancelled,
extinguished and converted automatically into the right to receive
an amount equal to $2.76 per share in cash (the “ Merger
Consideration ”) payable to the holder thereof, without
interest, upon surrender of the certificate that prior to the
Merger represented such Share in the manner provided in
Section 2.4, less any required withholding taxes.
(b) Each Share held
in the treasury of the Company and each Share owned by Parent
immediately prior to the Effective Time shall be cancelled and
retired without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(c) Each share of
common stock of Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock of the
Surviving Corporation.
(d) If after the
date hereof and on or prior to the Effective Time the outstanding
Shares shall be changed by reason of any exercise of warrants,
reclassification, recapitalization, split-up, combination or
exchange of shares, or any dividend payable in stock or other
securities shall be declared thereon with a record date within such
period, or any similar event shall occur, the Merger Consideration
shall be appropriately adjusted. No adjustment shall be required
for the exercise of any Company Stock Options outstanding on the
date hereof to the extent such options are disclosed in
Section 3.2(a)(ii) of the Company Disclosure Schedule
.
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Section 2.2
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Treatment of Company Stock
Options .
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(a) At the
Effective Time, each then outstanding option to purchase Shares
(collectively, the “ Company Stock Options ”),
granted pursuant to the Company’s 1995 Stock Option Plan and
its 2000 Omnibus Incentive Plan (collectively, the “
Company Stock Plan ”) whether or not then vested or
exercisable, shall be cancelled by the Company, and each holder of
a cancelled Company Stock Option shall be entitled to receive in
consideration for the cancellation of such Company Stock Option an
amount in cash equal to the product of (i) the number of
shares of Company Common Stock subject to such Company Stock Option
immediately prior to cancellation and (ii) the excess, if any,
of the Merger Consideration over the exercise price per share of
Company Common Stock subject to such Company Stock Option
immediately prior to cancellation.
(b) Except as
provided herein or as otherwise agreed to by the parties, all stock
incentive plans and any other plan, program or arrangement
providing for the issuance, purchase
or grant of any interest in respect
of the Shares, including the Company Stock Plan and the Company
ESPP, shall terminate as of the Effective Time, and the Company
shall, prior to the Effective Time, ensure that following the
Effective Time no holder of any Company Stock Option, Company
Warrant or any other equity-based right shall have any right to
acquire equity securities, or consideration other than described in
Section 2.2(a) above, of the Company or the Surviving
Corporation.
Section 2.3
Dissenting Shares . Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by
shareholders who have not voted in favor of the Merger and who
shall have delivered a written demand for payment of such shares of
Company Common Stock in the time and manner provided in
Section 805 ILCS 5/11.70 and shall not have failed to
perfect or shall not have effectively withdrawn or lost his, her or
its rights to dissent and payment under the IBCA (the “
Dissenting Shares ”) shall not be converted into the
right to receive the Merger Consideration, but shall be entitled to
receive the fair value of their Shares as shall be determined
pursuant to Section 805 ILCS 5/11.70; provided ,
however , that if such holder shall have failed to perfect
or shall have effectively withdrawn or lost his, her or its right
to dissent and payment under the IBCA, such holder’s Shares
shall thereupon be deemed to have been converted, at the Effective
Time, into the right to receive the Merger Consideration set forth
in Section 2.1(a) of this Agreement, without any interest
thereon, less any required withholding taxes. The Company shall
give Parent (a) prompt written notice of any demands for
payment pursuant to Section 805 ILCS 5/11.70 received by
the Company, withdrawals of such demands, and any other instruments
served pursuant to the IBCA and received by the Company and
(b) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the IBCA. The Company
shall not, except with the prior written consent of Parent, make
any payment with respect to any such demands or offer to settle or
settle any such demands.
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Section 2.4
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Surrender of Shares; Stock
Transfer Books .
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(a) Prior to the
Effective Time, Sub shall designate a bank or trust company (which
shall be reasonably satisfactory to the Company) to act as agent
for the holders of Shares in connection with the Merger (the
“ Paying Agent ”) to receive the Merger
Consideration to which holders of Shares shall become entitled
pursuant to Section 2.1(a). When and as needed, Parent or the
Surviving Corporation will make, or will cause to be made,
available to the Paying Agent sufficient funds to make all payments
pursuant to Section 2.4(b). Such funds may be invested by the
Paying Agent as directed by Parent or Sub or, after the Effective
Time, the Surviving Corporation, provided that such investments
shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A--1 or P--1 or
better by Moody’s Investors Service, Inc. or Standard &
Poor’s Rating Services, respectively, or in deposit accounts,
certificates of deposit, bank repurchase or reverse repurchase
agreements or banker’s acceptances of, or Eurodollar time
deposits purchased from, commercial banks with capital exceeding
$250 million (based on the most recent financial statements of
such bank which are then publicly available at the United States
Securities and Exchange Commission (“ SEC ”) or
otherwise). Any net profit resulting from, or interest or income
produced by, such investments will be payable to the Surviving
Corporation or Parent, as Parent directs.
(b) As soon as
practicable after the Effective Time (but in no event more than
10 business days after the Effective Time), the Surviving
Corporation shall cause the Paying Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time
represented Shares (the “ Certificates ”), a
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 not
inconsistent with this Agreement as Parent and the Surviving
Corporation shall reasonably specify) and instructions for use in
effecting the surrender of the Certificates for payment of the
Merger Consideration therefor. Upon surrender to the Paying Agent
of a Certificate, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each
Share formerly represented by such Certificate, and such
Certificate shall then be cancelled. Until so surrendered, each
Certificate will represent, from and after the Effective Time, only
the right to receive the Merger Consideration in cash as
contemplated by this Article II. No interest shall be paid or
accrued for the benefit of holders of the Certificates on the
Merger Consideration payable upon the surrender of the
Certificates. If payment of the Merger Consideration is to be made
to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the Person
requesting such payment shall have paid any transfer and other
taxes required by reason of the payment of the Merger Consideration
to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not
applicable. As used in this Agreement, “ Person
” means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated
organization, other entity or group (as defined in the Securities
Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the “ Exchange Act
”)).
(c) In the event
any Certificates shall have been lost, stolen or destroyed, the
Paying Agent shall deliver in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof, the Merger Consideration to which the
holder thereof is entitled pursuant to this Article II;
provided , however , that Parent or the Surviving
Corporation may, as a condition precedent to such delivery, require
the owner of such lost, stolen or destroyed Certificates to deliver
a bond in such sum as they may reasonably direct as indemnity
against any claim that may be made against Parent, the Surviving
Corporation, the Company or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or
destroyed.
(d) At any time
following six months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any interest and other income
received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property,
escheat or other similar Laws) only as general creditors thereof
with respect to the Merger Consideration payable, without interest,
to which such holders may be entitled pursuant to this
Article II. Notwithstanding the foregoing, none of the
Surviving Corporation, the Paying Agent
or any party hereto shall be liable
to any Person in respect of any Merger Consideration delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar Law.
(e) At the close of
business on the day of the Effective Time, the stock transfer books
of the Company shall be closed and thereafter there shall be no
further registration of transfers of shares of Company Common Stock
on the records of the Company. From and after the Effective Time,
the holders of Certificates evidencing ownership of Shares
outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise
provided for herein or by applicable Law.
Section 2.5
Withholding Taxes . Each of the Parent and the
Surviving Corporation shall be entitled to deduct and withhold (or
cause the Paying Agent to deduct or withhold) from the Merger
Consideration or Merger Consideration otherwise payable to a holder
of Shares or Company Stock Options, as the case may be, pursuant to
the Merger such amounts as are required under the Internal Revenue
Code of 1986, as amended (the “ Code ”), or
under any applicable provision of state, local or foreign Law. To
the extent that amounts are so withheld, such amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of the Shares or Company Stock Options, as the case may
be, in respect of which such deduction and withholding was made by
Parent or the Surviving Corporation, respectively.
Section 2.6
Further Action . At and after the Effective Time, the
officers and directors of Parent and the Surviving Corporation will
be authorized to execute and deliver, in the name and on behalf of
the Company and Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the
Company and Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the
Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and
warrants to Parent and Sub as follows:
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Section 3.1
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Organization; Subsidiaries;
Charter Documents .
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(a)
Organization . Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing
(where applicable) under the Laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or
other power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the
property owned, leased or operated by it r the nature of the
business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or
licensed and in good standing has not had and would not,
individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
As used in this Agreement, the term
“ Company Material Adverse Effect ” means, when
used with reference to one or more events, changes, circumstances
or effects, a material adverse effect on the business, operations,
assets, prospects, liabilities or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or
on the ability of the Company to perform its obligations hereunder
or that would prevent or materially delay the consummation of the
transaction contemplated hereby; provided , however ,
that no event, change, circumstance or effect resulting from any of
the following shall be considered in determining whether there has
occurred a Company Material Adverse Effect: (i) changes in
national or international economic or business conditions
generally, any natural disaster, or the outbreak or escalation of
hostilities, including acts of war or terrorism (other than any
such change having a materially disproportionate impact on the
Company and its Subsidiaries taken as a whole); (ii) changes
in factors generally affecting the industries or markets in which
the Company and its Subsidiaries operate (other than any such
change having a materially disproportionate impact on the Company
and its Subsidiaries, taken as a whole); (iii) changes in any
accounting rule or regulation or GAAP or any interpretation
thereof; (iv) any action taken pursuant to this Agreement;
(v) any failure by the Company to meet any estimates of
revenues or earnings for any period ending on or after the date of
this Agreement; (vi) a decline in the price of the
Company’s common shares on The Nasdaq National Market;
(vii) disruptions in financial, banking or securities markets
generally; or (viii) changes resulting from the announcement
of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
(b)
Subsidiaries . Section 3.1(b) of the Company
Disclosure Schedule dated the date hereof (the “
Company Disclosure Schedule ”) sets forth a complete
list of the Company’s Subsidiaries and all other entities in
which the Company owns, directly or indirectly, any shares of
capital stock, equity or membership interests and such list sets
forth the jurisdiction of organization, the authorized and
outstanding capital stock and the beneficial ownership of each
Subsidiary and other entity as of the date.
As used in this Agreement, the term
“ Subsidiary ” means, when used with reference
to any entity, any corporation or other organization, whether
incorporated or unincorporated, (i) of which such party or any
other Subsidiary of such party is a general or managing partner (or
the equivalent thereof) or (ii) the outstanding voting
securities or interests of which, having by their terms ordinary
voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such
corporation or other organization, (or, if there are no such voting
interests, 50% or more of the equity interests of which) is
directly or indirectly owned or controlled by such entity or by any
one or more of its Subsidiaries.
(c) Charter
Documents . The Company has delivered to Parent: (i) a
true and correct copy of each of the amended and restated articles
of incorporation and amended and restated by-laws of the Company,
as amended to date (collectively, the “ Company Charter
Documents ”) and (ii) true and correct copies of the
articles of incorporation and by-laws, or like organizational
documents, each as amended to date (collectively, “
Subsidiary Charter Documents ”) of each of its
Subsidiaries, and each such instrument is in full force and effect.
The Company is not in violation of any of the provisions of the
Company Charter Documents and each Subsidiary of the Company is not
in violation of its respective Subsidiary Charter
Documents.
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Section 3.2
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Capitalization of the
Company .
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(a)
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Company Capitalization
.
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(i) The
authorized capital stock of the Company consists of
sixty million (60,000,000) shares of Company Common Stock and
five million (5,000,000) shares of preferred stock, par value
$.01 per share, of the Company (the “ Preferred Stock
”). As of the close of business on the day immediately
preceding the date of this Agreement, (A) 17,971,849 shares of
Company Common Stock were issued and outstanding and no shares were
held by the Company as treasury shares, (B) 589,071 shares of
Company Common Stock were reserved for issuance under the
Company’s Employee Stock Purchase Plan of 2000 (“
Company ESPP ”), (C) 2,876,988 shares of Company
Common Stock were reserved for issuance upon the exercise of
outstanding Company Stock Options granted under the Company Stock
Plan, (D) 342,524 shares of Company Common Stock were reserved
for issuance upon the exercise of the outstanding warrants to
purchase Company Common Stock (the “ Company Warrants
”), (E) no shares of Preferred Stock were issued and
outstanding and (F) no bonds, debentures, notes or other
instruments or evidence of indebtedness having the right to vote
(or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matters of which
shareholders of the Company may vote were issued or outstanding.
All of the outstanding equity securities of the Company have been
offered and issued in compliance with all applicable securities
laws, including the Securities Act and “blue sky”
laws.
(ii)
Section 3.2(a)(ii) of the Company Disclosure Schedule
sets forth a summary, as of the close of business on the day
immediately preceding the date of this Agreement, of the number of
outstanding Company Stock Options and Company Warrants and the
following information with respect thereto: (A) the number of
shares of Company Common Stock subject thereto; (B) the date
of grant; (C) the expiration date; and (D) the exercise
price thereof. All outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid and non-assessable and
were not issued in violation of, and are not subject to, any
preemptive or other similar rights.
(iii) Except
as set forth above and as contemplated by this Agreement, there are
no outstanding (A) shares of capital stock or other voting
securities of the Company, (B) securities of the Company
convertible into or exchangeable or exercisable for shares of
capital stock or voting securities of the Company,
(C) options, warrants, restricted stock, restricted stock
units, or other rights to acquire from the Company, and no
preemptive or similar rights, subscriptions or other rights,
convertible securities, agreements, arrangements or commitments of
any character, relating to the capital stock or voting securities
of the Company obligating the Company to issue, register, transfer
or sell, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock
or voting securities of the Company or obligating the Company to
grant, extend or enter into any such option, warrant, restricted
stock units, subscription
or other right, convertible
security, agreement, arrangement or commitment or (D) no
equity equivalents, interests in the ownership or earnings of the
Company or other similar rights (the items in clauses (A),
(B), (C) and (D) being referred to collectively as the “
Company Securities ”).
(iv) None
of the Company or its Subsidiaries has any obligation, commitments
or arrangements to redeem, repurchase or otherwise acquire any of
the Company Securities or any of the Company Subsidiary Securities
(as hereinafter defined), including as a result of the transactions
contemplated by this Agreement or to provide funds to or make any
investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or other Person. Except as set forth
in Section 3.2(a)(iv) of the Company Disclosure
Schedule , there are no voting trusts or registration rights or
other agreements or understandings to which the Company or any of
its Subsidiaries is a party with respect to the voting or
disposition of the capital stock of the Company or any of its
Subsidiaries.
(v) The
Company does not have a “Shareholder Rights Plan” or
similar arrangement.
(b) Subsidiary
Capitalization . All outstanding shares of capital stock or
other interests of each Subsidiary of the Company have been duly
authorized and validly issued, are fully paid and non-assessable
and were not issued in violation of, and are not subject to any
preemptive or other similar rights. All of the outstanding shares
of capital stock of, or other ownership interests in, each
Subsidiary of the Company, is owned by the Company, directly or
indirectly, free and clear of any liens, charges, security
interests, options, claims, pledges, licenses, limitations in
voting rights or other encumbrances of any nature whatsoever
(collectively, “ Liens ”). There are no
outstanding (i) securities of the Company or any of its
Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership
interests in any Subsidiary of the Company, or (ii) options,
warrants, restricted stock, restricted stock units or other rights
to acquire from the Company or any of its Subsidiaries, and no
other obligations of the Company or any of its Subsidiaries to
issue, any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable or
exercisable for, any capital stock, voting securities or ownership
interests in, any Subsidiary of the Company or any equity
equivalents, interests in the ownership or earnings of any
Subsidiary or other similar rights (the items in clauses (i)
and (ii) being referred to collectively as the “ Company
Subsidiary Securities ”).
(c)
Indebtedness . Section 3.2(c) of the Company
Disclosure Schedule sets forth a complete and correct list, as
of the date of this Agreement, of each Contract pursuant to which
any Indebtedness of the Company or its Subsidiaries is outstanding
or may be incurred in an amount in excess of $50,000, together with
the amount outstanding thereunder as of the date of this Agreement.
No Contract pursuant to which any Indebtedness of the Company or
its Subsidiaries is outstanding or may be incurred provides for the
right to vote (or is convertible into, or exchangeable or
exercisable for, securities having the right to vote) on any
matters on which the shareholders of the Company or its
Subsidiaries may vote.
As used in this Agreement, the term
“ Contract ” means any written or oral
agreement, contract, lease, indenture, note, option, purchase
order, license, sublicense or other written or oral commitment of
any nature, as in effect as of the date hereof or as may
hereinafter be in effect.
As used in this Agreement, the term
“ Indebtedness ” means (i) indebtedness for
borrowed money, whether secured or unsecured, including all
principal, interest, premiums, fees, expenses, overdrafts and
penalties with respect thereto, (ii) obligations under
conditional or installment sale or other title retention Contracts
relating to purchased property or services, (iii) all
obligations that are required to be classified and accounted for as
capital lease obligations under GAAP, together with all obligations
to make termination payments under such capitalized lease
obligations, (iv) all obligations evidenced by bonds,
debentures, notes or other similar instruments, (v) all
obligations to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument,
(vi) trade payables that are due or otherwise payable more
than 90 days after such payables were created, (vii) all
other obligations which would be required to be shown as
indebtedness on a balance sheet prepared in accordance with GAAP
and (viii) direct or indirect guarantees of any of the
foregoing of another Person.
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Section 3.3
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Corporate Authorization; Board
Approval .
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(a) Corporate
Authorization . The Company has all necessary corporate power
and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of
the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action, except, with respect
to the Merger, for the approval of this Agreement and the Merger by
the affirmative votes of at least two-thirds of the votes of the
shares entitled to vote on this Agreement and the Merger (the
“ Company Requisite Vote ”). The Company
Requisite Vote is the only vote of holders of any class or series
of securities necessary to approve this Agreement and the Merger.
This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by
Parent and Sub, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar
Laws affecting creditors rights generally from time to time in
effect, and to general principles of equity, regardless whether in
a proceeding at equity or at law).
(b) Board
Approval . The Board of Directors of the Company has, at a
meeting duly called and held, unanimously (i) determined and
declared that this Agreement and the Merger are fair to, advisable
and in the best interests of the Company and its shareholders,
(ii) adopted and approved this Agreement and the Merger,
(iii) resolved to make the Company Recommendation,
(iv) directed that this Agreement and the Merger be submitted
to the Company’s shareholders for approval and
(v) approved the transactions contemplated by the Voting
Agreement.
Section 3.4
Governmental Approvals . The execution, delivery and
performance by the Company of this Agreement, and the consummation
by the Company of the transactions contemplated hereby, require no
action, permit, license, authorization, certification,
consent, approval, concession or
franchise by or in respect of, or filing with, any federal, state,
or local U.S. or foreign government, court, administrative agency,
commission, arbitrator or other governmental or regulatory agency
or authority (a “ Governmental Authority ”)
other than: (i) the filing of the Articles of Merger with
respect to the Merger with the Secretary of State of the State of
Illinois and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business;
(ii) the filing with the SEC of (A) a Proxy Statement and
other solicitation materials relating to the Shareholders Meeting
and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement;
(iii) compliance with any applicable requirements of the
Nasdaq National Market; and (iv) such other consents,
approvals, Orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made individually or
in the aggregate would not reasonably be expected to have a Company
Material Adverse Effect. No subsidiary of the Company is required
to make any filings with, or obtain approval from, the SEC, the
Nasdaq National Market or any Governmental Authority or stock
exchange.
Section 3.5
Non Contravention . The execution, delivery and
performance by the Company of this Agreement do not, and the
consummation of the transactions contemplated hereby will not:
(i) contravene, conflict with or violate the Company Charter
Documents or any Subsidiary Charter Documents; (ii) subject to
obtaining the approval of this Agreement and the Merger by the
Company’s shareholders as contemplated in Section 5.6
and obtaining all the consents, approvals and authorizations
specified in clauses (i) through (iv) of Section 3.4,
contravene or conflict with or constitute a violation of any
provision of any law, statute, ordinance, rule, code, or regulation
of any Governmental Authority (“ Law ”), or any
outstanding order, writ, judgment, injunction, ruling,
determination, award or decree by or with any Governmental
Authority (“ Order ”) binding upon or applicable
to the Company or its Subsidiaries or by which any of their
respective properties are bound; (iii) subject to obtaining
all the consents, approvals and authorizations specified in
clauses (i) through (iv) of Section 3.4 and
Section 3.5 of the Company Disclosure Schedule ,
constitute a default (or an event which with notice, the lapse of
time or both would become a default) under or give rise to a right
of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries, under
(A) any Contract to which the Company or any of its
Subsidiaries is a party or by which any of its or their properties
or assets are bound or (B) any Company Permit; or
(iv) result in the creation or imposition of any Liens on any
asset of the Company or any of its Subsidiaries, other than, in the
case of clauses (ii), (iii) or (iv), any such contraventions,
conflicts, violations, defaults, rights of termination,
cancellation or acceleration or other occurrences or Liens that
individually or in the aggregate have not had and would not
reasonably be expected to have a Company Material Adverse
Effect.
Section 3.6
Company SEC Documents . The Company has filed or
furnished on a timely basis all reports (including exhibits and all
other information incorporated by reference) and other documents
and information required to be filed or furnished by it with the
SEC since January 1, 2002 (collectively, the “
Company SEC Documents ”). None of the Company SEC
Documents is the subject of any confidential treatment request by
the Company. The Company SEC Documents (i) complied in all
material respects with the requirements of the Securities Act of
1933, as amended (together with the rules and regulations
promulgated thereunder, the “ Securities Act ”),
or the Exchange Act, as the case may be, applicable to
the
Company SEC Documents each as in
effect on the date so filed, and (ii) did not at the time they
were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to
the extent corrected by a subsequently filed Company SEC Document
filed and publicly available prior to the date of this Agreement
(including any financial statements or other documentation
incorporated by reference therein). As of the date of this
Agreement, there are no outstanding or unresolved comments in
comment letters received from the SEC staff with respect to any of
the Company SEC Documents. No Subsidiary of the Company is required
to file any form, report or other document with the SEC.
Section 3.7
Financial Statements; No Undisclosed Liabilities; Internal
and Disclosure Controls .
(a) Each of the
consolidated financial statements (including, in each case, any
related notes thereto) contained in the Company SEC Documents as of
their respective dates (the “ Company Financials
”): (i) complied as to form in all material respects
with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto,
(ii) were 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 Forms 10-Q, 8-K or any successor forms under the
Exchange Act), and (iii) fairly presented in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of the Company’s operations and cash
flows for the periods indicated. All of the Subsidiaries of the
Company are consolidated for accounting purposes. The consolidated
balance sheet of the Company contained in the Company SEC Documents
as of June 30, 2005, is hereinafter referred to herein as the
“ Company Balance Sheet ,” and June 30,
2005 is hereinafter referred to herein as the “ Company
Balance Sheet Date .”
(b) Except as set
forth in Section 3.7(b) of the Company Disclosure
Schedule , neither the Company nor any of its Subsidiaries has
any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required
by GAAP to be reflected on the Company Balance Sheet, except
(i) liabilities or obligations disclosed or provided for in
the Company Balance Sheet or the notes thereto or
Management’s Discussion and Analysis contained in the
Company’s Form 10-Q for the Quarterly Period Ended June 30,
2005, filed with the SEC on August 12, 2005, and
(ii) liabilities or obligations incurred in the ordinary
course of business consistent with past practice.
(c) The Company and
its Subsidiaries maintain disclosure controls and procedures as
required by Rule 13a-15 or 15d-15 under the Exchange Act. The
Company is in compliance in all material respects with (i) the
applicable provisions of the Sarbanes-Oxley Act of 2002 and
(ii) the applicable listing and corporate governance rules and
regulations of the Nasdaq National Market. The Company’s
internal control and reporting systems are adequate in light of
applicable law and regulation.
(d) Since
December 31, 2002, (i) neither the Company nor any of its
Subsidiaries nor any director or officer of the Company or any of
its Subsidiaries has received or otherwise had or obtained
knowledge of any material complaint, allegation, assertion or
claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the
Company or any of its Subsidiaries or their respective internal
accounting controls, including any material complaint, allegation,
assertion or claim that the Company or any of its subsidiaries has
engaged in questionable accounting or auditing practices, and
(ii) no attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of its
Subsidiaries, has reported evidence of a material violation of
securities laws, breach of fiduciary duty or similar violation by
the Company or any of its officers, directors, employees or agents
to the Board of Directors of the Company or any committee thereof
or to any director or officer of the Company.
Section 3.8
Information in Disclosure Documents . Neither the
Proxy Statement to be filed with the SEC in connection with the
Merger nor any amendment or supplement to the Proxy Statement, will
contain at the date the Proxy Statement or any such amendment or
supplement is first mailed to shareholders of the Company and at
the time of the Shareholders Meeting, 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 or warranty is made
by the Company with respect to statements made or incorporated by
reference therein based on written information supplied by Parent
or Sub for inclusion or incorporation by reference in the Proxy
Statement. The Proxy Statement will, when filed with the SEC,
comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations promulgated
thereunder.
Section 3.9
Absence of Certain Changes . Except as set forth in
Section 3.9 of the Company Disclosure Schedule , since
the Company Balance Sheet Date (i) the businesses of the
Company and its Subsidiaries have been conducted in the ordinary
course of business consistent with past practice, (ii) there
has not been any change, development, event, condition, occurrence
or effect that individually or in the aggregate has had or would
reasonably be expected to have (a) a Company Material Adverse
Effect or (b) a material adverse impact on the ability of the
Company to consummate the Merger and (iii) neither the Company
nor any of its Subsidiaries has taken any action contemplated by
Section 5.1.
Section 3.10
Insurance . Section 3.10 of the Company
Disclosure Schedule contains a true and correct list (including
the name of the insurer and insured, nature of coverage, limits,
deductibles, premiums, renewal and expiration dates with respect to
each type of coverage) of all material policies of insurance
maintained, owned or held by or for the benefit of the Company or
any of its Subsidiaries. With respect to all such policies:
(i) all such policies are in full force and effect or were in
full force and effect during the periods of time such insurance
policies are purported to be in effect; (ii) all premiums due
thereon have been paid neither the Company nor its Subsidiaries has
received any notice of cancellation, termination or non-renewal of
any such policy; and (iii) all appropriate insurers under such
insurance policies have been notified of all potentially insurable
losses and pending litigation and legal matters, and no such
insurer has informed either the Company or any of its Subsidiaries
of any denial of coverage or reservation of rights
thereto.
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Section 3.11
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Real Property; Title to
Assets .
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(a) Owned Real
Property . Neither the Company nor any of its Subsidiaries has
ever owned or currently owns any real property.
(b) Real
Property Leases . Section 3.11(b) of the Company
Disclosure Schedule contains a true, correct and complete list
of all leases, subleases, sub-subleases, licenses and other
agreements under which the Company or any of its Subsidiaries,
leases, subleases or occupies (whether as landlord, tenant,
subtenant other occupancy arrangement) (the “ Real
Property Leases ”). Each Real Property Lease constitutes
the valid and legally binding obligation of the Company or its
Subsidiaries, enforceable against the Company or its Subsidiaries,
as applicable, in accordance with its terms, and is in full force
and effect. With respect to each Real Property Lease (i) there
is no default or event which, with notice or lapse of time or both,
would constitute a default on the part of Company or its
Subsidiaries, or, to the knowledge of the Company any other party
thereto and (ii) except as set forth on the
Section 3.11(b) of the Company Disclosure Schedule ,
neither the Company nor any of its Subsidiaries, as applicable, has
assigned, sublet or transferred its leasehold interest. Each of the
Company and its Subsidiaries has a good and valid leasehold
interest in each Real Property Lease free and clear of all Liens,
except (i) as disclosed on Section 3.11(b) of the Company
Disclosure Schedule , (ii) Liens for Taxes and general and
special assessments not in default and payable without penalty or
interest or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been
set aside on the Company’s books, and (iii) other liens
which do not materially interfere with the Company’s or any
of its Subsidiaries’ use and enjoyment of such Real Property
Lease or with the conduct of the business of the Company and its
Subsidiaries. None of the Real Property Leases contain any
provision that would impose upon the lessee any material cost or
expense upon the expiration or sooner termination of such Real
Property Lease, including any provision requiring (x) the
refund of any tenant improvement allowance or rent abatement or
(y) the payment of any penalty or liquidated damages (other
than customary provisions requiring the payment of all rent
reserved upon the occurrence of an event of default by the lessee
and resulting termination of the Real Property Lease by the
lessor). For purposes of this Agreement, “ knowledge of
the Company ,” “ Company’s knowledge
” or similar “ knowledge ” qualifiers mean
the actual knowledge of the individuals listed on
Section 3.11(b) of the Company Disclosure Schedule
.
(c) Personal
Property . The Company and its Subsidiaries own or lease all
furniture, fixtures, equipment, operating supplies and other
personal property (the “ Personal Property ”)
necessary to carry on their businesses as now being conducted,
subject to no Liens that individually or in the aggregate have had
or would reasonably be expected to have a Company Material Adverse
Effect.
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Section 3.12
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Company Intellectual
Property .
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(a)
Section 3.12(a) of the Company Disclosure Schedule sets
forth a true and complete list of all of the (i) issued,
registered, renewed or the subject of a pending application
(“ Registered ”) and material unregistered
Intellectual Property owned by the Company or any of its
Subsidiaries (“ Owned Intellectual Property ”)
(each identified as a Patent, Trademark or Copyright as the case
may be) and (ii) all third party Intellectual Property to
which the Company
is licensed including to incorporate
in its Products or to maintain and support its Products (“
Licensed Intellectual Property ”).
As used in this Agreement, the term
“ Intellectual Property ” means all the United
States and foreign intellectual property and other proprietary
rights, arising under statutory, common, or other law and whether
or not perfected, owned by or licensed to the Company or its
Subsidiaries, including (a) registered and unregistered
trademarks, service marks, brand names, certification marks,
collective marks, d/b/a’s, Internet domain names, logos,
symbols, trade dress, industrial designs, assumed names, fictitious
names, trade names, and other indicia of origin, all applications
and registrations for all of the foregoing, and all goodwill
associated therewith and symbolized thereby, including all
extensions, modifications and renewals of same (collectively,
“ Trademarks ”); (b) patents, patent
applications, patent disclosures and inventions and discoveries
which may be patentable and improvements thereto, industrial
designs, invention disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, continuing patent
applications, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom and like statutory rights
related to the foregoing (collectively, “ Patents
”); (c) know-how or other trade secrets, whether or not
reduced to practice, including processes, schematics, databases,
formulae, drawings, prototypes, models and designs (collectively,
“ Trade Secrets ”); (d) published and
unpublished works of authorship (including computer software and
databases) whether copyrightable or not, copyrights therein and
thereto, and registrations and applications therefor, and all
renewals, extensions, restorations and reversions thereof
(collectively, “ Copyrights ”); and
(e) computer programs, including any and all software
implementation of algorithms, models and methodologies, whether in
source or object code form, user interfaces, databases and
compilations, including any and all data and collections of data,
and all manuals and other specifications and documentation and all
know-how relating thereto (including all computer programs, object
code, source code, user interface, databases and documentation)
(collectively, “ Computer Software
”).
(b) To the
Company’s knowledge, the Company and its Subsidiaries either
own or have valid and legally enforceable rights to use, as
currently used, all Owned Intellectual Property and Licensed
Intellectual Property. Except as set forth in
Section 3.12(b) of the Company Disclosure Schedule , no
Owned Intellectual Property or Licensed Intellectual Property
(i) is or has been adjudicated invalid or unenforceable (and
all such Owned Intellectual Property and Licensed Intellectual
Property subsists in full force and effect), (ii) is subject
to any outstanding order, judgment or decree restricting its use or
adversely affecting the Company’s or its Subsidiaries’
rights thereto, or (iii) has been abandoned, cancelled or
expired.
(c) The Company and
its Subsidiaries own or have the right to use all Intellectual
Property used in the business of the Company and its Subsidiaries.
The Company or its Subsidiaries are the sole and exclusive owner of
all right, title and interest in and to the Owned Intellectual
Property, and all rights in and to the Owned Intellectual Property
are free of all Liens (other than Permitted Liens) and are fully
assignable. The Owned Intellectual Property and Licensed
Intellectual Property is sufficient to operate the business of the
Company as currently or contemplated to be conducted. No Person
other than the Company has any right to receive a royalty or
similar payment with respect to, any of the Owned Intellectual
Property.
(d) Except as set
forth in Section 3.12(d) of the Company Disclosure
Schedule , to the knowledge of the Company (i) the use by
the Company or its Subsidiaries of each of the Owned Intellectual
Property and Licensed Intellectual Property and the operations of
the Company’s and its Subsidiaries’ respective
businesses as currently operated do not infringe upon the rights of
any other person, (ii) the Owned Intellectual Property and
Licensed Intellectual Property are not being infringed upon by any
other person or its property and (iii) there has been no
unauthorized use by, disclosure to or by or infringement,
misappropriation or other violation of any of the Owned
Intellectual Property by any third party and/or any current or
former officer, employee, independent contractor, consultant or any
other agent of the Company or its Subsidiaries. The Company has not
received any claim, any cease and desist or equivalent letter or
any other notice of any allegation that any of the Owned
Intellectual Property, or any operations of the Company’s or
any of its Subsidiaries’ businesses as currently operated,
infringes upon, misappropriates or otherwise violates the rights of
any third parties. None of the Owned Intellectual Property, and
none of the operations of the Company’s or any of its
Subsidiaries’ businesses as currently operated, are the
subject of any action, suit, investigation, claim, charge or
proceeding, and no action or proceeding, whether judicial,
administrative or otherwise (each, an “ Action
”), and, to the Company’s knowledge, no such action is
pending or threatened. To the knowledge of the Company, no claim
has been threatened or asserted against the Company or the
Subsidiaries or any of their indemnitees under a Customer Agreement
alleging a violation of any Intellectual Property rights of any
Person within the last two years.
(e) Except as set
forth in Section 3.18(a) of the Company Disclosure
Schedule , the Company is not a party to any agreements,
including license agreements, under which the Company has obtained
or is the beneficiary of any ownership of, or license right to use,
any of the Licensed Intellectual Property. The Company is not a
party to any agreements, including license agreements, development
agreements and joint venture agreements pursuant to which a third
party is authorized to use or has obtained any ownership rights in
any of the Owned Intellectual Property or Licensed Intellectual
Property. No Action is pending relating to any agreement between
the Company and a customer of the Company with respect to a Product
(“ Customer Agreement ”) or agreements
concerning the Licensed Intellectual Property (“
Licensed Intellectual Property Agreement ”),
including any Action alleging that the Company or the Subsidiaries
or another person has breached any Customer Agreement or Licensed
Intellectual Property Agreement or that any such agreement is
invalid or unenforceable. No such Action has, to the
Company’s knowledge, been threatened or asserted within the
last two years. The Company and the Subsidiaries are in compliance
in all material respects with the terms of all Customer Agreements
and Licensed Intellectual Property Agreements. To the
Company’s knowledge, there exists no event, condition or
occurrence which, with the giving of notice or lapse of time, or
both, would constitute a breach or default by the Company or the
Subsidiaries or the other party under any Customer Agreement or
Licensed Intellectual Property Agreement. Since the Company Balance
Sheet Date, no party to any Customer Agreement or Licensed
Intellectual Property Agreement has given the Company or the
Subsidiaries (i) written notice of its intention to cancel or
terminate any Customer Agreement or Licensed Intellectual Property
Agreement or (ii) written notice that it will not renew any
Customer Agreement or Licensed Intellectual Property Agreement. The
execution, delivery and performance by the Company of this
Agreement do not, and the consummation of the transactions
contemplated hereby will not result in the breach of, or create on
behalf of any Person the right to terminate or modify, any Customer
Agreement or Licensed Intellectual Property Agreement, or
otherwise
give rise to any right, obligation
or limitation with respect to any Customer Agreement or Licensed
Intellectual Property Agreement, including any right to cause the
release, or obligation to release, any Computer Software, whether
in source or object code form.
As used in this Agreement, the term
“ Products ” means the Computer Software
products marketed, sold, licensed, supported, serviced or
maintained by the Company or its Subsidiaries, together with the
inventory of the Products, the Ancillary Product Materials and any
and all such Computer Software related to, comprising or
constituting such products, and all supplements, modifications,
updates, corrections and enhancements to past and current versions
of such products and shipping versions of such products, in
existence as of the date hereof, and versions of such products
currently under development; and any and all English and foreign
language versions of current and past versions of such products,
shipping versions of such products and versions of such products
currently under development, in each case, to the extent
applicable, including the source code and object code versions of
such Computer Software; and all Documentation relating thereto; and
any and all back-up tapes and archival tapes relating to the
foregoing.
As used in this Agreement, the term
“ Ancillary Product Materials ” means all
Documentation used or distributed by the Company concerning the
Products, including customer support materials such as support
training materials, support bulletins, and any and all data
contained in the customer support organization computer system of
the Company; and marketing materials relating to the Products,
including Product data sheets, performance benchmark reports,
customer training materials, sales training materials and sales
presentation materials.
As used in this Agreement, the term
“ Documentation ” means all documentation
(including data entry and data processing procedures, report
generation and quality control procedures), logic and designs for
all programs, algorithms, edit controls, methodologies, flow charts
and file layouts and written narratives of all procedures used in
the coding, operation or maintenance of and customer support with
respect to a Product.
(f) No Action
is pending, or to the Company’s knowledge has been threatened
or asserted within the last two years, concerning the Owned
Intellectual Property, including any Action alleging that the Owned
Intellectual Property is invalid, unenforceable, unpatentable,
unregisterable, cancelable, not owned or not owned exclusively by
the Company or its Subsidiaries.
(g) No Action is
pending against the Company or any of its Subsidiaries concerning
the Licensed Intellectual Property, including any Action concerning
a claim that the Licensed Intellectual Property has been violated
or is invalid, unenforceable, unpatentable, unregisterable,
cancelable, not owned or not owned exclusively by the licensor of
such Intellectual Property. Except as set forth in
Section 3.12(g) of the Company Disclosure Schedule , no
Action is pending concerning the right of the Company or its
Subsidiaries to use the Licensed Intellectual Property, including
any Action concerning a claim or position that such right has been
violated or is invalid, unenforceable, not owned or not owned
exclusively by the Company or its Subsidiaries. Except as set forth
in Section 3.12(g) of the Company Disclosure Schedule ,
no such claims have been threatened or asserted within the last two
years.
(h) The Company has
no knowledge that any Person is violating any Owned Intellectual
Property or any material Licensed Intellectual Property.
(i) The
Company and the Subsidiaries have timely made all filings,
recordations, and payments with the appropriate foreign and
domestic agencies required to maintain in subsistence all Owned
Intellectual Property and reflecting the Company or a Subsidiary as
the owner thereof. Except as set forth in Section 3.12(i)
of the Company Disclosure Schedule , no due dates for filings
or payments concerning the Owned Intellectual Property (including
office action responses, affidavits of use, affidavits of
continuing use, renewals, requests for extension of time,
maintenance fees, application fees and foreign convention priority
filings) will fall due within ninety (90) days of the Closing
Date, whether or not such due dates are extendable. The Company and
its Subsidiaries are in compliance with the applicable rules and
regulations of such agencies with respect to Owned Intellectual
Property. All documentation necessary to confirm and effect the
Company’s and its Subsidiaries’ ownership of Owned
Intellectual Property, if acquired from other Persons, has been
recorded in the United States Patent and Trademark Office, the
United States Copyright Office and other official offices, as
appropriate.
(j) The
Company and the Subsidiaries have taken all commercially reasonable
measures to protect the secrecy, confidentiality and value of all
Trade Secrets used in their businesses (including entering into
confidentiality agreements with all current employees and other
Persons who have access to information relating to the development
of the Company’s Products.
(k) To the
Company’s knowledge, no current Company employee or
Subsidiary employee is a party to any confidentiality agreement
and/or agreement not to compete that forbids the activity that such
employee was hired to perform or otherwise performs on behalf of or
in connection with such employee’s employment by the Company
or a Subsidiary.
(l) (i) All works of
authorship, including the computer software, documentation,
software design, technical and functional specifications, and all
other materials subject to copyright protection, and included in
the Owned Intellectual Property, are original and were either
created by employees of the Company within the scope of their
employment or all right, title and interest in and to such works of
authorship have been legally and fully assigned and transferred to
the Company, (ii) all rights in all inventions and discoveries
made, developed or conceived by any employee or independent
contractor of the Company, during the course of their employment
(or other retention) by the Company and relating to or included in
the Owned Intellectual Property or made, written, developed or
conceived with the use or assistance of the Company’s
facilities or resources, or which are the subject of one or more
issued letters patent or applications for letters patent and which
relate to or are included in the Owned Intellectual Property, have
been assigned in writing to the Company, and (iii) all
employees of the Company have signed documents confirming that each
of them will assign to the Company all intellectual property
rights, to the extent that ownership of any such intellectual
property rights, to the extent that ownership of any such
intellectual property rights does not vest in the Company by
operation of law, made, written, developed or conceived by them
during the course of their employment (or other retention) by the
Company or made, written, developed or conceived with the use or
assistance of the Company’s facilities or
resources.
Section 3.13
Litigation . Except as set forth in
Section 3.13 of the Company Disclosure Schedule , there
is no Action pending against, or to the knowledge of the Company,
threatened against, the Company or any of its Subsidiaries or any
of their respective assets, properties or rights. Except as set
forth in Section 3.13 of the Company Disclosure
Schedule , there exist no Contracts with any of the directors
and officers of the Company or its Subsidiaries that provide for
indemnification by the Company or its Subsidiaries. Neither the
Company nor any of its Subsidiaries nor any of their respective
properties or assets is or are subject to any Order.
Section 3.14
Taxes . Except as set forth in Section 3.14
of the Company Disclosure Schedule :
(a) The Company and
each of its Subsidiaries has timely filed (or has had timely filed
on its behalf, taking into account all applicable extensions) all
material Tax Returns required by applicable Law to be filed by it.
All such Tax Returns are correct and complete in all material
respects and correctly and accurately set forth the amount of any
Taxes relating to the applicable period. The Company and each of
its Subsidiaries has timely paid (or has had timely paid on its
behalf) all Taxes shown whether or not as due and owing on any Tax
Return) and has established an adequate reserve for the payment of
all Taxes not yet due and owing in the Company Financials in
accordance with GAAP. Section 3.14(a) of the Company
Disclosure Schedule sets forth a true and complete list of all
Tax Returns last filed by the Company or its Subsidiaries, and the
jurisdictions where so filed.
As used in this Agreement, the term
“ Taxes ” means any and all taxes, charges,
fees, levies or other assessments, including income, gross
receipts, excise, real or Personal Property, sales, withholding,
social security, retirement, unemployment, occupation, use, goods
and services, service use, license, value added, capital, net
worth, payroll, profits, employment, severance, stamp, occupation,
premium, environmental, custom duties, disability, registration,
alternative or add-on minimum, estimated, franchise, transfer and
recording taxes, fees and charges, and any other taxes, assessment
or similar charges imposed by any Taxing Authority and any interest
or penalties or additional amounts, if any, attributable to, or
imposed upon, or with respect to, any such taxes, charges, fees,
levies or other assessments whether or not disputed.
As used in this Agreement, the term
“ Taxing Authority ” means the Internal Revenue
Service or any other taxing authority, whether domestic or foreign,
including any state, county, local or foreign government or any
subdivision or taxing agency thereof. As used in this Agreement,
the term “ Tax Return ” means any report,
return, document, claim for refund, declaration or other filing
required to be supplied to any taxing authority or jurisdiction
(foreign or domestic) with respect to Taxes.
(b) The Company and
each of its Subsidiaries has withheld and paid all Taxes required
to have been withheld and paid in connection with any amounts paid
or owing to any employee, independent contractor, creditor,
shareholder, or other third party.
(c) There is no
material audit, action, proceeding or assessment pending or
threatened by any Taxing Au
