\n 5.16 Branding………………………………………………………………. 58
\n 5.17 Nasdaq Listing…………………………………………………………. 59
\n 5.18 Company Affiliate Agreement……………………………………………… 59
\n 5.19 Comfort Letters………………………………………………………… 59
\n 5.20 Stockholder Agreements………………………………………………….. 59
\n 5.21 FIRPTA Compliance………………………………………………………. 59
\n 5.22 Additional Stockholder Vote……………………………………………… 60<\/p>\nARTICLE VI CONDITIONS TO THE MERGER……………………………………………………. 60<\/p>\n
6.1 Conditions to Obligations of Each Party to Effect the Merger………………… 60
\n 6.2 Additional Conditions to Obligations of the Company………………………… 61
\n 6.3 Additional Conditions to the Obligations of Parent and Merger Sub……………. 62<\/p>\n
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER…………………………………………… 63<\/p>\n
7.1 Termination……………………………………………………………. 64
\n 7.2 Notice of Termination; Effect of Termination………………………………. 65
\n 7.3 Fees and Expenses………………………………………………………. 65
\n 7.4 Amendment……………………………………………………………… 65
\n 7.5 Extension; Waiver………………………………………………………. 65<\/p>\n
ARTICLE VIII GENERAL PROVISIONS……………………………………………………….. 66<\/p>\n
8.1 Non-Survival of Representations and Warranties…………………………….. 66
\n 8.2 Notices……………………………………………………………….. 66
\n 8.3 Interpretation; Knowledge……………………………………………….. 67
\n 8.4 Counterparts…………………………………………………………… 68
\n 8.5 Entire Agreement; Third Party Beneficiaries……………………………….. 68
\n 8.6 Severability…………………………………………………………… 68
\n 8.7 Remedies………………………………………………………………. 68
\n 8.8 Governing Law………………………………………………………….. 69
\n 8.9 Rules of Construction…………………………………………………… 69
\n 8.10 Assignment…………………………………………………………….. 69
\n 8.11 WAIVER OF JURY TRIAL……………………………………………………. 69<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
-4-<\/p>\n
5
\n INDEX OF EXHIBITS<\/p>\n
Exhibit A Form of Company Voting Agreement<\/p>\n
Exhibits B-1,<\/p>\n
B-2, B-3 and B-4 Forms of Company Conversion Agreements<\/p>\n
Exhibit C Form of Microsoft Stockholder Agreement<\/p>\n
Exhibit D Form of Parent Voting Agreement<\/p>\n
-5-<\/p>\n
6
\n AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
\nMay 20, 1999, among Healtheon Corporation, a Delaware corporation (“PARENT”),
\nWater Acquisition Corp., a Georgia corporation and a wholly-owned subsidiary of
\nParent (“MERGER SUB”), and WebMD, Inc., a Georgia corporation (the “COMPANY”).<\/p>\n
RECITALS<\/p>\n
A. Upon the terms and subject to the conditions of this Agreement and in
\naccordance with the Georgia Business Corporation Code (“GEORGIA LAW”), Parent,
\nMerger Sub and the Company intend to enter into a business combination
\ntransaction.<\/p>\n
B. The Board of Directors of the Company (i) has determined that the
\nMerger (as defined in Section 1.1) is consistent with and in furtherance of the
\nlong-term business strategy of the Company and fair to, and in the best
\ninterests of, the Company and its stockholders, (ii) has approved this
\nAgreement, the Merger and the other transactions contemplated by this Agreement
\nand (iii) has determined to recommend that the stockholders of the Company adopt
\nand approve this Agreement and approve the Merger.<\/p>\n
C. The Board of Directors of Parent (i) has determined that the Merger
\n(as defined in Section 1.1) is consistent with and in furtherance of the
\nlong-term business strategy of Parent and fair to, and in the best interests of,
\nParent and its stockholders, (ii) has approved this Agreement, the Merger and
\nthe other transactions contemplated by this Agreement, and (iii) has determined
\nto recommend that the stockholders of Parent approve the issuance of shares of
\nParent Common Stock (as defined below) pursuant to the Merger.<\/p>\n
D. Concurrently with the execution of this Agreement, and as a condition
\nand inducement to Parent’s and Company’s respective willingness to enter into
\nthis Agreement, certain stockholders of the Company are entering into Voting
\nAgreements in substantially the form attached hereto as Exhibit A-1 (the
\n“COMPANY VOTING AGREEMENTS”), certain stockholders of the Company are entering
\ninto Conversion Agreements in substantially the form attached hereto as Exhibits
\nB-1, B-2, B-3, and B-4 (the “COMPANY CONVERSION AGREEMENTS”), and Microsoft
\nCorporation (“MICROSOFT”) is entering into a Stockholder Agreement (the
\n“MICROSOFT AGREEMENT”) in substantially the form of Exhibit C, (Exhibit C is
\nincluded in the definition of Company Voting Agreements for the purposes
\nhereof). Certain Stockholders of Parent are entering into Voting Agreements in
\nsubstantially the form attached hereto as Exhibit D (the “PARENT VOTING
\nAGREEMENTS”).<\/p>\n
E. The parties intend, by executing this Agreement, to adopt a plan of
\nreorganization within the meaning of Section 368 of the Internal Revenue Code of
\n1986, as amended (the “CODE”).<\/p>\n
-6-<\/p>\n
7
\n NOW, THEREFORE, in consideration of the covenants, promises and
\nrepresentations set forth herein, and for other good and valuable consideration,
\nthe receipt and sufficiency of which are hereby acknowledged, the parties agree
\nas follows:<\/p>\n
ARTICLE I<\/p>\n
THE MERGER<\/p>\n
1.1 The Merger<\/p>\n
At the Effective Time (as defined in Section 1.2) and subject to and
\nupon the terms and conditions of this Agreement and the applicable provisions of
\nGeorgia Law, Merger Sub shall be merged with and into the Company (the
\n“MERGER”), the separate corporate existence of Merger Sub shall cease and the
\nCompany shall continue as the surviving corporation. The Company, as the
\nsurviving corporation after the Merger, is hereinafter sometimes referred to as
\nthe “SURVIVING CORPORATION”. Notwithstanding the foregoing:<\/p>\n
(a) Parent and the Company may, at any time prior to the mailing
\nof the Proxy Statement\/Prospectus (as defined in Section 2.19 below), mutually
\nagree to change the structure of the Merger to a forward triangular merger with
\nthe Company merging with and into Merger Sub and Merger Sub surviving the
\nMerger. In such event, Merger Sub, as the surviving corporation after the
\nMerger, is hereinafter sometimes referred to as the “SURVIVING CORPORATION”.<\/p>\n
(b) Parent or the Company may, at any time prior to the mailing
\nof the Proxy Statement\/Prospectus, reasonably require that the structure of the
\nMerger be pursuant to a new Delaware corporation referred to herein as Newco
\nwould be formed by Parent and the Company solely for the purpose of the
\ntransactions contemplated hereunder; (i) a newly formed, wholly owned subsidiary
\nof Newco incorporated in Delaware would be merged with and into Parent, with
\nParent being the surviving corporation of such merger (the “PARENT MERGER”), and
\nall outstanding shares of Parent Common Stock would be converted, on a share for
\nshare basis, into shares of Newco Common Stock having identical rights,
\npreferences and privileges, as shares of Parent Common Stock; and (ii) another
\nnewly formed, wholly owned subsidiary of Newco incorporated in Georgia would be
\nmerged with and into the Company, with the Company being the surviving
\ncorporation of such merger (the “COMPANY MERGER”), and all outstanding shares of
\nCompany Capital Stock will be automatically converted into the right to receive
\nshares of Newco Common Stock in the same manner specified in Section 1.6(a)
\nbelow as if the Newco Common Stock were Parent Common Stock; provided that each
\nshare of any series or class of Company Capital Stock that, as a separate voting
\ngroup under Georgia Law has a right to approve the Company Merger as a separate
\nvoting group, does not in fact approve the Company Merger (a “NON APPROVING
\nSERIES”) outstanding prior to the Company Merger would remain outstanding as a
\nshare of the applicable series or class in the Company thereafter. For federal
\nincome tax purposes, it is intended that the Parent Merger and the<\/p>\n
-7-<\/p>\n
8
\nCompany Merger qualify as a reorganization under the provisions of Section
\n368(a) of the Internal Revenue Code and\/or as an exchange under the provisions
\nof Section 351(a) of the Internal Revenue Code. For purposes of this Agreement,
\nthe Parent Voting Agreements, the Company Voting Agreements and the Company
\nConversion Agreements, the term Merger as used herein and therein shall be
\ndeemed to mean the Parent Merger and\/or the Company Merger, as applicable. If
\nthe alternative in this paragraph (b) is applicable, the parties shall execute
\nan appropriate amendment to this Agreement to effect such changes as are
\nnecessary and appropriate to effect the structure of the Merger described in
\nthis paragraph and to provide that Newco shall cause the Company to honor the
\nCompany’s warrants and to provide shares of Newco common stock upon exercise of
\nsuch securities.<\/p>\n
1.2 Effective Time; Closing<\/p>\n
Subject to the provisions of this Agreement, the parties hereto shall
\ncause the Merger to be consummated by filing Articles of Merger with the
\nSecretary of State of the State of Georgia in accordance with the relevant
\nprovisions of Georgia Law (the “ARTICLES OF MERGER”) (the time of such filing
\nwith the Secretary of State of the State of Georgia (or such later time as may
\nbe agreed in writing by the Company and Parent and specified in the Articles of
\nMerger) being the “EFFECTIVE TIME”) as soon as practicable on or after the
\nClosing Date (as herein defined). Unless the context otherwise requires, the
\nterm “AGREEMENT” as used herein refers collectively to this Agreement and Plan
\nof Reorganization and the Articles of Merger. The closing of the Merger (the
\n“CLOSING”) shall take place at the offices of Wilson Sonsini Goodrich & Rosati,
\nProfessional Corporation, at a time and date to be specified by the parties,
\nwhich shall be no later than the second business day after the satisfaction or
\nwaiver of the conditions set forth in Article VI, or at such other time, date
\nand location as the parties hereto agree in writing (the “CLOSING DATE”).<\/p>\n
1.3 Effect of the Merger<\/p>\n
At the Effective Time, the effect of the Merger shall be as provided in
\nthis Agreement and the applicable provisions of Georgia Law. Without limiting
\nthe generality of the foregoing, and subject thereto, at the Effective Time all
\nthe property, rights, privileges, powers and franchises of the Company and
\nMerger Sub shall vest in the Surviving Corporation, and all debts, liabilities
\nand duties of the Company and Merger Sub shall become the debts, liabilities and
\nduties of the Surviving Corporation.<\/p>\n
1.4 Certificate of Incorporation; Bylaws<\/p>\n
(a) Subject to Section 5.11, at the Effective Time, the Articles
\nof Incorporation of Merger Sub, as in effect immediately prior to the Effective
\nTime, shall be the Articles of Incorporation of the Surviving Corporation until
\nthereafter amended as provided by law and such Articles of Incorporation of the
\nSurviving Corporation; provided, however, that at the Effective Time the
\nArticles of <\/p>\n
-8-<\/p>\n
9
\nIncorporation of the Surviving Corporation shall be amended so that the name of
\nthe Surviving Corporation shall be “WebMD, Inc.”<\/p>\n
(b) The Bylaws of Merger Sub, as in effect immediately prior to
\nthe Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
\nCorporation until thereafter amended.<\/p>\n
1.5 Directors and Officers<\/p>\n
The initial directors of the Surviving Corporation shall be the
\ndirectors of Merger Sub immediately prior to the Effective Time, until their
\nrespective successors are duly elected or appointed and qualified. The initial
\nofficers of the Surviving Corporation shall be the officers of the Company
\nimmediately prior to the Effective Time, until their respective successors are
\nduly appointed.<\/p>\n
1.6 Effect on Capital Stock <\/p>\n
Subject to the terms and conditions of this Agreement, at the Effective
\nTime, by virtue of the Merger and without any action on the part of Merger Sub,
\nthe Company or the holders of any of the following securities, the following
\nshall occur:<\/p>\n
(a) Conversion of Company Capital Stock. Each share of Common
\nStock of the Company (“COMPANY COMMON STOCK”) issued and outstanding immediately
\nprior to the Effective Time, other than any Dissenting Shares (as defined in
\nSection 1.7(a) hereof), and other than any shares of the Company Capital Stock
\nto be canceled pursuant to Section 1.6(b), will be canceled and extinguished and
\nautomatically converted, without regard to any conversion rights contained in
\nthe Company’s Articles of Incorporation, into the right to receive 1.815 shares
\nof Parent Common Stock (the “EXCHANGE RATIO”) (subject to Section 1.6(f)) upon
\nsurrender of the certificate representing such share of the Company Capital
\nStock in the manner provided in Section 1.7 (or in the case of a lost, stolen or
\ndestroyed certificate, upon delivery of an affidavit (and bond, if required) in
\nthe manner provided in Section 1.10). Each share of Preferred Stock of the
\nCompany (“COMPANY PREFERRED STOCK” and together with the Company Common Stock,
\nthe “COMPANY CAPITAL STOCK”) issued and outstanding immediately prior to the
\nEffective Time (other than Dissenting Shares) will be cancelled and extinguished
\nand automatically converted without regard to any conversion rights or rights to
\nreceive any liquidation or other preference contained in the Company’s Articles
\nof Incorporation into the right to receive a number of shares of Parent Common
\nStock equal to (i) the Exchange Ratio (subject to Section 1.6(f)) multiplied by
\n(ii) the number of shares of Company Common Stock into which such share of
\nCompany Preferred Stock is convertible immediately prior to the Effective Time
\n(without giving effect to any limitations on the exercise of such conversion
\nright), upon surrender of the certificate representing such Company Preferred
\nStock, in the manner provided in Section 1.7 (or in the case of a lost, stolen
\nor destroyed certificate, upon delivery of an affidavit (and bond) if required)
\nin the manner provided in Section 1.10. If any shares of Company Capital Stock
\noutstanding immediately prior to the Effective Time (but giving effect to the
\nMerger) are unvested or <\/p>\n
-9-<\/p>\n
10
\nare subject to a repurchase option, risk of forfeiture or other similar
\ncondition under any applicable restricted stock purchase agreement or other
\nsimilar agreement with the Company, then the shares of Parent Common Stock
\nissued in exchange for such shares of Company Capital Stock will also be
\nunvested and subject to the same repurchase option, risk of forfeiture or other
\nsimilar condition (except as provided in the applicable agreement or plan), and
\nthe certificates representing such shares of Parent Common Stock may accordingly
\nbe marked with appropriate legends. The Company shall take all action that may
\nbe necessary to ensure that, from and after the Effective Time, Parent or the
\nSurviving Corporation is entitled to exercise any such repurchase option or
\nother right set forth in any such restricted stock purchase agreement or other
\nsimilar agreement.<\/p>\n
(b) Cancellation of Parent-Owned Stock. Each share of Company
\nCapital Stock held by the Company or owned by Merger Sub, Parent or any direct
\nor indirect wholly-owned subsidiary of the Company or of Parent immediately
\nprior to the Effective Time shall be canceled and extinguished without any
\nconversion thereof.<\/p>\n
(c) Stock Options; Employee Stock Purchase Plans; Warrants. At
\nthe Effective Time, all options to purchase Company Capital Stock then
\noutstanding under the WebMD, Inc. Amended and Restated 1997 Stock Incentive Plan
\n(the “1997 Plan”), the Director Stock Option Plan of WebMD, Inc. (the “Director
\nPlan”), the Direct Medical Knowledge, Inc. 1997 Stock Option\/Stock Issuance
\nPlan, which was assumed by the Company in connection with its acquisition of
\nDirector Medical Knowledge, Inc. (the “DMK Plan”), the Sapient Health Network,
\nInc. 1996 Stock Incentive Plan, which the Company assumed in connection with its
\nacquisition of Sapient Health Network, Inc. (the “SHN Plan”), and the Employment
\nAgreement dated as of September 30, 1998 between the Company and Jeffrey T.
\nArnold (the “ARNOLD EMPLOYMENT AGREEMENT” and, together with the 1997 Plan, the
\nDirector Plan, the DMK Plan and the SHN Plan, the “COMPANY STOCK OPTION PLANS”)
\nshall be assumed by Parent in accordance with Section 5.9 hereof. At the
\nEffective Time, the issued and outstanding warrants to purchase Company Capital
\nStock set forth on Part 2.2 of the Company Schedules (collectively, the
\n“WARRANTS”) shall be, in connection with the Merger, assumed by Parent in
\naccordance with Section 5.9. Part 2.2 of the Company Schedules describes, with
\nrespect to each warrant outstanding, the number of shares of Company Capital
\nStock into which such warrant may be exercised, the exercise price, the name and
\naddress of the holder of record, the grant date, the termination date, whether
\nsuch warrant has registration rights, and, if applicable, a description of such
\nregistration rights and whether cashless exercise of such warrant is
\npermissible.<\/p>\n
(d) Capital Stock of Merger Sub. Each share of Common Stock of
\nMerger Sub (the “MERGER SUB COMMON STOCK”) issued and outstanding immediately
\nprior to the Effective Time shall be converted into one validly issued, fully
\npaid and nonassessable share of Common Stock of the Surviving Corporation. Each
\ncertificate evidencing ownership of shares of Merger Sub Common Stock shall
\nevidence ownership of such shares of capital stock of the Surviving Corporation.<\/p>\n
(e) Fractional Shares. No fraction of a share of Parent Common
\nStock will be issued by virtue of the Merger, but in lieu thereof each holder of
\nshares of Company Capital Stock who would <\/p>\n
-10-<\/p>\n
11
\notherwise be entitled to a fraction of a share of Parent Common Stock (after
\naggregating all fractional shares of Parent Common Stock that otherwise would be
\nreceived by such holder) shall, upon surrender of such holder’s Certificate(s)
\n(as defined in Section 1.8(c)), receive from Parent an amount of cash (rounded
\nto the nearest whole cent), without interest, equal to the product of (i) such
\nfraction, multiplied by (ii) the average closing price of one share of Parent
\nCommon Stock for the ten (10) most recent days that Parent Common Stock has
\ntraded ending on the trading day ending one day prior to the Closing Date, as
\nreported on the Nasdaq National Market System (“NASDAQ”).<\/p>\n
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
\nadjusted to reflect appropriately the effect of any stock split, reverse stock
\nsplit, stock dividend (including any dividend or distribution of securities
\nconvertible into Parent Common Stock or Company Capital Stock), reorganization,
\nrecapitalization, reclassification or other like change with respect to Parent
\nCommon Stock or Company Capital Stock occurring on or after the date hereof and
\nprior to the Effective Time.<\/p>\n
1.7 Dissenting Shares<\/p>\n
(a) Notwithstanding any other provisions of this Agreement to the
\ncontrary, any shares of Company Capital Stock held by a holder who has exercised
\ndissenters’ rights for such shares in accordance with Georgia Law and who, as of
\nthe Effective Time, has not effectively withdrawn or lost such dissenters’
\nrights (“DISSENTING SHARES”), shall not be converted into or represent a right
\nto receive the consideration for Company Capital Stock set forth in Section 1.6
\nhereof, but the holder thereof shall only be entitled to such rights as are
\nprovided by Georgia Law.<\/p>\n
(b) Notwithstanding the provisions of Section 1.7(a) hereof, if
\nany holder of Dissenting Shares shall effectively withdraw or lose (through
\nfailure to perfect or otherwise) such holder’s dissenters’ rights under Georgia
\nLaw, then, as of the later of the Effective Time and the occurrence of such
\nevent, such holder’s shares shall automatically be converted into and represent
\nonly the right to receive the consideration for Company Capital Stock set forth
\nin Section 1.6 hereof, without interest thereon, upon surrender of the
\ncertificate representing such shares.<\/p>\n
(c) The Company shall give Parent (i) prompt notice of any
\nwritten demand for appraisal received by the Company pursuant to the applicable
\nprovisions of Georgia Law; and (ii) the opportunity to participate in all
\nnegotiations and proceedings with respect to such demands. The Company shall
\nnot, except with the prior written consent of Parent, make any payment with
\nrespect to any such demands or offer to settle or settle any such demands.<\/p>\n
1.8 Surrender of Certificates<\/p>\n
-11-<\/p>\n
12
\n (a) Exchange Agent. Parent shall select an institution reasonably
\nsatisfactory to the Company to act as the exchange agent (the “EXCHANGE AGENT”)
\nin the Merger.<\/p>\n
(b) Parent to Provide Common Stock. Promptly after the Effective
\nTime, Parent shall make available to the Exchange Agent for exchange in
\naccordance with this Article I, the shares of Parent Common Stock issuable
\npursuant to Section 1.6 in exchange for outstanding shares of Company Capital
\nStock, and cash in an amount sufficient for payment in lieu of fractional shares
\npursuant to Section 1.6(e) and any dividends or distributions which holders of
\nshares of Company Capital Stock may be entitled pursuant to Section 1.8(d).<\/p>\n
(c) Exchange Procedures. Promptly after the Effective Time,
\nParent shall cause the Exchange Agent to mail to each holder of record (as of
\nthe Effective Time) of a certificate or certificates (the “CERTIFICATES”) which
\nimmediately prior to the Effective Time represented outstanding shares of
\nCompany Capital Stock whose shares were converted into the right to receive
\nshares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
\nfractional shares pursuant to Section 1.6(f) and any dividends or other
\ndistributions pursuant to Section 1.8(d), (i) a letter of transmittal (which
\nshall specify that delivery shall be effected, and risk of loss and title to the
\nCertificates shall pass, only upon delivery of the Certificates to the Exchange
\nAgent and shall be in such form and have such other provisions as Parent may
\nreasonably specify) and (ii) instructions for use in effecting the surrender of
\nthe Certificates in exchange for certificates representing shares of Parent
\nCommon Stock, cash in lieu of any fractional shares pursuant to Section 1.6(e)
\nand any dividends or other distributions pursuant to Section 1.8(d). Upon
\nsurrender of Certificates for cancellation to the Exchange Agent or to such
\nother agent or agents as may be appointed by Parent, together with such letter
\nof transmittal, duly completed and validly executed in accordance with the
\ninstructions thereto, the holders of such Certificates shall be entitled to
\nreceive in exchange therefor certificates representing the number of whole
\nshares of Parent Common Stock, payment in lieu of fractional shares which such
\nholders have the right to receive pursuant to Section 1.6(e) and any dividends
\nor distributions payable pursuant to Section 1.8(d), and the Certificates so
\nsurrendered shall forthwith be canceled. Until so surrendered, outstanding
\nCertificates will be deemed from and after the Effective Time, for all corporate
\npurposes, subject to Section 1.8(d) as to the payment of dividends, to evidence
\nthe ownership of the number of full shares of Parent Common Stock, into which
\nsuch shares of Company Capital Stock shall have been so converted and the right
\nto receive an amount in cash in lieu of the issuance of any fractional shares in
\naccordance with Section 1.6(e) and any dividends or distributions payable
\npursuant to Section 1.8(d).<\/p>\n
(d) Distributions With Respect to Unexchanged Shares. No
\ndividends or other distributions declared or made after the date of this
\nAgreement with respect to Parent Common Stock with a record date after the
\nEffective Time will be paid to the holders of any unsurrendered Certificates
\nwith respect to the shares of Parent Common Stock represented thereby until the
\nholders of record of such Certificates shall surrender such Certificates.
\nSubject to applicable law, following surrender of any such Certificates, the
\nExchange Agent shall deliver to the record holders thereof, <\/p>\n
-12-<\/p>\n
13
\nwithout interest, certificates representing whole shares of Parent Common Stock
\nissued in exchange therefor along with payment in lieu of fractional shares
\npursuant to Section 1.6(e) hereof and the amount of any such dividends or other
\ndistributions with a record date after the Effective Time payable with respect
\nto such whole shares of Parent Common Stock.<\/p>\n
(e) Transfers of Ownership. If certificates for shares of Parent
\nCommon Stock are to be issued in a name other than that in which the
\nCertificates surrendered in exchange therefor are registered, it will be a
\ncondition of the issuance thereof that the Certificates so surrendered will be
\nproperly endorsed and otherwise in proper form for transfer and that the persons
\nrequesting such exchange will have paid to Parent or any agent designated by it
\nany transfer or other taxes required by reason of the issuance of certificates
\nfor shares of Parent Common Stock in any name other than that of the registered
\nholder of the Certificates surrendered, or established to the satisfaction of
\nParent or any agent designated by it that such tax has been paid or is not
\npayable.<\/p>\n
(f) Required Withholding. Each of the Exchange Agent, Parent and
\nthe Surviving Corporation shall be entitled to deduct and withhold from any
\nconsideration payable or otherwise deliverable pursuant to this Agreement to any
\nholder or former holder of Company Capital Stock such amounts as may be required
\nto be deducted or withheld therefrom under the Code or under any provision of
\nstate, local or foreign tax law or under any other applicable Legal Requirement
\n(as defined in Section 2.2(c)). To the extent such amounts are so deducted or
\nwithheld, such amounts shall be treated for all purposes under this Agreement as
\nhaving been paid to the person to whom such amounts would otherwise have been
\npaid.<\/p>\n
(g) No Liability. Notwithstanding anything to the contrary in
\nthis Section 1.8, neither the Exchange Agent, Parent, the Surviving Corporation
\nnor any party hereto shall be liable to a holder of shares of Parent Common
\nStock or Company Capital Stock for any amount properly paid to a public official
\npursuant to any applicable abandoned property, escheat or similar law.<\/p>\n
1.9 No Further Transfers of Company Capital Stock<\/p>\n
There shall be no further recordation of transfers on the stock books of
\nthe Surviving Corporation of shares of Company Capital Stock which were
\noutstanding immediately prior to the Effective Time. If after the Effective Time
\nCertificates are presented to the Surviving Corporation for any reason, they
\nshall be canceled and exchanged as provided in this Article I.<\/p>\n
1.10 Lost, Stolen or Destroyed Certificates<\/p>\n
In the event any Certificates shall have been lost, stolen or destroyed,
\nthe Exchange Agent shall issue in exchange for such lost, stolen or destroyed
\nCertificates, upon the making of an affidavit of that fact by the holder
\nthereof, such shares of Parent Common Stock, cash for fractional shares, if any,
\nas may be required pursuant to Section 1.6(e) and any dividends or distributions
\npayable pursuant to Section 1.8(d); provided, however, that Parent may, in its
\ndiscretion and as a condition <\/p>\n
-13-<\/p>\n
14
\nprecedent to the issuance thereof, require the owner of such lost, stolen or
\ndestroyed Certificates to deliver a bond in such sum as it may reasonably direct
\nas indemnity against any claim that may be made against Parent, the Company or
\nthe Exchange Agent with respect to the Certificates alleged to have been lost,
\nstolen or destroyed.<\/p>\n
1.11 Tax Consequences<\/p>\n
It is intended by the parties hereto that the Merger shall constitute a
\nreorganization within the meaning of Section 368 of the Code. The parties hereto
\nadopt this Agreement as a “plan of reorganization” within the meaning of
\nSections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.<\/p>\n
ARTICLE II<\/p>\n
REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
As of the date hereof and as of the Closing Date, the Company represents
\nand warrants to Parent and Merger Sub, subject to the exceptions disclosed in
\nwriting in the disclosure letter and referencing a specific representation
\nsupplied by the Company to Parent dated as of the date hereof and certified by a
\nduly authorized officer of the Company (the “COMPANY SCHEDULES”), as follows:<\/p>\n
2.1 Organization of the Company<\/p>\n
(a) The Company has no subsidiaries, except for the corporations
\nidentified in Part 2.1(a)(i) of the Company Schedules; and neither the Company
\nnor any of the other corporations identified in Part 2.1(a)(i) of the Company
\nSchedules owns any capital stock of, or any equity interest of any nature in,
\nany other entity, other than the entities identified in Part 2.1(a)(ii) of the
\nCompany Schedules. (Where appropriate, the Company and each of its subsidiaries
\nare referred to singularly and\/or collectively in this Agreement as the
\n“COMPANY”). The Company has not agreed and is not obligated to make, nor bound
\nby any written, oral or other agreement, contract, subcontract, lease, binding
\nunderstanding, instrument, note, option, warranty, purchase order, license,
\nsublicense, insurance policy, benefit plan or legally binding commitment or
\nundertaking of any nature, as in effect as of the date hereof or as may
\nhereinafter be in effect (“CONTRACT”) under which Contract it may become
\nobligated to make, any future investment in or capital contribution to any other
\nentity. The Company has not, at any time, been a general partner of any general
\npartnership, limited partnership or other entity.<\/p>\n
(b) The Company is a corporation duly organized, validly existing
\nand in good standing under the laws of the jurisdiction of its incorporation and
\nhas all necessary power and authority: (i) to conduct its business in the manner
\nin which its business is currently being conducted; (ii) to own and <\/p>\n
-14-<\/p>\n
15
\nuse its assets in the manner in which its assets are currently owned and used;
\nand (iii) to perform its obligations under all Contracts by which it is bound.<\/p>\n
(c) The Company is qualified to do business as a foreign
\ncorporation, and is in good standing, under the laws of all jurisdictions where
\nthe nature of its business requires such qualification and where the failure to
\nso qualify would have a Material Adverse Effect (as defined in Section 8.3) on
\nthe Company.<\/p>\n
(d) The Company has delivered or made available to Parent a true
\nand correct copy of the Articles of Incorporation and Bylaws of the Company and
\nsimilar governing instruments of each of its subsidiaries, each as amended to
\ndate (collectively, the “COMPANY CHARTER DOCUMENTS”), and each such instrument
\nis in full force and effect. The Company is not in violation of any of the
\nprovisions of the Company Charter Documents.<\/p>\n
2.2 Company Capital Structure<\/p>\n
(a) The authorized capital stock of the Company consists of (i)
\n97,000,000 shares of Company Common Stock, 75,000,000 of which are shares of
\nCommon Stock, no par value per share (the “COMMON STOCK”), 3,000,000 of which
\nare shares of Common Stock Series B, no par value per share (the “SERIES B
\nCOMMON STOCK”), 1,500,000 of which are shares of Common Stock Series C, no par
\nvalue per share (the “SERIES C COMMON STOCK”), 15,000,000 of which are shares of
\nCommon Stock Series D, no par value per share (the “SERIES D COMMON STOCK”), and
\n2,500,000 of which are shares of Common Stock Series E, no par value per share
\n(the “SERIES E COMMON STOCK”); and (ii) 10,000,000 shares of Company Preferred
\nStock. As of the date of this Agreement, 2,500,000 shares of Common Stock are
\nissued and outstanding; 1,400,000 shares of Series B Common Stock are issued and
\noutstanding; 1,500,000 shares of Series C Common Stock are issued and
\noutstanding; 5,654,192 shares of Series D Common Stock would be issued and
\noutstanding assuming (A) no shares of Series F Preferred Stock are tendered to
\nMicrosoft pursuant to the Offer to Purchase (as defined in Section 2.5(c)) and
\n(B) no Company Options or Warrants are exercised in order to effect a tender of
\nthe Series F Preferred Stock to Microsoft (“No Tender or Exercise”) and
\n12,164,916 would be issued and outstanding assuming (A) all shares of Series F
\nPreferred Stock are tendered to Microsoft pursuant to the Offer to Purchase and
\n(B) the Company Options or Warrants are exercised in order to effect a full
\ntender of the Series F Preferred Stock to Microsoft (“Full Tender and
\nExercise”); and 2,100,000 shares of Series E Common Stock are issued and
\noutstanding. As of the date of this Agreement, 1,600,000 shares of Series A
\nConvertible Preferred Stock, no par value per share (the “SERIES A PREFERRED
\nSTOCK”), are authorized, of which 1,131,000 would be issued and outstanding
\nassuming No Tender or Exercise and 1,191,000 would be issued and outstanding,
\nassuming a Full Tender and Exercise; 3,400,000 shares of Series B Convertible
\nPreferred Stock, no par value per share (the “SERIES B PREFERRED STOCK”), are
\nauthorized, of which 3,036,596 would be issued and outstanding assuming No
\nTender or Exercise and 3,048,871 would be issued and <\/p>\n
-15-<\/p>\n
16
\noutstanding assuming a Full Tender and Exercise; 2,000,000 shares of Series C
\nConvertible Preferred Stock, no par value per share (the “SERIES C PREFERRED
\nSTOCK”), are authorized, of which 1,008,750 would be issued and outstanding
\nassuming No Tender or Exercise, and 1,108,750 would be issued and outstanding
\nassuming a Full Tender and Exercise; 200,000 shares of Series D Convertible
\nPreferred Stock, no par value per share (the “SERIES D PREFERRED STOCK”), are
\nauthorized, of which 200,000 are issued and outstanding; 792,000 shares of
\nSeries E Preferred Stock are authorized, of which 184,604 are issued and
\noutstanding; and 1,180,000 shares of Series F Preferred Stock are authorized of
\nwhich 751,546 shares would be issued and outstanding assuming No Tender or
\nExercise and 1,034,725 shares would be issued and outstanding assuming a Full
\nTender and Exercise. Subject to the assumptions set forth above, there are no
\nother authorized, issued or outstanding shares of capital stock of the Company.
\nAll of the outstanding shares of Company Capital Stock have been duly authorized
\nand validly issued, and are fully paid and nonassessable. As of the date of this
\nAgreement, there are no shares of Company Capital Stock held in treasury by the
\nCompany. Upon consummation of the Merger, (A) the shares of Parent Common Stock
\nissued in exchange for any shares of Company Capital Stock that are subject to a
\nContract pursuant to which the Company has the right to repurchase, redeem or
\notherwise reacquire any shares of Company Capital Stock will, without any
\nfurther act of Parent, the Company or any other person, become subject to the
\nrestrictions, conditions and other provisions contained in such Contract, and
\n(B) Parent will automatically succeed to and become entitled to exercise the
\nCompany’s rights and remedies under any such Contract.<\/p>\n
(b) As of the date of this Agreement and assuming No Tender or
\nExercise, 8,869,896 shares of Company Capital Stock are subject to issuance
\npursuant to outstanding options to purchase Company Capital Stock under the
\nCompany Stock Option Plans of which (i) 6,916,272 shares of Series D Common
\nStock are subject to issuance (and reserved for issuance) pursuant to
\noutstanding options to purchase Series D Common Stock under the 1997 Plan, (ii)
\n311,535 shares of Series D Common Stock are subject to issuance (and reserved
\nfor issuance) pursuant to options to purchase Series D Common Stock under the
\nDirector Plan, (iii) 257,489 shares of Series B Preferred Stock are subject to
\nissuance (and reserved for issuance) pursuant to outstanding options to purchase
\nSeries B Preferred Stock under the DMK Plan and the SHN Plan and (iv) 1,384,600
\nshares of Series D Common Stock are subject to issuance (and reserved for
\nissuance) pursuant to outstanding options to purchase Series D Common Stock
\nunder the Arnold Employment Agreement (stock options granted by the Company
\npursuant to the Company Stock Option Plans are referred to in this Agreement as
\n“COMPANY OPTIONS”). As of the date of this Agreement and assuming a Full Tender
\nand Exercise, 7,800,592 shares of Company Capital Stock are subject to issuance
\npursuant to outstanding options to purchase Company Capital Stock under the
\nCompany Stock Option Plans. As of the date of this Agreement and assuming No
\nTender or Exercise, 13,157,283 shares of Company Capital Stock are subject to
\nissuance pursuant to the exercise of warrants as set <\/p>\n
-16-<\/p>\n
17
\nforth on Part 2.2 of the Company Schedules, of which (i) 12,494,916 shares of
\nSeries D Common Stock are subject to issuance pursuant to the exercise of
\nwarrants as set forth on Part 2.2 of the Company Schedules; (ii) 260,000 shares
\nof Series A Preferred Stock are subject to issuance pursuant to the exercise of
\nwarrants as set forth on Part 2.2 of the Company Schedules; (iii) 12,286 shares
\nof Series B Preferred Stock are subject to issuance pursuant to the exercise of
\nwarrants as set forth on Part 2.2 of the Company Schedules; (iv) 200,000 shares
\nof Series C Preferred Stock are subject to issuance pursuant to the exercise of
\nwarrants as set forth on Part 2.2 of the Company Schedules, and (v) 190,081
\nshares of Series F Preferred Stock are subject to issuance pursuant to the
\nexercise of warrants as set forth on Part 2.2 of the Company Schedules. As of
\nthe date of this Agreement and assuming a Full Tender and Exercise, 856,538
\nshares of Company Capital Stock are subject to issuance pursuant to the exercise
\nof the Warrants. Each Company Option and Warrant by its terms may be treated in
\nand by virtue of the Merger strictly in accordance with the terms of Section
\n5.9(a) or 5.9(c) as appropriate, without any requirement that any holder of any
\nsuch Warrant or Company Option (or any other party) receive any notice or be
\nrequired to consent in any manner. Part 2.2(b) of the Company Schedules sets
\nforth the following information with respect to each Company Option outstanding
\nas of the date of this Agreement assuming No Tender or Exercise and a Full
\nTender and Exercise: (i) the name and address of the optionee; (ii) the
\nparticular plan pursuant to which such Company Option was granted; (iii) the
\nnumber of shares of Company Common Stock subject to such Company Option; (iv)
\nthe exercise price of such Company Option; (v) the date on which such Company
\nOption was granted; (vi) the applicable vesting schedule; (vii) the date on
\nwhich such Company Option expires; and (viii) whether the exercisability of such
\noption will be accelerated in any way by the transactions contemplated by this
\nAgreement, and indicates the extent of acceleration. The Company has made
\navailable to Parent accurate and complete copies of all stock option plans
\npursuant to which the Company has granted stock options that are currently
\noutstanding and the form of all stock option agreements evidencing such options.
\nAll shares of Company Capital Stock subject to issuance as aforesaid, upon
\nissuance on the terms and conditions specified in the instruments pursuant to
\nwhich they are issuable, would be duly authorized, validly issued, fully paid
\nand nonassessable. Except as set forth in Part 2.2(b)(i) of the Company
\nSchedules, there are no commitments or agreements of any character to which the
\nCompany is bound obligating the Company to accelerate the vesting of any Company
\nOption as a result of the Merger. As of the date of this Agreement the following
\nconversion ratios (the “CONVERSION RATIOS”) are applicable to the Company
\nPreferred Stock, (a) each share of Series A Preferred Stock, each share of
\nSeries B Preferred Stock and each share of Series C Preferred Stock converts
\ninto one share of Company Common Stock, (b) each share of Series D Preferred
\nStock converts into five shares of Company Common Stock and (c) each share of
\nSeries E Preferred Stock and each share of Series F Preferred Stock converts
\ninto ten shares of Company Common Stock. The number of additional shares of
\nCompany Capital Stock that would be issuable as a result of any adjustments in
\nsuch Conversion Ratios between the date of this Agreement and the Effective Time
\nshall not exceed 400,000 shares of Company Common Stock on an as-converted
\nbasis.<\/p>\n
(c) All outstanding shares of Company Capital Stock, all
\noutstanding Company Options, all outstanding warrants and all outstanding shares
\nof capital stock of each subsidiary of the Company have been issued and granted
\nin compliance with (i) all applicable securities laws and other applicable Legal
\nRequirements (as defined below) and (ii) all requirements set forth in
\napplicable Contracts. For <\/p>\n
-17-<\/p>\n
18
\nthe purposes of this Agreement, “LEGAL REQUIREMENTS” means any federal, state,
\nlocal, municipal, foreign or other law, statute, constitution, principle of
\ncommon law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
\nor requirement issued, enacted, adopted, promulgated, implemented or otherwise
\nput into effect by or under the authority of any Governmental Entity (as defined
\nbelow).<\/p>\n
(d) On May 14, 1999, the Company received $99,999,986.80 in
\nexchange for the sale of 184,604 shares of Series E Preferred Stock to
\nMicrosoft.<\/p>\n
2.3 Obligations With Respect to Capital Stock<\/p>\n
Except as set forth in Section 2.2 above (including any exercise or
\nconversion of Company Capital Stock, Company Options and Warrants referred to in
\nSection 2.2), as of the date hereof there are no equity securities, partnership
\ninterests or similar ownership interests of any class of any Company equity
\nsecurity, or any securities exchangeable or convertible into or exercisable for
\nsuch equity securities, partnership interests or similar ownership interests,
\nissued, reserved for issuance or outstanding. Except for securities the Company
\nowns free and clear of all claims and Encumbrances, directly or indirectly
\nthrough one or more subsidiaries, and except for shares of capital stock or
\nother similar ownership interests of certain subsidiaries of the Company that
\nare owned by certain nominee equity holders as required by the applicable law of
\nthe jurisdiction of organization of such subsidiaries (which shares or other
\ninterests do not materially affect the Company’s control of such subsidiaries),
\nas of the date of this Agreement, there are no equity securities, partnership
\ninterests or similar ownership interests of any class of equity security of any
\nsubsidiary of the Company, or any security exchangeable or convertible into or
\nexercisable for such equity securities, partnership interests or similar
\nownership interests, issued, reserved for issuance or outstanding. For the
\npurposes of this Agreement “ENCUMBRANCES” means any lien, pledge, hypothecation,
\ncharge, mortgage, security interest, encumbrance, claim, infringement,
\ninterference, option, right of first refusal, preemptive right, community
\nproperty interest or restriction of any nature (including any restriction on the
\nvoting of any security, any restriction on the transfer of any security or other
\nasset, any restriction on the receipt of any income derived from any asset, any
\nrestriction on the use of any asset and any restriction on the possession,
\nexercise or transfer of any other attribute of ownership of any asset). Except
\nas set forth in Part 2.3 of the Company Schedules or as set forth in Section 2.2
\nhereof, there are no subscriptions, options, warrants, equity securities,
\npartnership interests or similar ownership interests, calls, rights (including
\npreemptive rights), commitments or agreements of any character to which the
\nCompany or any of its subsidiaries is a party or by which it is bound obligating
\nthe Company or any of its subsidiaries to issue, deliver or sell, or cause to be
\nissued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
\nthe repurchase, 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 contemplated by this Agreement, there are no
\nregistration rights and there is, except for the Company Voting Agreements<\/p>\n
-18-<\/p>\n
19
\nand the Company Conversion Agreements, no voting trust, proxy, rights plan,
\nantitakeover plan or other agreement or understanding to which the Company is a
\nparty or by which it is bound with respect to any equity security of any class
\nof the Company or with respect to any equity security, partnership interest or
\nsimilar ownership interest of any class of any of its subsidiaries. The
\nrequisite vote of the stockholders of the Company to approve and adopt this
\nAgreement and approve the Merger under each of the Company Charter Documents and
\nGeorgia Law, including, without limitation the treatment of Company Capital
\nStock as set forth in Section 1.6(a), are set forth on Part 2.4 of the Company
\nSchedules. Stockholders of the Company that have executed the Company Voting
\nAgreements and the Company Conversion Agreements, together with Parent’s rights
\nunder Section 5.2(c), represent sufficient voting power to approve the Merger
\nand this Agreement under the Company Charter Documents and Georgia Law. If all
\nof the shares subject to such executed Company Voting Agreements are voted in
\naccordance with the terms of the Company Voting Agreements and all of the shares
\nsubject to such Company Conversion Agreements are converted pursuant to the
\nterms thereof, together with Parent’s rights under Section 5.2(c), the condition
\nset forth in Section 6.1(a) of this Agreement would be satisfied at the
\nCompany’s Stockholder’s Meeting (as defined in Section 5.2). If Parent exercises
\nits option pursuant to Section 5.2(c), the option will be valid, binding and
\nenforceable and Parent will have all voting rights (which rights will be valid,
\nbinding and enforceable) with respect to shares of Company Capital Stock, issued
\nor issuable upon exercise of such option.<\/p>\n
2.4 Authority; Non-Contravention<\/p>\n
(a) The Company has all requisite corporate power and authority
\nto enter into this Agreement and to consummate the transactions contemplated
\nhereby and thereby. The execution and delivery of this Agreement and the
\nconsummation of the transactions contemplated hereby have been duly authorized
\nby all necessary corporate action on the part of the Company, subject only to
\nthe approval and adoption of this Agreement and the approval of the Merger by
\nthe Company’s stockholders and the filing of the Articles of Merger pursuant to
\nGeorgia Law. This Agreement has been duly executed and delivered by the Company
\nand, assuming due execution and delivery by Parent and Merger Sub, constitutes a
\nvalid and binding obligation of the Company, enforceable against the Company in
\naccordance with its terms, except as enforceability may be limited by bankruptcy
\nand other similar laws and general principles of equity. The execution and
\ndelivery of this Agreement by the Company does not, and the performance of this
\nAgreement by the Company will not, (i) conflict with or violate the Company
\nCharter Documents; (ii) subject to obtaining the approval and adoption of this
\nAgreement and the approval of the Merger by the Company’s stockholders as
\ncontemplated in Section 5.2 and compliance with the requirements set forth in
\nSection 2.4(b) below, conflict with or violate any law, rule, regulation, order,
\njudgment or decree applicable to the Company or any of its subsidiaries or by
\nwhich the Company or any of its subsidiaries or any of their respective
\nproperties is bound or affected; or (iii) result in any material breach of or
\nconstitute a material default (or an event that with notice or lapse of time or
\nboth would <\/p>\n
-19-<\/p>\n
20
\nbecome a material default) under, or impair the Company’s rights or alter the
\nrights or obligations of any third party under, or give to others any rights of
\ntermination, amendment, acceleration or cancellation of, or result in the
\ncreation of a material lien or Encumbrance on any of the material properties or
\nassets of the Company or any of its subsidiaries pursuant to, any material note,
\nbond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise, concession, or other instrument or obligation to which the Company or
\nany of its subsidiaries is a party or by which the Company or any of its
\nsubsidiaries or its or any of their respective assets are bound or affected.
\nPart 2.4(b) of the Company Schedules lists all consents, waivers and approvals
\nunder any of the Company’s or any of its subsidiaries’ agreements, contracts,
\nlicenses or leases required to be obtained in connection with the consummation
\nof the transactions contemplated hereby, which, if individually or in the
\naggregate not obtained, would result in a material loss of benefits to the
\nCompany, Parent or the Surviving Corporation as a result of the Merger.<\/p>\n
(b) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with any court, administrative agency or
\ncommission or other governmental authority or instrumentality, foreign or
\ndomestic (“GOVERNMENTAL ENTITY”), is required to be obtained or made by the
\nCompany in connection with the execution and delivery of this Agreement or the
\nconsummation of the Merger, except for (i) the filing of the Articles of Merger
\nwith the Secretary of State of the State of Georgia; (ii) the filing of the
\nProspectus\/Proxy Statement (as defined in Section 2.19) with the Securities and
\nExchange Commission (“SEC”) in accordance with the Securities Exchange Act of
\n1934, as amended (the “EXCHANGE ACT”); (iii) such consents, approvals, orders,
\nauthorizations, registrations, declarations and filings as may be required under
\napplicable federal, foreign and state securities (or related) laws and the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
\nACT”), and the securities or antitrust laws of any foreign country; and (iv)
\nsuch other consents, authorizations, filings, approvals and registrations which
\nif not obtained or made would not be material to the Company or have a material
\nadverse effect on the ability of the parties hereto to consummate the Merger.<\/p>\n
2.5 SEC Filings; Company Financial Statements; Offer to Purchase<\/p>\n
(a) The Company has filed a Form S-1 (File No. 333-7135), as
\namended on February 26, 1999, (the “COMPANY FORM S-1”) with the SEC and has made
\navailable to Parent such Form S-1 in the form filed with the SEC. As of February
\n26, 1999, the Company Form S-1 was prepared in accordance with and complied in
\nall material respects with the requirements of the Securities Act of 1933, as
\namended (the “SECURITIES ACT”) and the rules and regulations of the SEC
\nthereunder applicable to such Company Form S-1. Neither the Company nor any of
\nits subsidiaries is required to file any forms, reports or other documents with
\nthe SEC. The Company filed a request with the SEC on May 13, 1999 to withdraw
\nthe Company Form S-1 from registration.<\/p>\n
(b) Part 2.5 of the Company Schedules sets forth the Company’s
\naudited balance sheet as <\/p>\n
-20-<\/p>\n
21
\nof December 31, 1997 and as of December 31, 1998 (the “COMPANY BALANCE SHEET”)
\nand the related audited statements of income and cash flow for the three year
\nperiods ending December 31, 1998 (the “COMPANY AUDITED FINANCIALS”) and the
\nCompany’s unaudited balance sheet as of March 31, 1999 and the related unaudited
\nstatements of income and cash flow for the three months then ended (the “COMPANY
\nUNAUDITED FINANCIALS” together with the Company Audited Financials, the “COMPANY
\nFINANCIALS”). The Company Financials and each of the consolidated financial
\nstatements contained in the Company Form S-1 (including, in each case, any
\nrelated notes thereto) (together, the “COMPANY FINANCIAL STATEMENTS”), (i)
\ncomplied as to form in all material respects with the published rules and
\nregulations of the SEC with respect thereto; (ii) were prepared in accordance
\nwith United States generally accepted accounting principles (“GAAP”) applied on
\na consistent basis throughout the periods involved (except as may be indicated
\nin the notes thereto or, in the case of unaudited interim financial statements,
\nas may be permitted by the SEC on Form 10-Q under the Exchange Act); and (iii)
\nfairly present the consolidated financial position of the Company and its
\nsubsidiaries as at the respective dates thereof and the consolidated results of
\nthe Company’s operations and cash flows for the periods indicated, except that
\nthe unaudited interim financial statements may not contain footnotes and were or
\nare subject to normal and recurring year-end adjustments. Except as disclosed in
\nthe Company Financial Statements, since the date of the Company Balance Sheet
\nneither the Company nor any of its subsidiaries has any liabilities required
\nunder GAAP to be set forth on a balance sheet (absolute, accrued, contingent or
\notherwise) which are, individually or in the aggregate, material to the
\nbusiness, results of operations or financial condition of the Company and its
\nsubsidiaries taken as a whole, except for liabilities incurred since the date of
\nthe Company Balance Sheet in the ordinary course of business consistent with
\npast practices.<\/p>\n
(c) The Company’s response to the Offer to Purchase For Cash of
\nAny and All Shares of Series F Preferred Shares of the Company by Microsoft
\ndated April 10, 1999 (the “OFFER TO PURCHASE”) distributed to the stockholders
\nof the Company in connection with Microsoft’s offer to purchase Company Capital
\nStock at the time it was initially mailed to the stockholders of the Company
\ncomplied in all material respects with all applicable law, including all
\napplicable rules and regulations promulgated under the Exchange Act and the
\nCompany will continue to comply in all material respects with applicable laws,
\nrules and regulations with respect to the Offer to Purchase as the same may be
\nextended or amended from time to time and its response thereto. The maximum
\nnumber of shares of Series F Preferred Stock of the Company that any officer,
\ndirector or other affiliate of the Company is permitted to tender to Microsoft
\npursuant to the Offer to Purchase is set forth on Part 2.5(c) of the Company
\nSchedules.<\/p>\n
2.6 Absence of Certain Changes or Events<\/p>\n
Since the date of the Company Balance Sheet to the date of this
\nAgreement there has not been: (i) any Material Adverse Effect on the Company;
\n(ii) any declaration, setting aside or payment of any dividend on, or other
\ndistribution (whether in cash, stock or property) in respect of, any of the
\nCompany’s or any of its subsidiaries’ capital stock, or any purchase, redemption
\nor other acquisition <\/p>\n
-21-<\/p>\n
22
\nby the Company of any of the Company’s capital stock or any other securities of
\nthe Company or its subsidiaries or any options, warrants, calls or rights to
\nacquire any such shares or other securities except for repurchases from
\nemployees following their termination pursuant to the terms of their
\npre-existing stock option or purchase agreements; (iii) any split, combination
\nor reclassification of any of the Company’s or any of its subsidiaries’ capital
\nstock; (iv) any granting by the Company or any of its subsidiaries of any
\nincrease in compensation or fringe benefits, except for normal increases of cash
\ncompensation in the ordinary course of business consistent with past practice,
\nor any payment by the Company or any of its subsidiaries of any bonus, except
\nfor bonuses made in the ordinary course of business consistent with past
\npractice, or any granting by the Company or any of its subsidiaries of any
\nincrease in severance or termination pay or any entry by the Company or any of
\nits subsidiaries into any currently effective employment, severance, termination
\nor director, officer or other employee indemnification agreement or any other
\nemployment or consulting related agreement the benefits of which are contingent
\nor the terms of which are materially altered upon the occurrence of a
\ntransaction involving the Company of the nature contemplated hereby; (v) entry
\nby the Company or any of its subsidiaries into any licensing or other agreement
\nwith regard to the acquisition or disposition of any material Intellectual
\nProperty (as defined in Section 2.9) other than licenses in the ordinary course
\nof business consistent with past practice; (vi) any amendment or consent with
\nrespect to any material licensing; (vii) any material change by the Company in
\nits accounting methods, principles or practices, except as required by
\nconcurrent changes in GAAP; or (viii) any revaluation by the Company of any of
\nits assets, including, without limitation, writing down the value of capitalized
\ninventory or writing off notes or accounts receivable other than in the ordinary
\ncourse of business consistent with past practice.<\/p>\n
2.7 Taxes<\/p>\n
(a) Definition of Taxes. For the purposes of this Agreement,
\n“TAX” or “TAXES” refers to any and all federal, state, local and foreign taxes,
\nassessments and other governmental charges, duties, impositions and liabilities
\nrelating to taxes, including taxes based upon or measured by gross receipts,
\nincome, profits, sales, use and occupation, and value added, ad valorem,
\ntransfer, franchise, withholding, payroll, recapture, employment, excise and
\nproperty taxes, together with all interest, penalties and additions imposed with
\nrespect to such amounts; (ii) any liability for the payment of any amounts of
\nthe type described in clause (i) as a result of being a member of an affiliated,
\nconsolidated, combined or unitary group for any period; and (iii) any liability
\nfor the payment of any amounts of the type described in clause (i) or (ii) as a
\nresult of any express or implied obligation to indemnify any other person or as
\na result of any obligations under any agreements or arrangements with any other
\nperson with respect to such amounts and including any liability for taxes of a
\npredecessor entity.<\/p>\n
(b) Tax Returns and Audits<\/p>\n
(i) The Company and each of its subsidiaries have timely
\nfiled all federal, state, <\/p>\n
-22-<\/p>\n
23
\nlocal and foreign returns, estimates, information statements and reports
\n(“RETURNS”) relating to Taxes required to be filed by the Company and each of
\nits subsidiaries with any Tax authority, except such Returns which are not
\nmaterial to the Company. The Company and each of its subsidiaries have paid all
\nTaxes shown to be due on such Returns.<\/p>\n
(ii) The Company and each of its subsidiaries as of the
\nEffective Time will have withheld with respect to its employees all federal and
\nstate income taxes, Taxes pursuant to the Federal Insurance Contribution Act
\n(“FICA”), Taxes pursuant to the Federal Unemployment Tax Act (“FUTA”) and other
\nTaxes required to be withheld.<\/p>\n
(iii) Neither the Company nor any of its subsidiaries has
\nbeen delinquent in the payment of any Tax nor is there any 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
(iv) No audit or other examination of any Return of the
\nCompany or any of its subsidiaries by any Tax authority is presently in
\nprogress, nor has the Company or any of its subsidiaries been notified of any
\nrequest for such an audit or other examination.<\/p>\n
(v)No adjustment relating to any Returns filed by the
\nCompany or any of its subsidiaries has been proposed in writing formally or
\ninformally by any Tax authority to the Company or any of its subsidiaries or any
\nrepresentative thereof.<\/p>\n
(vi) Neither the Company nor any of its subsidiaries has
\nany liability 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
(vii) There is no contract, agreement, plan or arrangement
\nto which the Company is a party as of the date of this Agreement, including but
\nnot limited to the provisions of this Agreement, covering any employee or former
\nemployee of the Company or any of its subsidiaries that, individually or
\ncollectively, could give rise to the payment of any amount that would not be
\ndeductible pursuant to Sections 280G, 404 or 162(m) of the Code.<\/p>\n
(viii) Neither the Company nor any of its subsidiaries has
\nfiled any consent agreement under Section 341(f) of the Code or agreed to have
\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
\n(as defined in Section 341(f)(4) of the Code) owned by the Company.<\/p>\n
(ix) Neither the Company nor any of its subsidiaries is
\nparty to or has any <\/p>\n
-23-<\/p>\n
24
\nobligation under any tax-sharing, tax indemnity or tax allocation agreement or
\narrangement.<\/p>\n
(x)Except as may be required as a result of the Merger,
\nthe Company and its subsidiaries have not been and will not be required to
\ninclude any adjustment in Taxable income for any Tax period (or portion thereof)
\npursuant to Section 481 or Section 263A of the Code or any comparable provision
\nunder state or foreign Tax laws as a result of transactions, events or
\naccounting methods employed prior to the Closing.<\/p>\n
(xi) None of the Company’s or its subsidiaries’ assets are
\ntax exempt use property within the meaning of Section 168(h) of the Code.<\/p>\n
(xii) The Company is not subject to (A) any foreign Tax
\nholidays, (B) any intercompany transfer pricing agreements, or other
\narrangements that have been established by the Company or any of its
\nsubsidiaries with any Tax authority and (C) any expatriate programs or policies
\naffecting the Company or any of its subsidiaries.<\/p>\n
(xiii) The Company is not, and has not been at any time, a
\n“United States real property holding corporation” within the meaning of Section
\n897(c)(2) of the Code.<\/p>\n
2.8 Title to Properties; Absence of Liens and Encumbrances<\/p>\n
(a) Part 2.8(a) of the Company Schedules lists the real property
\ninterests owned by the Company as of the date of this Agreement. Part 2.8(a)(i)
\nof the Company Schedules lists all real property leases to which the Company is
\na party as of the date of this Agreement and each amendment thereto that is in
\neffect as of the date of this Agreement. All such current leases are in full
\nforce and effect, are valid and effective in accordance with their respective
\nterms, and there is not, under any of such leases, any existing default or event
\nof default (or event which with notice or lapse of time, or both, would
\nconstitute a default) that would give rise to a material claim. Other than the
\nleaseholds created under the real property leases identified in Part 2.8(a)(i)
\nof the Company Schedules, the Company owns no interest in real property.<\/p>\n
(b) The Company has good and valid title to, or, in the case of
\nleased properties and assets, valid leasehold interests in, all of its tangible
\nproperties and assets, real, personal and mixed, used or held for use in its
\nbusiness, free and clear of any liens, pledges, charges, claims, security
\ninterests or other encumbrances of any sort (“LIENS”), except as reflected in
\nthe Company Financials and except for liens for taxes not yet due and payable
\nand such Liens or other imperfections of title and encumbrances, if any, which
\nare not material in character, amount or extent, and which do not materially
\ndetract from the value, or materially interfere with the present use, of the
\nproperty subject thereto or affected thereby.<\/p>\n
2.9 Intellectual Property<\/p>\n
-24-<\/p>\n
25
\n For the purposes of this Agreement, the following terms have the
\nfollowing definitions:<\/p>\n
“INTELLECTUAL PROPERTY” shall mean any or all of the following
\n and all rights in, arising out of, or associated therewith: (i) all
\n United States, international and foreign patents and applications
\n therefor and all reissues, divisions, renewals, extensions,
\n provisionals, continuations and continuations-in-part thereof; (ii) all
\n inventions (whether patentable or not), invention disclosures,
\n improvements, trade secrets, proprietary information, know how,
\n technology, technical data and customer lists, and all documentation
\n relating to any of the foregoing; (iii) all copyrights, copyrights
\n registrations and applications therefor, and all other rights
\n corresponding thereto throughout the world; (iv) all industrial designs
\n and any registrations and applications therefor throughout the world;
\n (v) all trade names, logos, URLs, common law trademarks and service
\n marks, trademark and service mark registrations and applications
\n therefor throughout the world; (vi) all databases and data collections
\n and all rights therein throughout the world; (vii) all moral and
\n economic rights of authors and inventors, however denominated,
\n throughout the world, and (viii) any similar or equivalent rights to any
\n of the foregoing anywhere in the world.<\/p>\n
“COMPANY INTELLECTUAL PROPERTY” shall mean any Intellectual
\n Property that is owned by, or exclusively licensed to, the Company.<\/p>\n
“REGISTERED INTELLECTUAL PROPERTY” means all United States,
\n international and foreign: (i) patents and patent applications
\n (including provisional applications); (ii) registered trademarks,
\n applications to register trademarks, intent-to-use applications, or
\n other registrations or applications related to trademarks; (iii)
\n registered copyrights and applications for copyright registration; and
\n (iv) any other Intellectual Property that is the subject of an
\n application, certificate, filing, registration or other document issued,
\n filed with, or recorded by any state, government or other public legal
\n authority.<\/p>\n
“COMPANY REGISTERED INTELLECTUAL PROPERTY” means all of the
\n Registered Intellectual Property owned by, or filed in the name of, the
\n Company.<\/p>\n
(a) No material Company Intellectual Property or product or
\nservice of the Company is subject to any proceeding or outstanding decree,
\norder, judgment, agreement, or stipulation restricting in any manner the use,
\ntransfer, or licensing thereof by the Company, or which may affect the validity,
\nuse or enforceability of such Company Intellectual Property.<\/p>\n
(b) Part 2.9(b) of the Company Schedules is a complete and
\naccurate list of all Company Registered Intellectual Property and specifies,
\nwhere applicable, the jurisdictions in which each such item of Company
\nRegistered Intellectual Property has been issued or registered or in which an
\napplication for such issuance and registration has been filed, including the
\nrespective registration or application numbers. Each material item of Company
\nRegistered Intellectual Property is valid and <\/p>\n
-25-<\/p>\n
26
\nsubsisting, all necessary registration, maintenance and renewal fees currently
\ndue in connection with such Registered Intellectual Property have been made and
\nall necessary documents, recordations and certificates in connection with such
\nRegistered Intellectual Property have been filed with the relevant patent,
\ncopyright, trademark or other authorities in the United States or foreign
\njurisdictions, as the case may be, for the purposes of maintaining such
\nRegistered Intellectual Property.<\/p>\n
(c) The Company owns and has good and exclusive title to, or has
\nlicense (sufficient for the conduct of its business as currently conducted and
\nas proposed to be conducted) to, each material item of Company Intellectual
\nProperty or other Intellectual Property used by the Company free and clear of
\nany lien or encumbrance (excluding licenses and related restrictions); and the
\nCompany is the exclusive owner of all trademarks and trade names used in
\nconnection with the operation or conduct of the business of the Company,
\nincluding the sale of any products or the provision of any services by the
\nCompany.<\/p>\n
(d) The Company owns exclusively, and has good title to, all
\ncopyrighted works that are Company products or which the Company otherwise
\nexpressly purports to own.<\/p>\n
(e) To the extent that any material Intellectual Property has
\nbeen developed or created by a third party for the Company, the Company has a
\nwritten agreement with such third party with respect thereto and the Company
\nthereby either (i) has obtained ownership of, and is the exclusive owner of; or
\n(ii) has obtained a license (sufficient for the conduct of its business as
\ncurrently conducted and as proposed to be conducted) to all such third party’s
\nIntellectual Property in such work, material or invention by operation of law or
\nby valid assignment, to the fullest extent it is legally possible to do so.<\/p>\n
(f) The Company has not transferred ownership of, or granted any
\nexclusive license with respect to, any Intellectual Property that is or was
\nmaterial to the Company Intellectual Property, to any third party.<\/p>\n
(g) The Company Schedules list all material contracts, licenses
\nand agreements to which the Company is a party (i) with respect to Company
\nIntellectual Property licensed or transferred to any third party (other than
\nend-user licenses in the ordinary course); or (ii) pursuant to which a third
\nparty has licensed or transferred any material Intellectual Property to the
\nCompany.<\/p>\n
(h) All material contracts, licenses and agreements relating to
\nthe Company Intellectual Property are in full force and effect. The consummation
\nof the transactions contemplated by this Agreement will neither violate nor
\nresult in the breach, modification, cancellation, termination, or suspension of
\nsuch contracts, licenses and agreements. The Company is in material compliance
\nwith, and has not materially breached any term any of such contracts, licenses
\nand agreements and, to the knowledge of the Company, all other parties to such
\ncontracts, licenses and agreements are in compliance with, and have not
\nmaterially breached any term of, such contracts, licenses and agreements.
\nFollowing the Closing Date, the Surviving Corporation will be permitted to
\nexercise all <\/p>\n
-26-<\/p>\n
27
\nof the Company’s rights under such contracts, licenses and agreements to the
\nsame extent the Company would have been able to had the transactions
\ncontemplated by this Agreement not occurred and without the payment of any
\nadditional amounts or consideration other than ongoing fees, royalties or
\npayments which the Company would otherwise be required to pay.<\/p>\n
(i) The operation of the business of the Company as such business
\ncurrently is conducted, including the Company’s design, development,
\nmanufacture, marketing and sale of the products or services of the Company
\n(including with respect to products currently under development) has not, does
\nnot and will not infringe or misappropriate the Intellectual Property of any
\nthird party or constitute unfair competition or trade practices under the laws
\nof any jurisdiction.<\/p>\n
(j) The Company has not received notice from any third party that
\nthe operation of the business of the Company or any act, product or service of
\nthe Company, infringes or misappropriates the Intellectual Property of any third
\nparty or constitutes unfair competition or trade practices under the laws of any
\njurisdiction.<\/p>\n
(k) Except as set forth in Part 2.9(k) of the Company Schedules
\nand to the knowledge of the Company, no person has infringed or misappropriated
\nor is infringing or misappropriating any Company Intellectual Property.<\/p>\n
(l) The Company has taken reasonable steps to protect the
\nCompany’s rights in the Company’s confidential information and trade secrets
\nthat it wishes to protect or any trade secrets or confidential information of
\nthird parties provided to the Company, and, without limiting the foregoing, the
\nCompany has and enforces, or prior to the Closing will have and will enforce, a
\npolicy requiring each employee and contractor to execute a proprietary
\ninformation\/confidentiality agreement substantially in the form provided to
\nParent and all current and former employees and contractors of the Company have
\nexecuted such an agreement, except where the failure to do so is not reasonably
\nexpected to be material to the Company.<\/p>\n
(m) Neither this Agreement nor the transactions contemplated by
\nthis Agreement, including the transfer to Surviving Corporation by operation of
\nlaw or otherwise of any contracts or agreements to which the Company is a party,
\nwill result in the Company’s granting to any third party any right to or with
\nrespect to any material Intellectual Property right owned by, or licensed to,
\neither of them.<\/p>\n
2.10 Compliance; Permits; Restrictions<\/p>\n
(a) Neither the Company nor any of its subsidiaries is, in any
\nmaterial respect, in conflict with, or in default or in violation of (i) any
\nlaw, rule, regulation, order, judgment or decree applicable to the Company or
\nany of its subsidiaries or by which the Company or any of its subsidiaries or
\nany of <\/p>\n
-27-<\/p>\n
28
\ntheir respective properties is bound or affected; or (ii) any material note,
\nbond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise or other instrument or obligation to which the Company or any of its
\nsubsidiaries is a party or by which the Company or any of its subsidiaries or
\nits or any of their respective properties is bound or affected, except for
\nconflicts, violations and defaults that (individually or in the aggregate) would
\nnot cause the Company to lose any material benefit or incur any material
\nliability. No investigation or review by any Governmental Entity is pending or,
\nto the Company’s knowledge, has been threatened in a writing delivered to the
\nCompany, against the Company or any of its subsidiaries, nor, to the Company’s
\nknowledge, has any Governmental Entity indicated an intention to conduct an
\ninvestigation of the Company or any of its subsidiaries. There is no material
\nagreement, judgment, injunction, order or decree binding upon the Company or any
\nof its subsidiaries which has or could reasonably be expected to have the effect
\nof prohibiting or materially impairing any business practice of the Company or
\nany of its subsidiaries, any acquisition of material property by the Company or
\nany of its subsidiaries or the conduct of business by the Company as currently
\nconducted.<\/p>\n
(b) The Company and its subsidiaries hold, to the extent legally
\nrequired, all permits, licenses, variances, exemptions, orders and approvals
\nfrom Governmental Entities that are material to and required for the operation
\nof the business of the Company as currently conducted (collectively, the
\n“COMPANY PERMITS”). The Company and its subsidiaries are in compliance in all
\nmaterial respects with the terms of the Company Permits, except where the
\nfailure to be in compliance with the terms of the Company Permits would not be
\nmaterial to the Company.<\/p>\n
2.11 Litigation<\/p>\n
Except as disclosed in Part 2.11 of the Company Schedules, there are no
\nclaims, suits, actions or proceedings pending or, to the knowledge of the
\nCompany, threatened against, relating to or affecting the Company or any of its
\nsubsidiaries, before any court, governmental department, commission, agency,
\ninstrumentality or authority, or any arbitrator that seeks to restrain or enjoin
\nthe consummation of the transactions contemplated by this Agreement or which
\ncould reasonably be expected, either singularly or in the aggregate with all
\nsuch claims, actions or proceedings, to be material to the Company. No
\nGovernmental Entity has at any time challenged or questioned in a writing
\ndelivered to the Company the legal right of the Company to design, manufacture,
\noffer or sell any of its products or services in the present manner or style
\nthereof. As of the date hereof, to the knowledge of the Company, no event has
\noccurred, and no claim, dispute or other condition or circumstance exists, that
\nwill, or that would reasonably be expected to, cause or provide a bona fide
\nbasis for a director or executive officer of the Company to seek indemnification
\nfrom the Company.<\/p>\n
Except as disclosed in Part 2.11 of the Company Schedules, the Company
\nhas never been subject to an audit, compliance review, investigation or like
\ncontract review by the GSA office of the Inspector General or other Governmental
\nEntity or agent thereof in connection with any government contract (a
\n“GOVERNMENT AUDIT”), to the Company’s knowledge no Government Audit is
\nthreatened or reasonably anticipated, and in the event of such Government Audit,
\nto the knowledge of the <\/p>\n
-28-<\/p>\n
29
\nCompany no basis exists for a finding of noncompliance with any material
\nprovision of any government contract or a refund of any amounts paid or owed by
\nany Governmental Entity pursuant to such government contract. For each item
\ndisclosed in the Company Schedule pursuant to this Section 2.11 a true and
\ncomplete copy of all correspondence and documentation with respect thereto has
\nbeen provided to Parent.<\/p>\n
2.12 Brokers’ and Finders’ Fees<\/p>\n
Except for fees payable to BancBoston Robertson Stephens Inc. and
\nGleacher & Co. LLC pursuant to an engagement letters dated March 12, 1999 and
\nApril 20, 1999, in the case of BancBoston Robertson Stephens, LLC, and January
\n27, 1999, in the case of Gleacher & Co. LLC, copies of which has been provided
\nto 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
2.13 Interested Party Transactions<\/p>\n
There are no transactions involving the Company of a nature that would
\nbe required to be described under Item 404 of Regulation S-K promulgated under
\nthe Securities Act if such item were applicable to the Company.<\/p>\n
2.14 Employee Benefit Plans<\/p>\n
(a) Definitions. With the exception of the definition of
\n“Affiliate” set forth in Section 2.14(a)(i) below (which definition shall apply
\nonly to this Section 2.14), for purposes of this Agreement, the following terms
\nshall have the meanings set forth below:<\/p>\n
(i) “AFFILIATE” shall mean any other person or entity
\nunder common control with the Company within the meaning of Section 414(b), (c),
\n(m) or (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, deferred compensation, performance
\nawards, stock or stock-related awards, fringe benefits or other employee
\nbenefits or remuneration of any kind, whether written or unwritten or otherwise,
\nfunded or unfunded, including without limitation, each “employee benefit plan,”
\nwithin the meaning of Section 3(3) of ERISA which is or has been maintained,
\ncontributed to, or required to be contributed to, by the Company or any
\nAffiliate for the benefit of any Employee, or with respect to which the Company
\nor any Affiliate has or may have any liability or obligation;<\/p>\n
(iii) “COBRA” shall mean the Consolidated Omnibus Budget
\nReconciliation <\/p>\n
-29-<\/p>\n
30
\nAct of 1985, as amended;<\/p>\n
(iv) “DOL” shall mean the Department of Labor;<\/p>\n
(v) “EMPLOYEE” shall mean any current or former employee,
\nconsultant, 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 other agreement, contract or understanding between the
\nCompany or any Affiliate and any Employee or consultant;<\/p>\n
(vii) “ERISA” shall mean the Employee Retirement Income
\nSecurity Act of 1974, as amended;<\/p>\n
(viii) “FMLA” shall mean the Family Medical Leave Act of
\n1993, as amended;<\/p>\n
(ix) “INTERNATIONAL EMPLOYEE PLAN” shall mean each Company
\nEmployee Plan that has been adopted or maintained by the Company or any
\nAffiliate, whether informally or formally, or with respect to which the Company
\nor any Affiliate will or may have any liability, for the benefit of Employees
\nwho perform services outside the United States;<\/p>\n
(x) “IRS” shall mean the Internal Revenue Service;<\/p>\n
(xi) “MULTIEMPLOYER PLAN” shall mean any “Pension Plan”
\n(as defined below) which is a “multiemployer plan,” as defined in Section 3(37)
\nof ERISA;<\/p>\n
(xii) “PBGC” shall mean the Pension Benefit Guaranty
\nCorporation; and<\/p>\n
(xiii) “PENSION PLAN” shall mean each Company Employee
\nPlan which is an “employee pension benefit plan,” within the meaning of Section
\n3(2) of ERISA.<\/p>\n
(b) Schedule. Part 2.14(b) of the Company Schedules contain an
\naccurate and complete list of each Company Employee Plan and each Employee
\nAgreement under each Company Employee Plan or Employee Agreement. The Company
\ndoes not have any plan or commitment to establish any new Company Employee Plan
\nor Employee Agreement, 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 Employee Agreement,
\nnor does it have any intention or commitment to do any of the foregoing.<\/p>\n
(c) Documents. The Company has provided to Parent: (i) correct
\nand complete copies of all documents embodying to each Company Employee Plan and
\neach Employee Agreement including <\/p>\n
-30-<\/p>\n
31
\n(without limitation) all amendments thereto, all related trust documents and
\nwritten interpretations thereof; (ii) the most recent annual actuarial
\nvaluations, if any, prepared for each Company Employee Plan; (iii) the three (3)
\nmost recent annual reports (Form Series 5500 and all schedules and financial
\nstatements attached thereto), if any, required under ERISA or the Code in
\nconnection with each Company Employee Plan or related trust; (iv) if the Company
\nEmployee Plan is funded, the most recent annual and periodic accounting of
\nCompany Employee Plan assets; (v) the most recent summary plan description
\ntogether with the summary(ies) of material modifications thereto, if any,
\nrequired under ERISA with respect to each Company Employee Plan or related
\ntrust; (vi) all IRS determination, opinion, notification and advisory letters,
\nand rulings relating to Company Employee Plans and copies of all applications
\nand correspondence to or from the IRS or the DOL with respect to any Company
\nEmployee Plan; (vii) all material written agreements and contracts relating to
\neach Company Employee Plan, including, but not limited to, administrative
\nservice agreements, group annuity contracts and group insurance contracts;
\n(viii) all communications material to any Employee or Employees relating to any
\nCompany Employee Plan and any proposed Company Employee Plans, in each case,
\nrelating to any amendments, terminations, establishments, increases or decreases
\nin benefits, acceleration of payments or vesting schedules or other events which
\nwould result in any material liability to the Company; (ix) all correspondence
\nto or from any governmental agency relating to any Company Employee Plan; (x)
\nall COBRA forms and related notices; (xi) all policies pertaining to fiduciary
\nliability insurance covering the fiduciaries for each Company Employee Plan;
\n(xii) all discrimination tests for each Company Employee Plan for the most
\nrecent plan year; and (xiii) all registration statements, annual reports (Form
\n11-K and all attachments thereto) and prospectuses prepared in connection with
\neach Company Employee Plan.<\/p>\n
(d) Employee Plan Compliance. (i) The Company has performed in
\nall material respects all obligations required to be performed by it under, is
\nnot in default or violation of, and has no knowledge of any default or violation
\nby any 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 or the Code; (ii) each
\nCompany Employee Plan intended to qualify under Section 401(a) of the Code and
\neach trust intended to qualify under Section 501(a) of the Code has either
\nreceived a favorable determination, opinion, notification or advisory letter
\nfrom the IRS with respect to each 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 letter and make any amendments necessary to obtain a favorable determination
\nas to the qualified status of each such Company Employee Plan; (iii) no
\n“prohibited transaction,” within the meaning of Section 4975 of the Code or
\nSections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
\nERISA, has occurred with respect to any Company Employee Plan; (iv) there are no
\nactions, suits or claims pending, or, to the knowledge of the Company,
\nthreatened or reasonably anticipated (other than routine claims for benefits)
\nagainst any Company Employee Plan or against the assets of any Company Employee
\nPlan; (v) each Company Employee Plan can be <\/p>\n
-31-<\/p>\n
32
\namended, terminated or otherwise discontinued in accordance with its terms,
\nwithout liability to Parent, the Company or any of its Affiliates (other than
\nordinary administration expenses); (vi) there are no audits, inquiries or
\nproceedings pending or, to the knowledge of the Company or any Affiliates,
\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 502(i) of ERISA or
\nSections 4975 through 4980 of the Code.<\/p>\n
(e) Pension Plans. Neither the Company nor any Affiliate has ever
\nmaintained, established, sponsored, participated in, or contributed to, any
\nPension Plan which is subject to Title IV of ERISA or Section 412 of the Code.<\/p>\n
(f) Multiemployer Plans. At no time has the Company or any
\nAffiliate contributed to or been obligated to contribute to any Multiemployer
\nPlan.<\/p>\n
(g) No Post-Employment Obligations. No Company Employee Plan
\nprovides, or has any liability to provide, retiree life insurance, retiree
\nhealth or other retiree employee welfare benefits to any person for any reason,
\nexcept as may be required by COBRA or other applicable statute, and the Company
\nhas never represented, promised or contracted (whether in oral or written form)
\nto any Employee (either individually or to Employees as a group) or any other
\nperson that such Employee(s) or other person would be provided with retiree life
\ninsurance, retiree health or other retiree employee welfare benefit, except to
\nthe extent required by statute.<\/p>\n
(h) COBRA, etc. Neither the Company nor any Affiliate has, prior
\nto the Effective Time, and in any material respect, violated any of the health
\ncare continuation requirements of COBRA, the requirements of FMLA, the
\nrequirements of the Women’s Health and Cancer Rights Act, the requirements of
\nthe Newborns’ and Mothers’ Health Protection Act of 1996, or any similar
\nprovisions of state law applicable to its Employees.<\/p>\n
(i) Effect of Transaction The execution of this Agreement and the
\nconsummation of the transactions contemplated hereby will not (either alone or
\nupon the occurrence of any additional or subsequent events) constitute an event
\nunder any Company Employee Plan, Employee Agreement, trust or loan that will or
\nmay result in any payment (whether of severance pay or otherwise), acceleration,
\nforgiveness of indebtedness, vesting, distribution, increase in benefits or
\nobligation to fund benefits with respect to any Employee.<\/p>\n
(j) Employment Matters. The Company: (i) is in compliance in all
\nmaterial respects with all applicable foreign, federal, state and local laws,
\nrules and regulations respecting employment, employment practices, terms and
\nconditions of employment and wages and hours, in each case, with respect to
\nEmployees; (ii) has withheld and reported all amounts required by law or by
\nagreement to be withheld and reported with respect to wages, salaries and other
\npayments to Employees; (iii) is not liable for any arrears of wages or any taxes
\nor any penalty for failure to comply with any of the foregoing; and (iv) is not
\nliable for any material payment to any trust or other fund or to any<\/p>\n
-32-<\/p>\n
33
\ngovernmental or administrative authority, with respect to unemployment
\ncompensation benefits, social security or other benefits or obligations for
\nEmployees (other than routine payments to be made in the normal course of
\nbusiness and consistent with past practice). There are no pending, threatened or
\nreasonably anticipated claims or actions against the Company under any worker’s
\ncompensation policy or long-term disability policy. To the Company’s knowledge,
\nno employee of the Company has violated any employment contract, nondisclosure
\nagreement or noncompetition agreement by which such employee is bound due to
\nsuch employee being employed by the Company and disclosing to the Company or
\nusing trade secrets or proprietary information of any other person or entity.<\/p>\n
(k) Labor. No work stoppage or labor strike against the Company
\nis pending, threatened or reasonably anticipated. The Company does not know of
\nany activities or proceedings of any labor union to organize any Employees.
\nThere are no actions, suits, claims, labor disputes or grievances pending, or,
\nto the knowledge of the Company, threatened or reasonably anticipated relating
\nto any labor, safety or discrimination matters involving any Employee,
\nincluding, without limitation, charges of unfair labor practices or
\ndiscrimination complaints, which, if adversely determined, would, individually
\nor in the aggregate, result in any material liability to the Company. Neither
\nthe Company nor any of its subsidiaries has engaged in any unfair labor
\npractices within the meaning of the National Labor Relations Act. The Company is
\nnot presently, nor has it been in the past, a party to, or bound by, any
\ncollective bargaining agreement or union contract with respect to Employees and
\nno collective bargaining agreement is being negotiated by the Company.<\/p>\n
(l) International Employee Plan. Each International Employee Plan
\nhas been established, maintained and administered in compliance with its terms
\nand conditions and with the requirements prescribed by any and all statutory or
\nregulatory laws that are applicable to such International Employee Plan.
\nFurthermore, no International Employee Plan has unfunded liabilities, that as of
\nthe Effective Time, will not be offset by insurance or fully accrued. Except as
\nrequired by law, no condition exists that would prevent the Company or Parent
\nfrom terminating or amending any International Employee Plan at any time for any
\nreason.<\/p>\n
2.15 Environmental Matters<\/p>\n
(a) Hazardous Material. Except as would not 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 1980, as amended, or defined as a hazardous waste pursuant
\nto the United States Resource Conservation and Recovery Act of 1976, as amended,
\nand the regulations promulgated pursuant to said laws, but excluding office and
\njanitorial supplies, (a “HAZARDOUS Material”) are present, as a result of the
\nactions of the Company <\/p>\n
-33-<\/p>\n
34
\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) Hazardous Materials Activities. Except as would not result in
\na material liability to the Company (in any individual case or in the aggregate)
\n(i) neither the Company nor any of its subsidiaries has transported, stored,
\nused, manufactured, disposed of, released or exposed its employees or others to
\nHazardous Materials in violation of any law in effect on or before the Closing
\nDate, 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) Permits. The Company and its subsidiaries currently hold all
\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) Environmental Liabilities. No action, proceeding, revocation
\nproceeding, amendment procedure, writ or injunction is pending, and to the
\nCompany’s knowledge, no action, proceeding, revocation proceeding, amendment
\nprocedure, writ or injunction has been threatened by any Governmental Entity
\nagainst the Company or any of its subsidiaries in a writing delivered to the
\nCompany concerning any Company Environmental Permit, Hazardous Material or any
\nHazardous Materials Activity of the Company or any of its subsidiaries. The
\nCompany is not aware of any fact or circumstance which could involve the Company
\nor any of its subsidiaries in any environmental litigation or impose upon the
\nCompany any material environmental liability.<\/p>\n
2.16 Year 2000 Compliance<\/p>\n
The Company’s products and internal systems have been designed to ensure
\ndate and time entry recognition, calculations that accommodate same century and
\nmulti-century formulas and date values, leap year recognition and calculations,
\nand date data interface values that reflect the century. The Company’s products
\nand internal systems manage and manipulate data involving dates and times,
\nincluding single century formulas and multi-century formulas, and do not cause
\nan abnormal ending scenario within the application or generate incorrect values
\nor invalid results involving such dates.<\/p>\n
2.17 Agreements, Contracts and Commitments<\/p>\n
Except as otherwise set forth in Part 2.17 of the Company Schedules, as
\nof the date hereof neither the Company nor any of its subsidiaries is a party to
\nor is bound by:<\/p>\n
-34-<\/p>\n
35
\n (a) any employment or consulting agreement, contract or
\ncommitment with any officer or director or higher level employee or member of
\nthe Company’s Board of Directors, other than those that are terminable by the
\nCompany or any of its subsidiaries on no more than thirty days notice without
\nliability or financial obligation, except to the extent general principles of
\nwrongful termination law may limit the Company’s or any of its subsidiaries’
\nability to terminate employees at will;<\/p>\n
(b) any agreement of indemnification or any guaranty other than
\nany agreement of indemnification entered into in connection with the sale or
\nlicense of software products in the ordinary course of business;<\/p>\n
(c) 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
(d) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition by the Company or any of its
\nsubsidiaries after the date of this Agreement of a material amount of assets not
\nin the ordinary course of business or pursuant to which the Company has any
\nmaterial ownership interest in any corporation, partnership, joint venture or
\nother business enterprise other than the Company’s subsidiaries;<\/p>\n
(e) any joint marketing or development agreement currently in
\nforce under which the Company or any of its subsidiaries have continuing
\nmaterial obligations to jointly market any product, technology or service and
\nwhich may not be canceled without penalty upon notice of 90 days or less, or any
\nmaterial agreement 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;<\/p>\n
(f) any agreement, contract or commitment currently in force to
\nprovide source code to any third party for any product or technology that is
\nmaterial to the Company and its subsidiaries taken as a whole; or<\/p>\n
(g) any agreement or plan, including, without limitation, any
\nstock option plan, stock appreciation right plan or stock purchase plan, any of
\nthe benefits of which will be increased, or the vesting of benefits of which
\nwill be accelerated, by the occurrence of any of the transactions contemplated
\nby this Agreement or the value of any of the benefits of which will be
\ncalculated on the basis of any of the transactions contemplated by this
\nAgreement;<\/p>\n
(h) any agreement, contract or commitment currently in force to
\nsell or distribute any Company products, service or technology except agreements
\nwith distributors or sales representatives in the normal course of business
\ncancelable without penalty upon notice of ninety (90) days or less <\/p>\n
-35-<\/p>\n
36
\nand substantially in the form previously provided to Parent;<\/p>\n
(i) any mortgages, indentures, guarantees, loans or credit
\nagreements, security agreements or other agreements or instruments relating to
\nthe borrowing of money or extension of credit;<\/p>\n
(j) any settlement agreement entered into within five (5) years
\nprior to the date of this Agreement; or<\/p>\n
(k) any other agreement, contract or commitment that has a value
\nof $100,000 or more individually.<\/p>\n
Neither the Company nor any of its subsidiaries, nor to the Company’s
\nknowledge any other party to a Company Contract (as defined below), is in
\nbreach, violation or default under, and neither the Company nor any of its
\nsubsidiaries has received written notice that it has breached, violated or
\ndefaulted under, any of the material terms or conditions of any of the material
\nagreements, contracts or commitments to which the Company or any of its
\nsubsidiaries is a party or by which it is bound (any such agreement, contract or
\ncommitment, a “COMPANY CONTRACT”) in such a manner as would permit any other
\nparty to cancel or terminate any such Company Contract, or would permit any
\nother party to seek material damages or other remedies (for any or all of such
\nbreaches, violations or defaults, in the aggregate).<\/p>\n
2.18 Change of Control Payments<\/p>\n
Part 2.18 of the Company Schedules sets forth each plan or agreement
\npursuant to which any amounts may become payable (whether currently or in the
\nfuture) to current or former employees and directors of the Company as a result
\nof or in connection with the Merger.<\/p>\n
2.19 Disclosure<\/p>\n
None of the information supplied or to be supplied by or on behalf of
\nthe Company for inclusion or incorporation by reference in the registration
\nstatement on Form S-4 (or similar successor form) to be filed with the SEC by
\nParent in connection with the issuance of Parent Common Stock in the Merger (the
\n“REGISTRATION STATEMENT”) will, at the time the Registration Statement becomes
\neffective under the Securities Act, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in the light of the
\ncircumstances under which they are made, not misleading. None of the information
\nsupplied or to be supplied by or on behalf of the Company for inclusion or
\nincorporation by reference in the Prospectus\/Proxy Statement to be filed with
\nthe SEC as part of the Registration Statement (the “PROSPECTUS\/PROXY
\nSTATEMENT”), will, at the time the Prospectus\/Proxy Statement is mailed to the
\nstockholders of the Company or Parent, at the time of the Company Stockholders’
\nMeeting (as defined in Section 5.2) or Parent Stockholders’ Meeting (as defined
\nin Section 5.3) or as of the <\/p>\n
-36-<\/p>\n
37
\nEffective Time, contain any untrue statement of a material fact or omit to state
\nany material fact required to be stated therein or necessary in order to make
\nthe statements therein, in the light of the circumstances under which they are
\nmade, not misleading. The Prospectus\/Proxy Statement will comply as to form in
\nall material respects with the provisions of the Exchange Act and the rules and
\nregulations promulgated by the SEC thereunder, except that no representation or
\nwarranty is made by the Company with respect to statements made or incorporated
\nby reference therein based on information supplied by or on behalf of Parent for
\ninclusion or incorporation by reference in the Prospectus\/Proxy Statement.<\/p>\n
2.20 Board Approval<\/p>\n
The Board of Directors of the Company has, as of the date of this
\nAgreement, determined (i) that the Merger is fair to, and in the best interests
\nof the Company and its stockholders; and (ii) to recommend that the stockholders
\nof the Company approve and adopt this Agreement and approve the Merger.<\/p>\n
2.21 Fairness Opinion<\/p>\n
The Company’s Board of Directors has received an opinion from BancBoston
\nRobertson Stephens Inc., dated as of the date hereof, to the effect that as of
\nthe date hereof, the Exchange Ratio is fair to the Company’s stockholders from a
\nfinancial point of view, a written copy of which will be delivered to Parent
\npromptly after receipt by the Company.<\/p>\n
2.22 Restrictions on Business Activities<\/p>\n
Except as set forth in Section 2.22 of the Company Schedule, there is no
\nagreement, commitment, judgment, injunction, order or decree binding upon the
\nCompany or to which the Company is a party which has or could reasonably be
\nexpected to have the effect of prohibiting or materially impairing any business
\npractice of the Company, any acquisition by the Company of property material to
\nit or the conduct of business by the Company as currently conducted.<\/p>\n
2.23 Insurance<\/p>\n
The Company maintains insurance policies and fidelity bonds covering the
\nassets, business, equipment, properties, operations, employees, officers and
\ndirectors of the Company and its subsidiaries (collectively, the “Insurance
\nPolicies”) which are of the type and in amounts customarily carried by persons
\nconducting businesses similar to those of the Company and its subsidiaries.
\nThere is no material claim by the Company or any of its subsidiaries pending
\nunder any of the material Insurance Policies as to which coverage has been
\nquestioned, denied or disputed by the underwriters of such policies or bonds.<\/p>\n
2.24 State Takeover Statutes<\/p>\n
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38
\n No state takeover statute or similar statute or regulation applies to or
\npurports to apply to the Merger, this Agreement and the Company Voting
\nAgreements or the transactions contemplated by this Agreement and the Company
\nVoting Agreements.<\/p>\n
2.25 Representations Complete<\/p>\n
As of the date of this Agreement, the representations and warranties
\nmade by the Company (as modified by the Company Schedules) in this Agreement, or
\nany statements made in any exhibit, schedule or certificate furnished by the
\nCompany pursuant to this Agreement do not contain any untrue statement of a
\nmaterial fact, or do not omit to state any material fact necessary in order to
\nmake the statements contained herein, in the light of the circumstances under
\nwhich they are made, not misleading.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB<\/p>\n
As of the date hereof and as of the Closing Date, Parent and Merger Sub
\nrepresent and warrant to the Company, subject to the exceptions disclosed in
\nwriting in the disclosure letter and referencing a specific representation
\nsupplied by Parent and Merger Sub to the Company dated as of the date hereof and
\ncertified by a duly authorized officer of Parent (the “PARENT Schedules”), as
\nfollows:<\/p>\n
3.1 Organization of Parent<\/p>\n
(a) Except as set forth on Part 3.1(a) of the Parent Schedules,
\nas of the date of this Agreement Parent does not own any capital stock of, or
\nany equity interest of any nature in, any other entity, except for passive
\ninvestments in equity interests of public companies as part of the cash
\nmanagement program of Parent. (Where appropriate, Parent and each of its
\nsubsidiaries are referred to singularly and\/or collectively in this Agreement as
\nthe “PARENT”). Parent has not agreed and is not obligated to make, nor bound by
\nany contract under which contract it may become obligated to make, any future
\ninvestment in or capital contribution to any other entity. Parent has not, at
\nany time, been a general partner of any general partnership, limited partnership
\nor other entity.<\/p>\n
(b) Parent is a corporation duly organized, validly existing and
\nin good standing under the laws of the jurisdiction of its incorporation and has
\nall necessary power and authority: (i) to conduct its business in the manner in
\nwhich its business is currently being conducted; (ii) to own and use its assets
\nin the manner in which its assets are currently owned and used; and (iii) to
\nperform its obligations under all Contracts by which it is bound.<\/p>\n
-38-<\/p>\n
39
\n (c) Parent is qualified to do business as a foreign corporation,
\nand is in good standing, under the laws of all jurisdictions where the nature of
\nits business requires such qualification and where the failure to so qualify
\nwould have a Material Adverse Effect on Parent.<\/p>\n
(d) Parent has delivered or made available to the Company a true
\nand correct copy of the Certificate of Incorporation and Bylaws of Parent and
\nsimilar governing instruments of each of its subsidiaries, each as amended to
\ndate (collectively, the “PARENT CHARTER Documents”), and each such instrument is
\nin full force and effect. Parent is not in violation of any of the provisions of
\nthe Parent Charter Documents.<\/p>\n
3.2 Parent Capital Structure<\/p>\n
(a) As of the date of this Agreement, the authorized capital
\nstock of Parent consists of: (i) 150,000,000 shares of Common Stock, $0.0001 par
\nvalue, of which an aggregate of 70,976,757 shares of Parent Common Stock (plus
\nany shares of Parent Common Stock issued upon exercise of Parent Options (as
\ndefined in Section 3.2(b)) since May 14, 1999 were issued and outstanding; and
\n(ii) 5,000,000 shares of Preferred Stock, $0.0001 par value per share, none of
\nwhich shares have been issued or are outstanding as of the date of this
\nAgreement. All of the outstanding shares of Parent’s Common Stock have been duly
\nauthorized and validly issued, and are fully paid and nonassessable.<\/p>\n
(b) As of the date of this Agreement: (i) an aggregate of
\n14,407,958 shares of Parent Common Stock less any shares of Parent Common Stock
\nsubject to Parent Options that have been exercised since May 14, 1999 are
\nsubject to issuance pursuant to outstanding options to purchase Parent Common
\nStock under Parent’s stock option plans; (ii) 1,413,458 shares of Common Stock
\nare reserved for future issuance under Parent’s 1996 Stock Plan (the “PARENT
\nPURCHASE Plan”); and (iii) 792,748 shares of Common Stock are reserved for
\nissuance under Parent’s 1998 Employee Stock Purchase Plan. (Stock options
\ngranted by Parent pursuant to Parent’s stock option plans are referred to in
\nthis Agreement as “PARENT OPTIONS”). Parent has made available to the Company
\naccurate and complete copies of all stock option plans pursuant to which Parent
\nhas granted stock options that are currently outstanding as of the date of this
\nAgreement and the form of all stock option agreements evidencing such options.
\nAll shares of Parent Common Stock subject to issuance as aforesaid, upon
\nissuance on the terms and conditions specified in the instruments pursuant to
\nwhich they are issuable, would be duly authorized, validly issued, fully paid
\nand nonassessable.<\/p>\n
(c) As of the date of this Agreement, 2,577,240 shares of Parent
\nCommon Stock are subject to issuance pursuant to outstanding warrants to
\npurchase Common Stock.<\/p>\n
(d) All outstanding shares of Parent Common Stock, all
\noutstanding Parent Options, and all outstanding shares of capital stock of each
\nsubsidiary of Parent have been issued and granted in <\/p>\n
-39-<\/p>\n
40
\ncompliance with (i) all applicable securities laws and other applicable Legal
\nRequirements and (ii) all requirements set forth in applicable Contracts.<\/p>\n
3.3 Obligations With Respect to Capital Stock. Except as set forth in
\nSection 3.2 above, as of the date of this Agreement, there are no equity
\nsecurities, partnership interests or similar ownership interests of any class of
\nParent equity security, or any securities exchangeable or convertible into or
\nexercisable for such equity securities, partnership interests or similar
\nownership interests, issued, reserved for issuance or outstanding. Except for
\nsecurities Parent owns free and clear of all claims and Encumbrances, directly
\nor indirectly through one or more subsidiaries, and except for shares of capital
\nstock or other similar ownership interests of certain subsidiaries of Parent
\nthat are owned by certain nominee equity holders as required by the applicable
\nlaw of the jurisdiction of organization of such subsidiaries (which shares or
\nother interests do not materially affect Parent’s control of such subsidiaries),
\nas of the date of this Agreement, there are no equity securities, partnership
\ninterests or similar ownership interests of any class of equity security of any
\nsubsidiary of Parent, or any security exchangeable or convertible into or
\nexercisable for such equity securities, partnership interests or similar
\nownership interests, issued, reserved for issuance or outstanding. Except as set
\nforth in Part 3.3 of the Parent Schedules or Section 3.2 above, as of the date
\nof this Agreement, there are no subscriptions, options, warrants, equity
\nsecurities, partnership interests or similar ownership interests, calls, rights
\n(including preemptive rights), commitments or agreements of any character to
\nwhich Parent or any of its subsidiaries is a party or by which it is bound
\nobligating Parent or any of its subsidiaries to issue, deliver or sell, or cause
\nto be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
\ncause the repurchase, redemption or acquisition of, any shares of capital stock,
\npartnership interests or similar ownership interests of Parent or any of its
\nsubsidiaries or obligating Parent or any of its subsidiaries to grant, extend,
\naccelerate the vesting of or enter into any such subscription, option, warrant,
\nequity security, call, right, commitment or agreement. As of the date of this
\nAgreement, except as contemplated by this Agreement, there are no registration
\nrights and, except for the Parent Voting Agreement, there is no voting trust,
\nproxy, rights plan, antitakeover plan or other agreement or understanding to
\nwhich Parent is a party or by which it is bound with respect to any equity
\nsecurity of any class of Parent or with respect to any equity security,
\npartnership interest or similar ownership interest of any class of any of its
\nsubsidiaries. Stockholders of Parent will not be entitled to dissenters’ rights
\nunder applicable state law in connection with the Merger.<\/p>\n
3.4 Authority; Non-Contravention<\/p>\n
(a) Parent has all requisite corporate power and authority to
\nenter into this Agreement and to consummate the transactions contemplated
\nhereby. The execution and delivery of this Agreement and the consummation of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\ncorporate action on the part of Parent, subject only to the approval of the
\nParent Proposals <\/p>\n
-40-<\/p>\n
41
\n(as defined in Section 5.3) by Parent’s stockholders and the filing of the
\nArticles of Merger pursuant to Georgia Law. A vote of the holders of a majority
\nof the outstanding shares of Parent Common Stock is sufficient for Parent’s
\nstockholders to approve the Parent Proposals. Stockholders of the Company that
\nhave executed Parent Voting Agreements represent sufficient voting power to
\napprove the Parent Proposals under the Parent Charter Documents and Delaware
\nLaw. This Agreement has been duly executed and delivered by Parent and\/or Merger
\nSub, execution and delivery by the Company, constitute a valid and binding
\nobligation of Parent and\/or Merger Sub, enforceable against Parent and\/or Merger
\nSub in accordance with their respective terms, except as enforceability may be
\nlimited by bankruptcy and other similar laws and general principles of equity.
\nThe execution and delivery of this Agreement by Parent and Merger Sub do not,
\nand the performance of this Agreement by Parent and Merger Sub will not, (i)
\nsubject to filing an amendment to Parent’s Certificate of Incorporation to
\nincrease the number of authorized shares of Parent Common Stock and Preferred
\nStock of Parent and to change Parent’s corporate name, conflict with or violate
\nthe Parent Charter Documents; (ii) subject to obtaining the approval of the
\nissuance of the shares of Parent Common Stock pursuant to the Merger by Parent’s
\nstockholders as contemplated in Section 5.3 and compliance with the requirements
\nset forth in Section 3.4(b) below, conflict with or violate any law, rule,
\nregulation, order, judgment or decree applicable to Parent or any of its
\nsubsidiaries or by which Parent or any of its subsidiaries or any of their
\nrespective properties are bound or affected; or (iii) result in any material
\nbreach of or constitute a material default (or an event that with notice or
\nlapse of time or both would become a material default) under, or impair Parent’s
\nrights or alter the 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 Parent 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 Parent
\nor any of its subsidiaries is a party or by which Parent or any of its
\nsubsidiaries or its or any of their respective assets are bound or affected.<\/p>\n
(b) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with any Governmental Entity, is required to
\nbe obtained or made by Parent in connection with the execution and delivery of
\nthis Agreement or the consummation of the Merger, except for (i) the filing of
\nthe Articles of Merger with the Secretary of State of the State of Georgia; (ii)
\nthe filing of the Registration Statement and the Prospectus\/Proxy Statement in
\naccordance with the Securities Act and the Exchange Act, respectively; (iii)
\nfiling an amendment to Parent’s Certificate of Incorporation to increase the
\nnumber of authorized shares of Parent Common Stock and Preferred Stock of
\nParent, (iv) filing an amendment to Parent’s Certificate of Incorporation to
\nchange Parent’s corporate name (subject to and conditional upon effectiveness of
\nthe Merger); (v) such consents, approvals, orders, authorizations,
\nregistrations, declarations and filings as may be required under applicable
\nfederal, foreign and state securities (or related) laws and the HSR Act, and the
\nsecurities or antitrust laws of any foreign country; and (vi) such other
\nconsents, authorizations, filings, approvals and registrations which if not
\nobtained or made would not be material to Parent or have a material adverse
\neffect on the ability of the parties hereto to consummate the Merger.<\/p>\n
-41-<\/p>\n
42
\n 3.5 SEC Filings; Parent Financial Statements<\/p>\n
(a) Parent has filed all forms, reports and documents required to
\nbe filed by Parent with the SEC since January 1, 1999 and has made available to
\nthe Company such forms, reports and documents in the form filed with the SEC.
\nAll such required forms, reports and documents (including those that Parent may
\nfile subsequent to the date hereof) filed with the SEC as of the date of this
\nAgreement are referred to herein as the “PARENT SEC REPORTS”). As of their
\nrespective dates (or, if amended, as of the repurchase dates of such
\namendments), Parent SEC Reports (i) were prepared in accordance and complied as
\nto form in all material respects with the requirements of the Securities Act, or
\nthe Exchange Act, as the case may be, and the rules and regulations of the SEC
\nthereunder applicable to such Parent SEC Reports and (ii) did not at the time
\nthey were filed contain any untrue statement of a material fact or omit to state
\na material fact required to be stated therein or necessary in order to make the
\nstatements therein, in the light of the circumstances under which they were
\nmade, not misleading. None of Parent’s subsidiaries is required to file any
\nforms, reports or other documents with the SEC.<\/p>\n
(b) Each of the consolidated financial statements (including, in
\neach case, any related notes thereto) contained in the Parent SEC Reports (the
\n“PARENT FINANCIALS”), (i) complied as to form in all material respects with the
\npublished rules and regulations of the SEC with respect thereto; (ii) was
\nprepared in accordance with United States generally accepted accounting
\nprinciples (“GAAP”) applied on a consistent basis throughout the periods
\ninvolved (except as may be indicated in the notes thereto or, in the case of
\nunaudited interim financial statements, as may be permitted by the SEC on Form
\n10-Q under the Exchange Act) and (iii) fairly presented the consolidated
\nfinancial position of Parent and its subsidiaries as at the respective dates
\nthereof and the consolidated results of Parent’s operations and cash flows for
\nthe periods indicated, except that the unaudited interim financial statements
\nmay not contain footnotes and were or are subject to normal and recurring
\nyear-end adjustments. The balance sheet of Parent contained in Parent’s
\nQuarterly Report on Form 10-Q for its quarter ended as of March 31, 1999 is
\nhereinafter referred to as (the “PARENT BALANCE SHEET”). Except as disclosed in
\nthe Parent Financials, since the date of the Parent Balance Sheet neither Parent
\nnor any of its subsidiaries has any liabilities required under GAAP to be set
\nforth on a balance sheet (absolute, accrued, contingent or otherwise) which are,
\nindividually or in the aggregate, material to the business, results of
\noperations or financial condition of Parent and its subsidiaries taken as a
\nwhole, except for liabilities incurred since the date of the Parent Balance
\nSheet in the ordinary course of business consistent with past practices.<\/p>\n
3.6 Absence of Certain Changes or Events<\/p>\n
From the date of Parent Balance Sheet to the date of this Agreement
\nthere has not been: (i) any Material Adverse Effect on Parent; (ii) any
\ndeclaration, setting aside or payment of any <\/p>\n
-42-<\/p>\n
43
\ndividend on, or other distribution (whether in cash, stock or property) in
\nrespect of, any of Parent’s or any of its subsidiaries’ capital stock, or any
\npurchase, redemption or other acquisition by Parent of any of Parent’s capital
\nstock or any other securities of Parent or its subsidiaries or any options,
\nwarrants, calls or rights to acquire any such shares or other securities except
\nfor repurchases from employees following their termination pursuant to the terms
\nof their pre-existing stock option or purchase agreements; (iii) any split,
\ncombination or reclassification of any of Parent’s or any of its subsidiaries’
\ncapital stock; (iv) any granting by Parent or any of its subsidiaries of any
\nincrease in compensation or fringe benefits, except for normal increases of cash
\ncompensation in the ordinary course of business consistent with past practice,
\nor any payment by Parent or any of its subsidiaries of any bonus, except for
\nbonuses made in the ordinary course of business consistent with past practice
\nand grants of Parent Options, or any granting by Parent or any of its
\nsubsidiaries of any increase in severance or termination pay or any entry by
\nParent or any of its subsidiaries into any currently effective employment,
\nseverance, termination or director, officer or other employee indemnification
\nagreement or any other employment or consulting related agreement the benefits
\nof which are contingent or the terms of which are materially altered upon the
\noccurrence of a transaction involving Parent of the nature contemplated hereby;
\n(v) entry by Parent or any of its subsidiaries into any licensing or other
\nagreement with regard to the acquisition or disposition of any material
\nIntellectual Property (as defined in Section 2.9) other than licenses in the
\nordinary course of business consistent with past practice; (vi) any amendment or
\nconsent with respect to any licensing agreement filed or required to be filed by
\nParent with the SEC; (vii) any material change by Parent in its accounting
\nmethods, principles or practices, except as required by concurrent changes in
\nGAAP, or (viii) any revaluation by Parent of any of its assets, including,
\nwithout limitation, writing down the value of capitalized inventory or writing
\noff notes or accounts receivable other than in the ordinary course of business.<\/p>\n
3.7 Taxes<\/p>\n
(a) Tax Returns and Audits.<\/p>\n
(i) Parent and each of its subsidiaries have timely filed
\nall Returns relating to Taxes required to be filed by Parent and each of its
\nsubsidiaries with any Tax authority, except such Returns which are not material
\nto Parent, and have paid all Taxes shown to be due on such Returns.<\/p>\n
(ii) Parent and each of its subsidiaries as of the
\nEffective Time will have withheld with respect to its employees all federal and
\nstate income taxes, Taxes pursuant to FICA, Taxes pursuant to the FUTA and other
\nTaxes required to be withheld.<\/p>\n
(iii) Neither Parent nor any of its subsidiaries has been
\ndelinquent in the payment of any Tax nor is there any Tax deficiency
\noutstanding, proposed or assessed against Parent or any of its subsidiaries, nor
\nhas Parent or any of its subsidiaries executed any unexpired waiver of <\/p>\n
-43-<\/p>\n
44
\nany statute of limitations on or extending the period for the assessment or
\ncollection of any Tax.<\/p>\n
(iv) No audit or other examination of any Return of Parent
\nor any of its subsidiaries by any Tax authority is presently in progress, nor
\nhas Parent or any of its subsidiaries been notified of any request for such an
\naudit or other examination.<\/p>\n
(v) No adjustment relating to any Returns filed by Parent
\nor any of its subsidiaries has been proposed in writing formally or informally
\nby any Tax authority to Parent or any of its subsidiaries or any representative
\nthereof.<\/p>\n
(vi) Neither Parent nor any of its subsidiaries has any
\nliability for unpaid Taxes which has not been accrued for or reserved on Parent
\nBalance Sheet, whether asserted or unasserted, contingent or otherwise, which is
\nmaterial to Parent, other than any liability for unpaid Taxes that may have
\naccrued since the date of Parent Balance Sheet in connection with the operation
\nof the business of Parent and its subsidiaries in the ordinary course.<\/p>\n
(vii) There is no contract, agreement, plan or arrangement
\nto which Parent is a party as of the date of this Agreement, including but not
\nlimited to the provisions of this Agreement, covering any employee or former
\nemployee of Parent or any of its subsidiaries that, individually or
\ncollectively, could give rise to the payment of any amount that would not be
\ndeductible pursuant to Sections 280G, 404 or 162(m) of the Code.<\/p>\n
(viii) Neither Parent nor any of its subsidiaries has
\nfiled any consent agreement under Section 341(f) of the Code or agreed to have
\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
\n(as defined in Section 341(f)(4) of the Code) owned by Parent.<\/p>\n
(ix) Neither Parent nor any of its subsidiaries is party
\nto or has any obligation under any tax-sharing, tax indemnity or tax allocation
\nagreement or arrangement.<\/p>\n
(x) Except as may be required as a result of the Merger,
\nParent and its subsidiaries have not been and will not be required to include
\nany adjustment in Taxable income for any Tax period (or portion thereof)
\npursuant to Section 481 or Section 263A of the Code or any comparable provision
\nunder state or foreign Tax laws as a result of transactions, events or
\naccounting methods employed prior to the Closing.<\/p>\n
(xi) None of Parent’s or its subsidiaries’ assets are tax
\nexempt use property within the meaning of Section 168(h) of the Code.<\/p>\n
3.8 Title to Properties; Absence of Liens and Encumbrances<\/p>\n
(a) All of Parent’s current leases with respect to real property
\nare in full force and effect, <\/p>\n
-44-<\/p>\n
45
\nare valid and effective in accordance with their respective terms, and there is
\nnot, under any of such leases, any existing default or event of default (or
\nevent which with notice or lapse of time, or both, would constitute a default)
\nthat would give rise to a material claim. As of the date of this Agreement,
\nother than the leaseholds created under real property leases, Parent owns no
\ninterest in real property.<\/p>\n
(b) Parent has good and valid title to, or, in the case of leased
\nproperties and assets, valid leasehold interests in, all of its tangible
\nproperties and assets, real, personal and mixed, used or held for use in its
\nbusiness, free and clear of any Liens, except as reflected in Parent Financials
\nand except for Liens for taxes not yet due and payable and such Liens or other
\nimperfections of title and encumbrances, if any, which are not material in
\ncharacter, amount or extent, and which do not materially detract from the value,
\nor materially interfere with the present use, of the property subject thereto or
\naffected thereby.<\/p>\n
3.9 Intellectual Property<\/p>\n
For the purposes of this Agreement, the following terms have the
\nfollowing definitions:<\/p>\n
“PARENT INTELLECTUAL PROPERTY” means any Intellectual Property that is
\nowned by, or exclusively licensed to, Parent.<\/p>\n
“PARENT REGISTERED INTELLECTUAL PROPERTY” means all of the Registered
\nIntellectual Property owned by, or filed in the name of, Parent.<\/p>\n
(a) No material Parent Intellectual Property or product or
\nservice of Parent is subject to any proceeding or outstanding decree, order,
\njudgment, agreement, or stipulation restricting in any manner the use, transfer,
\nor licensing thereof by Parent, or which may affect the validity, use or
\nenforceability of such Parent Intellectual Property.<\/p>\n
(b) Each material item of Parent Registered Intellectual Property
\nis valid and subsisting, all necessary registration, maintenance and renewal
\nfees currently due in connection with such Registered Intellectual Property have
\nbeen made and all necessary documents, recordations and certificates in
\nconnection with such Registered Intellectual Property have been filed with the
\nrelevant patent, copyright, trademark or other authorities in the United States
\nor foreign jurisdictions, as the case may be, for the purposes of maintaining
\nsuch Registered Intellectual Property.<\/p>\n
(c) Parent owns and has good and exclusive title to, or has
\nlicense (sufficient for the conduct of its business as currently conducted and
\nas proposed to be conducted) to, each material item of Parent Intellectual
\nProperty or Intellectual Property used by Parent free and clear of any Lien or
\nEncumbrance (excluding licenses and related restrictions); and Parent is the
\nexclusive owner of all trademarks and trade names used in connection with the
\noperation or conduct of the business of Parent, including the sale of any
\nproducts or the provision of any services by Parent.<\/p>\n
(d) To the extent that any material Intellectual Property has
\nbeen developed or created by <\/p>\n
-45-<\/p>\n
46
\na third party for Parent, Parent has a written agreement with such third party
\nwith respect thereto and Parent thereby either (i) has obtained ownership of,
\nand is the exclusive owner of, or (ii) has obtained a license (sufficient for
\nthe conduct of its business as currently conducted and as proposed to be
\nconducted) to all such third party’s Intellectual Property in such work,
\nmaterial or invention by operation of law or by valid assignment, to the fullest
\nextent it is legally possible to do so.<\/p>\n
(e) The operation of the business of Parent as such business
\ncurrently is conducted, including Parent’s design, development, manufacture,
\nmarketing and sale of the products or services of Parent (including with respect
\nto products currently under development) has not, does not and will not infringe
\nor misappropriate the Intellectual Property of any third party or constitute
\nunfair competition or trade practices under the laws of any jurisdiction.<\/p>\n
(f) Parent has not received notice from any third party that the
\noperation of the business of Parent or any act, product or service of Parent,
\ninfringes or misappropriates the Intellectual Property of any third party or
\nconstitutes unfair competition or trade practices under the laws of any
\njurisdiction.<\/p>\n
(g) To the knowledge of Parent, no person has or is infringing or
\nmisappropriating any Parent Intellectual Property.<\/p>\n
(h) Parent has taken reasonable steps to protect Parent’s rights
\nin Parent’s confidential information and trade secrets that it wishes to protect
\nor any trade secrets or confidential information of third parties provided to
\nParent, and, without limiting the foregoing, Parent has and enforces a policy
\nrequiring each employee and contractor to execute a proprietary information\/
\nconfidentiality agreement substantially in the form provided to the Company and
\nall current and former employees and contractors of Parent have executed such an
\nagreement, except where the failure to do so is not reasonably expected to be
\nmaterial to Parent.<\/p>\n
3.10 Compliance; Permits; Restrictions<\/p>\n
(a) Neither Parent nor any of its subsidiaries is, in any
\nmaterial respect, in conflict with, or in default or in violation of (i) any
\nlaw, rule, regulation, order, judgment or decree applicable to Parent or any of
\nits subsidiaries or by which Parent 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 Parent or any of its subsidiaries is a
\nparty or by which Parent or any of its subsidiaries or its or any of their
\nrespective properties is bound or affected, except for conflicts, violations and
\ndefaults that (individually or in the aggregate) would not cause Parent to lose
\nany material benefit or incur any material liability. No investigation or review
\nby any Governmental Entity is pending or, to Parent’s knowledge, has been
\nthreatened in a writing delivered to Parent against Parent or any of its<\/p>\n
-46-<\/p>\n
47
\nsubsidiaries, nor, to Parent’s knowledge, has any Governmental Entity indicated
\nan intention to conduct an investigation of Parent or any of its subsidiaries.
\nThere is no material agreement, judgment, injunction, order or decree binding
\nupon Parent or any of its subsidiaries which has or could reasonably be expected
\nto have the effect of prohibiting or materially impairing any business practice
\nof Parent or any of its subsidiaries, any acquisition of material property by
\nParent or any of its subsidiaries or the conduct of business by Parent as
\ncurrently conducted.<\/p>\n
(b) Parent and its subsidiaries hold, to the extent legally
\nrequired, all permits, licenses, variances, exemptions, orders and approvals
\nfrom Governmental Entities that are material to and required for the operation
\nof the business of Parent as currently conducted (collectively, the “PARENT
\nPERMITS”). Parent and its subsidiaries are in compliance in all material
\nrespects with the terms of Parent Permits, except where the failure to be in
\ncompliance with the terms of Parent Permits would not be material to Parent.<\/p>\n
3.11 Litigation<\/p>\n
Except as disclosed in Part 3.11 of the Parent Schedules, there are no
\nclaims, suits, actions or proceedings pending or, to the knowledge of Parent,
\nthreatened against, relating to or affecting Parent or any of its subsidiaries,
\nbefore any court, governmental department, commission, agency, instrumentality
\nor authority, or any arbitrator that seeks to restrain or enjoin the
\nconsummation of the transactions contemplated by this Agreement or which could
\nreasonably be expected, either singularly or in the aggregate with all such
\nclaims, actions or proceedings, to be material to Parent. No Governmental Entity
\nhas at any time challenged or questioned in a writing delivered to Parent the
\nlegal right of Parent to design, manufacture, offer or sell any of its products
\nor services in the present manner or style thereof. As of the date hereof, to
\nthe knowledge of Parent, no event has occurred, and no claim, dispute or other
\ncondition or circumstance exists, that will, or that would reasonably be
\nexpected to, cause or provide a bona fide basis for a director or executive
\nofficer of Parent to seek indemnification from Parent.<\/p>\n
3.12 Brokers’ and Finders’ Fees<\/p>\n
Except for fees payable to Morgan Stanley & Co. Incorporated, Parent has
\nnot incurred, nor will it incur, directly or indirectly, any liability for
\nbrokerage or finders’ fees or agents’ commissions or any similar charges in
\nconnection with this Agreement or any transaction contemplated hereby. Parent
\nshall provide Company a copy of an engagement letter with Morgan Stanley & Co.
\nIncorporated promptly after it is executed.<\/p>\n
3.13 Environmental Matters<\/p>\n
(a) Hazardous Material. Except as would not result in material
\nliability to Parent, no Hazardous Materials are present, as a result of the
\nactions of Parent or any of its subsidiaries or any affiliate of Parent, or, to
\nParent’s knowledge, as a result of any actions of any third party or <\/p>\n
-47-<\/p>\n
48
\notherwise, in, on or under any property, including the land and the
\nimprovements, ground water and surface water thereof, that Parent or any of its
\nsubsidiaries has at any time owned, operated, occupied or leased.<\/p>\n
(b) Hazardous Materials Activities. Except as would not result in
\na material liability to Parent (in any individual case or in the aggregate) (i)
\nneither Parent 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 Closing
\nDate; and (ii) neither Parent 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 in violation of any
\nrule, regulation, treaty or statute promulgated by any Governmental Entity in
\neffect prior to or as of the date hereof to prohibit, regulate or control
\nHazardous Materials or any Hazardous Material Activity.<\/p>\n
(c) Permits. Parent and its subsidiaries currently hold all
\nenvironmental approvals, permits, licenses, clearances and consents (the “PARENT
\nENVIRONMENTAL Permits”) necessary for the conduct of Parent’s and its
\nsubsidiaries’ Hazardous Material Activities and other businesses of Parent and
\nits subsidiaries as such activities and businesses are currently being
\nconducted.<\/p>\n
(d) Environmental Liabilities. No action, proceeding, revocation
\nproceeding, amendment procedure, writ or injunction is pending, and to Parent’s
\nknowledge, no action, proceeding, revocation proceeding, amendment procedure,
\nwrit or injunction has been threatened by any Governmental Entity against Parent
\nor any of its subsidiaries in a writing delivered to Parent concerning any
\nParent Environmental Permit, Hazardous Material or any Hazardous Materials
\nActivity of Parent or any of its subsidiaries. Parent is not aware of any fact
\nor circumstance which could involve Parent or any of its subsidiaries in any
\nenvironmental litigation or impose upon Parent any material environmental
\nliability.<\/p>\n
3.14 Year 2000 Compliance<\/p>\n
Parent’s products and internal systems have been designed to ensure date
\nand time entry recognition, calculations that accommodate same century and
\nmulti-century formulas and date values, leap year recognition and calculations,
\nand date data interface values that reflect the century. Parent’s products and
\ninternal systems manage and manipulate data involving dates and times, including
\nsingle century formulas and multi-century formulas, and do not cause an abnormal
\nending scenario within the application or generate incorrect values or invalid
\nresults involving such dates.<\/p>\n
3.15 Agreements, Contracts and Commitments<\/p>\n
As of the date of this Agreement, neither Parent nor any of its
\nsubsidiaries, nor to Parent’s knowledge any other party to a material Contract
\nof Parent, is in breach, violation <\/p>\n
-48-<\/p>\n
49
\nor default under, and neither Parent nor any of its subsidiaries has received
\nwritten notice that it has breached, violated or defaulted under, any of the
\nmaterial terms or conditions of any material Contract of Parent in such a manner
\nas would permit any other party to cancel or terminate any such material
\nContract of Parent, or would permit any other party to seek material damages or
\nother remedies (for any or all of such breaches, violations or defaults, in the
\naggregate).<\/p>\n
3.16 Disclosure<\/p>\n
None of the information to be supplied by or on behalf of Parent for
\ninclusion in the Registration Statement will, at the Registration Statement
\nbecomes effective under the Securities Act, 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 are made, not misleading. None of the information
\nto be supplied by or on behalf of Parent for inclusion or incorporation by
\nreference in the Prospectus\/Proxy Statement will, at the time the
\nProspectus\/Proxy Statement is mailed to the stockholders of the Company or
\nParent, at the time of the Company Stockholders’ Meeting or Parent Stockholders’
\nMeeting or as of the Effective Time, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in the light of the
\ncircumstances under which they are made, not misleading. The Registration
\nStatement and the Prospectus\/Proxy Statement will comply as to form in all
\nmaterial respects with the provisions of the Securities Act and the rules and
\nregulations promulgated by the SEC thereunder, except that no representation or
\nwarranty is made by Parent with respect to statements made or incorporated by
\nreference therein based on information supplied by or on behalf of the Company
\nfor inclusion or incorporation by reference in the Prospectus\/Proxy Statement.<\/p>\n
3.17 Board Approval <\/p>\n
The Board of Directors of Parent has, as of the date of this Agreement,
\ndetermined to recommend that the stockholders of Parent approve the Parent
\nProposals (as defined in Section 5.3) (other than the proposed name change).<\/p>\n
3.18 Fairness Opinion <\/p>\n
Parent’s Board of Directors has received an opinion from Morgan Stanley
\n& Co. Incorporated, dated as of the date hereof, to the effect that as of the
\ndate hereof, the Exchange Ratio is fair to Parent from a financial point of
\nview, a written copy of which will be delivered to the Company promptly after
\nreceipt by Parent of a copy of such opinion.<\/p>\n
3.19 Restrictions on Business Activities<\/p>\n
Except as set forth in Part 3.19 of Parent Schedules, there is no
\nagreement, commitment, judgment, injunction, order or decree binding upon Parent
\nor to which Parent is a party which has or could reasonably be expected to have
\nthe effect of prohibiting or materially impairing any business <\/p>\n
-49-<\/p>\n
50
\npractice of Parent, any acquisition by Parent or the conduct of business by
\nParent as currently conducted.<\/p>\n
3.20 Interested Party Transactions<\/p>\n
Except as set forth in Parent’s SEC Reports or in Parent’s Proxy
\nStatement for its 1999 Annual Meeting, since January 1, 1999, there have been no
\ntransactions of a nature that would be required to be described under Item 404
\nof Regulation S-K promulgated under the Securities Act.<\/p>\n
ARTICLE IV<\/p>\n
CONDUCT PRIOR TO THE EFFECTIVE TIME<\/p>\n
4.1 Conduct of Business by the Company<\/p>\n
During the period from the date of this Agreement and continuing until
\nthe earlier of the termination of this Agreement pursuant to its terms or the
\nEffective Time, the Company and each of its subsidiaries shall carry on its
\nbusiness in compliance with all applicable laws and regulations, pay its debts
\nand taxes when due subject to good faith disputes over such debts or taxes, pay
\nor perform other material obligations when due subject to good faith disputes
\nover such obligations, and use its commercially reasonable efforts consistent
\nwith past practices and policies to (i) preserve intact its present business
\norganization; (ii) keep available the services of its present officers and
\nemployees; and (iii) preserve its relationships with customers, suppliers,
\ndistributors, licensors, licensees, and others with which it has business
\ndealings.<\/p>\n
In addition, except as permitted by the terms of this Agreement, and
\nexcept as provided in Article 4 of the Company Schedules, without the prior
\nwritten consent of Parent, during the period from the date of this Agreement and
\ncontinuing until the earlier of the termination of this Agreement pursuant to
\nits terms or the Effective Time, the Company shall not do any of the following
\nand shall not permit its subsidiaries to do any of the following:<\/p>\n
(a) Waive any stock repurchase rights, accelerate, amend or
\nchange the period of exercisability of options or restricted stock, or reprice
\noptions granted under any employee, consultant, director or other stock plans or
\nauthorize cash payments in exchange for any options granted under any of such
\nplans;<\/p>\n
(b) Grant any severance or termination pay to any officer or
\nemployee except pursuant to written agreements outstanding, or policies
\nexisting, on the date hereof and as previously disclosed in writing or made
\navailable to Parent, or adopt any new severance plan;<\/p>\n
(c) Transfer or license to any person or entity or otherwise
\nextend, amend or modify in <\/p>\n
-50-<\/p>\n
51
\nany material respect any rights to the Company Intellectual Property, or enter
\ninto grants to future patent rights, other than non-exclusive licenses in the
\nordinary course of business and consistent with past practice;<\/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, other than the exercise of options or
\nwarrants or conversions of securities outstanding on the date of this Agreement
\nor granted pursuant to Section 4.1(f)(i) below (including any exchange of Series
\nD Common Stock for Series F Preferred Stock in connection with the Offer to
\nPurchase);<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or
\nindirectly, any shares of capital stock of the Company or its subsidiaries,
\nexcept repurchases of unvested shares at cost in connection with the termination
\nof the employment relationship with any employee pursuant to stock option or
\npurchase agreements in effect on the date hereof, other than the exercise of
\noptions or warrants or conversions of securities outstanding on the date of this
\nAgreement or granted pursuant to Section 4.1(f)(i) (including any exchange of
\nSeries D Common Stock for Series F Preferred Stock in connection with the Offer
\nto Purchase);<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise
\nencumber, any shares of capital stock or any securities convertible into shares
\nof capital stock, or subscriptions, rights, warrants or options to acquire any
\nshares of capital stock or any securities convertible into shares of capital
\nstock, or enter into other agreements or commitments of any character obligating
\nit to issue any such shares or convertible securities, other than (i) stock
\noptions for Company Common Stock pursuant to the Company Stock Option Plans
\ngranted to employees of the Company to purchase up to 700,000 shares (as
\nappropriately adjusted for stock splits and the like) of Company Common Stock to
\nemployees of the Company (other than officers of the Company) with strike prices
\nno less than the fair market value of the Parent Common Stock at the time of
\ngrant multiplied by the Exchange Ratio and otherwise with vesting schedules and
\nother terms and conditions consistent with Parent’s stock option grants to
\nParent’s employees; (ii) issuance of shares of the Company Common Stock and
\nSeries F Preferred Stock pursuant to the exercise of stock options or warrants
\ntherefor outstanding as of the date of this Agreement or granted pursuant to the
\npreceding clause (i); (iii) the exercise of options or warrants or conversions
\nof securities outstanding on the date of this Agreement or granted pursuant to
\nclause (i) above (including any exchange of Series D Common Stock for Series F
\nPreferred Stock in connection with the Offer to Purchase), and (iv) the issuance
\nof shares contemplated by Sections 6.3(i) and 6.3(j).<\/p>\n
(g) Cause, permit or propose any amendments to its Articles of
\nIncorporation, Bylaws or other charter documents (or similar governing
\ninstruments of any of its subsidiaries) except as set forth in the Company
\nConversion Agreements;<\/p>\n
-51-<\/p>\n
52
\n (h) Acquire or agree to acquire or be acquired by merging or
\nconsolidating with, or by purchasing any equity interest in or a portion of the
\nassets of, or by any other manner, any business or any corporation, partnership,
\nassociation or other business organization or division thereof, or 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 material joint
\nventures, strategic partnerships or alliances;<\/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 in the
\nordinary course of business consistent with past practice;<\/p>\n
(j) Incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness of another person, issue or sell any debt securities or
\noptions, warrants, calls or other rights to acquire any debt securities of the
\nCompany, enter into any “keep well” or other agreement to maintain any financial
\nstatement condition or enter into any arrangement having the economic effect of
\nany of the foregoing other than (i) in connection with the financing of ordinary
\ncourse trade payables consistent with past practice or (ii) pursuant to existing
\nagreements disclosed in the Company Schedules in the ordinary course of
\nbusiness;<\/p>\n
(k) Adopt or amend any employee benefit plan or employee stock
\npurchase or employee stock option plan, or enter into any employment contract or
\ncollective bargaining agreement (other than offer letters and letter agreements
\nentered into in the ordinary course of business consistent with past practice
\nwith employees who are terminable “at will”), pay any special bonus or special
\nremuneration to any director or employee, or increase the salaries or wage rates
\nor fringe benefits (including rights to severance or indemnification) of its
\ndirectors, officers, employees or consultants other than in the ordinary course
\nof business, consistent with past practice, or change in any material respect
\nany management policies or procedures;<\/p>\n
(l) Materially modify or amend, or terminate any Contract or
\nother material contract or agreement to which the Company or any subsidiary
\nthereof is a party or waive, release or assign any material rights or claims
\nthereunder, in any such case, in a manner materially adverse to the Company or
\nParent;<\/p>\n
(m) Enter into any contracts, agreements, or obligations relating
\nto the distribution, sale, license or marketing by third parties of the
\nCompany’s products or products licensed by the Company other than in the
\nordinary course of business consistent with past practice;<\/p>\n
(n) Materially revalue any of its assets or, except as required
\nby GAAP, make any change in accounting methods, principles or practices;<\/p>\n
(o) Engage in any action that could reasonably be expected to
\ncause the Merger to fail to <\/p>\n
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53
\nqualify as a “reorganization” under Section 368(a) of the Code, whether or not
\notherwise permitted by the provisions of this Article IV;<\/p>\n
(p) Permit Microsoft to increase the number of shares it is
\noffering to purchase pursuant to the Offer to Purchase or amend or modify the
\nOffer to Purchase in a manner knowingly materially adverse to Parent or the
\nCompany or in a manner which knowingly would cause a material delay in the
\nconsummation of the Merger; or<\/p>\n
(q) Amend the Investment Agreement (as defined in Section
\n6.3(i)(a)) in any manner, other than providing certain closing conditions set
\nforth therein to be applicable to the Purchasers (as defined therein).<\/p>\n
(r) Agree in writing or otherwise to take any of the actions
\ndescribed in (a) through (q) above.<\/p>\n
4.2 Conduct of Business by Parent<\/p>\n
During the period from the date of this Agreement and continuing until
\nthe earlier of the termination of this Agreement pursuant to its terms or the
\nEffective Time, Parent and each of its subsidiaries shall carry on its business
\nin compliance with all applicable laws and regulations, pay its debts and taxes
\nwhen due, subject to good faith disputes over such debts or taxes, pay or
\nperform other material obligations when due subject to good faith disputes over
\nsuch obligations, and use its commercially reasonable efforts consistent with
\npast practices and policies to (i) preserve intact its present business
\norganization; (ii) keep available the services of its present officers and
\nemployees; and (iii) preserve its relationships with customers, suppliers,
\ndistributors, licensors, licensees, and others with which it has business
\ndealings.<\/p>\n
In addition, except as permitted by the terms of this Agreement, except
\nas provided in Article 4 of the Parent Schedules and, subject to subsection (k)
\nbelow, except as contemplated by the MEDE Agreement (as defined in subsection
\n(k) below), without the prior written consent of the Company, during the period
\nfrom the date of this Agreement and continuing until the earlier of the
\ntermination of this Agreement pursuant to its terms or the Effective Time,
\nParent shall not do any of the following:<\/p>\n
(a) Waive any stock repurchase rights, accelerate, amend or
\nchange the period of exercisability of options or restricted stock, or reprice
\noptions granted under any employee, consultant, director or other stock plans or
\nauthorize cash payments in exchange for any options granted under any of such
\nplans;<\/p>\n
(b) Grant any severance or termination pay to any officer or
\nemployee except pursuant to written agreements outstanding, or policies
\nexisting, on the date hereof and as previously disclosed in writing or made
\navailable to the Company, or adopt any new severance plan;<\/p>\n
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54
\n (c) Transfer or license to any person or entity or otherwise
\nextend, amend or modify in any material respect any rights to the Parent
\nIntellectual Property, or enter into grants to future patent rights, other than
\nnon-exclusive licenses in the ordinary course of business and consistent with
\npast practice;<\/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, other than the exercise of options or
\nwarrants or conversions of securities outstanding on the date of this Agreement
\nor granted pursuant to Section 4.2(f)(i) below or assumed pursuant to the MEDE
\nAgreement;<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or
\nindirectly, any shares of capital stock of Parent or its subsidiaries, except
\nrepurchases of unvested shares at cost in connection with the termination of the
\nemployment relationship with any employee pursuant to stock option or repurchase
\nagreements in effect on the date hereof, other than the exercise of options or
\nwarrants or conversions of securities outstanding on the date of this Agreement
\nor granted pursuant to Section 4.2(f)(i) below or assumed pursuant to the MEDE
\nAgreement;<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
\nany shares of capital stock or any securities convertible into shares of capital
\nstock, or subscriptions, rights, warrants or options to acquire any shares of
\ncapital stock or any securities convertible into shares of capital stock, or
\nenter into other agreements or commitments of any character obligating it to
\nissue any such shares or convertible securities, other than (i) stock options
\nfor Parent Common Stock pursuant to stock options granted to employees of Parent
\n(other than officers of Parent) to purchase up to 1,400,000 (as appropriately
\nadjusted for stock splits and the like) shares of Parent Common Stock plus any
\ngrants of stock options for Parent Common Stock as contemplated by the MEDE
\nAgreement; (ii) issuance of shares of Parent Common Stock pursuant to the
\nexercise of stock options or warrants therefor outstanding as of the date of
\nthis Agreement or granted pursuant to the preceding clause (i) or warrants;
\n(iii) issuance of shares of Parent Common Stock to participants in the Parent
\nPurchase Plan pursuant to the terms thereof; (iv) subject to (k) below, issuance
\nof shares of Parent Common Stock in connection with mergers and acquisitions by
\nParent publicly announced by Parent prior to the date hereof; and (v) the
\nexercise of options or warrants or conversions of securities outstanding on the
\ndate of this Agreement or granted pursuant to subsection (i) above or assumed
\npursuant to the MEDE Agreement.<\/p>\n
(g) Except as contemplated by this Agreement, including
\nincreasing Parent’s authorized capitalization and changing Parent’s corporate
\nname, 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
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55
\n (h) Acquire or agree to acquire by merging or consolidating with,
\nor by purchasing any equity interest in or a portion of the assets of, or by any
\nother manner any business or any corporation, partnership, association or other
\nbusiness organization or division thereof, or otherwise acquire or agree to
\nacquire any assets which are material, individually or in the aggregate, to the
\nbusiness of Parent or enter into any material joint ventures, strategic
\npartnerships or alliances;<\/p>\n
(i) Engage in any action that could reasonably be expected to
\ncause the Merger to fail to qualify as a “reorganization” under Section 368(a)
\nof the Code, whether or not otherwise permitted by the provisions of this
\nArticle IV;<\/p>\n
(j) Materially revalue any of its assets or, except as required
\nby GAAP, make any change in accounting methods, principles or practices;<\/p>\n
(k) Parent shall not agree to increase the exchange ratio into
\nwhich the outstanding shares of MEDE AMERICA Corporation convert into shares of
\nParent Common Stock (the “MEDE Exchange Ratio”) pursuant to Section 1.6 of the
\nAgreement and Plan of Reorganization (the “MEDE Agreement”) among Parent, MEDE
\nAMERICA and Merc Acquisition Corp., dated April 20, 1999 such that the number of
\nshares of Parent Common Stock issuable pursuant to the MEDE Agreement would
\nexceed an amount equal to the sum of (i) the number of shares of Parent Common
\nStock that Parent would be required to issue (or reserve for issuance for the
\nexercise of outstanding options, warrants and other rights) under the Mede
\nAgreement if the MEDE Exchange Ratio is not adjusted plus (ii) an amount equal
\nto an additional 2,000,000 shares of Parent Common Stock (as appropriately
\nadjusted for stock splits and the like);<\/p>\n
(l) Incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness of another person, issue or sell any debt securities or
\noptions, warrants, calls or other rights to acquire any debt securities of
\nParent, enter into any “keep well” or other agreement to maintain any financial
\nstatement condition or enter into any arrangement having the economic effect of
\nany of the foregoing other than (i) in connection with the financing of ordinary
\ncourse trade payables consistent with past practice; or (ii) pursuant to
\nexisting agreements either disclosed in Parent SEC Reports or not material to
\nParent;<\/p>\n
(m) Adopt or amend any employee benefit plan or employee stock
\npurchase or employee stock option plan, or enter into any employment contract or
\ncollective bargaining agreement (other than offer letters and letter agreements
\nentered into in the ordinary course of business consistent with past practice
\nwith employees who are terminable “at will”), pay any special bonus or special
\nremuneration to any director or employee, or increase the salaries or wage rates
\nor fringe benefits (including rights to severance or indemnification) of its
\ndirectors, officers, employees or consultants other than in the ordinary course
\nof business, consistent with past practice, or change in any material respect
\nany management policies or procedures;<\/p>\n
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56
\n (n) Materially modify or amend or terminate any Contract or other
\nmaterial contract or agreement to which the Parent or any subsidiary thereof is
\na party or waive, release or assign any material rights or claims thereunder, in
\nany such case, in a manner materially adverse to Parent;<\/p>\n
(o) Enter into any contracts, agreements, or obligations relating
\nto the distribution, sale, license or marketing by third parties of Parent’s
\nproducts or products licensed by the Parent other than in the ordinary course of
\nbusiness;<\/p>\n
(p) Materially revalue any of its assets or, except as required
\nby GAAP, make any change in accounting methods, principles or practices;<\/p>\n
(q) Selling any material portion of Parent’s assets other than in
\nthe ordinary course of business; or<\/p>\n
(r) Agree in writing or otherwise to take any of the actions
\ndescribed in Section 4.2 (a) through (q) above.<\/p>\n
ARTICLE V<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
5.1 Prospectus\/Proxy Statement; Registration Statement; Other Filings;
\nBoard Recommendations <\/p>\n
As promptly as possible after the execution of this Agreement, the
\nCompany and Parent shall prepare and Parent shall file with the SEC the
\nProspectus\/Proxy Statement, and Parent will prepare and file with the SEC the
\nRegistration Statement in which the Prospectus\/Proxy Statement will be included
\nas a prospectus. Each of Parent and the Company shall provide promptly to the
\nother such information concerning its business and financial statements and
\naffairs as, in the reasonable judgment of the providing party or its counsel,
\nmay be required or appropriate for inclusion in the Proxy Statement and the
\nRegistration Statement, or in any amendments or supplements thereto, and to
\ncause its counsel and auditors to cooperate with the other’s counsel and
\nauditors in the preparation of the Proxy Statement and the Registration
\nStatement. Each of the Company and Parent will respond to any comments of the
\nSEC, will use its respective commercially reasonable efforts to have the
\nRegistration Statement declared effective under the Securities Act as promptly
\nas practicable after such filing and each of the Company and Parent will cause
\nthe Prospectus\/Proxy Statement to be mailed to its respective stockholders at
\nthe earliest practicable time after the Registration Statement is declared
\neffective by the SEC. As promptly as practicable after the date of this
\nAgreement, each of the Company and Parent will prepare and file (i) with the
\nUnited States Federal Trade Commission (the “FTC”) and the Antitrust Division of
\nthe United States Department of Justice (“DOJ”) Notification and Report Forms
\nrelating to the transactions contemplated herein as required by the HSR Act, as
\nwell as comparable pre-merger notification forms <\/p>\n
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57
\nrequired by the merger notification or control laws and regulations of any
\napplicable jurisdiction, as agreed to by the parties (the “ANTITRUST FILINGS”);
\nand (ii) any other filings required to be filed by it under the Exchange Act,
\nthe Securities Act or any other Federal, state or foreign laws relating to the
\nMerger and the transactions contemplated by this Agreement (the “OTHER
\nFILINGS”). The Company and Parent each shall promptly supply the other with any
\ninformation which may be required in order to effectuate any filings pursuant to
\nthis Section 5.1. Each of the Company and Parent will notify the other promptly
\nupon the receipt of any comments from the SEC or its staff or any other
\ngovernment officials in connection with any filing made pursuant hereto and of
\nany request by the SEC or its staff or any other government officials for
\namendments or supplements to the Registration Statement, the Prospectus\/Proxy
\nStatement or any Antitrust Filings or Other Filing or for additional information
\nand will supply the other with copies of all correspondence between such party
\nor any of its representatives, on the one hand, and the SEC, or its staff or any
\nother government officials, on the other hand, with respect to the Registration
\nStatement, the Prospectus\/Proxy Statement, the Merger or any Antitrust Filing or
\nOther Filing. Each of the Company and Parent will cause all documents that it is
\nresponsible for filing with the SEC or other regulatory authorities under this
\nSection 5.1 to comply in all material respects with all applicable requirements
\nof law and the rules and regulations promulgated thereunder. Whenever any event
\noccurs which is required to be set forth in an amendment or supplement to the
\nProspectus\/Proxy Statement, the Registration Statement or any Antitrust Filing
\nor Other Filing, the Company or Parent, as the case may be, will promptly inform
\nthe other of such occurrence and cooperate in filing with the SEC or its staff
\nor any other government officials, and\/or mailing to stockholders of the Company
\nand\/or Parent, such amendment or supplement.<\/p>\n
5.2 Meeting of Company Stockholders<\/p>\n
(a) Promptly after the date hereof, the Company will take all
\naction necessary in accordance with Georgia Law and its Articles of
\nIncorporation and Bylaws to convene a meeting of the Company’s stockholders to
\nconsider adoption and approval of this Agreement and approval of the Merger (the
\n“COMPANY STOCKHOLDERS’ MEETING”) to be held as promptly as practicable, and in
\nany event (to the extent permissible under applicable law) within 45 days after
\nthe declaration of effectiveness of the Registration Statement. The Company
\nshall set the record date for the Company Stockholders’ Meeting on the date
\nwhich is eight business days after the date the Prospectus\/Proxy Statement is
\nmailed to the Company’s stockholders. The Company will use its commercially
\nreasonable efforts to solicit from its stockholders proxies in favor of the
\nadoption and approval of this Agreement and the approval of the Merger and will
\ntake all other action necessary or advisable to secure the vote or consent of
\nits stockholders required by Georgia Law to obtain such approvals.
\nNotwithstanding anything to the contrary contained in this Agreement, the
\nCompany may adjourn or postpone the Company Stockholders’ Meeting, but only to
\nthe extent necessary to ensure that any necessary supplement or amendment to the
\nProspectus\/Proxy Statement is provided to Company stockholders in advance of a
\nvote on the Merger or, if as of the time for which Company <\/p>\n
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58
\nStockholders’ Meeting is originally scheduled (as set forth in the
\nProspectus\/Proxy Statement) there are insufficient shares of Company Capital
\nStock represented (either in person or by proxy) to constitute a quorum
\nnecessary to conduct the business of the Company Stockholders’ Meeting. The
\nCompany shall ensure that the Company Stockholders’ Meeting is called, noticed,
\nconvened, held and conducted, and that all proxies solicited by the Company in
\nconnection with the Company Stockholders’ Meeting are solicited, in compliance
\nwith the Georgia Law, the Company’s Articles of Incorporation and Bylaws, and
\nall other applicable legal requirements. The Company’s obligation to call, give
\nnotice of, convene and hold the Company Stockholders’ Meeting in accordance with
\nthis Section 5.2(a) shall not be limited to or otherwise affected by (except to
\nthe extent set forth in this Section 5.2(a)) the commencement, disclosure,
\nannouncement or submission to the Company of any Acquisition Proposal, or by any
\nwithdrawal, amendment or modification of the recommendation of the Board of
\nDirectors of the Company with respect to the Merger, this Agreement or the
\ntransactions contemplated hereby.<\/p>\n
(b) The Board of Directors of the Company shall recommend that
\nthe Company’s stockholders vote in favor of and adopt and approve this Agreement
\nand approve the Merger at the Company Stockholders’ Meeting or otherwise comply
\nwith Section 14-2-1103 of Georgia Law (including without limitation subsection
\n(b)(1) thereof). Except as necessary so as not to breach its fiduciary duties to
\nthe Company’s stockholders under Georgia Law, the Prospectus\/Proxy Statement
\nshall include a statement to the effect that the Board of Directors of the
\nCompany has recommended that the Company’s stockholders vote in favor of and
\nadopt and approve this Agreement and the Merger at the Company Stockholders’
\nMeeting. Except as necessary so as not to breach its fiduciary duties to the
\nCompany’s stockholders under Georgia Law, neither the Board of Directors of the
\nCompany nor any committee thereof shall withdraw, amend or modify, or propose or
\nresolve to withdraw, amend or modify in a manner adverse to Parent, the
\nrecommendation of the Board of Directors of the Company that the Company’s
\nstockholders vote in favor of and adopt and approve this Agreement and the
\nMerger. Notwithstanding anything permitted by the foregoing, neither the Company
\nnor its Board of Directors shall take any action that would cause any Company
\nVoting Agreement or Company Conversion Agreement to be unenforceable in
\naccordance with its terms under applicable law.<\/p>\n
(c) If, on the date immediately prior to the record date for the
\nCompany Stockholders Meeting, the shares of the Company Capital Stock subject to
\nCompany Voting Agreements (including Company Voting Agreements entered into by
\nparties to Company Conversion Agreements) do not represent sufficient voting
\npower to approve the Merger (other than with respect to the required vote, if
\nany, of the Series A Preferred Stock or Series B Preferred Stock as separate
\nvoting groups), then the Company will grant an option to Parent to purchase a
\nsufficient number of shares of Common Stock and\/or Series F Preferred Stock,
\nexercisable on the record date at a price equal to $54.17 per share of Company
\nCommon Stock (on an as-converted basis), payable by delivery of cash in the
\namount of the par value per share of the shares purchased upon the exercise of
\nsuch option(s), plus a note of Parent with interest at 5% per annum for the
\nremainder of the exercise price, so as to provide <\/p>\n
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59
\nsuch voting power. Any shares of Company Capital Stock purchased pursuant to
\nsuch option shall be subject to a put and call at the exercise price of the
\noption (payable by cancellation or return of the note, as the case may be,
\ntogether with cash in the amount of the cash purchase price) in the event this
\nAgreement is terminated prior to the Closing. The parties agree to take such
\nactions to ensure that the consummation of the transactions in this Section (or
\nsuch other substitute arrangements as the parties may mutually agree to
\naccomplish the purposes of this Section 5.2(c)) will not cause the Merger to
\nfail to constitute a tax-free transaction to the holders of Parent Common Stock
\nand Company Capital Stock under Section 368 or 351 of the Code.<\/p>\n
5.3 Meeting of Parent Stockholders<\/p>\n
(a) Promptly after the date hereof, Parent will take all action
\nnecessary in accordance with the Delaware Law and its Certificate of
\nIncorporation and Bylaws to convene a meeting of Parent’s stockholders (the
\n“PARENT STOCKHOLDERS MEETING”) to consider (i) the issuance of the shares of
\nParent Common Stock pursuant to the Merger (the “FIRST PROPOSAL”); (ii) an
\namendment to the Parent Certificate of Incorporation to increase the number of
\nshares of Parent Common Stock and Preferred Stock of Parent authorized
\nthereunder and (iii) an amendment to Parent’s certificate of Incorporation to
\nchange its corporate name (subject to and conditional upon the effectiveness of
\nthe Merger) (collectively, the “PARENT PROPOSALS”), to be held as promptly as
\npracticable, and in any event (to the extent permissible under applicable law)
\nwithin 45 days after the declaration of effectiveness of the Registration
\nStatement. Parent will use its commercially reasonable efforts to solicit from
\nits stockholders proxies in favor of the Parent Proposals and will take all
\nother action necessary or advisable to secure the vote or consent of its
\nstockholders required by the rules of Nasdaq or Delaware Law to obtain such
\napprovals. Notwithstanding anything to the contrary contained in this Agreement,
\nParent may adjourn or postpone the Parent Stockholders’ Meeting, but only to the
\nextent necessary to ensure that any necessary supplement or amendment to the
\nProspectus\/Proxy Statement is provided to Parent’s stockholders in advance of a
\nvote on the Parent Proposals or, if as of the time for which Parent
\nStockholders’ Meeting is originally scheduled (as set forth in the
\nProspectus\/Proxy Statement) there are insufficient shares of Parent Common Stock
\nrepresented (either in person or by proxy) to constitute a quorum necessary to
\nconduct the business of the Parent’s Stockholders’ Meeting. Parent shall ensure
\nthat the Parent Stockholders’ Meeting is called, noticed, convened, held and
\nconducted, that all proxies solicited by the Company in connection with the
\nParent Stockholders’ Meeting are solicited in compliance with the Delaware Law,
\nits Certificate of Incorporation and Bylaws, the rules of Nasdaq and all other
\napplicable legal requirements. Parent’s obligation to call, give notice of,
\nconvene and hold the Parent Stockholders’ Meeting in accordance with Section
\n5.3(a) shall not be limited or otherwise affected (except to the extent set
\nforth in this Section 5.3(a)) by the commencement, disclosure, announcement or
\nsubmission to Parent of any offer or proposal to acquire securities or assets of
\nParent or its subsidiaries or any merger, consolidation, business combination or
\nsimilar transaction involving Parent, or by the withdrawal, amendment or
\nmodification of the recommendation of the Board of Directors of Parent <\/p>\n
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60
\nwith respect to the Merger, the Parent Proposals, this Agreement or the
\ntransactions contemplated hereby.<\/p>\n
(b) The Board of Directors of Parent shall recommend that
\nParent’s stockholders vote in favor of the Parent Proposals or otherwise comply
\nwith Section 251(c) of Delaware Law. Except as necessary so as not to breach its
\nfiduciary duties to Parent’s stockholders under Delaware Law, the
\nProspectus\/Proxy Statement shall include a statement to the effect that the
\nBoard of Directors of Parent has recommended that Parent’s stockholders vote in
\nfavor of the Parent Proposals at the Parent Stockholders’ Meeting. Except as
\nnecessary so as not to breach its fiduciary duties to Parent’s stockholders
\nunder Delaware Law, neither the Board of Directors of Parent nor any committee
\nthereof shall withdraw, amend or modify, or propose or resolve to withdraw,
\namend or modify in a manner adverse to the Company, the recommendation of the
\nBoard of Directors of Parent that Parent’s stockholders vote in favor of the
\nFirst Proposal. Except as provided in the previous sentence with respect to the
\nFirst Proposal, neither the Board of Directors of Parent nor any committee
\nthereof shall withdraw, amend or modify, or propose or resolve to withdraw,
\namend or modify in a manner adverse to the Company, the recommendation of the
\nBoard of Directors of Parent that Parent’s stockholders vote in favor of the
\nParent Proposals. Notwithstanding anything permitted by the foregoing, neither
\nParent nor its Board of Directors shall take any action that would cause any
\nParent Voting Agreement to be unenforceable in accordance with its terms under
\napplicable law.<\/p>\n
5.4 Confidentiality; Access to Information<\/p>\n
(a) The parties acknowledge that the Company and Parent have
\npreviously executed a Mutual Non-Disclosure Agreement, dated as of May 6, 1999
\n(the “CONFIDENTIALITY AGREEMENT”), which Confidentiality Agreement will continue
\nin full force and effect in accordance with its terms.<\/p>\n
(b) Access to Information. The Company and Parent will afford to
\neach other and each other’s accountants, counsel and other representatives
\nreasonable access during normal business hours to the properties, books, records
\nand personnel of the Company or Parent, as the case may be, during the period
\nprior to the Effective Time to obtain all information concerning the business,
\nincluding the status of product development efforts, properties, results of
\noperations and personnel of the Company or Parent, as may be reasonably
\nrequested. No information or knowledge obtained by Parent or the Company in any
\ninvestigation pursuant to this Section 5.4 will affect or be deemed to modify
\nany representation or warranty contained herein or the conditions to the
\nobligations of the parties to consummate the Merger.<\/p>\n
5.5 No Solicitation<\/p>\n
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61
\n (a) From and after the date of this Agreement until the Effective
\nTime or termination of this Agreement pursuant to Article VII, the Company and
\nits subsidiaries will not, nor will they authorize or permit any of their
\nrespective officers, directors, affiliates or employees or any investment
\nbanker, attorney or other advisor or representative retained by any of them to,
\ndirectly or indirectly, (i) solicit, initiate, encourage or induce the making,
\nsubmission or announcement of any Acquisition Proposal (as hereinafter defined);
\n(ii) participate in any discussions or negotiations regarding, or furnish to any
\nperson any non-public information with respect to, or take any other action to
\nfacilitate any inquiries or the making of any proposal that constitutes or may
\nreasonably be expected to lead to, any Acquisition Proposal; (iii) engage in
\ndiscussions with any person with respect to any Acquisition Proposal, except as
\nto the existence of these provisions; (iv) approve, endorse or recommend any
\nAcquisition Proposal; or (v) enter into any letter of intent or similar document
\nor any contract agreement or commitment contemplating or otherwise relating to
\nany Acquisition Transaction. The Company and its subsidiaries will immediately
\ncease any and all existing activities, discussions or negotiations with any
\nparties conducted heretofore with respect to any Acquisition Proposal. Without
\nlimiting the foregoing, it is understood that any violation of the restrictions
\nset forth in the preceding two sentences by any officer, director or employee of
\nthe Company or any of its subsidiaries or any investment banker, attorney or
\nother advisor or representative of the Company or any of its subsidiaries shall
\nbe deemed to be a breach of this Section 5.5 by the Company.<\/p>\n
For purposes of this Agreement, “ACQUISITION PROPOSAL” shall mean any
\noffer or proposal (other than an offer or proposal by Parent or the Offer to
\nPurchase) relating to any Acquisition Transaction. For purposes of this
\nAgreement, “ACQUISITION TRANSACTION” shall mean any transaction or series of
\nrelated transactions involving: (A) any purchase from the Company or acquisition
\nby any person or “group” (as defined under Section 13(d) of the Exchange Act and
\nthe rules and regulations thereunder) of more than a 5% interest in the total
\noutstanding voting securities of the Company or any of its subsidiaries or any
\ntender offer or exchange offer that if consummated would result in any person or
\n“group” (as defined under Section 13(d) of the Exchange Act and the rules and
\nregulations thereunder) beneficially owning 5% or more of the total outstanding
\nvoting securities of the Company or any of its subsidiaries or any merger,
\nconsolidation, business combination or similar transaction involving the
\nCompany; (B) any sale, lease (other than in the ordinary course of business),
\nexchange, transfer, license (other than in the ordinary course of business),
\nacquisition or disposition of more than 5% of the assets of the Company; or (C)
\nany liquidation or dissolution of the Company.<\/p>\n
(b) In addition to the obligations of the Company set forth in
\nparagraph (a) of this Section 5.5, the Company as promptly as practicable shall
\nadvise Parent orally and in writing of any request for non-public information
\nwhich the Company reasonably believes would lead to an Acquisition Proposal or
\nto any Acquisition Transaction, or any inquiry with respect to or which the
\nCompany reasonably should believe would lead to any Acquisition Proposal, the
\nmaterial terms and conditions of such request, Acquisition Proposal or inquiry,
\nand the identity of the person or group making any such request, Acquisition
\nProposal or inquiry. The Company will keep Parent informed as promptly as
\npracticable in all material respects of the status and details (including
\nmaterial <\/p>\n
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62
\namendments or proposed material amendments) of any such request, Acquisition
\nProposal or inquiry.<\/p>\n
(c) The parties acknowledge and agree that nothing set forth in
\nthis Section 5.5 shall prohibit the Company from participating in discussions
\nregarding transactions that would be executed and consummated following the
\nEffective Time.<\/p>\n
5.6 Public Disclosure<\/p>\n
Parent and the Company will attempt to consult with each other, and to
\nthe extent practicable, agree, before issuing any press release or otherwise
\nmaking any public statement with respect to the Merger, this Agreement or any
\nmaterial transaction involving Parent or the Company and will not issue any such
\npress release or make any such public statement prior to such consultation,
\nexcept as may be required by law or any listing agreement with a national
\nsecurities exchange. With respect to the initial press release announcing the
\nMerger and this Agreement, the parties have agreed to the text of the joint
\npress release and will jointly announce the Merger and this Agreement. Parent
\nshall file this Agreement with the SEC on Form 8-K as soon as practicable after
\nthe date of this Agreement and, in any event, within five business days after
\nthe date of this Agreement.<\/p>\n
5.7 Reasonable Efforts; Notification<\/p>\n
(a) Upon the terms and subject to the conditions set forth in
\nthis Agreement, each of the parties agrees to use all reasonable efforts to
\ntake, or cause to be taken, all actions, and to do, or cause to be done, and to
\nassist and cooperate with the other parties in doing, all things necessary,
\nproper or advisable to consummate and make effective, in the most expeditious
\nmanner practicable, the Merger and the other transactions contemplated by this
\nAgreement, including using reasonable efforts to accomplish the following: (i)
\nthe taking of all reasonable acts necessary to cause the conditions precedent
\nset forth in Article VI to be satisfied; (ii) the obtaining of all necessary
\nactions or nonactions, waivers, consents, approvals, orders and authorizations
\nfrom Governmental Entities and the making of all necessary registrations,
\ndeclarations and filings (including registrations, declarations and filings with
\nGovernmental Entities, if any) and the taking of all reasonable steps as may be
\nnecessary to avoid any suit, claim, action, investigation or proceeding by any
\nGovernmental Entity; (iii) the obtaining of all necessary consents, approvals or
\nwaivers from third parties; (iv) the defending of any suits, claims, actions,
\ninvestigations or proceedings, whether judicial or administrative, challenging
\nthis Agreement or the consummation of the transactions contemplated hereby,
\nincluding seeking to have any stay or temporary restraining order entered by any
\ncourt or other Governmental Entity vacated or reversed; and (v) the execution or
\ndelivery of any additional instruments necessary to consummate the transactions
\ncontemplated by, and to fully carry out the purposes of, this Agreement. In
\nconnection with and without limiting the foregoing, the Company and its Board of
\nDirectors shall, if any state takeover statute or similar statute or regulation
\nis or becomes applicable to the Merger, this Agreement or any of the
\ntransactions contemplated by this Agreement, use all <\/p>\n
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63
\nreasonable efforts to ensure that the Merger and the other transactions
\ncontemplated by this Agreement may be consummated as promptly as practicable on
\nthe terms contemplated by this Agreement and otherwise to minimize the effect of
\nsuch statute or regulation on the Merger, this Agreement and the transactions
\ncontemplated hereby. Notwithstanding anything herein to the contrary, nothing in
\nthis Agreement shall be deemed to require Parent, the Company or any subsidiary
\nor affiliate thereof to agree to any divestiture by itself or any of its
\naffiliates of shares of capital stock or of any business, assets or property, or
\nthe imposition of any material limitation on the ability of any of them to
\nconduct their businesses or to own or exercise control of such assets,
\nproperties and stock.<\/p>\n
(b) The Company shall give prompt notice to Parent of any
\nrepresentation or warranty made by it contained in this Agreement becoming
\nuntrue or inaccurate, or any failure of the Company to comply with or satisfy in
\nany material respect any covenant, condition or agreement to be complied with or
\nsatisfied by it under this Agreement, in each case, such that the conditions set
\nforth in Section 6.3(a) or 6.3(b) would not be satisfied, provided, however,
\nthat no such notification shall affect the representations, warranties,
\ncovenants or agreements of the parties or the conditions to the obligations of
\nthe parties under this Agreement.<\/p>\n
(c) Parent shall give prompt notice to the Company of any
\nrepresentation or warranty made by it or Merger Sub contained in this Agreement
\nbecoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
\nwith or satisfy in any material respect any covenant, condition or agreement to
\nbe complied with or satisfied by it under this Agreement, in each case, such
\nthat the conditions set forth in Section 6.2(a) or 6.2(b) would not be
\nsatisfied, provided, however, that no such notification shall affect the
\nrepresentations, warranties, covenants or agreements of the parties or the
\nconditions to the obligations of the parties under this Agreement.<\/p>\n
5.8 Third Party Consents<\/p>\n
As soon as practicable following the date hereof, Parent and the Company
\nwill each use its commercially reasonable efforts to obtain any consents,
\nwaivers and approvals under any of its or its subsidiaries’ respective
\nagreements, contracts, licenses or leases required to be obtained in connection
\nwith the consummation of the transactions contemplated hereby.<\/p>\n
5.9 Stock Options, Warrants and Employee Benefits<\/p>\n
(a) At the Effective Time, each outstanding Company Option,
\nwhether or not exercisable and regardless of the respective exercise prices
\nthereof, will be assumed by Parent. Each Company Option so assumed by Parent
\nunder this Agreement will continue to have, and be subject to, the same terms
\nand conditions set forth in the applicable Company Stock Option Plan immediately
\nprior to the Effective Time (including, without limitation, any repurchase
\nrights or vesting provisions, but giving effect to any accelerated vesting and
\nexercisability resulting from the Merger), except that (i) each <\/p>\n
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64
\nCompany Option will be exercisable (or will become exercisable in accordance
\nwith its terms) for that number of whole shares of Parent Common Stock equal to
\nthe product of the number of shares of Company Common Stock that were issuable
\nupon exercise of such Company Option immediately prior to the Effective Time
\nmultiplied by the Exchange Ratio, rounded down to the nearest whole number of
\nshares of Parent Common Stock; and (ii) the per share exercise price for the
\nshares of Parent Common Stock issuable upon exercise of such assumed Company
\nOption will be equal to the quotient determined by dividing the exercise price
\nper share of Company Common Stock at which such Company Option was exercisable
\nimmediately prior to the Effective Time by the Exchange Ratio, rounded up to the
\nnearest whole cent.<\/p>\n
(b) It is intended that Company Options assumed by Parent shall
\nqualify following the Effective Time as incentive stock options as defined in
\nSection 422 of the Code to the extent Company Options qualified as incentive
\nstock options immediately prior to the Effective Time and the provisions of this
\nSection 5.9 shall be applied consistent with such intent.<\/p>\n
(c) At the Effective Time, the Warrants will be assumed by
\nParent. Each Warrant so assumed by Parent under this Agreement will continue to
\nhave, and be subject to, the same terms and conditions set forth in the
\napplicable warrant agreement immediately prior to the Effective Time (including,
\nwithout limitation, any repurchase rights or vesting provisions), except that
\n(i) each Warrant will be exercisable (or will become exercisable in accordance
\nwith its terms) for that number of whole shares of Parent Common Stock equal to
\nthe product of (a) the number of shares of Company Capital Stock that were
\nissuable upon exercise of such Warrant immediately prior to the Effective Time
\nmultiplied by (b) the number of shares of Parent Common Stock into which such
\nshares of Company Capital Stock would have been converted pursuant to Section
\n1.6(a) had such shares been outstanding immediately prior to the Effective Time
\n(the “RATIO”), rounded to the nearest whole number of shares of Parent Common
\nStock and (ii) the per share exercise price for the share of Parent Common Stock
\nissuable upon exercise of such assumed Warrant will be equal to the quotient
\ndetermined by dividing the exercise price per share of Company Capital Stock at
\nwhich such Warrant was exercisable immediately prior to the Effective Time by
\nthe Ratio, rounded to the nearest whole cent.<\/p>\n
5.10 Form S-8<\/p>\n
Parent agrees to file, if available for use by Parent, a registration
\nstatement on Form S-8 for the shares of Parent Common Stock issuable with
\nrespect to assumed Company Stock Options as soon as is reasonably practicable
\nafter the Effective Time and intends to maintain the effectiveness of such
\nregistration statement thereafter for so long as any of such options or other
\nrights remain outstanding.<\/p>\n
5.11 Indemnification<\/p>\n
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65
\n (a) From and after the Effective Time, Parent will cause the
\nSurviving Corporation to fulfill and honor in all respects the obligations of
\nthe Company pursuant to any indemnification agreements between the Company and
\nits directors and officers as of the Effective Time (the “INDEMNIFIED PARTIES”).
\nThe Articles of Incorporation and Bylaws of the Surviving Corporation will
\ncontain provisions with respect to exculpation and indemnification that are at
\nleast as favorable to the Indemnified Parties as those contained in the Articles
\nof Incorporation and Bylaws of the Company as in effect on the date hereof,
\nwhich provisions will not be amended, repealed or otherwise modified for a
\nperiod of six years from the Effective Time in any manner that would adversely
\naffect the rights thereunder of individuals who were directors, officers,
\nemployees or agents of the Company, unless such modification is required by law.<\/p>\n
(b) For a period of six years after the Effective Time, Parent
\nwill cause the Surviving Corporation to use its commercially reasonable efforts
\nto maintain in effect, if available, directors’ and officers’ liability
\ninsurance covering those persons who are currently covered by the Company’s
\ndirectors’ and officers’ liability insurance policy on terms comparable to those
\napplicable to the current directors and officers of the Company; provided,
\nhowever, that in no event will Parent or the Surviving Corporation be required
\nto expend an annual premium for such coverage in excess of $225,000 (or such
\ncoverage as is available for such annual premium).<\/p>\n
5.12 Board of Directors of Combined Company<\/p>\n
The Board of Directors of Parent will take all actions necessary to
\ncause the Parent’s Board of Directors, immediately after the Effective Time, to
\nconsist of nine persons, four of whom shall have been designated by the Board of
\nDirectors of the Company prior to the Effective Time (including Jeffrey T.
\nArnold) and four of whom shall have been designated by the Board of Directors of
\nParent immediately prior to the Effective Time (including W. Michael Long). In
\naddition, Parent and the Company by mutual agreement shall specify an additional
\nperson to serve on Parent’s Board of Directors effective immediately after the
\nEffective Time. If, prior to the Effective Time, any of the designees of Parent
\nor the Company shall decline or be unable to serve as a director of Parent
\nimmediately after the Merger, Parent (if such person was designated by Parent)
\nor the Company (if such person was designated by the Company) shall designate
\nanother person to serve in such person’s stead.<\/p>\n
5.13 Officers of the Combined Company<\/p>\n
At the Effective Time W. Michael Long will be offered a position as
\nChairman of the Board of Parent and Chief Operating Officer and Jeffrey T.
\nArnold will be offered a position as Chief Executive Officer of Parent.<\/p>\n
5.14 Change of Name; Increase of Authorized Shares<\/p>\n
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66
\n Subject to the terms hereof, at the Parent Stockholders Meeting, Parent
\nshall propose and recommend that its Certificate of Incorporation be amended at
\nthe Effective Time to change its name to a name mutually agreeable to the
\nCompany and Parent. In addition, at the Parent Stockholder Meeting, Parent shall
\npropose and recommend that its Certificate of Incorporation be amended to
\nincrease the authorized number of shares of Parent Common Stock thereunder to
\n450,000,000 shares and that the authorized number of shares of Preferred Stock
\nof Parent be increased to 10,000,000 shares, provided that Parent may propose
\nand recommend an increase of such lesser number as in good faith it determines
\n(provided that, subject to the terms hereof, such lesser number is not less than
\nthe number of shares required to be issued or reserved for issuance by virtue of
\nthe Merger and the other transactions contemplated hereby).<\/p>\n
5.15 Headquarters of Combined Company<\/p>\n
Immediately after the Effective Time the headquarters of Parent and the
\nCompany shall be jointly located in Atlanta, Georgia.<\/p>\n
5.16 Branding<\/p>\n
Immediately after the Effective Time of the Merger Parent and the
\nSurviving Corporation shall adopt WebMD as the brand name of Parent’s and the
\nSurviving Corporation’s products and services.<\/p>\n
5.17 Nasdaq Listing<\/p>\n
Parent agrees to use its commercially reasonable efforts to authorize
\nfor listing on Nasdaq the shares of Parent Common Stock issuable, and those
\nrequired to be reserved for issuance, in connection with the Merger, upon
\nofficial notice of issuance.<\/p>\n
5.18 Company Affiliate Agreement<\/p>\n
Not later than 30 days prior to the Company Stockholders’ Meeting, the
\nCompany shall deliver to Parent a list of those persons who may be deemed to be,
\nin the Company’s reasonable judgment, affiliates of the Company within the
\nmeaning of Rule 145 promulgated under the Securities Act (each a “COMPANY
\nAFFILIATE”). The Company will provide Parent with such information and documents
\nas Parent reasonably requests for purposes of reviewing such list. Parent will
\nbe entitled to place appropriate legends with respect to the restrictions
\nimposed by Rule 145 promulgated under the Securities Act on the certificates
\nevidencing any Parent Common Stock to be received by a Company Affiliate
\npursuant to the terms of this Agreement, and, in the reasonable judgment of
\nParent, to issue appropriate stop transfer instructions to the transfer agent
\nfor the Parent Common Stock.<\/p>\n
5.19 Comfort Letters<\/p>\n
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67
\n At the request of Parent, the Company shall cause its Ernst & Young LLP,
\ncertified public accountants to Company, to deliver a comfort letter, in form
\nand substance reasonably satisfactory to Parent, with respect to financial
\ninformation relating to the Company included in the Registration Statement. At
\nthe request of the Company, Parent shall cause Ernst & Young LLP, certified
\npublic accountants to Parent, to deliver a comfort letter in form and substance
\nreasonably satisfactory to Company, with respect to financial information
\nrelating to the Parent included in the Registration Statement.<\/p>\n
5.20 Stockholder Agreements<\/p>\n
Except for the registration rights arrangements described in the Company
\nSchedules and except for rights described in Part 6.2(h) of the Company
\nSchedules, prior to the Effective Time the Company shall use commercially
\nreasonable efforts to terminate all material rights of a stockholder and
\nobligations of the Company under any stockholder or other agreement entered into
\nbetween the Company and the stockholder of the Company in its capacity as a
\nstockholder (and not as a provider of goods and services), including, without
\nlimitation, rights of first refusal and information rights, other than dissenter
\nrights and the rights of the Company Capital Stock to receive shares of Parent
\nCommon Stock in the Merger.<\/p>\n
5.21 FIRPTA Compliance<\/p>\n
On or prior to the Closing Date, the Company shall deliver to Parent a
\nproperly executed statement that the shares of Company Capital Stock do not
\nconstitute “U.S. real property interests,” as defined in Section 897(c) of the
\nCode. Such statement shall be in a form reasonably acceptable to Parent and in
\naccordance with the requirements of Treasury Regulation Section 1.897-2(h), for
\npurposes of satisfying Parent’s obligations under Treasury Regulation Section
\n1.1445-2(c)(3). In addition, simultaneously with delivery of such statement, the
\nCompany shall provide to Parent, as agent for the Company, a form of notice to
\nthe Internal Revenue Service in accordance with the requirements of Treasury
\nRegulation Section 1.897-2(h), along with written authorization for Parent to
\ndeliver such form of notice to the Internal Revenue Service on behalf of the
\nCompany upon the Closing.<\/p>\n
5.22 Additional Stockholder Vote<\/p>\n
The Company shall seek approval by the requisite vote of its
\nstockholders of the acceleration of stock options under the Company Stock Option
\nPlans as a result of the consummation of the Merger that may be deemed to
\nconstitute “parachute payments” pursuant to Section 280(G) of the Code, such
\nthat if such approval is obtained, all such accelerated vesting resulting from
\nthe transactions contemplated hereby would not be deemed to be “parachute
\npayments” pursuant to Section 280(G) of the Code or would be exempt from such
\ntreatment under Section 280(G) of the Code with respect to the holders who have
\nagreed to waive such acceleration in the absence of <\/p>\n
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68
\nobtaining such requisite vote.<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS TO THE MERGER<\/p>\n
6.1 Conditions to Obligations of Each Party to Effect the Merger<\/p>\n
The respective obligations of each party to this Agreement to effect the
\nMerger shall be subject to the satisfaction at or prior to the Closing Date of
\nthe following conditions:<\/p>\n
(a) Company Stockholder Approval. This Agreement, including
\nwithout limitation the treatment of the Company Capital Stock as set forth in
\nSection 1.6(a), shall have been approved and adopted, and the Merger shall have
\nbeen duly approved, by the requisite vote under applicable law and the Company’s
\nArticles of Incorporation, by the stockholders of the Company.<\/p>\n
(b) Parent Stockholder Approval. The Parent Proposals shall have
\nbeen duly approved by the requisite vote under applicable law, Nasdaq rules and
\nParent’s Certificate of Incorporation by the stockholders of Parent.<\/p>\n
(c) Registration Statement Effective; Proxy Statement. The SEC
\nshall have declared the Registration Statement effective. No stop order
\nsuspending the effectiveness of the Registration Statement or any part thereof
\nshall have been issued and no proceeding for that purpose, and no similar
\nproceeding in respect of the Prospectus\/Proxy Statement, shall have been
\ninitiated or threatened in writing by the SEC.<\/p>\n
(d) No Order; HSR Act. No Governmental Entity shall have enacted,
\nissued, promulgated, enforced or entered any statute, rule, regulation,
\nexecutive order, decree, injunction or other order (whether temporary,
\npreliminary or permanent) which is in effect and which has the effect of making
\nthe Merger illegal or otherwise prohibiting consummation of the Merger. All
\nwaiting periods, if any, under the HSR Act relating to the transactions
\ncontemplated hereby will have expired or terminated early and all material
\nforeign antitrust approvals required to be obtained prior to the Merger in
\nconnection with the transactions contemplated hereby shall have been obtained.<\/p>\n
(e) Tax Opinions. Parent and the Company shall each have received
\nwritten opinions from their respective tax counsel (Wilson Sonsini Goodrich & Rosati, Professional Corporation, and Nelson Mullins Riley & Scarborough,
\nL.L.P., respectively), in form and substance reasonably satisfactory to them, to
\nthe effect that the Merger will constitute a tax-free reorganization within the
\nmeaning of Section 368(a) of the Code and such opinions shall not have been
\nwithdrawn; provided, however, that if the counsel to either Parent or the
\nCompany does not render such opinion, this condition shall nonetheless be deemed
\nto be satisfied with respect to such party if counsel to the other party renders
\nsuch opinion to such party. The parties to this Agreement agree to make such<\/p>\n
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69
\nreasonable representations as requested by such counsel for the purpose of
\nrendering such opinions.<\/p>\n
(f) Nasdaq Listing. The shares of Parent Common Stock to be
\nissued in the Merger shall have been authorized for listing on Nasdaq, subject
\nto notice of issuance.<\/p>\n
6.2 Additional Conditions to Obligations of the Company<\/p>\n
The obligation of the Company to consummate and effect the Merger shall
\nbe subject to the satisfaction at or prior to the Closing Date of each of the
\nfollowing conditions, any of which may be waived, in writing, exclusively by the
\nCompany:<\/p>\n
(a) Representations and Warranties. Each representation and
\nwarranty of Parent and Merger Sub contained in this Agreement (i) shall have
\nbeen true and correct as of the date of this Agreement and (ii) shall be true
\nand correct on and as of the Closing Date with the same force and effect as if
\nmade on the Closing Date except, (A) in each case, or in the aggregate, as does
\nnot constitute a Material Adverse Effect on Parent; provided, however, such
\nMaterial Adverse Effect qualification shall be inapplicable with respect to the
\nrepresentations and warranties contained in Sections 3.2, 3.3, 3.17, 3.18 and
\n3.19 (which shall have been true and correct in all material respects as of the
\ndate of this Agreement, and shall be true and correct in all material respects
\non and as of the Closing Date (other than representations and warranties which
\naddress matters only as of a particular date, which representations and
\nwarranties shall be true and correct in all material respects as of such date),
\nand (B) for those representations and warranties which address matters only as
\nof a particular date (which representations shall have been true and correct
\n(subject to the materiality qualifications set forth in the preceding clause
\n(A)) as of such particular date) (it being understood that, for purposes of
\ndetermining the accuracy of such representations and warranties, any update of
\nor modification to the Parent Schedules made or purported to have been made
\nafter the execution of this Agreement shall be disregarded). The Company shall
\nhave received a certificate with respect to the foregoing signed on behalf of
\nParent by an authorized officer of Parent.<\/p>\n
(b) Agreements and Covenants. Parent and Merger Sub shall have
\nperformed or complied in all material respects with all agreements and covenants
\nrequired by this Agreement to be performed or complied with by them on or prior
\nto the Closing Date, and the Company shall have received a certificate to such
\neffect signed on behalf of Parent by an authorized officer of Parent.<\/p>\n
(c) Material Adverse Effect. No Material Adverse Effect with
\nrespect to Parent shall have occurred since the date of this Agreement.<\/p>\n
(d) Consents. Parent shall have obtained all consents, waivers
\nand approvals required in connection with the consummation of the transactions
\ncontemplated hereby in connection with the agreements, contracts, licenses or
\nleases set forth on Schedule 6.2(d).<\/p>\n
6.3 Additional Conditions to the Obligations of Parent and Merger Sub<\/p>\n
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70
\n The obligations of Parent and Merger Sub to consummate and effect the
\nMerger shall be subject to the satisfaction at or prior to the Closing Date of
\neach of the following conditions, any of which may be waived, in writing,
\nexclusively by Parent:<\/p>\n
(a) Representations and Warranties. Each representation and
\nwarranty of the Company contained in this Agreement (i) shall have been true and
\ncorrect as of the date of this Agreement and (ii) shall be true and correct on
\nand as of the Closing Date with the same force and effect as if made on and as
\nof the Closing Date except (A) in each case, or in the aggregate, as does not
\nconstitute a Material Adverse Effect on the Company; provided, however, such
\nMaterial Adverse Effect qualification shall be inapplicable with respect to the
\nrepresentations and warranties contained in Sections 2.2, 2.3, 2.5(c), 2.20,
\n2.21 and 2.22 (which shall have been true and correct in all material respects
\nas of the date of this Agreement and shall be true and correct in all material
\nrespects on and as of the Closing Date (other than representations and
\nwarranties which address matters only as of a particular date, which
\nrepresentations and warranties shall be true and correct in all material
\nrespects as of such date), and (B) for those representations and warranties
\nwhich address matters only as of a particular date (which representations shall
\nhave been true and correct (subject to the materiality qualifications set forth
\nin the preceding clause (A)) as of such particular date) (it being understood
\nthat, for purposes of determining the accuracy of such representations and
\nwarranties, any update of or modification to the Company Schedules made or
\npurported to have been made after the execution of this Agreement shall be
\ndisregarded). Parent shall have received a certificate with respect to the
\nforegoing signed on behalf of the Company by an authorized officer of the
\nCompany.<\/p>\n
(b) Agreements and Covenants. The Company shall have performed or
\ncomplied in all material respects with all agreements and covenants required by
\nthis Agreement to be performed or complied with by it at or prior to the Closing
\nDate, and Parent shall have received a certificate to such effect signed on
\nbehalf of the Company by an authorized officer of the Company.<\/p>\n
(c) Material Adverse Effect. No Material Adverse Effect with
\nrespect to the Company shall have occurred since the date of this Agreement.<\/p>\n
(d) Consents. The Company shall have obtained all consents,
\nwaivers and approvals required in connection with the consummation of the
\ntransactions contemplated hereby in connection with the agreements, contracts,
\nlicenses or leases set forth on Schedule 6.3(d).<\/p>\n
(e) Ownership Limits. At the Effective Time, no stockholder
\n(taken together with its affiliates) of the Company shall beneficially own, or
\nhave the right to beneficially own at any time in the future, forty percent
\n(40%) or more of the outstanding shares of Company Capital Stock on a fully
\ndiluted as converted into Company Common Stock basis.<\/p>\n
(f) Appraisal Rights. No more than 0.66% of the shares of Company
\nCapital Stock on a fully diluted as converted into Company Common Stock basis
\noutstanding immediately prior to the <\/p>\n
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71
\nEffective Time shall have perfected or shall have the right to perfect in the
\nfuture rights of appraisal or dissenters’ rights with respect to the Merger.<\/p>\n
(g) Legal Opinion. Nelson Mullins Riley & Scarborough, L.L.P.,
\noutside counsel to the Company, shall have delivered a legal opinion to Parent,
\ndated as of the Closing Date, in a form reasonably acceptable to Parent,
\ncovering the substance set forth on Schedule 6.3(g).<\/p>\n
(h) Company Rights. The Company shall have provided Parent
\nevidence reasonably satisfactory to Parent that except for registration rights
\nand except for the rights specified in Part 6.2(h) of the Company Schedules, all
\nmaterial rights of a stockholder and obligations of the Company under any
\nstockholder or other agreement entered into between the Company and a
\nstockholder of the Company in its capacity as a stockholder (and not as a
\nprovider of goods or services), including without limitation rights of first
\nrefusal and information rights, other than the dissenters’ rights and the right
\nof the holders of Company Capital Stock to receive shares of Parent Common
\nStock, pursuant to the terms of this Agreement, shall have terminated.<\/p>\n
(i) Microsoft Arrangements. After the date of this Agreement and
\nprior to the Effective Time, the Company shall have received an investment from
\nMicrosoft pursuant to the terms of the Investment Agreement dated May 12, 1999
\namong the Company, Microsoft and the Purchasers named therein (the “INVESTMENT
\nAGREEMENT”) or other investors as permitted thereby in an amount equal to
\n$150,000,000 in exchange for 276,906 shares of the Company’s Series E Preferred
\nStock.<\/p>\n
(j) Strategic Investors. (i) Within 10 days following the date of
\nthis Agreement, the Company shall have received an amount equal to $114,500,000
\nin exchange for the sale of 211,372 shares of the Company’s Series E Preferred
\nStock to investors other than Microsoft pursuant to the Investment Agreement,
\nand (ii) after the date of this Agreement and prior to the Effective Time, the
\nCompany shall receive an amount equal to $35,500,000 in exchange for the sale of
\n65,534 shares of the Company’s Series E Preferred Stock to investors other than
\nMicrosoft in substantially the same form as the Investment Agreement.<\/p>\n
(k) The Stockholder Agreement attached hereto as Exhibit C with
\nMicrosoft shall be in full force and effect.<\/p>\n
ARTICLE VII<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 Termination<\/p>\n
This Agreement may be terminated at any time prior to the Effective
\nTime, whether before or after the requisite approvals of the stockholders of the
\nCompany or Parent:<\/p>\n
(a) by mutual written consent duly authorized by the Boards of
\nDirectors of Parent and <\/p>\n
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72
\nthe Company;<\/p>\n
(b) by either the Company or Parent if the Merger shall not have
\nbeen consummated by December 15, 1999 (the “END DATE”) for any reason; provided,
\nhowever, that the right to terminate this Agreement under this Section 7.1(b)
\nshall not be available to any party whose action or failure to act has been a
\nprincipal cause of or resulted in the failure of the Merger to occur on or
\nbefore such date and such action or failure to act constitutes a material breach
\nof this Agreement;<\/p>\n
(c) by either the Company or Parent if a Governmental Entity
\nshall have issued an order, decree or ruling or taken any other action, in any
\ncase having the effect of permanently restraining, enjoining or otherwise
\nprohibiting the Merger, which order, decree, ruling or other action is final and
\nnonappealable;<\/p>\n
(d) by the Company or Parent if the required approval of the
\nstockholders of Parent contemplated by this Agreement shall not have been
\nobtained by reason of the failure to obtain the required vote at a meeting of
\nParent stockholders duly convened therefor or at any adjournment thereof;
\nprovided, however, that the right to terminate this Agreement under this Section
\n7.1(d) shall not be available to Parent where the failure to obtain Parent
\nstockholder approval shall have been caused by the action or failure to act of
\nParent and such action or failure to act constitutes a material breach by Parent
\nof this Agreement.<\/p>\n
(e) by the Company or Parent if the required approval of the
\nstockholders of the Company contemplated by this Agreement shall not have been
\nobtained by reason of the failure to obtain the required vote at a meeting of
\nthe Company stockholders duly convened therefore or at any adjournment thereof;
\nprovided, however, that the right to terminate this Agreement under this Section
\n7.1(e) shall not be available to the Company where the failure to obtain the
\nCompany stockholder approval shall have been caused by the action or failure to
\nact of the Company and such action or failure to act constitutes a material
\nbreach by the Company of this Agreement.<\/p>\n
(f) by the Company, upon a breach of any representation,
\nwarranty, covenant or agreement on the part of Parent set forth in this
\nAgreement, or if any representation or warranty of Parent shall have become
\nuntrue, in either case such that the conditions set forth in Section 6.2(a) or
\nSection 6.2(b) would not be satisfied as of the time of such breach or as of the
\ntime such representation or warranty shall have become untrue, provided that if
\nsuch inaccuracy in Parent’s representations and warranties or breach by Parent
\nis curable by Parent through the exercise of its commercially reasonable
\nefforts, then the Company may not terminate this Agreement under this Section
\n7.1(f) prior to the End Date, provided Parent continues to exercise commercially
\nreasonable efforts to cure such breach (it being understood that the Company may
\nnot terminate this Agreement pursuant to this paragraph (f) if it shall have
\nmaterially breached this Agreement or if such breach by Parent is cured prior to
\nthe End Date);<\/p>\n
(g) by Parent, upon a breach of any representation, warranty,
\ncovenant or agreement on <\/p>\n
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73
\nthe part of the Company set forth in this Agreement, or if any representation or
\nwarranty of the Company shall have become untrue, in either case such that the
\nconditions set forth in Section 6.3(a) or Section 6.3(b) would not be satisfied
\nas of the time of such breach or as of the time such representation or warranty
\nshall have become untrue, provided, that if such inaccuracy in the Company’s
\nrepresentations and warranties or breach by the Company is curable by the
\nCompany through the exercise of its commercially reasonable efforts, then Parent
\nmay not terminate this Agreement under this Section 7.1(g) prior to the End
\nDate, provided the Company continues to exercise commercially reasonable efforts
\nto cure such breach (it being understood that Parent may not terminate this
\nAgreement pursuant to this paragraph (g) if it shall have materially breached
\nthis Agreement or if such breach by the Company is cured prior to the End Date).<\/p>\n
7.2 Notice of Termination; Effect of Termination<\/p>\n
Any termination of this Agreement under Section 7.1 above will be
\neffective immediately upon the delivery of a valid written notice of the
\nterminating party to the other parties hereto. In the event of the termination
\nof this Agreement as provided in Section 7.1, this Agreement shall be of no
\nfurther force or effect, except (i) as set forth in Section 5.4, this Section
\n7.2, Section 7.3 and Article 8 (miscellaneous), each of which shall survive the
\ntermination of this Agreement, and (ii) nothing herein shall relieve any party
\nfrom liability for any willful breach of this Agreement. 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
7.3 Fees and Expenses<\/p>\n
All fees and expenses incurred in connection with this Agreement and the
\ntransactions contemplated hereby shall be paid by the party incurring such
\nexpenses whether or not the Merger is consummated; provided, however, that
\nParent and the Company shall share equally all fees and expenses, other than
\nattorneys’ and accountants fees and expenses, incurred in relation to the
\nprinting and filing (with the SEC) of the Prospectus\/Proxy Statement (including
\nany preliminary materials related thereto) and the Registration Statement
\n(including financial statements and exhibits) and any amendments or supplements
\nthereto.<\/p>\n
7.4 Amendment<\/p>\n
Subject to applicable law, this Agreement may be amended by the parties
\nhereto at any time prior to the Effective Time by execution of an instrument in
\nwriting signed on behalf of each of Parent and the Company.<\/p>\n
7.5 Extension; Waiver<\/p>\n
At any time prior to the Effective Time any party hereto may, to the
\nextent legally allowed, (i) extend the time for the performance of any of the
\nobligations or other acts of the other parties <\/p>\n
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74
\nhereto, (ii) waive any inaccuracies in the representations and warranties made
\nto such party contained herein or in any document delivered pursuant hereto and
\n(iii) waive compliance with any of the agreements or conditions for the benefit
\nof such party contained herein. Any agreement on the part of a party hereto to
\nany such extension or waiver shall be valid only if set forth in an instrument
\nin writing signed on behalf of such party. Delay in exercising any right under
\nthis Agreement shall not constitute a waiver of such right.<\/p>\n
ARTICLE VIII<\/p>\n
GENERAL PROVISIONS<\/p>\n
8.1 Non-Survival of Representations and Warranties<\/p>\n
The representations and warranties of the Company, Parent and Merger Sub
\ncontained in this Agreement shall terminate at the Effective Time, and only the
\ncovenants that by their terms survive the Effective Time shall survive the
\nEffective Time.<\/p>\n
8.2 Notices<\/p>\n
All notices and other communications hereunder shall be in writing and
\nshall be deemed given if delivered personally or by commercial delivery service,
\nor sent via telecopy (receipt confirmed) to the parties at the following
\naddresses or telecopy numbers (or at such other address or telecopy numbers for
\na party as shall be specified by like notice):<\/p>\n
if to Parent or Merger Sub, to:<\/p>\n
Healtheon Corporation
\n 4600 Patrick Henry Road
\n Santa Clara, CA 95054
\n Attention: Jack Dennison, General Counsel
\n Telephone No.: (408) 876-5000
\n Telecopy No.: (408) 876-5175<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, California 94304-1050
\n Attention: Larry W. Sonsini
\n Marty W. Korman
\n Daniel R. Mitz<\/p>\n
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75
\n Telephone No.: (650) 493-9300
\n Telecopy No.: (650) 493-6811<\/p>\n
If to the Company, to:<\/p>\n
WebMD, Inc.
\n 400 The Lenox Building
\n 3399 Peachtree Road NE
\n Atlanta, GA 30326
\n Attention: W. Michael Heekin,
\n Executive Vice President,
\n Strategic Relations
\n Telephone No.: (404) 479-7600
\n Telecopy No.: (404) 479-7651<\/p>\n
with copies to:<\/p>\n
Nelson Mullins Riley & Scarborough, L.L.P.
\n Bank of America Corporate Center
\n Suite 2600
\n Charlotte, North Carolina 28204
\n Atlanta, GA 30309
\n Attention: H. Bryan Ives III
\n C. Mark Kelly
\n Telephone No.: (704) 417-3000
\n Telecopy No.: (704) 377-4814<\/p>\n
Wachtell, Lipton, Rosen & Katz
\n 51 West 52nd Street
\n New York, New York 10019
\n Attention: Eric S. Robinson, Esq.
\n Telephone No.: (212) 403-1000
\n Telecopy No.: (212) 403-2000<\/p>\n
8.3 Interpretation; Knowledge<\/p>\n
(a) When a reference is made in this Agreement to Exhibits, such
\nreference shall be to an Exhibit to this Agreement unless otherwise indicated.
\nWhen a reference is made in this Agreement to Sections, such reference shall be
\nto a Section of this Agreement unless otherwise indicated the words “INCLUDE,”
\n“INCLUDES” and “INCLUDING” when used herein shall be deemed in each case to be
\nfollowed by the words “without limitation.” The table of contents and headings
\ncontained in this Agreement are for reference purposes only and shall not affect
\nin any way the meaning or interpretation of this <\/p>\n
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76
\nAgreement. When reference is made herein to “THE BUSINESS OF” an entity, such
\nreference shall be deemed to include the business of all direct and indirect
\nsubsidiaries of such entity. Reference to the subsidiaries of an entity shall be
\ndeemed to include all direct and indirect subsidiaries of such entity.<\/p>\n
(b) For purposes of this Agreement the term “KNOWLEDGE” means
\nwith respect to a party hereto, with respect to any matter in question, that any
\nof the Chief Executive Officer, Chief Financial Officer, General Counsel or
\nController of such party, has actual knowledge of such matter.<\/p>\n
(c) For purposes of this Agreement, the term “MATERIAL ADVERSE
\nEFFECT” when used in connection with an entity means any change, event,
\nviolation, inaccuracy, circumstance or effect that is materially adverse to the
\nbusiness, assets (including intangible assets), financial condition or results
\nof operations of such entity taken as a whole with its subsidiaries.<\/p>\n
(d) For purposes of this Agreement, the term “PERSON” shall mean
\nany individual, corporation (including any non-profit corporation), general
\npartnership, limited partnership, limited liability partnership, joint venture,
\nestate, trust, company (including any limited liability company or joint stock
\ncompany), firm or other enterprise, association, organization, entity or
\nGovernmental Entity.<\/p>\n
8.4 Counterparts<\/p>\n
This Agreement may be executed in one or more counterparts, all of which
\nshall be considered one and the same agreement and shall become effective when
\none or more counterparts have been signed by each of the parties and delivered
\nto the other party, it being understood that all parties need not sign the same
\ncounterpart.<\/p>\n
8.5 Entire Agreement; Third Party Beneficiaries<\/p>\n
This Agreement and the documents and instruments and other agreements
\namong the parties hereto as contemplated by or referred to herein, including the
\nCompany Schedules and the Parent Schedules (a) constitute the entire agreement
\namong the parties with respect to the subject matter hereof and supersede all
\nprior agreements and understandings, both written and oral, among the parties
\nwith respect to the subject matter hereof, it being understood that the
\nConfidentiality Agreement shall continue in full force and effect until the
\nClosing and shall survive any termination of this Agreement; and (b) are not
\nintended to confer upon any other person any rights or remedies hereunder,
\nexcept as specifically provided in Section 5.11.<\/p>\n
8.6 Severability<\/p>\n
In the event that any provision of this Agreement or the application
\nthereof, becomes or is declared by a court of competent jurisdiction to be
\nillegal, void or unenforceable, the remainder of this Agreement will continue in
\nfull force and effect and the application of such provision to other <\/p>\n
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77
\npersons or circumstances will be interpreted so as reasonably to effect the
\nintent of the parties hereto. The parties further agree to replace such void or
\nunenforceable provision of this Agreement with a valid and enforceable provision
\nthat will achieve, to the extent possible, the economic, business and other
\npurposes of such void or unenforceable provision.<\/p>\n
8.7 Remedies<\/p>\n
Except as otherwise provided herein, any and all remedies herein
\nexpressly conferred upon a party will be deemed cumulative with and not
\nexclusive of any other remedy conferred hereby, or by law or equity upon such
\nparty, and the exercise by a party of any one remedy will not preclude the
\nexercise of any other remedy.<\/p>\n
8.8 Governing Law<\/p>\n
This Agreement shall be governed by and construed in accordance with the
\nlaws of the State of Delaware, regardless of the laws that might otherwise
\ngovern under applicable principles of conflicts of law thereof.<\/p>\n
8.9 Rules of Construction<\/p>\n
The parties hereto agree that they have been represented by counsel
\nduring the negotiation and execution of this Agreement and, therefore, waive the
\napplication of any law, regulation, holding or rule of construction providing
\nthat ambiguities in an agreement or other document will be construed against the
\nparty drafting such agreement or document.<\/p>\n
8.10 Assignment<\/p>\n
No party may assign either this Agreement or any of its rights,
\ninterests, or obligations hereunder without the prior written approval of the
\nother parties. Subject to the preceding sentence, this Agreement shall be
\nbinding upon and shall inure to the benefit of the parties hereto and their
\nrespective successors and permitted assigns.<\/p>\n
8.11 WAIVER OF JURY TRIAL<\/p>\n
EACH OF PARENT, THE COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL
\nRIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
\nON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
\nTHE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB IN THE NEGOTIATION,
\nADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.<\/p>\n
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78
\n IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
\nexecuted by their duly authorized respective officers as of the date first
\nwritten above.<\/p>\n
HEALTHEON CORPORATION<\/p>\n
By: \/s\/ Jack Dennison
\n —————————-
\n Name: Jack Dennison
\n ————————–
\n Title: Vice President and
\n General Counsel
\n ————————-<\/p>\n
WATER ACQUISITION CORP.<\/p>\n
By: \/s\/ Jack Dennison
\n —————————-
\n Name: Jack Dennison
\n ————————–
\n Title: Vice President and
\n General Counsel
\n ————————-<\/p>\n
WEBMD, INC.<\/p>\n
By: \/s\/ Jeffrey Arnold
\n —————————-
\n Name: Jeffrey Arnold
\n ————————–
\n Title: Chief Executive Officer
\n ————————-<\/p>\n
**** REORGANIZATION AGREEMENT ****<\/p>\n
-78-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7750,9303],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9622,9626],"class_list":["post-43183","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-healtheon-corp","corporate_contracts_companies-webmd-corp","corporate_contracts_industries-technology__programming","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\/43183","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=43183"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43183"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43183"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}