\n Section 4.1. Organization and Qualification of Parent and Purchaser…………………………30
\n Section 4.2. Authority…………………………………………………………………30
\n Section 4.3. Information……………………………………………………………….31
\n Section 4.4. Available Funds……………………………………………………………31
\n Section 4.5. Litigation………………………………………………………………..32<\/p>\nARTICLE V COVENANTS……………………………………………………………………..32
\n Section 5.1. Conduct of Business by the Company…………………………………………..32
\n Section 5.2. Source Code Escrow…………………………………………………………35
\n Section 5.3. Access to Information………………………………………………………36
\n Section 5.4. Efforts…………………………………………………………………..37
\n Section 5.5. Public Announcements……………………………………………………….37
\n Section 5.6. Employee Benefit Arrangements……………………………………………….38
\n Section 5.7. Indemnification……………………………………………………………38
\n Section 5.8. Notification of Certain Matters……………………………………………..39
\n Section 5.9. State Takeover Laws………………………………………………………..39
\n Section 5.10. No Solicitation……………………………………………………………39
\n Section 5.11. Section 203 of the DGCL…………………………………………………….42<\/p>\n
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER………………………………………….42
\n Section 6.1. Conditions………………………………………………………………..42<\/p>\n
ARTICLE VII TERMINATION; AMENDMENTS; WAIVER………………………………………………….43
\n Section 7.1. Termination……………………………………………………………….43
\n Section 7.2. Notice of Termination; Effect of Termination………………………………….44
\n Section 7.3. Fees and Expenses………………………………………………………….44
\n Section 7.4. Amendment…………………………………………………………………46
\n Section 7.5. Extension; Waiver………………………………………………………….46<\/p>\n
ARTICLE VIII MISCELLANEOUS………………………………………………………………….46
\n Section 8.1. Non-Survival of Representations and Warranties………………………………..46
\n Section 8.2. Entire Agreement; Assignment………………………………………………..46
\n Section 8.3. Validity………………………………………………………………….47
\n Section 8.4. Notices…………………………………………………………………..47
\n Section 8.5. Governing Law……………………………………………………………..48
\n Section 8.6. Interpretation…………………………………………………………….48
\n Section 8.7. Counterparts………………………………………………………………48
\n Section 8.8. Severability………………………………………………………………48
\n Section 8.9. Parties in Interest………………………………………………………..48
\n Section 8.10. Certain Definitions………………………………………………………..48
\n Section 8.11. Specific Performance……………………………………………………….49<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
(ii)<\/p>\n
4<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and
\nentered into as of July 28, 1998, by and among Networks Associates, Inc., a
\nDelaware corporation (“Parent”), Cyclone Acquisition Corp., a Delaware
\ncorporation and a wholly-owned subsidiary of Parent (“Purchaser”), and
\nCyberMedia, Inc., a Delaware corporation (the “Company”).<\/p>\n
RECITALS<\/p>\n
A. The respective Boards of Directors of Parent, Purchaser and the
\nCompany and the sole stockholder of Purchaser have approved the acquisition of
\nthe Company by the Purchaser on the terms and subject to the conditions set
\nforth in this Agreement;<\/p>\n
B. Pursuant to this Agreement, Purchaser has agreed to commence a
\ntender offer (the “Offer”) to purchase all of the outstanding shares of the
\nCompany’s common stock, par value $0.01 per share (the “Shares”), at a price per
\nShare of $9.50 (the “Offer Price”);<\/p>\n
C. The Board of Directors of the Company (the “Company Board”) has (i)
\napproved the Offer and (ii) adopted and approved this Agreement and is
\nrecommending that the Company’s stockholders accept the Offer, tender their
\nShares to Purchaser and approve this Agreement;<\/p>\n
D. The Board of Directors of Purchaser and the Company Board have
\napproved the merger of the Purchaser with and into the Company, as set forth in
\nthis Agreement (the “Merger”), in accordance with the Delaware General
\nCorporation Law (the “DGCL”) and upon the terms and subject to the conditions
\nset forth in this Agreement, whereby each of the issued and outstanding Shares
\nnot owned directly or indirectly by Parent, Purchaser or the Company will be
\nconverted into the right to receive in cash the Offer Price or such higher price
\nas is paid pursuant to the Offer;<\/p>\n
E. As a condition and inducement to Parent’s and Purchaser’s
\nwillingness to enter into this Agreement, upon the execution and delivery of
\nthis Agreement, Kanwal Rekhi, James R. Tolonen, Suhas Patil and Ronald S. Posner
\n(the “Director Stockholders”) and Robert Davis and Kenneth Kucera (the
\n“Management Stockholders”) are simultaneously entering into and delivering
\nsupport agreements (the “Support Agreements”) in the form attached hereto as
\nAnnex II;<\/p>\n
F. As a condition and inducement to Parent’s and Purchaser’s
\nwillingness to enter into this Agreement, Parent and the Company are
\nsimultaneously entering into and delivering a stock option agreement (the
\n“Company Option Agreement”) in the form attached hereto as Annex III; and<\/p>\n
G. Parent, Purchaser and the Company desire to make certain
\nrepresentations, warranties, covenants and agreements in connection with the
\nOffer and the Merger and to <\/p>\n
2<\/p>\n
5<\/p>\n
prescribe various conditions to the Offer and the Merger.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the respective
\nrepresentations, warranties, covenants and agreements set forth herein, Parent,
\nPurchaser and the Company agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE OFFER<\/p>\n
Section 1.1. The Offer.<\/p>\n
(a) Provided that this Agreement shall not have been terminated in
\naccordance with Article VII hereof, as promptly as practicable but in no event
\nlater than the fifth business day following the date of this Agreement,
\nPurchaser shall, and Parent shall cause Purchaser to, commence (within the
\nmeaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
\n“Exchange Act”)) the Offer at the Offer Price.<\/p>\n
(b) The obligations of Purchaser to consummate the Offer and to accept
\nfor payment and pay for any of the Shares tendered shall be subject to the
\nconditions set forth on Annex I hereto (the “Tender Offer Conditions”),
\nincluding the condition that a number of Shares equal to a majority of the
\nShares outstanding on a fully diluted basis (including for purposes of such
\ncalculation all Shares issuable upon exercise of all stock options and warrants
\nwhich are vested or scheduled to vest on or before October 31, 1998 with an
\nexercise price less than the Offer Price, and conversion of all convertible
\nsecurities or other rights to purchase or acquire Shares with a conversion price
\nless than the Offer Price) shall be validly tendered and not withdrawn prior to
\nthe Expiration Date or shall be held by Parent, Purchaser or any affiliate
\nthereof or issuable upon the exercise or conversion of any equity or debt
\nsecurity held by Parent, Purchaser or any affiliate thereof which is then
\nexercisable or convertible (the “Minimum Condition”). The amount of the Offer
\nPrice shall be net to the seller in cash, upon the terms and subject to the
\nconditions of the Offer and subject to reduction for any applicable federal
\nback-up or other applicable withholding or stock transfer taxes. The Offer shall
\nremain open until 12:00 Midnight, New York City time, on the twentieth business
\nday following the commencement of the Offer. Parent and Purchaser agree that if
\nall of the conditions set forth in Annex I hereto are not satisfied by the time
\nof any scheduled termination of the Offer then, provided that all such
\nconditions are reasonably capable of being satisfied, Purchaser shall extend the
\nOffer until such conditions are satisfied or waived; provided that Purchaser
\nshall not be required to extend the Offer beyond September 15, 1998. As used in
\nthis Agreement, the “Expiration Date” means 12:00 Midnight, New York City time,
\non the twentieth business day following the commencement of this Offer, unless
\nPurchaser extends the Offer as permitted or required by this Agreement, in which
\ncase the “Expiration Date” means the latest time and date to which the Offer is
\nextended. <\/p>\n
(c) Purchaser expressly reserves the right to waive any conditions to
\nthe Offer (other than the <\/p>\n
3<\/p>\n
6<\/p>\n
conditions set forth in clauses (i) or (iii)(d) of Annex I), to increase the
\nprice per Share payable in the Offer, to extend the duration of the Offer, or to
\nmake any other changes in the terms and conditions of the Offer; provided,
\nhowever, that, without the Company’s prior written consent, no such change may
\nbe made which decreases the price per Share payable in the Offer, changes the
\nform of consideration to be paid in the Offer, reduces the maximum number of
\nShares to be purchased in the Offer, imposes conditions to the Offer in addition
\nto the Tender Offer Conditions or amends any other material terms of the Offer
\nin a manner adverse to the Company’s stockholders; and provided further that the
\nOffer may not, without the Company’s prior written consent, be extended, except
\nas necessary to provide time to satisfy the Tender Offer Conditions, and, in any
\nevent, may not be extended beyond September 30, 1998, except that Purchaser may
\nextend the Offer for up to 10 business days, if as of such date, there shall not
\nhave been tendered at least 90% of the Shares then outstanding plus any Shares
\nthen held by Parent, Purchaser or any affiliate thereof or issuable upon the
\nexercise or conversion of any equity or debt security held by Parent, Purchaser
\nor any affiliate thereof which is then exercisable or convertible, so that the
\nMerger could be effected without a meeting of the Company’s stockholders in
\naccordance with applicable provisions of the DGCL. <\/p>\n
(d) The Offer shall be made by means of an offer to purchase to which
\nthe Company shall not have reasonably objected (the “Offer to Purchase”)
\ncontaining the terms set forth in this Agreement and the Tender Offer
\nConditions. Concurrently with the commencement of the Offer, Parent and
\nPurchaser shall file with the Securities and Exchange Commission (the “SEC”) a
\ntender offer statement on Schedule 14D-1 under the Exchange Act to which the
\nCompany shall not have reasonably objected reflecting the Offer (together with
\nall exhibits, amendments and supplements thereto, the “Schedule 14D-1”). The
\nSchedule 14D-1 will contain or will incorporate by reference the Offer to
\nPurchase (or portions thereof) and forms of the related letter of transmittal
\nand summary advertisements (which Schedule 14D-1, Offer to Purchase and other
\ndocuments, together with any supplements or amendments thereto, are referred to
\nherein collectively as the “Offer Documents”). The Company and its counsel shall
\nbe given a reasonable opportunity to review and comment on the Offer Documents
\nprior to their filing with the SEC or dissemination to the stockholders of the
\nCompany. Parent and Purchaser agree to provide the Company and its counsel with
\nany comments which Parent, Purchaser or their counsel may receive from the SEC
\nor the staff of the SEC with respect to such documents promptly after receipt
\nthereof. Parent and Purchaser represent and warrant that the Offer Documents
\nwill, on the date filed with the SEC and on the date first published, sent or
\ngiven to the Company’s stockholders, comply in all material respects with all
\nprovisions of applicable federal securities laws and the rules and regulations
\npromulgated thereunder. Parent, Purchaser and the Company agree promptly to
\ncorrect any information provided by any of them for use in the Offer Documents
\nthat shall be or have become false or misleading, and Parent and Purchaser
\nfurther agree to take all steps necessary to cause the Schedule 14D-1, as so
\ncorrected, to be filed with the SEC and the other Offer Documents, as so
\ncorrected, to be disseminated to the holders of Shares, in each case as and to
\nthe extent required by applicable federal securities laws.<\/p>\n
(e) Upon the terms and subject to the conditions of the Offer
\n(including, if the Offer is extended or amended, the terms and conditions of any
\nsuch extension or amendment), Purchaser will purchase by accepting for payment
\nand will pay for Shares validly tendered and not properly <\/p>\n
4<\/p>\n
7<\/p>\n
withdrawn, as promptly as practicable after the Expiration Date. Parent shall
\nprovide or cause to be provided to Purchaser on a timely basis the funds
\nnecessary to pay for any Shares that Purchaser becomes obligated to accept for
\npayment, and pay for, pursuant to the Offer.<\/p>\n
Section 1.2. Company Action.<\/p>\n
(a) The Company hereby approves of and consents to the Offer and
\nrepresents and warrants that (i) the Company Board has unanimously (A)
\ndetermined that this Agreement and the transactions contemplated hereby,
\nincluding each of the Offer and the Merger, are fair to and in the best
\ninterests of the holders of the Shares, (B) approved and adopted this Agreement
\nand the transactions contemplated hereby and (C) resolved to recommend that the
\nstockholders of the Company accept the Offer and approve and adopt this
\nAgreement and approve the transactions contemplated hereby (provided, however,
\nthat subject to the provisions of Section Section 5.10, such recommendation may
\nbe withdrawn, modified or amended in connection with a Superior Proposal (as
\ndefined in Section Section 5.10) and (ii) Hambrecht & Quist (“H&Q”), the
\nCompany’s financial advisor, has rendered to the Company Board its opinion to
\nthe effect that the consideration to be received by the holders of Shares
\npursuant to each of the Offer and the Merger is fair to the holders of Shares
\nfrom a financial point of view. The Company hereby consents to the inclusion in
\nthe Offer Documents of the recommendation of the Company Board described in
\nclause (i) of the first sentence of this Section Section 1.2(a), and
\nrepresents and warrants that it has obtained the consent of H&Q to the inclusion
\nin the Offer Documents and the Schedule 14D-9 (as defined in Section Section
\n1.2(b) of a copy of the written opinion referred to in clause (ii) of the
\nfirst sentence of this Section Section 1.2(a).<\/p>\n
(b) The Company shall file with the SEC, concurrently with the filing by
\nParent and Purchaser of the Schedule 14D-1, or promptly thereafter on the same
\nday, a Solicitation\/Recommendation Statement on Schedule 14D-9 under the
\nExchange Act, to which Parent shall not have reasonably objected, relating to
\nthe Offer (together with all exhibits, amendments and supplements thereto, the
\n“Schedule 14D-9”), which shall, subject to Section Section 5.10 hereof, contain
\nthe recommendation of the Company Board described in Section Section 1.2((a))
\nand the information required pursuant to Section 14(f) of the Exchange Act and
\nRule 14f-1 thereunder, and shall disseminate the Schedule 14D-9 as required by
\nRule 14D-9 under the Exchange Act. Parent and Purchaser each will supply to the
\nCompany any information with respect to itself and its officers, directors and
\naffiliates required to be provided in the Schedule 14D-9. Parent and its counsel
\nshall be given a reasonable opportunity to review and comment on the Schedule
\n14D-9 prior to its filing with the SEC or dissemination to the stockholders of
\nthe Company. The Company agrees to provide Purchaser and its counsel with any
\ncomments the Company or its counsel may receive from the SEC with respect to the
\nSchedule 14D-9 promptly after receipt thereof. The Company represents and
\nwarrants that the Schedule 14D-9 will, on the date filed with the SEC and on the
\ndate first published, sent or given to the Company’s stockholders, comply in all
\nmaterial respects with all provisions of applicable federal securities laws and
\nthe rules and regulations promulgated thereunder. The Company, Parent and
\nPurchaser agree promptly to correct any information provided by any of them for
\nuse in the Schedule 14D-9 that shall be or have become false or misleading, and
\nthe Company further agrees to take all steps necessary to cause the Schedule
\n14D-9, as so corrected, to be filed with <\/p>\n
5<\/p>\n
8<\/p>\n
the SEC and disseminated to the holders of Shares, in each case as and to the
\nextent required by applicable federal securities laws. <\/p>\n
(c) The Company shall promptly furnish Purchaser with mailing labels
\ncontaining the names and addresses of all record holders of Shares and security
\nposition listings of Shares held in stock depositories, each of a recent date,
\nand shall promptly furnish Purchaser with such additional information, including
\nupdated lists of stockholders, mailing labels and security position listings,
\nand such other assistance as Parent, Purchaser or their agents may reasonably
\nrequest in connection with communicating the Offer and any amendments or
\nsupplements thereto to the Company’s stockholders. Subject to the requirements
\nof applicable laws and except for such steps as are necessary to disseminate the
\nOffer Documents and any other documents necessary to consummate the Merger,
\nParent and Purchaser (and their agents) shall hold in confidence the information
\ncontained in any of such labels and lists and, if this Agreement shall be
\nterminated, will promptly deliver to the Company all copies, extracts, or
\nsummaries of such information then in their possession or control or in the
\npossession of their agents.<\/p>\n
Section 1.3. Directors.<\/p>\n
(a) Subject to compliance with applicable law, promptly upon the payment
\nby Purchaser for the Shares pursuant to the Offer, and from time to time
\nthereafter, Parent shall be entitled to designate such number of directors,
\nrounded up to the next whole number, on the Company Board as is equal to the
\nproduct of the total number of directors on the Company Board (determined after
\ngiving effect to the directors elected pursuant to this sentence) multiplied by
\nthe percentage that the aggregate number of Shares beneficially owned by Parent
\nor its affiliates bears to the total number of Shares then outstanding. The
\nCompany shall, upon request of Parent, promptly take all actions necessary to
\ncause Parent’s designees to be so elected, including, if necessary, increasing
\nthe size of the Company Board (to the extent permitted by the Company’s
\nCertificate of Incorporation and By-laws) and\/or seeking the resignations of one
\nor more existing directors, provided, however, that prior to the Effective Time
\n(as defined in Section Section 2.2), the Company Board shall at all times have
\nat least two members who are members of the Company Board on the date of this
\nAgreement and are neither officers of the Company or any of its subsidiaries, or
\nofficers or directors of Purchaser or any of its affiliates (“Independent
\nDirectors”). If the number of Independent Directors is reduced below two prior
\nto the Effective Time, the remaining Independent Director shall be entitled to
\ndesignate a person to fill such vacancy who shall not be an officer or affiliate
\nof the Company or any of its subsidiaries or an officer, director, or affiliate
\nof Parent or any of its subsidiaries, and such person shall be deemed an
\nIndependent Director for all purposes of this Agreement. If no Independent
\nDirectors then remain, the other directors of the Company on the date hereof
\nshall designate two persons to fill such vacancies who shall not be officers or
\naffiliates of the Company or any of its subsidiaries, or officers, directors or
\naffiliates of Parent or any of its subsidiaries, and such persons shall be
\ndeemed to be Independent Directors for all purposes of this Agreement.<\/p>\n
(b) The Company’s obligations to appoint Parent’s designees to the
\nCompany Board shall be subject to Section 14(f) of the Exchange Act and Rule
\n14f-1 thereunder. The Company shall, at its expense, promptly take all actions
\nrequired pursuant to such Section and Rule in order to <\/p>\n
6<\/p>\n
9<\/p>\n
fulfill its obligations under this Section Section 1.3 and shall include in the
\nSchedule 14D-9 such information with respect to the Company and its officers and
\ndirectors as is required under such Section and Rule in order to fulfill its
\nobligations under this Section Section 1.3. Parent will supply any information
\nwith respect to itself, and its officers, directors and affiliates required by
\nsuch Section and Rule to the Company. <\/p>\n
(c) Following the election or appointment of Parent’s designees pursuant
\nto this Section Section 1.3 and prior to the Effective Time (as defined in
\nSection Section 2.2), any amendment or termination of this Agreement by the
\nCompany, any extension by the Company of the time for the performance of any of
\nthe obligations or other acts of Parent or Purchaser or any waiver of any of the
\nCompany’s rights hereunder, shall require the concurrence of a majority of the
\nIndependent Directors (or in the case where there is only one Independent
\nDirector, the concurrence of such Independent Director).<\/p>\n
ARTICLE II<\/p>\n
THE MERGER<\/p>\n
Section 2.1. The Merger. Upon the terms and subject to the satisfaction
\nor waiver of the conditions hereof, and in accordance with the applicable
\nprovisions of this Agreement and the DGCL, Purchaser shall be merged with and
\ninto the Company. Following the Merger, the separate corporate existence of
\nPurchaser shall cease and the Company shall continue as the surviving
\ncorporation (the “Surviving Corporation”).<\/p>\n
Section 2.2. Effective Time; Closing. As soon as practicable after the
\nsatisfaction of the conditions set forth in Article VI, the Company shall
\nexecute, in the manner required by the DGCL, and file with the Secretary of
\nState of the State of Delaware a duly executed and verified certificate of
\nmerger (the “Certificate of Merger”), and the parties shall take such other and
\nfurther actions as may be required by law to make the Merger effective.
\nContemporaneous with such filing, a closing (the “Closing”) will be held at the
\noffices of Gray Cary Ware & Freidenrich LLP, 400 Hamilton Avenue, Palo Alto,
\nCalifornia, or at such other location as the parties may establish for the
\npurpose of confirming the foregoing. The time the Merger becomes effective in
\naccordance with applicable law is referred to herein as the “Effective Time.”<\/p>\n
Section 2.3. Effects of the Merger. The Merger shall have the effects
\nset forth in the applicable provision of the DGCL. Without limiting the
\ngenerality of the foregoing, and subject thereto, at the Effective Time, all the
\nproperties, rights, privileges, powers and franchises of the Company and the
\nPurchaser shall vest in the Surviving Corporation, and all debts, liabilities
\nand duties of the Company and the Purchaser shall become the debts, liabilities
\nand duties of the Surviving Corporation.<\/p>\n
Section 2.4. Certificate of Incorporation and By-Laws of the Surviving
\nCorporation.<\/p>\n
7<\/p>\n
10<\/p>\n
(a) The Certificate of Incorporation of the Company shall be amended to
\ncontain the substantive provisions of the Certificate of Incorporation of
\nPurchaser, as in effect immediately prior to the Effective Time, and, as so
\namended, shall be the Certificate of Incorporation of the Surviving Corporation
\nuntil thereafter duly amended in accordance with the provisions thereof and
\napplicable law.<\/p>\n
(b) Subject to the provisions of Section Section 5.7 of this Agreement,
\nthe By-Laws of Purchaser, as in effect at the Effective Time, shall be the
\nBy-Laws of the Surviving Corporation until thereafter duly amended in accordance
\nwith the provisions thereof and applicable law. <\/p>\n
Section 2.5. Directors. Subject to applicable law, the directors of
\nPurchaser immediately prior to the Effective Time shall be the initial directors
\nof the Surviving Corporation and shall hold office until their respective
\nsuccessors are duly elected and qualified, or their earlier death, resignation
\nor removal.<\/p>\n
Section 2.6. Officers. The officers of Purchaser immediately prior to
\nthe Effective Time shall be the initial officers of the Surviving Corporation
\nand shall hold office until their respective successors are duly elected and
\nqualified, or their earlier death, resignation or removal.<\/p>\n
Section 2.7. Conversion of Shares. At the Effective Time, by virtue of
\nthe Merger and without any action on the part of Parent, Purchaser, the Company
\nor the holders of the Shares:<\/p>\n
(a) each Share issued and outstanding immediately prior to the Effective
\nTime (other than Shares held by Parent, Purchaser, the Company or any of their
\nwholly-owned subsidiaries, and any Dissenting Shares (as defined in Section
\nSection 2.11)) shall automatically be canceled and extinguished and shall be
\nconverted into the right to receive $9.50, or the greatest amount per Share as
\nis paid pursuant to the Offer (the “Merger Consideration”), in cash without
\ninterest thereon (in the event of any reclassification, recapitalization, stock
\nsplit, stock dividend or similar transaction with respect to the Shares,
\nappropriate and proportionate adjustments, if any, shall be made to the amount
\nof the Offer Price and Merger Consideration, and all references to the Offer
\nPrice or the Merger Consideration in this Agreement shall be deemed to be to the
\nOffer Price or the Merger Consideration as so adjusted);<\/p>\n
(b) each Share issued and outstanding immediately prior to the Effective
\nTime which is owned or held by Parent, Purchaser, the Company or any of their
\nwholly-owned subsidiaries shall be canceled and extinguished and cease to exist,
\nwithout any conversion thereof, and no payment shall be made with respect
\nthereto;<\/p>\n
(c) each holder (other than holders referred to in Section Section
\n2.7((b))) of a certificate representing any Shares shall after the Effective
\nTime cease to have any rights with respect to such Shares, except either to
\nreceive the Merger Consideration upon surrender of such certificate, or to
\nexercise such holder’s appraisal rights as provided in Section Section 2.11 and
\nthe DGCL; and<\/p>\n
(d) each share of Common Stock of Purchaser issued and outstanding
\nimmediately prior to the Effective Time shall be converted into and thereafter
\nrepresent one validly issued, fully paid <\/p>\n
8
\n 11<\/p>\n
and nonassessable share of Common Stock of the Surviving Corporation.<\/p>\n
Section 2.8. Options; Company Stock Plans; Warrants.<\/p>\n
(a) At the Effective Time, each option to purchase shares of Company
\nCommon Stock (an “Option”) outstanding under any of the Company’s Amended 1993
\nStock Plan, or 1996 Directors Option Plan (collectively the “Company Stock
\nPlans”) shall be assumed by Parent and shall be deemed to constitute an option
\nto acquire, on the same terms and conditions as were applicable under such
\nOption (including, without limitation, any repurchase rights or vesting
\nprovisions) shares of Common Stock, $.01 par value, of Parent (“Parent Common
\nStock”), except that (i) such Option shall be exercisable for that number of
\nshares of Parent Common Stock equal to the product of the number of shares of
\nCompany Common Stock that were issuable upon exercise of such Option immediately
\nprior to the Effective Time multiplied by a fraction, the numerator of which is
\nthe Merger Consideration and the denominator of which is the average of the last
\nreported sale prices of Parent Common Stock on the five (5) trading days
\nimmediately preceding the date of the Effective Time, rounded down to the
\nnearest whole number of shares of Parent Common Stock and (ii) the per share
\nexercise price for the shares of Parent Common Stock issuable upon exercise of
\nsuch assumed Option will be equal to the aggregate exercise price for the shares
\nof Company Common Stock purchasable pursuant to such Option immediately prior to
\nthe Effective Time divided by the number of full shares of Parent Common Stock
\npurchasable thereafter in accordance with the foregoing, rounded down to the
\nnearest whole cent. As soon as practicable after the Effective Time, Parent
\nshall deliver to holders of Options appropriate notice setting forth such
\nholders’ rights pursuant hereto.<\/p>\n
(b) Parent shall take all corporate action necessary to reserve and make
\navailable for issuance a sufficient number of shares of Parent Common Stock for
\ndelivery under the Options assumed in accordance with this Section Section 2.8
\nand shall use its best efforts to cause such shares to be approved for quotation
\non the Nasdaq National Market. Within five business days following the Effective
\nTime, Parent shall file a registration statement on Form S-8 (or any successor
\nor other appropriate form) with respect to the shares of Parent Common Stock
\nsubject to such Options and shall use its best efforts to maintain the
\neffectiveness of such registration statement for so long as such Options remain
\noutstanding.<\/p>\n
(c) Parent shall not assume or continue any outstanding warrants to
\npurchase shares of Company Common Stock (the “Warrants”). The parties hereto
\nshall take all appropriate action to provide that, at or following the Effective
\nTime each holder of an outstanding Warrant shall be entitled to receive an
\namount in cash equal to the product of (i) the excess, if any, of the Merger
\nConsideration over the per share exercise price of such Warrant and (ii) the
\nnumber of Shares subject to such Warrant which are exercisable immediately prior
\nto the Effective Time. <\/p>\n
Section 2.9. Stockholders’ Meeting.<\/p>\n
(a) If required by applicable law in order to consummate the Merger, the
\nCompany, acting through the Company Board, shall, in accordance with applicable
\nlaw:<\/p>\n
(i) duly call, give notice of, convene and hold a special
\nmeeting of its stockholders <\/p>\n
9
\n 12<\/p>\n
(the “Special Meeting”) as soon as practicable following the acceptance for
\npayment of and payment for Shares by Purchaser pursuant to the Offer for the
\npurpose of considering and taking action upon this Agreement;<\/p>\n
(ii) prepare and file with the SEC a preliminary proxy statement
\nrelating to the Merger and this Agreement, and use its best efforts (A) to
\nobtain and furnish the information required to be included by the SEC in the
\nProxy Statement (as hereinafter defined) and, after consultation with Parent, to
\nrespond as soon as practicable to any comments made by the SEC with respect to
\nthe preliminary proxy statement and cause a definitive proxy statement (the
\n“Proxy Statement”) to be mailed to its stockholders and (B) to obtain the
\nnecessary approvals of the Merger and adoption of this Agreement by its
\nstockholders; and <\/p>\n
(iii) include in the Proxy Statement the recommendation of the
\nCompany Board that stockholders of the Company vote in favor of the approval and
\nadoption of the Merger and of this Agreement.<\/p>\n
(b) Parent agrees that it will vote, or cause to be voted, all of the
\nShares then owned by it, Purchaser or any of its other subsidiaries in favor of
\nthe approval of the Merger and of this Agreement.<\/p>\n
Section 2.10. Merger Without Meeting of Stockholders. Notwithstanding
\nthe provisions of Section Section 2.9, in the event that Purchaser shall acquire
\nat least 90% of the outstanding Shares pursuant to the Offer, the parties hereto
\nagree to take all necessary and appropriate action to cause the Merger to become
\neffective as soon as practicable after the acceptance for payment of and payment
\nfor Shares by Purchaser pursuant to the Offer without a meeting of stockholders
\nof the Company, in accordance with the provisions of Section 253 of the DGCL.<\/p>\n
Section 2.11. Dissenting Shares. Notwithstanding anything in this
\nAgreement to the contrary, Shares which are outstanding immediately prior to the
\nEffective Time and which are held by a holder who has not voted in favor of the
\nMerger or consented thereto in writing and who has demanded appraisal for such
\nShares in accordance with Section 262 of the DGCL (“Dissenting Shares”) shall
\nnot be converted into a right to receive the Merger Consideration pursuant to
\nSection Section 2.7, but the holders of Dissenting Shares shall instead be
\nentitled to receive such consideration as shall be determined pursuant to
\nSection 262 of the DGCL; provided, however, that if any such holder shall have
\nfailed to perfect or shall withdraw or lose such holder’s right of appraisal and
\npayment under the DGCL, such holder’s Shares shall be treated as if they had
\nbeen converted as of the Effective Time into the right to receive the Merger
\nConsideration, without interest thereon, as provided in Section Section 2.7 and
\nsuch Shares shall no longer be Dissenting Shares. The Company shall give Parent
\nand Purchaser prompt notice of any demands received by the Company for appraisal
\nof Shares, and of any withdrawals of demands for appraisal, or of any other
\ninstruments served pursuant to Section 262 of the DGCL and received by the
\nCompany. Prior to the Effective Time, Parent and Purchaser shall have the right
\nto participate in all negotiations and proceedings with respect to such demands
\nfor appraisal. Prior to the Effective Time, the Company shall not, except with
\nthe prior written consent of Parent and Purchaser, make any payment with respect
\nto, or settle or offer to settle, any such demands. Each <\/p>\n
10<\/p>\n
13<\/p>\n
holder of Dissenting Shares shall have only such rights and remedies as are
\ngranted to such holder under Section 262 of the DGCL.<\/p>\n
Section 2.12. Payment for Shares.<\/p>\n
(a) Prior to the Effective Time, Purchaser shall select and appoint a
\nbank or trust company having net capital of not less than $100,000,000 to act as
\npaying agent (the “Paying Agent”) in effecting the payment of the Merger
\nConsideration in respect of certificates (the “Certificates”) that, prior to the
\nEffective Time, represented Shares entitled to payment of the Merger
\nConsideration pursuant to Section Section 2.7. At the Effective Time, Parent or
\nPurchaser shall deposit, or cause to be deposited, in trust with the Paying
\nAgent the aggregate Merger Consideration to which holders of Shares shall be
\nentitled at the Effective Time pursuant to Section Section 2.7.<\/p>\n
(b) Promptly after the Effective Time, Purchaser or Parent shall cause
\nthe Paying Agent to mail to each record holder of Certificates a form of letter
\nof transmittal (which shall specify that delivery shall be effected, and risk of
\nloss and title to the Certificates shall pass, only upon proper delivery of the
\nCertificates to the Paying Agent) and instructions for use of such letter of
\ntransmittal in surrendering the Certificates for payment. Upon the surrender of
\neach Certificate, together with a completed and duly executed letter of
\ntransmittal and such other documents as may be requested in connection
\ntherewith, the Paying Agent shall pay the holder of such Certificate the Merger
\nConsideration multiplied by the number of Shares formerly represented by such
\nCertificate, in consideration therefor, and such Certificate shall forthwith be
\ncanceled. Until so surrendered, each Certificate shall represent solely the
\nright to receive the aggregate Merger Consideration relating thereto. No
\ninterest or dividends shall be paid or accrued on the Merger Consideration.<\/p>\n
(c) If the Merger Consideration (or any portion thereof) is to be paid
\nand delivered to any person other than the person in whose name the Certificate
\nsurrendered is registered, it shall be a condition to such person’s right to
\nreceive such Merger Consideration that the Certificate so surrendered shall be
\nproperly endorsed or otherwise be in proper form for transfer and that the
\nperson requesting such payment shall pay to the Paying Agent any transfer or
\nother taxes required by reason of the payment to a person other than the
\nregistered holder of the Certificate surrendered, or shall establish to the
\nsatisfaction of the Paying Agent that such taxes have been paid or are not
\napplicable. In the event any Certificate shall have been lost, stolen or
\ndestroyed, the Paying Agent shall be required to pay the full Merger
\nConsideration in respect of any Shares represented by such Certificate; however,
\nParent may require the owner of such lost, stolen or destroyed Certificate to
\nexecute and deliver to the Paying Agent a form of affidavit claiming such
\nCertificate to be lost, stolen or destroyed in form and substance reasonably
\nsatisfactory to Parent and the posting by such owner of a bond in such amount as
\nParent may determine is reasonably necessary as indemnity against any claim that
\nmay be made against Parent or the Paying Agent.<\/p>\n
(d) Promptly following the date which is 180 days after the Effective
\nTime, the Paying Agent shall deliver to the Surviving Corporation all cash,
\nCertificates and other documents in its <\/p>\n
11<\/p>\n
14<\/p>\n
possession relating to the transactions described in this Agreement, and the
\nPaying Agent’s duties shall terminate. Thereafter, each holder of a Certificate
\nmay surrender such Certificate to the Surviving Corporation and (subject to
\napplicable abandoned property, escheat and similar laws) receive in exchange
\ntherefor the aggregate Merger Consideration relating thereto, without any
\ninterest thereon. Notwithstanding the foregoing, none of Parent, Purchaser, the
\nSurviving Corporation or the Paying Agent shall be liable to any person in
\nrespect of any cash delivered to a public official pursuant to any applicable
\nabandoned property, escheat or similar law. If any Certificates shall not have
\nbeen surrendered immediately prior to such date on which any payment with
\nrespect thereto would otherwise escheat to or become the property of any court,
\nadministrative agency, commission, or other governmental authority or
\ninstrumentality (“Governmental Entity”), the cash payment in respect of such
\nCertificate shall, to the extent permitted by applicable law, become the
\nproperty of the Surviving Corporation, free and clear of all claims or interests
\nof any person previously entitled thereto.<\/p>\n
(e) After the Effective Time, there shall be no transfers on the stock
\ntransfer books of the Surviving Corporation of any Shares which were outstanding
\nimmediately prior to the Effective Time. If, after the Effective Time,
\nCertificates are presented to the Surviving Corporation or the Paying Agent,
\nthey shall be surrendered and canceled in return for the payment of the
\naggregate Merger Consideration relating thereto, as provided in this Article II.<\/p>\n
Section 2.13. Supplementary Action. If at any time after the Effective
\nTime, any further assignments or assurances in law or any other things are
\nnecessary or desirable to vest or to perfect or confirm of record in the
\nSurviving Corporation the title to any property or rights of either the Company
\nor Purchaser, or otherwise to carry out the provisions of this Agreement, the
\nofficers and directors of the Surviving Corporation are hereby authorized and
\nempowered, in the name of and on behalf of the Company and Purchaser, to execute
\nand deliver any and all documents and instruments and to take all other action
\nnecessary or proper to vest or to perfect or confirm title to such property or
\nrights in the Surviving Corporation, and otherwise to carry out the purposes and
\nprovisions of this Agreement.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
The Company represents and warrants to Parent and Purchaser, subject to
\nthe exceptions specifically disclosed in writing in a disclosure schedule
\ndelivered by the Company to Parent on or before the date hereof and certified by
\na duly authorized officer of the Company (the “Company Schedule”), as follows:<\/p>\n
Section 3.1. Organization and Qualification of the Company.<\/p>\n
(a) The Company and each of its subsidiaries (i) is a corporation or
\nother legal entity duly organized, validly existing and in good standing under
\nthe laws of the jurisdiction in which it is <\/p>\n
12<\/p>\n
15<\/p>\n
organized; (ii) has the corporate or other power and authority to own, lease and
\noperate its assets and property and to carry on its business as now being
\nconducted; and (iii) is duly qualified or licensed to do business in each
\njurisdiction where the character of the properties owned, leased or operated by
\nit or the nature of its activities makes such qualification or licensing
\nnecessary other than in jurisdictions where the failure to be so qualified or
\nlicensed (individually or in the aggregate) would not have a Material Adverse
\nEffect on the Company.<\/p>\n
(b) The Company has made available to Parent a true and complete list of
\nall of the Company’s subsidiaries as of the date of this Agreement, indicating
\nthe jurisdiction of organization of each subsidiary and the Company’s equity
\ninterest therein.<\/p>\n
(c) The Company has delivered or made available to Parent a true and
\ncorrect copy of the Certificate of Incorporation and Bylaws of the Company and
\nsimilar governing instruments of each of its subsidiaries, each as amended to
\ndate, and each such instrument is in full force and effect. Neither the Company
\nnor any of its subsidiaries is in violation of any of the provisions of its
\nCertificate of Incorporation or Bylaws or equivalent governing instruments.<\/p>\n
Section 3.2. Company Capital Structure. The authorized capital stock of
\nthe Company consists of 50,000,000 shares of Common Stock, $0.01 par value per
\nshare (the “Company Common Stock”), of which there were an aggregate of
\n13,362,540 shares issued and outstanding as of the close of business on July 27,
\n1998 (with no shares held in treasury) plus shares of Company Common Stock to be
\nissued due to the exercise of Options since July 14, 1998, and 2,000,000 shares
\nof Preferred Stock, $0.01 par value per share, of which no shares are issued or
\noutstanding. All outstanding shares of the Company Common Stock are duly
\nauthorized, validly issued, fully paid and nonassessable and are not subject to
\npreemptive rights created by statute, the Certificate of Incorporation or Bylaws
\nof the Company or any agreement or document to which the Company is a party or
\nby which it is bound. As of July 27, 1998, the Company has reserved an aggregate
\nof 4,552,000 shares of the Company Common Stock, net of exercises, for issuance
\npursuant to the Company Stock Plans and is obligated to issue 22,511 shares of
\nCompany Common Stock pursuant to the Company’s Employee Stock Purchase Plan
\nduring the current purchase period. As of July 27, 1998, there were Options
\noutstanding to purchase an aggregate of 2,818,386 (minus shares of Company
\nCommon Stock issued upon exercise of Options since July 14, 1998) shares of the
\nCompany Common Stock pursuant to the Company Stock Plans. As of July 27, 1998,
\nthere were Warrants outstanding to purchase an aggregate of 59,668 shares of the
\nCompany Common Stock. All shares of the Company Common Stock subject to issuance
\nas aforesaid, upon issuance on the terms and conditions specified in the
\ninstruments pursuant to which they are issuable, would be duly authorized,
\nvalidly issued, fully paid and nonassessable. The Company Schedule lists for
\neach person who held Options or Warrants as of July 27, 1998, the name of the
\nholder, the exercise price of such Option or Warrant, the number of shares as to
\nwhich such Option or Warrant had vested at such date, the vesting schedule for
\nsuch Option or Warrant, whether the exercisability of such Option or Warrant
\nwill be accelerated in any way by the transactions contemplated by this
\nAgreement, and the extent of any such acceleration; provided that such schedule
\ndoes not reflect Option exercises since July 14, 1998.<\/p>\n
13<\/p>\n
16<\/p>\n
Section 3.3. Obligations With Respect to Capital Stock. Except as set
\nforth in Section Section 3.2, there are no shares of capital stock, partnership
\ninterests or similar ownership interests of any class of the Company’s equity
\nsecurities, or any securities exchangeable or convertible into or exercisable
\nfor such equity securities, issued, reserved for issuance or outstanding. Except
\nfor securities the Company owns free and clear of all claims and encumbrances,
\ndirectly or indirectly through one or more subsidiaries, and except for shares
\nof capital stock or other similar ownership interests of certain subsidiaries of
\nthe Company that are owned by certain nominee equity holders as required by the
\napplicable law of the jurisdiction of organization of such subsidiaries, as of
\nthe date of this Agreement, there are no shares of capital stock, partnership
\ninterests or similar ownership interests of any class of equity securities of
\nany subsidiary of the Company, or any securities exchangeable or convertible
\ninto or exercisable for such equity securities, issued, reserved for issuance or
\noutstanding. Except as set forth in Section Section 3.2, as of July 27, 1998,
\nthere are no subscriptions, options, warrants, equity securities, partnership
\ninterests or similar ownership interests, calls, rights (including preemptive
\nrights), commitments or agreements of any character to which the Company or any
\nof its subsidiaries is a party or by which it is bound obligating the Company or
\nany of its subsidiaries to issue, deliver or sell, or cause to be issued,
\ndelivered or sold, or repurchase, redeem or otherwise acquire, or cause the
\nrepurchase, redemption or acquisition of, any shares of capital stock,
\npartnership interests or similar ownership interests of the Company or any of
\nits subsidiaries or obligating the Company or any of its subsidiaries to grant,
\nextend, accelerate the vesting of or enter into any such subscription, option,
\nwarrant, equity security, call, right, commitment or agreement. As of the date
\nof this Agreement, except as set forth in the Company Schedule and as
\ncontemplated by this Agreement, the Company Option Agreement and the Support
\nAgreements, there are no registration rights and, to the knowledge of the
\nCompany, there are no voting trusts, proxies, rights plan, antitakeover plans or
\nother agreements or understandings to which the Company is a party or by which
\nit is bound with respect to any equity security of any class of the Company or
\nwith respect to any equity security, partnership interest or similar ownership
\ninterest of any class of any of its subsidiaries.<\/p>\n
Section 3.4. Authority.<\/p>\n
(a) The Company has all requisite corporate power and authority to enter
\ninto this Agreement and the Company Option Agreement and to consummate the
\ntransactions contemplated hereby and thereby. The execution and delivery of this
\nAgreement and the Company Option Agreement by the Company and the consummation
\nby the Company of the transactions contemplated hereby and thereby have been
\nduly and validly authorized and approved by the Company Board and no other
\ncorporate proceedings on the part of the Company are necessary to authorize or
\napprove this Agreement or the Company Option Agreement or to consummate the
\ntransactions contemplated hereby or thereby (other than, with respect to the
\nMerger, the approval and adoption of this Agreement by the affirmative vote of
\nthe holders of a majority of the then outstanding Shares entitled to vote
\nthereon, to the extent required by the applicable law). This Agreement and the
\nCompany Option Agreement have been duly executed and delivered by the Company
\nand, assuming the due authorization, execution and delivery by Parent and
\nPurchaser, constitute valid and binding obligations of the Company, enforceable
\nagainst the Company in accordance with their respective terms, except that (i)
\nsuch enforcement may be subject to <\/p>\n
14<\/p>\n
17<\/p>\n
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
\nhereafter in effect relating to creditors’ rights generally and (ii) the remedy
\nof specific performance and injunctive relief may be subject to equitable
\ndefenses and to the discretion of the court before which any proceeding therefor
\nmay be brought. The execution and delivery of this Agreement and the Company
\nOption Agreement by the Company do not, and the performance of this Agreement
\nand the Company Option Agreement by the Company will not, (i) conflict with or
\nviolate the Certificate of Incorporation or Bylaws of the Company or the
\nequivalent organizational documents of any of its subsidiaries, (ii) subject to
\ncompliance with the requirements set forth in Section Section 3.4((b)) below,
\nconflict with or violate any law, rule, regulation, order, judgment or decree
\napplicable to the Company or any of its subsidiaries or by which the Company or
\nany of its subsidiaries or any of their respective properties is bound or
\naffected, other than such conflicts or violations which, individually or in the
\naggregate, do not and would not reasonably be expected to have a Material
\nAdverse Effect (as defined in Section Section 8.10((d))) on the Company or a
\nmaterial adverse effect on the ability of the parties hereto to consummate the
\nOffer or the Merger, (iii) result in any material breach of or constitute a
\nmaterial default (or an event that with notice or lapse of time or both would
\nbecome a material default) under, or impair the Company’s material rights or
\nalter the material rights or obligations of any third party under, or give to
\nothers any rights of termination, amendment, acceleration or cancellation of, or
\nresult in the creation of a material lien or encumbrance on any of the material
\nproperties or assets of the Company or any of its subsidiaries pursuant to, any
\nmaterial note, bond, mortgage, indenture, contract, agreement, lease, license,
\npermit, franchise, concession, or other instrument or obligation to which the
\nCompany or any of its subsidiaries is a party or by which the Company or any of
\nits subsidiaries or its or any of their respective assets are bound or affected.
\nThe Company Schedule lists all consents, waivers and approvals under any of the
\nCompany’s or any of its subsidiaries’ agreements, contracts, licenses or leases
\nrequired to be obtained in connection with the consummation of the transactions
\ncontemplated hereby, which, if individually or in the aggregate are not
\nobtained, would be reasonably expected to have a Material Adverse Effect on the
\nCompany.<\/p>\n
(b) No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with any Governmental Entity is required to be obtained or
\nmade by the Company or any of its subsidiaries in connection with the execution
\nand delivery of this Agreement or the Company Option Agreement or the
\nconsummation of the Merger, except for (i) the filing of the Certificate of
\nMerger with the Secretary of State of the State of Delaware, (ii) the filing of
\nthe Proxy Statement, if applicable, with the SEC in accordance with the Exchange
\nAct, (iii) such consents, approvals, orders, authorizations, registrations,
\ndeclarations and filings as may be required under applicable federal and state
\nsecurities (or related) laws, the Hart-Scott-Rodino Antitrust Improvements Act
\nof 1976, as amended (the “HSR Act”), and the securities or antitrust laws of any
\nforeign country, and (iv) such other consents, authorizations, filings,
\napprovals and registrations which if not obtained or made would not be
\nreasonably expected to have Material Adverse Effect on the Company or a material
\nadverse effect on the ability of the parties hereto to consummate the Offer or
\nthe Merger. <\/p>\n
Section 3.5. SEC Filings; the Company Financial Statements.<\/p>\n
15<\/p>\n
18<\/p>\n
(a) The Company has filed in a timely manner all forms, reports and
\ndocuments required to be filed by the Company with the SEC since October 23,
\n1996 and has made available to Parent such forms, reports and documents in the
\nform filed with the SEC. All such required forms, reports and documents
\n(including those that Company may file subsequent to the date hereof) are
\nreferred to herein as the “Company SEC Reports.” As of their respective dates,
\nthe Company SEC Reports (i) were prepared, in all material respects, in
\naccordance with the requirements of the Securities Act of 1933, as amended (the
\n“Securities Act”), or the Exchange Act, as the case may be, and the rules and
\nregulations of the SEC thereunder applicable to such Company SEC Reports and
\n(ii) did not at the time they were filed (or if amended or superseded by a
\nfiling prior to the date of this Agreement, then on the date of such filing)
\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
\ntherein, in the light of the circumstances under which they were made, not
\nmisleading. None of the Company’s subsidiaries is required to file any forms,
\nreports or other documents with the SEC.<\/p>\n
(b) Each of the consolidated financial statements (including, in each
\ncase, any related notes thereto) contained in the Company SEC Reports (the
\n“Company Financials”), including any Company SEC Reports filed after the date
\nhereof until the consummation of the Offer, (i) complied, or will comply, as to
\nform in all material respects with the published rules and regulations of the
\nSEC with respect thereto, (ii) was, or will be, prepared in accordance with
\nUnited States generally accepted accounting principles (“GAAP”) applied on a
\nconsistent basis throughout the periods involved (except as may be indicated in
\nthe notes thereto or, in the case of unaudited interim financial statements, as
\nmay be permitted by the SEC on Form 10-Q under the Exchange Act) and (iii)
\nfairly presented, or will present, the consolidated financial position of the
\nCompany and its subsidiaries as at the respective dates thereof and the
\nconsolidated results of the Company’s operations and cash flows for the periods
\nindicated, except that the unaudited interim financial statements may not
\ncontain footnotes and were or are subject to normal and recurring year-end
\nadjustments. The consolidated balance sheet of the Company as of June 30, 1998
\nset forth in Section 3.5 of the Company Schedule is hereinafter referred to as
\nthe “Company Balance Sheet” and shall be deemed to be a part of the Company
\nFinancials. Except as disclosed in the Company Financials, since the date of the
\nCompany Balance Sheet neither the Company nor any of its subsidiaries has any
\nliabilities (absolute, accrued, contingent or otherwise) required under GAAP to
\nbe set forth on a balance sheet which are, individually or in the aggregate,
\nmaterial to the business, results of operations or financial condition of the
\nCompany and its subsidiaries taken as a whole, except for liabilities incurred
\nsince the date of the Company Balance Sheet in the ordinary course of business
\nconsistent with past practices. <\/p>\n
(c) The Company has heretofore furnished to Parent a complete and
\ncorrect copy of any amendments or modifications, which have not yet been filed
\nwith the SEC but which are required to be so filed, to agreements, documents or
\nother instruments which previously have been filed by Company with the SEC
\npursuant to the Securities Act or the Exchange Act.<\/p>\n
Section 3.6. Absence of Certain Changes or Events. Between the date of
\nthe Company Balance Sheet and the date hereof, there has not been: (i) any event
\nor occurrence which has had a Material Adverse Effect on the Company, (ii) any
\ndeclaration, setting aside or payment of any dividend <\/p>\n
16<\/p>\n
19<\/p>\n
on, or other distribution (whether in cash, stock or property) in respect of,
\nany of the Company’s or any of its subsidiaries’ capital stock, or any purchase,
\nredemption or other acquisition by the Company of any of the Company’s capital
\nstock or any other securities of the Company or its subsidiaries or any options,
\nwarrants, calls or rights to acquire any such shares or other securities except
\nfor repurchases from employees, directors or consultants following the
\ntermination of their services pursuant to the terms of pre-existing stock option
\nor purchase agreements, (iii) any split, combination or reclassification of any
\nof the Company’s or any of its subsidiaries’ capital stock, (iv) any granting by
\nthe Company or any of its subsidiaries of any increase in compensation or fringe
\nbenefits, except for normal increases of cash compensation in the ordinary
\ncourse of business consistent with past practice, or any payment by the Company
\nor any of its subsidiaries of any bonus, except for bonuses made in the ordinary
\ncourse of business consistent with past practice, or any granting by the Company
\nor any of its subsidiaries of any increase in severance or termination pay or
\nany entry by the Company or any of its subsidiaries into any currently effective
\nemployment, severance, termination or indemnification agreement or any agreement
\nthe benefits of which are contingent or the terms of which are materially
\naltered upon the occurrence of a transaction involving the Company of the nature
\ncontemplated hereby, (v) entry by the Company or any of its subsidiaries into
\nany licensing or other agreement with regard to the acquisition or disposition
\nof any material Intellectual Property (as defined in Section Section 3.9((a)))
\nother than non-exclusive licenses granted in the ordinary course of business
\nconsistent with past practice, (vi) any material change by the Company in its
\naccounting methods, principles or practices, except as required by concurrent
\nchanges in GAAP or SEC requirements, or (vii) any material revaluation by the
\nCompany of any of its assets, including, without limitation, writing down the
\nvalue of capitalized inventory or writing off notes or accounts receivable other
\nthan in the ordinary course of business consistent with past practice.<\/p>\n
Section 3.7. Taxes.<\/p>\n
(a) For the purposes of this Agreement, “Tax” or “Taxes” refers to any
\nand all federal, state, local and foreign taxes, assessments and other
\ngovernmental charges, duties, impositions and liabilities relating to taxes,
\nincluding taxes based upon or measured by gross receipts, income, profits,
\nsales, use and occupation, and value added, ad valorem, transfer, franchise,
\nwithholding, payroll, recapture, employment, excise and property taxes, together
\nwith all interest, penalties and additions imposed with respect to such amounts
\nand any obligations under any agreements or arrangements with any other person
\nwith respect to such amounts and including any liability for taxes of a
\npredecessor entity.<\/p>\n
(b) The Company and each of its subsidiaries have timely filed (taking
\ninto account applicable extensions) all federal, state, local and foreign
\nreturns, estimates, information statements and reports (“Returns”) relating to
\nTaxes required to be filed by the Company and each of its subsidiaries with any
\nTax authority, except such Returns which are not material to the Company, and
\nhave paid all Taxes shown to be due on such Returns.<\/p>\n
(c) The Company and each of its subsidiaries as of the Effective Time
\nwill have withheld with respect to its employees all federal and state income
\ntaxes, Taxes pursuant to the Federal Insurance Contribution Act (“FICA”), Taxes
\npursuant to the Federal Unemployment Tax Act <\/p>\n
17<\/p>\n
20<\/p>\n
(“FUTA”) and any other Taxes required to be withheld, in all cases to the extent
\nsuch amounts are material individually or in the aggregate.<\/p>\n
(d) Neither the Company nor any of its subsidiaries has been delinquent
\nin the payment of any material Tax nor is there any material Tax deficiency
\noutstanding, proposed or assessed against the Company or any of its
\nsubsidiaries, nor has the Company or any of its subsidiaries executed any
\nunexpired waiver of any statute of limitations on or extending the period for
\nthe assessment or collection of any Tax.<\/p>\n
(e) To the Company’s knowledge, no audit or other examination of any
\nReturn of the Company or any of its subsidiaries by any Tax authority is
\npresently in progress, nor has the Company or any of its subsidiaries been
\nnotified of any request for such an audit or other examination.<\/p>\n
(f) No adjustment relating to any Returns filed by the Company or any of
\nits subsidiaries has been proposed in writing formally or informally by any Tax
\nauthority to the Company or any of its subsidiaries or any representative
\nthereof.<\/p>\n
(g) Neither the Company nor any of its subsidiaries has any material
\nliability for unpaid Taxes which has not been accrued for or reserved on the
\nCompany Balance Sheet, whether asserted or unasserted, contingent or otherwise,
\nwhich is material to the Company, other than any liability for unpaid Taxes that
\nmay have accrued since the date of the Company Balance Sheet in connection with
\nthe operation of the business of the Company and its subsidiaries in the
\nordinary course.<\/p>\n
(h) There is no contract, agreement, plan or arrangement to which the
\nCompany is a party of this Agreement, including but not limited to the
\nprovisions of this Agreement, covering any employee or former employee of the
\nCompany or any of its subsidiaries that, individually or collectively, could
\ngive rise to the payment of any amount that would not be deductible pursuant to
\nSections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended
\n(the “Code”).<\/p>\n
(i) Neither the Company nor any of its subsidiaries has filed any
\nconsent agreement under Section 341(f) of the Code or agreed to have Section
\n341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
\ndefined in Section 341(f)(4) of the Code) owned by the Company.<\/p>\n
(j) Neither the Company nor any of its subsidiaries is party to or has
\nany obligation under any tax-sharing, tax indemnity or tax allocation agreement
\nor arrangement.<\/p>\n
(k) Except as may be required as a result of the Merger, the Company and
\nits subsidiaries have not been and will not be required to include any material
\nadjustment in Taxable income for any Tax period (or portion thereof) pursuant to
\nSection 481 or Section 263A of the Code or any comparable provision under state
\nor foreign Tax laws as a result of transactions, events or accounting methods
\nemployed prior to the Closing.<\/p>\n
18<\/p>\n
21<\/p>\n
(l) None of the Company’s or its subsidiaries’ assets are tax exempt use
\nproperty within the meaning of Section 168(h) of the Code.<\/p>\n
(m) The Company Schedule lists (i) any foreign Tax holidays, (ii) any
\nintercompany transfer pricing agreements, or other arrangements that have been
\nestablished by the Company or any of its subsidiaries with any Tax authority and
\n(iii) any expatriate programs or policies affecting the Company or any of its
\nsubsidiaries.<\/p>\n
Section 3.8. Title to Properties; Absence of Liens and Encumbrances.<\/p>\n
(a) The Company Schedule lists all real property interests owned by the
\nCompany or any of its subsidiaries as of the date hereof. The Company Schedule
\nlists all real property leases to which the Company or any of its subsidiaries
\nis a party as of the date hereof and each amendment thereto. All such leases are
\nin full force and effect, are valid and effective in accordance with their
\nrespective terms, and there is not, under any of such leases, any existing
\ndefault or event of default (or event which with notice or lapse of time, or
\nboth, would constitute a default) that would give rise to a material claim.<\/p>\n
(b) The Company and each of its subsidiaries has good and valid title
\nto, or, in the case of leased properties and assets, valid leasehold interests
\nin, all of its tangible properties and assets, real, personal and mixed, used or
\nheld for use in its business, free and clear of any liens, pledges, charges,
\nclaims, security interests or other encumbrances of any sort (“Liens”), except
\nas reflected in the Company Financials and except for liens for taxes not yet
\ndue and payable and such Liens or other imperfections of title and encumbrances,
\nif any, which are not material in character, amount or extent, and which do not
\nmaterially detract from the value, or materially interfere with the present use,
\nof the property subject thereto or affected thereby. <\/p>\n
Section 3.9. Intellectual Property.<\/p>\n
(a) The Company and each of its subsidiaries owns, or is licensed or
\notherwise possesses legally enforceable rights to use, all patents, trademarks,
\ntrade names, service marks, copyrights, and any applications for such patents,
\ntrademarks, trade names, service marks and copyrights, and all patent rights,
\ntrade secrets, schematics, technology, know-how, computer software and tangible
\nor intangible proprietary information or material and other intellectual
\nproperty or proprietary rights (collectively, “Intellectual Property”) material
\nto the conduct of its business as currently conducted, including without
\nlimitation all copyrights registered in the name of the Company or any of its
\nsubsidiaries (“Company Intellectual Property”). The Company and each of its
\nsubsidiaries has taken reasonable measures to protect the proprietary nature of
\neach item of Company Intellectual Property that it considers confidential, and
\nto maintain in confidence all trade secrets and confidential information that it
\npresently owns or uses, except where the failure to own, license or possess
\nlegally enforceable rights to use such Company Intellectual Property would not,
\nindividually or in the aggregate, reasonably be expected to result in a material
\nloss of benefits or a material loss to the Company’s business.<\/p>\n
(i) Section Section 3.9((a))((i)) of the Company Schedule lists,
\nas of the date hereof, all patents and patent applications and all trademarks,
\nregistered copyrights, trade names and <\/p>\n
19<\/p>\n
22<\/p>\n
service marks owned by, or licensed exclusively to, the Company or any of its
\nsubsidiaries and which are currently used in connection with the business of the
\nCompany or its subsidiaries, including the jurisdictions in which each item of
\nsuch Company Intellectual Property has been issued or registered or in which any
\nsuch application for such issuance or registration has been filed.<\/p>\n
(ii) Section Section 3.9(a)(ii) of the Company Schedule
\nlists, as of the date hereof, all written licenses, sublicenses and other
\nagreements to which Company or any of its subsidiaries is a party and pursuant
\nto which any person is authorized to use any Company Intellectual Property
\nrights, excluding (A) source or object code end-user licenses granted to
\nend-users in the ordinary course of business that permit use of software
\nproducts without a right to modify, distribute or sublicense the same (“End-User
\nLicenses”) and (B) licenses, sublicenses or other agreements with resellers,
\ndistributors, original equipment manufacturers and other third party
\nintermediaries that grant non-exclusive rights to use or modify (for purposes of
\nestablishing program interfaces) and resell or sublicense source or object code
\nwhich (I) did not in any individual case represent $100,000 or more of revenues
\nto the Company in 1997 on a consolidated basis, (II) were in all material
\nrespects in the standard form of agreements provided by the Company to Parent,
\nand (III) the Company has no reason to believe will be material to the Company’s
\nor any of its subsidiaries’ business or would reasonably be expected to result
\nin a material loss to the Company.<\/p>\n
(iii) Section Section 3.9(a)(iii) of the Company Schedule
\nlists, as of the date hereof, all written licenses, sublicenses and other
\nagreements to which the Company or any of its subsidiaries is a party and
\npursuant to which the Company or any such subsidiary is authorized to use any
\nthird party Intellectual Property, including software (“Third Party Intellectual
\nProperty”) which is incorporated in any existing product or service of the
\nCompany or any of its subsidiaries, or any material product or service currently
\nunder development (“Embedded Products”).<\/p>\n
(iv) Section Section 3.9(a)(iv) of the Company Schedule
\nlists, as of the date hereof, all written agreements or other arrangements under
\nwhich the Company or any of its subsidiaries has provided or agreed to provide
\nsource code of any product of the Company or any of its subsidiaries to any
\nthird party, except for software development kits provided either to agent
\nintegration providers or by End-User Licenses.<\/p>\n
The Company has made available to Parent correct and complete
\ncopies of all patents, registrations, applications (owned by the Company or any
\nof its subsidiaries), and all licenses, sublicenses and agreements referred to
\nin this Section Section 3.9(a), each as amended to date. Except for retail
\npurchases of software, neither the Company nor any of its subsidiaries is a
\nparty to any oral license, sublicense or agreement which, if reduced to written
\nform, would be required to be listed in Section Section 3.9 of the Company
\nSchedule under the terms of this Section Section 3.9(a).<\/p>\n
(b) With respect to each item of Company Intellectual Property that the
\nCompany or any of its subsidiaries owns: (i) other than common law trademarks,
\nand subject to such rights as have <\/p>\n
20<\/p>\n
23<\/p>\n
been granted by the Company or any of its subsidiaries under non-exclusive
\nlicense agreements and joint development agreements entered into by the Company
\nor any of its subsidiaries (copies of which have previously been made available
\nor disclosed in writing to Parent), the Company or its subsidiaries possess all
\nright, title and interest in and to such item; and (ii) such item is not subject
\nto any outstanding judgment, order, decree, stipulation or injunction that
\nmaterially interferes with the conduct of the Company’s or any of its
\nsubsidiaries’ business as currently conducted.<\/p>\n
(c) Except as set forth in Section 3.9 of the Company Schedule, with
\nrespect to each item of Third Party Intellectual Property listed in Section
\n3.9(a)(iii): (i) the license, sublicense or other agreement covering such
\nitem is legal, valid, binding, enforceable and in full force and effect with
\nrespect to the Company or such subsidiary, and, to the Company’s knowledge, is
\nlegal, valid, binding, enforceable and in full force and effect with respect to
\neach other party thereto; (ii) neither the Company nor any of its subsidiaries
\nis in material breach or default thereunder, and, to the Company’s knowledge, no
\nother party to such license, sublicense or other agreement is in material breach
\nor default thereunder, and, to the Company’s knowledge, no event has occurred
\nwhich with notice or lapse of time would constitute a material breach or default
\nby the Company or any of its subsidiaries or permit termination, modification or
\nacceleration thereunder by the other party thereto; (iii) to the Company’s
\nknowledge, the underlying item of Third Party Intellectual Property is not
\nsubject to any outstanding judgment, order, decree, stipulation or injunction to
\nwhich the Company or any of is subsidiaries is a party or has been specifically
\nnamed that materially interferes with the conduct of the Company’s or any of its
\nsubsidiaries’ business as currently conducted, nor, to the Company’s knowledge,
\nsubject to any other outstanding judgment, order, decree, stipulation, or
\ninjunction that materially interferes with the conduct of the Company’s or any
\nof its subsidiaries’ business as currently conducted.<\/p>\n
(d) Except as set forth in Section 3.9 of the Company Schedule, as of
\nthe date hereof, neither the Company nor any of its subsidiaries has (i) been
\nnamed in any suit, action or proceeding as to which it has been served with
\nprocess which involves a claim of infringement or misappropriation of any
\nIntellectual Property right of any third party or (ii) received any written
\nnotice alleging any such claim of infringement or misappropriation. The Company
\nhas made available to Parent correct and complete copies of all such suits,
\nactions or proceedings or written notices. To the Company’s knowledge, except as
\nset forth in Section 3.9 of the Company Schedule, the manufacturing, marketing,
\nlicensing or sale of the products or the performance of the services offered by
\nthe Company and its subsidiaries do not currently infringe, and have not
\ninfringed, any Intellectual Property right of any third party (other than patent
\nrights) or, to the Company’s knowledge, any patent rights of third parties; and,
\nto the knowledge of the Company, none of the Company Intellectual Property
\nrights are being infringed by activities, products or services of any third
\nparty.<\/p>\n
(e) Except as set forth in Section 3.9 of the Company Schedule, the
\nexecution and delivery of this Agreement by the Company, and the consummation of
\nthe transactions contemplated hereby, will neither cause the Company nor any of
\nits subsidiaries to be in violation or default under any license, sublicense or
\nother agreement relating to Intellectual <\/p>\n
21<\/p>\n
24<\/p>\n
Property, nor terminate nor modify nor entitle any other party to any such
\nlicense, sublicense or agreement to terminate or modify such license, sublicense
\nor agreement, nor limit in any way the Company’s or any of its subsidiaries’
\nability to conduct its business or use or provide the use of Company
\nIntellectual Property or any Intellectual Property rights of others, which
\nviolation, default, termination, modification or limitation would reasonably be
\nexpected, individually or in the aggregate, to result in a material loss of
\nbenefits or material loss to the Company.<\/p>\n
(f) Except for Embedded Products for which the Company has valid
\nnon-exclusive licenses which are disclosed in Section 3.9 of the Company
\nSchedule and which are adequate for each of the Company’s and its subsidiaries’
\nbusinesses as presently conducted, and except for usual and customary rights
\nretained by the United States government with respect to Intellectual Property
\ndeveloped under research contracts with the Federal government (the “Retained
\nFed Rights”), the Company is the sole and exclusive owner or the licensee of,
\nwith all right, title and interest in and to all Company Intellectual Property
\n(free and clear of any liens or encumbrances), and has sole and exclusive rights
\n(and is not contractually obligated to pay any compensation to any third party
\nin respect thereof) to the use and distribution thereof or the material covered
\nthereby in connection with the services or products in respect of which Company
\nIntellectual Property is being used, except where the failure to have such
\nrights would not reasonably be expected to result in a material loss of benefits
\nor loss to the Company. To the Company’s knowledge, the United States government
\nhas never exercised, and the Company has no notice that the government intends
\nto exercise, its rights to use or provide to others the use of the Retained Fed
\nRights with respect to any Company Intellectual Property in a manner that would
\nbe material to the Company’s non-governmental business. The Retained Fed Rights
\ndo not materially interfere with the conduct of the Company’s business.<\/p>\n
(g) The Company has made available to Parent copies of the Company’s and
\neach of its subsidiaries’ standard forms of End-User Licenses. Except as
\ndisclosed in Section 3.9 of the Company Schedule (which describes the material
\nvariations from the standard form of End-User License), as of the date hereof,
\nneither the Company nor any of its subsidiaries has entered into any End-User
\nLicenses which contain terms materially different than as set forth in the
\nstandard forms of such agreements made available to Parent.<\/p>\n
(h) The Company and each of its subsidiaries has taken reasonable
\nsecurity measures to safeguard and maintain the secrecy, confidentiality and
\nvalue of, and its property rights in, all Company Intellectual Property. All
\nofficers, employees and consultants of the Company or any of its subsidiaries
\nwho have access to proprietary information or Company Intellectual Property have
\nexecuted and delivered to the Company or such subsidiary an agreement regarding
\nthe protection of proprietary information and the assignment to the Company or
\nany of its subsidiaries of all Intellectual Property arising from the services
\nperformed for the Company or any of its subsidiaries by such persons. To the
\nCompany’s knowledge, no current or prior officers, employees or consultants of
\nthe Company or any of its subsidiaries claim any ownership interest in any
\nmaterial Company Intellectual Property as a result of having been involved in
\nthe development of such property while employed by or consulting to the Company
\nor any of its subsidiaries, or otherwise. Except as set forth in Section 3.9 of
\nthe Company Schedule and except for the Embedded Products, all Company
\nIntellectual Property has been developed by <\/p>\n
22<\/p>\n
25<\/p>\n
employees of the Company or its subsidiaries, within the course and scope of
\ntheir employment.<\/p>\n
(i) The Company and each of its subsidiaries has sufficient right, title
\nand interest in and to all material software development tools, not entirely
\ndeveloped internally, currently used by the Company or any of its subsidiaries
\nin the development of any of the computer software included in the Company
\nIntellectual Property.<\/p>\n
(j) To the Company’s knowledge, there are no material defects in the
\nCompany’s or any of its subsidiaries’ software products, and there are no errors
\nin any documentation, specifications, manuals, user guides, promotional
\nmaterial, internal notes and memos, technical documentation, drawings, flow
\ncharts, diagrams, source language statements, demo disks, benchmark test
\nresults, and other written materials related to, associated with or used or
\nproduced in the development of the Company’s or any of its subsidiaries’
\nsoftware products (collectively, the “Design Documentation”), which defects or
\nerrors would reasonably be expected to have, individually or in the aggregate, a
\nMaterial Adverse Effect on the Company. The occurrence in or use by the computer
\nsoftware products currently sold by the Company or any of its subsidiaries, of
\ndates on or after January 1, 2000 (the “Millennial Dates”) will not adversely
\naffect the performance of the software with respect to date dependent data,
\ncomputations, output or other functions (including without limitation,
\ncalculating, computing and sequencing) and such software will create, sort and
\ngenerate output data related to or including Millennial Dates without errors or
\nomissions.<\/p>\n
(k) No government funding or university or college facilities were used
\nin the development of the Company’s or any of its subsidiaries’ software
\nproducts and such software was not developed pursuant to any contract or other
\nagreement with any person or entity except pursuant to contracts or agreements
\nlisted in Section 3.9 of the Company Schedule.<\/p>\n
(l) Section 3.9 of the Company Schedule lists all material warranty
\nclaims (including any pending claims) related to the Company’s or any of its
\nsubsidiaries’ products and the nature of such claims, except for customary
\nproduct support and maintenance. Except as set forth in Section 3.9 of the
\nCompany Schedule, neither the Company nor any of its subsidiaries has made any
\nmaterial oral or written representations or warranties with respect to its
\nproducts or services.<\/p>\n
(m) Except as set forth in Section 3.9 of the Company Schedule, the
\nCompany and its subsidiaries have been and are in compliance with the Export
\nAdministration Act of 1979, as amended, and all regulations promulgated
\nthereunder.<\/p>\n
Section 3.10. Compliance; Permits; Restrictions.<\/p>\n
(a) Neither the Company nor any of its subsidiaries is, in any material
\nrespect, in conflict with, or in default or in violation of (i) any law, rule,
\nregulation, order, judgment or decree applicable to the Company or any of its
\nsubsidiaries or by which the Company or any of its subsidiaries or any of their
\nrespective properties is bound or affected, or (ii) any material note, bond,
\nmortgage, indenture, contract, agreement, lease, license, permit, franchise or
\nother instrument or obligation to which the Company or any of its subsidiaries
\nis a party or by which the Company or any of its subsidiaries or its or any of
\ntheir respective properties is bound or <\/p>\n
23<\/p>\n
26<\/p>\n
affected, except for conflicts, violations and defaults that (individually or in
\nthe aggregate) would not cause the Company to lose any material benefit or incur
\nany material liability. To the knowledge of the Company, no investigation or
\nreview by any Governmental Entity is pending or has been threatened against the
\nCompany or any of its subsidiaries, nor, to the Company’s knowledge, has any
\nGovernmental Entity indicated an intention to conduct an investigation of the
\nCompany or any of its subsidiaries. There is no material agreement, judgment,
\ninjunction, order or decree binding upon the Company or any of its subsidiaries
\nwhich has or could reasonably be expected to have the effect of prohibiting or
\nmaterially impairing any business practice of the Company or any of its
\nsubsidiaries, any acquisition of material property by the Company or any of its
\nsubsidiaries or the conduct of business by the Company as currently conducted.<\/p>\n
(b) The Company and its subsidiaries hold all permits, licenses,
\nvariances, exemptions, orders and approvals from any Governmental Entities that
\nare material to and required for the operation of the business of the Company as
\ncurrently conducted (collectively, the “Company Permits”) except for any such
\nfailure which would not, individually or in the aggregate, be reasonably
\nexpected to have a Material Adverse Effect on the Company. The Company and its
\nsubsidiaries are in compliance in all material respects with the terms of the
\nCompany Permits, except where the failure to be in compliance would not
\nreasonably be expected to have a Material Adverse Effect on the Company.<\/p>\n
Section 3.11. Litigation.<\/p>\n
(a) There are no claims, suits, actions or proceedings pending or, to
\nthe Company’s knowledge, threatened against, relating to or affecting the
\nCompany or any of its subsidiaries, before any court, governmental department,
\ncommission, agency, instrumentality or authority, or any arbitrator that seeks
\nto restrain or enjoin the consummation of the transactions contemplated by this
\nAgreement, or, except as set forth in Section 3.11 of the Company Schedule,
\nwhich would reasonably be expected, either singularly or in the aggregate with
\nall such claims, actions or proceedings, to have a Material Adverse Effect on
\nthe Company. No Governmental Entity has at any time challenged or questioned in
\na writing delivered to the Company the legal right of the Company to design,
\nmanufacture, offer or sell any of its products in the present manner or style
\nthereof.<\/p>\n
(b) Neither the Company nor any of its subsidiaries has ever been
\nnotified in writing that it has been subject to an audit, compliance review,
\ninvestigation or like contract review by the office of the Inspector General of
\nthe U.S. General Services Administration or any other Governmental Entity or
\nagent thereof in connection with any government contract (a “Government Audit”).
\nTo the Company’s knowledge, no Government Audit is threatened, and in the event
\nof any such Government Audit, to the knowledge of the Company, no basis exists
\nfor a finding of noncompliance with any material provision of any government
\ncontract or for a material refund of any amounts paid or owed to the Company or
\nany of its subsidiaries by any Governmental Entity pursuant to such government
\ncontract. For each item disclosed in the Company Schedule pursuant to this
\nSection 3.11 a true and complete copy of all material correspondence and
\ndocumentation with respect thereto has been made available to Parent.<\/p>\n
24<\/p>\n
27<\/p>\n
Section 3.12. Brokers’ and Finders’ Fees. Except for fees payable to H&Q
\npursuant to an engagement letter dated March 31, 1998, a copy of which has been
\nprovided to Parent, the Company has not incurred, nor will it incur, directly or
\nindirectly, any liability for brokerage or finders’ fees or agents’ commissions
\nor any similar charges in connection with this Agreement or any transaction
\ncontemplated hereby.<\/p>\n
Section 3.13. Employee Benefit Plans and Employee Matters.<\/p>\n
(a) With the exception of the definition of “Affiliate” set forth in
\nSection 3.13(a)(i) below (which definition shall apply only to this Section
\n3.13), for purposes of this Agreement, the following terms shall have the
\nmeanings set forth below:<\/p>\n
(i) “Affiliate” shall mean any other person or entity under
\ncommon control with the Company within the meaning of Section 414(b), (c), (m)
\nor (o) of the Code and the regulations issued thereunder;<\/p>\n
(ii) “Company Employee Plan” shall mean any plan, program,
\npolicy, practice, contract, agreement or other arrangement providing for
\ncompensation, severance, termination pay, performance awards, stock or
\nstock-related awards, fringe benefits or other employee benefits or remuneration
\nof any kind, whether written or unwritten or otherwise, funded or unfunded,
\nincluding without limitation, each “employee benefit plan,” within the meaning
\nof Section 3(3) of ERISA which is or has been maintained, contributed to, or
\nrequired to be contributed to, by the Company or any Affiliate for the benefit
\nof any Employee (as defined in Section 3.13(a)(v) below);<\/p>\n
(iii) “COBRA” shall mean the Consolidated Omnibus Budget
\nReconciliation Act of 1985, as amended;<\/p>\n
(iv) “DOL” shall mean the Department of Labor;<\/p>\n
(v) “Employee” shall mean any current, former, or retired
\nemployee, officer, or director of the Company or any Affiliate;<\/p>\n
(vi) “Employee Agreement” shall mean each management,
\nemployment, severance, consulting, relocation, repatriation, expatriation,
\nvisas, work permit or similar agreement or contract between the Company or any
\nAffiliate and any Employee or consultant;<\/p>\n
(vii) “ERISA” shall mean the Employee Retirement Income Security
\nAct of 1974, as amended;<\/p>\n
(viii) “FMLA” shall mean the Family Medical Leave Act of 1993,
\nas amended;<\/p>\n
(ix) “International Employee Plan” shall mean each Company
\nEmployee Plan that has been adopted or maintained by the Company, whether
\ninformally or formally, for the benefit of Employees outside the United States;<\/p>\n
(x) “IRS” shall mean the Internal Revenue Service;<\/p>\n
25<\/p>\n
28<\/p>\n
(xi) “Multiemployer Plan” shall mean any Pension Plan (as
\ndefined in Section 3.13(a)(xiii) below) which is a “multiemployer plan,” as
\ndefined in Section 3(37) of ERISA;<\/p>\n
(xii) “PBGC” shall mean the Pension Benefit Guaranty
\nCorporation; and<\/p>\n
(xiii) “Pension Plan” shall mean each Company Employee Plan
\nwhich is an “employee pension benefit plan,” within the meaning of Section 3(2)
\nof ERISA.<\/p>\n
(b) The Company Schedule contains an accurate and complete list of each
\nCompany Employee Plan and each material Employee Agreement as of the date
\nhereof. The Company does not have any plan or commitment to establish any new
\nCompany Employee Plan, to modify any Company Employee Plan or Employee Agreement
\n(except to the extent required by law or to conform any such Company Employee
\nPlan or Employee Agreement to the requirements of any applicable law, in each
\ncase as previously disclosed to Parent in writing, or as required by this
\nAgreement), or to enter into any Company Employee Plan or material Employee
\nAgreement, nor does it have any intention or commitment to do any of the
\nforegoing.<\/p>\n
(c) The Company has provided to Parent: (i) correct and complete copies
\nof all documents embodying each Company Employee Plan and each Employee
\nAgreement, including all amendments thereto and written interpretations thereof;
\n(ii) the three most recent annual reports (Form Series 5500 and all schedules
\nand financial statements attached thereto), if any, required under ERISA or the
\nCode in connection with each Company Employee Plan or related trust; (iii) if
\nthe Company Employee Plan is funded, the most recent annual and periodic
\naccounting of Company Employee Plan assets; (iv) the most recent summary plan
\ndescription together with the summary of material modifications thereto, if any,
\nrequired under ERISA with respect to each Company Employee Plan; (v) all IRS
\ndetermination, opinion, notification and advisory letters, and rulings relating
\nto Company Employee Plans and copies of all applications and correspondence to
\nor from the IRS or the DOL with respect to any Company Employee Plan; (vi) all
\nmaterial written agreements and contracts relating to each Company Employee
\nPlan, including, but not limited to, administrative service agreements, group
\nannuity contracts and group insurance contracts; (vii) all communications
\nmaterial to any Employee or Employees relating to any Company Employee Plan and
\nany proposed Company Employee Plan, in each case, relating to any amendments,
\nterminations, establishments, increases or decreases in benefits, acceleration
\nof payments or vesting schedules or other events which would result in any
\nmaterial liability to the Company; (viii) all standard COBRA forms and related
\nnotices; and (ix) all registration statements and prospectuses prepared in
\nconnection with each Company Employee Plan.<\/p>\n
(d) (i) The Company has performed in all material respects all
\nobligations required to be performed by it under, is not in default or violation
\nin any material respect of, and has no knowledge of any default or violation by
\nany other party to each Company Employee Plan, and each Company Employee Plan
\nhas been established and maintained in all material respects in accordance with
\nits terms and in compliance with all applicable laws, statutes, orders, rules
\nand regulations, including but not limited to ERISA and the Code; (ii) each
\nCompany Employee Plan intended to qualify under Section 401(a) of the Code and
\neach trust intended to qualify under <\/p>\n
26<\/p>\n
29<\/p>\n
Section 501(a) of the Code has either received a favorable determination letter
\nfrom the IRS with respect to such plan as to its qualified status under the
\nCode, including all amendments to the Code effected by the Tax Reform Act of
\n1986 and subsequent legislation, or has remaining a period of time under
\napplicable Treasury regulations or IRS pronouncements in which to apply for such
\na determination letter and make any amendments necessary to obtain a favorable
\ndetermination; (iii) no “prohibited transaction,” within the meaning of Section
\n4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
\nunder Section 408 of ERISA, has occurred with respect to any Company Employee
\nPlan; (iv) there are no actions, suits or claims pending, or, to the Company’s
\nknowledge, threatened (other than routine claims for benefits) against any
\nCompany Employee Plan or against the assets of any Company Employee Plan; (v)
\neach Company Employee Plan can be amended, terminated or otherwise discontinued
\nafter the Effective Time in accordance with its terms, without material
\nliability to Parent, the Company or any of its Affiliates (other than ordinary
\nadministration expenses typically incurred in a termination event); (vi) there
\nare no audits, inquiries or proceedings pending or, to the Company’s knowledge,
\nthreatened by the IRS or DOL with respect to any Company Employee Plan; and
\n(vii) neither the Company nor any Affiliate is subject to any penalty or tax
\nwith respect to any Company Employee Plan under Section 402(i) of ERISA or
\nSections 4975 through 4980 of the Code.<\/p>\n
(e) The Company does not now, nor has it ever, maintained, established,
\nsponsored, participated in, or contributed to, any Pension Plan which is subject
\nto Title IV of ERISA or Section 412 of the Code.<\/p>\n
(f) At no time has the Company contributed to or been requested to
\ncontribute to any Multiemployer Plan.<\/p>\n
(g) No Company Employee Plan provides, or has any liability to provide,
\nretiree life insurance, retiree health or other retiree employee welfare
\nbenefits to any person for any reason, except as may be required by COBRA or
\nother applicable statute, and the Company has never represented, promised or
\ncontracted (whether in oral or written form) to or with any Employee (either
\nindividually or as a group) or any other person that such Employee(s) or other
\nperson would be provided with retiree life insurance, retiree health or other
\nretiree employee welfare benefit, except to the extent required by statute.<\/p>\n
(h) Neither the Company nor any Affiliate has, prior to the Effective
\nTime, and in any material respect, violated any of the health care continuation
\nrequirements of COBRA, the requirements of FMLA or any similar provisions of
\nstate law applicable to its Employees.<\/p>\n
(i) The execution of this Agreement and the consummation of the
\ntransactions contemplated hereby will not (either alone or upon the occurrence
\nof any additional or subsequent events) constitute an event under any Company
\nEmployee Plan, Employee Agreement, trust or loan that will or may result in any
\npayment (whether of severance pay or otherwise), acceleration, forgiveness of
\nindebtedness, vesting, distribution, increase in benefits or obligation to fund
\nbenefits with respect to any Employee.<\/p>\n
(j) The Company: (i) is in compliance in all material respects with all
\napplicable federal,<\/p>\n
27<\/p>\n
30<\/p>\n
state, local and foreign laws, rules and regulations respecting employment,
\nemployment practices, terms and conditions of employment and wages and hours;
\n(ii) has withheld all amounts required by law or by agreement to be withheld
\nfrom the wages, salaries and other payments to Employees, which amounts are
\nmaterial individually or in the aggregate; (iii) is not liable for any material
\narrears of wages or any taxes or any penalty for failure to comply with any of
\nthe foregoing; and (iv) is not liable for any material payment to any trust or
\nother fund or to any governmental or administrative authority, with respect to
\nunemployment compensation benefits, social security or other benefits or
\nobligations for Employees (other than routine payments to be made in the normal
\ncourse of business and consistent with past practice). There are no pending or,
\nto the Company’s knowledge, threatened claims or actions against the Company
\nunder any worker’s compensation policy or long-term disability policy. To the
\nCompany’s knowledge, no employee of the Company has violated any employment
\ncontract, nondisclosure agreement or noncompetition agreement by which such
\nemployee is bound due to such employee being employed by the Company and
\ndisclosing to the Company or using trade secrets or proprietary information of
\nany other person or entity.<\/p>\n
(k) No work stoppage or labor strike against the Company is pending or,
\nto the knowledge of the Company, threatened. The Company does not know of any
\nactivities or proceedings of any labor union to organize any Employees. There
\nare no actions, suits, claims, labor disputes or grievances pending, or, to the
\nCompany’s knowledge, threatened relating to any labor, safety or discrimination
\nmatters involving any Employee, including, without limitation, charges of unfair
\nlabor practices or discrimination complaints, which, if adversely determined,
\nindividually or in the aggregate, would be reasonably likely to have a Material
\nAdverse Effect on the Company. Neither the Company nor any of its subsidiaries
\nhas engaged in any unfair labor practices within the meaning of the National
\nLabor Relations Act. The Company is not presently, nor has it been in the past,
\na party to, or bound by, any collective bargaining agreement or union contract
\nwith respect to Employees and no collective bargaining agreement is currently
\nbeing negotiated by the Company.<\/p>\n
(l) Each International Employee Plan has been established, maintained
\nand administered in material compliance with its terms and conditions and with
\nthe requirements prescribed by any and all statutory or regulatory laws that are
\napplicable to such International Employee Plan. No International Employee Plan
\nhas unfunded liabilities, that as of the Effective Time, will not be offset by
\ninsurance or fully accrued. Except as required by law, no condition exists that
\nwould prevent the Company or Parent from terminating or amending any
\nInternational Employee Plan at any time for any reason.<\/p>\n
Section 3.14. Environmental Matters.<\/p>\n
(a) Except as would not be reasonably likely to result in material
\nliability to the Company, no underground storage tanks and no amount of any
\nsubstance that has been designated by any Governmental Entity or by applicable
\nfederal, state or local law to be radioactive, toxic, hazardous or otherwise a
\ndanger to health or the environment, including, without limitation, PCBs,
\nasbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
\nsubstances pursuant to the Comprehensive Environmental Response, Compensation,
\nand Liability Act of <\/p>\n
28<\/p>\n
31<\/p>\n
1980, as amended, or defined as a hazardous waste pursuant to the United States
\nResource Conservation and Recovery Act of 1976, as amended, and the regulations
\npromulgated pursuant to said laws, but excluding office and janitorial supplies
\n(a “Hazardous Material”), is present, as a result of the actions of the Company
\nor any of its subsidiaries or any affiliate of the Company or, to the Company’s
\nknowledge, as a result of any actions of any third party or otherwise, in, on or
\nunder any property, including the land and the improvements, ground water and
\nsurface water thereof, that the Company or any of its subsidiaries has at any
\ntime owned, operated, occupied or leased.<\/p>\n
(b) Except as would not be reasonably likely to result in a material
\nliability to the Company (in any individual case or in the aggregate) (i)
\nneither the Company nor any of its subsidiaries has transported, stored, used,
\nmanufactured, disposed of, released or exposed its employees or others to
\nHazardous Materials in violation of any law in effect on or before the Effective
\nTime, and (ii) neither the Company nor any of its subsidiaries has disposed of,
\ntransported, sold, used, released, exposed its employees or others to or
\nmanufactured any product containing a Hazardous Material (collectively
\n“Hazardous Materials Activities”) in violation of any rule, regulation, treaty
\nor statute promulgated by any Governmental Entity in effect prior to or as of
\nthe date hereof to prohibit, regulate or control Hazardous Materials or any
\nHazardous Material Activity.<\/p>\n
(c) The Company and its subsidiaries currently hold all material
\nenvironmental approvals, permits, licenses, clearances and consents (the
\n“Company Environmental Permits”) necessary for the conduct of the Company’s and
\nits subsidiaries’ Hazardous Material Activities and other businesses of the
\nCompany and its subsidiaries as such activities and businesses are currently
\nbeing conducted.<\/p>\n
(d) No action, proceeding, revocation proceeding, amendment procedure,
\nwrit or injunction is pending, and to the Company’s knowledge, no action,
\nproceeding, revocation proceeding, amendment procedure, writ or injunction has
\nbeen threatened by any Governmental Entity against the Company or any of its
\nsubsidiaries in a writing delivered to the Company concerning any Company
\nEnvironmental Permit, Hazardous Material or Hazardous Materials Activity of the
\nCompany or any of its subsidiaries. The Company is not aware of any fact or
\ncircumstance which could involve the Company or any of its subsidiaries in any
\nmaterial environmental litigation or impose upon the Company any material
\nenvironmental liability.<\/p>\n
Section 3.15. Agreements, Contracts and Commitments. Except as set forth
\nin the Company Schedule as of the date hereof, neither the Company nor any of
\nits subsidiaries is a party to or is bound by:<\/p>\n
(a) any employment or consulting agreement, contract or commitment with
\nany officer or other employee at the director level or higher or any member of
\nthe Company Board, other than those that are terminable by the Company or any of
\nits subsidiaries on no more than 30 days notice without liability or financial
\nobligation, except to the extent general principles of wrongful termination law
\nmay limit the Company’s or any of its subsidiaries’ ability to terminate
\nemployees at will;<\/p>\n
(b) any agreement or plan, including, without limitation, any stock
\noption plan, stock <\/p>\n
29<\/p>\n
32<\/p>\n
appreciation right plan or stock purchase plan, any of the benefits of which
\nwill be increased, or the vesting of benefits of which will be accelerated, by
\nthe occurrence of any of the transactions contemplated by this Agreement or the
\nvalue of any of the benefits of which will be calculated on the basis of any of
\nthe transactions contemplated by this Agreement;<\/p>\n
(c) any agreement of indemnification or any guaranty other than any
\nagreement of indemnification entered into in connection with the sale or license
\nof software products in the ordinary course of business;<\/p>\n
(d) any agreement, contract or commitment containing any covenant
\nlimiting in any respect the right of the Company or any of its subsidiaries to
\nengage in any line of business or to compete with any person or granting any
\nexclusive distribution rights;<\/p>\n
(e) any agreement, contract or commitment currently in force relating to
\nthe disposition or acquisition by the Company or any of its subsidiaries after
\nthe date of this Agreement of a material amount of assets not in the ordinary
\ncourse of business or pursuant to which the Company has any material ownership
\ninterest in any corporation, partnership, joint venture or other business
\nenterprise other than the Company’s subsidiaries;<\/p>\n
(f) any joint marketing or development agreement currently in force
\nunder which the Company or any of its subsidiaries have continuing material
\nobligations to jointly market any product, technology or service and which may
\nnot be canceled without penalty upon notice of 90 days or less, or any material
\nagreement pursuant to which the Company or any of its subsidiaries have
\ncontinuing material obligations to jointly develop any intellectual property
\nthat will not be owned, in whole or in part, by the Company or any of its
\nsubsidiaries and which may not be canceled without penalty upon notice of 90
\ndays or less; or<\/p>\n
(g) any agreement, contract or commitment currently in force to license
\nany third party to manufacture or reproduce any Company product, service or
\ntechnology except as a distributor in the normal course of business.<\/p>\n
Neither the Company nor any of its subsidiaries, nor to the Company’s
\nknowledge any other party to any of the agreements, contracts or commitments to
\nwhich the Company or any of its subsidiaries is a party or by which any of them
\nare bound that are required to be disclosed in the Company Schedule pursuant to
\nSection 3.9 or this Section 3.15 (“Company Contracts”) is, as of the date
\nhereof, in breach, violation or default under, and neither the Company nor any
\nof its subsidiaries has received written notice that it has breached, violated
\nor defaulted under, any of the material terms or conditions of any Company
\nContract in such a manner as would permit any other party to cancel or terminate
\nsuch Company Contract, or would permit any other party to seek material damages
\nor other remedies (for any or all of such breaches, violations or defaults, in
\nthe aggregate).<\/p>\n
Section 3.16. Change of Control Payments. The Company Schedule sets
\nforth, as of the date hereof, each plan or agreement pursuant to which any
\namounts may become payable (whether currently or in the future) to current or
\nformer officers or directors of the Company as a result of or in connection with
\nthe Merger.<\/p>\n
30<\/p>\n
33<\/p>\n
Section 3.17. Customs. The Company has acted with reasonable care to
\nproperly value and classify, in accordance with applicable tariff laws, rules
\nand regulations, all goods that the Company or any of its subsidiaries import
\ninto the United States or into any other country (the “Imported Goods”). To the
\nCompany’s knowledge, there are currently no material claims pending against the
\nCompany by the U.S. Customs Service (or any foreign customs authorities)
\nrelating to the valuation, classification or marking of any of the Imported
\nGoods.<\/p>\n
Section 3.18. Information. None of the information supplied by the
\nCompany for inclusion or incorporation by reference in the Offer Documents or
\nany other document to be filed with the SEC or any other Governmental Entity in
\nconnection with the transactions contemplated by this Agreement (the “Other
\nFilings”) will, at the respective times filed with the SEC or other Governmental
\nEntity, 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 made therein, in light of the circumstances under which they were
\nmade, not misleading.<\/p>\n
Section 3.19. Section 203 of the DGCL Not Applicable. The Company Board
\nhas taken all necessary action so that the restrictions contained in Section 203
\nof the DGCL applicable to a “business combination” (as defined in such Section
\n203) will not apply to the execution, delivery or performance of this Agreement
\nor the Company Option Agreement or to the consummation of the Offer or the
\nMerger or any of the other transactions contemplated by this Agreement.<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES
\n OF PARENT AND PURCHASER<\/p>\n
Parent and Purchaser, jointly and severally, represent and warrant to
\nthe Company as follows:<\/p>\n
Section 4.1. Organization and Qualification of Parent and Purchaser.
\nEach of Parent and Purchaser (i) is a corporation duly organized, validly
\nexisting and in good standing under the laws of the jurisdiction in which it is
\norganized; (ii) has the corporate or other power and authority to own, lease and
\noperate its assets and property and to carry on its business as now being
\nconducted; and (iii) is duly qualified or licensed to do business in each
\njurisdiction where the character of the properties owned, leased or operated by
\nit or the nature of its activities makes such qualification or licensing
\nnecessary other than in jurisdictions where the failure to be so qualified or
\nlicensed (individually or in the aggregate) would not have a Material Adverse
\nEffect on Parent.<\/p>\n
Section 4.2. Authority.<\/p>\n
(a) Each of Parent and Purchaser has all requisite corporate power and
\nauthority to enter into this Agreement and to consummate the transactions
\ncontemplated hereby. The execution and delivery of this Agreement by Parent and
\nPurchaser and the consummation by them of the <\/p>\n
31<\/p>\n
34<\/p>\n
transactions contemplated hereby have been duly and validly authorized by all
\nnecessary corporate action on the part of Parent and Purchaser, subject only to
\nthe filing of the Certificate of Merger pursuant to Delaware Law. This Agreement
\nhas been duly executed and delivered by each of Parent and Purchaser and,
\nassuming the due authorization, execution and delivery by the Company,
\nconstitutes the valid and binding obligation of Parent and Purchaser,
\nenforceable against Parent and Purchaser in accordance with its terms, except
\nthat (i) such enforcement may be subject to bankruptcy, insolvency,
\nreorganization, moratorium or other similar laws now or hereafter in effect
\nrelating to creditors’ rights generally and (ii) the remedy of specific
\nperformance and injunctive relief may be subject to equitable defenses and to
\nthe discretion of the court before which any proceeding therefor may be brought.
\nThe execution and delivery of this Agreement by each of Parent and Purchaser
\ndoes not, and the performance of this Agreement by each of Parent and Purchaser
\nwill not, (i) conflict with or violate the Certificate of Incorporation or
\nBylaws of Parent or Purchaser, (ii) conflict with or violate any law, rule,
\nregulation, order, judgment or decree applicable to Parent or Purchaser or by
\nwhich any of their respective properties is bound or affected, other than such
\nconflicts or violations which, individually or in the aggregate, do not and
\ncould not reasonably be expected to have a Material Adverse Effect on Parent or
\na material adverse effect on the ability of the parties hereto to consummate the
\nOffer or the Merger, or (iii) result in any material breach of or constitute a
\nmaterial default (or an event that with notice or lapse of time or both would
\nbecome a material default) under, or impair the rights of Parent or Purchaser or
\nalter the rights or obligations of any third party under, or give to others any
\nrights of termination, amendment, acceleration or cancellation of, or result in
\nthe creation of a material lien or encumbrance on any of the material properties
\nor assets of Parent or Purchaser pursuant to, any material note, bond, mortgage,
\nindenture, contract, agreement, lease, license, permit, franchise or other
\ninstrument or obligation to which Parent or Purchaser is a party or by which
\nParent or Purchaser or any of their respective properties are bound or affected.<\/p>\n
(b) No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with any Governmental Entity is required to be obtained or
\nmade by Parent or Purchaser in connection with the execution and delivery of
\nthis Agreement or the consummation of the Offer or the Merger, except for (i)
\nthe filing of the Schedule 14D-1 with the SEC in accordance with the Exchange
\nAct, (ii) the filing of the Certificate of Merger with the Secretary of State of
\nthe State of Delaware, (iii) such consents, approvals, orders, authorizations,
\nregistrations, declarations and filings as may be required under applicable
\nfederal and state securities (or related) laws and the HSR Act and the
\nsecurities or antitrust laws of any foreign country, and (iv) such other
\nconsents, authorizations, filings, approvals and registrations which if not
\nobtained or made could not reasonably be expected to have a Material Adverse
\nEffect on Parent or a material adverse effect on the ability of the parties
\nhereto to consummate the Merger.<\/p>\n
Section 4.3. Information. Neither the Schedule 14D-1 nor the Offer
\nDocuments, nor any of the information supplied by Parent or Purchaser for
\ninclusion in the Schedule 14D-9, shall at the respective times they are filed
\nwith the SEC or are first published, sent or given to stockholders or upon the
\nexpiration of the Offer, as the case may be, contain any untrue statement of a
\nmaterial fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein in the light of the
\ncircumstances under which they were made not <\/p>\n
32<\/p>\n
35<\/p>\n
misleading (except for information supplied by the Company for inclusion in the
\nSchedule 14D-1 and the Offer Documents, as to which Parent and Purchaser make no
\nrepresentation). None of the information supplied by Parent or Purchaser for
\ninclusion in the Proxy Statement shall, at the date the Proxy Statement (or any
\namendment thereof or supplement thereto) is first mailed to stockholders, at the
\ntime of the Special Meeting or at the Effective Time, contain any untrue
\nstatement of a material fact required to be stated therein or necessary in order
\nto make the statements made therein in light of the circumstances under which
\nthey were made, not misleading.<\/p>\n
Section 4.4. Available Funds. Parent has or has available to it, and
\nwill make available to Purchaser, all funds necessary to satisfy all of Parent’s
\nand Purchaser’s obligations under this Agreement and in connection with the
\ntransaction contemplated hereby, including, without limitation, the obligation
\nto purchase all outstanding Shares pursuant to the Offer and the Merger and to
\npay all related fees and expenses in connection with Offer and the Merger.<\/p>\n
Section 4.5. Litigation. There is no action or suit pending or, to
\nParent’s knowledge, threatened or any judgment decree or order applicable to
\nParent or Purchaser or any of their directors or officers that would be
\nreasonably expected to have a material adverse effect on the consummation of the
\nOffer or the Merger.<\/p>\n
ARTICLE V<\/p>\n
COVENANTS<\/p>\n
Section 5.1. Conduct of Business by the Company. Except as contemplated
\nby this Agreement or as set forth in Section 5.1 of the Company Schedule, during
\nthe period from the date of this Agreement and continuing until the earlier of
\nthe termination of this Agreement pursuant to its terms, the Effective Time, or
\nsuch time as Parent’s designees shall constitute a majority of the Company
\nBoard, the Company and each of its subsidiaries shall, except to the extent that
\nParent shall otherwise consent in writing, carry on its business, in all
\nmaterial respects, in the usual, regular and ordinary course, in substantially
\nthe same manner as heretofore conducted and in compliance in all material
\nrespects with all applicable laws and regulations, pay its debts and taxes when
\ndue, subject to good faith disputes over such debts or taxes, pay or perform
\nother material obligations when due, subject to good faith disputes over such
\nobligations, and use its commercially reasonable efforts consistent with past
\npractices and policies to (i) preserve intact its present business organization,
\n(ii) keep available the services of its present officers and employees, and
\n(iii) preserve its relationships with customers, suppliers, distributors,
\nlicensors, licensees, and others with which it has business dealings. In
\naddition, except as permitted by the terms of this Agreement, and except as
\nprovided in the Company Schedule, without the prior written consent of Parent,
\nduring such period, the Company shall not do any of the following and shall not
\npermit its subsidiaries to do any of the following:<\/p>\n
(a) Waive any stock repurchase rights, accelerate, amend or change the
\nperiod of <\/p>\n
33<\/p>\n
36<\/p>\n
exercisability of options or restricted stock, or reprice options granted under
\nany employee, consultant, director or other stock plans or authorize cash
\npayments in exchange for any options granted under any of such plans except
\npursuant to written agreements outstanding, or policies existing, on the date
\nhereof and disclosed in the Company Schedule;<\/p>\n
(b) Grant any severance or termination pay to any officer or employee
\nexcept pursuant to written agreements outstanding, or policies existing, on the
\ndate hereof and disclosed in the Company Schedule, or adopt any new severance
\nplan;<\/p>\n
(c) Transfer or license to any person or entity or otherwise extend,
\namend or modify in any material respect any rights to the Company Intellectual
\nProperty, or enter into grants to future patent, copyright or other intellectual
\nproperty rights, other than non-exclusive licenses granted in the ordinary
\ncourse of business and consistent with past practice (it being agreed that
\nParent shall not unreasonably withhold consent to any non-exclusive license
\nagreement related to the Company’s enterprise business and that Parent’s failure
\nto reasonably object to any such agreement within five business days of any
\nrequest for consent shall constitute such consent);<\/p>\n
(d) Declare, set aside or pay any dividends on or make any other
\ndistributions (whether in cash, stock, equity securities or property) in respect
\nof any capital stock or split, combine or reclassify any capital stock or issue
\nor authorize the issuance of any other securities in respect of, in lieu of or
\nin substitution for any capital stock; provided that any of the Company’s
\nwholly-owned subsidiaries may declare, set aside or pay dividends or make other
\ndistributions with respect to their capital stock in the ordinary course of
\nbusiness and consistent with past practices.<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
\nshares of capital stock of the Company or its subsidiaries, except repurchases
\nof unvested shares at cost in connection with the termination of the service
\nrelationship with any employee, director or consultant pursuant to stock option
\nor purchase agreements in effect on the date hereof (which repurchases the
\nCompany shall be obligated to effectuate if the repurchase price is less than
\nthe Offer Price);<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
\nshares of the capital stock of the Company or any of its subsidiaries, or any
\nsecurities convertible into shares of such capital stock, or subscriptions,
\nrights, warrants or options to acquire any shares of such capital stock or any
\nsecurities convertible into shares of capital stock, or enter into other
\nagreements or commitments of any character obligating it to issue any such
\nshares or convertible securities, other than (i) the issuance, delivery and\/or
\nsale of shares of Company Common Stock pursuant to the exercise of Options
\ntherefor outstanding as of the date of this Agreement, and (ii) the grant of
\nemployee stock options, consistent with the Company’s established past practice
\nfor similarly situated employees, to non-officer employees who are hired in
\naccordance with Section 5.1((k));<\/p>\n
(g) Cause, permit or propose any amendments to its Certificate of
\nIncorporation, Bylaws or other charter documents (or similar governing
\ninstruments of any of its subsidiaries);<\/p>\n
(h) Acquire or agree to acquire by merging or consolidating with, or by
\npurchasing any equity interest in or a material portion of the assets of, or by
\nany other manner, any business or <\/p>\n
34<\/p>\n
37<\/p>\n
any corporation, partnership, association or other business organization or
\ndivision thereof or, except as permitted by Section 5.1((m)) or ((r)), otherwise
\nacquire or agree to acquire any assets which are material, individually or in
\nthe aggregate, to the business of the Company or enter into any joint venture,
\nstrategic partnership or alliance;<\/p>\n
(i) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets which are material, individually or in the aggregate, to
\nthe business of the Company, except sales of inventory and used equipment, or
\nthe license of the Company’s products in the ordinary course of business
\nconsistent with past practice (it being agreed that Parent shall not
\nunreasonably withhold consent to any non-exclusive license agreement related to
\nthe Company’s enterprise business and that Parent’s failure to reasonably object
\nto any such agreement within five business days of any request for consent shall
\nconstitute such consent);<\/p>\n
(j) Incur, assume or pre-pay any indebtedness for borrowed money,
\nguarantee any indebtedness or obligation of another person, issue or sell any
\ndebt securities or options, warrants, calls or other rights to acquire any debt
\nsecurities, enter into any “keep well” or other agreement to maintain any
\nfinancial statement condition or enter into any arrangement having the economic
\neffect of any of the foregoing other than (i) in connection with the financing
\nof ordinary course trade payables consistent with past practice, (ii) pursuant
\nto existing credit facilities in the ordinary course of business, or (iii) as
\ncontemplated by this Agreement;<\/p>\n
(k) Hire any employee, except replacements for former non-officer
\nemployees, hired in the ordinary course of business consistent with past
\npractice;<\/p>\n
(l) Adopt or amend any employee stock purchase or employee stock option
\nplan, or adopt or amend any material employee benefit plan, or enter into any
\nemployment contract or collective bargaining agreement (other than offer letters
\nand letter agreements entered into in the ordinary course of business consistent
\nwith past practice with employees who are terminable “at will”), pay any special
\nbonus or special remuneration to any director, employee or consultant except
\npursuant to written agreements outstanding on the date hereof and previously
\ndisclosed in writing to Parent, or increase the salaries or wage rates or fringe
\nbenefits (including rights to severance or indemnification) of any of its
\ndirectors, officers, employees or consultants other than normal periodic salary
\nincreases for non-officer employees made in the ordinary course of business,
\nconsistent with past practice, or change in any material respect any management
\npolicies or procedures;<\/p>\n
(m) Make any payments outside of the ordinary course of business in an
\naggregate excess of $250,000;<\/p>\n
(n) Except in the ordinary course of business, modify, amend or
\nterminate any material contract or agreement to which the Company or any
\nsubsidiary thereof is a party or waive, release or assign any material rights or
\nclaims thereunder;<\/p>\n
(o) Enter into, amend or extend any contracts, agreements, or
\nobligations relating to the distribution, sale, license or marketing by third
\nparties of the Company’s products or products licensed by the Company, other
\nthan agreements, extensions or amendments that grant non-<\/p>\n
35<\/p>\n
38<\/p>\n
exclusive rights to such third parties and provide for termination by the
\nCompany for convenience on not more than 60 days’ notice;<\/p>\n
(p) Materially revalue any of its assets (other than the booking of
\nreserves in the ordinary course of business and consistent with past practices)
\nor, except as required by a change in law or in GAAP or the rules of the SEC,
\nmake any change in accounting methods, principles or practices, including
\ninventory accounting practices;<\/p>\n
(q) Make any loans, advances or capital contributions to, or investments
\nin, any other person or entity, except for loans, advances, capital
\ncontributions or investments between any wholly-owned subsidiary of the Company
\nand the Company or another wholly-owned subsidiary of the Company and advances
\nof business related expenses (including expenses related to business travel) to
\nemployees in the ordinary course and consistent with past practice;<\/p>\n
(r) Authorize or make capital expenditures beyond those provided in the
\nCompany’s existing capital expenditure budget, or that are individually in
\nexcess of $100,000 or in the aggregate in excess of $500,000 in any calendar
\nquarter;<\/p>\n
(s) Materially accelerate or delay collection of any notes or accounts
\nreceivable in advance of or beyond their regular due dates or the dates when the
\nsame would have been collected in the ordinary course of business;<\/p>\n
(t) Materially delay or accelerate payment of any account payable beyond
\nor in advance of its due date or the date such liability would have been paid in
\nthe ordinary course of business;<\/p>\n
(u) Settle or compromise any suits or claims or threatened suits or
\nclaims for payments in an aggregate amount in excess of $500,000;<\/p>\n
(v) Make any tax election not required by law or settle or compromise
\nany material tax liability;<\/p>\n
(w) Cancel or terminate any material insurance policy naming it as a
\nbeneficiary or a loss payable payee or permit any such policy to lapse (it being
\nunderstood that the Company may renew any insurance policy in effect as of the
\ndate of this Agreement);<\/p>\n
(x) Increase the aggregate dollar value of inventory owned by
\ndistributors in the first and second tiers of its distribution channel (which
\nhas not been “sold through” to end-user customers and which such distributors
\nhave the right to return) above the aggregate value of such inventory at June
\n30, 1998;<\/p>\n
(y) Begin shipment of any new products to customers, except for alpha
\nversions and not more than 50 beta versions of any product delivered to
\ncustomers solely for evaluation purposes; or<\/p>\n
(z) Agree in writing or otherwise to take any of the actions described
\nin Section 5.1(a) through (y) above.<\/p>\n
36<\/p>\n
39<\/p>\n
Section 5.2. Source Code Escrow.<\/p>\n
(a) Promptly following the execution of this Agreement, the Company
\nagrees to deposit into escrow (the “Source Code Escrow”) with Brambles NSD,
\nInc., or such other entity as is reasonably satisfactory to Parent and the
\nCompany (the “Escrow Agent”) CDROMs containing true, correct and complete copies
\nof the source code, together with all relevant documentation, build
\ninstructions, and any tools or libraries used in the build process that are not
\ncommercially available in off-the-shelf or shrink wrap form, for each of its
\ncurrently shipping versions of products (including but not limited to versions
\nof products in the following product families: First Aid, UnInstaller, Oil
\nChange, Guard Dog and CSS Repair Engine for Workgroups) and versions of all
\nproducts currently under development (collectively, the “Cyclone Source Code”).
\nSuch deposit shall consist of a sealed package certified by an authorized
\nofficer of the Company to contain a true, correct and complete copy of each such
\nitem of Cyclone Source Code (in form and content) as required by this Agreement.
\nThe Company and Parent will enter into an escrow agreement with the Escrow Agent
\nwith respect to the Source Code Escrow (the “Escrow Agreement”) which will
\nprovide that the Company will pay all fees and expenses of the Escrow Agent and
\nwhich will contain terms and conditions consistent with the provisions of this
\nSection 5.2 and other terms and conditions customary for such agreements.<\/p>\n
(b) On the day that is 18 business days following the commencement of
\nthe Offer (and, if the Offer is extended, on the day that is two calendar days
\nprior to the then current Expiration Date and, if the Offer is extended at any
\none time by more than 25 days, every 20 days while the Offer is pending), the
\nCompany agrees to deposit into the Source Code Escrow a complete and updated
\ncopy of all Cyclone Source Code, any of which shall thereafter be deemed to be a
\npart of the Cyclone Source Code.<\/p>\n
(c) The Escrow Agreement will direct the Escrow Agent to provide Parent
\nreasonable access to the Cyclone Source Code for the limited purpose of ensuring
\nthat the Cyclone Source Code is what it purports to be by running a compile of
\nthe Cyclone Source Code and checking the functionality of the resulting binary
\ncode against the provided documentation. Such access shall, to the extent
\nreasonably practicable, take place on a one-time basis with respect to each
\ndeposit of Cyclone Source Code into the Source Code Escrow, and shall be
\nconducted with two business days prior notice to the Company and during normal
\nbusiness hours by a single Parent representative for whom Parent shall be
\nresponsible. Nothing in this Section 5.2((c)) shall entitle Parent to remove or
\nmake copies of the originals of the Cyclone Source Code or any part thereof. The
\nCompany shall be entitled to have a representative present at any inspection of
\nthe Cyclone Source Code by a Parent representative, provided that the Company’s
\nfailure to have a representative present shall not prevent or delay Parent’s
\nright to such inspection.<\/p>\n
(d) The Cyclone Source Code shall be held in the Source Code Escrow at
\nthe offices of the Escrow Agent until the date on which Purchaser has accepted
\nfor payment and paid for Shares pursuant to the Offer (the “Release Date”). The
\nEscrow Agreement shall contain provisions instructing the Escrow Agent to
\ndeliver the Cyclone Source Code to Parent or its designated representative
\npromptly upon request at any time from and after the Release Date.<\/p>\n
37<\/p>\n
40<\/p>\n
(e) In the event that, prior to the Release Date, this Agreement shall
\nbe terminated pursuant to its terms, the Source Code Escrow shall terminate and
\nthe Cyclone Source Code shall be returned to the Company.<\/p>\n
Section 5.3. Access to Information.<\/p>\n
(a) From the date of this Agreement until the Effective Time, the
\nCompany will give, and will cause its subsidiaries, and each of their respective
\nofficers, directors, employees, counsel, advisors and representatives
\n(collectively, the “Company Representatives”) to give Parent and Purchaser and
\ntheir respective officers, employees, counsel, advisors and representatives
\n(collectively, the “Parent Representatives”) reasonable access, upon reasonable
\nnotice and during normal business hours, to the offices and other facilities and
\nto the books and records of the Company and its subsidiaries and will cause the
\nCompany Representatives and the Company’s subsidiaries to furnish Parent,
\nPurchaser and Parent Representatives, to the extent available, with such
\nfinancial and operating data and such other information with respect to the
\nbusiness and operations of the Company and its subsidiaries as Parent and
\nPurchaser may from time to time reasonably request subject, in each case, to the
\ncontinuing obligations of the parties under the Confidentiality Agreement
\nbetween Parent and the Company dated June 9, 1998 (the “Confidentiality
\nAgreement”), which agreement shall survive until termination pursuant to the
\nterms thereof. The Company shall furnish promptly to Parent and Purchaser a copy
\nof each report, schedule, registration statement and other document filed by it
\nor its subsidiaries during such period pursuant to the requirements of federal,
\nstate or foreign securities laws.<\/p>\n
(b) No investigation made by Parent, Purchaser or any Parent
\nRepresentative pursuant to this Section 5.3 shall affect any representations or
\nwarranties of the parties contained in this Agreement or any conditions to their
\nobligations hereunder.<\/p>\n
Section 5.4. Efforts.<\/p>\n
(a) Subject to the terms and conditions hereof, each of the Company,
\nParent and Purchaser shall, and the Company shall cause each of its subsidiaries
\nto, cooperate and use their respective reasonable commercial efforts to take, or
\ncause to be taken, all actions reasonably necessary, proper or advisable under
\napplicable laws and regulations to consummate and make effective the
\ntransactions contemplated by this Agreement as promptly as is practicable,
\nincluding but not limited to cooperation in the preparation and filing of the
\nOffer Documents, the Schedule 14D-9, the Proxy Statement, any required filings
\nunder the HSR Act, or other foreign filings and any amendments to any thereof.<\/p>\n
(b) If at any time prior to the Effective Time any event or circumstance
\nrelating to the Company, Parent or Purchaser, or any of their respective
\nsubsidiaries, should be discovered by the Company or Parent, as the case may be,
\nwhich is required to be set forth in an amendment to the Offer Documents or the
\nSchedule 14D-9, the discovering party will promptly inform the other party of
\nsuch event or circumstance.<\/p>\n
(c) Each of the parties will use its reasonable commercial efforts to
\nobtain as promptly as practicable all consents of any Governmental Entity or any
\nother person required in connection <\/p>\n
38<\/p>\n
41<\/p>\n
with, and waivers of any violations that may be caused by, the consummation of
\nthe transactions contemplated by the Offer, the Merger and this Agreement.<\/p>\n
Section 5.5. Public Announcements. The Company, on the one hand, and
\nParent and the Purchaser, on the other hand, agree to attempt in good faith to
\nconsult with each other prior to issuing any press release or otherwise making
\nany public statement with respect to this Agreement, the Offer, the Merger or
\nthe other transactions contemplated hereby, agree to provide to the other party
\nfor review a copy of any such press release or statement, and shall not issue
\nany such press release or make any such public statement prior to attempting in
\ngood faith such consultation and review, unless required by applicable law or
\nany listing agreement with a securities exchange. This Section 5.5 shall
\nsupersede any conflicting provisions of the Confidentiality Agreement.<\/p>\n
Section 5.6. Employee Benefit Arrangements.<\/p>\n
(a) The Company shall, and Parent agrees to cause the Company to, honor
\nand, from and after the Effective Time, the Surviving Corporation to honor, all
\nobligations under the employment and severance agreements to which the Company
\nor any of its subsidiaries is presently a party which are listed in the Company
\nSchedule. Notwithstanding the foregoing, from and after the Effective Time, the
\nSurviving Corporation shall have the right to amend, modify, alter or terminate
\nany Company Employee Plan, provided that any such action shall not affect any
\nrights for which the agreement or consent of the other party or a beneficiary is
\nrequired; provided that, except as prohibited by the Company’s 401(k) plan or
\napplicable law, the Company will promptly take any and all actions necessary and
\nappropriate to terminate the Company’s 401(k) plan, including without limitation
\n(i) adoption of resolutions by the Company Board terminating the 401(k) plan
\nimmediately prior to consummation of the Offer and (ii) timely delivery of any
\nnotices required under the terms of the 401(k) plan.<\/p>\n
(b) Employees of the Surviving Corporation immediately following the
\nEffective Time who immediately prior to the Effective Time were employees of the
\nCompany or any Company subsidiary shall be given credit for purposes of
\neligibility and vesting under each employee benefit plan, program, policy or
\narrangement of the Parent or the Surviving Corporation in which such employees
\nparticipate subsequent to the Effective Time for all service with the Company
\nand any Company subsidiary prior to the Effective Time (to the extent such
\ncredit was given by the Company or any Company subsidiary) for purposes of
\neligibility and vesting.<\/p>\n
Section 5.7. Indemnification.<\/p>\n
(a) Parent agrees that all rights to indemnification now existing in
\nfavor of any of the current or former directors and officers of the Company (the
\n“Indemnified Parties”) as provided in its Certificate of Incorporation or
\nBy-Laws, in each case as of the date of this Agreement, and in indemnification
\nagreements between the Company and the Indemnified Parties shall survive the
\nMerger and shall continue in full force and effect from and after consummation
\nof the Offer in accordance with their terms, as such terms exist on the date
\nhereof. After the Effective Time, Parent agrees to cause the Surviving
\nCorporation to honor all rights to indemnification referred to in the preceding
\nsentence.<\/p>\n
39<\/p>\n
42<\/p>\n
(b) Parent agrees to cause the Company, and from and after the Effective
\nTime, the Surviving Corporation to maintain in effect for not less than six
\nyears from the Effective Time the current policies of directors’ and officers’
\nliability insurance maintained by the Company; provided that the Surviving
\nCorporation may substitute therefor other policies not less advantageous (other
\nthan to a de minimus extent) to the beneficiaries of the current policies,
\nprovided that such substitution shall not result in any gaps or lapses in
\ncoverage with respect to matters occurring prior to the Effective Time; and
\nprovided, further, that the Surviving Corporation shall not be required to pay
\nan annual premium in excess of 150% of the last annual premium paid by the
\nCompany prior to the date hereof (which the Company represents to be $210,000
\nfor the 12-month period ending October 22, 1998) and if the Surviving
\nCorporation is unable to obtain the insurance required by this Section 5.7((b))
\nfor such maximum amount it shall obtain as much comparable insurance as possible
\nfor an annual premium equal to such maximum amount.<\/p>\n
Section 5.8. Notification of Certain Matters.<\/p>\n
(a) Parent and the Company shall give prompt notice in writing to the
\nother of the occurrence or non-occurrence of any fact or event which would be
\nreasonably likely to (i) cause any representation or warranty made by such party
\nin this Agreement to be untrue or inaccurate in any material respect at any time
\nfrom the date hereof to the Effective Time or (ii) cause any covenant or
\nagreement made by such party under this Agreement not to be complied with or
\nsatisfied in any material respect; provided, however, that no such notification
\nshall affect the representations or warranties of any party or the conditions to
\nthe obligations of any party hereunder.<\/p>\n
(b) Each of the Company, Parent and Purchaser shall give prompt notice
\nin writing to the other parties hereto of any notice or other communication from
\nany third party alleging that the consent of such third party is or may be
\nrequired in connection with the transactions contemplated by this Agreement.<\/p>\n
(c) The Company shall give prompt notice in writing to Parent of any
\nact, omission to act, event or occurrence which, with the passage of time or
\notherwise, would be reasonably expected to have a Material Adverse Effect on the
\nCompany; provided, however, that no such notification shall affect the
\nrepresentations or warranties of any party or the conditions to the obligations
\nof any party hereunder.<\/p>\n
(d) The failure by the Company to provide timely notice of the
\noccurrence or non-occurrence of any particular fact, event, act, omission to
\nact, event, occurrence, liability or communication relating to the possible
\nuntruth or inaccuracy of any representation or warranty of the Company in this
\nAgreement or the possible non-compliance by the Company with any covenant or
\nobligation of the Company under this Agreement shall not constitute a failure to
\nsatisfy the condition to the Offer set forth in clause (iii)(f) of Annex I, or a
\nbasis for the Parent to terminate this Agreement pursuant to Section
\n7.1((c))((iv)) unless the matter or matters as to which notice was not timely
\nsent would constitute or indicate a failure to satisfy clauses (iii) (c) or (e)
\nof Annex I, or constitute a material breach by the Company of a covenant or
\nobligation under this Agreement other than this Section 5.8.<\/p>\n
40<\/p>\n
43<\/p>\n
Section 5.9. State Takeover Laws. The Company shall, upon the request of
\nthe Purchaser, take all reasonable steps to assist in any challenge by the
\nPurchaser to the validity or applicability to the transactions contemplated by
\nthis Agreement, including the Offer and the Merger, of any state takeover law.<\/p>\n
Section 5.10. No Solicitation.<\/p>\n
(a) For purposes of this Agreement:<\/p>\n
(i) “Alternative Proposal” means any inquiry, proposal or offer
\nfrom any person or Group relating to any direct or indirect acquisition or
\npurchase of any product line or other material portion of the assets of the
\nCompany and its subsidiaries taken as a whole (other than the purchase of the
\nCompany’s products or used equipment in the ordinary course of business), or
\nmore than a 20% interest in the total outstanding voting securities of the
\nCompany or any of its subsidiaries, or any tender offer or exchange offer that
\nif consummated would result in any person or Group beneficially owning 10% or
\nmore of the total outstanding voting securities of the Company or any of its
\nsubsidiaries, or any merger, consolidation, business combination, sale of
\nsubstantially all the assets, recapitalization, liquidation, dissolution or
\nsimilar transaction involving the Company or any of its subsidiaries, other than
\nthe transactions contemplated by this Agreement.<\/p>\n
(ii) “Superior Proposal” means a bona fide offer made by a third
\nparty to acquire, directly or indirectly, including pursuant to a tender offer,
\nexchange offer, merger, consolidation, business combination, recapitalization,
\nliquidation, dissolution or similar transaction, for consideration consisting of
\ncash and\/or securities, more than 50% of the total outstanding voting securities
\nof the Company or all or substantially all the assets of the Company, which
\noffer is otherwise on terms which the Company Board determines in its good faith
\njudgment (after consultation with a financial advisor of nationally recognized
\nreputation) to be more favorable to the Company’s stockholders from a financial
\npoint of view than the Offer and the Merger, and for which financing, to the
\nextent required, is then committed or which, in the good faith judgment of the
\nCompany Board is capable of being obtained by such third party.<\/p>\n
(iii) “Representative” means the officers, directors or
\nemployees or any investment banker, attorney, accountant or other advisor or
\nrepresentative retained by the Company or its subsidiaries.<\/p>\n
(iv) “Group” means any group as defined under Section 13(d) of
\nthe Exchange Act and the rules and regulations thereunder.<\/p>\n
(b) (i) From and after the date of this Agreement until the earlier
\nof the Effective Time or termination of this Agreement pursuant to its terms,
\nthe Company and its subsidiaries will not, and they will direct their respective
\nRepresentatives not to, directly or indirectly, (A) solicit, initiate or
\nencourage the submission of any Alternative Proposal or (B) participate in any
\ndiscussions or negotiations regarding, or furnish to any person any non-public
\ninformation with respect to, or take any other action to facilitate the making
\nof any proposal that constitutes or may reasonably be expected to lead to, an
\nAlternative Proposal. The Company and its<\/p>\n
41<\/p>\n
44<\/p>\n
subsidiaries will immediately cease, and will instruct and cause their
\nrespective Representatives to immediately cease, any and all existing
\nactivities, discussions or negotiations with any parties conducted heretofore
\nwith respect to any Alternative Proposal. Any violation of the restrictions set
\nforth in this Section 5.10(b)(i) by any Representative of the Company or any
\nof its subsidiaries will be deemed to be a breach material hereof by the
\nCompany.<\/p>\n
(ii) Notwithstanding the provisions of Section 5.10(b)(i), if,
\nat any time prior to the consummation of the Offer, the Company Board reasonably
\ndetermines in good faith, after consultation with outside legal counsel, that it
\nis necessary to do so in order to comply with its fiduciary duties to the
\nCompany’s stockholders under applicable law, the Company and its Representatives
\nmay, in response to a Superior Proposal that was unsolicited or that did not
\notherwise result from a breach of this Section 5.10, and subject to compliance
\nwith Section 5.10(d) and Section 5.10(f), furnish non-public information with
\nrespect to the Company and participate in discussions and negotiations regarding
\nsuch Superior Proposal.<\/p>\n
(c) (i) From and after the date of this Agreement until the
\nearlier of the Effective Time or termination of this Agreement pursuant to its
\nterms, neither the Company Board nor any committee thereof shall (A) withdraw or
\nmodify, or propose publicly to withdraw or modify, in a manner adverse to Parent
\nor Purchaser, their approval or recommendation to the Company’s stockholders of
\nthe Offer, this Agreement or the Merger or (B) cause the Company to enter into
\nany letter of intent, agreement in principle, acquisition agreement or other
\nsimilar agreement (an “Acquisition Agreement”) with respect to any Alternative
\nProposal. In addition, from and after the date of this Agreement until the
\nearlier of the Effective Time and termination of this Agreement pursuant to its
\nterms, the Company and its subsidiaries will not, and they will direct their
\nRepresentatives not to, directly or indirectly, make or authorize any public
\nstatement, recommendation or solicitation in support of any Alternative
\nProposal.<\/p>\n
(ii) Notwithstanding the provisions of Section 5.10(c)(i), if,
\nat any time prior to the consummation of the Offer, the Company Board reasonably
\ndetermines in good faith, after consultation with outside legal counsel, that it
\nis necessary to do so in order to comply with its fiduciary duties to the
\nCompany’s stockholders under applicable law, the Company Board may withdraw or
\nmodify its approval or recommendation of the Offer, this Agreement or the
\nMerger, approve or recommend a Superior Proposal, or enter into an Acquisition
\nAgreement with respect to a Superior Proposal, provided that the Company shall
\nhave given Parent written notice (a “Notice of Superior Proposal”) at least two
\nbusiness days prior to entering into any such Acquisition Agreement and at least
\ntwo business days prior to public disclosure by the Company Board of such
\nwithdrawal, modification, approval or recommendation, advising Parent that the
\nCompany Board has received a Superior Proposal, specifying the material terms
\nand conditions of the Superior Proposal and identifying the person making such
\nSuperior Proposal. Any amendment to the price or material terms of a Superior
\nProposal shall require an additional Notice of Superior Proposal and an
\nadditional two business day period thereafter, to the extent permitted under
\napplicable law, prior to public disclosure by the Company Board of its
\nrecommendation with respect thereto.<\/p>\n
(d) In addition to the obligations of the Company set forth in Section
\n5.10(b) and <\/p>\n
42<\/p>\n
45<\/p>\n
Section 5.10(c), the Company as promptly as practicable, and in any event
\nwithin 24 hours, shall advise Parent orally and in writing of (i) any request
\nfor non-public information which the Company reasonably believes may lead to an
\nAlternative Proposal, or of any Alternative Proposal, (ii) the material terms
\nand conditions of such information request or Alternative Proposal, and (iii)
\nthe identity of the person making any such information request or Alternative
\nProposal. The Company will keep Parent informed in all material respects of the
\nstatus and details (including material amendments) of any such request or
\nAlternative Proposal.<\/p>\n
(e) Nothing contained in this Section 5.10 or elsewhere in this
\nAgreement shall prohibit the Company from (i) taking and disclosing to its
\nstockholders a position contemplated by Rules 14d-9 and 14e-2(a) under the
\nExchange Act or (ii) making any disclosure to the Company’s stockholders if, in
\nthe good faith judgment of the Company Board, after consultation with outside
\nlegal counsel, failure to so disclose would be inconsistent with applicable
\nlaws; provided that neither the Company nor the Company Board nor any committee
\nthereof shall, except in accordance with the provisions of Section
\n5.10(c)(ii), withdraw or modify, or publicly propose to withdraw or modify,
\nits position with respect to the Offer, this Agreement or the Merger or approve
\nor recommend, or propose to approve or recommend, an Alternative Proposal.<\/p>\n
(f) Notwithstanding anything to the contrary in this Section 5.10, the
\nCompany will not provide any non-public information to a third party unless: (i)
\nthe Company provides such non-public information pursuant to a nondisclosure
\nagreement with terms regarding the protection of confidential information at
\nleast as restrictive as such terms in the Confidentiality Agreement; and (ii)
\nsuch non-public information has been previously or is contemporaneously
\ndelivered to Parent.<\/p>\n
Section 5.11. Section 203 of the DGCL. From and after the date of this
\nAgreement until the earlier of the termination of this Agreement pursuant to its
\nterms or the Effective Time, the Company will not approve any acquisition of
\nshares of Company Common Stock by any person (other than Parent, Purchaser or
\ntheir respective affiliates) which would result in such person becoming an
\n“interested stockholder” (as such term is defined in Section 203 of the DGCL) or
\notherwise become subject to Section 203 of the DGCL, unless such acquisition is
\nrelated to a Superior Proposal and the Company has complied with Section 5.10
\nand, if applicable, Section 7.3.<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS TO CONSUMMATION OF THE MERGER<\/p>\n
Section 6.1. Conditions. The respective obligations of Parent, the
\nPurchaser and the Company to consummate the Merger are subject to the
\nsatisfaction, at or before the Effective Time, of each of the following
\nconditions:<\/p>\n
43<\/p>\n
46<\/p>\n
(a) Stockholder Approval. The stockholders of the Company shall have
\nduly approved and adopted this Agreement, if required by applicable law.<\/p>\n
(b) Purchase of Shares. The Purchaser shall have accepted for payment
\nand paid for Shares pursuant to the Offer in accordance with the terms hereof.<\/p>\n
(c) Injunctions; Illegality. The consummation of the Merger shall not be
\nrestrained, enjoined or prohibited by any order, judgment, decree, injunction or
\nruling of a Governmental Entity of competent jurisdiction and there shall not
\nhave been any statute, rule or regulation enacted, promulgated or issued by any
\nGovernmental Entity which prevents the consummation of the Merger or has the
\neffect of making the purchase of Shares illegal.<\/p>\n
ARTICLE VII<\/p>\n
TERMINATION; AMENDMENTS; WAIVER<\/p>\n
Section 7.1. Termination. This Agreement may be terminated and the
\nMerger contemplated hereby may be abandoned at any time prior to the Effective
\nTime, notwithstanding approval thereof by the stockholders of the Company (with
\nany termination by Parent also being an effective termination by Purchaser):<\/p>\n
(a) by mutual written consent duly authorized by the Board of Directors
\nof Parent and the Company Board, subject to the concurrence of the Independent
\nDirectors to the extent required by Section 1.3(c);<\/p>\n
(b) by either Parent or the Company if:<\/p>\n
(i) the Offer is terminated, withdrawn or expires pursuant to
\nits terms without any Shares having been purchased thereunder; provided,
\nhowever, that neither Parent nor the Company may terminate this Agreement
\npursuant to this Section 7.1(b)(i) if such party is in material breach of
\nthis Agreement (including if Parent or Purchaser is in breach of Section 1.1 of
\nthis Agreement) or, in the case of Parent, if Parent or Purchaser is in material
\nviolation of the terms of the Offer; or<\/p>\n
(ii) a Governmental Entity shall have issued an order, decree or
\nruling or taken any other action, in any case having the effect of permanently
\nrestraining, enjoining or otherwise prohibiting the Offer or the Merger, which
\norder, decree, ruling or other action is final and nonappealable.<\/p>\n
(iii) prior to the purchase of Shares pursuant to the Offer, the
\nCompany Board has recommended, or the Company has entered into an Acquisition
\nAgreement with respect to, a Superior Proposal; provided, however, that
\ntermination by the Company pursuant to this Section 7.1(b)(iii) shall be
\nconditioned upon concurrent payment by the Company of <\/p>\n
44
\n 47<\/p>\n
the Termination Fee pursuant to Section 7.3.<\/p>\n
(c) by Parent prior to the purchase of Shares pursuant to the Offer if:<\/p>\n
(i) the Company shall have failed to include in the Schedule
\n14D-9 the recommendation of the Company Board that the stockholders of the
\nCompany accept the Offer;<\/p>\n
(ii) the Company Board or any committee thereof shall have (A)
\nwithdrawn or modified (including but not limited to by amendment of the Schedule
\n14D-9) in a manner adverse to Parent or Purchaser its approval or recommendation
\nof the Offer, this Agreement or the Merger, (B) approved or recommended, taken
\nno position with respect to, or failed to recommend against any Alternative
\nProposal, or (C) resolved to do any of the foregoing;<\/p>\n
(iii) the Company or any of its subsidiaries or any of their
\nrespective Representatives participate in any discussions or negotiations with
\nor provide any non-public information to any third party in breach of the
\nprovisions of Section 5.10;<\/p>\n
(iv) the Company is in material breach of any of its covenants
\nor obligations under this Agreement; provided that if such breach is curable
\nthrough the exercise of the Company’s commercially reasonable efforts, Parent
\nmay not terminate this Agreement under this Section 7.1(c)(iv) unless such
\nbreach is not cured on or prior to September 30, 1998;<\/p>\n
(d) by the Company prior to the purchase of Shares pursuant to the Offer
\nif:<\/p>\n
(i) the Offer shall not have been commenced in accordance with
\nSection 1.1, or Parent or Purchaser shall have failed to purchase validly
\ntendered Shares in violation of the terms of the Offer within 10 business days
\nafter the expiration of the Offer; provided, however, that the Company shall not
\nbe entitled to terminate this Agreement pursuant to this Section 7.1(d)(i)
\nif it is in material breach of this Agreement; or<\/p>\n
(ii) Parent or Purchaser is in material breach of any of its
\ncovenants or obligations under this Agreement; provided that if such breach is
\ncurable through exercise of Parent’s or Purchaser’s commercially reasonable
\nefforts, the Company may not terminate this Agreement under this Section
\n7.1(d)(ii) unless such breach is not cured within 20 days after giving
\nnotice to the Parent.<\/p>\n
Section 7.2. Notice of Termination; Effect of Termination.<\/p>\n
(a) Any termination of this Agreement under Section 7.1 above will be
\neffective immediately upon the delivery of written notice by the terminating
\nparty to the other parties hereto.<\/p>\n
(b) In the event of the termination of this Agreement as provided in
\nSection 7.1, this Agreement shall be of no further force or effect, except (i)
\nas set forth in this Section 7.2, Section 7.3 and Article VIII (miscellaneous),
\neach of which shall survive the termination of this Agreement, and (ii) nothing
\nherein shall relieve any party from liability for any willful <\/p>\n
45<\/p>\n
48<\/p>\n
breach of this Agreement.<\/p>\n
(c) Except as provided in Section 7.2(d), no termination of this
\nAgreement shall affect the obligations of the parties contained in the
\nConfidentiality Agreement, all of which obligations shall survive termination of
\nthis Agreement in accordance with their terms.<\/p>\n
(d) In the event this Agreement is terminated pursuant to Section
\n7.1(b)(iii) or Section 7.1(c)(i), (ii) or (iii), the Company irrevocably waives
\nany otherwise applicable standstill or other agreement or restrictions in favor
\nof the Company (contractual or otherwise) on the ability and right of Parent,
\nPurchaser or any of their affiliates to acquire Shares.<\/p>\n
Section 7.3. Fees and Expenses.<\/p>\n
(a) Except as set forth in this Section 7.3, all costs and expenses
\nincurred in connection with this Agreement, the Offer, the Merger and the other
\ntransactions contemplated hereby shall be paid by the party incurring such
\nexpenses, whether or not such transactions are consummated.<\/p>\n
(b) In the event that this Agreement is terminated pursuant to Section
\n7.1(b)(iii) or Section 7.1(c)(i), (ii) or (iii), the Company shall, concurrently
\nwith such termination in the case of termination by the Company pursuant to
\nSection 7.1(b)(iii), or within one business day after any other such
\ntermination, pay Parent a termination fee of $4,000,000 (the “Termination Fee”)
\nin immediately available funds by wire transfer to an account designated by
\nParent. In the event that this Agreement is terminated pursuant to Section
\n7.1(a), Section 7.1(b)(i) or Section 7.1(c)(iv), and at the time of such
\ntermination there is pending any offer by any person other than Parent or any
\naffiliate of Parent to effect an Acquisition (as hereinafter defined) and,
\nwithin 12 months following such termination, any person other than Parent or any
\naffiliate of Parent effects an Acquisition, or enters into an Acquisition
\nAgreement with the Company or commences a tender offer for an Acquisition and
\nthe transactions contemplated thereby are subsequently consummated at any time,
\nthe Company shall pay Parent the Termination Fee at or prior to the consummation
\nof such Acquisition in immediately available funds by wire transfer to an
\naccount designated by Parent. In the event that this Agreement is terminated
\npursuant to Section 7.1(a), Section 7.1(b)(i) (other than a termination solely
\nas a result of a failure to satisfy the Minimum Condition, or a failure to
\nsatisfy the conditions specified in clauses (iii)(a) or (iii)(b) of Annex I) or
\nSection 7.1(c)(iv), and at the time of such termination no offer by any person
\nother than Parent or any affiliate of Parent to effect an Acquisition is
\npending, and, within six months following such termination, any person other
\nthan Parent or any affiliate of Parent effects an Acquisition, or enters into an
\nAcquisition Agreement with the Company or commences a tender offer for an
\nAcquisition and the transactions contemplated thereby are subsequently
\nconsummated at any time, the Company shall pay Parent at or prior to the
\nconsummation of such Acquisition in immediately available funds by wire transfer
\nto an account designated by Parent an amount equal to the lesser of (A) the
\nTermination Fee or (B) the amount, if any, by which the aggregate consideration
\npaid to the Company and\/or its stockholders in such Acquisition exceeds
\n$126,944,000. For the purposes hereof, an “Acquisition” shall mean any merger,
\nconsolidation <\/p>\n
46<\/p>\n
49<\/p>\n
or other reorganization, any tender offer or other transaction or series of
\nrelated transactions involving the acquisition of securities of the Company, or
\nany sale or license of all or substantially all the business or assets of the
\nCompany, unless the stockholders of the Company prior to such transaction or
\nseries of related transactions retain following such transaction or series of
\nrelated transactions (in respect of their equity interest in the Company prior
\nthereto) more than 50% of the voting equity securities of the surviving or
\nsuccessor corporation to the business of the Company. The Company acknowledges
\nthat the agreements contained in this Section 7.3(b) are an integral part of
\nthe transactions contemplated by this Agreement, and that, without these
\nagreements, Parent would not enter into this Agreement; accordingly, if the
\nCompany fails promptly to pay any amount due pursuant to this Section 7.3(b),
\nand, in order to obtain such payment, Parent commences a suit which results in a
\njudgment against the Company for the amounts set forth in this Section 7.3(b),
\nthe Company shall pay to Parent its reasonable costs and expenses (including
\nattorneys’ fees and expenses) in connection with such suit, together with
\ninterest on the amounts set forth in this Section 7.3(b) at the prime rate of
\nBank of America, NT&SA, in effect on the date such payment was required to be
\nmade.<\/p>\n
(c) The Termination Fee shall not be deemed to be liquidated damages,
\nand the right to the payment of the Termination Fee shall be in addition to (and
\nnot a maximum payment in respect of) any other damages or remedies at law or in
\nequity to which Parent or Purchaser may be entitled as a result of the willful
\nviolation or willful breach of any term or provision of this Agreement or any
\nSupport Agreement.<\/p>\n
Section 7.4. Amendment. Subject to applicable law, this Agreement may be
\namended by the parties hereto at any time by execution of an instrument in
\nwriting signed on behalf of each of Parent and Company.<\/p>\n
Section 7.5. Extension; Waiver. At any time prior to the Effective Time
\nany party hereto may, to the extent legally allowed and subject to the terms and
\nconditions of Section 1.3(c) hereof, (i) extend the time for the performance
\nof any of the obligations or other acts of the other parties hereto, (ii) waive
\nany inaccuracies in the representations and warranties made to such party
\ncontained herein or in any document delivered pursuant hereto and (iii) waive
\ncompliance with any of the agreements or conditions for the benefit of such
\nparty contained herein. Any agreement on the part of a party hereto to any such
\nextension or waiver shall be valid only if set forth in an instrument in writing
\nsigned on behalf of such party. Delay in exercising any right under this
\nAgreement shall not constitute a waiver of such right.<\/p>\n
ARTICLE VIII<\/p>\n
MISCELLANEOUS<\/p>\n
Section 8.1 Non-Survival of Representations and Warranties. The
\nrepresentations and warranties by the Company made in Article III shall not
\nsurvive beyond the consummation of the Offer, and <\/p>\n
47<\/p>\n
50<\/p>\n
the representations and warranties made by Parent and Purchaser in Article IV
\nshall not survive beyond the Effective Time.<\/p>\n
Section 8.2. Entire Agreement; Assignment.<\/p>\n
(a) This Agreement (including the documents and the instruments referred
\nto herein) constitutes the entire agreement and supersedes all prior agreements
\nand understandings, both written and oral, among the parties with respect to the
\nsubject matter hereof and thereof.<\/p>\n
(b) Neither this Agreement nor any of the rights, interests or
\nobligations hereunder may be assigned by any of the parties hereto (whether by
\noperation of law or otherwise) without the prior written consent of each other
\nparty (except that Parent may assign its rights and Purchaser may assign its
\nrights, interest and obligations to any wholly-owned subsidiary of Parent
\nincorporated in the State of Delaware without the consent of the Company
\nprovided that no such assignment shall relieve Parent of any liability for any
\nbreach by such assignee). Subject to the preceding sentence, this Agreement will
\nbe binding upon, inure to the benefit of and be enforceable by the parties and
\ntheir respective successors and assigns.<\/p>\n
Section 8.3. Validity. The invalidity or unenforceability of any
\nprovision of this Agreement shall not affect the validity or enforceability of
\nany other provision of this Agreement, each of which shall remain in full force
\nand effect.<\/p>\n
Section 8.4. Notices. All notices, requests, claims, demands and other
\ncommunications hereunder shall be in writing and shall be deemed to have been
\nduly given when delivered in person, by overnight courier or facsimile to the
\nrespective parties as follows:<\/p>\n
If to Parent or the Purchaser:
\n Networks Associates, Inc.
\n 2805 Bowers Avenue
\n Santa Clara, California 95051
\n Attn: Richard Hornstein, Esq.
\n Fax: (408) 346-3038<\/p>\n
with a copy to:
\n Gray Cary Ware & Freidenrich LLP
\n 400 Hamilton Avenue
\n Palo Alto, California 94301
\n Attn: Dennis C. Sullivan, Esq.
\n Bradley J. Rock, Esq.
\n Fax: (650) 327-3699<\/p>\n
If to the Company:<\/p>\n
48
\n 51<\/p>\n
CyberMedia, Inc.
\n 2850 Ocean Park Blvd., Suite 100
\n Santa Monica, California 90405
\n Attn: Chief Executive Officer
\n Fax: (310) 581-4751<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati, P.C.
\n 650 Page Mill Road
\n Palo Alto, California 94304-1050
\n Attn: Arthur F. Schneiderman, Esq.
\n Blair W. Stewart, Jr., Esq.
\n Daniel R. Mitz, Esq.
\n Fax: (650) 493-6811<\/p>\n
or to such other address as the person to whom notice is given may have
\npreviously furnished to the other in writing in the manner set forth above;
\nprovided that notice of any change of address shall be effective only upon
\nreceipt thereof.<\/p>\n
Section 8.5. Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the State of Delaware, regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaws thereof.<\/p>\n
Section 8.6. Interpretation. The headings contained in this Agreement
\nare for reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement. When reference is made in this Agreement to a
\nSection or Article, such reference shall be to a Section or Article of this
\nAgreement, unless otherwise indicated. Whenever the words “include,” “includes,”
\nor “including” are used in this Agreement, they shall be deemed to be followed
\nby the words “without limitation.” Whenever “or” is used in this Agreement it
\nshall be construed in the nonexclusive sense. The words “herein,” “hereby,”
\n“hereof,” “hereto,” “hereunder” and words of similar import refer to this
\nAgreement.<\/p>\n
Section 8.7. Counterparts. This Agreement may be executed in two or more
\ncounterparts, each of which shall be deemed to be an original, but all of which
\nshall constitute one and the same agreement.<\/p>\n
Section 8.8. Severability. If any term or other provision of this
\nAgreement is invalid, illegal or incapable of being enforced by any rule of law
\nor public policy, all other conditions and provisions of this Agreement shall
\nnevertheless remain in full force and effect. Upon such determination that any
\nterm or other provision is invalid, illegal or incapable of being enforced, the
\nparties hereto shall negotiate in good faith to modify this Agreement so as to
\neffect the original intent of the parties as closely as possible to the fullest
\nextent permitted by applicable law in an acceptable manner to the end that the
\ntransactions contemplated hereby, subject to the terms and conditions hereof,
\nare fulfilled to the fullest extent possible.<\/p>\n
49<\/p>\n
52<\/p>\n
Section 8.9. Parties in Interest. This Agreement shall be binding upon
\nand inure solely to the benefit of each party hereto, and, except with respect
\nto Sections Section 5.6 and Section 5.7 and the obligations of the parties
\nfollowing consummation of the Offer which are intended for the benefit of the
\nCompany’s stockholders, nothing in this Agreement, express or implied, is
\nintended to confer upon any other person any rights or remedies of any nature
\nwhatsoever under or by reason of this Agreement.<\/p>\n
Section 8.10. Certain Definitions. As used in this Agreement:<\/p>\n
(a) the term “affiliate”, as applied to any Person, shall mean any other
\nperson directly or indirectly controlling, controlled by, or under common
\ncontrol with, that Person. For the purposes of this definition, “control”
\n(including, with correlative meanings, the terms “controlling,” “controlled by”
\nand “under common control with”), as applied to any Person, means the
\npossession, directly or indirectly, of the power to direct or cause the
\ndirection of the management and policies of that Person, whether through the
\nownership of voting securities, by contract or otherwise;<\/p>\n
(b) the term “Person” or “person” shall include individuals,
\ncorporations, partnerships, trusts, other entities and groups (which term shall
\ninclude a “group” as such term is defined in Section 13(d)(3) of the Exchange
\nAct);<\/p>\n
(c) the term “subsidiary” or “subsidiaries” means, with respect to
\nParent, the Company or any other person, any corporation, partnership, joint
\nventure or other legal entity of which Parent, the Company or such other person,
\nas the case may be (either alone or through or together with any other
\nsubsidiary), owns, directly or indirectly, stock or other equity interests the
\nholders of which are generally entitled to 50% or more of the vote for the
\nelection of the board of directors or other governing body of such corporation
\nor other legal entity;<\/p>\n
(d) the term “Material Adverse Effect” when used in connection with an
\nentity means any change, event or effect that is materially adverse to the
\nbusiness, assets (including intangible assets), financial condition or results
\nof operations of such entity and its subsidiaries, taken as a whole, except for
\nthose changes, events and effects that (i) are directly caused by conditions
\naffecting the United States economy as a whole or affecting the industry in
\nwhich such entity competes as a whole, which conditions do not affect such
\nentity in a disproportionate manner, or (ii) are related to or result from the
\nannouncement or pendency of the Offer and\/or the Merger; and<\/p>\n
(e) the phrase “to the Company’s knowledge” refers to the actual
\nknowledge of any of the following officers and employees of the Company: Kanwal
\nRekhi, James R. Tolonen, Alex Klyce, Nancy Tullos and Jane Wike.<\/p>\n
Section 8.11. Specific Performance. The parties hereto agree that
\nirreparable damage would occur in the event that any of the provisions of this
\nAgreement were not performed in accordance with their specific terms or were
\notherwise breached. It is accordingly agreed that the parties shall be entitled
\nto an injunction or injunctions to prevent breaches of this Agreement and to
\nenforce specifically the terms and provisions hereof in any court of the United
\nStates or any state having <\/p>\n
50<\/p>\n
53<\/p>\n
jurisdiction, this being in addition to any other remedy to which they are
\nentitled at law or in equity, without posting any bond or proving that damages
\nwould be inadequate.<\/p>\n
51
\n 54<\/p>\n
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
\nexecuted on its behalf by its respective officer thereunto duly authorized, all
\nas of the day and year first above written.<\/p>\n
Networks Associates, Inc.<\/p>\n
By: \/s\/ Richard Hornstein
\n —————————————–
\n Name: Richard Hornstein
\n Title: Vice President, Legal Affairs and Corporate
\n Development<\/p>\n
Cyclone Acquisition Corp.<\/p>\n
By: \/s\/ Richard Hornstein
\n —————————————–
\n Name: Richard Hornstein
\n Title: Vice President, Legal Affairs and
\n Corporate Development<\/p>\n
CyberMedia, Inc.<\/p>\n
By: \/s\/ Kanwal Rekhi
\n —————————————–
\n Name: Kanwal Rekhi
\n Title: Chief Executive Officer and Chairman of the
\n Board<\/p>\n
52
\n 55<\/p>\n
Annex I<\/p>\n
TENDER OFFER CONDITIONS<\/p>\n
The capitalized terms used in this Annex I shall have the meanings set
\nforth in the Agreement and Plan of Merger to which this Annex is attached,
\nexcept that the term “Merger Agreement” shall be deemed to refer to such
\nAgreement and Plan of Merger.<\/p>\n
Notwithstanding any other provisions of the Offer, Purchaser shall not
\nbe required to accept for payment or pay for any tendered Shares, if at the
\nExpiration Date (i) the Minimum Condition is not satisfied, (ii) any applicable
\nwaiting period under the HSR Act shall not have expired or been terminated, or
\n(iii) any of the following exist:<\/p>\n
(a) any statute, rule, regulation, legislation, ruling, judgment, order
\nor injunction enacted, enforced, promulgated, amended, issued or deemed
\napplicable to the Offer or the Merger, by any Governmental Entity of competent
\njurisdiction that (1) makes illegal or otherwise prohibits consummation of the
\nOffer or the Merger, (2) prohibits or materially limits the ownership or
\noperation by Parent or Purchaser of all or any substantial portion of the
\nbusiness or assets of the Company (or any of its subsidiaries that is material
\nto the Company and its subsidiaries, taken as a whole), or compels Parent or
\nPurchaser to dispose of, divest or hold separately all or any substantial
\nportion of the business or assets of Parent, Purchaser or the Company (or any of
\nits subsidiaries that is material to the Company and its subsidiaries, taken as
\na whole), or imposes any material limitation on the ability of Parent or
\nPurchaser to conduct its business or own such assets, (3) imposes any material
\nlimitation on the ability of Parent or Purchaser effectively to acquire, hold or
\nexercise full rights of ownership of the Shares, including, without limitation,
\nthe right to vote any Shares acquired or owned by Purchaser or Parent on the
\nadoption of the Merger Agreement and all other matters properly presented to the
\nCompany’s stockholders, (4) requires divestiture by Parent or Purchaser of any
\nShares, or (5) results in a Material Adverse Effect on the Company; or<\/p>\n
(b) there shall be instituted and pending any action or proceeding by
\nany Governmental Entity that would reasonably be expected to result in any of
\nthe consequences referred to in clauses (1) through (5) of paragraph (a) above;
\nor<\/p>\n
(c) any change shall have occurred that has had, or reasonably would be
\nexpected to have, a Material Adverse Effect on the Company; or<\/p>\n
(d) the Merger Agreement shall have been terminated in accordance with
\nits terms; or<\/p>\n
(e) any of the representations and warranties of the Company set forth
\nin the Merger Agreement, when read without any exception or qualification as to
\nmateriality or Material Adverse Effect, shall not be true and correct, as if
\nsuch representations and warranties were made <\/p>\n
56<\/p>\n
immediately prior to the consummation of the Offer (except as to any such
\nrepresentation or warranty which speaks as of a specific date, which must be
\nuntrue or incorrect as of such specific date), except where the failure or
\nfailures to be so true and correct, individually or in the aggregate, do not and
\nwould not reasonably be expected to have a Material Adverse Effect on the
\nCompany; or<\/p>\n
(f) the Company shall have failed to perform or to comply with any of
\nits obligations, covenants or agreements under the Merger Agreement in any
\nmaterial respect.<\/p>\n
The foregoing conditions (including those set forth in clauses (i) and
\n(ii) of the initial paragraph) are for the benefit of Parent and Purchaser and
\nmay be asserted by Parent or Purchaser regardless of the circumstances giving
\nrise to any such conditions (except for any action or inaction in material
\nbreach of the Merger Agreement by Parent or Purchaser) and, except for the
\nMinimum Condition, may be waived by Parent or Purchaser, in whole or in part, at
\nany time and from time to time in their sole discretion, in each case, subject
\nto the terms of the Merger Agreement. The failure by Parent or Purchaser at any
\ntime to exercise any of the foregoing rights shall not be deemed a waiver of any
\nsuch right and each such right shall be deemed an ongoing right which may be
\nasserted at any time and from time to time.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7255,8333],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43098","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-cybermedia-inc","corporate_contracts_companies-networks-associates-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\/43098","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=43098"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43098"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43098"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}