\n Section 6.11 Tax Treatment ……………………………………………………………. 48
\n Section 6.12 Conveyance Taxes …………………………………………………………. 48
\n Section 6.13 Exemption from Liability Under Section 16(b) ………………………………… 48
\n Section 6.14 Affiliate Legends ………………………………………………………… 48
\n Section 6.15 Service Credit …………………………………………………………… 48
\n Section 6.16 Acquisitions of Company Stock ……………………………………………… 49
\n Section 6.17 Parent Board of Directors …………………………………………………. 49<\/p>\nARTICLE 7 CONDITIONS …………………………………………………………………….. 49
\n Section 7.1 Conditions to Each Party’s Obligation to Effect the Merger ……………………. 49
\n Section 7.2 Conditions to the Parent’s and Merger Sub’s Obligations to Effect the
\n Merger ………………………………………………………………….. 50
\n Section 7.3 Conditions to the Company’s Obligations to Effect the Merger ………………….. 51<\/p>\n
ARTICLE 8 TERMINATION ……………………………………………………………………. 51
\n Section 8.1 Termination ……………………………………………………………… 51
\n Section 8.2 Effect of Termination …………………………………………………….. 53
\n Section 8.3 Method of Termination …………………………………………………….. 53<\/p>\n
ARTICLE 9 MISCELLANEOUS ………………………………………………………………….. 53
\n Section 9.1 Fees and Expenses ………………………………………………………… 53
\n Section 9.2 Amendment and Modification ………………………………………………… 54
\n Section 9.3 Non-survival of Representations and Warranties ………………………………. 55
\n Section 9.4 Notices …………………………………………………………………. 55
\n Section 9.5 Counterparts …………………………………………………………….. 56
\n Section 9.6 Entire Agreement; No Third Party Beneficiaries ………………………………. 56
\n Section 9.7 Severability …………………………………………………………….. 56
\n Section 9.8 Governing Law ……………………………………………………………. 56
\n Section 9.9 Enforcement ……………………………………………………………… 56
\n Section 9.10 Extension, Waiver ………………………………………………………… 57
\n Section 9.11 Assignment ………………………………………………………………. 57
\n<\/c><\/s><\/caption>\n<\/table>\n
Table of Contents – iii<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
AGREEMENT AND PLAN OF MERGER, dated as of February 20, 2002 (this
\n“Agreement”), by and among Legato Systems, Inc., a Delaware corporation (the
\n“Parent”), Orion Acquisition Sub Corp., a Delaware corporation and a direct
\nwholly-owned subsidiary of the Parent (“Merger Sub”), and OTG Software, Inc., a
\nDelaware corporation (the “Company”). Capitalized terms used and not otherwise
\ndefined herein have the meanings set forth in Article 1.<\/p>\n
WHEREAS, the boards of directors of each of the Parent, Merger Sub and
\nthe Company have determined that it is advisable and in the best interests of
\ntheir respective corporations and stockholders to enter into a business
\ncombination by means of the merger of the Company with and into Merger Sub and
\nhave approved and adopted the Merger, this Agreement and the transactions
\ncontemplated hereby;<\/p>\n
WHEREAS, as a condition and inducement to each party’s entering into
\nthis Agreement, the Company Major Stockholders, concurrently with the execution
\nand delivery of this Agreement, is entering into a Voting Agreement; and<\/p>\n
WHEREAS, for United States federal income tax purposes, it is intended
\nthat the Merger shall qualify as a tax-free reorganization within the meaning of
\nSection 368(a) of the Code and that this Agreement shall be, and hereby is,
\nadopted as a plan of reorganization within the meaning of Section 368(a) of the
\nCode.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the mutual
\nrepresentations, warranties and covenants in this Agreement, the parties hereto,
\nintending to be legally bound, agree as follows:<\/p>\n
ARTICLE 1<\/p>\n
DEFINITIONS AND INTERPRETATION<\/p>\n
Section 1.1 Definitions. For all purposes of this Agreement, except as
\n ———–
\notherwise expressly provided or unless the context clearly requires otherwise:<\/p>\n
“Additional Cash” means the aggregate amount of cash equal to the
\nproduct of the Major Stockholder Number and $2.50.<\/p>\n
“Additional Shares” means the number of shares of Parent Common Stock
\nequal to the Additional Cash divided by $12.55, the last sale price of the
\nParent Common Stock on the date hereof.<\/p>\n
“Affiliate” has the meaning set forth in Rule l2b-2 of the Exchange
\nAct.<\/p>\n
“Affiliate Share Fraction” means the Additional Shares divided by the
\nMajor Affiliate Number.<\/p>\n
“Balance Sheet Date” means December 31, 2001.<\/p>\n
“Benefit Plan” means any material employee benefit fund, plan, program,
\narrangement or contract (including any “pension” plan, fund or program, as
\ndefined in Section 3(2) of ERISA, and any “employee benefit plan,” as defined in
\nSection 3(3) of ERISA and any plan, program, arrangement or contract providing
\nfor severance; medical, dental or vision benefits; life insurance or death
\nbenefits; disability benefits, sick pay or other wage replacement; vacation,
\nholiday or sabbatical; pension or profit-sharing benefits; stock options or
\nother equity compensation; bonus or incentive pay or other material fringe
\nbenefits), whether written or not but does not include any contract, agreement
\nor other arrangement relating to only one employee.<\/p>\n
“Business Day” means any day other than a Saturday, a Sunday or a day
\non which commercial banks in The City of New York are authorized or obligated by
\nlaw, rule or regulation to be closed.<\/p>\n
“Certificate of Merger” means a certificate of merger to be reasonably
\nagreed upon by the Parent, Merger Sub, and the Company and filed with the
\nSecretary of State of the State of Delaware as provided in the DGCL, pursuant to
\nSection 2.2.<\/p>\n
“Change in Company Recommendation” means any action by the Company’s
\nboard of directors, or any committee thereof, with respect to the (i) withdrawal
\nor modification or any proposal to withdraw or modify, or the taking of any
\naction in furtherance of the withdrawal or modification, in a manner adverse to
\nthe Parent or Merger Sub, of the approval or recommendation by such board of
\ndirectors or any such committee of this Agreement or the Merger, (ii) approval
\nor recommendation or a proposal to approve or recommend or take any action in
\nfurtherance of approval or recommendation of, any Competing Transaction or (iii)
\nentering into any agreement with respect to any Competing Transaction.<\/p>\n
“Closing” means the closing referred to in Section 2.6.<\/p>\n
“Closing Date” means the date and time at which the Closing occurs.<\/p>\n
“Code” means the Internal Revenue Code of 1986, as amended, and the
\nrules and regulations promulgated thereunder.<\/p>\n
“Company Agreement” means any contract of the Company or any Company
\nSubsidiary listed on Schedule 4.18.<\/p>\n
“Company Audited Financial Statements” means each of the audited
\nconsolidated financial statements of the Company (including any related notes
\nand schedules) included (or incorporated by reference) in the Company SEC
\nDocuments.<\/p>\n
“Company Balance Sheet” means the most recent consolidated balance
\nsheet dated December 31, 2001 of the Company and its Subsidiaries included in
\nthe Company Unaudited Annual Financial Statements.<\/p>\n
“Company Benefit Plan” means any Benefit Plan maintained sponsored or
\ncontributed to or required to be contributed to by the Company or any Company
\nERISA Affiliate.<\/p>\n
2<\/p>\n
“Company Certificate” means a certificate representing, immediately
\nprior to the Effective Time, one or more shares of Company Common Stock, but not
\ncertificates representing Dissenting Shares.<\/p>\n
“Company Common Stock” means the common stock, par value $0.01 per
\nshare, of the Company.<\/p>\n
“Company Disclosure Letter” means the disclosure letter, dated as of
\nthe date of this Agreement, delivered by the Company to the Parent concurrently
\nwith the execution of this Agreement and forming a part hereof.<\/p>\n
“Company ERISA Affiliate” means the Company, any Company Subsidiary and
\nany other trade or business (whether or not incorporated) that is or was under
\n“common control” with the Company or any Company Subsidiary (within the meaning
\nof ERISA Section 4001) or with respect to which the Company or any Company
\nSubsidiary could otherwise incur liability under Title IV of ERISA.<\/p>\n
“Company ESPP” means the Company’s amended and restated 2000 Employee
\nStock Purchase Plan.<\/p>\n
“Company Financial Advisor” means Goldman, Sachs & Co.<\/p>\n
“Company Financial Statements” means each of (i) the Company Audited
\nFinancial Statements, (ii) the Company Unaudited Interim Financial Statements
\nand (iii) the Company Unaudited Annual Financial Statements.<\/p>\n
“Company Insiders” means those officers and directors of the Company
\nwho are subject to short-swing profits liability provisions of Section 16(a) of
\nthe Exchange Act.<\/p>\n
“Company Intellectual Property” means all Intellectual Property that
\n(a) is owned by the Company or any Company Subsidiary, (b) is licensed to the
\nCompany or any Company Subsidiary, (c) was developed or created by or for the
\nCompany or any Company Subsidiary or (d) is currently used in the Company’s
\nbusiness or the business of any Company Subsidiary.<\/p>\n
“Company Major Stockholders” means the Major Stockholder and the Major
\nStockholder Affiliates.<\/p>\n
“Company Material Adverse Effect” means a Material Adverse Effect with
\nrespect to the Company.<\/p>\n
“Company Option” means an option or warrant to purchase Shares (other
\nthan pursuant to the Company ESPP) which has been granted by the Company and
\nwhich is outstanding at the Effective Time.<\/p>\n
“Company Preferred Stock” means the preferred stock, par value $0.01,
\nof the Company.<\/p>\n
“Company SEC Documents” means each form, report, schedule, statement
\nand other document required to be filed by the Company since March 9, 2000
\nthrough the Closing Date<\/p>\n
3<\/p>\n
under the Exchange Act or the Securities Act or by the rules and regulations of
\nthe NNM, and any amendment to such document filed through the date of this
\nAgreement, whether or not such amendment is required to be so filed.<\/p>\n
“Company Stock Plans” means the Company’s 1998 Stock Incentive Plan,
\n2000 Stock Incentive Plan and the 1994 Stock Plan of Smart Storage, Inc., as
\nended.<\/p>\n
“Company Subsidiary” means each Person that is a Subsidiary of the
\nCompany.<\/p>\n
“Company Unaudited Annual Financial Statements” means the unaudited
\nconsolidated financial statements of the Company as of and through the period
\nended December 31, 2001, which have been made available to the Parent.<\/p>\n
“Company Unaudited Interim Financial Statements” means the unaudited
\ncondensed consolidated interim financial statements of the Company (including
\nany related notes and schedules) included (or incorporated by reference) in the
\nCompany SEC Documents.<\/p>\n
“Company’s knowledge” means the actual knowledge of the directors or
\nofficers of the Company.<\/p>\n
“Competing Transaction” means any of the following (other than the
\nMerger and the other Transactions): (i) any merger, consolidation, share
\nexchange, reorganization, liquidation, dissolution, business combination or
\nother similar transaction involving the Company pursuant to which the
\nstockholders of the Company immediately preceding such transaction hold less
\nthan 50% of the aggregate equity interests in the surviving or resulting entity
\nof such transaction; (ii) any sale, lease, exchange, license, transfer or other
\ndisposition of fifteen percent or more of the consolidated assets (other than
\nsales of inventory and non-exclusive licenses to customers in the ordinary
\ncourse of business consistent with past practices) of the Company and the
\nCompany Subsidiaries, in a single transaction or a series of transactions; (iii)
\nany tender offer or exchange offer for fifteen percent or more of the
\noutstanding voting securities of the Company or the filing of (x) a registration
\nstatement under the Securities Act or (y) a pre-commencement communication under
\nthe Exchange Act in connection therewith; or (iv) any public announcement of a
\nproposal, plan or intention to do any of the foregoing, or any agreement to
\nengage in any of the foregoing.<\/p>\n
“Confidentiality Agreement” means the confidentiality agreement, dated
\nJanuary 10, 2002, between the Company and the Parent and the confidentiality
\nagreement, dated January 24, 2002 between the Company and the Parent.<\/p>\n
“DGCL” means the General Corporation Law of the State of Delaware.<\/p>\n
“Dissenting Shares” means shares of Company Common Stock, if any, held
\nby Persons who have not voted such shares for adoption of this Agreement and
\nwith respect to which such Persons shall have perfected (and not lost or
\nsurrendered) appraisal rights in accordance with the DGCL.<\/p>\n
4<\/p>\n
“Effective Time” means the date and time at which the Certificate of
\nMerger is duly filed with the Secretary of State of the State of Delaware or
\nsuch other date and time as is agreed upon by the parties and specified in the
\nCertificate of Merger.<\/p>\n
“Employment Agreements” means employment and severance agreements and
\narrangements, as amended through the date of this Agreement, with respect to
\nemployees and former employees of the Company or any Company Subsidiary.<\/p>\n
“Environmental Claim” means any claim, action, investigation or notice
\nby any Person or entity alleging potential liability for investigatory, cleanup
\nor governmental response costs, or natural resources or property damages, or
\npersonal injuries, attorney’s fees or penalties relating to (i) the presence, or
\nrelease into the environment, of any Hazardous Materials at any location owned
\nor operated by the Company or any Subsidiary of the Company, now or in the past,
\nor (ii) any violation, or alleged violation, of any Environmental Law.<\/p>\n
“Environmental Law” means each Law relating to pollution, protection or
\npreservation of human health or the environment including ambient air, surface
\nwater, ground water, land surface or subsurface strata, and natural resources,
\nand including each Law relating to emissions, discharges, releases or threatened
\nreleases of Hazardous Materials, or otherwise relating to the generation,
\nstorage, containment (whether above ground or underground), disposal, transport
\nor handling of Hazardous Materials, or the preservation of the environment or
\nmitigation of adverse effects thereon and each Law with regard to record
\nkeeping, notification, disclosure and reporting requirements respecting
\nHazardous Materials.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of 1974.<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934.<\/p>\n
“Exchange Agent” means the bank or trust company designated by the
\nParent, subject to the Company’s reasonable approval, to act as exchange agent
\nand paying agent for the holders of the Shares pursuant to Section 3.3(a).<\/p>\n
“Exchange Ratio” has the meaning ascribed to it in Section 3.1.<\/p>\n
“GAAP” means generally accepted accounting principles in the United
\nStates as in effect from time to time.<\/p>\n
“Governmental Entity” means a court, arbitral tribunal, administrative
\nagency or commission or other governmental or regulatory authority or agency.<\/p>\n
“Hazardous Materials” means pollutants, contaminants, toxic or
\nhazardous substances, materials and wastes, petroleum and petroleum products,
\nasbestos and asbestos-containing materials, polychlorinated biphenyls, radon and
\nlead or lead-based paints and materials.<\/p>\n
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
\n1976.<\/p>\n
5<\/p>\n
“Indemnified Party” means each present and former officer and director
\nof the Company or any Company Subsidiary, and each Person who becomes any of the
\nforegoing prior to the Effective Time.<\/p>\n
“Intellectual Property” means all trademarks and trademark rights,
\ntrade names and trade name rights, service marks and service mark rights,
\nservice names and service name rights, patents and patent rights, utility models
\nand utility model rights, copyrights, mask work rights, brand names, trade
\ndress, product designs, product packaging, business and product names, logos,
\nslogans, rights of publicity, trade secrets, inventions (whether patentable or
\nnot), invention disclosures, improvements, processes, formulae, industrial
\nmodels, processes, designs, specifications, technology, methodologies, computer
\nsoftware (including all source code and object code), firmware, development
\ntools, flow charts, annotations, all Web addresses, sites and domain names, all
\ndata bases and data collections and all rights therein, any other confidential
\nand proprietary right or information, whether or not subject to statutory
\nregistration, and all related technical information, manufacturing, engineering
\nand technical drawings, know-how and all pending applications for and
\nregistrations of patents, utility models, trademarks, service marks and
\ncopyrights, and the right to sue for patent infringement, if any, in connection
\nwith any of the foregoing, and all documents, disks, records, files and other
\nmedia on which any of the foregoing is stored.<\/p>\n
“IRS” means the United States Internal Revenue Service or any
\nsuccessor agency performing similar functions under the Code.<\/p>\n
“Law” means any law, statute, order, decree, consent decree, judgement,
\nrule, regulation, ordinance or other pronouncement having the effect of law
\nwhether in the United States, any foreign country, or any domestic or foreign
\nstate, county, city or other political subdivision or of any Governmental Entity
\napplicable to the parties hereto, this Agreement or the transactions
\ncontemplated hereby.<\/p>\n
“Licenses” means all licenses and agreements pursuant to which a Person
\nor any Subsidiary of that Person has acquired rights in or to any Intellectual
\nProperty, or licenses and agreements pursuant to which a Person or any
\nSubsidiary of that Person has licensed or transferred the right to use any of
\nthe foregoing (including, any covenants not to sue with respect to any
\nIntellectual Property).<\/p>\n
“Lien” means any mortgage, pledge, assessment, security interest,
\nlease, lien, easement, license, covenant, condition, restriction, adverse claim,
\nlevy, charge, option, equity, adverse claim or restriction or other encumbrance
\nof any kind, or any conditional sale contract, title retention contract or other
\ncontract to give any of the foregoing, except for any restrictions on transfer
\ngenerally arising under any applicable federal or state securities Law.<\/p>\n
“Major Affiliate Number” means the number of Shares held by the Major
\nStockholder Affiliates as of the Effective Time.<\/p>\n
“Major Cash Fraction” means an amount expressed in dollars equal to the
\nAdditional Cash divided by the Major Stockholder Number.<\/p>\n
6<\/p>\n
“Major Share Fraction” means the Additional Shares divided by the Major
\nStockholder Number.<\/p>\n
“Major Stockholder” means Richard A. Kay.<\/p>\n
“Major Stockholder Affiliates” means the entities which are parties to
\nthe Voting Agreement.<\/p>\n
“Major Stockholder Number” means the number of Shares held by the
\nMajor Stockholder as of the Effective Time.<\/p>\n
“Material Adverse Effect” means a material adverse effect on or change
\nwith respect to (i) the business, financial condition, assets, operations or
\nresults of operations of a Person and its Subsidiaries, taken as a whole, or
\n(ii) the ability of such Person to timely consummate any of the Transactions;
\nprovided, however, that in no event shall any change or effect that arises out
\nof, results from or relates to the following constitute a Material Adverse
\nEffect: (a) general economic, financial, regulatory or political conditions in
\nthe United States or elsewhere, (b) conditions affecting the computer software
\nindustry generally, (c) the execution and announcement of this Agreement, the
\nperformance of a Person’s obligations hereunder, or the consummation of the
\nTransactions or (d) a decline in the market price of such Person’s securities in
\nthe capital markets.<\/p>\n
“Merger” means the merger of the Company into Merger Sub referred to in
\nSection 2.1.<\/p>\n
“Merger Sub Common Stock” means common stock, par value $0.0001 per
\nshare, of Merger Sub.<\/p>\n
“NNM” means the distinct tier of the Nasdaq Stock Market referred to as
\nthe Nasdaq National Market.<\/p>\n
“Parent Balance Sheet” means the most recent consolidated balance sheet
\ndated December 31, 2001 of the Parent and its Subsidiaries included in the
\nParent Unaudited Annual Financial Statements.<\/p>\n
“Parent Audited Financial Statements” means the audited consolidated
\nfinancial statements of the Parent (including any related notes and schedules)
\nas of and through the period ended December 31, 2000, included (or incorporated
\nby reference) in the Parent SEC Documents.<\/p>\n
“Parent Common Stock” means shares of common stock, par value $0.0001
\nper share, of the Parent, together with an associated Right under the Parent
\nRights Plan.<\/p>\n
“Parent Financial Statements” means each of (i) the Parent Audited
\nFinancial Statements, (ii) the Parent Unaudited Interim Financial Statements and
\n(iii) the Parent Unaudited Annual Financial Statements.<\/p>\n
“Parent Intellectual Property” means all Intellectual Property that (a)
\nis owned by the Parent; (b) is licensed to the Parent or (c) was developed or
\ncreated by or for the Parent.<\/p>\n
7<\/p>\n
“Parent Material Adverse Effect” means a Material Adverse Effect with
\nrespect to the Parent.<\/p>\n
“Parent Option” means an option or warrant to purchase shares of Parent
\nCommon Stock.<\/p>\n
“Parent Preferred Stock” means the preferred stock, par value $0.0001
\nper share, of the Parent.<\/p>\n
“Parent Rights Plan” means the Rights Agreement, dated as of May 23,
\n1997, by and between Parent and Harris Trust and Savings Bank, as amended from
\ntime to time.<\/p>\n
“Parent SEC Documents” means each form, report, schedule, statement and
\nother document required to be filed by the Parent since December 31, 2000
\nthrough the Closing Date under the Exchange Act or the Securities Act or by the
\nrules and regulations of the NNM, and any amendment to such document filed
\nthrough the date of this Agreement, whether or not such amendment was required
\nto be so filed.<\/p>\n
“Parent Stock Price” means the closing price for a share of Parent
\nCommon Stock as quoted on the NNM on the day during which the Effective Time
\noccurs.<\/p>\n
“Parent Subsidiary” means each Person that is a Subsidiary of the
\nParent.<\/p>\n
“Parent Unaudited Annual Financial Statements” means the unaudited
\nconsolidated financial statements of the Parent as of and through the period
\nended December 31, 2001, which have been made available to the Company.<\/p>\n
“Parent Unaudited Interim Financial Statements” means the unaudited
\ncondensed consolidated interim financial statements of the Parent (including any
\nrelated notes and schedules) included (or incorporated by reference) in the
\nParent SEC Documents.<\/p>\n
“Parent’s knowledge” means the actual knowledge of the directors or
\nofficers of the Parent.<\/p>\n
“Person” means a natural person, partnership (general or limited),
\ncorporation, limited liability company, business trust, joint stock company,
\ntrust, unincorporated association, joint venture, Governmental Entity or other
\nentity or organization.<\/p>\n
“Product” means any product designed, manufactured, shipped, sold,
\nmarketed and\/or distributed by or on behalf of the Company or any Company
\nSubsidiary, including any product sold in the United States by the Company or
\nany Company Subsidiary as the distributor, agent, or pursuant to any other
\ncontractual relationship with a non-U.S. manufacturer.<\/p>\n
“Proxy Statement\/Prospectus” means the joint proxy statement to be
\nfiled by the Company and the Parent with the SEC pursuant to Section 6.9,
\ntogether with all amendments and supplements thereto and including the annexes
\nthereto.<\/p>\n
“Purchase Rights” means rights to purchase shares of Company Common
\nStock under the Company ESPP.<\/p>\n
8<\/p>\n
“Registration Statement” means the registration statement on Form S-4
\nor other appropriate registration form to be filed with the SEC by the Parent in
\nconnection with the offer and issuance of Parent Common Stock in or as a result
\nof the Merger.<\/p>\n
“Right” means the preferred share purchase right as such term is
\ndefined in the Parent Rights Plan.<\/p>\n
“SEC” means the United States Securities and Exchange Commission.<\/p>\n
“Securities Act” means the Securities Act of 1933.<\/p>\n
“Share” means a share of Company Common Stock.<\/p>\n
“Subsidiary” means, with respect to any Person, any corporation or
\nother organization, whether incorporated or unincorporated, of which (a) at
\nleast a majority of the securities or other interests having by their terms
\nordinary voting power to elect a majority of the board of directors or others
\nperforming similar functions with respect to such corporation or other
\norganization is, directly or indirectly, owned or controlled by such Person or
\nby any one or more of its Subsidiaries, or (b) such Person or any other
\nSubsidiary of such Person is a general partner (excluding any such partnership
\nwhere such Person or any Subsidiary of such Person does not have a majority of
\nthe voting interest in such partnership).<\/p>\n
“Superior Proposal” means an unsolicited bona fide written offer to
\nconsummate a Competing Transaction (but changing the fifteen percent amount in
\nclauses (ii) and (iii) of the definition of Competing Transaction to fifty
\npercent) not resulting from, arising out of or otherwise by virtue of any breach
\nof Section 6.5(a), and with respect to which the board of directors of the
\nCompany determines in good faith (a) has a reasonable likelihood of closing on
\nterms which the board of directors of the Company determines in good faith
\n(after consultation with a financial advisor of nationally recognized reputation
\nregarding the consideration to be received by the holders of the Shares in the
\nCompeting Transaction from a financial point of view) would, if consummated,
\nresult in a transaction more favorable to the Company’s stockholders than the
\nMerger, and (b) is capable of being, and likely to be, funded on the proposed
\nterms, including committed financing, to the extent required.<\/p>\n
“Surviving Corporation” has the meaning ascribed to it in Section 2.1.<\/p>\n
“Tax Return” means any return, statement, report or form (including,
\nany estimated tax report or return, withholding tax report or return and
\ninformation report or return) required to be filed with respect to any Taxes.<\/p>\n
“Tax” or “Taxes” means (i) any and all taxes, fees, levies, tariffs,
\nand imposts in the nature of a tax (together with any and all interest,
\npenalties, additions to tax and additional amounts imposed with respect thereto)
\nimposed by any Governmental Entity or taxing authority, including, without
\nlimitation, income, franchise, windfall or other profits, gross receipts,
\nproperty, sales, use, capital stock, payroll, employment, social security,
\nworkers’ compensation, unemployment compensation or net worth taxes; taxes or
\nother charges in the nature of excise, withholding, ad valorem, stamp, transfer,
\nvalue-added or gains taxes; license, registration and documentation fees; and
\ncustoms duties, tariffs and similar charges; (ii) any liability for the<\/p>\n
9<\/p>\n
payment of any amounts of the type described in (i) as a result of being a
\nmember of an affiliated, combined, consolidated, unitary or aggregate group for
\nany taxable period; and (iii) any liability for the payment of amounts of the
\ntype described in (i) or (ii) as a result of being a transferee of, or a
\nsuccessor in interest to, any Person or as a result of an express or implied
\nobligation to indemnify any person.<\/p>\n
“Termination Fee” means $13 million, less any amounts previously paid
\npursuant to Section 9.1(b).<\/p>\n
“Transactions” means the transactions provided for or contemplated by
\nthis Agreement and the Voting Agreement, including the Merger.<\/p>\n
“Voting Agreement” means the agreement, dated as of the date of this
\nAgreement, between the Company Major Stockholders and the Parent.<\/p>\n
“Voting Debt” means indebtedness having general voting rights and debt
\nconvertible into securities having such rights.<\/p>\n
“WARN Act” means of the Worker Adjustment and Retaining Notification
\nAct of 1988, as amended.<\/p>\n
Section 1.2 Interpretation.
\n ————–<\/p>\n
(a) When a reference is made in this Agreement to a section or
\narticle, such reference shall be to a section or article of this Agreement
\nunless otherwise clearly indicated to the contrary.<\/p>\n
(b) Whenever the words “include,” “includes” or “including” are used
\nin this Agreement they shall be deemed to be followed by the words “without
\nlimitation.”<\/p>\n
(c) The words “hereof,” “herein” and “herewith” and words of
\nsimilar import shall, unless otherwise stated, be construed to refer to this
\nAgreement as a whole and not to any particular provision of this Agreement, and
\narticle, section, paragraph, exhibit and schedule references are to the
\narticles, sections, paragraphs, exhibits and schedules of this Agreement unless
\notherwise specified.<\/p>\n
(d) The plural of any defined term shall have a meaning correlative
\nto such defined term, and words denoting any gender shall include all genders
\nand the neuter. Where a word or phrase is defined herein, each of its other
\ngrammatical forms shall have a corresponding meaning.<\/p>\n
(e) A reference to any party to this Agreement or any other agreement
\nor document shall include such party’s successors and permitted assigns.<\/p>\n
(f) A reference to any legislation or to any provision of any
\nlegislation shall include any modification, amendment or re-enactment thereof,
\nany legislative provision substituted therefor and all rules, regulations and
\nstatutory instruments issued under or pursuant to such legislation.<\/p>\n
10<\/p>\n
(g) The parties have participated jointly in the negotiation and drafting
\nof this Agreement. In the event an ambiguity or question of intent or
\ninterpretation arises, this Agreement shall be construed as if drafted jointly
\nby the parties, and no presumption or burden of proof shall arise favoring or
\ndisfavoring any party by virtue of the authorship of any provisions of this
\nAgreement.<\/p>\n
(h) No prior draft of this Agreement shall be used in the interpretation
\nor construction of this Agreement.<\/p>\n
ARTICLE 2<\/p>\n
THE MERGER<\/p>\n
Section 2.1 The Merger. Subject to the satisfaction or waiver of all of
\n ———-
\nthe conditions set forth in this Agreement and in accordance with the DGCL, at
\nthe Effective Time, the Company shall merge with and into Merger Sub. Following
\nthe Effective Time, the separate corporate existence of the Company shall cease
\nand Merger Sub shall continue as the surviving corporation (sometimes referred
\nto as the “Surviving Corporation”) in the Merger as a wholly-owned subsidiary of
\nthe Parent.<\/p>\n
Section 2.2 Effective Time. Subject to the provisions of this Agreement,
\n ————–
\nat the Closing, the parties shall cause the Merger to be consummated by filing
\nwith the Secretary of State of the State of Delaware the Certificate of Merger
\nand shall make all other filings or recordings required under the DGCL. The
\nMerger shall become effective at the Effective Time.<\/p>\n
Section 2.3 Effects of the Merger. The Merger shall have the effects set
\n ———————
\nforth in Section 259 of the DGCL. Without limiting the generality of the
\nforegoing, and subject thereto, at the Effective Time, all of the property,
\nrights, privileges, powers and franchises of each of the Company and Merger Sub
\nshall vest in the Surviving Corporation, and all debts, liability and duties of
\neach of the Company and Merger Sub shall become the debts, liabilities and
\nduties of the Surviving Corporation.<\/p>\n
Section 2.4 Certificate of Incorporation and Bylaws of the Surviving
\n —————————-
\nCorporation. At the Effective Time, the certificate of incorporation of Merger
\nSub as in effect immediately prior to the Effective Time shall be the
\ncertificate of incorporation of the Surviving Corporation, except that the name
\nof the corporation shall be OTG Software, Inc., until thereafter amended in
\naccordance with applicable law. At the Effective Time, the bylaws of Merger Sub,
\nas in effect immediately prior to the Effective Time shall be the bylaws of the
\nSurviving Corporation, except that the name of the corporation shall be OTG
\nSoftware, Inc., until thereafter amended in accordance with applicable law.<\/p>\n
Section 2.5 Directors and Officers of the Surviving Corporation. At the
\n —————————————————
\nEffective Time, the directors of Merger Sub immediately prior to the Effective
\nTime shall be the directors of the Surviving Corporation until their successors
\nare elected or appointed and qualified or until their earlier death, resignation
\nor removal in accordance with the certificate of incorporation and the bylaws of
\nthe Surviving Corporation. At the Effective Time, the officers of Mereger Sub<\/p>\n
11<\/p>\n
immediately prior to the Effective Time shall be the officers of the Surviving
\nCorporation until their earlier death, resignation or removal in accordance with
\nthe certificate of incorporation and the bylaws of the Surviving Corporation.<\/p>\n
Section 2.6 Closing. The closing (“Closing”) of the Merger shall take
\n ——
\nplace at 10:00 a.m. (local time) on a date to be agreed upon by the parties,
\nand if such date is not agreed upon by the parties, the Closing shall occur on
\nthe second Business Day after satisfaction or waiver of all of the conditions
\nset forth in Article 7, at the offices of Brobeck, Phleger & Harrison, LLP, One
\nMarket, Spear Street Tower, San Francisco, CA 94105, or at such other place as
\nagreed upon by the parties.<\/p>\n
ARTICLE 3<\/p>\n
EFFECTS OF THE MERGER ON
\n CAPITAL STOCK; EXCHANGE OF CERTIFICATES<\/p>\n
Section 3.1 Effect on Company Capital Stock. As of the Effective Time, by
\n ——————————
\nvirtue of the Merger and without any action on the part of the holders of any
\nshares of Company Common Stock, each issued and outstanding share of Company
\nCommon Stock (X) (other than any shares of Company Common Stock held by the
\nMajor Stockholder and the Major Stockholder Affiliates, any shares of Company
\nCommon Stock to be cancelled pursuant to Section 3.2 and Dissenting Shares)
\nshall be converted into the right to receive (a) 0.6876 (the “Exchange Ratio”)
\nof a fully paid and nonassessable share of Parent Common Stock (the “Stock
\nMerger Consideration”) and (b) an amount in cash equal to $2.50 per share
\nwithout interest, less any required withholding tax (the “Cash Merger
\nConsideration”); (Y) held by the Major Stockholder Affiliates shall be converted
\ninto the right to receive (a) the Exchange Ratio fully paid and nonassessable
\nshares of Parent Common Stock, as Stock Merger Consideration, and (b) the
\nAffiliate Share Fraction fully paid and nonassessable shares of Parent Common
\nStock in lieu of the Cash Merger Consideration; (Z) held by the Major
\nStockholder shall be converted into the right to receive (a) the Exchange Ratio
\n(less the Major Share Fraction) fully paid and nonassessable shares of Parent
\nCommon Stock, (b) the Cash Merger Consideration and (c) the Major Cash Fraction.
\nAs of the Effective Time, all such shares of Company Common Stock shall no
\nlonger be outstanding and shall automatically be cancelled and retired and shall
\ncease to exist. As of the Effective Time, each Company Certificate, without any
\naction on the part of the Parent, the Company or the holder of such share of
\nCompany Common Stock, shall be deemed to represent the right to receive the
\nmerger consideration as provided by the second preceding sentence. Each holder
\nof a Company Certificate shall cease to have any rights with respect thereto,
\nexcept the right to receive, upon the surrender of any such Company
\nCertificates, certificates representing the shares of Parent Common Stock to be
\nissued or paid in consideration therefor upon surrender of such Company
\nCertificate in accordance with Section 3.3 and cash in lieu of fractional
\ninterests pursuant to Section 3.4.<\/p>\n
Section 3.2 Cancellation of Treasury Stock and Parent-Owned Stock. Each
\n —————————————————-
\nshare of Company Common Stock owned by the Company as treasury stock, any
\nCompany Subsidiary, the Parent, Merger Sub or any other wholly-owned Subsidiary
\nof Parent (other than shares in trust accounts, managed accounts, custodial
\naccounts and the like that are beneficially<\/p>\n
12<\/p>\n
owned by third parties) shall be cancelled and retired and shall cease to exist,
\nand no consideration shall be delivered in exchange therefor.<\/p>\n
Section 3.3 Exchange of Company Certificates.
\n ——————————–<\/p>\n
(a) As soon as practicable, the Parent shall designate the Exchange Agent
\nto act as agent for the holders of Shares to receive in trust the shares of
\nParent Common Stock, funds to be paid for fractional shares and funds to pay the
\nCash Merger Consideration, to which holders of the Shares shall become entitled
\npursuant to this Article 3. From time to time after the Effective Time, the
\nParent shall deposit, or cause to be deposited, with the Exchange Agent for the
\nbenefit of holders of Shares the aggregate consideration to which such holders
\nshall be entitled at the Effective Time pursuant to Section 3.1.<\/p>\n
(b) As soon as reasonably practicable after the Effective Time, the Parent
\nshall cause the Exchange Agent to mail to each holder of record of one or more
\nCompany Certificates, (i) a letter of transmittal (which shall specify that
\ndelivery shall be effected, and risk of loss and title to the Company
\nCertificates shall pass, only upon receipt of the Company Certificates by the
\nExchange Agent and shall be in such form and have such other provisions not
\ninconsistent with this Agreement as the Parent may reasonably specify) and (ii)
\ninstructions for effecting the surrender of Company Certificates in exchange for
\ncertificates representing shares of Parent Common Stock together with any
\ndividends and other distributions with respect thereto, any cash in lieu of
\nfractional shares and the Cash Merger Consideration. Upon surrender of a Company
\nCertificate for cancellation to the Exchange Agent, together with such letter of
\ntransmittal, duly executed and completed in accordance with the instructions
\nthereto, and such other documents as may be reasonably required by the Exchange
\nAgent, the holder of such Company Certificate shall be entitled to receive in
\nexchange therefor (x) a certificate representing that number of whole shares of
\nParent Common Stock (which shall be credited in street name through Depository
\nTrust Company if delivered in street name unless a physical certificate is
\nspecifically requested or is otherwise required by applicable Law) and payment
\nof cash in lieu of fractional shares which such holder has the right to receive
\npursuant to this Article 3 and (y) cash in an amount equal to the product of (I)
\nthe number of shares of Company Common Stock formerly represented by such
\nCompany Certificate and (II) the Cash Merger Consideration, and the Company
\nCertificate so surrendered shall be cancelled. If certificates representing
\nshares of Parent Common Stock are to be registered in the name of a Person, cash
\nin lieu of fractional shares is to be paid or the Cash Merger Consideration is
\nto be paid to a Person other than the Person in whose name the surrendered
\nCompany Certificate is registered, it shall be a condition to the issuance of
\nsuch certificates representing shares of Parent Common Stock that the Company
\nCertificate so surrendered shall be properly endorsed or shall be otherwise in
\nproper form for transfer and that the Person requesting such payment shall have
\npaid any transfer and other Taxes required by reason of the issuance of
\ncertificates representing shares of Parent Common Stock to a Person other than
\nthe registered holder of the Company Certificate surrendered or shall have
\nestablished to the satisfaction of the Parent that such Tax either has been paid
\nor is not applicable. No interest shall be paid or shall accrue on the cash
\npayable upon the surrender of any Company Certificate.<\/p>\n
13<\/p>\n
(c) At the close of business on the day during which the Effective Time
\noccurs, the stock transfer books of the Company shall be closed, and thereafter
\nthere shall be no further registration of transfers of shares of Company Common
\nStock on the records of the Company.<\/p>\n
(d) No dividends or other distributions with respect to the Parent Common
\nStock with a record date after the Effective Time shall be paid to the holder of
\nany unsurrendered Company Certificate with respect to the shares of Parent
\nCommon Stock represented thereby, no cash payment in lieu of fractional shares
\nshall be paid to any such holder pursuant to Section 3.4 and no Cash Merger
\nConsideration shall be paid to any such holder, until the surrender of such
\nCompany Certificate in accordance with this Article 3. Subject to the effect of
\napplicable escheat or similar laws, following surrender of any such Company
\nCertificate, there shall be paid to the holder thereof, without interest, (i)
\npromptly after the time of such surrender, the amount of any cash payable in
\nlieu of fractional shares of Parent Common Stock to which such holder is
\nentitled pursuant to Section 3.4 and the amount of dividends or other
\ndistributions with a record date after the Effective Time theretofore paid with
\nrespect to such shares of Parent Common Stock, (ii) the Cash Merger
\nConsideration, and (iii) at the appropriate payment date, the amount of
\ndividends or other distributions with a record date after the Effective Time and
\na payment date subsequent to such surrender payable with respect to such shares
\nof Parent Common Stock.<\/p>\n
(e) All shares of Parent Common Stock issued upon the surrender for
\nexchange of Company Certificates in accordance with the terms of this Article 3
\n(including any cash paid pursuant to Section 3.3(d) or 3.4) shall be deemed to
\nhave been issued and paid in full satisfaction of all rights pertaining to the
\nShares formerly represented by such Company Certificates, subject, however, to
\nthe obligation of the Surviving Corporation, if any, to pay any dividends or
\nmake any other distributions with a record date prior to the Effective Time
\nwhich may have been declared or made by the Company on such shares of Company
\nCommon Stock in accordance with the terms of this Agreement and which remain
\nunpaid at the Effective Time. If, after the Effective Time, Company Certificates
\nare presented to the Surviving Corporation or the Exchange Agent for any reason,
\nthey shall be canceled and exchanged as provided in this Article 3, except as
\notherwise provided by Law.<\/p>\n
Section 3.4 No Fractional Shares. No certificates representing fractional
\n ———————
\nshares of Parent Common Stock shall be issued upon the surrender for exchange of
\nCompany Certificates, and such fractional share interests shall not entitle the
\nowner thereof to vote or to any other rights of a stockholder of the Parent.
\nNotwithstanding any other provision of this Agreement, each holder of Shares
\nconverted pursuant to Section 3.1 who would otherwise have been entitled to
\nreceive a fraction of a share of Parent Common Stock (after taking into account
\nall Company Certificates delivered by such holder) shall receive, in lieu
\nthereof, cash (without interest) in an amount equal to the product of (i) such
\nfraction multiplied by (ii) the Parent Stock Price.<\/p>\n
Section 3.5 Investment of Exchange Fund. The Exchange Agent shall invest
\n —————————
\nany cash included in the Exchange Fund, as directed by the Surviving Corporation
\nor Parent, on a daily basis. Any interest and other income resulting from such
\ninvestments shall be payable to the Surviving Corporation or Parent on demand.<\/p>\n
Section 3.6 Termination of Exchange Fund. At any time following twelve
\n ——————————
\nmonths after the Effective Time, the Parent shall be entitled to require the
\nExchange Agent to deliver to<\/p>\n
14<\/p>\n
it any portion of the Exchange Fund which had been made available to the
\nExchange Agent and which has not been disbursed to holders of Company
\nCertificates, and thereafter such holders shall be entitled to look only to the
\nParent (subject to abandoned property, escheat or other similar laws) with
\nrespect to the shares of Parent Common Stock, cash in lieu of fractional
\ninterests in a share of Parent Common Stock or any dividends or distributions
\nwith respect to shares of Parent Common Stock and the Cash Merger Consideration
\npayable upon due surrender of their Company Certificates, without any interest
\nthereon. Notwithstanding the foregoing, none of the Parent, Merger Sub, the
\nSurviving Corporation nor the Exchange Agent shall be liable to any holder of a
\nCompany Certificate for shares of Parent Common Stock, cash in lieu of
\nfractional interests in a share of Parent Common Stock or any dividends or
\ndistributions with respect to shares of Parent Common Stock delivered to a
\npublic official pursuant to any applicable abandoned property, escheat or
\nsimilar law. Any such shares, cash, dividends or distributions in respect of
\nsuch Company Certificate shall, to the extent permitted by applicable law,
\nbecome the property of the Parent, free and clear of all claims or interest of
\nany Person previously entitled thereto.<\/p>\n
Section 3.7 Certain Adjustments. If between the date hereof and the
\n ——————-
\nEffective Time, the outstanding shares of Company Common Stock or Parent Common
\nStock shall be changed into a different number of shares by reason of any
\nreclassification, recapitalization, split-up, combination or exchange of shares,
\nor any dividend payable in stock or other securities shall be declared thereon
\nwith a record date within such period, or if the Rights become exercisable, the
\nExchange Ratio, Affiliate Share Fraction and Major Share Fraction shall be
\nadjusted accordingly to provide to the holders of shares of Company Common Stock
\nthe same economic effect as contemplated by this Agreement prior to such
\nreclassification, recapitalization, split-up, combination, exchange or dividend
\nor issuance of Rights.<\/p>\n
Section 3.8 Company Options.
\n —————-<\/p>\n
(a) As of the Effective Time, each outstanding Company Option shall
\nthereafter entitle the holder thereof to receive, upon the exercise thereof, (i)
\nthat number of shares of Parent Common Stock (rounded down to the nearest whole
\nshare) equal to the product of (A) the number of shares of Company Common Stock
\nsubject to such Company Option immediately prior to the Effective Time and (B)
\nthe Exchange Ratio, and (ii) a cash payment in an amount equal to the product of
\n(A) the number of shares of Company Common Stock subject to such Company Option
\nimmediately prior to the Effective Time and (B) the Cash Merger Consideration
\n(unreduced by any withholding Taxes), at an exercise price per share (rounded up
\nto the nearest whole cent) equal to (y) the exercise price per share of Company
\nCommon Stock subject to such Company Option divided by (z) the Exchange Ratio.<\/p>\n
(b) As of the Effective Time, the Parent shall assume in full each
\nCompany Option, whether vested or unvested, together with all Company Stock
\nPlans. The assumption of a Company Option by the Parent shall not terminate or
\nmodify (except as required hereunder or as provided by the existing terms of the
\nCompany Option, Company Stock Plans or any Employment Agreement) any right of
\nfirst refusal, right of repurchase, vesting schedule or other restriction on
\ntransferability relating to a Company Option or the stock issuable upon the
\nexercise thereof. Continuous employment with the Company shall be credited to an
\noptionee for purposes of determining the number of shares subject to exercise,
\nvesting or repurchase after the Effective<\/p>\n
15<\/p>\n
Time, and the provisions in the applicable Company Stock Plans and stock
\noption agreement evidencing the terms and conditions of any Company Option
\nrelating to the exercisability of any Company Option upon termination of an
\noptionee’s employment or service as a director shall not be deemed triggered
\nuntil such time as such optionee shall be neither an employee or officer nor
\nserving as a director of the Parent or any Subsidiary of the Parent except as or
\nas provided by the existing terms of the Company Option, Company Stock Plans or
\nany Employment Agreement. After such assumption, the Parent shall issue, upon
\nany partial or total exercise of any Company Option, in lieu of shares of
\nCompany Common Stock, the number of shares of Parent Common Stock as described
\nin Section 3.8(a) together with the Cash Merger Consideration. The Parent shall
\nfile with the SEC, as soon as reasonably practicable following the Effective
\nTime, a registration statement on Form S-8 under the Securities Act, covering,
\nto the extent permissible, the shares of Parent Common Stock to be issued upon
\nthe exercise of Company Options assumed pursuant to this Section 3.8(b). Prior
\nto the Effective Time, the Company shall make such amendments, if any, to the
\nCompany Stock Plans as shall be necessary to permit the assumption contemplated
\nby this Section 3.8(b).<\/p>\n
(c) Except provided by Section 3.8(a) or as may be otherwise agreed to by
\nthe Parent and the Company, all stock option plans established by the Company or
\nany Company Subsidiary shall terminate as of the Effective Time and the
\nprovisions in any other plan, program or arrangement providing for the issuance
\nor grant of any other interest in respect of the capital stock of the Company or
\nany Company Subsidiary shall be deleted, terminated and of no further force or
\neffect as of the Effective Time.<\/p>\n
(d) If and to the extent necessary or required by the terms of the plans
\ngoverning Company Options or pursuant to the terms of any Company Option granted
\nthereunder, each of the Parent and the Company shall use commercially reasonable
\nefforts to obtain the consent of each holder of outstanding Company Options to
\nthe foregoing treatment of such Company Options.<\/p>\n
(e) The Company shall terminate the Company ESPP in accordance with its
\nterms immediately prior to the Effective Time. Participants in the Company ESPP
\nshall be notified of the cancellation of the Company ESPP and shall have the
\nopportunity to purchase shares of Company Common Stock through the Company ESPP
\nin accordance therewith prior to the Closing.<\/p>\n
Section 3.9 Appraisal Rights. Any Dissenting Shares shall not be
\n —————-
\nconverted into, or be exchangeable for, the right to receive Parent Common Stock
\nand Cash Merger Consideration but shall instead be converted into the right to
\nreceive such consideration as may be determined to be due with respect to such
\nDissenting Shares pursuant to the DGCL unless and until such Dissenting Shares
\nshall cease to be Dissenting Shares under the DGCL. The Company shall give the
\nParent prompt notice of any demand for appraisal of Shares or the existence of
\nany Dissenting Shares (and shall also give the Parent prompt notice of any
\nwithdrawals of such demands for appraisal rights). The Company shall not, except
\nwith the prior written consent of the Parent, enter into negotiations or
\nproceedings or voluntarily make any payments with respect to, or settle or offer
\nto settle, any such demand for appraisal rights. If, after the Effective Time,
\nany Dissenting Shares shall lose their status as Dissenting Shares, the Parent
\nshall issue and deliver, upon surrender by such stockholder of a Company
\nCertificate, the number of shares of<\/p>\n
16<\/p>\n
Parent Common Stock and Cash Merger Consideration to which such stockholder
\nwould otherwise be entitled pursuant to this Article 3 (and cash in lieu of
\nfractional shares pursuant to Section 3.4).<\/p>\n
Section 3.10 Lost, Stolen or Destroyed Company Certificates. If any
\n ———————————————-
\nCompany Certificates are lost, stolen or destroyed, the Exchange Agent shall
\nissue in exchange for such lost, stolen or destroyed Company Certificates, upon
\nthe making of an affidavit of that fact by the holder thereof, such shares of
\nParent Common Stock (and cash for the Cash Merger Consideration and in lieu of
\nfractional shares) as may be required pursuant to Section 3.1, provided,
\nhowever, that the Parent may, in its discretion and as a condition precedent to
\nthe issuance thereof, require the owner of such lost, stolen or destroyed
\nCompany Certificates to indemnify the Parent against any claim that may be made
\nagainst the Parent, the Surviving Corporation or the Exchange Agent with respect
\nto the Company Certificates alleged to have been lost, stolen or destroyed.<\/p>\n
Section 3.11 Withholding Rights. The Parent or the Surviving
\n ——————
\nCorporation shall be entitled to deduct and withhold, or cause the Exchange
\nAgent to deduct or withhold, from the shares of Parent Common Stock and Cash
\nMerger Consideration otherwise payable pursuant to this Agreement to any former
\nholder of shares of Company Common Stock such amounts as it reasonably
\ndetermines it was required to deduct and withhold with respect to the making of
\nsuch payment under the Code or any provision of state, local or foreign tax law.
\nTo the extent that amounts are so withheld by the Parent or the Surviving
\nCorporation, such withheld amounts shall be treated for all purposes of this
\nAgreement as having been paid to the former holder of such shares of Company
\nCommon Stock in respect of which such deduction and withholding was made by the
\nParent or the Surviving Corporation.<\/p>\n
Section 3.12 Conversion of Merger Sub Capital Stock. As of the
\n ————————————–
\nEffective Time, by virtue of the Merger and without any further action on the
\npart of the holder of shares of Merger Sub Common Stock, each issued and
\noutstanding share of Merger Sub Common Stock shall be converted into and become
\none fully paid and nonassessable share of Common Stock, par value $0.0001 per
\nshare, of the Surviving Corporation.<\/p>\n
Section 3.13 Taking of Necessary Action; Further Action. If, at any
\n ——————————————
\ntime after the Effective Time, any further action is necessary or desirable to
\ncarry out the purposes of this Agreement and to vest the Surviving Corporation
\nwith full right, title and possession to all assets, property, rights,
\nprivileges, powers and franchises of the Company, the officers and directors of
\nthe Surviving Corporation are fully authorized in the name of their corporation
\nor otherwise to take, and will use good faith efforts to take, all such lawful
\nand necessary action, so long as such action is not inconsistent with this
\nAgreement.<\/p>\n
17<\/p>\n
ARTICLE 4<\/p>\n
REPRESENTATIONS AND
\n WARRANTIES OF THE COMPANY<\/p>\n
Except as set forth in the Company Disclosure Letter, the Company
\nrepresents and warrants to the Parent and Merger Sub that all of the statements
\ncontained in this Article 4 are true and correct. The Company Disclosure Letter
\nshall be arranged in paragraphs corresponding to the numbered and lettered
\nparagraphs contained in this Article 4 and the disclosure in any paragraph shall
\nqualify (a) the corresponding paragraph in this Article 4 and (b) the other
\nparagraphs in this Article 4 only to the extent that it is clear from a reading
\nof such disclosure that it also qualifies or applies to such other paragraphs.<\/p>\n
Section 4.1 Organization; Qualification. The Company (a) is a
\n —————————
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the State of Delaware; (b) has all requisite corporate power and authority to
\ncarry on its business as it is now being conducted and to own, lease and operate
\nits properties and assets; and (c) is duly qualified or licensed to do business
\nas a foreign corporation in good standing in every jurisdiction in which such
\nqualification is required, except for such failures to be so qualified or
\nlicensed and in good standing as have not had and would not, individually or in
\nthe aggregate, reasonably be expected to have a Company Material Adverse Effect.
\nThe Company has made available to the Parent complete and correct copies of its
\ncertificate of incorporation and the bylaws, each as presently in effect.<\/p>\n
Section 4.2 Subsidiaries and Affiliates. Section 4.2 of the Company
\n —————————
\nDisclosure Letter sets forth the name, jurisdiction of incorporation and
\nauthorized and outstanding capital of each material Company Subsidiary and the
\njurisdictions in which such Company Subsidiary is qualified to do business, as
\nwell as a list of other Company Subsidiaries. Other than the Company
\nSubsidiaries, and except as set forth in Section 4.2 of the Company Disclosure
\nLetter, the Company does not own, directly or indirectly, any capital stock or
\nother equity securities of any corporation or have any direct or indirect equity
\nor ownership interest in any business or other Person, which equity or ownership
\ninterests and investments in the aggregate exceed $1,000,000. Except for
\ndirector qualifying shares and except as would not have a Company Material
\nAdverse Effect, all the outstanding capital stock of each Company Subsidiary is,
\ndirectly or indirectly, owned (of record and beneficially) by the Company free
\nand clear of any liens, options or encumbrances of any kind, restrictions on
\ntransfers (other than restrictions on transfer arising under applicable
\nsecurities laws), claims or charges of any kind, and is validly issued, fully
\npaid and nonassessable, and there are no outstanding options, rights or
\nagreements of any kind relating to the issuance, sale or transfer of any capital
\nstock or other equity securities of any Company Subsidiary to any Person except
\nto the Company. Each Company Subsidiary (a) is a corporation duly organized,
\nvalidly existing and in good standing under the laws of its state of
\nincorporation; (b) has full corporate power and authority to carry on its
\nbusiness as it is now being conducted and to own, lease and operate its
\nproperties and assets; and (c) is duly qualified or licensed to do business as a
\nforeign corporation in good standing in every jurisdiction in which such
\nqualification is required, except for such failures to be so qualified or
\nlicensed and in good standing as would not, individually or in the aggregate,
\nreasonably be expected to have a Company Material Adverse Effect. The Company
\nhas made available to the<\/p>\n
18<\/p>\n
Parent complete and correct copies of the certificate of incorporation, bylaws
\nor similar organizational documents of each material Company Subsidiary, as
\npresently in effect.<\/p>\n
Section 4.3 Capitalization.
\n ————–<\/p>\n
(a) The authorized capital stock of the Company consists of 65,000,000
\nshares of Company Common Stock and 5,000,000 shares of Company Preferred Stock.
\nAs of February 15, 2002, (i) 33,691,381 shares of Company Common Stock are
\nissued and outstanding and 93,200 shares of Company Common Stock are issued and
\nheld in the treasury of the Company; (ii) no shares of Company Preferred Stock
\nare issued and outstanding and no shares of Company Preferred Stock are issued
\nand held in the treasury of the Company, (iii) 6,723,301 shares of Company
\nCommon Stock are reserved for issuance upon exercise of Company Options issued
\nor issuable under the Company Stock Plans and (iv) 505,413 shares of Company
\nCommon Stock are reserved for issuance pursuant to the Company ESPP. Section
\n4.3(a) of the Company Disclosure Letter lists the holder of each outstanding
\nCompany Option, the number of Shares for which such Company Option is
\nexercisable, the exercise price of such Company Option, the extent to which such
\nCompany Option will vest upon consummation of any of the Transactions and the
\nvesting schedule of such Company Option. All the outstanding shares of the
\nCompany’s capital stock are, and all shares of Company Common Stock which may be
\nissued pursuant to the exercise of outstanding Company Options will be, when
\nissued in accordance with the respective terms of such Company Option, duly
\nauthorized, validly issued, fully paid and nonassessable and not issued in
\nviolation of any preemptive rights. Neither the Company nor any Company
\nSubsidiary has any outstanding Voting Debt. Except as set forth above and except
\nfor the Transactions, as of the date hereof, (x) there are no shares of capital
\nstock of the Company authorized, issued or outstanding; (y) there are no
\nexisting options, warrants, calls, pre-emptive rights, subscriptions or other
\nrights, agreements, arrangements, understandings or commitments of any
\ncharacter, relating to the issued or unissued capital stock of the Company or
\nany Company Subsidiary, obligating the Company or any Company Subsidiary to
\nissue, transfer or sell or cause to be issued, transferred or sold any shares of
\ncapital stock or Voting Debt of, or other equity interest in, the Company or any
\nCompany Subsidiary or securities convertible into or exchangeable for such
\nshares, equity interests or Voting Debt, or obligating the Company or any
\nCompany Subsidiary to grant, extend or enter into any such option, warrant,
\ncall, subscription or other right, agreement, arrangement or commitment; and (z)
\nthere are no outstanding contractual obligations of the Company or any Company
\nSubsidiary to repurchase, redeem or otherwise acquire any shares of Company
\nCommon Stock, or the capital stock of the Company, or any Company Subsidiary or
\nAffiliate of the Company or to provide funds to make any investment (in the form
\nof a loan, capital contribution or otherwise) in any Company Subsidiary or any
\nother entity or Person. Except as set forth on Schedule 4.3, there are no
\nregistration rights, and there is no rights agreement, “poison pill”
\nanti-takeover plan or other agreement or understanding to which the Company or
\nany Company Subsidiary is a party or by which it or they are bound with respect
\nto any class of any equity security of the Company or any the Company
\nSubsidiary.<\/p>\n
(b) There are no voting trusts or other agreements or understandings to
\nwhich the Company or any Company Subsidiary is a party with respect to the
\nvoting of the capital stock of the Company or any Company Subsidiary.<\/p>\n
19<\/p>\n
Section 4.4 Authorization, Validity of Agreement, Company Action. The
\n —————————————————-
\nCompany has full corporate power and authority to execute and deliver this
\nAgreement, to perform its obligations under this Agreement and to consummate the
\nTransactions. The execution and delivery of, and the performance by the Company
\nof its obligations under, this Agreement and the consummation by it of the
\nTransactions, have been duly authorized by the Company’s board of directors and,
\nexcept for obtaining the approval of its stockholders as contemplated by Section
\n4.6, no other corporate action on the part of the Company or its stockholders is
\nnecessary to authorize the execution and delivery by the Company of this
\nAgreement or the consummation by it of the Transactions. This Agreement has been
\nduly executed and delivered by the Company and, assuming due and valid
\nauthorization, execution and delivery thereof by each of the Parent and Merger
\nSub, this Agreement is a valid and binding obligation of the Company,
\nenforceable against the Company in accordance with its terms, subject to
\napplicable laws of bankruptcy, insolvency or similar laws relating to creditors’
\nrights generally and to general principles of equity (whether applied in a
\nproceeding in law or equity).<\/p>\n
Section 4.5 Board Approvals Regarding Transactions. The Company’s board
\n ————————————–
\nof directors, at a meeting duly called and held, has (a) determined that each of
\nthis Agreement and the Merger are fair to, advisable and in the best interests
\nof the Company and the stockholders of the Company, (b) approved the
\nTransactions, including approval of the Company Major Stockholders and the
\nParent executing and delivering, and performing their obligations under, the
\nVoting Agreement, and (c) recommended that the stockholders of the Company adopt
\nthis Agreement, and none of the aforesaid actions by the Company’s board of
\ndirectors has been amended, rescinded or modified. Assuming the accuracy of the
\nrepresentations and warranties of the Parent and Merger Sub in Section 5.4, the
\naction taken by the Company’s board of directors constitutes approval of the
\nMerger and the other Transactions by the Company’s board of directors under the
\nprovisions of Section 203 of the DGCL such that Section 203 of the DGCL does not
\napply to this Agreement or the other Transactions. No other state takeover,
\nanti-takeover, moratorium, fair price, interested stockholder, business
\ncombination or similar statute or rule is applicable to the Merger or the other
\nTransactions.<\/p>\n
Section 4.6 Vote Required. The affirmative vote of the holders of
\n ————-
\ngreater than fifty percent of the outstanding shares of the Company Common Stock
\nis the only vote of the holders of any class or series of the Company’s capital
\nstock necessary to approve the Merger or adopt this Agreement and no other vote
\nof any holders of shares of the Company’s capital stock is necessary to approve
\nany of the Transactions.<\/p>\n
Section 4.7 Consents and Approvals, No Violations. Except for the
\n ————————————-
\nfilings, permits, authorizations, consents and approvals as may be required
\nunder, and other applicable requirements of the Exchange Act, the HSR Act (and
\nsimilar laws of foreign countries), state securities or blue sky laws, the NNM
\nand the filing of the Certificate of Merger, none of the execution or delivery
\nby the Company of, or performance by the Company of its obligations under, this
\nAgreement, the consummation by the Company of the Transactions or compliance by
\nthe Company with any of the provisions of this Agreement will (a) conflict with
\nor result in any breach of any provision of the certificate of incorporation,
\nthe bylaws or similar organizational documents of the Company or any Company
\nSubsidiary, (b) require any filing with, or permit, authorization, consent or
\napproval of, any Governmental Entity, (c) result in a violation or breach of, or
\nconstitute (with or without due notice or the passage of time or both) a default
\n(or give rise<\/p>\n
20<\/p>\n
to any right of termination, amendment, cancellation or acceleration or loss of
\nany rights) under, any of the terms, conditions or provisions of any Company
\nAgreement or (d) violate any order, writ, injunction, decree, statute, rule or
\nregulation applicable to the Company, any Company Subsidiary or any of their
\nproperties or assets, excluding from the foregoing clauses (b) and (c) such
\nfilings, permits, authorizations, consents, approvals, violations, breaches or
\ndefaults which would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect. Section 4.7 of the Company
\nDisclosure Letter sets forth all consents, waivers and approvals under any of
\nthe Company’s or any Company Subsidiary’s agreements, licenses or leases
\nrequired to be obtained in connection with the consummation of the transactions
\ncontemplated by this Agreement, which, if individually or in the aggregate were
\nnot obtained, would result in a material loss of benefits to the Company, the
\nParent or the Surviving Corporation as a result of the Merger.<\/p>\n
Section 4.8 Reports and Financial Statements.
\n ——————————–<\/p>\n
(a) The Company has timely filed the Company SEC Documents with the SEC.
\nAs of their respective dates or, if amended, as of the date of the last such
\namendment filed prior to the date of this Agreement, the Company SEC Documents,
\nincluding any financial statements or schedules included therein (i) did not
\ncontain any untrue statement of a material fact or omit to state a material fact
\nrequired to be stated therein or necessary in order to make the statements made
\ntherein, in the light of the circumstances under which they were made, not
\nmisleading and (ii) complied in all material respects with the applicable
\nrequirements of the Exchange Act, the Securities Act, the rules and regulations
\nof the SEC applicable to such Company SEC Documents. No Company Subsidiary is
\nrequired to file any forms, reports or other documents with the SEC, the NNM,
\nany other stock exchange or any other comparable Governmental Entity.<\/p>\n
(b) The Company Audited Financial Statements and the Company Unaudited
\nInterim Financial Statements complied, as of their respective dates, with
\napplicable accounting requirements and rules and regulations of the SEC. The
\nCompany Financial Statements have been prepared in accordance with GAAP applied
\non a consistent basis (except as may be indicated in the notes thereto and
\nsubject, in the case of the Company Unaudited Interim Financial Statements and
\nthe Company Unaudited Annual Financial Statements, to normal year-end
\nadjustments and, with respect to the Company Unaudited Interim Financial
\nStatements, the absence of certain notes) and fairly present in all material
\nrespects (i) the consolidated financial position of the Company and the Company
\nSubsidiaries as of the dates thereof and (ii) the consolidated results of
\noperations, changes in stockholders’ equity and cash flows of the Company and
\nthe Company Subsidiaries for the periods presented therein.<\/p>\n
Section 4.9 No Undisclosed Liabilities. Except (a) as disclosed in
\n ————————–
\nthe Company Financial Statements and (b) for liabilities and obligations
\nincurred in the ordinary course of business and consistent with past practice
\nsince the Balance Sheet Date, neither the Company nor any Company Subsidiary has
\nany liabilities or obligations of any nature, whether or not accrued, contingent
\nor otherwise, that, (i) would be required to be reflected in the Company’s
\nfinancial statements, and (ii) individually or in the aggregate, have had, or
\nwould reasonably be expected to have, a Company Material Adverse Effect.<\/p>\n
21<\/p>\n
Section 4.10 Absence of Certain Changes. Since the Balance Sheet Date,
\n ————————–
\nexcept as disclosed in the Company SEC Documents, (a) the Company and each
\nCompany Subsidiary has conducted its respective business only in the ordinary
\ncourse consistent with past practice, (b) there have not occurred any events or
\nchanges in or developments having, or which would reasonably be expected to
\nhave, individually or in the aggregate, a Company Material Adverse Effect and
\n(c) the Company has not taken, resolved to take or committed to take any action
\nwhich would have been prohibited under Section 6.1 if such section applied to
\nthe period between the Balance Sheet Date and the date of this Agreement.<\/p>\n
Section 4.11 Litigation. There is no action, suit, inquiry,
\n ———-
\narbitration, proceeding or investigation of any nature pending or, to the
\nknowledge of the Company, threatened against the Company, any Company
\nSubsidiary, their respective properties or assets or, to the knowledge of the
\nCompany, any of their respective officers or directors, in their respective
\ncapacities as such which would reasonably be expected to have a Company Material
\nAdverse Effect. There is no action, suit, inquiry, arbitration proceeding or
\ninvestigation by or before any Governmental Entity pending or, to the knowledge
\nof the Company, threatened, against or involving the Company or any Company
\nSubsidiary or any of their respective properties (a) that questions or
\nchallenges the validity of this Agreement or any action taken or to be taken by
\nthe Company or any Company Subsidiary pursuant to this Agreement or in
\nconnection with the Transactions, or (b) that, individually or in the aggregate,
\nwould reasonably be expected to have a Company Material Adverse Effect. Neither
\nthe Company nor any Company Subsidiary is subject to any judgment, order or
\ndecree specifically naming the Company or any Company Subsidiary which is
\nreasonably likely to have an adverse effect on its or the Surviving
\nCorporation’s business or on its or the Surviving Corporation’s properties or
\nassets in any material respect.<\/p>\n
Section 4.12 Employee Benefit Plans.
\n ———————-<\/p>\n
(a) Section 4.12(a) of the Company Disclosure Letter lists each Company
\nBenefit Plan.<\/p>\n
(b) With respect to each Company Benefit Plan, the Company has made
\navailable to the Parent a complete and correct copy of (i) such Company Benefit
\nPlan (or, if not written, a written summary of its material terms) and the most
\nrecent summary plan description and all summaries of material modifications
\nissued since the date of the most recent summary plan description, if any,
\nrelated to such Company Benefit Plan, (ii) each trust agreement or other funding
\narrangement, (iii) the most recent annual report ((Form 5500) filed with the
\nIRS) (and, if the most recent annual report is a Form 5500R, the most recent
\nForm 5500C filed with respect to such Company Benefit Plan), (iv) the most
\nrecent actuarial report or financial statement, (v) the most recent
\ndetermination letter, if any, issued by the IRS and any pending request for a
\ndetermination letter and (vi) each registration statement and prospectus.
\nNeither the Company nor any Company ERISA Affiliate nor, to the knowledge of the
\nCompany or any Company ERISA Affiliate, any other Person or entity, has any
\nexpress or implied commitment, whether legally enforceable or not, to continue
\n(for any period), modify, change or terminate any Company Benefit Plan, other
\nthan with respect to a modification, change or termination required by
\napplicable Law.<\/p>\n
22<\/p>\n
(c) Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, each Company Benefit Plan
\nhas been administered in accordance with its terms and all applicable laws,
\nincluding ERISA and the Code (including the prohibited transaction rules
\nthereunder). All contributions required to be made under the terms of any of the
\nCompany Benefit Plans have, as of the date of this Agreement, been or will be
\ntimely made. No suit, administrative proceeding, action or other adverse
\nproceeding or claim has been brought or threatened against or with respect to
\nany such Company Benefit Plan (other than routine benefits claims or relating to
\nqualified domestic relations orders (as that term is defined in Section 414(p)
\nof the Code)) and there is no pending audit or inquiry by the IRS or United
\nStates Department of Labor with respect to any Company Benefit Plan. No event
\nhas occurred and, to the knowledge of the Company or any Company ERISA
\nAffiliate, there exists no condition or set of circumstances that could subject
\nthe Company or any Company ERISA Affiliate to any material liability (other than
\nfor routine benefit liabilities) relating in any way to any Company Benefit Plan
\nwhich would reasonably be expected to have a Company Material Adverse Effect.<\/p>\n
(d) Each Company Benefit Plan can be amended, discontinued or terminated
\nat any time (including after the Effective Time) in accordance with its terms,
\nwithout liability (other than (i) liability for benefits accrued prior to the
\nEffective Time, (ii) liability for ordinary administrative expenses typically
\nincurred in a termination event or (iii) liabilities for which sufficient assets
\nare set aside in a trust or insurance contract to satisfy such liabilities or
\nwhich are reflected on the most recent Balance Sheet included in the Company
\nFinancial Statements).<\/p>\n
(e) Each Company Benefit Plan and its related trust that is intended to
\nqualify under Section 401(a) and Section 501(a), respectively, of the Code has
\nreceived a favorable determination letter from the IRS as to such qualified
\nstatus or an application for such a determination letter is pending or has been
\nestablished under a standardized prototype plan for which an IRS opinion letter
\nhas been obtained by the plan sponsor and is valid as to the adopting employer
\nand, in either case, nothing has occurred that could adversely affect such
\nqualified status.<\/p>\n
(f) No Company Benefit Plan is a multi-employer pension plan (as defined
\nin Section 3(37) of ERISA) and no Company ERISA Affiliate has sponsored or
\ncontributed to or been required to contribute to any such pension plan.<\/p>\n
(g) With respect to each Company Benefit Plan that is subject to Title IV
\nof ERISA or the minimum funding rules of ERISA or Section 302 or 412 of the
\nCode, (i) no reportable event (within the meaning of Section 4043 of ERISA,
\nother than an event that is not required to be reported before or within thirty
\ndays of such event) has occurred or is expected to occur, (ii) there was not an
\naccumulated funding deficiency (within the meaning of Section 302 of ERISA or
\nSection 412 of the Code), whether or not waived, as of the most recently ended
\nplan year of such Company Benefit Plan; and (iii) there is no “unfunded benefit
\nliability” (within the meaning of Section 4001(a)(18) of ERISA). No material
\nliability under Title IV of ERISA has been incurred by the Company or any
\nCompany ERISA Affiliate that has not been satisfied in full, and no condition
\nexists that presents a material risk to the Company or any Company ERISA
\nAffiliate of incurring or being subject (whether primarily, jointly or
\nsecondarily) to a material liability thereunder. None of the assets of the
\nCompany or any Company ERISA Affiliate is, or<\/p>\n
23<\/p>\n
may reasonably be expected to become, the subject of any lien arising under
\nERISA or Section 412(n) of the Code.<\/p>\n
(h) Except as required by Law, no Company Benefit Plan provides any of the
\nfollowing retiree or post-employment benefits to any person: medical, disability
\nor life insurance benefits. To the Company’s knowledge, the Company and each
\nCompany ERISA Affiliate is in material compliance with (i) the requirements of
\nthe applicable health care continuation and notice provisions of the
\nConsolidated Omnibus Budget Reconciliation Act of 1985, as amended, and (ii) the
\napplicable requirements of the Health Insurance Portability and Accountability
\nAct of 1996, as amended.<\/p>\n
(i) The Company has made available to the Parent complete and correct
\ncopies of all plans, agreements, programs and policies of the Company or any
\nCompany Subsidiary with or relating to (i) severance for their respective
\nemployees or directors, and (ii) their respective employees or directors which
\ncontain “change of control” or similar provisions. Except as set forth on
\nSection 4.12(i) of the Company Disclosure Letter, the consummation of the
\nTransactions will not, alone or in conjunction with any other possible event
\n(including termination of employment), (x) entitle any current or former
\nemployee or other service provider of the Company or any Company Subsidiary to
\nseverance benefits or any other payment, compensation or benefit (including
\nforgiveness of indebtedness), except as expressly provided by this Agreement, or
\n(y) accelerate the time of payment or vesting, or increase the amount of
\ncompensation or benefit due any such employee or service provider, alone or in
\nconjunction with any other possible event (including termination of employment).<\/p>\n
Section 4.13 Tax Matters.
\n ———–<\/p>\n
(a) Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, the Company and each Company
\nSubsidiary, and any affiliated, consolidated, combined, unitary or aggregate
\ngroup for Tax purposes of which the Company or any Company Subsidiary is or has
\nbeen a member, have (i) properly completed and filed all Tax Returns that were
\nrequired to be filed by them through the date of this Agreement and all such Tax
\nReturns are true, correct and complete in all material respects and (ii) have
\nduly paid or caused to be duly paid in full all Taxes reflected on such Tax
\nReturns or subsequently assessed by any Governmental Entity responsible for the
\nimposition of any Tax with respect to such Tax Returns. Since the Balance Sheet
\nDate, the Company and the Company Subsidiaries have not incurred any liability
\nfor any Taxes other than in the ordinary course of business. Neither the Company
\nnor any Company Subsidiary has received notice of any claim made by a Taxing
\nauthority in a jurisdiction where the Company or any Company Subsidiary, as the
\ncase may be, does not file Tax Returns, that the Company or any Company
\nSubsidiary is or may be subject to Taxation by that jurisdiction.<\/p>\n
(b) There is (i) no material lien for Taxes against the property or assets
\nof the Company or any Company Subsidiary, other than liens for Taxes not yet due
\nand payable, (ii) no audit, administrative proceeding or court proceeding with
\nrespect to Taxes or Tax Returns of the Company or any Company Subsidiary that is
\nbeing conducted or with respect to which the Company or Company Subsidiary has
\nbeen notified that such audit or proceeding is pending and no deficiency or
\nclaim for Taxes that is being asserted by any Governmental Entity responsible<\/p>\n
24<\/p>\n
for the imposition of any Tax against the Company or any Company Subsidiary;
\n(iii) no extension of the statute of limitations on the assessment of any Taxes
\nthat has been granted by the Company or any Company Subsidiary and is currently
\nin effect, and (iv) no agreement, contract or arrangement to which the Company
\nor any Company Subsidiary is a party, based upon the value of the Stock
\nConsideration as of the date hereof, may result in the payment of any amount
\nthat would not be deductible by reason of Section 162(m), 280G or 404 of the
\nCode.<\/p>\n
(c) Neither the Company nor any Company Subsidiary has filed a consent
\npursuant to Section 341(f) of the Code (or any predecessor provision) concerning
\ncollapsible corporations, or agreed to have Section 341(f)(2) of the Code apply
\nto any disposition of a “subsection (f) asset” (as such term is defined in
\nSection 341(f)(4) of the Code) owned by the Company or any Company Subsidiary.<\/p>\n
(d) Neither the Company nor any Company Subsidiary is a party to any Tax
\nsharing, Tax indemnity or other agreement or arrangement with any entity not
\nconsolidated in the Financial Statements most recently filed by the Company with
\nthe SEC or has any liability or potential liability to another party under any
\nsuch agreement, and neither the Company nor any Company Subsidiary has any
\nliability or potential liability for Taxes of any Person (other than the Company
\nor any Company Subsidiary) under Section 1.1502-6 of the Treasury Regulations
\n(or any similar provision of state, local or foreign law), as a transferee or
\nsuccessor, by contract or otherwise.<\/p>\n
(e) The Company and each Company Subsidiary have withheld and paid all
\nTaxes required to have been withheld and paid in connection with amounts paid or
\nowing to any employee, independent contractor, creditor, stockholder or other
\nthird party.<\/p>\n
(f) Neither the Company nor any Company Subsidiary is or has ever been a
\n“United States real property holding corporation” within the meaning of Section
\n897 of the Code during the applicable period specified in Section 897(c)(1)(A)
\nof the Code.<\/p>\n
Section 4.14 Environmental Laws. Except as would not, individually or in
\n ——————
\nthe aggregate, reasonably be expected to have a Company Material Adverse Effect,
\nthe Company and each Company Subsidiary are in compliance with all Environmental
\nLaws, including, but not limited to, compliance with any permits or other
\ngovernmental authorizations or the terms and conditions of such permits or
\nauthorized actions. Neither the Company nor any Company Subsidiary has received
\nany communication or notice, whether from a Governmental Entity or otherwise,
\nalleging any violation of or noncompliance with any Environmental Laws by the
\nCompany or any Company Subsidiary, and there is no pending or, to the Company’s
\nknowledge, threatened Environmental Claim, except where such Environmental Claim
\nwould not, individually or in the aggregate, reasonably be expected to have a
\nCompany Material Adverse Effect. All permits and other governmental
\nauthorizations currently held or required to be held by the Company and any of
\nCompany Subsidiary pursuant to any Environmental Laws are identified in the
\nSection 4.14 of the Company Disclosure Letter. The Company has made available to
\nthe Parent all assessments, reports, data, results of investigations or audits,
\nand other information that is in the possession of or reasonably available to
\nthe Company or any Company Subsidiary regarding environmental matters pertaining
\nto or the environmental condition of the business of the Company or any of
\nCompany Subsidiary, or the compliance (or noncompliance)<\/p>\n
25<\/p>\n
by the Company or any Company Subsidiary with any Environmental Laws. All
\nfacilities or properties presently owned, leased, used or operated by the
\nCompany or any Company Subsidiary are identified in Section 4.14 of the Company
\nDisclosure Letter.<\/p>\n
Section 4.15 Intellectual Property
\n ———————<\/p>\n
(a) Section 4.15(a) of the Company Disclosure Letter contains a true and
\ncomplete list of all of the patent, trademark and copyright applications and
\nregistrations filed and issued pursuant to federal, state, local and foreign
\nlaws by the Company and\/or any Company Subsidiary to protect its interests in
\nCompany Intellectual Property, as well as certain other non-registered
\nintellectual property in which the Company has an interest. To the Company’s
\nknowledge, Section 4.15(a) of the Company Disclosure Letter lists all the
\nsignificant Company Intellectual Property presently used by the Company in the
\nconduct of its business.<\/p>\n
(b) Company Intellectual Property consists solely of items and rights
\nwhich are: (i) owned by the Company or any Company Subsidiary; (ii) in the
\npublic domain; or (iii) except as set forth in Section 4.15(b) of the Company
\nDisclosure Letter, rightfully used by the Company or any Company Subsidiary and
\ntheir successors pursuant to a valid license. The Company and Company
\nSubsidiaries have all rights in Company Intellectual Property necessary to carry
\nout their current and currently contemplated and reasonably foreseeable
\nactivities.<\/p>\n
(c) Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, the reproduction,
\nmanufacturing, distribution, licensing, sublicensing, sale or any other exercise
\nof rights in any Company Intellectual Property, Product, work, technology or
\nprocess as now used or offered or proposed for use, licensing or sale by the
\nCompany or any Company Subsidiary does not infringe on any copyright, trade
\nsecret, trademark, service mark, trade name, trade dress, firm name, Internet
\ndomain name, logo, trade dress or mask work of any Person or the patent of any
\nPerson. No claims (i) challenging the validity, effectiveness or ownership by
\nthe Company or any Company Subsidiary of any of Company Intellectual Property,
\nor (ii) to the effect that the use, distribution, licensing, sublicensing, sale
\nor any other exercise of rights in any Product, work, technology or process as
\nnow used or offered or proposed for use, licensing, sublicensing or sale by the
\nCompany or any Company Subsidiary infringes or will infringe on any intellectual
\nproperty or other proprietary right of any Person have been asserted or, to the
\nknowledge of the Company, are threatened by any Person, nor are there, to the
\nCompany’s knowledge, any valid grounds for any bona fide claim of any such kind.
\nAll material registered, granted or issued trademarks, Internet domain names and
\ncopyrights held by the Company and any Company Subsidiary are enforceable and
\nsubsisting and all material registered, granted or issued patents held by the
\nCompany and any Company Subsidiary are subsisting and, to the Company’s
\nknowledge, enforceable. To the Company’s knowledge, there is no unauthorized
\nuse, infringement or misappropriation of any of Company Intellectual Property by
\nany third party, employee or former employee.<\/p>\n
(d) Except as set forth in Section 4.15(d) of the Company Disclosure
\nLetter, there are no material royalties, fees, honoraria or other payments
\npayable by the Company or any Company Subsidiary to any Person by reason of the
\nownership, development, use, license, sale<\/p>\n
26<\/p>\n
or disposition of Company Intellectual Property, other than salaries and sales
\ncommissions paid to employees and sales agents in the ordinary course of
\nbusiness.<\/p>\n
(e) Neither the Company nor any Company Subsidiary is in violation of any
\nlicense, sublicense, agreement or instrument to which the Company or any Company
\nSubsidiary is a party or otherwise bound, nor will execution or delivery of this
\nAgreement, or performance of the Company’s obligations hereunder, cause the
\ndiminution, termination or forfeiture of any Company Intellectual Property
\nexcept as would not, individually or in the aggregate, reasonably be expected to
\nresult in a Company Material Adverse Effect. Section 4.15(e) of the Company
\nDisclosure Letter sets forth a list of all Licenses by the Company or any of
\nCompany Subsidiaries of Company Intellectual Property.<\/p>\n
(f) Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, the Company and each of
\nCompany Subsidiaries has observed all provisions of, and performed all of their
\nobligations currently required to be performed under, the license agreements to
\nwhich it is a party. Except as would not, individually or in the aggregate,
\nreasonably be expected to have a Company Material Adverse Effect, neither the
\nCompany nor any Company Subsidiary has taken any action that could cause, or
\nfailed to take any action, the failure of which could cause, (i) any source
\ncode, trade secret or other Company Intellectual Property to be (A) released
\nfrom an escrow or otherwise made available to any person or entity other than
\nthose persons described in Section 4.15(f) of the Company Disclosure Letter or
\n(B) dedicated to the public or otherwise placed in the public domain or (ii) any
\nother material adverse affect to the protection of Company Intellectual Property
\nunder trade secret, copyright, patent or other intellectual property laws.<\/p>\n
Section 4.16 Employment Matters.
\n ——————<\/p>\n
(a) Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, the Company and each Company
\nSubsidiary are in compliance in all respects with all currently applicable Laws
\nrespecting employment, discrimination in employment, terms and conditions of
\nemployment, wages, hours and occupational safety and health and employment
\npractices, and is not engaged in any unfair labor practice. The Company and each
\nCompany Subsidiary have withheld all amounts required by Law or by agreement to
\nbe withheld from the wages, salaries, and other payments to employees, and
\nneither the Company nor any Company Subsidiary is liable for any arrears of
\nwages or any Taxes or any penalty for failure to comply with any of the
\nforegoing. Neither the Company nor any Company Subsidiary is liable for any
\npayment to any trust or other fund or to any governmental or administrative
\nauthority, with respect to unemployment compensation benefits, social security
\nor other benefits or obligations for employees (other than routine payments to
\nbe made in the ordinary course of business and consistent with past practice).
\nExcept as would not, individually or in the aggregate, reasonably be expected to
\nhave a Company Material Adverse Effect, there are no pending claims against the
\nCompany or any Company Subsidiary under any workers compensation plan or policy
\nor for long-term disability. Neither the Company nor any Company Subsidiary is a
\nparty to any collective bargaining agreement or other labor union contract, and
\nneither the Company nor any Company Subsidiary knows of any activities or
\nproceedings of any labor union in connection with an attempt to organize any
\nsuch employees. To the Company’s or any Company Subsidiary’s knowledge, no
\nemployees of the Company or<\/p>\n
27<\/p>\n
any Company Subsidiary are in violation of any term of any employment contract,
\npatent disclosure agreement, non-competition agreement, or any restrictive
\ncovenant to a former employer relating to the right of any such employee to be
\nemployed by the Company or Company Subsidiary because of the nature of the
\nbusiness conducted or presently proposed to be conducted by the Company or any
\nCompany Subsidiary or to the use of trade secrets or proprietary information of
\nothers. Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, no employee of the Company
\nor any Company Subsidiary has given written notice to the Company or any Company
\nSubsidiary of an intention to terminate his or her employment with the Company
\nor any Company Subsidiary. Except for the Employee Agreements listed pursuant to
\nSection 4.18(b), neither the Company nor any Company Subsidiary is a party to
\nany severance agreements with obligations in excess of $100,000, individually.<\/p>\n
(b) All officers and employees of the Company and each Company Subsidiary
\nhave signed proprietary rights and confidentiality agreements in substantially
\nthe form listed on Section 4.16(b) of the Company Disclosure Letter. To the
\nextent reasonably required by the nature of their services to the Company and
\neach Company Subsidiary, all consultants of the Company and each Company
\nSubsidiary have signed proprietary rights and confidentiality agreements.<\/p>\n
(c) Since the Company’s inception, neither the Company nor any Company
\nSubsidiary has effected (i) a plant closing as defined in the WARN Act affecting
\nany site of employment or facility or one or more operating units within any
\nsite of employment or facility of the Company or any Company Subsidiary or (ii)
\na mass layoff as defined in the WARN Act affecting any site of employment or
\nfacility of the Company or any Company Subsidiary. Neither the Company nor any
\nCompany Subsidiary is currently engaged in any layoffs or employment
\nterminations sufficient in number to trigger application of any similar state or
\nlocal law.<\/p>\n
Section 4.17 Compliance with Laws. Except as would not, individually or
\nin aggregate, reasonably be expected to have a Company Material Adverse Effect,
\nthe Company and each of the Company Subsidiaries are in compliance with, and
\nhave not violated any applicable Law of any United States federal, state, local,
\nor foreign Governmental Entity which affects the business, properties or assets
\nof the Company and any Company Subsidiary, and no notice, charge, claim, action
\nor assertion has been received by the Company or any Company Subsidiary or has
\nbeen filed, commenced or, to the knowledge of the Company, threatened against
\nthe Company or any Company Subsidiary alleging any such violation. All licenses,
\npermits and approvals required under such Laws are in full force and effect
\nexcept where the failure to be in full force and effect would not, individually
\nor in the aggregate, reasonably be expected to have a Company Material Adverse
\nEffect.<\/p>\n
Section 4.18 Contracts and Commitments. Neither the Company nor any of
\nthe Company Subsidiaries is a party to or is bound by:<\/p>\n
(a) any contracts relating to the borrowing of money, the guaranty of
\nanother Person’s borrowing of money, or the creation of an encumbrance or
\nlien on the assets of the<\/p>\n
28<\/p>\n
Company or any of the Company Subsidiaries with outstanding obligations in
\nexcess of $500,000, individually, or $5 million in the aggregate;<\/p>\n
(b) any employment or consulting agreement, contract or commitment with any
\nofficer or director level employee or member of the Company’s board of directors
\nor any other employee who is one of the ten most highly compensated employees,
\nincluding base salary and bonuses, other than those that are terminable by the
\nCompany or any of the Company Subsidiaries on no more than thirty days notice
\nwithout liability or financial obligation or benefits generally available to
\nemployees of the Company, except to the extent general principles of wrongful
\ntermination law may limit the Company’s or any of the Company Subsidiaries’
\nability to terminate employees at will;<\/p>\n
(c) any agreement of indemnification or guaranty by the Company or any of
\nthe Company Subsidiaries not entered into in the ordinary course of business
\nother than indemnification agreements between the Company or any of the Company
\nSubsidiaries and any of its officers or directors in standard forms as filed by
\nthe Company with the SEC;<\/p>\n
(d) any agreement, contract or commitment containing any covenant limiting
\nthe freedom of the Company or any of the Company Subsidiaries to engage in any
\nline of business or conduct business in any geographical area, compete with any
\nperson or granting any exclusive distribution rights or limits the use or
\nexploitation of the Company Intellectual Property;<\/p>\n
(e) any agreement that expires or which the Company may not terminate more
\nthan one year after the date of this Agreement or any contract that may be
\nrenewed at the option of any person other than the Company so as to expire more
\nthan two years after the date of this Agreement, other than distribution and
\nresale agreements entered into in the ordinary course of business consistent
\nwith past practice;<\/p>\n
(f) any agreement where performance in accordance with its terms will
\nresult in a loss to the Company or any Company Subsidiary of more than $300,000
\nduring any 12 month period upon completion or performance thereof, after
\nallowance for direct distribution expenses;<\/p>\n
(g) any contracts for capital expenditures in excess of $300,000,
\nindividually, or such contracts representing $3 million in the aggregate;<\/p>\n
(h) any agreement, contract or commitment currently in force relating
\nto the disposition or acquisition of assets not in the ordinary course of
\nbusiness; or<\/p>\n
(i) any agreement, contract or commitment for the purchase of any ownership
\ninterest in any corporation, partnership, joint venture or other business
\nenterprise for consideration in excess of $300,000, in any case, which includes
\nall escrow and earn-out agreements with outstanding obligations.<\/p>\n
A true and complete copy (including all material amendments) of each agreement,
\ncontract, obligation, promise or undertaking (whether written or oral and
\nwhether express or implied) required to be listed in Section 4.18(a) through
\nSection 4.18(i) of the Company Disclosure Letter (a “Company Agreement”), or a
\nsummary of each oral contract, has been made available to the Parent. Each
\nCompany Agreement is in full force and effect. No condition exists or event has<\/p>\n
29<\/p>\n
occurred that, (whether with or without notice or lapse of time or both, or the
\nhappening or occurrence of any other event) would constitute a default by the
\nCompany or a Company Subsidiary of the Company or, to the Company’s knowledge,
\nany other party thereto under, or result in a right in termination of, any
\nCompany Agreement, except as would not, individually or in the aggregate, be
\nreasonably expected to result in a Company Material Adverse Effect. Neither the
\nCompany nor any Company Subsidiary is in violation of, nor to the Company’s
\nknowledge, is there any valid basis for any claim of material default under or
\nviolation of, any Company Agreement or commitment or restriction to which the
\nCompany or any Company Subsidiary is a party or by which any of them or any of
\ntheir assets is bound.<\/p>\n
Section 4.19 Customers. Since December 31, 2001, there has not been any
\n ———
\nmaterial adverse change in the business relationship of the Company or any
\nCompany Subsidiary with any customer or customers who together accounted for
\nmore than seven percent of the Company’s sales (on a consolidated basis) for the
\nyear ended December 31, 2001.<\/p>\n
Section 4.20 Information Supplied. None of the information supplied or to
\n ——————–
\nbe supplied by the Company specifically for inclusion or incorporation by
\nreference in (i) the Registration Statement will, at the time the Registration
\nStatement becomes effective under the Securities Act, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary to make the statements therein not misleading or
\n(ii) the Proxy Statement\/Prospectus will, at the date it is first mailed to the
\nCompany’s stockholders, and to the Parent stockholders, or at the time of the
\nCompany Stockholders’ Meeting and Parent’s Stockholders’ Meeting to vote on this
\nAgreement, contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they are made, not
\nmisleading. The Proxy Statement\/Prospectus will comply as to form in all
\nmaterial respects with the requirements of the Exchange Act and the rules and
\nregulations thereunder, except that no representation or warranty is made by the
\nCompany with respect to statements made or incorporated by reference therein
\nbased on information supplied by the Parent specifically for inclusion or
\nincorporation by reference in the Proxy Statement\/Prospectus and no
\nrepresentation or warranty is made by the Company with respect to any
\nforward-looking information, budgets or projections which may have been supplied
\nby the Company.<\/p>\n
Section 4.21 Opinion of Financial Advisor. The Company has received the
\n —————————-
\nopinion of the Company Financial Advisor dated the date of this Agreement, to
\nthe effect that, as of such date, the Exchange Ratio and Cash Merger
\nConsideration to be received for each share of Company Common Stock pursuant to
\nthis Agreement is fair to the holders of such shares from a financial point of
\nview.<\/p>\n
Section 4.22 Absence of Certain Payments. Neither the Company nor any
\n —————————
\nCompany Subsidiary nor any director, officer, agent, employee or other Person
\nacting on behalf of the Company or any Company Subsidiary, has used any
\ncorporate or other funds for unlawful contributions, payments, gifts, or
\nentertainment, or made any unlawful expenditures relating to political activity
\nto government officials or others or established or maintained any unlawful or
\nunrecorded funds in violation of Section 30A of the Exchange Act. Neither the
\nCompany nor any Company Subsidiary nor any current director, officer, agent,
\nemployee or other Person<\/p>\n
30<\/p>\n
acting on behalf of the Company or any Company Subsidiary, has accepted or
\nreceived any unlawful contributions, payments, gifts or expenditures.<\/p>\n
Section 4.23 Insider Interests. Except as set forth in the Company SEC
\n —————–
\nDocuments, no officer or director of the Company or any Company Subsidiary has
\nany material interest in any property, real or personal, tangible or intangible,
\nincluding inventions, patents, trademarks or trade names, used in or pertaining
\nto the business of the Company or any Company Subsidiary.<\/p>\n
Section 4.24 Brokers or Finders. Except as set forth in Section 4.24 of
\n ——————
\nthe Company Disclosure Letter, neither the Company nor any Company Subsidiary or
\ntheir respective Affiliates has an obligation to pay any agent, broker,
\ninvestment banker, financial advisor, attorney or other firm or Person any
\nbrokers’, finder’s or legal fee or any other commission or similar fee in
\nconnection with any of the Transactions. True and correct copies of all
\nagreements between the Company and the Company Financial Advisor including any
\nfee arrangements are included in Section 4.24 of the Company Disclosure Letter.<\/p>\n
ARTICLE 5<\/p>\n
REPRESENTATIONS AND WARRANTIES
\n OF THE PARENT AND MERGER SUB<\/p>\n
Except as set forth in the Parent Disclosure Letter, the Parent and
\nMerger Sub represent and warrant to the Company that all of the statements
\ncontained in this Article 5 are true and correct. The Parent Disclosure Letter
\nshall be arranged in paragraphs corresponding to the numbered and lettered
\nparagraphs contained in this Article 5 and the disclosure in any paragraph shall
\nqualify (a) the corresponding paragraph in this Article 5 and (b) the other
\nparagraphs in this Article 5 only to the extent that it is clear from a reading
\nof such disclosure that it also qualifies or applies to such other paragraphs.<\/p>\n
Section 5.1 Organization; Qualification. Each of the Parent and Merger
\n —————————
\nSub (a) is a corporation duly organized, validly existing and in good standing
\nunder the laws of the State of Delaware; (b) has all requisite corporate power
\nand authority to carry on its business as it is now being conducted and to own,
\nlease and operate its properties and assets; and (c) is duly qualified or
\nlicensed to do business as a foreign corporation in good standing in every
\njurisdiction in which such qualification is required, except for such failures
\nto be so qualified or licensed and in good standing as have not had and would
\nnot, individually or in the aggregate, reasonably be expected to have a Parent
\nMaterial Adverse Effect. The Parent has made available to the Company complete
\nand correct copies of its certificate of incorporation and bylaws, each as
\npresently in effect. Merger Sub has conducted no business and has no operations
\nother than in connection with this Agreement and the Transactions.<\/p>\n
Section 5.2 Capitalization.
\n ————–<\/p>\n
(a) The authorized capital stock of the Parent consists of 200,000,000
\nshares of Parent Common Stock and 5,000,000 shares of Parent Preferred Stock,
\n30,000 of which have been designated as Series A Junior Participating Preferred
\nStock. As of February 19, 2002,<\/p>\n
31<\/p>\n
(i) 90,442,748 shares of Parent Common Stock are issued and outstanding and
\nno shares of Parent Common Stock are issued and held in the treasury of the
\nParent, (ii) no shares of Parent Preferred Stock are issued and outstanding and
\nno shares of Parent Preferred Stock are issued and held in the treasury of the
\nParent, and (iii) 26,987,319 shares of Parent Common Stock are issued or
\nreserved for issuance upon exercise of Parent Options under the Parent’s stock
\noption plans. Section 5.2(a) of the Parent Disclosure Letter lists, as of
\nFebruary 19, 2002, the aggregate number of outstanding Parent Options and shares
\nof Parent Common Stock subject thereto, and the exercise price of such Parent
\nOptions. No Parent Option will vest upon consummation of any of the
\nTransactions. Except as set forth above and except for the Transactions, as of
\nthe date hereof, there are no shares of capital stock of the Company authorized,
\nissued or outstanding. All the outstanding shares of the Parent’s capital stock
\nare, and all shares of Parent Common Stock which may be issued pursuant to the
\nexercise of outstanding Parent Options will be, when issued in accordance with
\nthe respective terms of such Parent Option, duly authorized, validly issued,
\nfully paid and nonassessable and not issued in violation of any preemptive
\nrights. All the outstanding shares of the Parent’s capital stock are, and all
\nshares of Parent Common Stock which may be issued pursuant to the exercise of
\noutstanding Parent Options will be, when issued in accordance with the
\nrespective terms of such Parent Option or Article 3, as applicable, duly
\nauthorized, validly issued, fully paid and nonassessable and not issued in
\nviolation of any preemptive rights. Neither the Parent or any of its
\nSubsidiaries has any outstanding Voting Debt.<\/p>\n
(b) Except as set forth in Section 5.2(b) of the Parent Disclosure Letter,
\nthere are no voting trusts or other agreements or understandings to which the
\nParent or any of its Subsidiaries is a party with respect to the voting of the
\ncapital stock of the Parent or any of its Subsidiaries.<\/p>\n
Section 5.3 Authorization, Validity of Agreement, Parent Action. Each
\n —————————————————
\nof the Parent and Merger Sub has full corporate power and authority to execute
\nand deliver this Agreement, to perform its obligations under this Agreement and
\nto consummate the Transactions. The execution and delivery of, and the
\nperformance by the Parent and Merger Sub of their respective obligations under,
\nthis Agreement and the consummation by each of the Parent and Merger Sub of the
\nTransactions, have been duly authorized by each of the Parent’s and Merger Sub’s
\nboards of directors and, except for obtaining the approval of the Parent’s
\nstockholders as contemplated by Section 5.5, no other corporate action on the
\npart of the Parent or Merger Sub or their respective stockholders is necessary
\nto authorize the execution and delivery by the Parent and Merger Sub of this
\nAgreement or the consummation by them of the Transactions. This Agreement has
\nbeen duly executed and delivered by the Parent and Merger Sub, and, assuming due
\nand valid authorization, execution and delivery by the Company, this Agreement
\nis a valid and binding obligation of each of the Parent and Merger Sub,
\nenforceable against each of them in accordance with its terms, subject to
\napplicable laws of bankruptcy, insolvency or similar laws relating to creditors’
\nrights generally and to general principles of equity (whether applied in a
\nproceeding in law or equity).<\/p>\n
Section 5.4 Share Ownership. Neither the Parent nor Merger Sub
\n ————–
\nbeneficially owns any Shares. Neither Parent nor any Parent Subsidiary
\n(including Merger Sub) is, nor at any time during the last three years has any
\nof them been, an “interested stockholder” of the Company within the meaning of
\nSection 203(c)(5) of the DGCL. Neither Parent nor any Parent Subsidiary
\n(including Merger Sub) owns (directly or indirectly, beneficially or of record)
\nand is not a party to any agreement, arrangement or understanding for the
\npurpose of acquiring,<\/p>\n
32<\/p>\n
holding, voting or disposing of, in each case, any shares of the capital stock
\nof the Company (other than as contemplated by this Agreement).<\/p>\n
Section 5.5 Vote Required. The affirmative vote of the holders of
\n ————-
\ngreater than fifty percent of the shares of the Parent Common Stock voting on
\nthe proposal to approve this Agreement at a meeting of the Parent’s
\nstockholders, is the only vote of the holders of any class or series of the
\nParent’s capital stock necessary to approve the Merger or adopt this Agreement
\nand no other vote of any holders of shares of the Parent’s capital stock is
\nnecessary to approve any of the Transactions.<\/p>\n
Section 5.6 Consents and Approvals, No Violations. Except for the
\n ————————————-
\nfilings, permits, authorizations, consents and approvals as may be required
\nunder, and other applicable requirements of, the Securities Act, the Exchange
\nAct, the HSR Act (and similar laws of foreign countries), state securities or
\nblue sky laws, the NNM and the filing of the Certificate of Merger, none of the
\nexecution or delivery by the Parent or Merger Sub of, or performance by the
\nParent or Merger Sub of its obligations under, this Agreement, the consummation
\nby the Parent or Merger Sub of the Transactions or compliance by the Parent or
\nMerger Sub with any of the provisions of this Agreement will (a) conflict with
\nor result in any breach of any provision of the respective certificate of
\nincorporation or bylaws of the Parent or Merger Sub; (b) require any filing
\nwith, or permit, authorization, consent or approval of, any Governmental Entity;
\n(c) result in a violation or breach of, or constitute (with or without due
\nnotice or the passage of time or both) a default (or give rise to any right of
\ntermination, amendment, cancellation or acceleration or loss of any rights)
\nunder, any of the terms, conditions or provisions of any note, bond, mortgage,
\nindenture, lease, license, contract, agreement or other instrument or obligation
\nto which the Parent or any of its Subsidiaries is a party or by which any of
\nthem or any of their respective properties or assets may be bound; or (d)
\nviolate any order, writ, injunction, decree, statute, rule or regulation
\napplicable to the Parent, any of its Subsidiaries or any of their properties or
\nassets, excluding from the foregoing clauses (b), (c) and (d) such violations,
\nbreaches or defaults which would not, individually or in the aggregate,
\nreasonably be expected to have a Parent Material Adverse Effect. No action is
\nrequired under the Parent Rights Plan so as to provide that (i) no Person will
\nbecome an “Acquiring Person” and (ii) no “Shares Acquisition Date” or
\n“Distribution Date” (as such terms are defined in the Parent Rights Plan) will
\noccur in each case, as a result of the approval, execution and delivery of this
\nAgreement and the Voting Agreement and the consummation of the transactions
\ncontemplated by this Agreement.<\/p>\n
Section 5.7 Reports and Financial Statements.
\n ——————————–<\/p>\n
(a) The Parent has timely filed the Parent SEC Documents with the SEC.
\nAs of their respective dates or, if amended, as of the date of the last such
\namendment filed prior to the date of this Agreement, the Parent SEC Documents,
\nincluding any financial statements or schedules included therein (i) did not
\ncontain any untrue statement of a material fact or omit to state a material fact
\nrequired to be stated therein or necessary in order to make the statements made
\ntherein, in the light of the circumstances under which they were made, not
\nmisleading and (ii) complied in all material respects with the applicable
\nrequirements of the Exchange Act, the Securities Act, the rules and regulations
\nof the SEC applicable to such Parent SEC Documents. No Parent Subsidiary is
\nrequired to file any forms, reports or other documents with the SEC, the NNM,
\nany other stock exchange or any other comparable Governmental Entity.<\/p>\n
33<\/p>\n
(b) The Parent Audited Financial Statements and the Parent Unaudited
\nInterim Financial Statements complied, as of their respective dates, with
\napplicable accounting requirements and rules and regulations of the SEC. The
\nParent Financial Statements have been prepared in accordance with GAAP applied
\non a consistent basis (except as may be indicated in the notes thereto and
\nsubject, in the case of the Parent Unaudited Interim Financial Statements and
\nthe Parent Unaudited Annual Financial Statements, to normal year-end adjustments
\nand, with respect to the Parent Unaudited Interim Financial Statements, the
\nabsence of certain notes) and fairly present (i) the consolidated financial
\nposition of the Parent and the Parent Subsidiaries as of the dates thereof and
\n(ii) the consolidated results of operations, changes in stockholders’ equity and
\ncash flows of the Parent and the Parent Subsidiaries for the periods presented
\ntherein.<\/p>\n
(c) Except (x) as disclosed in the Parent Financial Statements and (y) for
\nliabilities and obligations incurred in the ordinary course of business and
\nconsistent with past practice since the Balance Sheet Date, neither the Parent
\nnor any Parent Subsidiary has any liabilities or obligations of any nature,
\nwhether or not accrued, contingent or otherwise, that, (i) would be required to
\nbe reflected in the Parent’s financial statements, and (ii) individually or in
\nthe aggregate, have had, or would reasonably be expected to have, a Parent
\nMaterial Adverse Effect.<\/p>\n
Section 5.8 Absence of Certain Changes. Since the Balance Sheet Date,
\n ————————–
\nexcept as disclosed in the Parent SEC Documents, (a) the Parent has conducted
\nits business only in the ordinary course and consistent with past practice and
\n(b) there have not occurred any events or changes in or developments having, or
\nwhich would reasonably be expected to have, individually or in the aggregate, a
\nParent Material Adverse Effect.<\/p>\n
Section 5.9 Litigation. There is no material action, suit or proceeding
\n ———-
\nof any nature pending or to the knowledge of the Parent threatened against the
\nParent, Merger Sub, or any Parent Subsidiary, their respective properties or any
\nof their respective officers or directors, in their respective capacities as
\nsuch which would reasonably be expected to have a Parent Material Adverse
\nEffect. There is no material investigation pending or to the knowledge of the
\nParent threatened against the Parent, Merger Sub, or any Parent Subsidiary, any
\nof their respective properties or any of their respective officers or directors
\nby or before any Governmental Entity which would reasonably be expected to have
\na Parent Material Adverse Effect.<\/p>\n
Section 5.10 Information Supplied. None of the information supplied or to
\n ——————–
\nbe supplied by the Parent specifically for inclusion or incorporation by
\nreference in (i) the Registration Statement will, at the time the Registration
\nStatement becomes effective under the Securities Act, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary to make the statements therein not misleading or
\n(ii) the Proxy Statement\/Prospectus will, at the date it is first mailed to the
\nCompany’s stockholders, and to the Parent stockholders to the extent necessary,
\nor at the time of the Company Stockholders’ Meeting and Parent Stockholders’
\nMeeting to the extent necessary, contain any untrue statement of a material fact
\nor omit to state any material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey are made, not misleading. The Proxy Statement\/Prospectus and the
\nRegistration Statement will comply as to form in all material respects with the
\nrequirements of the Securities Act and the Exchange Act and the rules and
\nregulations thereunder, except that no representation or warranty is made by the<\/p>\n
34<\/p>\n
Parent with respect to statements made or incorporated by reference therein
\nbased on information supplied by the Company specifically for inclusion or
\nincorporation by reference in the Proxy Statement\/Prospectus and no
\nrepresentation or warranty is made by the Parent with respect to any
\nforward-looking information, budgets or projections which may have been supplied
\nby Parent.<\/p>\n
Section 5.11 Compliance with Laws. Except as would not, individually or
\n ——————–
\nin the aggregate, reasonably be expected to have a Parent Material Adverse
\nEffect, the Parent and each of the Parent Subsidiaries are in compliance with,
\nand have not violated any applicable Law of any United States federal, state,
\nlocal, or foreign Governmental Entity which affects the business, properties or
\nassets of the Parent and any Parent Subsidiary, and no notice, charge, claim,
\naction or assertion has been received by the Parent or any Parent Subsidiary or
\nhas been filed, commenced or, to the knowledge of the Parent, threatened against
\nthe Parent or any Parent Subsidiary alleging any such violation. All licenses,
\npermits and approvals required under such Laws are in full force and effect
\nexcept where the failure to be in full force and effect would not, individually
\nor in the aggregate, reasonably be expected to have a Parent Material Adverse
\nEffect.<\/p>\n
Section 5.12 Tax Matters.
\n ———–<\/p>\n
(a) Except as would not, individually or in the aggregate, reasonably
\nbe expected to have a Parent Material Adverse Effect, the Parent and each Parent
\nSubsidiary, and any affiliated, consolidated, combined, unitary or aggregate
\ngroup for Tax purposes of which the Parent or any Parent Subsidiary is or has
\nbeen a member, have (i) properly completed and filed all Tax Returns that were
\nrequired to be filed by them through the date of this Agreement and all such Tax
\nReturns are true, correct and complete in all material respects and (ii) have
\nduly paid or caused to be duly paid in full all Taxes reflected on such Tax
\nReturns or subsequently assessed by any Governmental Entity responsible for the
\nimposition of any Tax with respect to such Tax Returns. Since the Balance Sheet
\nDate, the Parent and the Parent Subsidiaries have not incurred any liability for
\nany Taxes other than in the ordinary course of business. Neither the Parent nor
\nany Parent Subsidiary has received notice of any claim made by a Taxing
\nauthority in a jurisdiction where the Parent or any Parent Subsidiary, as the
\ncase may be, does not file Tax Returns, that the Parent or any Parent Subsidiary
\nis or may be subject to Taxation by that jurisdiction.<\/p>\n
(b) There is (i) no material lien for Taxes against the property or
\nassets of the Parent or any Parent Subsidiary, other than liens for Taxes not
\nyet due and payable, (ii) no audit, administrative proceeding or court
\nproceeding with respect to Taxes or Tax Returns of the Parent or any Parent
\nSubsidiary that is being conducted or with respect to which the Parent or Parent
\nSubsidiary has been notified in writing that such audit or proceeding is pending
\nand no deficiency or claim for Taxes that is being asserted by any Governmental
\nEntity responsible for the imposition of any Tax against the Parent or any
\nParent Subsidiary; (iii) no extension of the statute of limitations on the
\nassessment of any Taxes that has been granted by the Parent or any Parent
\nSubsidiary and is currently in effect, and (iv) no agreement, contract or
\narrangement to which the Parent or any Parent Subsidiary is a party that may
\nresult in the payment of any amount that would not be deductible by reason of
\nSection 162(m), 280G or 404 of the Code.<\/p>\n
35<\/p>\n
(c) Neither the Parent nor any Parent Subsidiary has filed a consent
\npursuant to Section 341(f) of the Code (or any predecessor provision) concerning
\ncollapsible corporations, or agreed to have Section 341(f)(2) of the Code apply
\nto any disposition of a “subsection (f) asset” (as such term is defined in
\nSection 341(f)(4) of the Code) owned by the Parent or any Parent Subsidiary.<\/p>\n
(d) Neither the Parent nor any Parent Subsidiary is a party to any Tax
\nsharing, Tax indemnity or other agreement or arrangement with any entity not
\nconsolidated in the Financial Statements most recently filed by the Parent with
\nthe SEC or has any liability or potential liability to another party under any
\nsuch agreement, and neither the Parent nor any Parent Subsidiary has any
\nliability or potential liability for Taxes of any Person (other than the Parent
\nor any Parent Subsidiary) under Section 1.1502-6 of the Treasury Regulations (or
\nany similar provision of state, local or foreign law), as a transferee or
\nsuccessor, by contract or otherwise.<\/p>\n
(e) The Parent and each Parent Subsidiary have withheld and paid all
\nTaxes required to have been withheld and paid in connection with amounts paid or
\nowing to any employee, independent contractor, creditor, stockholder or other
\nthird party.<\/p>\n
(f) Neither the Parent nor any Parent Subsidiary is or has ever been a
\n“United States real property holding corporation” within the meaning of Section
\n897 of the Code during the applicable period specified in Section
\n897(c)(1)(A)(ii) of the Code.<\/p>\n
Section 5.13 Environmental Laws. Except as would not, individually or in
\n ——————
\nthe aggregate, reasonably be expected to have a Parent Material Adverse Effect,
\nthe Parent and each Parent Subsidiary are in compliance with all Environmental
\nLaws, including, but not limited to, compliance with any permits or other
\ngovernmental authorizations or the terms and conditions of such permits or
\nauthorized actions. Neither the Parent nor any Parent Subsidiary has received
\nany communication or notice, whether from a Governmental Entity or otherwise,
\nalleging any violation of or noncompliance with any Environmental Laws by the
\nParent or any Parent Subsidiary, and there is no pending or, to the Parent’s
\nknowledge, threatened Environmental Claim, except where such Environmental Claim
\nwould not, individually or in the aggregate, reasonably be expected to have a
\nParent Material Adverse Effect. All permits and other governmental
\nauthorizations currently held or required to be held by the Parent and any of
\nParent Subsidiary pursuant to any Environmental Laws are identified in the
\nSection 5.13 of the Parent Disclosure Letter. The Parent has made available to
\nthe Company all assessments, reports, data, results of investigations or audits,
\nand other information that is in the possession of or reasonably available to
\nthe Parent or any Parent Subsidiary regarding environmental matters pertaining
\nto or the environmental condition of the business of the Parent or any of Parent
\nSubsidiary, or the compliance (or noncompliance) by the Parent or any Parent
\nSubsidiary with any Environmental Laws. All facilities or properties presently
\nowned by the Parent or any Parent Subsidiary and all facilities or properties
\nleased, used or operated by the Parent or any Parent Subsidiary which require
\naggregate payments of over $100,000 on an annual basis are identified in Section
\n5.13 of the Parent Disclosure Letter.<\/p>\n
Section 5.14 Intellectual Property.
\n ———————<\/p>\n
36<\/p>\n
(a) Parent Intellectual Property consists solely of items and rights
\nwhich are: (i) owned by the Parent or any Parent Subsidiary, (ii) in the public
\ndomain; or (iii) except as set forth in Section 5.14(a) of the Parent Disclosure
\nLetter, rightfully used by the Parent or any Parent Subsidiary and their
\nsuccessors pursuant to a valid license. The Parent and Parent Subsidiaries have
\nall rights in Parent Intellectual Property necessary to carry out their current
\nand currently contemplated and reasonably foreseeable activities.<\/p>\n
(b) Except as would not, individually or in the aggregate, reasonably be
\nexpected to have a Parent Material Adverse Effect, the reproduction,
\nmanufacturing, distribution, licensing, sublicensing, sale or any other exercise
\nof rights in any Parent Intellectual Property, Product, work, technology or
\nprocess as now used or offered or proposed for use, licensing or sale by the
\nParent or any Parent Subsidiary does not infringe on any copyright, trade
\nsecret, trademark, service mark, trade name, trade dress, firm name, Internet
\ndomain name, logo, trade dress or mask work of any Person or the patent of any
\nPerson. No claims (i) challenging the validity, effectiveness or ownership by
\nthe Parent or any Parent Subsidiary of any of Parent Intellectual Property, or
\n(ii) to the effect that the use, distribution, licensing, sublicensing, sale or
\nany other exercise of rights in any Product, work, technology or process as now
\nused or offered or proposed for use, licensing, sublicensing or sale by the
\nParent or any Parent Subsidiary infringes or will infringe on any intellectual
\nproperty or other proprietary right of any Person have been asserted or, to the
\nParent’s knowledge, are threatened by any Person, nor are there, to the Parent’s
\nknowledge, any valid grounds for any bona fide claim of any such kind. All
\nmaterial registered, granted or issued trademarks, Internet domain names and
\ncopyrights held by the Parent and any Parent Subsidiary are enforceable and
\nsubsisting and, to the Parent’s knowledge, all material registered, granted or
\nissued patents held by the Parent and any Parent Subsidiary are enforceable and
\nsubsisting. To the Parent’s knowledge, there is no unauthorized use,
\ninfringement or misappropriation of any of Parent Intellectual Property by any
\nthird party, employee or former employee.<\/p>\n
(c) Except as set forth in Section 5.14(c) of the Parent Disclosure
\nLetter, there are no material royalties, fees, honoraria or other payments
\npayable by the Parent or any Parent Subsidiary to any Person by reason of the
\nownership, development, use, license, sale or disposition of Parent Intellectual
\nProperty, other than salaries and sales commissions paid to employees and sales
\nagents in the ordinary course of business.<\/p>\n
(d) Neither the Parent nor any Parent Subsidiary is in violation of any
\nlicense, sublicense, agreement or instrument to which the Parent or any Parent
\nSubsidiary is a party or otherwise bound, nor will execution or delivery of this
\nAgreement, or performance of the Parent’s obligations hereunder, cause the
\ndiminution, termination or forfeiture of any Parent Intellectual Property except
\nas would not, individually or in the aggregate, reasonably be expected to result
\nin a Parent Material Adverse Effect.<\/p>\n
(e) Except as would not, individually or in the aggregate, reasonably be
\nexpected to ave a Parent Material Adverse Effect, the Parent and each of Parent
\nSubsidiaries has observed all provisions of, and performed all of their
\nobligations currently required to be performed under, the license agreements to
\nwhich it is a party. Except as would not, individually or in the aggregate,
\nreasonably be expected to have a Parent Material Adverse Effect, neither the
\nParent nor any Parent Subsidiary has taken any action that could cause, or
\nfailed to take any action, the<\/p>\n
37<\/p>\n
failure of which could cause, (i) any source code, trade secret or other Parent
\nIntellectual Property to be (A) released from an escrow or otherwise made
\navailable to any person or entity other than those persons described in Section
\n5.14(e) of the Parent Disclosure Letter or (B) dedicated to the public or
\notherwise placed in the public domain or (ii) any other material adverse affect
\nto the protection of Parent Intellectual Property under trade secret, copyright,
\npatent or other intellectual property laws.<\/p>\n
Section 5.15 Absence of Certain Payments. Neither the Parent nor any
\n —————————
\nParent Subsidiary nor any director, officer, agent, employee or other Person
\nacting on behalf of the Parent or any Parent Subsidiary, has used any corporate
\nor other funds for unlawful contributions, payments, gifts, or entertainment, or
\nmade any unlawful expenditures relating to political activity to government
\nofficials or others or established or maintained any unlawful or unrecorded
\nfunds in violation of Section 30A of the Exchange Act. Neither the Parent nor
\nany Parent Subsidiary nor any current director, officer, agent, employee or
\nother Person acting on behalf of the Parent or any Parent Subsidiary, has
\naccepted or received any unlawful contributions, payments, gifts or
\nexpenditures.<\/p>\n
Section 5.16 Opinion of Financial Advisor. The Parent has received the
\n —————————-
\nopinion of JP Morgan Securities Inc. dated as of February 18, 2002, to the
\neffect that, as of such date, the consideration to be paid in the Merger is
\nfair, from a financial point of view to the Parent.<\/p>\n
Section 5.17 Brokers or Finders. Except as set forth in Section 5.17 of
\n ——————
\nthe Parent Disclosure Letter neither the Parent nor any Parent Subsidiary or
\ntheir respective Affiliates has an obligation to pay any agent, broker,
\ninvestment banker, financial advisor or other firm or Person to any brokers’ or
\nfinders’ fee any other commission or similar fee in connection with any of the
\nTransactions.<\/p>\n
ARTICLE 6<\/p>\n
COVENANTS<\/p>\n
Section 6.1 Interim Operations of the Company. The Company covenants and
\n ———————————
\nagrees that prior to the Effective Time, except (i) as expressly contemplated by
\nthis Agreement, (ii) as set forth in Section 6.1 of the Company Disclosure
\nLetter or (iii) as agreed in writing by the Parent (which agreement shall not be
\nunreasonably withheld), after the date hereof:<\/p>\n
(a) the business of the Company and of each Company Subsidiary shall be
\nconducted only in the ordinary course and consistent with past practice, and the
\nCompany and each Company Subsidiary shall use commercially reasonable efforts to
\npreserve its business organization intact, keep available the services of its
\ncurrent officers and employees and maintain its existing relations with
\nlicensors, customers, suppliers, distributors, creditors, business partners and
\nothers having business dealings with it, to the end that their respective
\ngoodwill and ongoing business shall be unimpaired at the Effective Time;<\/p>\n
(b) neither the Company nor any Company Subsidiary shall: (i) amend
\nits certificate of incorporation or bylaws or similar organizational
\ndocuments, (ii) issue, sell, transfer, pledge,<\/p>\n
38<\/p>\n
dispose of or encumber any shares of any class or series of its capital stock or
\nVoting Debt, or securities convertible into or exchangeable for, or options,
\nwarrants, calls, commitments or rights of any kind to acquire, any shares of any
\nclass or series of its capital stock or any Voting Debt, other than (x) the
\nissuance of shares of Company Common Stock reserved for issuance on the date of
\nthis Agreement pursuant to the exercise of Company Options and Purchase Rights
\nunder the Company ESPP outstanding on the date of this Agreement or (y) the
\nissuance of up to 400,000 company options to non-executive officer employees
\nconsistent with past practices in the ordinary course of business (provided that
\nconsummation of the Merger in accordance with the terms hereof shall not result
\nin accelerated vesting of such options), (iii) declare, set aside or pay any
\ndividend or other distribution payable in cash, stock or property with respect
\nto any shares of any class or series of its capital stock, (iv) split, combine
\nor reclassify any shares of any class or series of its capital stock, (v)
\nredeem, purchase or otherwise acquire directly or indirectly any shares of any
\nclass or series of its capital stock, or enter into any instrument or security
\nwhich consists of or includes a right to acquire such shares, other than share
\nrevesting arrangements entitling the Company to purchase shares from employees
\nor consultants at their cost or (vi) adopt or implement any stockholder rights
\nplan that does not exempt from its provisions the Transactions;<\/p>\n
(c) neither the Company nor any Company Subsidiary shall modify, amend or
\nterminate any of its material contracts or waive, release or assign any material
\nrights or claims, except in the ordinary course of business consistent with past
\npractice;<\/p>\n
(d) neither the Company nor any Company Subsidiary shall (i) incur,
\nmodify or assume any long-term indebtedness for borrowed money, or except in the
\nordinary course of business consistent with past practice, incur or assume any
\nshort-term indebtedness for borrowed money; (ii) modify the terms of any
\nindebtedness, other than modifications of short term debt in the ordinary course
\nof business consistent with past practice; (iii) assume, guarantee, endorse or
\notherwise intentionally become liable or responsible (whether directly,
\ncontingently or otherwise) for the obligations of any other Person, except in
\nthe ordinary course of business consistent with past practice; or (iv) make any
\nloans, advances or capital contributions to, or investments in, any other Person
\n(other than to or in wholly owned Company Subsidiaries and expense advances to
\nemployees in the ordinary course of business and consistent with past practice);<\/p>\n
(e) neither the Company nor any Company Subsidiary shall transfer, lease,
\nlicense, sell, mortgage, pledge, dispose of, or encumber any material asset,
\nother than in the ordinary course of business and consistent with past practice;<\/p>\n
(f) except as otherwise specifically provided in this Agreement, neither
\nthe Company nor any Company Subsidiary shall (x) with respect to employees or
\nconsultants who are executive officers, directors or Affiliates of the Company
\n(i) make or offer to make any change in the compensation payable or to become
\npayable to such individuals, (ii) enter into or amend any employment, severance,
\ntermination or employee benefit plan or any other agreement, contract,
\ncommitment, understanding or arrangement with such individuals, or (iii) make
\nany change in its existing borrowing or lending arrangements for or on behalf of
\nany such individuals pursuant to a Company Benefit Plan or otherwise, (y) other
\nthan in the ordinary course of business and consistent with past practice, with
\nrespect to employees or consultants who are not<\/p>\n
39<\/p>\n
executive officers, directors or Affiliates of the Company (i) make or offer to
\nmake any change in the compensation payable or to become payable to such
\nconsultants or employees, (ii) enter into or amend any employment, severance,
\ntermination or employee benefit plan or any other agreement, contract,
\ncommitment, understanding or arrangement with such consultants or employees, or
\n(iii) make any change in its existing borrowing or lending arrangements for or
\non behalf of such consultants or employees pursuant to a Company Benefit Plan or
\notherwise, or (z) make any loans subsequent to the date hereof in excess of
\n$200,000 in the aggregate, to its officers, directors or employees;<\/p>\n
(g) except as otherwise specifically contemplated by this Agreement or as
\nset forth in Section 6.1(g) of the Company Disclosure Letter, neither the
\nCompany nor any Company Subsidiary shall (x) except payments and accruals made
\nin the ordinary course of business consistent with past practice (i) pay or make
\nany accrual or arrangement for payment of any pension, retirement allowance or
\nother employee benefit pursuant to any existing plan, agreement or arrangement
\nto any officer, director, employee or Affiliate, (ii) pay, offer to pay or agree
\nto pay or make any accrual or arrangement for payment to any officers,
\ndirectors, employees or Affiliates of the Company or any Company Subsidiary of
\nany amount relating to unused vacation days, or (iii) amend in any material
\nrespect any such existing plan, agreement or arrangement in a manner
\ninconsistent with the foregoing, or (y) (i) adopt or pay, grant, issue,
\naccelerate or accrue salary or other payments or benefits pursuant to any new
\npension, profit-sharing, bonus, extra compensation, incentive, deferred
\ncompensation, stock purchase, stock option, stock appreciation right, group
\ninsurance, severance pay, retirement or other employee benefit plan, agreement
\nor arrangement, or any employment or consulting agreement with or for the
\nbenefit of any director, officer, employee, agent or consultant, or (ii) pay or
\nmake any accrual or arrangement for payment of any amount in connection with any
\nof the foregoing in (y)(i) outside of the ordinary course consistent with past
\npractice;<\/p>\n
(h) neither the Company nor any Company Subsidiary shall enter into any
\ncontract or transaction involving total consideration in excess of $400,000
\nother than in the ordinary course of business consistent with past practice;<\/p>\n
(i) neither the Company nor any Company Subsidiary shall revalue in any
\nmaterial respect any of its assets, including writing down the value of
\ninventory or writing-off notes or accounts receivable, other than in the
\nordinary course of business consistent with past practice or as required by a
\nchange in GAAP promulgated after the date of this Agreement;<\/p>\n
(j) neither the Company nor any Company Subsidiary shall settle or
\ncompromise any pending or threatened suit, action or claim that (i) relates to
\nthe transactions contemplated hereby or (ii) the settlement or compromise of
\nwhich would involve more than $300,000 and does not obligate the Company to take
\nor refrain from taking any action other than the payment of such sum or that
\nwould otherwise be material to the Company and Company Subsidiaries, considering
\nthe Company together with the Company Subsidiaries as a whole, or that relates
\nto any matters concerning Company Intellectual Property;<\/p>\n
(k) neither the Company nor any Company Subsidiary will adopt a plan of
\ncomplete or partial liquidation, dissolution, merger, consolidation,
\nrestructuring, recapitalization or other reorganization of the Company or any
\nCompany Subsidiary (other than the Merger);<\/p>\n
40<\/p>\n
(l) neither the Company nor any Company Subsidiary will (i) change any of
\nthe accounting methods used by it unless required by a change in GAAP
\npromulgated after the date of this Agreement or (ii) make any material election
\nrelating to Taxes, change any material election relating to Taxes already made,
\nadopt any material accounting method relating to Taxes, change any material
\naccounting method relating to Taxes unless required by a change in GAAP or
\nchange in the Code or the regulations under the Code promulgated after the date
\nof this Agreement, enter into any closing agreement relating to any material
\nTaxes, settle any claim or assessment relating to any material Taxes or consent
\nto any claim or assessment relating to any material Taxes or any waiver of the
\nstatute of limitations for any such claim or assessment;<\/p>\n
(m) neither the Company nor any Company Subsidiary will take, or agree to
\ncommit to take, any action that would reasonably be expected to result in any of
\nthe conditions set forth in Sections 7.1 and 7.2 not being satisfied, or that
\nwould materially impair the ability of the Company, the Parent or Merger Sub to
\nconsummate the Merger in accordance with the terms thereof or materially delay
\nsuch consummation; or<\/p>\n
(n) neither the Company nor any Company Subsidiary will enter into any
\nagreement, contract, commitment, understanding or arrangement to do any of the
\nforegoing, or to authorize, recommend, propose or announce an intention to do
\nany of the foregoing.<\/p>\n
Section 6.2 Interim Operations of the Parent. During the period from the
\n ——————————–
\ndate of this Agreement and continuing until the earlier of the termination of
\nthis Agreement pursuant to its terms and the Effective Time, the Parent shall
\nnot, prior to the Effective Time or the earlier termination of this Agreement,
\nwithout the prior written consent of the Company (which consent shall not be
\nunreasonably withheld or delayed):<\/p>\n
(a) adopt a plan of complete or partial liquidation, dissolution, merger or
\nconsolidation (other than any merger or consolidation in which the Parent would
\nnot become a Subsidiary of any other Person), or enter into any other
\ntransaction which would cause or would be reasonably likely to cause, a material
\ndelay in consummation of the transactions contemplated hereby;<\/p>\n
(b) adopt any amendments to its certificate of incorporation which would
\nmaterially adversely affect the terms and provisions of the Parent Common Stock
\nor the rights of the holders of such shares, or amend, modify or waive any
\nprovisions of the Parent Rights Plan, or take any action to redeem the Rights or
\nrender the Rights applicable to the Merger, or adversely affect the rights of
\nthe holders of Shares;<\/p>\n
(c) declare or pay any dividends on or make any other distributions
\n(whether in cash, stock or property) in respect of any of its capital stock, or
\nsplit, combine or reclassify any of its capital stock or issue or authorize the
\nissuance of any other securities in respect of, in lieu of or in substitution
\nfor shares of capital stock of the Parent, or except in accordance with
\nagreements existing as of the date hereof, repurchase or otherwise acquire,
\ndirectly or indirectly, any shares of its capital stock; or<\/p>\n
(d) take, or agree in writing or otherwise to take, any of the actions
\ndescribed in this Section 6.2, or any other action which would cause or would be
\nreasonably likely to cause, any<\/p>\n
41<\/p>\n
of the conditions set forth in Section 7.1 or 7.3 not to be satisfied, or that
\nwould materially impair the ability of the Parent or Merger Sub to consummate
\nthe Merger in accordance with the terms thereof or materially delay such
\nconsummation.<\/p>\n
Section 6.3 Access; Confidentiality. The Company shall (and shall cause
\n ———————–
\neach Company Subsidiary to) afford to the officers, employees, accountants,
\ncounsel, financing sources and other representatives of the Parent, reasonable
\naccess during the period prior to the Effective Time, to all its properties,
\nbooks, contracts, commitments and records and, during such period, the Company
\nshall (and shall cause each Company Subsidiary to) furnish promptly to the
\nParent (a) a copy of each report, schedule, registration statement and other
\ndocument filed or received by it during such period pursuant to the requirements
\nof federal securities laws and (b) all other information concerning its
\nbusiness, properties and personnel as the Parent may reasonably request,
\nprovided the Parent has complied with its obligations hereunder in all material
\nrespects. Unless otherwise required by law, the Parent will hold any such
\ninformation which is nonpublic in confidence in accordance with the provisions
\nof the Confidentiality Agreement.<\/p>\n
Section 6.4 Reasonable Efforts.
\n ——————<\/p>\n
(a) Prior to the Closing, upon the terms and subject to the conditions of
\nthis Agreement, the Parent, Merger Sub and the Company agree to use reasonable
\nbest efforts to take, or cause to be taken, all actions, and to do, or cause to
\nbe done, all things necessary, proper or advisable (subject to any applicable
\nlaws) to consummate the Merger and make effective the Merger and the other
\nTransactions as promptly as practicable including, (i) the preparation and
\nfiling of all forms, registrations and notices required to be filed to
\nconsummate the Merger and the other Transactions and the taking of such actions
\nas are necessary to obtain any requisite approvals, consents, orders, exemptions
\nor waivers by any third party or Governmental Entity and (ii) the satisfaction
\nof the other parties’ conditions to Closing. In addition, no party hereto shall
\ntake any action after the date of this Agreement to materially delay the
\nobtaining of, or result in not obtaining, any permission, approval or consent
\nfrom any Governmental Entity necessary to be obtained prior to Closing.
\nNotwithstanding the foregoing or any other covenant in this Agreement, in
\nconnection with the receipt of any necessary approvals under the HSR Act,
\nneither the Company nor any of the Company Subsidiaries shall be entitled to
\ndivest or hold separate or otherwise take, or commit to take, any action that
\nlimits the Parent’s or the Surviving Corporation’s freedom of action with, or
\ntheir ability to retain, the Company or any Company Subsidiary or any material
\nportions thereof or any of the businesses, product lines, properties or assets
\nof the Company or any Company Subsidiary, without the Parent’s prior written
\nconsent (which may be withheld in the Parent’s sole and absolute discretion).<\/p>\n
(b) Prior to the Closing, each party shall promptly consult with the other
\nparties hereto with respect to, provide any necessary information with respect
\nto, and provide the other parties (or their respective counsel) with copies of,
\nall filings made by such party with any Governmental Entity or any other
\ninformation supplied by such party to a Governmental Entity in connection with
\nthis Agreement, the Merger and the other Transactions, except to the extent any
\nsuch information is sensitive competitive information. Each party hereto shall
\npromptly inform the other of any communication from any Governmental Entity
\nregarding any of the Transactions. If any party hereto or Affiliate thereof
\nreceives a request for additional<\/p>\n
42<\/p>\n
information or documentary material from any such Governmental Entity with
\nrespect to any of the Transactions, then such party shall endeavor in good faith
\nto make, or cause to be made, as soon as reasonably practicable and after
\nconsultation with the other parties, an appropriate response in compliance with
\nsuch request. To the extent that transfers, amendments or modifications of
\npermits (including environmental permits) are required as a result of the
\nexecution of this Agreement or consummation of any of the Transactions, the
\nCompany shall and shall cause the Company Subsidiaries to use reasonable best
\nefforts to effect such transfers, amendments or modifications.<\/p>\n
(c) The Company and the Parent shall file as soon as practicable
\nnotifications under the HSR Act and respond as promptly as practicable to any
\ninquiries received from the Federal Trade Commission and the Antitrust Division
\nof the Department of Justice for additional information or documentation and
\nrespond as promptly as practicable to all inquiries and requests received from
\nany State Attorney General or other Governmental Entity in connection with
\nantitrust matters. Concurrently with the filing of notifications under the HSR
\nAct or as soon thereafter as practicable, the Company and the Parent shall each
\nrequest early termination of the HSR Act waiting period.<\/p>\n
(d) Nothing in this Agreement shall be deemed to require the Parent or any
\nof its Subsidiaries to (x) divest or hold separate any material assets or
\notherwise materially restrict its conduct of business or (y) commence any
\nlitigation against any entity in order to facilitate the consummation of any of
\nthe Transactions or to defend against any litigation brought by any Governmental
\nEntity seeking to prevent the consummation of any of the Transactions. Without
\nlimiting the foregoing, the Parent and the Company agree, and shall cause each
\nof their respective Subsidiaries, to cooperate and to use their respective
\nreasonable best efforts to obtain any government clearances required for the
\nMerger (including through compliance with the HSR Act and any applicable foreign
\ngovernment reporting requirements) and to respond to any requests for
\ninformation from any Governmental Entity, including any so-called “Second
\nRequest” under the HSR Act.<\/p>\n
Section 6.5 No Solicitation of Competing Transaction.
\n —————————————-<\/p>\n
(a) Neither the Company nor any Affiliate of the Company shall (and the
\nCompany shall cause the officers, directors, employees, representatives and
\nagents of the Company, each Affiliate of the Company, and their respective
\ninvestment bankers, financial advisers, attorneys, accountants and other agents,
\nnot to), directly or indirectly, encourage, solicit, participate in or initiate
\nor resume (including by way of furnishing or disclosing non-public information),
\nor take any action designed to facilitate, any discussions, inquiries,
\nnegotiations or any other action that could be expected to lead to the making of
\nany proposals with respect to or concerning any Competing Transaction. Nothing
\ncontained in this Section 6.5 or any other provision of this Agreement shall
\nprohibit the Company or the Company’s board of directors from (i) taking and
\ndisclosing to the Company’s stockholders a position with respect to a tender or
\nexchange offer by a third party pursuant to Rule 14d-9 or Rule l4e-2 under the
\nExchange Act, or (ii) making such disclosure to the Company’s stockholders as,
\nin the good faith judgment of the board of directors of the Company, after
\nconsultation with outside counsel, is required under applicable law; provided,
\nthat the Company may not, except as permitted by Section 6.5(b), withdraw or
\nmodify, or propose to withdraw or modify, its position with respect this
\nAgreement or to the<\/p>\n
43<\/p>\n
Merger or approve or recommend, or propose to approve or recommend any Competing
\nTransaction, or enter into any agreement with respect to any Competing
\nTransaction. Upon execution of this Agreement, the Company will immediately
\ncease any existing activities, discussions or negotiations with any parties
\nconducted heretofore with respect to any of the foregoing. Notwithstanding the
\nforegoing, prior to receipt of the Company stockholder approval of the Merger
\nand adoption of this Agreement, the Company may furnish information concerning
\nits business, properties or assets to any corporation, partnership, Person or
\nother entity or group pursuant to appropriate confidentiality agreements (which
\nshall be no more permissive than the Confidentiality Agreement and shall permit
\nthe disclosure contemplated by this Section 6.5(a)), and may negotiate and
\nparticipate in discussions and negotiations with such entity or group concerning
\na Competing Transaction if such entity or group has, on an unsolicited basis and
\nwithout violation of this Section 6.5, submitted a bona fide written proposal to
\nthe board of directors of the Company relating to any such transaction which the
\nboard determines in good faith, after consultation with its outside legal and
\nfinancial advisors, is or may reasonably be expected to lead to a Superior
\nProposal.<\/p>\n
The Company will promptly (and in any event within 24 hours) notify the
\nParent of the existence of any proposal, discussion, negotiation or inquiry of
\nthe type referred to in this Section 6.5(a) received by the Company, any Company
\nSubsidiary or any of their respective representatives, and the Company will
\npromptly (and in any event within 24 hours) communicate to the Parent the
\nmaterial terms of any proposal, discussion, negotiation or inquiry which it, any
\nCompany Subsidiary or any of their respective representatives may receive and
\nthe identity of the party making such proposal or inquiry or engaging in such
\ndiscussion or negotiation. The Company will promptly provide to the Parent any
\nnon-public information concerning the Company provided any other party which was
\nnot previously provided to the Parent.<\/p>\n
(b) Except as set forth in this Section 6.5(b), neither the Company’s board
\nof directors nor any committee thereof shall effect a Change in Company
\nRecommendation. Notwithstanding the foregoing, prior to receipt of the Company
\nstockholder approval of the Merger and adoption of this Agreement, the Company’s
\nboard of directors may withdraw or modify its approval or recommendation of this
\nAgreement or the Merger, approve or recommend a Superior Proposal, or terminate
\nthis Agreement and enter into an agreement in accordance with Section
\n8.1(c)(ii), in each case at any time after 48 hours following the Parent’s
\nreceipt of written notice from the Company advising the Parent that the board of
\ndirectors of the Company has received a Superior Proposal which it intends to
\naccept, specifying the material terms and conditions of such Superior Proposal,
\nand identifying the Person making such Superior Proposal. Nothing in this
\nAgreement shall permit the Company to enter into any agreement, arrangement or
\nunderstanding with any third party making or proposing to make a Competing
\nTransaction providing for the payment of fees or reimbursement of expenses if
\nthe Parent makes a proposal in response to such Superior Proposal, other than in
\nan agreement entered into in accordance with the preceding sentence concurrently
\nwith termination of this Agreement pursuant to Section 8.1(c)(ii).<\/p>\n
Section 6.6 Publicity. The initial press release with respect to the
\n ———
\nexecution of this Agreement shall be a joint press release reasonably acceptable
\nto each of the Parent and the Company. Thereafter, until the Effective Time, or
\nthe date this Agreement is terminated pursuant to Article 8 (whichever occurs
\nfirst), neither the Company, the Parent nor any of their<\/p>\n
44<\/p>\n
respective Affiliates shall issue or cause the publication of any press release
\nor other announcement with respect to the Merger, this Agreement or the other
\nTransactions without prior consultation with the other party, except as advised
\nby outside counsel is required by law or by any listing agreement with a
\nnational securities exchange or trading market, in which case, prior
\nconsultation with the other party will be made to the extent reasonably
\npracticable.<\/p>\n
Section 6.7 Notification of Certain Matters. Each Party shall give prompt
\n ——————————-
\nnotice to the other party, of (a) the occurrence or non-occurrence of any event
\nthe occurrence or non-occurrence of which caused or would reasonably be expected
\nto cause any representation or warranty contained in this Agreement to be untrue
\nor inaccurate in any material respect at or prior to the Effective Time and (b)
\nany material failure of such party to comply with or satisfy any covenant,
\ncondition or agreement to be complied with or satisfied by it hereunder;
\nprovided, however, that the delivery of any notice pursuant to this Section 6.7
\nshall not limit or otherwise affect the remedies of the other party.<\/p>\n
Section 6.8 Directors’ and Officers’ Insurance and Indemnification.
\n ——————————————————<\/p>\n
(a) For six years after the Effective Time, the Surviving Corporation (or
\nany successor to the Surviving Corporation) shall indemnify, defend and hold
\nharmless each Indemnified Party against all losses, claims, damages,
\nliabilities, costs, fees and expenses, including reasonable fees and
\ndisbursements of counsel and judgments, fines, losses, claims, liabilities and
\namounts paid in settlement (provided, that any such settlement is effected with
\nthe written consent of the Parent or the Surviving Corporation) arising out of
\nactions or omissions occurring at or prior to the Effective Time to the full
\nextent required under applicable Delaware law, the terms of the Company’s
\ncertificate of incorporation, bylaws or indemnity agreements in the form filed
\nas exhibits to Company SEC Documents, each as in effect at the date hereof;
\nprovided, that if any claim or claims are asserted or made within such six-year
\nperiod, all rights to indemnification in respect of any such claim or claims
\nshall continue until disposition of any and all such claims. For a period of six
\nyears following the Effective Time, the Surviving Corporation (and its
\nsuccessors) shall establish and maintain from and after the Effective Time
\nprovisions in its certificate of incorporation and bylaws concerning the
\nindemnification and exoneration of the Company’s former and current officers,
\ndirectors, employees, and agents that are no less favorable to those persons
\nthan the provisions of the certificate of incorporation and bylaws of the
\nCompany as in effect as of the date hereof.<\/p>\n
(b) Prior to or concurrent with the Effective Time, the Company shall
\npurchase a six year extension of the discovery period from the Effective Time
\nunder the Company’s current directors’ and officers’ liability insurance policy;
\nprovided, however, that in no event shall the Company and the Surviving
\nCorporation together be required to expend in excess of $3 million for such six
\nyear extension; provided, further, that prior to the execution of such extension
\nParent shall be given the opportunity to review any material enhancements to
\nsuch extension as compared to the Company’s current directors’ and officers’
\nliability insurance policy; and provided, further, that if the Company is unable
\nto obtain the amount of insurance required by this sentence of this Section
\n6.8(b) for such aggregate premiums, the Company shall obtain as much insurance
\nas can be obtained for aggregate premiums not in excess of $3 million. If for
\nany reason the coverage described in the previous sentence should not be in full
\neffect, the Parent or the Surviving Corporation shall maintain the Company’s
\nexisting officers’ and directors’<\/p>\n
45<\/p>\n
liability insurance for a period of not less than six years after the Effective
\nDate; provided, that the Parent may substitute therefor policies of coverage and
\namounts containing terms no less favorable to such former directors or officers
\nas currently in effect for directors and officers of the Parent; provided,
\nfurther, that in no event shall the Parent or the Surviving Corporation be
\nrequired to pay aggregate premiums under this Section 6.8(b) in excess of 150%
\nof the premium paid by the Parent for coverage of its directors and officers in
\nthe twelve months prior to the date of this Agreement; and provided, further,
\nthat if the Parent or the Surviving Corporation is unable to obtain the amount
\nof insurance required by this sentence of this Section 6.8(b) for such aggregate
\npremiums, the Parent or the Surviving Corporation shall obtain as much insurance
\nas can be obtained for aggregate premiums not in excess of 150% of the premium
\npaid by the Parent for coverage of its directors and officers in the twelve
\nmonths prior to the date of this Agreement.<\/p>\n
(c) The rights of each Indemnified Party hereunder shall be in addition to,
\nand not in limitation of, any other rights such Indemnified Party may have under
\nthe certificate of incorporation or bylaws of the Company, any other
\nindemnification arrangement, the DGCL or otherwise. The provisions of this
\nSection 6.8 shall survive the consummation of the Merger and expressly are
\nintended to benefit each of the Indemnified Parties. In the event that the
\nSurviving Corporation or any of its successors or assigns (i) consolidates with
\nor merges into any other person and shall not be the continuing or surviving
\ncorporation or entity of such consolidation or merger or (ii) transfers or
\nconveys all or substantially all of its properties and assets to any person,
\nthen, and in each such case, proper provision shall be made so that the
\nsuccessors or assigns of the Surviving Corporation, as the case may be, shall
\nsucceed to the obligations set forth in this Section 6.8. The Surviving
\nCorporation shall pay all expenses, including reasonable attorney’s fees and
\ncosts, that may be incurred by any Indemnified Person in enforcing the indemnity
\ncontained in this Section 6.8.<\/p>\n
Section 6.9 State Takeover Laws. Notwithstanding any other provision in
\n ——————-
\nthis Agreement, in no event shall the approval of the Transactions by the board
\nof directors of the Company under section 203 of the DGCL be withdrawn, revoked
\nor modified by the board of directors of the Company. If any state takeover
\nstatute becomes or is deemed to become applicable to the Agreement, the
\nacquisition of Shares pursuant to the Merger or the other Transactions, the
\nCompany or the applicable Company Subsidiary shall take all action necessary to
\nrender such statute inapplicable to all of the foregoing. If under the Parent
\nRights Plan (i) a Person will become an “Acquiring Person” and (ii) “Share
\nAcquisition Date” or “Distribution Date” will occur in each case, as a result of
\nthe approval, execution and delivery of this Agreement and the Voting Agreement
\nand the consummation of the transactions contemplated by this Agreement, Parent
\nshall take all action necessary to prevent the foregoing and render such Parent
\nRights Plan inapplicable to all of the foregoing.<\/p>\n
Section 6.10 Preparation of the Registration Statement and the Proxy
\n ——————————————————-
\nStatement\/ Prospectus; Stockholders’ Meeting.
\n——————————————–<\/p>\n
(a) As soon as practicable following the date of this Agreement, the Parent
\nand the Company shall prepare the Proxy Statement\/Prospectus and the Parent
\nshall prepare and file with the SEC the Registration Statement, in which the
\nProxy Statement\/Prospectus will be included as a prospectus. Each of the Parent
\nand the Company shall use reasonable best efforts to have the<\/p>\n
46<\/p>\n
Registration Statement declared effective under the Securities Act as promptly
\nas practicable after such filing. Subject to the terms of this Agreement, the
\nCompany will use reasonable best efforts to cause the Proxy Statement\/Prospectus
\nto be mailed to the Company’s stockholders as promptly as practicable after the
\nRegistration Statement is declared effective under the Securities Act. The
\nParent shall also take any action required to be taken under any applicable
\nstate securities laws in connection with the issuance of shares of the Parent
\nCommon Stock in the Merger and the conversion of Company Options into options to
\nacquire Parent Common Stock, and the Company shall furnish all information
\nconcerning the Company and the holders of Company Common Stock and Company
\nOptions as may reasonably be requested in connection with any such action. No
\nfiling of, or amendment or supplement to, the Registration Statement or the
\nProxy Statement\/Prospectus will be made by the Parent without the Company’s
\nprior consent (which shall not be unreasonably withheld) and without providing
\nthe Company the opportunity to review and comment thereon; provided that with
\nrespect to documents filed by a party which are incorporated by reference in the
\nRegistration Statement or Proxy Statement\/Prospectus, this right of approval
\nshall apply only with respect to information relating to the other party or its
\nbusiness, financial condition or results of operations; and provided further
\nthat the Company, in connection with a change in the recommendation of its board
\nof directors, or as otherwise required, may amend or supplement the Proxy
\nStatement\/Prospectus or Registration Statement (including by incorporation by
\nreference). The Parent will advise the Company promptly after it receives notice
\nthereof, of the time when the Registration Statement has become effective or any
\nsupplement or amendment has been filed, the issuance of any stop order, the
\nsuspension of the qualification of the share of Parent Common Stock issuable in
\nconnection with the Merger for offering or sale in any jurisdiction, or any
\nrequest by the SEC for amendment of the Proxy Statement\/Prospectus or the
\nRegistration Statement or comments thereon and responses thereto or requests by
\nthe SEC for additional information. If at any time prior to the Effective Time,
\nany information relating to the Parent or the Company, or any of their
\nrespective Affiliates, officers or directors, should be discovered by the Parent
\nor the Company which should be set forth in an amendment or supplement to any of
\nthe Registration Statement or the Proxy Statement\/Prospectus, so that any of
\nsuch documents would not include any misstatement of a material fact or omit to
\nstate any material fact necessary to make the statements therein, in light of
\nthe circumstances under which they were made, not misleading, the party which
\ndiscovers such information shall promptly notify the other parties hereto and an
\nappropriate amendment or supplement describing such information shall be
\npromptly filed with the SEC and, to the extent required by law, disseminated to
\nthe stockholders of the Company and the Parent.<\/p>\n
(b) The Company shall, as promptly as practicable after the Registration
\nStatement is declared effective under the Securities Act, duly give notice of,
\nconvene and hold a meeting (the “Company Stockholders’ Meeting”) of its
\nstockholders entitled to vote thereon in accordance with the DGCL for the
\npurpose of obtaining the approval of the Company’s stockholders and shall,
\nsubject to the provisions of Section 6.5(b), through its board of directors,
\nrecommend to its stockholders the adoption of this Agreement.<\/p>\n
(c) The Parent shall, as promptly as practicable after the Registration
\nStatement is declared effective under the Securities Act, duly give notice of,
\nconvene and hold a meeting (the “Parent Stockholders’ Meeting”) of its
\nstockholders entitled to vote thereon in accordance with<\/p>\n
47<\/p>\n
the DGCL for the purpose of obtaining the approval of the Parent’s stockholders
\nand shall, through its board of directors, recommend to its stockholders the
\napproval of this Agreement.<\/p>\n
Section 6.11 Tax Treatment. Each of the Parent, the Company and their
\n ————-
\nrespective Subsidiaries shall use commercially reasonable efforts to cause the
\nMerger to qualify as a reorganization within the meaning of Section 368(a) of
\nthe Code, and to obtain the opinions of counsel referred to in Sections 7.2(e)
\nand 7.3(e). Neither the Parent, nor the Company, nor their respective
\nSubsidiaries, shall take any action which could reasonably be expected to cause
\nthe Merger to fail to qualify as a reorganization within the meaning of section
\n368(a) of the Code.<\/p>\n
Section 6.12 Conveyance Taxes. The Company and the Parent shall cooperate
\n —————-
\nin the preparation, execution and filing of all Tax Returns, questionnaires,
\napplications or other documents regarding Taxes, transfer, recording,
\nregistration and\/or other fees which become payable in connection with the
\ntransactions contemplated by this Agreement that are required or permitted to be
\nfiled on or before the Effective Time.<\/p>\n
Section 6.13 Exemption from Liability Under Section 16(b).
\n ——————————————–<\/p>\n
(a) The board of directors of Parent, or a committee thereof consisting
\nexclusively of Non-Employee Directors (as such term is defined for purposes of
\nRule 16b-3(b) under the Exchange Act), shall adopt a resolution in advance of
\nthe Effective Time providing that the receipt by Company Insiders of Parent
\nCommon Stock in exchange for shares of Company Common Stock pursuant to the
\nTransactions is intended to be exempt pursuant to Rule 16b-3 under the Exchange
\nAct.<\/p>\n
(b) The board of directors of the Company (or a committee thereof
\nexclusively consisting of Non-Employee Directors) shall adopt a resolution in
\nadvance of the Effective Time that exempts the disposition of Company equity
\nsecurities by Company Insiders pursuant to the Transactions from the short-swing
\nprofits liability provisions of Section 16 of the Exchange Act by reason of Rule
\n16b-3.<\/p>\n
Section 6.14 Affiliate Legends. Section 6.14 of the Company Disclosure
\n —————–
\nLetter sets forth a list of those persons who are, in the Company’s reasonable
\njudgment, as of the date of this Agreement, “affiliates” of the Company within
\nthe meaning of Rule 145 promulgated under the Securities Act (together with
\nPersons who after the date of this agreement become “affiliates” of the Company
\nwithin the meaning of Rule 145 promulgated under the Securities Act, the “Rule
\n145 Affiliates”). Parent shall be entitled to place appropriate legends on the
\ncertificates evidencing any shares of Parent Common Stock to be received by Rule
\n145 Affiliates of the Company in the Merger reflecting the restrictions set
\nforth in Rule 145 promulgated under the Securities Act and to issue appropriate
\nstop transfer instructions to the transfer agent for Parent Common Stock. The
\nCompany shall use commercially reasonable efforts to cause each of the Rule 145
\nAffiliates to enter into an affiliate agreement with Parent (the “Rule 145
\nAffiliate Agreements”) substantially in the form set forth in Section 6.14 of
\nthe Company Disclosure Letter.<\/p>\n
Section 6.15 Service Credit. Following the Effective Time, the Parent will
\n ————–
\ngive each employee of the Company who continues as an employee of the Company or
\nthe Parent<\/p>\n
48<\/p>\n
after the Effective Time (a “Continuing Employee”) full credit for prior service
\nwith the Company or the Company Subsidiaries for purposes of (a) eligibility and
\nvesting under any Parent Benefit Plans, (b) determination of benefits levels
\nunder any Parent Benefit Plan or policy relating to vacation or severance and
\n(c) determination of “retiree” status under any Parent Benefit Plan, in each
\ncase for which the Continuing Employee is otherwise eligible and in which the
\nContinuing Employee is offered participation, but except where such crediting
\nwould (i) result in a duplication of benefits or (ii) otherwise cause Parent or
\nany Parent Subsidiary or any Parent Benefit Plan or trust relating thereto to
\naccrue or pay for benefits that relate to any time period prior to the
\nContinuing Employee’s participation in the Parent Benefit Plan.<\/p>\n
Section 6.16 Acquisitions of Company Stock. Except as contemplated by the
\n —————————–
\nVoting Agreement, from the date of this Agreement through the earlier of the
\nEffective Time or the termination of this Agreement in accordance with its
\nterms, the Parent will not acquire beneficial ownership of any shares of Company
\nCommon Stock or otherwise acquire the right to vote shares of Company Common
\nStock without the Company’s prior written consent.<\/p>\n
Section 6.17 Parent Board of Directors. Parent shall take all necessary
\n ————————-
\naction to cause Richard A. Kay to be appointed to the Board of Directors of
\nParent as of the Effective Time to serve until the next annual election of
\nmembers of the Board of Directors of Parent. In connection with such election,
\nParent shall take all necessary action to include Richard A. Kay as a nominee
\nfor the Board of Directors of Parent recommended by such Board of Directors for
\nelection by the Parent’s stockholders.<\/p>\n
ARTICLE 7<\/p>\n
CONDITIONS<\/p>\n
Section 7.1 Conditions to Each Party’s Obligation to Effect the Merger.
\n ———————————————————-
\nThe respective obligation of each party to effect the Merger shall be subject to
\nthe satisfaction at or prior to the Effective Time of each of the following
\nconditions, any and all of which may be waived in whole or in part by the
\nCompany, the Parent or Merger Sub, as the case may be, to the extent permitted
\nby applicable law:<\/p>\n
(a) This Agreement shall have been adopted by the requisite vote of the
\nholders of the shares of Company Common Stock in order to consummate the Merger
\nand this Agreement shall have been approved by the requisite vote under the
\nrules and regulations of the NNM by the stockholders of the Parent.<\/p>\n
(b) No statute, rule or regulation shall have been enacted or promulgated
\nby any Governmental Entity which prohibits the consummation of the Merger, and
\nthere shall be no order or injunction of a court of competent jurisdiction in
\neffect precluding consummation of the Merger; provided, however, that each of
\nthe parties to this Agreement shall have used commercially reasonable efforts to
\nprevent the entry of such restraints and to appeal as promptly as possible any
\nsuch restraints that may be entered.<\/p>\n
49<\/p>\n
(c) The applicable waiting periods under the HSR Act shall have expired or
\nbeen terminated.<\/p>\n
(d) The Registration Statement shall have become effective under the
\nSecurities Act and no stop order or proceedings seeking a stop order suspending
\nthe effectiveness of the Registration Statement or any part thereof shall have
\nbeen issued and no proceeding for that purpose, and no similar proceeding in
\nrespect of the Proxy Statement, shall have been threatened in writing by the SEC
\nor shall have been initiated by the SEC.<\/p>\n
(e) All consents of any Governmental Entity or third party, the failure of
\nwhich to obtain would reasonably be expected to have a Material Adverse Effect
\nwith respect to the Surviving Corporation, shall have been obtained.<\/p>\n
Section 7.2 Conditions to the Parent’s and Merger Sub’s Obligations to
\n ———————————————————-
\nEffect the Merger. The obligations of the Parent and Merger Sub to consummate
\n—————–
\nthe Merger shall be subject to the satisfaction on or prior to the Closing Date
\nof each of the following conditions, any and all of which may be waived in whole
\nor in part by the Parent and Merger Sub, to the extent permitted by applicable
\nlaw.<\/p>\n
(a) The representations and warranties of the Company set forth in this
\nAgreement shall be true and correct (i) as of the date of this Agreement (except
\nto the extent such representations and warranties are specifically made as of a
\nparticular date, in which case such representations and warranties shall be true
\nand correct as of such date) and (ii) as of the Effective Time as though made on
\nand as of the Effective Time (except (x) to the extent such representations and
\nwarranties are specifically made as of a particular date, in which case such
\nrepresentations and warranties shall be true and correct as of such date, (y)
\nfor changes contemplated by this Agreement and (z) where the failures to be true
\nand correct (without regard to any materiality, Company Material Adverse Effect
\nor knowledge qualifications contained therein), individually or in the
\naggregate, have not had, and are not reasonably be expected to have, a Company
\nMaterial Adverse Effect).<\/p>\n
(b) The Company shall have complied in all material respects with its
\nobligations under this Agreement.<\/p>\n
(c) The Parent shall have received an officer’s certificate duly executed
\nby each of the Chief Executive Officer and Chief Financial Officer of the
\nCompany to the effect that the conditions set forth in Sections 7.2(a) and
\n7.2(b) have been satisfied.<\/p>\n
(d) The Parent shall have received an opinion of Brobeck, Phleger & Harrison LLP, in form and substance reasonably satisfactory to the Parent, dated
\nas of the date during which the Effective Time occurs, substantially to the
\neffect that, on the basis of facts, representations and assumptions set forth in
\nsuch opinion, for United States federal income tax purposes, the Merger will
\nconstitute a “reorganization” within the meaning of section 368(a) of the Code.
\nIn rendering such opinion, Brobeck, Phleger & Harrison LLP shall receive and may
\nrely upon representations contained in certificates of the Company, the Parent
\nand Merger Sub.<\/p>\n
(e) The holders of less than five percent of the outstanding Shares at the
\nEffective Time shall have validly delivered to the Company a demand for
\nappraisal rights with respect<\/p>\n
50<\/p>\n
thereto, and shall not have voted in favor of the Merger or otherwise failed to
\nperfect or effectively withdrawn or lost such rights under Section 262 of the
\nDGCL.<\/p>\n
Section 7.3 Conditions to the Company’s Obligations to Effect the Merger.
\n ————————————————————
\nThe obligations of the Company to consummate the Merger shall be subject to the
\nsatisfaction on or prior to the Closing Date of each of the following
\nconditions, any and all of which may be waived in whole or in part by the
\nCompany, to the extent permitted by applicable law.<\/p>\n
(a) The representations and warranties of Parent and Merger Sub set forth
\nin this Agreement shall be true and correct (i) as of the date of this Agreement
\n(except to the extent such representations and warranties are specifically made
\nas of a particular date, in which case such representations and warranties shall
\nbe true and correct as of such date) and (ii) as of the Effective Time as though
\nmade on and as of the Effective Time (except (x) to the extent such
\nrepresentations and warranties are specifically made as of a particular date, in
\nwhich case such representations and warranties shall be true and correct as of
\nsuch date, (y) for changes contemplated by this Agreement and (z) where the
\nfailures to be true and correct (without regard to any materiality, Parent
\nMaterial Adverse Effect or knowledge qualifications contained therein),
\nindividually or in the aggregate, have not had, and are not reasonably likely to
\nhave, a Parent Material Adverse Effect).<\/p>\n
(b) Each of the Parent and Merger Sub shall have complied in all material
\nrespects with its obligations under this Agreement.<\/p>\n
(c) The Company shall have received an officer’s certificate duly executed
\nby the Chief Financial Officer of the Parent to the effect that the conditions
\nset forth in Sections 7.3(a) and 7.3(b) have been satisfied.<\/p>\n
(d) The Company shall have received an opinion of Hale and Dorr LLP, in
\nform and substance reasonably satisfactory to the Company, dated as of the date
\nduring which the Effective Time occurs, substantially to the effect that, on the
\nbasis of facts, representations and assumptions set forth in such opinion, for
\nUnited States federal income tax purposes, the Merger will constitute a
\n“reorganization” within the meaning of section 368(a) of the Code. In rendering
\nsuch opinion, Hale and Dorr LLP shall receive and may rely upon representations
\ncontained in certificates of the Company, the Parent and Merger Sub.<\/p>\n
(e) The shares of Parent Common Stock issuable to the stockholders of the
\nCompany as contemplated by Article 3 shall have been approved for listing on the
\nNNM, subject to official notice of issuance.<\/p>\n
ARTICLE 8<\/p>\n
TERMINATION<\/p>\n
Section 8.1 Termination. This Agreement may be terminated or abandoned at
\n ———–
\nany time prior to the Effective Time, whether before or after stockholder
\napproval hereof:<\/p>\n
51<\/p>\n
(a) By the mutual written consent of the Parent and the Company,<\/p>\n
(b) By either of the Company or the Parent:<\/p>\n
(i) if any Governmental Entity shall have issued an order, decree
\nor ruling or taken any other action (which order, decree, ruling or other action
\nthe parties hereto shall use their commercially reasonable efforts to lift),
\nwhich permanently restrains, enjoins or otherwise prohibits the Merger and such
\norder, decree, ruling or other action shall have become final and
\nnon-appealable; or<\/p>\n
(ii) if the Merger shall not have been consummated by July 15,
\n2002; provided that if on such date all conditions to the consummation of the
\nMerger and the other transactions contemplated hereby have been satisfied or are
\ncapable of being satisfied other than the expiration of any waiting period under
\nthe HSR Act, this Agreement may be terminated pursuant to this Section
\n8.1(b)(ii) only if the Merger shall not have been consummated by September 16,
\n2002, provided, however, that the right to terminate this Agreement pursuant to
\nthis Section 8.1(b)(ii) shall not be available to any party whose failure to
\nperform any of its obligations under this Agreement results in the failure of
\nthe Merger to be consummated by such time; or<\/p>\n
(iii) if at a Company Stockholders’ Meeting (including any
\nadjournments thereof) convened and held pursuant to this Agreement, the approval
\nof this Agreement and the Merger by the Company’s stockholders shall not have
\nbeen obtained, provided, however, that the Company’s right to terminate this
\nAgreement under this Section 8.1(b)(iii) shall not be available to the Company
\nif the Company has not complied with its obligations under Section 6.10(b); or<\/p>\n
(iv) if at a Parent Stockholders’ Meeting convened and held
\npursuant to this Agreement, the approval of the Parent’s stockholders of the
\nissuance of shares of the Parent Common Stock hereunder shall not have been
\nobtained, provided, however, that the Parent’s right to terminate this Agreement
\nunder this Section 8.1(b)(iv) shall not be available to the Parent if the Parent
\nhas not complied with its obligations under Section 6.10(c).<\/p>\n
(c) By the Company:<\/p>\n
(i) if the Parent or Merger Sub shall have breached in any
\nmaterial respect any of their respective representations, warranties, covenants
\nor other agreements contained in this Agreement, which breach cannot be or has
\nnot been cured within thirty days after the giving of written notice of such
\nmaterial breach by the Company to the Parent, in either case such that the
\nconditions set forth in Section 7.3(a) or (b) would not be satisfied as of the
\ntime of such termination; or<\/p>\n
(ii) if (x) prior to adoption of this Agreement by the stockholders
\nof the Company, concurrently with, or promptly after, termination pursuant to
\nthis Section 8.1(c)(ii) the Company enters into an agreement providing for or
\nauthorizes or consummates a Superior Proposal, where in the good faith judgment
\nof the board of directors of the Company, after consultation with independent
\nlegal counsel to the Company, the failure to take such action would create a
\nreasonable probability of a breach of the Company’s board of directors’
\nfiduciary duties to the Company and the Company’s stockholders under applicable
\nlaw, (y) the Company<\/p>\n
52<\/p>\n
has complied with the notice provisions of Section 6.5(b), and (z) concurrently
\nwith effecting the termination pursuant to this Section 8.1(c)(ii), the Company
\npays the Termination Fee pursuant to Section 9.1(b)(i).<\/p>\n
(d) By the Parent (on behalf of itself and Merger Sub):<\/p>\n
(i) if, prior to the Effective Time, the Company’s board of
\ndirectors shall have, whether or not permitted by this Agreement, made a Change
\nin the Company Recommendation; or<\/p>\n
(ii) if prior to the Effective Time, the Company shall have
\nreached in any material respect any representation, warranty, covenant or other
\nagreement contained in this Agreement which cannot be or has not been cured
\nwithin thirty days after the giving of written notice by the Parent to the
\nCompany, in either case such that the conditions set forth in Section 7.2(a) or
\n(b) would not be satisfied as of the time of such termination.<\/p>\n
Section 8.2 Effect of Termination. If this Agreement is terminated, there
\n ———————
\nshall be no liability on the part of any party to this Agreement except (a) for
\nfraud or intentional misstatement or (b) for material breach of this Agreement
\nprior to such termination. Only Sections 6.6, 8.1 and 8.2, Article 9 and the
\nConfidentiality Agreement shall survive the termination of this Agreement.<\/p>\n
Section 8.3 Method of Termination. This Agreement may be terminated only
\n ———————
\nupon receipt of notice from the party desiring to terminate this Agreement that
\n(a) states that it is terminating this Agreement, (b) specifies the portion of
\nSection 8.1 pursuant to which such termination is being effected and (c) recites
\nthat such termination has been approved by proper action of the board of
\ndirectors of such party.<\/p>\n
ARTICLE 9<\/p>\n
MISCELLANEOUS<\/p>\n
Section 9.1 Fees and Expenses.
\n —————–<\/p>\n
(a) Except as specifically provided to the contrary in this Agreement,
\nincluding Section 9.1(b), all costs and expenses incurred in connection with
\nthis Agreement and the consummation of the Transactions shall be paid by the
\nparty incurring such expenses, but each of the Parent and the Company shall pay
\none half of (x) the filing fee under the HSR Act and (y) the cost of printing
\nand mailing the Proxy Statement\/Prospectus and the cost of printing the
\nRegistration Statement.<\/p>\n
(b) If<\/p>\n
(i) the Company shall terminate this Agreement pursuant to Section
\n8.1(c)(ii), or<\/p>\n
(ii) the Parent shall terminate this Agreement pursuant to Section
\n8.1(d)(i);<\/p>\n
53<\/p>\n
then the Company shall pay to the Parent an amount equal to the Termination Fee.
\nThe Termination Fee shall be paid by wire transfer of immediately available
\nfunds concurrently with the execution of an agreement referred to in Section
\n8.1(c)(ii) or within one Business Day following receipt of notice of the
\ntermination referred to in Section 9.1(b)(ii), whichever shall first occur.<\/p>\n
(iii) If this Agreement is terminated pursuant to Section
\n8.1(b)(iii) then (a) within five Business Days of receipt of an invoice, the
\nCompany shall pay to the Parent an amount equal to the actual and reasonably
\ndocumented out-of-pocket fees and expenses (provided that such reimbursable out
\nof pocket fees and expenses shall not exceed one-fifth of the Termination Fee)
\nincurred by the Parent or Merger Sub in connection with this Agreement and the
\nTransactions and (b) if prior to such termination there shall have been publicly
\nannounced and not withdrawn a bona fide Competing Transaction (but changing the
\nfifteen percent amount in clauses (ii) and (iii) of the definition of Competing
\nTransaction to fifty percent) and within twelve months of such termination of
\nthe Company shall enter into a definitive agreement implementing any Competing
\nTransaction (but changing the fifteen percent amount in clauses (ii) and (iii)
\nof the definition of Competing Transaction to fifty percent), the Company shall,
\nconcurrently with entering into such definitive agreement pay to the Parent the
\nbalance of the Termination Fee. The Termination Fee shall be paid by wire
\ntransfer of immediately available funds.<\/p>\n
(iv) If (a) this Agreement is terminated by the Company pursuant to
\nSection 8.1(b)(ii), (b) the Company Stockholder Meeting shall not have been
\nconvened, (c) prior to such termination there shall have been publicly announced
\nand not withdrawn a bona fide Competing Transaction (but changing the fifteen
\npercent amount in clauses (ii) and (iii) of the definition of Competing
\nTransaction to fifty percent) and (d) within twelve months of such termination
\nthe Company shall enter into a definitive agreement implementing any Competing
\nTransaction (but changing the fifteen percent amount in clauses (ii) and (iii)
\nof the definition of Competing Transaction to fifty percent), the Company shall,
\nconcurrently with entering into such definitive agreement pay to the Parent the
\nTermination Fee. The Termination Fee shall be paid by wire transfer of
\nimmediately available funds.<\/p>\n
(c) If this Agreement is terminated pursuant to Section 8.1(b)(iv), then
\nthe Parent shall pay to the Company within five Business Days of receipt of an
\ninvoice, an amount equal to the actual and reasonably documented out-of-pocket
\nfees and expenses (provided that such reimbursable out of pocket fees and
\nexpenses shall not exceed one-fifth of the Termination Fee) incurred by the
\nCompany in connection with this Agreement and the Transactions. Such amounts
\nshall be paid by wire transfer of immediately available funds.<\/p>\n
Section 9.2 Amendment and Modification. Subject to applicable law, this
\n ————————–
\nAgreement may be amended, modified and supplemented in any and all respects,
\nwhether before or after any vote of the stockholders of the Company, by written
\nagreement of the parties, by action taken by their respective boards of
\ndirectors at any time prior to the Closing Date with respect to any of the terms
\ncontained in this Agreement; provided, however, that after the approval of this
\nAgreement by the stockholders of the Company, no such amendment, modification or
\nsupplement shall reduce the amount or change the form of the consideration
\npayable pursuant to Article 3.<\/p>\n
54<\/p>\n
Section 9.3 Non-survival of Representations and Warranties. None of the
\n ———————————————-
\nrepresentations and warranties in this Agreement or in any schedule, instrument
\nor other document delivered pursuant to this Agreement shall survive the
\nEffective Time. The preceding sentence shall not limit any covenant or agreement
\nof the parties which by its terms contemplates performance after the Effective
\nTime.<\/p>\n
Section 9.4 Notices. All notices and other communications hereunder shall
\n ——-
\nbe in writing and shall be deemed given if delivered personally, telecopied
\n(which is confirmed) or sent by an internationally recognized overnight courier
\nservice, such as Federal Express, to the parties at the following addresses (or
\nat such other address for a party as shall be specified by like notice):<\/p>\n
(a) if to the Parent or Merger Sub, to:<\/p>\n
Legato Systems, Inc.
\n 2350 West El Camino Real
\n Mountain View, California 94040
\n Attention: President, Chief Executive Officer and General
\n Counsel
\n Telecopy No.: (650) 210-7032<\/p>\n
with a copy (which shall not constitute notice) to:<\/p>\n
Brobeck, Phleger & Harrison, LLP
\n One Market, Spear Street Tower
\n San Francisco, California 94105
\n Attention: John W. Larson
\n Telecopy No.: (415) 442-1010<\/p>\n
and<\/p>\n
if to the Company, to:<\/p>\n
OTG Software, Inc.
\n 2600 Tower Oaks Blvd
\n Attention: Chairman of the Board, Chief Executive Officer and
\n President
\n and to
\n General Counsel
\n Telecopy No.: (240) 747-6200<\/p>\n
with a copy (which shall not constitute notice) to:<\/p>\n
Hale and Dorr LLP
\n 11951 Freedom Drive
\n Reston, Virginia 20190
\n Attention: David Sylvester
\n Donald L. Toker, Jr.
\n Telecopy No.: (703) 654-7100<\/p>\n
55<\/p>\n
Section 9.5 Counterparts. This Agreement may be executed in one or more
\n ————
\ncounterparts (whether delivered by facsimile or otherwise), each of which shall
\nbe considered one and the same agreement and shall become effective when two or
\nmore counterparts have been signed by each of the parties and delivered to the
\nother parties.<\/p>\n
Section 9.6 Entire Agreement; No Third Party Beneficiaries. This
\n ———————————————-
\nAgreement, the Voting Agreements, and the Confidentiality Agreement (including
\nthe documents and the instruments referred to herein and therein): (a)
\nconstitute the entire agreement and supersede all prior agreements,
\nnegotiations, arrangements and understandings, whether written, electronic or
\noral, among the parties with respect to the subject matter hereof and thereof,
\nand (b) except as provided in Section 6.7 are not intended to confer upon any
\nPerson other than the parties hereto and thereto any rights or remedies
\nhereunder.<\/p>\n
Section 9.7 Severability. Any term or provision of this Agreement that is
\n ————
\nheld by a court of competent jurisdiction or other authority to be invalid, void
\nor unenforceable in any situation in any jurisdiction shall not affect the
\nvalidity or enforceability of the remaining terms and provisions hereof or the
\nvalidity or enforceability of the invalid, void or unenforceable term or
\nprovision in any other situation or in any other jurisdiction. If the final
\njudgment of a court of competent jurisdiction or other authority declares that
\nany term or provision hereof is invalid, void or unenforceable, the parties
\nagree that the court making such determination shall have the power to and
\nshall, subject to the discretion of such court, reduce the scope, duration, area
\nor applicability of the term or provision, to delete specific words or phrases,
\nor to replace any invalid, void or unenforceable term or provision with a term
\nor provision that is valid and enforceable and that comes closest to expressing
\nthe intention of the invalid or unenforceable term or provision.<\/p>\n
Section 9.8 Governing Law. This Agreement shall be governed by, and
\n ————-
\nconstrued and enforced in accordance with, the internal laws of the State of
\nDelaware (without regard to any conflict of laws rules thereof which would cause
\nthe laws of any other jurisdiction to be applied).<\/p>\n
Section 9.9 Enforcement. The parties agree that irreparable damage would
\n ———–
\noccur in the event that any of the provisions of this Agreement were not
\nperformed in accordance with their specific terms or were otherwise breached. It
\nis accordingly agreed that the parties shall be entitled to an injunction or
\ninjunctions to prevent breaches of this Agreement and to enforce specifically
\nthe terms and provisions of this Agreement in any court of the United States or
\nthe Court of Chancery of and for the County of New Castle, the State of
\nDelaware, this being in addition to any other remedy to which they are entitled
\nat law or in equity. In addition, each of the parties (a) consents to submit
\nitself to the personal jurisdiction of the Court of Chancery of and for the
\nCounty of New Castle, the State of Delaware in the event any dispute arises out
\nof this Agreement or any of the Transactions, (b) agrees that it will not
\nattempt to deny or defeat such personal jurisdiction by motion or other request
\nfor leave from any such court and (c) agrees that it will not bring any action
\nrelating to this Agreement or any of the Transactions in any court other than
\nthe Court of Chancery of and for the County of New Castle, the State of
\nDelaware. EACH PARTY UNCONDITIONALLY AND IRREVOCABLY WAIVES AND<\/p>\n
56<\/p>\n
AGREES NOT TO ASSERT ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN CONNECTION WITH
\nTHIS AGREEMENT OR ANY OF THE TRANSACTIONS.<\/p>\n
Section 9.10 Extension, Waiver. At any time prior to the Effective Time,
\n —————–
\nthe parties to this Agreement may (a) extend the time for the performance of any
\nof the obligations or other acts of the other parties to this Agreement, (b)
\nwaive any inaccuracies in the representations and warranties of the other
\nparties contained in this Agreement or in any document delivered pursuant to
\nthis Agreement or (c) subject to Section 9.2, waive compliance by the other
\nparties with any of the agreements or conditions contained in this Agreement.
\nAny agreement on the part of a party to any such extension or waiver shall be
\nvalid only if set forth in an instrument in writing signed on behalf of such
\nparty. The failure of any party to this Agreement to assert any of its rights
\nunder this Agreement or otherwise shall not constitute a waiver of those rights.<\/p>\n
Section 9.11 Assignment. Neither this Agreement not any of the rights,
\n ———-
\ninterests or obligations hereunder shall be assigned by any of the parties to
\nthis Agreement (whether by operation of law or otherwise) without the prior
\nwritten content of the other parties to this Agreement. Subject to the preceding
\nsentence, this Agreement will be binding upon, inure to the benefit of and be
\nenforceable by the parties and their respective successors and permitted
\nassigns.<\/p>\n
57<\/p>\n
IN WITNESS WHEREOF, each of the Parent, Merger Sub and the Company have
\ncaused this Agreement to be signed by their respective duly authorized officers
\nas of the date first written above.<\/p>\n
LEGATO SYSTEMS, INC.<\/p>\n
By \/s\/ David B. Wright
\n ——————-
\n David B. Wright
\n Chairman, President and Chief Executive
\n Officer<\/p>\n
ORION ACQUISITION SUB CORP.<\/p>\n
By \/s\/ Andrew J. Brown
\n ——————-
\n Andrew J. Brown
\n President<\/p>\n
OTG SOFTWARE, INC.<\/p>\n
By \/s\/ Richard A. Kay
\n ——————
\n Richard A. Kay
\n Chairman, President and Chief Executive
\n Officer<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8039,8431],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43084","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-legato-systems-inc","corporate_contracts_companies-otg-software-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43084","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43084"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43084"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43084"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43084"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}