AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

OPEN TEXT CORPORATION,

SCENIC MERGER CORP.

AND

VIGNETTE CORPORATION

Dated as of May 5, 2009

 

i

 

ii

 

iii

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of May 5, 2009 by and among OPEN TEXT CORPORATION , a Canadian corporation (“Parent”), SCENIC MERGER CORP. , a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and VIGNETTE CORPORATION , a Delaware corporation (the “Company”). All capitalized terms that are used in this Agreement shall have the respective meanings ascribed thereto in Article I.

W I T N E S S E T H:

WHEREAS, each of the respective Board of Directors of Parent, Merger Sub and the Company has approved this Agreement and the transactions contemplated hereby, and deems it advisable and in the best interest of its respective stockholder(s) to enter into this Agreement and consummate the transactions contemplated hereby pursuant to which, among other things, Merger Sub will be merged with and into the Company (the “Merger”) in accordance with the applicable provisions of the General Corporation Law of the State of Delaware (the “DGCL”), the Company will continue as the surviving corporation of the Merger and each share of the Company Common Stock (as defined below) outstanding immediately prior to the Effective Time will be cancelled and converted into the right to receive the consideration set forth herein, all upon the terms and subject to the conditions set forth in this Agreement.

WHEREAS, concurrently with the execution of this Agreement, and as an inducement to Parent and Merger Sub to enter into this Agreement, Parent and certain stockholders of the Company have entered into voting agreements, dated as of the date hereof, in the form attached hereto as Exhibit A (collectively, the “Voting Agreements”), pursuant to which such stockholders have agreed, subject to the terms of the Voting Agreements, to vote or cause to be voted, at the Company Stockholder Meeting (as defined below) all of the shares of the Company Common Stock beneficially owned by such stockholders in favor of the adoption and approval of this Agreement.

WHEREAS, in connection with the transactions contemplated herein, the Company is amending the Stockholder Rights Agreement (as defined below) to render the Stockholder Rights Agreement inapplicable to this Agreement and the Merger and to ensure that the rights granted pursuant to the Stockholder Rights Agreement shall not become exercisable by reason of the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby.

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with this Agreement and the transactions contemplated hereby, and to prescribe certain conditions with respect to the consummation of the Merger and the other transactions contemplated by this Agreement.

 

1

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

DEFINITIONS & INTERPRETATIONS

1.1 Certain Definitions . For all purposes of and under this Agreement, the following capitalized terms shall have the following respective meanings:

(a) “Acceptable Confidentiality Agreement” shall mean an agreement that is either (i) in effect as of the execution and delivery of this Agreement or (ii) executed, delivered and effective after the execution, delivery and effectiveness of this Agreement, in either case containing provisions that require any counter-party(ies) thereto (and any of its (their) Representatives named therein) that receive material non-public information of or with respect to the Company to keep such information confidential, provided that such confidentiality provisions are no less restrictive in the aggregate to such counter-party(ies) (and any of its (their) Representatives named therein) than the terms of the Confidentiality Agreement. For the avoidance of doubt, an “Acceptable Confidentiality Agreement” need not contain any “standstill” or other similar provisions.

(b) “Acquisition Proposal” shall mean any offer or proposal made by any Person or Persons (other than an offer or proposal by Parent or Merger Sub) contemplating or otherwise relating to an Acquisition Transaction.

(c) “Acquisition Transaction” shall mean any transaction or series of related transactions (other than the Merger) involving:

(i) any direct or indirect purchase or other acquisition by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act), whether from the Company and/or any other Person(s), of (A) shares of Company Common Stock representing more than twenty percent (20%) of the Company Common Stock outstanding prior to giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person or “group” that, if consummated in accordance with its terms, would result in such Person or “group” beneficially owning more than twenty percent (20%) of the Company Common Stock outstanding prior to giving effect to the consummation of such tender or exchange offer or (B) any class of capital stock of, or other equity or voting interest in, any Company Subsidiary holding, directly or indirectly, individually or taken together, the business or assets referred to in (ii) immediately below;

(ii) any direct or indirect purchase, lease, license, transfer, exchange or other acquisition by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act) of the assets or business that constitute or represent more than twenty percent (20%) of the total revenue, operating income, EBITDA, or consolidated assets (such assets to be measured by the fair market value thereof as of the date of such sale, lease, license, transfer, exchange, acquisition or disposition) of the Company and its Subsidiaries taken as a whole; or

(iii) any direct or indirect merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other similar transaction involving the

 

2

Company pursuant to which any Person or “group” (as defined in or under Section 13(d) of the Exchange Act) would acquire shares of Company Common Stock representing more than twenty percent (20%) of the Company Common Stock outstanding prior to giving effect to the consummation of such transaction.

(d) “Affiliate” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

(e) “Antitrust Law” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other laws of any jurisdiction that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or the creation or strengthening of a dominant position through merger or acquisition, in any case that are applicable to the transactions contemplated by this Agreement.

(f) “Audited Company Balance Sheet” shall mean the consolidated balance sheet of the Company and its consolidated Subsidiaries as of December 31, 2008 included in the Company’s Annual Report on Form 10-K filed by the Company with the SEC for the year ended December 31, 2008.

(g) “Audited Parent Balance Sheet” shall mean the consolidated balance sheet of Parent and its consolidated Subsidiaries as of June 30, 2008 included in Parent’s Annual Report on Form 10-K filed by Parent with the SEC for the year ended December 31, 2008.

(h) “Business Day” shall mean any day, other than a Saturday, Sunday or any day which is a legal holiday under the laws of the State of Texas or is a day on which banking institutions located in the State of Texas are authorized or required by Law or other governmental action to close.

(i) “Certificate” shall mean a certificate representing outstanding shares of Company Common Stock.

(j) “CFIUS” means the Committee on Foreign Investment in the United States.

(k) “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.

(l) “Company Board” shall mean the Board of Directors of the Company.

(m) “Company Capital Stock” shall mean the Company Common Stock and the Company Preferred Stock.

 

3

(n) “Company Common Stock” shall mean the Common Stock, par value $0.01 per share, of the Company.

(o) “Company Disclosure Letter” shall mean the disclosure letter delivered by the Company to Parent on the date of this Agreement.

(p) “Company Intellectual Property” shall mean any and all Intellectual Property Rights that are owned by the Company or any of its Subsidiaries.

(q) “Company Material Adverse Effect” shall mean any fact, change, event, condition, circumstance, development or effect (each, an “Effect”) that individually or in the aggregate, has had, or would reasonably be expected to have, a materially adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided , however , that no Effect (by itself or when aggregated or taken together with any and all other Effects) resulting from, arising out of, attributable to, or related to any of the following shall be deemed to be or constitute a “Company Material Adverse Effect,” and no Effect (by itself or when aggregated or taken together with any and all other such Effects) resulting from, arising out of, attributable to, or related to any of the following shall be taken into account when determining whether a “Company Material Adverse Effect” has occurred or may, would or could occur:

(i) general economic or political conditions (or changes in such conditions) in the United States or any other country or region in the world in which the Company or any of its Subsidiaries operate or conduct business, the industries therein or conditions in the global economy generally (in any case only to the extent such Effect has not had a disproportionate impact on the Company relative to other companies in the industries in which the Company and its Subsidiaries operate or conduct business);

(ii) conditions (or changes in such conditions) in the industries in which the Company or any of its Subsidiaries operate or conduct business, including conditions (or changes in such conditions) in the software industry generally (in any case only to the extent such Effect has not had a disproportionate impact on the Company relative to other companies in the industries in which the Company and its Subsidiaries operate or conduct business);

(iii) any failure of the Company to meet internal or analysts’ estimates, projections or forecasts of revenues, earnings or other financial or business metrics, in and of itself (it being understood that, subject to the other exceptions set forth in this definition of a “Company Material Adverse Effect”, the underlying cause(s) of any such failure, as well as the business and financial performance of the Company, may be taken into consideration when determining whether a Company Material Adverse Effect has occurred or may, would or could occur);

(iv) acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in the United States or any other country or region in the world in which the Company or any of its Subsidiaries operate or conduct business, and any other force majeure events in the United States or any other country or region in which the Company or any of its Subsidiaries operate or conduct business;

 

4

(v) the public announcement or pendency of the transactions contemplated hereby;

(vi) compliance with the terms of, or the taking of any action expressly required or contemplated by, this Agreement, or the failure to take any action expressly prohibited by this Agreement;

(vii) changes in Law applicable to the Company or any of its Subsidiaries;

(viii) changes in GAAP (or the interpretation thereof);

(ix) in and of itself, any decrease in the market price or change in the trading volume of the Company Common Stock (it being understood that the factors and circumstances giving rise to such decrease or change may be deemed to constitute, and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred or may, would or could occur);

(x) any legal proceedings made or brought by any of the current or former stockholders of the Company (on their own behalf or on behalf of the Company) against the Company arising out of the Merger or in connection with any other transactions contemplated by this Agreement; and

(xi) any facts expressly set forth in the Company Disclosure Letter relating to matters as of or prior to the date hereof, but only to the extent any such fact is readily apparent from the text setting forth such fact in the Company Disclosure Letter.

(r) “Company Options” shall mean any options to purchase shares of Company Common Stock outstanding under any of the Company Option Plans.

(s) “Company Option Plans” shall mean the Company’s (i) 1995 Stock Option/Stock Issuance Plan; (ii) 1999 Equity Incentive Plan; (iii) 1999 Supplemental Stock Option Plan; (iv) 1999 Non-Employee Directors Option Plan; (v) Employee Stock Purchase Plan; (vi) the International Employee Stock Purchase Plan; (vii) the 2009 Stock Option Plan, and (viii) any other compensatory option plans or Contracts of the Company, including option plans or Contracts assumed by the Company pursuant to a merger, acquisition or other similar transaction.

(t) “Company Preferred Stock” shall mean the Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company.

(u) “Company Stock-Based Awards” shall mean each right of any kind, contingent or accrued, to receive shares of Company Common Stock or benefits measured in whole or in part by the value of a number of shares of Company Common Stock granted under the Company Option Plans or Employee Plans (including performance shares, restricted stock, restricted stock units, phantom units, deferred stock units and dividend equivalents, but not including any 401(k) plan of the Company), other than Company Options.

 

5

(v) “Company Stock Purchase Plans” shall mean the Company’s Employee Stock Purchase Plan and International Employee Stock Purchase Plan.

(w) “Company Stockholders” shall mean holders of shares of Company Capital Stock.

(x) “Competing Acquisition Transaction” shall have the same meaning as an “Acquisition Transaction” under this Agreement except that all references therein to “twenty percent (20%)” shall be references to “fifty percent (50%).”

(y) “Continuing Employee” shall mean each individual who is an employee of the Company immediately prior to the Effective Time and continues to be an employee of the Company, Parent or any Subsidiary of Parent immediately following the Effective Time.

(z) “Contract” shall mean any contract, agreement, subcontract, note, bond, mortgage, indenture, lease, license, or sublicense.

(aa) “Delaware Law” shall mean the DGCL and any other applicable Law or Order of the State of Delaware.

(bb) “DOL” shall mean the United States Department of Labor or any successor thereto.

(cc) “EBITDA” means the Company’s consolidated net income before deductions for interest, taxes, depreciation and amortization, the components of which shall be determined in accordance with GAAP as applied by the Company.

(dd) “Environmental Law” shall mean any and all laws relating to pollution or protection of the environment or exposure of any Person to or release of Hazardous Materials, including laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, registration, distribution, labeling, recycling, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

(ee) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, or any successor statue, rules and regulations thereto.

(ff) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

(gg) “FTC” shall mean the U.S. Federal Trade Commission, or any successor thereto.

(hh) “GAAP” shall mean generally accepted accounting principles, as applied in the United States.

 

6

(ii) “Governmental Authority” shall mean any government, any governmental or regulatory entity or body, department, commission, board, agency, instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, whether local or foreign.

(jj) “Hazardous Materials” shall mean chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and biological materials, asbestos-containing materials (ACM), hazardous substances, petroleum and petroleum products or any fraction thereof, and all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law.

(kk) “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

(ll) “Intellectual Property Rights” shall mean all worldwide rights in patents, patent applications, trademarks, service marks, trademark applications, service mark registrations and service mark applications, trade names, trade dress, logos, slogans, tag lines, uniform resource locators, Internet domain names, Internet domain name applications, corporate names, copyright applications, registered copyrighted works and unregistered copyrightable works (including proprietary software, books, written materials, prerecorded video or audio tapes, and other copyrightable works), industrial designs, technology, software, mask works, Trade Secrets, know-how, technical documentation, inventions, devices, methods, processes, specifications, data, designs and other intellectual property and proprietary rights, including those under development, whether or not any of the foregoing are registered or on file with a governmental or quasi-governmental agency or registry.

(mm) “IRS” shall mean the U.S. Internal Revenue Service.

(nn) “Knowledge” means such facts and other information that as of the date of determination are known to, in the case of the Company, Michael Aviles, Patrick Kelly, Bryce Johnson or Somesh Singh, and in the case of Parent or Merger Sub, John Shackleton, Paul McFeeters, John Trent or Kirk Roberts, in each case after reasonable inquiry.

(oo) “Law” means any federal, state, local or foreign law, statute, ordinance or regulation.

(pp) “Legal Proceeding” shall mean any lawsuit, litigation, arbitration or other legal proceeding brought by or pending before any Governmental Authority or any arbitrator or arbitration panel.

(qq) “Maintenance Customer” shall mean each of the twenty-five (25) largest customers of the Company and its Subsidiaries, determined on the basis of revenues received by the Company or any of its Subsidiaries for maintenance services for the fiscal year ended December 31, 2008.

 

7

(rr) “Major Customer” shall mean each of the twenty-five (25) largest customers of the Company and its Subsidiaries, determined on the basis of revenues received by the Company or any of its Subsidiaries for the fiscal year ended December 31, 2008.

(ss) “Merger Consideration” shall mean, with respect to each share of Company Common Stock, the Cash Consideration and the Stock Consideration.

(tt) “Nasdaq” shall mean the Nasdaq Global Select Market, any successor stock exchange or inter-dealer quotation system operated by The Nasdaq Stock Market, Inc. or any successor thereto.

(uu) “Open Source License” shall mean any software that contains, includes, incorporates, or has instantiated therein, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software ( e.g. , Linux) or similar licensing or distribution models, including software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (1) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (2) the Artistic License ( e.g. , PERL); (3) the Mozilla Public License; (4) the Netscape Public License; (5) the Sun Community Source License (SCSL); (6) the Sun Industry Standards License (SISL); (7) the BSD License; and (8) the Apache License.

(vv) “Order” shall mean any judgment, decision, decree, injunction, ruling, writ, assessment or order of any Governmental Authority that is binding on any Person or its property under applicable Law.

(ww) “Parent Board” shall mean the board of directors of Parent.

(xx) “Parent Capital Stock” shall mean the Parent Common Stock and the Parent Preferred Stock.

(yy) “Parent Common Stock” shall mean the common shares without par value of Parent.

(zz) “Parent Material Adverse Effect” shall mean any Effect that individually or in the aggregate, has had, or would reasonably be expected to have, a materially adverse effect on the business, financial condition or results of operations of the Parent and its subsidiaries, taken as a whole; provided , however , that no Effect (by itself or when aggregated or taken together with any and all other Effects) resulting from, arising out of, attributable to, or related to any of the following shall be deemed to be or constitute a “Parent Material Adverse Effect,” and no Effect (by itself or when aggregated or taken together with any and all other such Effects) resulting from, arising out of, attributable to, or related to any of the following shall be taken into account when determining whether a “Parent Material Adverse Effect” has occurred or may, would or could occur:

(i) general economic or political conditions (or changes in such conditions) in the United States or any other country or region in the world in which Parent or any of its Subsidiaries operate or conduct business, the industries therein or conditions in the global economy generally (in any case only to the extent such Effect has not had a disproportionate impact on Parent relative to other companies in the industries in which Parent and its Subsidiaries operate or conduct business);

 

8

(ii) conditions (or changes in such conditions) in the industries in which the Parent or any of its Subsidiaries operate or conduct business, including conditions (or changes in such conditions) in the software industry generally (in any case only to the extent such Effect has not had a disproportionate impact on Parent relative to other companies in the industries in which Parent and its Subsidiaries operate or conduct business);

(iii) any failure of Parent to meet internal or analysts’ estimates, projections or forecasts of revenues, earnings or other financial or business metrics, in and of itself (it being understood that, subject to the other exceptions set forth in this definition of a “Parent Material Adverse Effect”, the underlying cause(s) of any such failure, as well as the business and financial performance of Parent, may be taken into consideration when determining whether a Parent Material Adverse Effect has occurred or may, would or could occur);

(iv) acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in the United States or any other country or region in the world in which Parent or any of its Subsidiaries operate or conduct business, and any other force majeure events in the United States or any other country or region in which Parent or any of its Subsidiaries operate or conduct business;

(v) the public announcement or pendency of the transactions contemplated hereby;

(vi) compliance with the terms of, or the taking of any action expressly required or contemplated by, this Agreement, or the failure to take any action expressly prohibited by this Agreement;

(vii) changes in Law applicable to Parent;

(viii) changes in GAAP (or the interpretation thereof);

(ix) in and of itself, any decrease in the market price or change in the trading volume of the Parent Common Stock (it being understood that the factors and circumstances giving rise to such decrease or change may be deemed to constitute, and may be taken into consideration when determining whether a Parent Material Adverse Effect has occurred or may, would or could occur); and

(x) any legal proceedings made or brought by any of the current or former stockholders of Parent (on their own behalf or on behalf of Parent) against Parent arising out of the Merger or in connection with any other transactions contemplated by this Agreement.

(aaa) “Parent Preferred Stock” shall mean the first preference shares without par value of Parent.

(bbb) “Permitted Liens” shall mean any of the following: (i) liens for Taxes, assessments and governmental charges or levies that in any event either are not yet delinquent or

 

9

which are being contested in good faith and by appropriate proceedings and for which appropriate reserves have been established to the extent required by GAAP; (ii) mechanics, carriers’, workmen’s, warehouseman’s, repairmen’s, materialmen’s or other liens or security interests that are in any event not yet due or that are being contested in good faith and by appropriate proceedings; (iii) defects, imperfections or irregularities in title, easements, covenants and rights of way (unrecorded and of record) of real property, and zoning, building and other similar codes or restrictions on real property, in each case that do not adversely affect in any material respect the current use of the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries; (iv) liens the existence of which are expressly disclosed with particularity in the notes to the consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the SEC; and (v) statutory, common law or contractual liens (or other encumbrances of any type) of landlords or liens against the interests of the landlord or owner of any Leased Real Property unless caused by the Company or any of its Subsidiaries.

(ccc) “Person” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.

(ddd) “Registered Intellectual Property” shall mean applications, registrations and filings for Intellectual Property Rights that have been registered or filed, with or by any Government Authority.

(eee) “Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.

(fff) “SEC” shall mean the United States Securities and Exchange Commission or any successor thereto.

(ggg) “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.

(hhh) “Significant Subsidiaries” shall mean Vignette Europe Limited (UK), Vignette Pty Limited (Australia), Vignette Iberica S.L. (Spain), Vignette do Brasil Ltda (Brazil) and Vignette SARL (France).

(iii) “Source Code” shall mean software code, which may be printed out or displayed in human readable form or from which object or other executable code can be derived by compilation or otherwise.

(jjj) “Stockholder Rights Agreement” means that certain Rights Agreement dated as of April 25, 2002, between the Company and Mellon Investor Services, LLC.

(kkk) “Subsidiary” of any Person shall mean (i) a corporation more than fifty percent (50%) of the combined voting power of the outstanding voting stock of which is owned,

 

10

or the power to direct the policies, management and affairs of such corporation is held, directly or indirectly, by such Person or by one of more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof, (ii) a partnership of which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner or has the power to direct the policies, management and affairs of such partnership, (iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the managing member or has the power to direct the policies, management and affairs of such company or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership or power to direct the policies, management and affairs thereof.

(lll) “Superior Proposal” shall mean an unsolicited, bona fide, third party written Acquisition Proposal for an Acquisition Transaction on terms that the Company Board shall have determined in good faith (after consultation with its financial advisor and outside legal counsel and taking into consideration all financial, regulatory, legal and other aspects of such Acquisition Proposal, including the likelihood of consummation and certainty of financing) would be more favorable to the Company Stockholders than the Merger; provided, however , that for purposes of the reference to an “Acquisition Proposal” in this definition of a “Superior Proposal,” all references to “twenty percent (20%)” in the definition of “Acquisition Transaction” shall be references to “fifty percent (50%).”

(mmm) “Tax” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, charges, fees, levies, penalties or other assessments, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, service, license, net worth, franchise, withholding, payroll, recapture, social security, employment, escheat, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts and (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including any liability under Treasury Regulation Section 1.1502-6 or any comparable provision of foreign, state or local law, and including any arrangement for group or consortium relief or similar arrangement).

(nnn) “Tax Returns” shall mean all returns, declarations, reports, estimates, statements and other documents filed or required to be filed in respect of any Taxes, including any attachments, addenda or amendments thereto.

(ooo) “Trade Secrets” shall mean any information belonging to or in Company’s possession (without regard to form) including but not limited to technical or non-technical data, formulas, patterns, compilations, programs, computer software, flow charts, devices, methods, techniques, drawings, processes, product specifications, financial data, financial plans, product plans, market feasibility studies, designs and design concepts, documents and manuals related to product plans, designs and design concepts, or lists (whether in written form or otherwise) of actual or potential customers or suppliers, which (i) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other

 

11

Persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Trade Secrets also includes any information described in the section obtained from a third party.

1.2 Additional Definitions . The following capitalized terms shall have the respective meanings ascribed thereto in the respective sections of this Agreement set forth opposite each of the capitalized terms below:

 

 

12

1.3 Certain Interpretations .

(a) Unless otherwise indicated, all references herein to Articles, Sections, Annexes, Exhibits or Schedules, shall be deemed to refer to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.

(b) Unless otherwise indicated, the words “include,” “includes” and “including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.”

(c) The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.

 

13

(d) When reference is made herein to a Person, such reference shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.

(e) Unless otherwise indicted, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.

(f) Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

(g) The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law or Order, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

(h) All monetary amounts herein shall be denominated in U.S. Dollars unless otherwise expressly noted.

ARTICLE II

THE MERGER

2.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company in the Merger, the separate corporate existence of Merger Sub shall thereupon cease and the Company shall continue as the surviving corporation of the Merger and as a wholly-owned Subsidiary of Parent. The Company, as the surviving corporation of the Merger, is sometimes referred to herein as the “Surviving Corporation.”

2.2 The Closing . The consummation of the Merger shall take place at a closing (the “Closing”) to occur at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 900 South Capital of Texas Highway, Las Cimas IV, Fifth Floor, Austin, Texas 78746, on a date and at a time to be agreed upon by Parent, Merger Sub and the Company, which date shall be no later than the first (1 ^st ) Business Day after the satisfaction or waiver (to the extent permitted hereunder) of the last to be satisfied or waived of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted hereunder), of such conditions), or at such other location, date and time as Parent and the Company shall mutually agree upon in writing. The date upon which the Closing is to take place pursuant hereto is referred to herein as the “Closing Date.”

2.3 Effective Time of the Merger . Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, Parent, Merger Sub and the Company shall cause the Merger to be consummated under Delaware Law by filing a certificate of merger substantially in the form as attached hereto as Exhibit B (the “Certificate of Merger”) with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) in accordance with the applicable provisions of the DGCL (the time of such filing and acceptance by the

 

14

Delaware Secretary of State, or such later time as may be agreed in writing by Parent, Merger Sub and the Company and specified in the Certificate of Merger, being referred to herein as the “Effective Time”).

2.4 Effect of the Merger . At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing (and subject thereto), at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

2.5 Organizational Documents of the Surviving Corporation .

(a) Certificate of Incorporation . At the Effective Time, subject to the provisions of Section 6.14, the Certificate of Incorporation of the Company shall be amended and restated in its entirety to read identically to the Certificate of Incorporation of Merger Sub as in effect immediately prior to the Effective Time, and such amended and restated Certificate of Incorporation shall become the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of Delaware Law and such Certificate of Incorporation; provided, however , that at the Effective Time the Certificate of Incorporation of the Surviving Corporation shall be amended so that the name of the Surviving Corporation shall be “Vignette Corporation.”

(b) Bylaws . At the Effective Time, subject to the provisions of Section 6.14, the Bylaws of Merger Sub as in effect immediately prior to the Effective Time shall become the Bylaws of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of Delaware Law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws.

2.6 Directors and Officers of the Surviving Corporation .

(a) Directors . At the Effective Time, the initial directors of the Surviving Corporation shall be the directors of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified.

(b) Officers . At the Effective Time, the initial officers of the Surviving Corporation shall be the officers of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly appointed.

2.7 Effect of Merger on Capital Stock of Constituent Corporations . Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, the following shall occur:

(a) Merger Sub Capital Stock . Each share of Common Stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and

 

15

become 1,000 fully paid and nonassessable shares of Series A Preferred Stock of the Surviving Corporation. In exchange for, and in consideration of, Parent issuing and delivering (on behalf of the Merger Sub) at or promptly following the Effective Time shares of Parent Common Stock for the Merger and paying the Surviving Corporation $10.00 (or such other amount as is agreed by the Surviving Corporation and Parent), the Surviving Corporation will issue to Parent at the Effective Time 1,000 (or such other number as is agreed to by the Surviving Corporation and Parent) fully paid and nonassessable shares of common stock of the Surviving Corporation.

(b) Company Capital Stock .

(i) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any Cancelled Company Shares and any Dissenting Company Shares) shall be cancelled and extinguished and automatically converted into the right to receive (1) $8.00 in cash, without interest thereon (such per share cash amount being referred to herein as the “Cash Consideration”) and (2) 0.1447 of one validly issued, fully paid and nonassessable share of Parent Common Stock (such per share amount being referred to herein as the “Stock Consideration”). The Merger Consideration shall be paid thereon upon the surrender of the Certificate representing such share of Company Common Stock (or the receipt of an agent’s message in the case of Book-Entry Shares) in the manner set forth in Section 2.9 (or in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and bond, if required) in the manner set forth in Section 2.11). For all purposes of and under this Agreement, the term “Merger Consideration” shall mean, with respect to a share of Company Common Stock representing the right to receive such consideration, the Cash Consideration and the Stock Consideration.

(ii) Notwithstanding anything to the contrary set forth in this Agreement, (A) the Stock Consideration shall be adjusted appropriately to reflect fully the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into shares of Parent Common Stock), reorganization, recapitalization, reclassification or other like change with respect to Parent Common Stock having a record date on or after the date hereof and prior to the Effective Time; provided that, for the avoidance of doubt, no such adjustment shall be made with regard to the Parent Common Stock if (i) Parent issues additional shares of Parent Common Stock and receives consideration for such shares, or (ii) Parent issues employee or director stock grants or similar equity awards or stock exercisable pursuant to equity awards; and (B) the Cash Consideration and the Stock Consideration shall be adjusted appropriately to reflect fully the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into shares of Company Common Stock), reorganization, recapitalization, reclassification or other like change with respect to Company Common Stock having a record date on or after the date hereof and prior to the Effective Time (it being understood and agreed that the inclusion of this clause (B) shall not be deemed to amend or modify in any respect the restrictions set forth in Article V). Furthermore, notwithstanding anything to the contrary set forth in this Agreement, the Cash Consideration shall be increased by an amount equal to the product of (x) the Stock Consideration times (y) the per share amount of any cash dividend declared by Parent in respect of the Parent Common Stock having a record date on or after the date hereof and prior to the Effective Time.

 

16

(iii) No fraction of a share of Parent Common Stock will be issued by virtue of the Merger or pursuant to this Agreement, and in lieu thereof each holder of record of shares of Company Common Stock who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that otherwise would be received by such holder of record) shall be entitled to receive from Parent, upon surrender of such holder’s Certificate(s) in the manner set forth in Section 2.9, an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of such fraction multiplied by the average of the closing prices of Parent Common Stock on Nasdaq for the five (5) trading days immediately preceding the Closing Date.

(iv) Notwithstanding anything to the contrary set forth in this Agreement, each share of Company Common Stock owned by Parent, any Subsidiary of Parent or the Company (collectively, “Cancelled Company Shares”), in each case as of immediately prior to the Effective Time, shall be cancelled and extinguished without any conversion thereof or consideration paid therefor.

(v) Notwithstanding anything to the contrary set forth in this Agreement, all shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a stockholder who shall have neither voted in favor of the Merger nor consented thereto in writing and who shall have properly and validly exercised such stockholder’s statutory rights of appraisal in respect of such shares of Company Common Stock in accordance with Section 262 of the DGCL (“Dissenting Company Shares”) shall not be converted into, or represent the right to receive, the Merger Consideration pursuant to this Section 2.7. Any such stockholder shall be entitled to receive payment of the appraised value of such Dissenting Company Shares in accordance with the provisions of 262 of the DGCL; provided, however , that notwithstanding the foregoing, all Dissenting Company Shares held by a stockholder who shall have failed to perfect or who shall have effectively withdrawn or lost such stockholder’s statutory right to appraisal of such Dissenting Company Shares under such Section 262 of the DGCL shall thereupon be deemed to have been converted into, and to have become exchangeable for, the right to receive the Merger Consideration, without any interest thereon, and such holder of Dissenting Company Shares shall receive the Merger Consideration upon surrender of the certificate or certificates that formerly evidenced such shares of Company Common Stock in the manner set forth in Section 2.9. The Company shall give Parent (x) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands, and any other instruments served pursuant to Delaware Law and received by the Company in respect of Dissenting Company Shares and (y) the opportunity to direct and control all negotiations and proceedings with respect to demands for appraisal under Delaware Law in respect of Dissenting Company Shares. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands for payment in respect of Dissenting Company Shares.

(vi) If any shares of Company Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition (including restrictions on transferability) under any applicable restricted stock purchase agreement or other agreement or arrangement with the Company that does not by its terms provide that such repurchase option, risk of forfeiture or other condition lapses upon consummation of the Merger (“Company Restricted Stock”), then notwithstanding any other

 

17

provision of this Agreement, each holder of shares of Company Restricted Stock shall have the right to receive the Merger Consideration with respect to such shares in accordance with Section 2.7(b), and such shares shall be cancelled and extinguished and automatically converted into the right to receive Merger Consideration in accordance with Section 2.7(b), which Stock Consideration or Cash Consideration shall also be unvested and subject to the same repurchase option, risk of forfeiture or other condition (including restrictions on transferability), and the certificates representing any shares of Parent Common Stock issued in respect thereof may be marked with appropriate legends reflecting the foregoing. To the extent any shares of Company Restricted Stock are converted into the right to receive Cash Consideration, such Cash Consideration shall vest and become payable on the date that the Company Restricted Stock would have otherwise vested pursuant to its original vesting schedule as in effect prior to the Effective Time, and such payment shall be made at the first regularly scheduled payroll date of Parent (or a Subsidiary of Parent) following the vesting date applicable to such payment.

2.8 Company Options .

(a) At the Effective Time, all Company Options outstanding and unexercised, whether or not vested or exercisable, immediately prior to the Effective Time shall be cancelled and no longer outstanding. All Company Options shall automatically cease to exist, and each holder of a Company Option shall cease to have any rights with respect thereto, except the right to receive the applicable payment, if any, pursuant to this Section 2.8.

(b) Company Options with per share exercise prices less than the value of the Cash Consideration, shall be converted, as of the Effective Time, into the right to receive (A) an amount in cash equal to the product of (i) the Cash Consideration reduced by the applicable per share exercise price of such Company Option, and (ii) the number of shares subject to such Company Option as of the Effective Time; and (B) such number of shares of Parent Common Stock equal to the product of (i) the Stock Consideration, and (ii) the number of shares subject to such Company Option as of the Effective Time. For the purposes of this Section 2.8(b), an amount necessary to satisfy the applicable minimum withholding tax obligation shall first be reduced from the amount of the cash payment to be received pursuant to subsection (A) of this Section 2.8(b) and then, if necessary, from the number of shares of Parent Common Stock issued pursuant to subsection (B) of this Section 2.8(b). For purposes of this Section 2.8(b), the value of the Stock Consideration shall be based on the most recent closing price of the Parent Company Common Stock prior to the date of the Closing.

(c) Company Options with per share exercise prices less than the value of the Merger Consideration, but greater than, or equal to, the Cash Consideration, shall be converted, as of the Effective Time, into the right to receive, in shares of Parent Common Stock, an amount equal to the product of (i) the excess, if any, of the value of the Merger Consideration over the applicable per share exercise price of such Company Option, and (ii) the number of shares subject to such Company Option as of the Effective Time. For the purposes of this Section 2.8(c), the number of shares of Parent Common Stock issued shall be reduced in an amount necessary to satisfy the applicable minimum withholding tax obligation. For purposes of this Section 2.8(c), the value of the Stock Consideration shall be based on the most recent closing price of the Parent Company Common Stock prior to the date of the Closing.

 

18

(d) The Company Board (or, if appropriate, any committee administering the Company Option Plans) shall adopt such resolutions or use its reasonable best effort to take such other actions as are required to provide for the cancellation of each Company Stock Option as provided in this Section 2.8. Parent shall pay the applicable payment required by this Section 2.8 as soon as practical after the Closing. Parent and the Company shall work together in good faith to determine the most efficient manner to provide such payments in order to ensure that all applicable payroll taxes which are required to be remitted by the Company are properly paid.

(e) With respect to the Company Stock Purchase Plans, the Company shall take all necessary action to (i) terminate the current Offering Period and Contribution Period (each as defined under the applicable Company Stock Purchase Plan) effective as of the day immediately prior to the Effective Time (the “Final Exercise Date”); (ii) provide that no further Offering Periods shall commence under the Company Stock Purchase Plans on or following the Final Exercise Date; and (iii) terminate the Company Stock Purchase Plans as of the Final Exercise Date. Each outstanding option under the Company Stock Purchase Plans on the Final Exercise Date shall be exercised on such date for the purchase of Company Common Stock in accordance with the terms of the applicable Company Stock Purchase Plan.

2.9 Exchange Fund; Exchange of Shares .

(a) Exchange Fund .

(i) Prior to the date on which Parent and the Company shall disseminate the Proxy Statement, Parent shall select a bank or trust company reasonably acceptable to the Company to act as the exchange agent for the Merger (the “Exchange Agent”).

(ii) As soon as practicable following the Effective Time, Merger Sub (or Parent on behalf of Merger Sub) shall deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the holders of shares of Company Common Stock, for exchange in accordance with the terms and conditions of this Article II, the following:

(A) a number of shares of Parent Common Stock equal to the aggregate Stock Consideration issuable pursuant to Section 2.7(b)(i);

(B) cash in an amount equal to the aggregate Cash Consideration payable pursuant to Section 2.7(b)(i); and

(C) cash in an amount sufficient to make all requisite payments of cash in lieu of fractional shares payable pursuant to Section 2.7(b)(iii) and any dividends or other distributions which holders of shares of Company Common Stock may be entitled pursuant to Section 2.9(c).

All shares of Parent Common Stock and cash deposited with the Exchange Agent pursuant hereto shall hereinafter be referred to as the “Exchange Fund.” Pursuant to irrevocable instructions, the Exchange Agent shall promptly deliver the Merger Consideration from the Exchange Fund to the former Company stockholders who are entitled thereto pursuant to Section 2.7(b).

 

19

(b) Exchange Procedures .

(i) Promptly following the Effective Time, Parent and Merger Sub shall cause the Exchange Agent to mail to each holder of record (as of immediately prior to the Effective Time) of a Certificate that represented outstanding shares of Company Common Stock as of immediately prior to the Effective Time, and each holder of record of Book-Entry Shares as of immediately prior to the Effective Time (other than any holders of record that have surrendered a Certificate or Book-Entry Shares to the Exchange Agent) with, (A) a letter of transmittal, and other appropriate and customary transmittal materials, in such form and containing such provisions as Parent and the Company shall mutually agree (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) (collectively, the “Letter of Transmittal”) and (B) instructions for use in effecting the surrender of Certificates (or uncertificated shares of Company Common Stock represented by book-entry (“Book-Entry Shares”)) in exchange for the Merger Consideration issuable and payable in respect thereof (in accordance with Section 2.7(b)) and any dividends or other distributions to which such holders is entitled to receive pursuant to Section 2.9(c).

(ii) Upon surrender of Certificates for cancellation to the Exchange Agent (or upon receipt of an appropriate agent’s message in the case of Book-Entry Shares), together with the Letter of Transmittal, properly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates and Book-Entry Shares shall be entitled to receive in exchange therefor (A) the number of whole shares of Parent Common Stock (after taking into account all Certificates surrendered by such holder of record) to which such holder is entitled pursuant to Section 2.7(b) (which, at the election of Parent, may be in uncertificated book entry form unless a physical certificate is requested by the holder of record or is otherwise required by applicable Law or Order), (B) the cash amounts such holders are entitled to receive pursuant to Section 2.7(b), (C) the cash payable in lieu of fractional shares of Parent Common Stock such holder is entitled to receive pursuant to Section 2.7(b)(iii), and (D) any dividends or distributions to which such holders are entitled pursuant to Section 2.9(c), and any Certificates or Book-Entry Shares so surrendered shall forthwith be canceled. The Exchange Agent shall accept such Certificates and Book-Entry Shares upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on any amounts payable upon the surrender of such Certificates or Book-Entry Shares pursuant to this Section 2.9. Until so surrendered, outstanding Certificates and Book-Entry Shares shall be deemed, from and after the Effective Time, to evidence only the right to receive the Merger Consideration issuable and payable in respect thereof and any dividends or distributions payable or issuable in respect thereof pursuant to Section 2.9(c). Exchange of Book-Entry Shares shall be effected in accordance with the customary procedures in respect of shares represented by book entry on the stock ledger of the Company.

(c) Dividends and Other Distributions . No dividends or other distributions declared or made after the date hereof with respect to Parent Common Stock with a record date after the Effective Time, and no payment in lieu of fractional shares pursuant to Section 2.7(b)(iii), will be paid to the holders of any unsurrendered Certificates or Book-Entry

 

20

Shares with respect to the shares of Parent Common Stock represented thereby until the holders of record of such Certificates or Book-Entry Shares shall surrender such Certificates or Book-Entry Shares in accordance with the terms of Section 2.9(b). Subject to applicable Law or Order, promptly following the surrender of any such Certificates, the Exchange Agent shall deliver to the record holders thereof, without interest, any dividends or other distributions with a record date after the Effective Time and theretofore paid with respect to such whole shares of Parent Common Stock and, at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect to such whole shares of Parent Common Stock.

(d) Transfers of Ownership . In the event that shares of Parent Common Stock are to be issued in a name other than that in which the Certificates surrendered in exchange therefor are registered (including as a result of a transfer of ownership of shares of Company Common Stock that has not been registered in the stock transfer books or ledger of the Company), it will be a condition of the issuance of such shares of Parent Common Stock that the Certificates so surrendered are properly endorsed and otherwise in proper form for surrender and transfer and the Person requesting such payment has paid to Parent (or any agent designated by Parent) any transfer or other Taxes required by reason of the issuance of shares of Parent Common Stock in any name other than that of the registered holder of the Certificates surrendered, or established to the satisfaction of Parent (or any agent designated by Parent) that such transfer or other Taxes have been paid or are otherwise not payable.

(e) Required Withholding . Each of the Exchange Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of shares of Company Common Stock such amounts as may be required to be deducted or withheld therefrom under United States federal or state, local or foreign law. To the extent that such amounts are so deducted or withheld and paid to the applicable Governmental Authority, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

(f) No Liability . Notwithstanding anything to the contrary set forth in this Agreement, none of the Exchange Agent, Parent, the Surviving Corporation, or any other party hereto shall be liable to a holder of shares of Parent Common Stock or Company Common Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar laws.

(g) Termination of Exchange Fund . At the request of Parent, any portion of the Exchange Fund which remains undistributed or unclaimed on the date that is twelve (12) months immediately following the Effective Time shall be delivered to Parent, and any holders of the Certificates who have not theretofore surrendered Certificates in compliance with this Section 2.9 shall thereafter look only to Parent for issuance or payment of the Merger Consideration issuable and payable in respect thereto pursuant to Section 2.7(b) and issuance and payment of any dividends or other distributions payable or issuable in respect thereof pursuant to Section 2.9(c).

 

21

2.10 No Further Ownership Rights in Company Common Stock . From and after the Effective Time, all shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of a Certificate theretofore representing any shares of Company Common Stock and holders of Book-Entry Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration issuable and payable in respect thereof pursuant to Section 2.7(b) and any dividends or other distributions issuable or payable in respect thereof pursuant to Section 2.9(c) upon the surrender thereof in accordance with the provisions of Section 2.9. All shares of Parent Common Stock issued upon the surrender for exchange of shares of Company Common Stock in accordance with the terms hereof (including any cash paid in respect thereof pursuant to Section 2.7(b) and Section 2.9(c)) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Common Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to Parent or the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II.

2.11 Lost, Stolen or Destroyed Certificates . In the event that any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration that is issuable and payable in respect thereof pursuant to Section 2.7(b) and any dividends or distributions issuable or payable in respect thereof pursuant to Section 2.9(c); provided, however , that Parent and/or the Exchange Agent may, in its discretion and as a condition precedent to the issuance thereof, require the owners of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

2.12 Taking of Necessary Further Action . If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the directors and officers of the Company and Merger Sub shall take all such lawful and necessary action.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (i) as set forth in (A) the corresponding section or subsection of the Company Disclosure Letter or (B) any other section or subsection of the Company Disclosure Letter solely to the extent that it is reasonably apparent from the text of the disclosure set forth therein that such disclosure applies to the representations and warranties set forth in another section or subsection of this Article III, or (ii) as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (excluding disclosures set forth in any risk factor section or forward looking statements contained therein) filed by the Company with the SEC, the Company hereby represents and warrants to Parent and Merger Sub as follows:

 

22

3.1 Organization and Standing . The Company is a corporation duly organized, validly existing and in good standing under Delaware Law, and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties and assets, except where the failure to be in good standing would not have a Company Material Adverse Effect. The Company is duly licensed and qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such licensing or qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified or in good standing would not have a Company Material Adverse Effect. The Company has delivered or made available to Parent true, complete and correct copies of the Certificate of Incorporation and Bylaws of the Company, each as amended to date. The Company is not in violation of its Certificate of Incorporation or its Bylaws.

3.2 Corporate Approvals .

(a) The Company has the requisite corporate power and authority to execute and deliver this Agreement, to perform its covenants and obligations hereunder and, subject to receiving the Requisite Company Stockholder Approval, to consummate the Merger. The adoption, execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and obligations hereunder and the consummation of the Merger have been duly authorized by all necessary corporate action on the part of the Company and no additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and obligations hereunder or, subject to the receipt of the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock in favor of the Company Voting Proposal (the “Requisite Company Stockholder Approval”), the consummation of the Merger. This Agreement has been duly and validly authorized, executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting or relating to creditors’ rights generally, and (b) is subject to general principles of equity.

(b) The Company Board (acting upon the unanimous approval of Board members) has (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement and consummate the Merger upon the terms and subject to the conditions set forth herein, (ii) approved the execution and delivery of this Agreement by the Company, the performance by this Company of its covenants and obligations hereunder and the consummation of the Merger upon the terms and conditions contained set forth herein, and (iii) resolved to recommend that the Company Stockholders approve this Agreement and the Merger in accordance with the applicable provisions of the DGCL (the “Company Board Recommendation”).

(c) Assuming that the representations of Parent and Merger Sub set forth in Section 4.12 are accurate, the Requisite Company Stockholder Approval is the only vote of the holders of any class or series of Company Capital Stock that is necessary under applicable Law or Order, the Company’s Certificate of Incorporation and the Company’s Bylaws to adopt this Agreement and consummate the Merger.

 

23

3.3 Non-contravention; Required Consents .

(a) The execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and obligations hereunder and the consummation of the Merger do not and will not (i) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of the Company, (ii) violate, conflict with, or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any Material Contract, (iii) assuming compliance with the matters referred to in Section 3.3(b)(i), (ii) and (iii) and, in the case of the consummation of the Merger, subject to obtaining the Requisite Company Stockholder Approval, violate or conflict with any Law or Order applicable to the Company or any of its Subsidiaries or by which any of their respective properties or assets are bound, or (iv) result in the creation of any lien upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of each of clauses (ii), (iii) and (iv) above, for such violations, conflicts, defaults, terminations, accelerations or liens which would not (A) have a Company Material Adverse Effect, (B) prevent or materially delay the consummation of the Merger, or (C) prevent or materially delay the Company’s performance of its material obligations under this Agreement.

(b) No consent, approval, order or authorization of, filing or registration with, or notification to (any of the foregoing being referred to herein as a “Consent”), any Governmental Authority is required on the part of the Company in connection with the execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and obligations hereunder or the consummation of the Merger, except (i) the filing and recordation of the Certificate of Merger with the Delaware Secretary of State, (ii) such filings and approvals as may be required by any federal or state securities laws, including compliance with any applicable requirements of the Exchange Act; (iii) compliance with any applicable requirements of the HSR Act and any applicable foreign Antitrust Laws, and (iv) such other Consents, the failure of which to obtain would not have a Company Material Adverse Effect, prevent or materially delay the consummation of the Merger or the ability of the Company to fully perform its covenants and obligations under this Agreement.

3.4 Capitalization .

(a) The authorized capital stock of the Company consists of (i) five hundred million (500,000,000) shares of Company Common Stock, $.01 par value, and (ii) ten million (10,000,000) shares of Company Preferred Stock. As of the close of business in Austin, Texas on May 4, 2009 (the “Capitalization Date”): (A) 23,825,706 shares of Company Common Stock were issued and outstanding (of which 653,825 were shares of Company Restricted Stock), (B) no shares of Company Preferred Stock were issued and outstanding, and (C) there were 7,597,385 shares of Company Capital Stock held by the Company as treasury shares. All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of any preemptive rights. All issuances, transfers or purchases by the

 

24

Company of Company Common Stock have been in compliance with all applicable agreements and all applicable Law or Order, including federal and state securities laws, and all taxes thereon have been paid. Since the close of business on the Capitalization Date, the Company has not issued any shares of Company Capital Stock other than pursuant to the exercise of Company Options granted under a Company Option Plan and pursuant to Company Stock-Based Awards.

(b) There are 3,472,886 shares of Company Common Stock available for future grant under the Company Option Plans. As of the close of business on the Capitalization Date, there were outstanding (A) Company Options to purchase 3,337,268 shares of Company Common Stock (of which 33,400 were options issued under the Company Stock Purchase Plans) and (B) 653,825 shares of Company Restricted Stock, and, since such date, the Company has not granted, committed to grant or otherwise created or assumed any obligation with respect to any Company Options, Company Restricted Stock or any other exercise, conversion or equity right, other than as permitted by this Agreement, and no other Company Options, Company Restricted Stock awards, or other exercise, conversion, or equity rights with respect to the capital stock of the Company have been granted or are outstanding. The Company has made available to the Parent accurate and complete copies of the Company Option Plans and the forms of all Company Option or Company Restricted Stock agreements evidencing any such awards granted thereunder.

(c) Except as set forth in Section 3.4(a) and Section 3.4(b), there are (i) no outstanding shares of capital stock of, or other equity or voting interest in, the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company, (iii) no outstanding options, warrants, calls, subscriptions or other rights to acquire from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar Contract relating to any capital stock of, or other equity or voting interest (including any voting debt) in, the Company, (v) no contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the Company or any of its Subsidiaries, (vi) no voting trusts or similar agreements to which the Company is a party with respect to the voting of the capital stock of the Company (the items in clauses (i), (ii), (iii), (iv), (v) and (vi), together with the capital stock of the Company, being referred to collectively as “Company Securities”) and (vii) no other obligations by the Company to make any payments based on the price or value of any Company Securities. Neither the Company nor any of its Subsidiaries is a party to any Contract that obligates the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.

(d) Neither the Company nor any of its Subsidiaries is a party to any Contract relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any securities of the Company.

 

25

3.5 Company Subsidiaries .

(a) Section 3.5(a) of the Company Disclosure Letter contains a complete and accurate list of the name, jurisdiction of organization, capitalization and schedule of stockholders of each Company Subsidiary. Each of the Significant Subsidiaries, and to the Knowledge of the Company each other Subsidiary, is duly organized, validly existing and in good standing under the Laws or Orders of the jurisdiction of its respective organization (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States). Each of the Significant Subsidiaries, and to the Knowledge of the Company each other Subsidiary, has the requisite corporate power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate its respective properties and assets. Each of the Significant Subsidiaries, and to the Knowledge of the Company each other Subsidiary, is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified or in good standing would not have a Company Material Adverse Effect. The Company has delivered or made available to Parent complete and correct copies of the charters and bylaws or other constituent documents, as amended to date, of each of the Significant Subsidiaries. None of the Significant Subsidiaries, and to the Knowledge of the Company no other Subsidiary, is in violation of its charter, bylaws or other constituent documents.

(b) All of the outstanding capital stock of, or other equity or voting interest in, each Company Subsidiary (i) have been duly authorized, validly issued and are fully paid and nonassessable and (ii) are owned, directly or indirectly, by the Company, free and clear of all liens and free of any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting interest) that would prevent the Company Subsidiaries from conducting their respective businesses as of the Effective Time in substantially the same manner such businesses are conducted on the date hereof.

(c) There are no outstanding (i) securities of any Company Subsidiary convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, any Subsidiaries of the Company, (ii) options, warrants, calls, subscriptions or other rights obligating the Company or any of its Subsidiaries to acquire from any Subsidiaries of the Company, or that obligate any Subsidiaries of the Company to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, any Subsidiaries of the Company, (iii) obligations of the Company or any Subsidiaries of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar Contract relating to any capital stock of, or other equity or voting interest (including any voting debt) in, any Subsidiaries of the Company, (iv) contractual obligations of the Company or any Company Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the Company or any of its Subsidiaries or (v) voting trusts or similar agreements to which the Company or any Company Subsidiary is a party with respect to the voting of the capital stock of the Company or any Company Subsidiary (the items in clauses (i), (ii), (iii), (iv) and (v), together with the capital stock of the Company Subsidiaries, being referred to collectively as “Subsidiary Securities”), or (vi) other obligations by any Subsidiaries of the Company to make any payments

 

26

based on the price or value of any shares of any Subsidiaries of the Company. Neither the Company nor any of its Subsidiaries is a party to any Contract that obligated any Subsidiaries of the Company to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.

3.6 Company SEC Reports . The Company has filed all forms, reports and documents with the SEC that have been required to be filed by it under applicable Law or Order prior to the date hereof, and the Company will file prior to the Effective Time all forms, reports and documents with the SEC that are required to be filed by it under applicable Law or Order prior to such time (all such forms, reports and documents, together with all exhibits and schedules thereto, the “Company SEC Reports”). Each Company SEC Report complied, or will comply, as the case may be, as of its filing date, as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act or the Sarbanes-Oxley Act, as the case may be, each as in effect on the date such Company SEC Report was, or will be, filed. True and correct copies of all Company SEC Reports filed prior to the date hereof have been furnished to Parent or are publicly available in the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC. The Company has resolved with the staff of the SEC any comments it may have received prior to the date of this Agreement in comment letters to the Company from the staff of the SEC. As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), each Company SEC Report did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. None of the Company’s Subsidiaries is required to file any forms, reports or other documents with the SEC. The Company is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations of the SEC promulgated thereunder, including the provisions therein relating to recent acquisitions. No executive officer of the Company has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any Company SEC Report. All such certifications are accurate and complete, and neither the Company nor any of its executive officers has received notice from any Governmental Authority challenging or questioning the accuracy, completeness, form or manner of filing of such certifications. As used in this Section 3.6, the term “file” and variations thereof shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC.

3.7 Company Financial Statements .

(a) Each of the consolidated financial statements of the Company and its Subsidiaries filed with the Company SEC Reports complied at the time it was filed as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of such filing, have been (or will be with regard to Company SEC Reports to be filed) prepared in accordance with GAAP consistently applied during the periods and at the dates involved (except as may be indicated in the notes thereto or as otherwise permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q), and fairly present in all material respects (or will present in all material respects with regard to Company SEC Reports to be filed) the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of operations and cash flows for the periods then ended.

 

27

(b) The Company has established and maintains, adheres to and enforces a system of internal accounting controls which are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and, to the Company’s Knowledge, its Subsidiaries, (ii) provide reasonable assurance that transactions are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and, to the Company’s Knowledge, its Subsidiaries are being made only in accordance with appropriate authorizations of management and the Company Board, and (iii) provide assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and, to the Company’s Knowledge, its Subsidiaries. Neither the Company nor, to the Knowledge of the Company, any Company Subsidiary or the Company’s independent auditors, has identified or been made aware of (A) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and, to the Company’s Knowledge, its Subsidiaries, in each case which has not been subsequently remediated, or (B) any fraud that involves the Company’s executive management who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and, to the Company’s Knowledge, its Subsidiaries. There are no internal investigations and, to the Company’s Knowledge, there are no SEC inquiries or investigations or other governmental inquiries or investigations pending or threatened in each case regarding any accounting practices of the Company or, to the Company’s Knowledge, any of its Subsidiaries, any malfeasance by any director or executive officer of the Company in their capacity as a director or executive officer of the Company or, to the Company’s Knowledge, any of its Subsidiaries or any other actions of the Company or, to the Company’s Knowledge, any of its Subsidiaries or their respective Representatives relating to any possible violation of any Law or Order.

(c) Neither the Company nor any of its Subsidiaries is a party to any joint venture, partnership agreement or any similar Contract (including any Contract relating to any transaction, arrangement or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand (such as any arrangement described in Section 303(a)(4) of Regulation S-K under the Exchange Act)) where the purpose or effect of such Contract is to avoid disclosure of any material transaction involving the Company or any its Subsidiaries in the Company’s consolidated financial statements.

(d) Section 3.7(d) of the Company Disclosure Letter lists, and the Company has delivered to Parent, accurate and complete copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K under the Exchange Act) effected by the Company since December 31, 2005.

3.8 No Undisclosed Liabilities . Neither the Company nor any of its Subsidiaries has any liabilities or obligations, including, without limitation, pursuant to any pension or other employee benefit plan of the Company or its Subsidiaries, of a nature required to be reflected or

 

28

reserved against on a balance sheet prepared in accordance with GAAP, other than (a) liabilities reflected or otherwise reserved against in the Audited Company Balance Sheet, (b) liabilities directly arising under this Agreement or incurred directly in connection with the transactions expressly contemplated by this Agreement, (c) liabilities incurred in the ordinary course of business consistent with past practice that are not individually or in the aggregate material in amount or significance, and (d) liabilities that would not have a Company Material Adverse Effect. Except as set forth on Section 3.8 of the Company Disclosure Letter, the Company and its Subsidiaries are under no requirement to maintain any level of cash or assets in any jurisdiction.

3.9 Absence of Certain Changes .

(a) Since December 31, 2008 through the date hereof, except for actions expressly contemplated by this Agreement, the business of the Company and its Subsidiaries has been conducted, in all material respects, in the ordinary course consistent with past practice, and there has not been or occurred any Company Material Adverse Effect.

(b) Since December 31, 2008 through the date hereof, the Company has not taken any action, or agreed to take any action, that would be prohibited by Section 5.2 if proposed to be taken after the date hereof.

3.10 Compliance with Laws and Orders . The Company and each of its Subsidiaries is in compliance with all Laws and Orders that are applicable to the Company and its Subsidiaries or to the conduct of the business or operations of the Company and/or its Subsidiaries, except for such violations or noncompliance that would not have a Company Material Adverse Effect. No representation or warranty is made in this Section 3.10 with respect to (a) compliance with the Exchange Act, which is exclusively addressed by Section 3.6 and Section 3.7, (b) compliance with applicable Tax laws, which is exclusively addressed by Section 3.14, (c) compliance with ERISA and other applicable Laws and Orders relating to employee benefits, which is exclusively addressed by Section 3.15, (d) compliance with labor law matters, which is exclusively addressed by Section 3.16, or (e) compliance with Environmental Laws, which is exclusively addressed by Section 3.18.

3.11 Permits . The Company and each of its Subsidiaries hold all permits, licenses, variances, authorizations, exemptions, Orders, registrations, and approvals of all Governmental Authorities, except for such permits, licenses, variances, authorizations, exemptions, Orders, registrations, and approvals, the failure of which to hold would have a Company Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms of all permits from Governmental Authorities required to conduct their businesses as currently conducted, and no suspension or cancellation of any such permits is pending or, to the Knowledge of the Company, threatened, except for such noncompliance, suspensions or cancellations that would not have a Company Material Adverse Effect.

 

29

3.12 Litigation; Orders; Regulatory Agreements .

(a) As of the date of this Agreement, there are no Legal Proceedings pending (in which notice or service of process has been received by an employee of the Company) or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries.

(b) Neither the Company nor any of its Subsidiaries is subject to any legal Order.

3.13 Material Contracts .

(a) For all purposes of and under this Agreement, a “Material Contract” shall mean any of the following in which there is a current obligation, right, or liability of the Company or any of its Subsidiaries:

(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange Act, other than those agreements and arrangements described in Item 601(b)(10)(iii)) with respect to the Company and its Subsidiaries, taken as whole;

(ii) any employment or consulting Contract (in each case, under which the Company has continuing obligations as of the date hereof) with any current or former executive officer or other employee of the Company or its Subsidiaries or member of the Company Board providing for an annual base salary in excess of $150,000;

(iii) any form commission or sales plan;

(iv) any material Contract with any of the Major Customers (the “Material Customer Agreements”);

(v) any Contract containing any covenant (A) limiting the right of the Company or any of its Subsidiaries to engage in any line of business or to compete with any Person in any line of business, or (B) prohibiting the Company or any of its Subsidiaries from engaging in business with any Person (including non solicitations of employees) or levying a fine, charge or other payment for doing so, in each case other than any such Contracts that may be cancelled without material liability to the Company or its Subsidiaries upon notice of ninety (90) days or less;

(vi) any Contract (A) relating to the disposition or acquisition by the Company or any of its Subsidiaries of a material amount of assets or any interest in any business enterprise, or (B) pursuant to which the Company or any of its Subsidiaries will acquire any material ownership interest in any other Person or other business enterprise other than the Company’s Subsidiaries;

(vii) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money or extension of credit by the Company (other than a loan by the Company to any of its Subsidiaries), in each case in excess of $250,000, other than (A) accounts receivables and payables, and (B) loans to direct or indirect wholly-owned Subsidiaries, in each case in the ordinary course of business consistent with past practice;

 

30

(viii) any Lease set forth in Section 3.17 of the Company Disclosure Letter;

(ix) other than standard customer contracts previously provided to Parent or the Material Customer Agreements, any agreement that provides unlimited liability or unlimited indemnification (other than for claims relating to intellectual property infringement, violation of nondisclosure or non-use provisions, personal injury, death or damage to property) relating to the performance of the Company’s or any Subsidiary’s products or services or extraordinary performance guaranty to any Person;

(x) any agreement of the Company or any of its Subsidiaries relating to capital expenditures, or open purchase orders, involving future payments in excess of $150,000 individually or in the aggregate;

(xi) any dealer, distribution, joint marketing (including any pilot program), development, content provider, destination site or merchant agreement, joint venture, partnership, strategic alliance, or agreement of the Company or any of its Subsidiaries involving the sharing of profits, losses, costs or liabilities, with any Person or any development, original equipment manufacturer, value added reseller, remarketer or other agreement for distribution, data-sharing, marketing, resale, distribution or similar arrangement relating to any product or service of the Company or any of its Subsidiaries that involved payments by the Company and its Subsidiaries of $250,000 or more in the twelve (12) month period ended December 31, 2008;

(xii) any material commitment to any customer of the Company or any of its Subsidiaries or other Person to support any customized product or service of the Company or any of its Subsidiaries and compensation to the Company therefor is below market rate;

(xiii) any Material Customer Agreement pursuant to which the Company or any of its Subsidiaries agreed to provide “most favored nation” pricing or other terms and conditions to any Person with respect to the sale, distribution, license or support of any products or services; or

(xiv) any agreement, the termination or loss of which would result in a Company Material Adverse Effect.

(b) Section 3.13(b) of the Company Disclosure Letter contains a complete and accurate list of all Material Contracts to or by which the Company or any of its Subsidiaries is a party or is bound.

(c) Each Material Contract is valid and binding on the Company (and/or each such Subsidiary of the Company party thereto) and is in full force and effect, and neither the Company nor any of its Subsidiaries party thereto, nor to the Knowledge of the Company, any other party thereto, is in breach of, or default under, any such Material Contract, and no event has occurred that with notice or lapse of time or both would constitute a breach or default under any Material Contract by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other party thereto, except for such failures to be in full force and effect and such breaches and defaults that would not have a Company Material Adverse Effect.

 

31

3.14 Taxes .

(a) All material Tax Returns required by applicable Law or Order to be filed by or on behalf of the Company or any of its Subsidiaries have been filed in accordance with all applicable Law or Order, and all such Tax Returns are true, correct and complete in all material respects. Except for Tax Returns for the most recent Tax year, neither the Company nor any of its Subsidiaries is currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where the Company and each of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no agreements in effect to extend the period of limitations for the assessment or collection of any material Tax for which the Company or any of its Subsidiaries may be liable.

(b) The Company and each of its Subsidiaries has paid or has withheld and remitted to the appropriate Governmental Authority all material Taxes due and payable or has established reserves for Taxes in accordance with GAAP. The Company has made available to Parent complete and accurate copies of all material Tax Returns filed by or on behalf of the Company or any of its Subsidiaries for all taxable years commencing after 2002. The Company and each of its Subsidiaries have 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, stockholder, or other third party.

(c) There are no liens on the assets of the Company or any of its Subsidiaries relating or attributable to material Taxes, other than Permitted Liens.

(d) As of the date of this Agreement, there are no Legal Proceedings now pending, or to the Knowledge of the Company, threatened against or with respect to the Company or any of its Subsidiaries with respect to any material Taxes. Neither the Company nor any of its Subsidiaries has received from any Governmental Authority any (i) notice indicating an intent to open an audit or other review related to Tax matters, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment with respect to Taxes of the Company and any of its Subsidiaries. No proceedings are pending or being conducted with respect to any Tax matter and no power of attorney (other than powers of attorney authorizing employees of the Company to act on behalf of the Company) with respect to any Taxes of the Company or any of its Subsidiaries has been filed or executed with any Governmental Authority. Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency nor has any request been made in writing for any such extension or waiver.

(e) The Company and each of its Subsidiaries (i) has not agreed, nor required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise; (ii) has not made an election, nor required to make an election, to treat any of its assets as owned by another Person for Tax purposes or as a tax-exempt bond financed

 

32

property or tax-exempt use property within the meaning of Section 168 of the Code; (iii) has not acquired nor owns any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103(a) of the Code; and (v) has not made any of the foregoing elections nor is required to apply any of the foregoing rules under any comparable state or local Tax provision.

(f) Each of the Company and its Subsidiaries has disclosed on its Tax Returns for all taxable years for which the applicable statute of limitations has not expired all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code or any similar Laws or Orders.

(g) Neither the Company nor any of its Subsidiaries has ever been a member of an affiliated group filing a consolidated, combined or unitary Tax Return (other than a group the common parent of which is the Company) for federal, state, local or foreign Tax purposes. Neither the Company nor any of its Subsidiaries is a party to any Tax allocation, Tax sharing or similar agreement (including indemnity agreements other than employee tax equalization agreements and customary agreements with customers, vendors, lessors and other third parties entered into in the ordinary course of business).

(h) No written claim has been made during the past five (5) years by any appropriate Governmental Authority in a jurisdiction where neither the Company nor any of its Subsidiaries filed Tax Returns that it is or may be subject to any taxation by that jurisdiction.

(i) Neither the Company nor any of its Subsidiaries has participated in or entered into (i) any transaction identified as a “listed transaction” for purposes of Treasury Regulations Sections 1.6011-4(b)(2) or 301.6111-2(b)(2), or (ii) any confidential corporate tax shelter within the meaning of Code Section 6111(d) and Treasury Regulation Section 301.6111-2, as in effect prior to the American Job Creation Act of 2004.

(j) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any change in method of accounting for a taxable period ending on or prior to the Closing Date.

(k) The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code and no amount of the consideration paid to shareholders will be required to be deducted or withheld pursuant to Section 1445(a) of the Code in connection with the Merger.

(l) There is no contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party, including the provisions of this Agreement, covering any employee, consultant or director of the Company or any of its Subsidiaries, which, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 404 or 162(m) of the Code. Except as set forth on Section 3.14(l) of the Company Disclosure Letter, the Company is not party to any contract, agreement or arrangement that is a “nonqualified deferred compensation plan” subject to

 

33

Section 409A of the Code. Each such nonqualified deferred compensation plan has been operated since January 1, 2005 in good faith compliance with Section 409A of the Code and all applicable guidance issued thereunder.

(m) To the Knowledge of the Company, as of the date of this Agreement, the Company has not experienced an “ownership change” as that term is defined in Section 382(g) of the Code.

(n) Section 3.14(n) of the Company Disclosure Letter sets forth the United States federal income Tax classification of each foreign Subsidiary and, if applicable, the date on which IRS Form 8832 was filed with respect to such foreign Subsidiary.

(o) No foreign Subsidiary of the Company is a “passive foreign investment company,” as defined in Section 1297 of the Code.

(p) Except as set forth in Section 3.14(p) of the Company Disclosure Letter, each foreign Subsidiary is registered for VAT in its jurisdiction of incorporation (except those foreign Subsidiaries of the Company incorporated in jurisdictions where VAT is not imposed) and each has substantially complied with all statutory provisions, rules, regulations, orders and directions in respect thereof, in all material respects, and has never been subject to any material interest, forfeiture, surcharge or penalty and none is a member of a group or consolidation with any other company for the purposes of VAT.

(q) Neither the Company nor any of its Subsidiaries has been a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code in the two (2) years prior to the date of this Agreement.

3.15 Employee Benefits .

(a) Sections 3.15(a)(i) and 3.15(a)(ii) of the Company Disclosure Letter, respectively, set forth a complete and accurate list of (i) all material “employee benefit plans” (as defined in Section 3(3) of ERISA), whether or not subject to ERISA and (ii) to the extent material, all other employment, independent contractor and consulting agreements, as well as all material bonus, stock option, stock purchase or other equity-based, benefit, incentive compensation, profit sharing, savings, retirement (including early retirement and supplemental retirement), disability, insurance, vacation, incentive, deferred compensation, supplemental retirement, termination, retention, change of control and other similar fringe, welfare or other employee benefit plans, programs, agreements, contracts, policies or arrangements (whether or not in writing) maintained or contributed to for the benefit of any current employee, independent contractor, consultant or director of the Company, any of its Subsidiaries or any other trade or business (whether or not incorporated) which would be treated as a single employer with the Company or any of its Subsidiaries under Section 414 of the Code (an “ERISA Affiliate”), or with respect to which the Company or any of its Subsidiaries has any material liability (together the “Employee Plans”). With respect to each Employee Plan other than any International Employee Plan, the Company has made available to Parent complete and accurate copies of, to the extent applicable, (A) the most recent annual report on Form 5500 required to have been filed

 

34

for each Employee Plan, including any required schedules thereto; (B) the most recent determination letter, if any, from the IRS for any Employee Plan that is intended to qualify under Section 401(a) of the Code; (C) the plan documents and summary plan descriptions; (D) any related trust agreements, insurance contracts, insurance policies or other documents of any funding arrangements; (E) any notices to or from the IRS or any office or Representative of the DOL or any similar Governmental Authority relating to any compliance issues in respect of any such Employee Plan; (F) with respect to each Employee Plan that is maintained in any non-U.S. jurisdiction (the “International Employee Plans”), to the extent applicable, the most recent annual report or similar compliance documents required to be filed with any Governmental Authority with respect to such plan; and (G) all material amendments, modifications or supplements to any such document.

(b) Neither the Company, any of the Company’s Subsidiaries nor any of their respective ERISA Affiliates has ever maintained, participated in or contributed to (or been obligated to contribute to) (i) an Employee Plan which was ever subject to Section 412 of the Code or Title IV of ERISA, (ii) a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA), (iii) a “multiple employer plan” as defined in ERISA or the Code, or (iv) a “funded welfare plan” within the meaning of Section 419 of the Code. No Employee Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code.

(c) Except as would not cause a Company Material Adverse Effect, each Employee Plan has been maintained, operated and administered in compliance in all material respects with its terms and with all applicable Law and Orders. To the extent applicable, each International Employee Plan has been approved by the relevant taxation and other Governmental Authorities so as to enable: (i) the Company or any of its Subsidiaries and the participants and beneficiaries under the relevant