Agreement and Plan of Merger - SAP America Inc. and Retek Inc.
AGREEMENT AND PLAN OF MERGER
FEBRUARY 28, 2005
BY AND AMONG
SAP AMERICA, INC.,
SAPPHIRE EXPANSION CORPORATION,
AND
RETEK INC.
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CONTENTS
SECTION PAGE
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1. THE OFFER..............................................................1
1.1 The Offer.................................................1
1.2 Company Actions...........................................3
1.3 Directors.................................................3
1.4 Top-Up Option.............................................4
2. THE MERGER.............................................................6
2.1 The Merger................................................6
2.2 Closing...................................................6
2.3 Effective Time............................................6
2.4 Effects...................................................7
2.5 Certificate of Incorporation and By-laws..................7
2.6 Directors.................................................7
2.7 Officers..................................................7
3. EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES...............................................7
3.1 Effect on Capital Stock...................................7
3.2 Exchange of Certificates..................................8
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................10
4.1 Organization, Standing and Power.........................10
4.2 Company Subsidiaries; Equity Interests...................10
4.3 Capital Structure........................................10
4.4 Authority; Execution and Delivery; Enforceability........12
4.5 No Conflicts; Consents...................................13
4.6 SEC Documents; Undisclosed Liabilities...................13
4.7 Information Supplied.....................................16
4.8 Absence of Certain Changes or Events.....................16
4.9 Taxes....................................................17
4.10 Absence of Changes in Benefit Plans......................19
4.11 ERISA Compliance; Excess Parachute Payments..............19
4.12 Litigation...............................................21
4.13 Compliance with Applicable Law...........................22
4.14 Environmental Matters....................................22
4.15 Contracts................................................23
4.16 Title to Properties......................................25
4.17 Intellectual Property; Computer Software.................26
4.18 Labor Matters............................................30
4.19 Insurance................................................30
4.20 Brokers; Schedule of Fees and Expenses...................30
4.21 Opinion of Financial Advisor.............................31
4.22 Potential Conflicts of Interest..........................31
4.23 Vote Required............................................31
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB......................31
5.1 Organization, Standing and Power.........................31
5.2 Sub......................................................32
5.3 Authority; Execution and Delivery; Enforceability........32
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SECTION PAGE
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5.4 No Conflicts; Consents...................................32
5.5 Information Supplied.....................................33
5.6 Brokers..................................................33
5.7 Financing................................................33
5.8 Litigation...............................................33
6. COVENANTS RELATING TO CONDUCT OF BUSINESS.............................34
6.1 Conduct of Business......................................34
6.2 No Solicitation..........................................36
7. ADDITIONAL AGREEMENTS.................................................39
7.1 Preparation of Proxy Statement; Stockholders Meeting.....39
7.2 Access to Information; Confidentiality...................40
7.3 Reasonable Best Efforts..................................40
7.4 Stock Options............................................41
7.5 Indemnification..........................................42
7.6 Fees and Expenses........................................43
7.7 Public Announcements.....................................44
7.8 Transfer Taxes...........................................44
7.9 Stockholder Litigation...................................44
7.10 Further Assurances.......................................44
7.11 Additional Agreement Regarding Benefit Plans.............44
8. CONDITIONS PRECEDENT..................................................45
9. TERMINATION, AMENDMENT AND WAIVER.....................................45
9.1 Termination..............................................45
9.2 Effect of Termination....................................46
9.3 Amendment................................................46
9.4 Extension; Waiver........................................47
10. GENERAL PROVISIONS....................................................47
10.1 Nonsurvival of Representations and Warranties............47
10.2 Notices..................................................47
10.3 Definitions..............................................48
10.4 Interpretation; Company Disclosure Schedule..............49
10.5 Severability.............................................49
10.6 Counterparts.............................................50
10.7 Entire Agreement; No Third-Party Beneficiaries...........50
10.8 Governing Law............................................50
10.9 Assignment...............................................50
10.10 Enforcement; Waiver of Jury Trial........................50
Signatories....................................................................52
ANNEX
1. Conditions of the Offer..............................................A-1
ii
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GLOSSARY
TERM SECTION
---- -------
Acquisition Agreement.....................................................6.2(b)
Adverse Change in Recommendation..........................................6.2(b)
affiliate................................................................10.3(a)
Appraisal Shares..........................................................3.1(d)
Certificate...........................................................3.1(c)(ii)
Certificate of Merger........................................................2.3
Closing......................................................................2.2
Closing Date.................................................................2.2
Code.....................................................................4.11(b)
Company.................................................................Preamble
Company Benefit Agreements...............................................4.10(b)
Company Benefit Plans....................................................4.10(a)
Company Board.............................................................4.4(b)
Company By-laws..............................................................4.1
Company Charter..............................................................4.1
Company Common Stock....................................................Recitals
Company Disclosure Schedule....................................................4
Company ESPP.............................................................4.11(k)
Company Intellectual Property.......................................4.17(m)(vii)
Company Licensed Intellectual Property...............................4.17(m)(ix)
Company Material Adverse Effect..............................................4.1
Company Multiemployer Pension Plan.......................................4.11(h)
Company Owned Intellectual Property................................4.17(m)(viii)
Company Pension Plans....................................................4.11(a)
Company Preferred Stock...................................................4.3(a)
Company SAR............................................................7.4(e)(i)
Company Software.........................................................4.17(d)
Company Stock Option..................................................7.4(e)(ii)
Company Stock Plans..................................................7.4(e)(iii)
Company Stockholder Approval................................................4.23
Company Stockholders Meeting..............................................7.1(b)
Company Subsidiaries.........................................................4.1
Company Takeover Proposal..............................................6.2(d)(i)
Company Web Sites........................................................4.17(l)
Confidentiality Agreement.................................................7.2(b)
Consent...................................................................4.5(b)
Contract..................................................................4.3(a)
Copyrights.........................................................4.17(m)(i)(C)
Current Purchase Period...................................................7.4(c)
Customer Software....................................................4.17(m)(vi)
Derivative Work.......................................................4.17(m)(x)
DGCL.........................................................................2.1
Effective Time...............................................................2.3
Environmental Claims..................................................4.14(b)(i)
Environmental Laws...................................................4.14(b)(ii)
Environmental Permits...............................................4.14(b)(iii)
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TERM SECTION
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ERISA....................................................................4.11(a)
Exchange Act..............................................................4.4(c)
Exchange Fund.............................................................3.2(a)
Expiration Date...........................................................1.1(a)
Filed SEC Document........................................................4.6(a)
Fully Diluted Shares.....................................................Annex 1
GAAP......................................................................4.6(a)
Governmental Entity.......................................................4.5(b)
Hazardous Materials..................................................4.14(b)(iv)
HSR Act...................................................................4.5(b)
in the ordinary course of business.......................................10.3(c)
Indemnified Parties.......................................................7.5(a)
Independent Directors.....................................................1.3(a)
Information Statement.....................................................1.2(b)
Intellectual Property.................................................4.17(m)(i)
Judgment..................................................................4.5(a)
knowledge................................................................10.3(d)
Law.......................................................................4.5(a)
Licensed Software....................................................4.17(m)(iv)
Liens.....................................................................4.2(a)
material adverse effect..................................................10.3(b)
Merger..................................................................Recitals
Merger Consideration...................................................3.1(c)(i)
Minimum Tender Condition.................................................Annex 1
Notice of Superior Proposal...............................................6.2(b)
Offer...................................................................Recitals
Offer Documents...........................................................1.1(b)
Offer Price.............................................................Recitals
Open Source Software..................................................4.17(m)(v)
Owned Software...........................................................4.17(b)
Parent..................................................................Preamble
Parent Disclosure Schedule.....................................................5
Parent Material Adverse Effect............................................5.4(a)
Patents............................................................4.17(m)(i)(B)
Paying Agent..............................................................3.2(a)
Permits..................................................................4.13(b)
person...................................................................10.3(e)
Primary Company Executives...............................................4.11(l)
Proxy Statement...........................................................4.5(b)
Representatives...........................................................6.2(a)
Schedule 14D-9............................................................1.2(b)
SEC.......................................................................1.1(a)
SEC Documents.............................................................4.6(a)
Secret Information.................................................4.17(m)(i)(D)
Section 262...............................................................3.1(d)
Securities Act............................................................4.6(a)
Software.............................................................4.17(m)(ii)
SOX.......................................................................4.6(a)
Sub.....................................................................Preamble
subsidiary...............................................................10.3(f)
Superior Company Proposal.............................................6.2(d)(ii)
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TERM SECTION
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Surviving Corporation........................................................2.1
Tax....................................................................4.9(h)(i)
Tax Return............................................................4.9(h)(ii)
Taxation...............................................................4.9(h)(i)
Taxes..................................................................4.9(h)(i)
Termination Fee...........................................................7.6(b)
Third-Party Software................................................4.17(m)(iii)
Top-Up Closing............................................................1.4(c)
Top-Up Exercise Event..................................................1.4(b)(i)
Top-Up Exercise Notice....................................................1.4(c)
Top-Up Notice Date........................................................1.4(c)
Top-Up Option.............................................................1.4(a)
Top-Up Option Shares......................................................1.4(a)
Top-Up Termination Date...............................................1.4(b)(ii)
Trademarks.........................................................4.17(m)(i)(A)
Transactions..............................................................1.2(a)
Transfer Taxes...............................................................7.8
Voting Company Debt.......................................................4.3(a)
Web......................................................................4.17(l)
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AGREEMENT AND PLAN OF MERGER dated as of February 28, 2005
AMONG:
(1) SAP AMERICA, INC., a Delaware corporation (PARENT),
(2) SAPPHIRE EXPANSION CORPORATION, a Delaware corporation and a wholly-owned
subsidiary of Parent (SUB), and
(3) RETEK INC., a Delaware corporation (the COMPANY).
WHEREAS:
(A) the respective Boards of Directors of Parent, Sub and the Company have
approved the acquisition of the Company on the terms and subject to the
conditions set forth in this Agreement;
(B) in furtherance of such acquisition, Parent will cause Sub to make a tender
offer (as it may be amended from time to time as permitted under this
Agreement, the OFFER) to purchase all the outstanding shares of common
stock, par value $0.01 per share, of the Company (the COMPANY COMMON
STOCK) at a price per share of Company Common Stock of $8.50, net to the
seller in cash (the OFFER PRICE), on the terms and subject to the
conditions set forth in this Agreement;
(C) the respective Boards of Directors of Parent, Sub and the Company have
approved the merger (the MERGER) of Sub into the Company on the terms and
subject to the conditions set forth in this Agreement, whereby each issued
share of Company Common Stock not owned directly by Parent, Sub or the
Company (other than Appraisal Shares, as defined in Section 3.1(d)) shall
be converted into the right to receive an amount in cash equal to the
Offer Price on the terms and subject to the conditions set forth in this
Agreement; and
(D) Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the
Merger and also to prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
subject to the conditions set forth herein, the parties hereto agree as follows:
1. THE OFFER
1.1 THE OFFER
(a) Subject to the conditions of this Agreement, as promptly as
practicable but in no event later than five business days after the
date hereof, Sub shall, and Parent shall cause Sub to, commence the
Offer within the meaning of the applicable rules and regulations of
the Securities and Exchange Commission (the SEC); provided, however,
that the obligation of Sub to, and of Parent to cause Sub to,
commence the Offer and accept for payment, and pay for, any shares
of Company Common Stock tendered pursuant to the Offer is subject to
the conditions set forth in Annex 1 (any or all of which (other than
the Minimum Tender Condition) may, subject to the provisions hereof,
be waived by Parent or Sub, subject to applicable Law). The initial
expiration date of the Offer (the EXPIRATION DATE) shall be the 20th
business day following the commencement of
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the Offer (determined pursuant to Rules 14d-1 and 14d-2 promulgated
by the SEC). Sub expressly reserves the right to modify the terms
and conditions of the Offer, except that, without the prior written
consent of the Company, Sub shall not (i) reduce the number of
shares of Company Common Stock sought to be purchased in the Offer,
(ii) reduce the Offer Price, (iii) reduce or waive the Minimum
Tender Condition (defined in Annex 1), (iv) add to the conditions
set forth in Annex 1, (v) except as provided in the next sentence,
extend the Offer, (vi) change the form of consideration payable in
the Offer or (vii) amend any other condition of the Offer in any
manner adverse to the Company's stockholders. Sub may, without the
consent of the Company, (A) extend the Offer in increments of not
more than ten business days each, if at the scheduled Expiration
Date any of the conditions to Sub's obligation to purchase shares of
Company Common Stock are not satisfied, until such time as such
conditions are satisfied or waived, (B) extend the Offer for any
period required by any rule, regulation, interpretation, position or
request of the SEC or the staff thereof applicable to the Offer and
(C) make available a subsequent offering period (within the meaning
of Rule 14d-11 promulgated by the SEC). Without limiting the right
of Sub to extend the Offer, in the event that any condition set
forth in Annex 1 is not satisfied or waived at the scheduled
Expiration Date, at the request of the Company, Sub shall, and
Parent shall cause Sub to, extend the Expiration Date of the Offer
in increments of five business days each until the earliest to occur
of (v) the date that is 15 days after the initial Expiration Date,
(w) the satisfaction or waiver of such condition, (x) the
determination by Parent that such condition to the Offer is not
capable of being satisfied on or prior to the date specified in
Section 9.1(b)(ii)(B), provided that such inability to satisfy such
condition is not due to any failure of Parent or Sub to perform in
any material respect any covenant or agreement of Parent or Sub
contained herein, or the material breach by Parent or Sub of any
representation or warranty contained herein, (y) the termination of
this Agreement in accordance with its terms and (z) the date
specified in Section 9.1(b)(ii)(B); provided, however, that Parent
and Sub shall not be required to so extend the Expiration Date if
the failure to satisfy any condition set forth in Annex 1 was caused
by or resulted from the failure of the Company to perform in any
material respect any covenant or agreement of the Company contained
herein, or the material breach by the Company of any representation
or warranty contained herein. On the terms and subject to the
conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment shares of Company Common
Stock tendered as soon as it is legally permitted to do so under
applicable Law.
(b) On the date of commencement of the Offer, Sub shall, and Parent
shall cause Sub to, file with the SEC a Tender Offer Statement on
Schedule TO with respect to the Offer, which shall contain an offer
to purchase and a related letter of transmittal and summary
advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the OFFER DOCUMENTS). The Company
shall cooperate fully in the preparation of the Offer Documents and
the Company and its counsel shall be given a reasonable opportunity
to review the Offer Documents before they are filed with the SEC.
Each of Parent, Sub and the Company shall promptly correct any
information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents
and to cause the Offer Documents as so amended or supplemented to be
filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by
applicable Federal securities Law. Parent and Sub shall provide the
Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
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(c) Parent and Sub shall timely file with the Commissioner of Commerce
of the State of Minnesota any registration statement relating to the
Offer required to be filed pursuant to Chapter 80B of the Minnesota
Statutes and shall disseminate to the Company's stockholders via the
Offer Documents the information set forth in any such registration
statement to the extent and within the time period required by
Chapter 80B of the Minnesota Statutes.
1.2 COMPANY ACTIONS
(a) The Company hereby approves of and consents to the Offer, the Merger
and the other matters contemplated by this Agreement (collectively,
the TRANSACTIONS).
(b) On the date the Offer Documents are filed with the SEC and as soon
as practicable on such date after such filing, the Company shall
file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer, including an appropriate
information statement (INFORMATION STATEMENT) under Rule 14f-1 (such
Schedule 14D-9 and Information Statement, as amended or supplemented
from time to time, the SCHEDULE 14D-9) containing the determinations
and recommendations described in Section 4.4(b) and shall mail the
Schedule 14D-9 to all holders of Company Common Stock. Each of
Parent, Sub and their counsel shall be given a reasonable
opportunity to review the Schedule 14D-9 before it is filed with
SEC. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or
misleading in any material respect, and the Company shall take all
steps necessary to amend or supplement the Schedule 14D-9 and to
cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to all Company stockholders, in each
case as and to the extent required by applicable Federal securities
Law. The Company shall provide Parent and its counsel in writing
with any comments the Company or its counsel may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the
names and addresses of the record holders of Company Common Stock as
of the most recent practicable date and of those persons becoming
record holders subsequent to such date, together with copies of all
lists of stockholders, security position listings and computer files
and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall
furnish to Sub such information and assistance (including updated
lists of stockholders, security position listings and computer
files) as Parent or Sub may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of
applicable Law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to
consummate the Transactions, Parent and Sub shall hold in confidence
the information contained in any such labels, listings and files,
shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated in accordance with
Section 9.1, shall, upon written request, deliver, and shall use
their reasonable efforts to cause their affiliates, agents and
advisors to deliver, to the Company all copies of such information
then in their possession.
1.3 DIRECTORS
(a) Promptly upon the acceptance for payment of, and payment by Sub for,
any shares of Company Common Stock pursuant to the Offer, Sub shall
be entitled to designate such number of directors on the Company
Board as will give Sub, subject to compliance with Section 14(f) of
the
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Exchange Act, representation on the Company Board equal to at least
that number of directors, rounded up to the next whole number, that
equals the product of (i) the total number of directors on the
Company Board (giving effect to the directors elected pursuant to
this sentence) multiplied by (ii) the percentage that (A) such
number of shares of Company Common Stock so accepted for payment and
paid for by Sub plus the number of shares of Company Common Stock
otherwise owned by Sub or any other subsidiary of Parent bears to
(B) the number of such shares outstanding, and the Company shall, at
such time, cause Sub's designees to be so elected or appointed to
the Company Board, provided that in the event that Sub's designees
are appointed or elected to the Company Board, until the Effective
Time the Company Board shall have at least three directors who are
members of the Company Board on the date of this Agreement and who
are not officers of the Company (the INDEPENDENT DIRECTORS); and
provided further that, in such event, if the number of Independent
Directors shall be reduced below three for any reason whatsoever,
the remaining Independent Directors shall be entitled to nominate a
person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate two
persons to fill such vacancies who are not officers, employees,
stockholders or affiliates of the Company, Parent or Sub, and such
persons shall be deemed to be Independent Directors for purposes of
this Agreement. Subject to applicable Law, the Company shall take
all action requested by Parent necessary to effect any such election
or appointment, including mailing to its stockholders the
Information Statement containing the information required by Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule
14D-9 (provided that Sub shall have provided to the Company on a
timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company shall promptly, at the
option of Sub, either increase the size of the Company Board or
obtain the resignation of such number of its current directors as is
necessary to enable Sub's designees to be elected or appointed to
the Company Board as provided above. The Company shall also use its
reasonable efforts to cause the Sub's designees to be
proportionately represented on each committee of the Company Board
(other than any committee of the Company Board established to take
action under this Agreement) and each board of directors of each
subsidiary of the Company designated by Sub.
(b) Following the election or appointment of Sub's designees pursuant to
Section 1.3(a) until the Effective Time, the concurrence of a
majority of the Independent Directors shall be required for any
amendment to this Agreement, any termination of this Agreement by
the Company, any extension by the Company of the time for the
performance of any of the obligations of Sub or Parent under this
Agreement (except as expressly permitted hereunder), any
recommendation to stockholders or any modification or withdrawal of
any such recommendation, any retention of counsel or other advisors
in connection with the transactions contemplated hereby, any
required or permitted consent or action by the Company Board
hereunder or any waiver of any of the Company's rights or Parent's
or Sub's obligations under this Agreement.
1.4 TOP-UP OPTION
(a) Subject to the terms and conditions herein, the Company hereby
grants to Parent an irrevocable option (the TOP-UP OPTION) to
purchase up to that number of shares of the Company Common Stock
(the TOP-UP OPTION SHARES) equal to the lowest number of shares of
Company Common Stock that, when added to the number of shares of
Company Common Stock collectively owned by Parent, Sub and any of
their respective affiliates immediately following consummation of
the Offer shall constitute 90% of the shares of Company Common Stock
then outstanding (after giving effect to the issuance of the Top-Up
Option Shares) at a purchase price per Top-Up
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Option Share equal to the Offer Price. Notwithstanding the foregoing
provisions of this Section 1.4(a), the Top-Up Option shall not be
exercisable if the aggregate number of shares issuable upon exercise
of the Top-Up Option, plus the aggregate number of then-outstanding
shares of Company Common Stock, plus the aggregate number of shares
of Company Common Stock issuable upon exercise of all options and
other rights to purchase Company Common Stock, plus the aggregate
number of shares reserved for issuance pursuant to the Company Stock
Plans (as defined in Section 7.4) would exceed the number of
authorized shares of Company Common Stock.
(b) Parent may, at its election, exercise the Top-Up Option, in whole,
but not in part, at any one time after the occurrence of a Top-Up
Exercise Event and prior to the occurrence of a Top-Up Termination
Event.
(i) A TOP-UP EXERCISE EVENT shall occur upon Parent's or Sub's
acceptance for payment pursuant to the Offer (which shall
include, for sake of clarity, any subsequent offering period
that Parent or Sub may elect to extend pursuant to the terms
and conditions of this Agreement) of shares of Company Common
Stock constituting, together with Company Common Stock owned
directly or indirectly by any other affiliates of Parent, at
least 80 percent, but less than 90 percent of the shares of
the Company Common Stock then outstanding.
(ii) The TOP-UP TERMINATION DATE shall occur upon the earliest to
occur of (A) the Effective Time, (B) the termination of this
Agreement, (C) the date that is ten business days after the
occurrence of a Top-Up Exercise Event, unless the Top-Up
Option has been previously exercised in accordance with the
terms and conditions hereof and (D) the date that is ten
business days after the Top-Up Notice Date unless the Top-Up
Closing shall have previously occurred.
(c) If Parent wishes to exercise the Top-Up Option, Parent shall send to
the Company a written notice (a TOP-UP EXERCISE NOTICE, and the date
of receipt of which notice is referred to herein as the TOP-UP
NOTICE DATE) specifying the place for the closing of the purchase
and sale of shares of Company Common Stock pursuant to the Top-Up
Option (the TOP-UP CLOSING) and a date not earlier than one business
day nor later than ten business days after the Top-Up Notice Date
for the Top-Up Closing. The Company shall, promptly after receipt of
the Top-Up Exercise Notice, deliver a written notice to Parent
confirming the number of Top-Up Option Shares and the aggregate
purchase price therefor.
(d) At the Top-Up Closing, subject to the terms and conditions of this
Agreement, (i) the Company shall deliver to Parent a certificate or
certificates evidencing the applicable number of Top-Up Option
Shares, provided that the obligation of the Company to deliver
Top-Up Option Shares upon the exercise of the Top-Up Option is
subject to the condition that no provision of any applicable Law or
Judgment shall prohibit the exercise of the Top-Up Option or the
delivery of the Top-Up Option Shares in respect of any such exercise
and (ii) Parent shall purchase each Top-Up Option Share from the
Company at the Offer Price. Payment by Parent of the purchase price
for the Top-Up Option Shares may be made, at Parent's option, by
delivery of (A) immediately available funds by wire transfer to an
account designated by the Company or (B) a demand note issued by
Parent in customary form that is reasonably acceptable to the
parties and in a principal face amount equal to the aggregate amount
of the cash portion of the purchase price for the Top-Up Option
Shares. Any demand note issued pursuant to the preceding sentence
shall be accompanied by a credit support arrangement reasonably
acceptable to the parties hereto.
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(e) Upon the delivery by Parent to the Company of the Top-Up Exercise
Notice, and the tender of the consideration described in Section
1.4(d), Parent shall be deemed to be the holder of record of the
Top-Up Option Shares issuable upon that exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or
that certificates representing those Top-Up Option Shares shall not
then be actually delivered to Parent or the Company shall have
failed or refused to designate the bank account described in Section
1.4(d).
(f) Certificates evidencing Top-Up Option Shares delivered hereunder may
include legends legally required including a legend in substantially
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
2. THE MERGER
2.1 THE MERGER
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the General Corporation Law of the State of
Delaware (the DGCL), Sub shall be merged with and into the Company at the
Effective Time (as defined below). At the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as
the surviving corporation (the SURVIVING CORPORATION) and shall succeed to
and assume all the rights and obligations of Sub in accordance with the
DGCL.
2.2 CLOSING
The closing of the Merger (the CLOSING) shall take place at 10:00 a.m.,
New York time, on the second business day following the satisfaction or
waiver of the conditions set forth in Article 8 (other than those
conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions), at the offices
of Allen & Overy, 1221 Avenue of the Americas, New York, NY 10020, or at
such other time, date or place as shall be agreed in writing between
Parent and the Company; provided, however, that if all the conditions set
forth in Article 8 shall not have been satisfied or waived on such second
business day, then the Closing shall take place on the first business day
on which all such conditions shall have been satisfied or waived. The date
on which the Closing occurs is referred to in this Agreement as the
CLOSING DATE.
2.3 EFFECTIVE TIME
Prior to the Closing, the Company shall prepare, and on the Closing Date
the Company (or Sub, in the case of a certificate of ownership and merger)
shall file with the Secretary of State of the State of Delaware, a
certificate of merger (or a certificate of ownership and merger, as the
case may be) (the CERTIFICATE OF MERGER) executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with such Secretary
of State, or at such subsequent time as Parent and the Company shall agree
and specify in the Certificate of Merger (the time the Merger becomes
effective being the EFFECTIVE TIME).
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2.4 EFFECTS
The Merger shall have the effects set forth in Section 259 of the DGCL.
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS
(a) At the Effective Time, the certificate of incorporation of the
Company shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein
or by applicable Law.
(b) The by-laws of Sub, as in effect immediately prior to the Effective
Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable
Law.
2.6 DIRECTORS
The directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation until the next annual meeting of
stockholders of the Surviving Corporation (or until their earlier of their
resignation or removal) and until their respective successors are duly
elected and qualified, as the case may be. The Company shall cause all
directors of the Company to resign immediately prior to the Effective
Time.
2.7 OFFICERS
The officers of the Company immediately prior to the Effective Time shall
be the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be.
3. EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES
3.1 EFFECT ON CAPITAL STOCK
At the Effective Time, the following events shall occur by virtue of the
Merger and without any further action on the part of Sub, the Company or
the holders of any securities of the Company or Sub.
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of common
stock of Sub shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share of
Company Common Stock that, immediately prior to the Effective Time,
is owned directly by the Company as treasury stock, or by Parent or
Sub, shall automatically be cancelled and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK.
(i) Subject to Sections 3.1(b) and 3.1(d), each share of Company
Common Stock that is issued and outstanding immediately prior
to the Effective Time shall be converted into the right to
receive an amount in cash equal to the Offer Price, without
interest (the MERGER CONSIDERATION).
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(ii) As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically
be cancelled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time
represented any such shares of Company Common Stock (a
CERTIFICATE) shall cease to have any rights with respect
thereto, except the right to receive Merger Consideration,
without interest, upon surrender of such Certificate in
accordance with Section 3.2.
(d) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to the
contrary, shares (APPRAISAL SHARES) of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and
that are held by any person who is entitled to demand and properly
demands appraisal of such shares pursuant to, and who complies in
all respects with, Section 262 of the DGCL (SECTION 262), shall not
be converted into the right to receive the Merger Consideration as
provided in Section 3.1(c), but instead such holder shall be
entitled to payment of the fair value of such shares in accordance
with Section 262. At the Effective Time, all Appraisal Shares shall
no longer be outstanding and shall automatically be cancelled and
shall cease to exist, and each holder of Appraisal Shares shall
cease to have any rights with respect thereto, except the right to
receive the fair value of such shares in accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any
such holder shall fail to perfect or otherwise shall waive, withdraw
or lose the right to appraisal under Section 262 or if a court of
competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262, then the right of
such holder to be paid the fair value of such holder's Appraisal
Shares under Section 262 shall cease and each such Appraisal Share
shall be deemed to have been converted as of the Effective Time
into, and to have become, the right to receive Merger Consideration
without interest as provided in Section 3.1(c). The Company shall
provide prompt notice to Parent of any demands for appraisal of any
shares of Company Common Stock pursuant to Section 262, and Parent
shall have the right to participate in and direct all negotiations
and proceedings with respect to such demands. Prior to the Effective
Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to
settle, any such demands, or agree to do any of the foregoing.
3.2 EXCHANGE OF CERTIFICATES
(a) PAYING AGENT. Prior to the Effective Time, Parent shall designate a
bank or trust company reasonably satisfactory to the Company to act
as agent for the payment of the Merger Consideration (the PAYING
AGENT). From time to time after the Effective Time, Parent shall
provide, or cause the Surviving Corporation to provide, to the
Paying Agent funds in amounts and at the times necessary for the
payment of the Merger Consideration pursuant to Section 3.1(c) upon
surrender of Certificates, it being understood that any and all
interest or income earned on funds made available to the Paying
Agent pursuant to this Agreement shall be turned over to Parent
(such funds being hereinafter referred to as the EXCHANGE FUND).
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record
of a Certificate (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and shall be in customary form and
have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of a
Certificate in exchange for the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly completed, validly executed and
authenticated, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash into
which the shares formerly represented
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by such Certificate shall have been converted pursuant to Section
3.1(c), and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the stock transfer books of the
Company, the proper amount of cash may be paid in exchange therefor
to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the cash
payable upon surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash paid
upon the surrender of a Certificate in accordance with the terms of
this Article 3 shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company
Common Stock formerly represented by such Certificate. At the close
of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for transfer or any other reason,
they shall be cancelled and exchanged as provided in this Article 3.
(d) NO LIABILITY. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar Law.
(e) LOST CERTIFICATES. If any Certificate shall have been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen, defaced
or destroyed and, if required by Parent, the posting by such person
of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against the Surviving
Corporation with respect to such Certificate, the Paying Agent shall
pay in respect of such lost, stolen, defaced or destroyed
Certificate the Merger Consideration with respect to each share of
Company Common Stock formerly represented by such Certificate.
(f) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold any applicable taxes
from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock. To the extent that
amounts are so deducted and withheld and paid over to the
appropriate taxing authority by Parent, the Surviving Corporation or
the Paying Agent, such deducted and withheld amounts shall be
treated for all purposes of this Agreement as having been paid to
the stockholder in respect of which such deduction and withholding
was made by Parent, the Surviving Corporation or the Paying Agent.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon
demand, and any holder of a Certificate who has not theretofore
complied with this Article 3 shall thereafter look only to Parent,
as general unsecured creditors thereof, for payment of its claim for
Merger Consideration.
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered to Parent and Sub
contemporaneously with the execution of this Agreement (the COMPANY
DISCLOSURE SCHEDULE), the Company represents and warrants to Parent and
Sub as follows:
4.1 ORGANIZATION, STANDING AND POWER
The Company and each of its subsidiaries (the COMPANY SUBSIDIARIES) is a
corporation or other legal entity duly organized, validly existing and in
good standing (with respect to jurisdictions that recognize such concept)
under the Law of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority
necessary to enable it to own, lease or otherwise hold its properties and
assets and to conduct its businesses as currently conducted. The Company
and each of the Company Subsidiaries is duly qualified to do business in
each jurisdiction where the nature of its businesses or its ownership or
leasing of properties make such qualification necessary except where the
failure to so qualify has not had and would not reasonably be expected to
have a material adverse effect (as defined in Section 10.3) on the Company
and the Company Subsidiaries taken as a whole (a COMPANY MATERIAL ADVERSE
EFFECT). The Company has delivered to Parent true and complete copies of
the certificate of incorporation of the Company, as amended to the date of
this Agreement (as so amended, the COMPANY CHARTER), and the by-laws of
the Company, as amended to the date of this Agreement (as so amended, the
COMPANY BY-LAWS), and the comparable charter and organizational documents
of each of the Company Subsidiaries, in each case as amended through the
date of this Agreement. Neither the Company nor any Company Subsidiary is
in default or violation of any term, provision or condition of any
document referred to in the preceding sentence.
4.2 COMPANY SUBSIDIARIES; EQUITY INTERESTS
(a) Section 4.2(a) of the Company Disclosure Schedule lists each of the
Company Subsidiaries and its jurisdiction of organization. All the
outstanding shares of capital stock of, or other ownership interests
in, each of the Company Subsidiaries have been validly issued and
are fully paid and nonassessable and are owned by the Company, by
another Company Subsidiary or by the Company and another Company
Subsidiary, free and clear of all pledges, claims, liens, charges,
mortgages, encumbrances and security interests of any kind or nature
whatsoever (including any restriction on the right to vote, sell,
transfer, pledge or otherwise dispose of capital stock or other
ownership interests) (collectively, LIENS).
(b) Except for its interests in the Company Subsidiaries, the Company
does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other
equity or ownership interest in any person.
4.3 CAPITAL STRUCTURE
(a) The authorized capital stock of the Company consists of 150,000,000
shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $0.01 per share (COMPANY PREFERRED STOCK). At the
close of business on February 25, 2005 (i) 56,117,640 shares of
Company Common Stock were issued and outstanding, (ii) no shares of
Company Common Stock were held by the Company in its treasury, (iii)
110,913 shares of Company Common Stock were subject to issuance upon
exercise of Company Stock Options (as defined in Section 7.4) under
the Company's 1999 Employee Stock Purchase Plan at a weighted
average exercise price of $4.6325 per share, (iv) 8,004,358 shares
of Company Common Stock were subject to issuance upon exercise of
Company Stock Options under the Company's 1999 Equity
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Incentive Plan at a weighted average exercise price of $10.5900 per
share, (v) 295,000 shares of Company Common Stock were subject to
issuance upon exercise of Company Stock Options under the Company's
1999 Director Stock Option Plan at a weighted average exercise price
of $12.4510 per share, (vi) 1,208,325 shares of Company Common Stock
were subject to issuance upon exercise of Company Stock Options
under the Hightouch Technologies, Inc. 1999 Stock Option Plan at a
weighted average exercise price of $5.9861 per share, (vii)
5,896,126 additional shares of Company Common Stock were reserved
for issuance pursuant to the Company Stock Plans and (viii) no
shares of Company Preferred Stock were issued. Except as set forth
above and except for the shares of Company Common Stock reserved for
issuance upon the exercise of the Top-Up Option, at the close of
business on the date of this Agreement, no shares of capital stock
or other voting securities of the Company were issued, reserved for
issuance or outstanding. There are no outstanding Company SARs (as
defined in Section 7.4). All outstanding shares of Company capital
stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the Company Charter, the Company
By-laws or any contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a
CONTRACT) to which the Company or any Company Subsidiary is a party
or otherwise bound. There are not any bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of Company Common Stock may
vote (VOTING COMPANY DEBT). Except as set forth above, as of the
date of this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights,
stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to
which the Company or any Company Subsidiary is a party or by which
any of them is bound (x) obligating the Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other
equity interests in, or any security convertible or exercisable for
or exchangeable into any capital stock of or other equity interest
in, the Company or any Company Subsidiary or any Voting Company
Debt, (y) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right,
security, unit, commitment, Contract, arrangement or undertaking or
(z) that give any person the right to receive any economic benefit
or right similar to or derived from the economic benefits and rights
accruing to holders of Company capital stock. As of the date of this
Agreement, there are not any outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary. No person is entitled to registration rights
with respect to any shares of capital stock of the Company. Except
as contemplated in connection with the execution of this Agreement,
there are no stockholder agreements, voting trusts or other
agreements, Contracts or understandings to which the Company or any
Company Subsidiary is a party or to which it is bound relating to
the voting of any shares of capital stock of the Company or any
Company Subsidiary.
(b) The Company Board (as defined below) or a committee administering
the Company Stock Plans has the power and authority to adjust the
terms of all outstanding Company Stock Options and all outstanding
Company SARs granted under any Company Stock Plan, by resolution or
other action, to provide that each such Company Stock Option and
Company SAR outstanding immediately prior to the Effective Time
shall be cancelled in accordance with Section 7.4, with the holder
thereof becoming entitled to receive the amount of cash specified in
Section 7.4. Such cancellation of Company Stock Options and Company
SARs in exchange for the cash
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payments described in Section 7.4 will extinguish any and all rights
the holders of such Company Stock Options and Company SARs had or
may have had in respect thereof. No consents of the holders of the
Company Stock Options or Company SARs are necessary to effectuate
the foregoing. The Company Board or a committee administering the
Company Stock Plans has the power and authority to cause (i) the
Company Stock Plans to terminate as of the Effective Time and (ii)
the provisions in any other Company Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or
any interest in respect of any capital stock of the Company to be
deleted as of the Effective Time. Following the Effective Time no
holder of a Company Stock Option or Company SAR or any participant
in any Company Stock Plan or other Company Benefit Plan will have
any right thereunder to acquire any capital stock of the Company or
the Surviving Corporation.
4.4 AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY
(a) The Company has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the
Transactions. The execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate
and stockholder action on the part of the Company, subject, in the
case of the Merger, to receipt of the Company Stockholder Approval
if required by applicable Law. The Company has duly executed and
delivered this Agreement and this Agreement constitutes its legal,
valid and binding obligation, enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and other similar Laws
affecting creditors' rights generally and by general principles of
equity.
(b) The Board of Directors of the Company (the COMPANY BOARD), at a
meeting duly called and held at which directors of the Company
constituting a quorum were present, duly and unanimously adopted
resolutions (i) approving and declaring advisable this Agreement,
the Offer, the Merger and the other Transactions, (ii) determining
that the terms of the Offer, the Merger and the other Transactions
are fair to and in the best interests of the Company and its
stockholders, (iii) recommending that the holders of Company Common
Stock accept the Offer and tender their shares of Company Common
Stock pursuant to the Offer, (iv) directing that, if required by the
DGCL, this Agreement be submitted to a vote at a meeting of the
Company's stockholders and (v) recommending that, if required by the
DGCL, the Company's stockholders adopt this Agreement. Such
resolutions are sufficient to render the restrictions on "business
combinations" (as defined in Section 203 of the DGCL) of Section 203
of the DGCL inapplicable to Parent and Sub and this Agreement, the
Offer, the Merger and the other Transactions. Other than Section 203
of the DGCL and Chapter 80B of the Minnesota Statutes, no state
takeover statute or similar statute or regulation applies to the
Company or any Company Subsidiary with respect to this Agreement,
the Offer, the Merger or any other Transaction.
(c) The Company has been advised by each of its directors and executive
officers (which executive officers are, to the knowledge of the
Company, aware of the Transactions as of the date hereof) that each
such person intends to tender and sell all shares of Company Common
Stock owned by such person in the Offer, except to the extent of any
restrictions created by Section 16(b) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder (the EXCHANGE ACT) and otherwise intends to support the
consummation of the Transactions.
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4.5 NO CONFLICTS; CONSENTS
(a) The execution, delivery and performance by the Company of this
Agreement do not, and the consummation of the Offer, the Merger and
the other Transactions and compliance with the terms of this
Agreement will not, conflict with, or result in any violation or
breach of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in
the creation of any Lien upon any of the properties or assets of the
Company or any Company Subsidiary under, any provision of (i) the
Company Charter, the Company By-laws or the comparable charter or
organizational documents of any Company Subsidiary, (ii) any
Contract to which the Company or any Company Subsidiary is a party
or by which any of their respective properties or assets is bound or
(iii) subject to the filings and other matters referred to in
Section 4.5(b), any judgment, injunction, order or decree (JUDGMENT)
or statute, law (including common law), ordinance, rule,
legislation, interpretation or regulation (LAW) applicable to the
Company or any Company Subsidiary or their respective properties or
assets, except in the case of clauses (ii) and (iii) above, for such
matters that individually or in the aggregate have not had and would
not reasonably be expected to have a Company Material Adverse Effect
or result in a liability to the Company and the Company
Subsidiaries, taken as a whole, in excess of $5,000,000.
(b) No consent, approval, license, permit, order or authorization
(CONSENT) of, or registration, declaration or filing with, or Permit
from, any Federal, state, local or foreign government or any court
of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic, foreign
or supranational (a GOVERNMENTAL ENTITY), or termination or
expiration of any waiting period under applicable Law, is required
to be obtained or made by or with respect to the Company or any
Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the
Transactions, other than: (i) compliance with and filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the HSR ACT) and all other applicable competition and antitrust
Laws, if any, including under the German Federal Cartel Office; (ii)
the filing with the SEC of (A) the Schedule 14D-9, (B) a proxy or
information statement relating to the adoption of this Agreement by
the Company's stockholders (the PROXY STATEMENT), if such adoption
is required by Law, (C) the Information Statement and (D) such
reports under Section 13 of the Exchange Act, as may be required in
connection with this Agreement, the Offer, the Merger and the other
Transactions; (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of the other jurisdictions
in which the Company is qualified to do business; (iv) compliance
with and such filings as may be required under applicable
Environmental Laws; (v) such filings as may be required in
connection with the taxes described in Section 7.8 and (vi) such
filings as may be required under Chapter 80B of the Minnesota
Statutes.
4.6 SEC DOCUMENTS; UNDISCLOSED LIABILITIES
(a) The Company has filed all reports, schedules, forms, statements and
other documents required to be filed by the Company with the SEC
since December 31, 2002 (together with all information incorporated
therein by reference, the SEC DOCUMENTS). As of its respective date,
each SEC Document complied in all material respects with the
requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the SECURITIES ACT),
the Exchange Act and the Sarbanes-Oxley Act of 2002, and the rules
and regulations promulgated thereunder (SOX), in each case,
applicable to such SEC Document, and none of the SEC
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Documents contained any untrue statement of a material fact or
omitted a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to
the extent that information contained in any SEC Document has been
duly revised or superseded by a later-filed SEC Document filed and
publicly available prior to February 24, 2005 (a FILED SEC
DOCUMENT), none of the SEC Documents contains any untrue statement
of a material fact or omits any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. As of their respective dates of filing with the SEC, the
consolidated financial statements (including the related notes) of
the Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted accounting
principles in the United States (GAAP) (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto). Such consolidated financial
statements fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for
the periods then ended. None of the Company Subsidiaries is, or has
at any time been, subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act.
(b) Except as set forth on the face of, or expressly identified in the
notes to, the most recent balance sheet of the Company included in
the Filed SEC Documents, neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required under GAAP to
be set forth on such balance sheet or in such notes thereto that
individually or in the aggregate have had or would reasonably be
expected to have a Company Material Adverse Effect.
(c) Each of the Company and its senior financial officers has consulted
with the Company's independent auditors and with the Company's
outside counsel with respect to, and (to the extent applicable to
the Company) is familiar in all material respects with, the
requirements of SOX as in existence on the date hereof. The Company
is, and has been, in compliance in all material respects with the
provisions of SOX applicable to it.
(d) Each of the principal executive officer of the Company and the
principal financial officer of the Company has made all
certifications required by Rule 13a-14 or 15d-14 under the Exchange
Act and Sections 302 and 906 of SOX with respect to the SEC
Documents, and the statements contained in such certifications are
accurate in all material respects as of the date hereof. For
purposes of this Agreement, "principal executive officer" and
"principal financial officer" shall have the meanings given to such
terms in SOX. Neither the Company nor any Company Subsidiary has
outstanding, or has arranged any outstanding, "extensions of credit"
to directors or executive officers within the meaning of Section 402
of SOX.
(e) Neither the Company nor Company Subsidiary is a party to, or has any
commitment to become a party to, any joint venture, off-balance
sheet partnership or any similar Contract (including any Contract
relating to any transaction or relationship between or among the
Company and any Company Subsidiary, on the one hand, and any
unconsolidated affiliate, including any structured finance, special
purpose or limited purpose entity or person, on the other hand or
any "off-balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K of the SEC)), where the result, purpose or effect of
such Contract is to avoid disclosure of any material transaction
involving, or material liabilities of, the Company or any Company
Subsidiary in the
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Company's or such Company Subsidiary's published financial
statements or other SEC Documents.
(f) The books, records and accounts of the Company, all of which have
been made available to Parent upon Parent's request, are complete
and correct in all material respects.
(g) The Company's system of internal controls over financial reporting
are reasonably sufficient in all material respects to provide
reasonable assurance (i) that transactions are recorded as necessary
to permit preparation of financial statements in conformity with
GAAP, (ii) that receipts and expenditures are executed only in
accordance with the authorization of management and (iii) regarding
prevention or timely detection of the unauthorized acquisition, use
or disposition of the Company's assets that would materially affect
the Company's financial statements. No significant deficiency or
material weakness was identified in management's assessment of
internal controls as of December 31, 2004 (nor has any such
deficiency or weakness since been identified) and, to management's
knowledge and belief, the Company's external auditors are in a
position to deliver an attestation without qualification of
management's internal control report to be included in the Company's
Form 10-K filing for the period ended December 31, 2004.
(h) The Company's "disclosure controls and procedures" (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
designed to ensure that (i) all information (both financial and
non-financial) required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified
in the rules and forms of the SEC and (ii) all such information is
accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure
and to make the certifications of the principal executive officer
and principal financial officer of the Company required under the
Exchange Act with respect to such reports.
(i) Since the date of this Agreement, neither the chief executive
officer nor the chief financial officer of the Company has become
aware of any fact or circumstance that is reasonably likely to
result in a substantial change to the Company's internal controls
over financial reporting.
(j) Since the date of the most recent Filed SEC Report, neither the
chief executive officer nor the chief financial officer of the
Company has become aware of any fact, circumstance or change that is
reasonably likely to result in a "material weakness" in the
Company's internal controls over financial reporting.
(k) The audit committee of the Board of Directors of the Company
includes an Audit Committee Financial Expert, as defined by Item
401(h)(2) of Regulation S K.
(l) The Company has adopted a code of ethics, as defined by Item 406(b)
of Regulation S-K, for senior financial officers, applicable to its
principal financial officer, comptroller or principal accounting
officer, or persons performing similar functions. The Company has
promptly disclosed, by filing a Form 8-K, any change in or waiver of
the Company's code of ethics, as required by Section 406(b) of SOX.
To the knowledge of the Company, there have been no violations of
provisions of the Company's code of ethics.
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4.7 INFORMATION SUPPLIED
None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (a) the Offer Documents, the
Schedule 14D-9 or the Information Statement will, at the time such
document is filed with the SEC, at any time it is amended or supplemented
or at the time it is first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (b) the Proxy Statement will, at
the date it is first mailed to the Company's stockholders or at the time
of the Company Stockholders Meeting (defined in Section 7.1(b)), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by the Company pursuant to this
Section 4.7 with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub for inclusion or
incorporation by reference therein.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as disclosed in the Filed SEC Documents, since the date of the most
recent audited financial statements included in the Filed SEC Documents,
each of the Company and the Company Subsidiaries has conducted its
business in the ordinary course of business and there has not been:
(a) any event, change or development that, individually or in the
aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect;
(b) (i) any declaration, setting aside or payment of any dividend on, or
other distribution (whether in cash, stock, property or otherwise)
in respect of, any capital stock of the Company or any Company
Subsidiary, other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent or
(ii) any repurchase, redemption or other acquisition by the Company
or any Company Subsidiary of any capital stock or other equity
securities of, or other ownership interests in, the Company or any
Company Subsidiary or any other securities thereof or any rights,
options, warrants or calls to acquire any such shares or other
securities;
(c) any split, combination or reclassification of any capital stock of
the Company or any Company Subsidiary or any issuance of, or the
authorization of any issuance of, any other securities in respect
of, in lieu of or in substitution for, shares of capital stock of
the Company or any Company Subsidiary;
(d) (i) any granting by the Company or any Company Subsidiary to any
current or former director, officer or employee of the Company or
any Company Subsidiary of any increase in compensation or pay any
bonus, except for increases of cash compensation in the ordinary
course of business to the extent required under employment
agreements (or in the case of any employee not covered by an
employment agreement to the extent granted in accordance with the
Company's employment compensation policies) in each case in effect
as of the date of the most recent audited financial statements
included in the Filed SEC Documents, (ii) any granting by the
Company or any Company Subsidiary to any such current or former
director, officer or employee of any increase in severance or
termination pay, except to the extent required under any agreement
(or in the case of any employee not covered by an employment
agreement to the extent granted in accordance with the Company's
employment compensation policies) in each
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case in effect as of the date of the most recent audited financial
statements included in the Filed SEC Documents or (iii) any
amendment or modification to any Company Stock Option;
(e) any change in financial or tax accounting methods, principles or
practices by the Company or any Company Subsidiary except insofar as
may have been required by a change in GAAP or Law;
(f) any material Tax election by the Company or any Company Subsidiary
or settlement or compromise by the Company or any Company Subsidiary
of any material Tax liability or refund;
(g) any amendment of any term of any outstanding security of the Company
or any Company Subsidiary that would increase the obligations of the
Company or such Company Subsidiary under such security;
(h) any incurrence, assumption or guarantee by the Company or any
Company Subsidiary of any indebtedness for borrowed money other than
in the ordinary course of business;
(i) any creation or assumption by the Company or any Company Subsidiary
of any Lien on any asset of the Company or any Company Subsidiary
other than in the ordinary course of business;
(j) any making of any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any
direct or indirect wholly-owned subsidiary of the Company;
(k) (i) any direct or indirect acquisition by the Company or any Company
Subsidiary, or agreement to acquire, by merging or consolidating
with, or by purchasing or by any other manner, any equity interest
in, business of or any substantial portion of the assets of, any
person or any acquisition by the Company or any Company Subsidiary
of any assets that are material to the Company and the Company
Subsidiaries, (ii) any sale, lease, license, Lien or other
disposition of any intellectual property or other material assets of
the Company or any Company Subsidiary, other than sales and licenses
of products to customers in the ordinary course of business, (iii)
any incurrence or agreement to incur any new capital expenditures by
the Company or any Company Subsidiary that are in excess of
$1,000,000 in any calendar quarter or (iv) any assignment,
termination or relinquishment by the Company or any Company
Subsidiary of any contract, license or other right with a value in
excess of $250,000;
(l) any other transaction, Contract or commitment of the Company or any
Company Subsidiary other than in the ordinary course of business and
on an arm's length basis; or
(m) any authorization, commitment or agreement to take any action
referred to in Sections 4.8(a) through 4.8(l).
4.9 TAXES
(a) The Company and the Company Subsidiaries have timely filed or caused
to be filed with the appropriate Tax or governmental authority all
material Tax Returns required to be filed by them and all such Tax
Returns are true, correct and complete in all material respects. The
Company and the Company Subsidiaries have timely paid or caused to
be paid all material Taxes due with respect to the taxable periods
covered by such Tax Returns and all other Taxes otherwise due and
payable, and the most recent financial statements included in the
Filed SEC Documents
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reflect an adequate reserve (including any reserve for deferred
Taxes) for all Taxes not yet due but that are payable for periods or
portions thereof accrued through the date of such financial
statements.
(b) There is no written claim or notice of deficiency, audit
examination, refund litigation, proposed adjustment or matter in
controversy with any Tax authority with respect to any Taxes of the
Company or any Company Subsidiary whether or not with respect to a
Tax Return filed by the Company or any Company Subsidiary. No claim
has been made by any Tax authority in a jurisdiction where the
Company or any Company Subsidiary does not file Tax Returns that it
is or may be subject to Taxation by that jurisdiction.
(c) No Liens for Taxes exist with respect to any of the assets or
properties of the Company or any Company Subsidiary except for
statutory Liens for Taxes not yet due or payable.
(d) Neither the Company nor any Company Subsidiary is a party to any
written (i) Tax sharing agreement or similar agreement, arrangement
or practice (including any liability for Taxes of any other Person
under Treasury Regulation 1.1502-6 or comparable provision of
foreign, state or local Law) with any party other than the Company
or any Company Subsidiary or (ii) tax indemnity obligation or
similar agreement, arrangement or practice (including any liability
for Taxes of any other Person under Treasury Regulation 1.1502-6 or
comparable provision of foreign, state or local Law) other than with
respect to the Company or any Company Subsidiary. Neither the
Company nor any Company Subsidiary is liable for Taxes of any other
Person other than the Company or any Company Subsidiary as
transferee or otherwise and whether by contract or otherwise.
(e) There is no currently effective agreement or other document
extending the period of limitation on assessment or collection of
any Taxes, and no power of attorney with respect to any Taxes has
been executed or filed with any taxing authority by or on behalf of
the Company or any Company Subsidiary.
(f) The Company and each Company Subsidiary has, within the time and the
manner prescribed by Law, withheld from and paid over to the proper
Tax or governmental authorities all amounts required to be withheld
and paid over under applicable Law (including withholding of Taxes
pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or
similar provisions under any state, local or foreign Laws).
(g) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code in the two-year period ending on the date of
this Agreement (or will constitute such a corporation in the
two-year period ending on the Effective Time).
(h) For purposes of this Agreement:
(i) TAX or TAXES (and with correlative meaning, TAXATION) means
any and all taxes, charges, fees, levies, tariffs, duties,
liabilities, impositions or other assessments of any kinds
(together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto)
imposed by any tax or governmental authority, including
income, gross receipts, profits, alternative minimum tax,
gaming, excise, real or personal property, environmental,
sales, use, value-added, ad valorem, withholding, national
insurance and social security, customs, excise and import
duties, retirement,
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employment, unemployment, workers' compensation, occupation,
service, license, net worth, capital stock, payroll,
franchise, gains, stamp, transfer and recording taxes.
(ii) TAX RETURN means any return, declaration, report, document,
claim for refund, estimate, information return or other
statement or information required to be filed or supplied to
any Tax or governmental authority with respect to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
4.10 ABSENCE OF CHANGES IN BENEFIT PLANS
(a) Except as disclosed in the Filed SEC Documents, since December 1,
2003 there has not been any adoption or amendment in any material
respect by the Company or any Company Subsidiary of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, thrift, savings,
stock bonus, restricted stock, cafeteria, paid time off, perquisite,
fringe benefit, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current
or former employee, officer or director of the Company or any
Company Subsidiary (collectively, COMPANY BENEFIT PLANS).
(b) Except as disclosed in the Filed SEC Documents, there are not any
employment, consulting, deferred compensation, indemnification,
severance or termination agreements or arrangements between the
Company or any Company Subsidiary and any current or former
employee, officer or director of the Company or any Company
Subsidiary (collectively, COMPANY BENEFIT AGREEMENTS).
(c) Except as disclosed in the Filed SEC Documents, since December 1,
2003 there has not been any action to accelerate any rights or
benefits, any action to fund or in any other way secure the payment
of compensation or benefits under any Company Benefit Agreement or
Company Benefit Plan, or any material determinations not in the
ordinary course of business, under any collective bargaining
agreement or Company Benefit Plan or Company Benefit Agreement.
4.11 ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS
(a) Section 4.11(a)(i) of the Company Disclosure Schedule sets forth a
complete and accurate list and brief description of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended (ERISA))
(sometimes referred to herein as COMPANY PENSION PLANS), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
other Company Benefit Plans and Company Benefit Agreements
(including in such description the number of participants in each
such plan and the cost to the Company to maintain each such plan),
each as of the date hereof maintained, or contributed to, by the
Company or any Company Subsidiary, or to which the Company or any
Company Subsidiary is a party, for the benefit of any current or
former employees, officers or directors of the Company or any
Company Subsidiary. The Company has made available to Parent true,
complete and correct copies of (i) each Company Benefit Plan and
Company Benefit Agreement (or, in the case of any unwritten Company
Benefit Plan or Company Benefit Agreement a description thereof),
(ii) the three most recent annual reports on Form 5500 filed with
the Department of Labor with respect to each Company Benefit Plan
(if any such report was required), as well as copies of all other
filings made with the Internal Revenue Service, the Department of
Labor and the Pension Benefit Guaranty Corporation for each Company
Benefit Plan's most recent three plan years, (iii) the most recent
summary plan description for each
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Company Benefit Plan for which such summary plan description is
required and (iv) each trust agreement and insurance, group annuity
and any other material contract relating to any Company Benefit
Plan.
(b) All Company Pension Plans that are intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
CODE) have received favorable determination letters from the
Internal Revenue Service with respect to TRA (as defined in Section
I of Rev. Proc. 93-39), to the effect that such Company Pension
Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the knowledge of the
Company, has revocation been threatened, nor has any such Company
Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that
would adversely affect its qualification or materially increase its
costs.
(c) With respect to all Company Benefit Plans, the reporting, disclosure
and other requirements of ERISA and the Code, as applicable, have
been fulfilled in all material respects.
(d) There are no pending or, to the knowledge of the Company, threatened
claims, investigations, proceedings, suits, litigation or other
actions by, on behalf of, against, or otherwise affecting, involving
or in any way relating to any of the Company Benefit Plans or the
Company Benefit Arrangements, and, to the knowledge of the Company,
there are no facts or set of circumstances to the knowledge of the
Company that has resulted in or would result in any such claims,
investigations, proceedings, suits, litigation or actions.
(e) No Company Pension Plan is subject to Title IV of ERISA or the
minimum funding requirements of Section 302 of ERISA or Section 412
of the Code, and neither the Company nor any Company Subsidiary or
any of their respective affiliates have any actual or contingent
liability under any plan (whether or not currently sponsored,
maintained or contributed to by any such entity) that is or was
subject to such provisions of ERISA or the Code.
(f) None of the Company, any Company Subsidiary, any officer of the
Company or any Company Subsidiary or any of the Company Benefit
Plans which are subject to ERISA, including the Company Pension
Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that would subject the Company,
any Company Subsidiary or any officer of the Company or any Company
Subsidiary to the tax or penalty on prohibited transactions imposed
by such Section 4975 or to any liability under Section 502(i) or
502(1) of ERISA.
(g) All contributions and premiums required to be made under the terms
of any Company Benefit Plan as of the date hereof have been timely
made or have been reflected on the most recent consolidated balance
sheet filed or incorporated by reference in the Filed SEC Documents.
(h) No Company Pension Plan is a multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA (a COMPANY MULTIEMPLOYER PENSION
PLAN), and neither the Company nor any Company Subsidiary has any
actual or contingent liability under any former Company
Multiemployer Pension Plan.
(i) With respect to any Company Benefit Plan that is an employee welfare
benefit plan, (i) no such Company Benefit Plan is funded through a
"welfare benefit fund" (as defined in
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Section 419(e) of the Code), (ii) each such Company Benefit Plan
that is a "group health plan" (as defined in Section 5000(b)(1) of
the Code) complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code and (iii) each such
Company Benefit Plan (including any such Plan covering retirees or
other former employees) may be amended or terminated without
material liability to the Company and the Company Subsidiaries on or
at any time after the Effective Time.
(j) Neither the Company nor any Company Subsidiary have any obligations
for retiree health and life benefits under any Company Benefit Plan
or Company Benefit Agreement.
(k) Except with respect to accelerated vesting of Company Stock Options
under the Company Stock Plans (excluding the Retek Inc. 1999
Employee Stock Purchase Plan (the COMPANY ESPP)), the consummation
of the Offer, the Merger or any other Transaction will not (i)
entitle any employee, officer or director of the Company or any
Company Subsidiary to severance pay, (ii) accelerate the time of
payment or vesting or trigger any payment or funding (through a
grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation
pursuant to, any of the Company Benefit Plans or Company Benefit
Agreements or (iii) result in any breach or violation of, or a
default under, any of the Company Benefit Plans or Company Benefit
Agreements.
(l) Other than payments that may be made to the persons listed in the
Company Disclosure Schedule (the PRIMARY COMPANY EXECUTIVES), any
amount or economic benefit that would be received (whether in cash
or property or the vesting of property) as a result of the Offer,
the Merger or any other Transaction (including as a result of
termination of employment on or following the Effective Time) by any
employee, officer or director of the Company or any of its
affiliates who is a "disqualified individual" (as defined in
proposed Treasury Regulation Section 1.280G-1) under any Company
Benefit Plan or Company Benefit Agreement or otherwise would not be
characterized as an "excess parachute payment" (as defined in
Section 280G(b)(1) of the Code), and no disqualified individual is
entitled to receive any additional payment from the Company or any
Company Subsidiary or any other person in the event that the excise
tax under Section 4999 of the Code is imposed on such disqualified
individual. Set forth in the Company Disclosure Schedule are (i) the
estimated maximum amount that would be paid to each Primary Company
Executive as a result of the Offer, the Merger and the other
Transactions under all Company Benefit Plans and Company Benefit
Agreements and (ii) the "base amount" (as defined in Section
280G(b)(3) of the Code) for each Primary Company Executive
calculated as of the date of this Agreement.
4.12 LITIGATION
(a) There is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or
affecting, the Company or any Company Subsidiary or any of their
respective businesses or assets or any of the directors or employees
of the Company or any Company Subsidiary or, to the knowledge of the
Company, its stockholders or representatives (in each case insofar
as any such matters relate to their activities with the Company or
any Company Subsidiary) at law or in equity, or before any
Governmental Entity, arbitrator or arbitration panel that
individually or in the aggregate would reasonably be expected to
have a Company Material Adverse Effect or result in a liability to
the Company or any Company Subsidiary, taken as a whole, in excess
of $5,000,000. Neither the Company nor any Company Subsidiary is
subject to any outstanding Judgment against the Company or any
Company Subsidiary or naming the Company or any Company Subsidiary
as a party or by which any of the employees or representatives of
the Company or any Company Subsidiary is prohibited or restricted
from engaging in or otherwise conducting the business of the Company
or any
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Company Subsidiary as presently conducted that, individually or in
the aggregate, would reasonably be expected to have a Company
Material Adverse Effect or result in a liability to the Company or
any Company Subsidiary taken as a whole, in excess of $5,000,000.
Section 4.12(a) of the Company Disclosure Schedule shall include a
complete and accurate summary of each suit, claim, action,
proceeding, investigation and Judgment set forth therein, together
with a summary of its status as well as the damages or other relief
sought or imposed thereby.
(b) There is no investigation or review by any Governmental Entity or
self-regulatory authority with respect to the Company or any Company
Subsidiary (excluding investigations and reviews of Intellectual
Property applications by the Intellectual Property offices of a
Governmental Entity) or any of their respective employees (insofar
as any such investigation or review relates to their activities with
the Company or any Company Subsidiary) actually pending or, to the
knowledge of the Company, threatened, nor has any Governmental
Entity or self-regulatory authority indicated to the Company or any
Company Subsidiary in writing or, to the knowledge of the Company,
verbally, an intention to conduct the same.
4.13 COMPLIANCE WITH APPLICABLE LAW
(a) Except as disclosed in the Filed SEC Documents, the Company and the
Company Subsidiaries and their personnel and operations are, and
since January 1, 2003 have been, in compliance in all material
respects with all material Laws applicable to the Company or any
Company Subsidiary. Except as disclosed in the Filed SEC Documents,
neither the Company nor any Company Subsidiary has received any
written notice since January 1, 2003 (i) of any administrative,
civil or criminal investigation or audit (other than Tax audits) by
any Governmental Entity relating to the Company or any Company
Subsidiary or (ii) from any Governmental Entity alleging that the
Company or a Company Subsidiary is not in compliance in any material
respect with any applicable Law.
(b) Each of the Company and the Company Subsidiaries has in effect all
approvals, authorizations, certificates, filings, franchises,
licenses, variances, exemptions, notices, permits and rights of or
with all Governmental Entities (PERMITS) necessary for it to own,
lease or otherwise hold and to operate its properties and assets and
to carry on its businesses and operations as now conducted, except
for the failure to have such Permits that, individually and in the
aggregate, have not had and would not reasonably be expected to have
a Company Material Adverse Effect. There have occurred no defaults
(with or without notice or lapse of time or both) under violations
of, or event giving to others any right of termination, amendment or
cancellation of, with or without notice or lapse of time or both,
any such Permit, except for such defaults, violations and events
that, individually and in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect.
Neither the Offer nor the Merger, in and of itself, would reasonably
be expected to cause the revocation or cancellation (with or without
notice or lapse of time or both) of any such Permit that
individually or in the aggregate would reasonably be expected to
have a Company Material Adverse Effect.
4.14 ENVIRONMENTAL MATTERS
(a) Except for such matters that individually and in the aggregate have
not had and would not reasonably be expected to have a Company
Material Adverse Effect: (i) each of the Company and the Company
Subsidiaries is and has been in compliance with all applicable
Environmental Laws and possesses and is and has been in compliance
with all required Environmental Permits; (ii) there are no
Environmental Claims (as defined below) pending or, to the knowledge
of the
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Company, threatened against the Company or any Company Subsidiary
and (iii) none of the Company, any Company Subsidiary or any of
their predecessors has caused any releases or threatened releases of
Hazardous Materials at any property currently or formed owned or
operated by the Company, any Company Subsidiary or any of their
predecessors, or at any off-site disposal location in connection
with the current or past operations of the Company, any Company
Subsidiary or their predecessors.
(b) For the purposes of this Agreement:
(i) ENVIRONMENTAL CLAIMS means any and all actions, orders,
decrees, suits, demands, notices, directives, claims, Liens,
investigations, proceedings or notices of noncompliance,
liability or violation by any Governmental Entity or other
person alleging liability, whether contingent or otherwise
(including investigation or remediation costs, administrative
oversight costs and natural resource damages) arising out of,
based on or related to Environmental Laws (including asbestos
or other personal injury or property damage claims).
(ii) ENVIRONMENTAL LAWS means all Laws or Judgments in each case
issued, promulgated by, or entered into with, any Governmental
Entity relating in any way to pollution or protection of human
heath or the environment (including ambient air, surface
water, groundwater, soils or subsurface strata), the
preservation or reclamation of natural resources, or the
presence, management, release or threatened release of
Hazardous Materials.
(iii) ENVIRONMENTAL PERMITS means all Permits required pursuant to
Environmental Laws.
(iv) HAZARDOUS MATERIALS means (A) all hazardous, toxic, explosive
or radioactive substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or
asbestos-containing material and (B) all other substances,
materials, chemicals or wastes of any nature that are
prohibited, limited or regulated pursuant to any Environmental
Law.
4.15 CONTRACTS
Except as filed as an exhibit to the Filed SEC Documents and except for
Contracts made solely between the Company and one or more wholly-owned
Company Subsidiaries or between two or more wholly-owned Company
Subsidiaries, neither the Company nor any Company Subsidiary is a party to
any:
(a) Contract that involves performance of services or delivery of goods,
materials, supplies or equipment by the Company or any Company
Subsidiary, or the payment therefor by the Company or any Company
Subsidiary, with a remaining cost to complete in excess of $250,000;
(b) covenant of the Company or a Company Subsidiary not to compete or
other covenant of the Company or a Company Subsidiary restricting
the development, manufacture, marketing or distribution of the
products or services of the Company or any Company Subsidiary or
otherwise limiting the freedom of the Company or any Company
Subsidiary to compete in any line of business or with any person or
in any area or to own, operate, sell, transfer, pledge or otherwise
dispose of or encumber any material assets or that by its terms
purports to limit the freedom of any successor to or affiliate of
the Company after the consummation of the Offer or the Merger;
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(c) Contract or other arrangement with any current or former officer,
director or employee of the Company or a Company Subsidiary (other
than employment agreements covered by clause (b) above);
(d) lease, sublease or similar Contract with any person (other than the
Company or a Company Subsidiary) under which the Company or a
Company Subsidiary is a lessor or sublessor of, or makes available
for use to any person (other than the Company or a Company
Subsidiary), (i) any real property or interest in real property
owned or leased by the Company or a Company Subsidiary or (ii) any
portion of any premises otherwise occupied by the Company or a
Company Subsidiary;
(e) lease or similar agreement with any person (other than the Company
or a Company Subsidiary) under which (i) the Company or a Company
Subsidiary is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any person or
(ii) the Company or a Company Subsidiary is a lessor or sub-lessor
of, or makes available for use by any person, any tangible personal
property owned or leased by the Company or a Company Subsidiary, in
any such case which has an aggregate future liability or receivable,
as the case may be, in excess of $250,000 and is not terminable by
the Company or a Company Subsidiary by notice of not more than 90
days for a cost of less than $250,000;
(f) (i) continuing Contract for the future purchase of materials,
supplies or equipment (other than purchase Contracts and orders for
inventory in the ordinary course of business), (ii) management,
service, consulting or other similar type of Contract or (iii)
advertising agreement or arrangement, in any such case which has an
aggregate future liability to any person (other than the Company or
a Company Subsidiary) in excess of $250,000 and is not terminable by
the Company or a Company Subsidiary by notice of not more than 90
days for a cost of less than $250,000;
(g) material license, option or other agreement relating in whole or in
part (other than incidentally) to the Intellectual Property set
forth in Section 4.17(a) of the Company Disclosure Schedule
(including any license or other agreement under which the Company or
a Company Subsidiary is licensee or licensor of any such
Intellectual Property) other than any (i) Contract entered into by
the Company or a Company Subsidiary in the ordinary course of
business pursuant to which Company Software is licensed to a
third-party customer, (ii) commercially available over-the-counter
"shrink-wrap" used by the Company or a Company Subsidiary in the
operation of its business or (iii) non-negotiated license of
third-party Intellectual Property embedded in equipment or fixtures
and used by the Company or a Company Subsidiary for internal
purposes only;
(h) Contract under which the Company or a Company Subsidiary has
borrowed any money from, or issued any note, bond, debenture or
other evidence of indebtedness to, any person (other than the
Company or a Company Subsidiary) or any other note, bond, debenture
or other evidence of indebtedness issued to any person (other than
the Company or a Company Subsidiary) in any such case which,
individually, is in excess of $100,000;
(i) Contract (including so-called take-or-pay or keepwell agreements)
under which (i) any person (including the Company or a Company
Subsidiary) has directly or indirectly guaranteed indebtedness,
liabilities or obligations of the Company or a Company Subsidiary or
(ii) the Company or a Company Subsidiary has directly or indirectly
guaranteed indebtedness, liabilities or obligations of any person
(in each case other than endorsements for the purpose of collection
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in the ordinary course of business), in any such case which,
individually, is in excess of $250,000;
(j) Contract under which the Company or a Company Subsidiary has,
directly or indirectly, made any advance, loan, extension of credit
or capital contribution to, or other investment in, any person
(other than the Company or a Company Subsidiary), in any such case
which, individually, is in excess of $100,000;
(k) mortgage, pledge, security agreement, deed of trust or other
instrument granting a Lien upon any real property or interest in
real property owned or leased by the Company or a Company
Subsidiary;
(l) agreement or instrument providing for indemnification of any person
with respect to material liabilities relating to any current or
former business of the Company, a Company Subsidiary or any
predecessor person other than indemnification obligations of the
Company or any Company Subsidiary pursuant to the provisions of a
Contract entered into by the Company or a Company Subsidiary in the
ordinary course of business with a third-party customer licensing
Company Software or purchasing related services;
(m) any partnership, joint venture or other similar agreement or
arrangement;
(n) other Contract or commitment to which the Company or any Company
Subsidiary is a party or by or to which it or any of its assets or
business is bound or subject which has an aggregate future liability
to any person (other than to the Company or a Company Subsidiary) in
excess of $250,000 and is not terminable by the Company or a Company
Subsidiary by notice of not more than 90 days for a cost of less
than $250,000; or
(o) employee collective bargaining agreement or other Contract with any
labor union or employment agreement or employment Contract (other
than for employment at-will) that has an aggregate future liability
in excess of $100,000 and is not terminable by the Company or a
Company Subsidiary by notice of not more than 60 days for a cost of
less than $100,000.
Neither the Company nor any Company Subsidiary, nor, to the knowledge of
the Company, any other party thereto, is in violation of or in default
under (nor does there exist any condition which upon the passage of time
or the giving of notice would cause such a violation of or default under)
in any material respect any Contract to which the Company or a Company
Subsidiary is a party or by which the Company or a Company Subsidiary or
any of its properties or assets is bound that is set forth in Section 4.15
of the Company Disclosure Schedule. Each such Contract is a valid and
binding agreement of the Company or a Company Subsidiary, and, to the
knowledge of the Company, any other party thereto, and is in full force
and effect except as such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar Laws affecting creditors' rights
generally and by general principles of equity.
4.16 TITLE TO PROPERTIES
(a) The Company and each of the Company Subsidiaries have good and
marketable title to, or valid leasehold interests in, all their
material tangible properties and material tangible assets. All such
assets and properties, other than assets and properties in which the
Company or any Company Subsidiary has leasehold interests, are free
and clear of all Liens except for Liens that, in the aggregate, do
not and would not reasonably be expected to result in a Company
Material Adverse Effect.
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(b) The Company and each of the Company Subsidiaries enjoy peaceful and
undisturbed possession under all material real property leases to
which they are parties.
4.17 INTELLECTUAL PROPERTY; COMPUTER SOFTWARE
(a) Section 4.17(a)(i) of the Company Disclosure Schedule sets forth (i)
a complete and accurate list as of the date hereof of all Company
Owned Intellectual Property and (ii) the owner of such Company Owned
Intellectual Property and any registration thereof or application
therefor. Section 4.17(a)(ii) of the Company Disclosure Schedule
sets forth a complete and accurate list of Contracts existing as of
the date hereof pursuant to which the Company or one of the Company
Subsidiaries has obtained rights to the Company Licensed
Intellectual Property (other than Contracts the non-disclosure of
which therein does not constitute a misrepresentation under Section
4.15(g)). All Company Owned Intellectual Property is owned by the
Company or one of the Company Subsidiaries free and clear of all
Liens, other than (A) immaterial Liens that do not limit the ability
of the Company or any Company Subsidiary to use, modify, extend or
enhance the same or require any royalty or other similar payment to
be made to any person other than the Company or any Company
Subsidiary and (B) statutory Liens for Taxes not yet due or payable.
Neither the Company nor any Company Subsidiary has entered into any
agreements which limit in any respect its or their right to use,
execute, reproduce, display, perform, modify, enhance, distribute,
prepare Derivative Works of and sublicense any Company Owned
Intellectual Property, without payment or other material obligation,
to any other person.
(b) Section 4.17(b) of the Company Disclosure Schedule contains a
complete and accurate list of all Software owned by the Company or
any Company Subsidiary as of the date of this Agreement (the OWNED
SOFTWARE) that is material, which list specifies which of the
Company or any Company Subsidiary is the owner thereof. The Company
or one of the Company Subsidiaries has title to the Owned Software,
free and clear of all Liens, including claims or rights of
employees, agents, consultants, contractors, partners, inventors,
customers, licensees or other parties involved in the development,
creation, marketing, maintenance, enhancement or licensing of such
computer software, other than (A) immaterial Liens that do not limit
the ability of the Company or any Company Subsidiary to use, modify,
extend or enhance the same or require any royalty or other similar
payment to be made to any person other than the Company or any
Company Subsidiary and (B) statutory Liens for Taxes not yet due or
payable.
(c) Section 4.17(c) of the Company Disclosure Schedule contains a
complete and accurate list of (i) all Open Source Software and (ii)
all other Licensed Software that is material as identified by the
license or other agreement by which such right to use has been
obtained and the duration or term thereof. The Company and any
Company Subsidiary utilizing such Licensed Software has the rights
and licenses to the Licensed Software as set forth in the respective
license, lease or similar agreement pursuant to which the Licensed
Software is licensed to the Company or any Company Subsidiary, and
the Company and each of the Company Subsidiaries are in compliance
in all material respects with all applicable provisions of such
agreements. None of the Licensed Software constitutes a component
of, has been included, incorporated or embedded into or made a part
of, any Owned Software or any other Licensed Software. Neither the
Company nor any Company Subsidiary has published or disclosed any
Licensed Software or other Third Party Software to any other party
except in accordance with and as permitted by any license, lease or
similar agreement relating to the Licensed Software or other Third
Party Software, in which case neither the Company nor any Company
Subsidiary has any obligations to make royalty or other similar
payments in respect of such distribution. No party to whom the
Company or any Company Subsidiary has disclosed Licensed Software
has, to the knowledge of Company, breached its obligation of
confidentiality in any material respect. To the knowledge
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of the Company, no (i) Open Source Software that is embedded in or
bundled, shipped or distributed with any Customer Software nor (ii)
any other Open Source Software (other than immaterial Open Source
Software) is used in a manner that requires the contribution of any
portion of any Customer Software to any person, including into the
open source Software community.
(d) The Owned Software, Licensed Software and commercially available
over-the-counter "shrink-wrap" Software constitute all Software used
in the businesses of the Company and the Company Subsidiaries as of
the date of this Agreement (collectively, the COMPANY SOFTWARE).
Section 4.17(d) of the Company Disclosure Schedule sets forth a list
of all contract programmers, independent contractors, nonemployee
agents and persons or other entities (other than employees) who on
or prior to the date hereof have performed computer programming
services for the Company or any Company Subsidiary (it being
understood that if any entity was engaged, the entity rather than
the individual persons working for such entity are to be listed) and
identifies all contracts and agreements pursuant to which such
services were performed. Each such listed entity or person has
executed an agreement providing that the Company or a Company
Subsidiary, as the case may be, has the exclusive ownership rights
to all Intellectual Property and other work product conceived,
developed or produced in connection with the programming services
provided by such persons. Between January 1, 1999 and the date of
this Agreement, none of the former or current members of management
or key personnel of the Company or any Company Subsidiary, including
all former and current employees, agents, consultants and
contractors who have contributed to or participated in the
conception and development of Company Owned Intellectual Property
has asserted any claim against the Company or any Company Subsidiary
in connection with the involvement of such persons in the conception
and development of any Company Owned Intellectual Property, and to
the knowledge of the Company no such claim has been threatened. To
the knowledge of the Company, no other person or entity is
infringing in any respect any Intellectual Property rights of the
Company or any Company Subsidiary with respect to the Company
Software.
(e) Section 4.17(e)(1) of the Company Disclosure Schedule lists and
separately identifies all agreements in effect as of the date of
this Agreement pursuant to which the Company or any Company
Subsidiary has been granted rights to market Third Party Software,
and Section 4.17(e)(2) of the Company Disclosure Schedule lists and
separately identifies all agreements in effect as of the date of
this Agreement pursuant to which the Company or any Company
Subsidiary has granted marketing rights in the Company Software to
third parties.
(f) All Company Owned Intellectual Property consisting of patents,
patent applications, trademark registrations, trademark applications
and copyright registrations have been duly registered and/or filed,
as applicable, with or issued by each applicable Governmental Entity
in each jurisdiction in which the Company or any Company Subsidiary
has sought to register such rights, all necessary affidavits of
continuing use have been filed, and all necessary maintenance fees
have been paid to continue all such rights in effect. The Company
and each Company Subsidiary have complied with all applicable notice
and marking requirements for such Patents, Trademarks and
Copyrights.
(g) Between January 1, 1999 and the date of this Agreement, neither the
Company nor any Company Subsidiary has received any notice of any
possible infringement or other violation by the Company or any
Company Subsidiary or any of its or their products or services. To
the Company's knowledge, between January 1, 1999 and the date of
this Agreement, neither the Company nor any Company Subsidiary is
violating or has violated, and the conduct of the
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businesses of the Company and Company Subsidiaries as currently
conducted, does not violate or infringe the rights of any person in
any Intellectual Property.
(h) The execution and delivery of this Agreement do not, and the
consummation of the Transactions will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of
time or both) under, or give rise to any Lien, right, license, lease
or similar agreement relating to, any Company Intellectual Property
or any Company Software, or any right of termination, cancellation
or acceleration of any Company Intellectual Property right or
obligation set forth in any agreement to which the Company or any
Company Subsidiary is a party, cause the loss or encumbrance of any
Company Intellectual Property or material benefit related thereto,
result in the creation of any Lien in or upon any Company
Intellectual Property or right, or otherwise impair the Company's or
any Company Subsidiary's ability to use the Company Software in the
same manner as such Software is currently used by the Company or any
Company Subsidiary.
(i) Neither the Company nor any Company Subsidiary has assigned, sold or
otherwise transferred ownership of any material Patent, Trademark or
Copyright since December 31, 2001.
(j) The Company and each of the Company Subsidiaries have taken
reasonable steps to protect their rights in respect of Company Owned
Intellectual Property, including complying with appropriate
marking/notice requirements and to the knowledge of the Company no
such rights, including any right to prevent other persons from using
rights in Company Owned Intellectual Property, have been lost or are
reasonably expected to be lost through failure to act by the Company
or any Company Subsidiary. Neither the Company nor any Company
Subsidiary has agreed to waive any rights in Company Intellectual
Property except pursuant to customary right to use granting
provisions of licenses to Customer Software.
(k) Section 4.17(k) of the Company Disclosure Schedule sets forth a
complete and accurate list of all material actions that are required
to be taken by the Company or any Company Subsidiary within 180 days
of the date of this Agreement with respect to any of the Company
Intellectual Property.
(l) The Company and each Company Subsidiary have at all times since
January 1, 2001, maintained in connection with the conduct of the
business of the Company and the Company Subsidiaries including its
and their activities on or related to the World Wide Web (the WEB)
and the Internet, one or more written privacy statements or policies
governing the collection, maintenance, and use of data and
information collected from users of Web sites owned, operated, or
maintained by, on behalf of, or for the benefit of the Company or
any Company Subsidiary (COMPANY WEB SITES) and such privacy
statements or policies have at all relevant times been conspicuously
made available to users of Company Web Sites. Such statements or
policies, along with the collection, maintenance, and use of user
data and information and transfer thereof, including in connection
with the Transactions, comply and will comply in all material
respects with all applicable Law, including the rules and
regulations promulgated by the U.S. Federal Trade Commission.
(m) For purposes of this Agreement, the following terms shall have the
definitions set forth below:
(i) INTELLECTUAL PROPERTY means:
(A) all trademarks (registered or unregistered), service
marks, brand names, trade names, domain names,
certification marks, trade dress, assumed names, other
indications of origin and the goodwill associated
therewith, and all registrations
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or applications for registration thereof in any
jurisdiction, including any extension, modification or
renewal of any such registration or application
(collectively, TRADEMARKS);
(B) all patents, patent applications, continuations,
continuations-in-part, divisionals and foreign
counterparts in any jurisdiction (collectively,
PATENTS);
(C) all copyrights, database rights and moral rights in both
published works and unpublished works, including all
such rights in Software, user and training manuals,
marketing and promotional materials, internal reports,
business plans and any other writings, expressions, mask
works, firmware and videos, whether copyrighted,
copyrightable or not, and all registrations or
applications for registration of copyrights thereof and
any renewals or extensions thereof in any jurisdiction
(collectively, COPYRIGHTS);
(D) trade secret and confidential information, and rights in
any jurisdiction to limit the use or disclosure thereof
by a third party, including such rights in inventions,
discoveries and ideas, whether patented, patentable or
not in any jurisdiction (and whether or not reduced to
practice), know-how, customer lists, technical
information, proprietary information, technologies,
processes and formulae, software, data, plans, drawings
and blue prints, whether tangible or intangible and
whether stored, compiled, or memorialized physically,
electronically, photographically or otherwise
(collectively, SECRET INFORMATION); and
(E) any similar intellectual property or proprietary rights
similar to any of the foregoing, licenses, immunities,
covenants not to sue and the like relating to the
foregoing, and any claims or causes of action arising
out of or related to any infringement, misuse or
misappropriation of any of the foregoing;
(ii) SOFTWARE means any and all: (A) computer programs and
applications, including any and all software implementations
of algorithms, models and methodologies, whether in source
code or object code, (B) databases and compilations, including
any and all data and collections of data, whether machine
readable or otherwise, (C) descriptions, flow-charts, library
functions, algorithms, architecture, structure, display
screens and development tools, and other information, work
product or tools used to design, plan, organize or develop any
of the foregoing and (D) all documentation, including user
manuals and training materials, relating to any of the
foregoing;
(iii) THIRD PARTY SOFTWARE means Software with respect to which a
third party holds any copyright or other ownership right (and,
therefore, such Software is not owned exclusively by the
Company or any Company Subsidiary);
(iv) LICENSED SOFTWARE means all Software (other than commercially
available over-the-counter "shrink-wrap" Software) under which
the Company or any Company Subsidiary is, as of the date
hereof, a licensee, lessee or otherwise has obtained the right
to use, including all open source Software, shareware and
freeware;
(v) OPEN SOURCE SOFTWARE means all Licensed Software that is open
source Software, shareware or freeware;
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(vi) CUSTOMER SOFTWARE means all Owned Software that is licensed by
the Company or any Company Subsidiary to customers in the
ordinary course of its or their business;
(vii) COMPANY INTELLECTUAL PROPERTY means all Intellectual Property
consisting of patents, patent applications, trademark
registrations, trademark applications, common-law trademarks,
copyright registrations and domain names that is both (A)
material to and used in the business of the Company or any
Company Subsidiary as of the date of this Agreement and (B)
owned by or licensed to the Company or any Company Subsidiary;
(viii) COMPANY OWNED INTELLECTUAL PROPERTY means Company
Intellectual Property that is owned by the Company or any
Company Subsidiary;
(ix) COMPANY LICENSED INTELLECTUAL PROPERTY means Company
Intellectual Property that is licensed to the Company or any
Company Subsidiary; and
(x) DERIVATIVE WORK shall have the meaning set forth in 17 U.S.C.
Section 101.
4.18 LABOR MATTERS
There are no collective bargaining or other labor union or similar
agreements or arrangements to which the Company or any Company Subsidiary
is a party or by which any of them is bound in any jurisdiction in which
the Company or any Company Subsidiary operates. To the knowledge of the
Company, since January 1, 2002, neither the Company nor any Company
Subsidiary has encountered any labor union organizing activity, or had any
actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
4.19 INSURANCE
Section 4.19(a) of the Company Disclosure Schedule lists all insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company
and the Company Subsidiaries. There is no claim by the Company or any
Company Subsidiary pending under any of such policies or bonds as to which
the Company has been notified that coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due
and payable under all such policies and bonds have been paid, and the
Company, the Company Subsidiaries and affiliates are otherwise in material
compliance with the terms of such policies and bonds (or other policies
and bonds providing substantially similar insurance coverage). As of the
date hereof, the Company does not have any knowledge of threatened
termination of, or material premium increase with respect to, any of such
policies.
4.20 BROKERS; SCHEDULE OF FEES AND EXPENSES
No broker, investment banker, financial advisor or other person, other
than Deutsche Bank, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Offer, the Merger
and the other Transactions based upon arrangements made by or on behalf of
the Company. The estimated professional fees and expenses incurred and to
be incurred by the Company in connection with the Offer, the Merger and
the other Transactions (including the fees of Deutsche Bank and the
applicable hourly fee rates of the Company's legal counsel) are set forth
in Section 4.20 of the Company Disclosure Schedule. The Company has
furnished to Parent a true and complete copy of all agreements between the
Company and Deutsche Bank relating to the Offer, the Merger and the other
Transactions.
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4.21 OPINION OF FINANCIAL ADVISOR
The Company has received the opinion of Deutsche Bank Securities Inc.,
dated the date of this Agreement, to the effect that, as of such date, the
consideration to be received in the Offer and the Merger by the holders of
Company Common Stock is fair to the holders of Company Common Stock from a
financial point of view. A signed copy of that opinion has been provided
to Parent.
4.22 POTENTIAL CONFLICTS OF INTEREST
Except as disclosed in the Filed SEC Documents, there have been no
transactions, agreements, arrangements or understandings between the
Company or any Company Subsidiary, on the one hand, and their respective
affiliates, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act. Except as
disclosed in the Filed SEC Documents, to the knowledge of the Company (a)
no officer of the Company or any Company Subsidiary owns, directly or
indirectly, any interest in (except stock holdings of publicly held and
traded companies solely for investment purposes and not in excess of 1% of
the outstanding shares of any such class of securities) or is an officer,
director, employee or consultant of any person which is, a competitor,
lessor, lessee, customer or supplier of the Company and (b) no officer or
director of the Company or any Company Subsidiary (i) owns, directly or
indirectly, in whole or in part, any Intellectual Property which the
Company or any Company Subsidiary is using or the use of which is
necessary for the business of the Company or the Company Subsidiaries,
(ii) has any claim, charge, action or cause of action against the Company
or any Company Subsidiary, except for claims for accrued vacation pay,
accrued benefits under the employee benefit plans maintained by the
Company or a Company Subsidiary and similar matters and agreements
existing on the date hereof, (iii) has made, on behalf of the Company or
any Company Subsidiary, any payment or commitment to pay any commission,
fee or other amount to, or to purchase or obtain or otherwise contract to
purchase or obtain any goods or services from, any other person of which
any officer or director of the Company or any Company Subsidiary, or, to
the Company's knowledge, a relative of any of the foregoing, is a partner
or stockholder (except stock holdings solely for investment purposes in
securities of publicly held and traded companies) or (iv) owes any money
to the Company or any Company Subsidiary.
4.23 VOTE REQUIRED
The only vote of holders of any class or series of Company capital stock
necessary to approve and adopt this Agreement and the Merger is, if
required by applicable Law, the approval and adoption of this Agreement by
the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock (the COMPANY STOCKHOLDER
APPROVAL). The affirmative vote of any holders of any other class of
Company capital stock is not necessary to approve this Agreement or to
consummate any Transaction.
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as set forth in the disclosure schedule delivered to the Company
contemporaneously with the execution and delivery hereof (the PARENT
DISCLOSURE SCHEDULE), Parent and Sub represent and warrant to the Company
as follows:
5.1 ORGANIZATION, STANDING AND POWER
Each of Parent and Sub is a corporation duly organized, validly existing
and in good standing under the Laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority
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necessary to enable it to own, lease or otherwise hold its properties and
assets and to conduct its businesses as currently conducted.
5.2 SUB
(a) Since the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of
this Agreement, the performance of its obligations hereunder and
thereunder and matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 1000 shares of
common stock, par value $0.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned
directly by Parent free and clear of any Lien.
5.3 AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY
Each of Parent and Sub has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the
Transactions. The execution, delivery and performance by each of Parent
and Sub of this Agreement and the consummation by it of the Transactions
have been duly authorized by all necessary corporate and, subject to the
next sentence, stockholder action on the part of Parent and Sub.
Immediately after the execution and delivery of this Agreement, Parent, as
sole stockholder of Sub, will approve and adopt this Agreement. Each of
Parent and Sub has duly executed and delivered this Agreement and each
this Agreement constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and
other similar Laws affecting creditors' rights generally and by general
principles of equity.
5.4 NO CONFLICTS; CONSENTS
(a) The execution, delivery and performance by each of Parent and Sub of
this Agreement do not, and the consummation of the Offer, the Merger
and the other Transactions and compliance with the terms of this
Agreement will not, conflict with, or result in any violation or
breach of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in
the creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under any provision of (i) the
charter or organizational documents of Parent or any of its
subsidiaries, (ii) any Contract to which Parent or any of its
subsidiaries is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 5.4(b), any Judgment or Law
applicable to Parent or any of its subsidiaries or their respective
properties or assets, except in the case of clauses (ii) and (iii)
above, for such matters that individually or in the aggregate, have
not had and would not reasonably be expected to have a material
adverse effect on Parent and its subsidiaries, taken as a whole (a
PARENT MATERIAL ADVERSE EFFECT).
(b) No Consent of, or registration, declaration or filing with, or
Permit from any Governmental Entity or termination or expiration of
any waiting period under applicable Law, is required to be obtained
or made by or with respect to Parent or Sub in connection with the
execution, delivery and performance of this Agreement or the
consummation of the Transactions, other than: (i) compliance with
and filings under the HSR Act and all other applicable competition
and antitrust Laws, including under the German Federal Cartel
Office, (ii) the filing with the SEC of (A) the Offer Documents and
(B) such reports under Sections 13 and 16 of the Exchange Act as
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may be required in connection with this Agreement, the Offer, the
Merger and the other Transactions, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware, (iv) compliance with and such filings as may be required
under applicable Environmental Laws, (v) such filings as may be
required in connection with the taxes described in Section 7.8, (vi)
filings under state securities or takeover Law and (vii) such
filings as may be required under Chapter 80B of the Minnesota
Statutes.
5.5 INFORMATION SUPPLIED
None of the information supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in (a) the Offer Documents, the
Schedule 14D-9 or the Information Statement will, at the time such
document is filed with the SEC, at any time it is amended or supplemented
or at the time it is first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or (b) Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of
the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Offer
Documents will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by Parent or Sub pursuant to this
Section 5.5 with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference therein.
5.6 BROKERS
No broker, investment banker, financial advisor or other person other than
Credit Suisse First Boston LLC, the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the Offer, the
Merger and the other Transactions based upon arrangements made by or on
behalf of Parent.
5.7 FINANCING
Parent and Sub will have available (through cash on hand and existing
credit arrangements or otherwise) all of the funds necessary for the
acquisition of all shares of Company Common Stock pursuant to the Offer
and conversion of all remaining shares of Company Common Stock pursuant to
the Merger, as and when needed, and to perform their respective
obligations under this Agreement.
5.8 LITIGATION
There is no suit, action, proceeding or investigation pending against or,
to the knowledge of Parent, threatened against or affecting, Parent or any
of its subsidiaries or any of their respective properties before any
Governmental Entity that questions the validity of this Agreement or any
action to be taken by Parent or Sub in connection with the consummation of
the Transactions or would otherwise prevent or delay the consummation of
the Transactions that individually or in the aggregate would reasonably be
expected to have a Parent Material Adverse Effect.
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6. COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 CONDUCT OF BUSINESS
(a) CONDUCT OF BUSINESS BY THE COMPANY. Except for matters contemplated
by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall, and shall cause each of the Company
Subsidiaries to, conduct its business in the usual, regular and
ordinary course of business and use all reasonable efforts to
preserve intact its assets, Intellectual Property, business
organization and relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with
them, and to keep available the services of its current officers and
employees with the objective of preserving unimpaired their goodwill
and ongoing business at the Effective Time. In addition, and without
limiting the generality of the foregoing, except for matters
expressly permitted by this Agreement or set forth on Section 6.1(a)
of the Company Disclosure Schedule, from the date of this Agreement
to the Effective Time, the Company shall not, and shall not permit
any Company Subsidiary to do any of the following without the prior
written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock, property or
otherwise) in respect of, any of capital stock of the Company
or any Company Subsidiary, other than dividends and
distributions by a direct or indirect wholly owned subsidiary
of the Company to its parent, (B) split, combine or reclassify
any of capital stock of the Company or any Company Subsidiary
or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of
capital stock of the Company or any Company Subsidiary or (C)
purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any Company Subsidiary or any other
securities thereof or any rights, options, warrants or calls
to acquire any such shares or other securities;
(ii) issue, deliver, sell, grant, pledge, transfer or otherwise
encumber or dispose of or subject to any Lien (A) any shares
of its capital stock, (B) any Voting Company Debt or other
voting securities, (C) any securities convertible into or
exchangeable for, or any options, warrants or rights of any
kind to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D)
any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock-based performance units, other
than (1) the issuance of Company Common Stock upon the
exercise of Company Stock Options outstanding on the date of
this Agreement and in accordance with their current terms and
(2) the issuance of Company Common Stock pursuant to the
Top-Up Option;
(iii) amend the Company Charter, Company By-laws or other comparable
charter or organizational documents;
(iv) directly or indirectly acquire or agree to acquire, by merging
or consolidating with, or by purchasing or by any other
manner, any equity interest in, business of or a substantial
portion of the assets of, any person or any acquisition by the
Company or any Company Subsidiary of any assets that are
material to the Company and the Company Subsidiaries;
(v) (A) grant to any current or former director, officer or
employee of the Company or any Company Subsidiary any increase
in compensation or pay any bonus, except for increases of cash
compensation in the ordinary course of business or to the
extent
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required under employment agreements in effect on the date
hereof and set forth in Section 4.15 of the Company Disclosure
Schedule, (B) grant to any such current or former director,
officer or employee of the Company or any Company Subsidiary
any increase in severance or termination pay, except to the
extent required under any agreement in effect on the date
hereof and set forth in Section 4.15 of the Company Disclosure
Schedule, (C) establish, adopt, enter into or amend any
Company Benefit Agreement, (D) establish, adopt, enter into or
amend in any material respect any collective bargaining
agreement or Company Benefit Plan, (E) take any action to
accelerate any rights or benefits, take any action to fund or
in any other way secure the payment of compensation or
benefits under any Company Benefit Agreement or Company
Benefit Plan, or make any material determinations not in the
ordinary course of business, under any collective bargaining
agreement or Company Benefit Plan or Company Benefit Agreement
or (F) amend or modify any Company Stock Option;
(vi) make any change in its fiscal year, revalue any assets or make
any change in its financial or tax accounting methods,
principles or practices, except insofar as may have been
required by a change in GAAP or Law;
(vii) except licenses of Company Intellectual Property to customers
in the ordinary course of business, directly or indirectly
sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any properties or assets with a value,
individually or in the aggregate, in excess of $100,000;
(viii) (A) incur, assume or guarantee any indebtedness for borrowed
money, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any
Company Subsidiary, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of
any of the foregoing, or (B) make any loans, advances (other
than advances to non-officer employees in the ordinary course
of business) or capital contributions to, or investments in,
any other person, other than to the Company or any direct or
indirect wholly-owned subsidiary of the Company;
(ix) engage in (A) any trade loading practices or any other
promotional sales or discount activity with any customers or
distributors with any intent of accelerating to prior fiscal
quarters (including the current fiscal quarter) sales to the
trade or otherwise that would otherwise be expected (based on
past practice) to occur in subsequent fiscal quarters, (B) any
practice which would have the effect of accelerating to prior
fiscal quarters (including the current fiscal quarter)
collections of receivables that would otherwise be expected
(based on past practice) to be made in subsequent fiscal
quarters, (C) any practice which would have the effect of
postponing to subsequent fiscal quarters payments by the
Company or any Company Subsidiary that would otherwise be
expected (based on past practice) to be made in prior fiscal
quarters (including the current fiscal quarter) or (D) any
other promotional sales or discount activity, in each case in
clauses (A) through (D) in a manner outside the ordinary
course of business;
(x) incur or agree to incur any new capital expenditures that, in
the aggregate, are in excess of $1,000,000 in any calendar
quarter;
(xi) make or change any material Tax election or settle or
compromise any material Tax liability or refund;
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(xii) (A) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary course
of business or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes
thereto) of the Company included in the Filed SEC Documents or
incurred since the date of such financial statements in the
ordinary course of business or (B) cancel any indebtedness
that is material, individually or in the aggregate, to the
Company and the Company Subsidiaries taken as a whole, or
waive any claims or rights of substantial value;
(xiii) adopt a plan or agreement of, or resolutions providing for or
authorizing, complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or
other reorganization other than for the liquidation of any
Company Subsidiary into the Company;
(xiv) make, enter into or renew, extend, amend, modify, or waive any
material provisions of any Contract or commitment or
relinquish or waive any material Contract rights or agree to
the termination of any material Contract, except in the
ordinary course of business;
(xv) institute, settle, or agree to settle any action, claim or
proceeding pending or threatened before any arbitrator, court
or other Governmental Entity;
(xvi) agree to any covenant of the Company or a Company Subsidiary
not to compete or other covenant of the Company or a Company
Subsidiary restricting the development, manufacture, marketing
or distribution of the products or services of the Company or
any Company Subsidiary or otherwise limiting the freedom of
the Company or any Company Subsidiary to compete in any line
of business or with any person or in any area or to own,
operate, sell, transfer, pledge or otherwise dispose of or
encumber any material assets or that would so limit the
freedom of Parent or any of its affiliates after the
consummation of the Offer or the Merger;
(xvii) make any change in personnel relating to key employees,
operations or finance; or
(xviii) authorize, commit or agree to take any action referred to in
Sections 6.1(a)(i) through 6.1(a)(xvii).
Without limiting the generality of Section 10.7 (Entire Agreement;
No Third-Party Beneficiaries), the provisions of this Section 6.1(a)
shall be limited by and subject to the provisions of Section 10.7.
(b) OTHER ACTIONS. The Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that
would, or that would reasonably be expected to, result in, except as
otherwise permitted by Section 6.2, any condition to the Offer set
forth in Annex 1, or any condition to the Merger set forth in
Article 8, not being satisfied.
6.2 NO SOLICITATION
(a) The Company shall not, nor shall it authorize or permit any Company
Subsidiary to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, financial
advisor, attorney, accountant or other advisor, agent or
representative (collectively,
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REPRESENTATIVES) of, the Company or any Company Subsidiary to,
directly or indirectly, (i) solicit, initiate or encourage the
submission of, any Company Takeover Proposal (as defined below),
(ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate knowingly the making of any inquiry or
any proposal that constitutes, or would reasonably be expected to
lead to, any Company Takeover Proposal or (iii) make or authorize
any statement, recommendation or solicitation in respect of any
Company Takeover Proposal (except as permitted by Section 6.2(b)).
The Company shall, and shall cause each of the Company Subsidiaries
and each Representative of the Company or any Company Subsidiary to,
(A) immediately cease and cause to be terminated all discussions or
negotiations with any person conducted heretofore with respect to
any proposal that constitutes or would reasonably be expected to
lead to a Company Takeover Proposal and (B) request the prompt
return or destruction of all confidential information previously
furnished. The Company shall, and shall cause each Company
Subsidiary to, enforce (and not release any person from any
obligations under) any confidentiality, standstill or similar
agreement to which the Company or any Company Subsidiary is a party.
Notwithstanding the foregoing, at any time prior to acceptance for
payment of shares of Company Common Stock pursuant to the Offer, the
Company may, in response to a Company Takeover Proposal that the
Company Board determines in good faith after consultation with
outside counsel and an independent financial advisor of nationally
recognized reputation is or is reasonably likely to result in a
Superior Company Proposal (as defined below) that was not solicited
by the Company or its Representatives and that did not otherwise
result from a breach or a deemed breach of this Section 6.2(a), and
subject to providing prior written notice of its decision to take
such action to Parent and compliance with Section 6.2(c): (x)
furnish information with respect to the Company and the Company
Subsidiaries to the person making such Company Takeover Proposal
pursuant to a confidentiality agreement not less restrictive of the
other party (including with respect to standstill provisions) than
the Confidentiality Agreement (as defined in Section 7.2), provided
that all such information not previously provided to Parent
is provided or made available on a substantially concurrent basis to
Parent and (y) participate in discussions or negotiations with the
person making such Company Takeover Proposal regarding such Company
Takeover Proposal. Without limiting the foregoing, any violation of
the restrictions set forth in the preceding sentence by any
Representative or affiliate of the Company or any Company
Subsidiary, whether or not such person is purporting to act on
behalf of the Company or any Company Subsidiary or otherwise, shall
be deemed to be a breach of this Section 6.2(a) by the Company.
(b) Neither the Company nor the Company Board nor any committee thereof
shall (i) (A) withdraw or modify, or propose to withdraw or modify
the approval or recommendation by the Company Board or any such
committee of this Agreement, the Offer or the Merger or (B) approve
or recommend, or propose to approve or recommend, any Company
Takeover Proposal (either (A) or (B) being an ADVERSE CHANGE IN
RECOMMENDATION) or (ii) approve, cause or permit the Company or any
Company Subsidiary to enter into any letter of intent, agreement in
principle, acquisition agreement or similar agreement (each, an
ACQUISITION AGREEMENT) relating to any Company Takeover Proposal.
Notwithstanding the foregoing, the Company may, to the extent that a
failure to do so would be inconsistent with the fiduciary
obligations of the Company Board under applicable Law as determined
in good faith by a majority of the disinterested members thereof
after consultation with outside counsel, (x) make an Adverse Change
in Recommendation or (y) at any time prior to the acceptance for
payment of shares of Company Common Stock pursuant to the Offer, in
response to a Superior Company Proposal that was not solicited by or
on behalf of the Company or any Company Subsidiary and did not
otherwise
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result from a breach of Section 6.2(a), terminate this Agreement
pursuant to Section 9.1(e) so long as concurrently with or
immediately after such termination, the Company Board causes the
Company to accept such Superior Company Proposal and enter into an
Acquisition Agreement with respect thereto; provided, however, that
such determination shall not be made prior to: (1) the fifth
business day following the receipt by Parent of a Notice of Superior
Proposal if such Notice of Superior Proposal is received prior to
the date on which the Company has filed the Schedule 14D-9 or (2)
the third business day following receipt of such Notice of Superior
Proposal thereafter. A NOTICE OF SUPERIOR PROPOSAL means a written
notice to Parent from the Company advising Parent that the Company
Board is prepared to make an Adverse Change in Recommendation or
accept a Superior Company Proposal, specifying the terms and
conditions of such Superior Company Proposal and identifying the
person making such Superior Company Proposal (it being understood
and agreed that any amendment to the price or any other material
term of such Superior Company Proposal shall require a new Notice of
Superior Proposal and a new three or five business day period, as
provided above). In determining whether to make an Adverse Change in
Recommendation or to accept a Superior Company Proposal, the Company
Board shall give effect to any changes to the terms of this
Agreement proposed by Parent following receipt of such written
notice.
(c) The Company shall promptly, but in any event within 24 hours, advise
Parent orally and in writing of any Company Takeover Proposal or any
inquiry with respect to, or that would reasonably be expected to
lead to or contemplates, any Company Takeover Proposal (including
any change to the terms of any such Company Takeover Proposal or
inquiry) and the identity of the person making any such Company
Takeover Proposal or inquiry. The Company shall (i) keep Parent
fully informed of the status of any such Company Takeover Proposal
or inquiry, (ii) promptly advise Parent of any material amendments
to the terms of any such Company Takeover Proposal or inquiry and
(iii) provide to Parent copies of all correspondence and other
written material in the possession or control of the Company or its
Representatives, in connection with any Company Takeover Proposal,
as soon as practicable after receipt or delivery thereof. The
Company shall not take any actions whether contractually or
otherwise to limit its ability to comply with its obligations
hereunder.
(d) For purposes of this Agreement:
(i) COMPANY TAKEOVER PROPOSAL means any inquiry, proposal or offer
from any person relating to, or that is reasonably likely to
lead to, directly or indirectly: (A) a merger, consolidation,
tender offer, exchange offer, binding share exchange, joint
venture, dissolution, recapitalization, liquidation, business
combination or other similar transaction involving the Company
or any Company Subsidiary, (B) the acquisition by any person
in any manner of a number of shares of any class of equity
securities of the Company or any Company Subsidiary equal to
or greater than 15% of the number of such shares outstanding
before such acquisition or (C) the acquisition by any person
in any manner, directly or indirectly, of assets that
constitute 15% or more of the net revenues, net income, EBITDA
or assets of the Company and the Company Subsidiaries taken as
a whole, in each case other than the Transactions.
(ii) SUPERIOR COMPANY PROPOSAL means any bona fide written offer
not solicited by or on behalf of the Company or any Company
Subsidiary made by a third party that if consummated would
result in such third party acquiring, directly or indirectly,
at least a majority of the voting power of the Company Common
Stock (so long as such third party is obliged to consummate a
customary back end merger pursuant to which any remaining
holders of Company Common Stock are entitled to receive the
same
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consideration) or all or substantially all the assets of the
Company and the Company Subsidiaries taken as a whole, (A) for
consideration that the Company Board determines in its good
faith judgment to be superior from a financial point of view
on a present value basis to the holders of Company Common
Stock than the Transactions (based on the advice of an
independent financial advisor of nationally recognized
reputation), taking into account all the terms and conditions
of such proposal, this Agreement and any proposal by Parent to
amend the terms of this Agreement, (B) for which financing, to
the extent required, is then committed, (C) for which, in the
good faith judgment of the Company Board, no regulatory
approvals are required, including antitrust approvals, that
would not reasonably be expected to be obtained without undue
cost or delay and (D) that, in the good faith judgment of the
Company Board, is otherwise reasonably likely to be
consummated, taking into account all legal, financial,
regulatory and other aspects of the proposal and the person
making the proposal.
7. ADDITIONAL AGREEMENTS
7.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING
(a) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, as soon as practicable following
the expiration of the Offer (provided that the Minimum Tender
Condition has been satisfied), prepare and file with the SEC the
Proxy Statement in preliminary form, and each of the Company and
Parent shall use its reasonable best efforts to respond as promptly
as practicable to any comments of the SEC with respect thereto. The
Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all
correspondence between the Company or any of its representatives, on
the one hand, and the SEC or its staff, on the other hand, with
respect to the Proxy Statement. If at any time prior to receipt of
the Company Stockholder Approval there shall occur any event that
should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. No filing of, or
amendment to, the Proxy Statement or any response to comments of the
SEC shall be made by the Company without first providing Parent a
reasonable opportunity to review and comment thereon. The Company
shall include in such document or response all comments reasonably
proposed by Parent and shall not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects.
The Company shall use its reasonable efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as
practicable after filing with the SEC.
(b) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, as soon as practicable following
the expiration of the Offer (provided that the Minimum Tender
Condition has been satisfied), duly call, give notice of, convene
and hold a meeting of its stockholders (the COMPANY STOCKHOLDERS
MEETING) for the purpose of seeking the Company Stockholder Approval
regardless of whether the Company Board determines at any time that
this Agreement or the Merger are no longer advisable or recommends
that the stockholders of the Company reject this Agreement or the
Merger. The Company shall, through the Company Board, recommend to
its stockholders that they give the Company Stockholder Approval
(subject to Section 6.2(b)). Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the
first sentence of this Section 7.1(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to
the Company of any Company Takeover Proposal or the occurrence of
any Adverse Change in
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Recommendation. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 90% of the outstanding
shares of Company Common Stock with or without exercising its rights
under the Top-Up Option, the parties shall take all necessary and
appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a
stockholders meeting in accordance with Section 253 of the DGCL.
(c) Parent shall cause all shares of Common Stock purchased pursuant to
the Offer and all other shares of Company Common Stock owned by Sub
or any other subsidiary of Parent to be voted in favor of the
approval and adoption of this Agreement.
7.2 ACCESS TO INFORMATION; CONFIDENTIALITY
(a) The Company shall, and shall cause each of the Company Subsidiaries
to, afford to Parent, and to Parent's officers, employees,
accountants, counsel, financial advisors and other advisors and
representatives, reasonable access during reasonable business hours
during the period prior to the Effective Time to: (i) all their
respective properties, facilities, books, contracts, commitments,
personnel and records and other information and business documents
and (ii) customers of the Company or any Company Subsidiary as may
reasonably be designated by Parent, provided that a representative
of the Company shall be entitled to participate in any meetings or
calls with such customers. During the period prior to the Effective
Time, the Company shall, and shall cause each of the Company
Subsidiaries to, furnish promptly to Parent (A) a copy of each
report, schedule, registration statement and other document filed by
it during such period pursuant to the requirements of Federal or
state securities Laws and (B) all other information concerning its
business, properties and personnel as Parent may reasonably request
(including the work papers of PricewaterhouseCoopers LLP). Without
limiting the generality of the foregoing, the Company shall, within
two business days of request therefor, provide to Parent the
information described in Rule 14a-7(a)(2)(ii) under the Exchange Act
and any information to which a stockholder of the Company would be
entitled under Section 219 of the DGCL (assuming such holder met the
requirements of such section). In connection with the access
contemplated by this Section 7.2, Parent shall, and shall cause its
representatives to, act in a manner as not to unreasonably interfere
with the operations of the Company or the Company Subsidiaries.
(b) Neither any investigation conducted by Parent or its representatives
pursuant to this Section 7.2 nor the results thereof shall affect
any representation or warranty of the Company contained in this
Agreement or the ability of Parent to rely thereon. All information
exchanged pursuant to this Section 7.2 shall be subject to the
confidentiality agreement dated October 29, 2004, between the
Company and Parent (the CONFIDENTIALITY AGREEMENT).
7.3 REASONABLE BEST EFFORTS
(a) Upon the terms and subject to the conditions set forth in this
Agreement (including Section 6.2), each of the parties shall use all
reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
reasonably practicable, the Offer, the Merger and the other
Transactions, including: (i) the obtaining of all necessary actions
or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings
(including using all reasonable best efforts to cause the pre-merger
notifications required under the HSR Act to be filed within seven
business days after the date hereof and including other
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filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental
Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Transactions,
including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or
reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully
carry out the purposes of this Agreement; provided, however, that
Parent shall not be required to consent to any action described in
paragraph (a) of Annex 1 to this Agreement. In connection with and
without limiting the foregoing, Parent, Sub, the Company and the
Company Board shall (A) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or
becomes applicable to any Transaction or this Agreement and (B) if
any state takeover statute or similar statute or regulation becomes
applicable to this Agreement, take all action necessary to ensure
that the Offer, the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by
this Agreement and otherwise to minimize the effect of such statute
or regulation on the Offer, the Merger and the other Transactions.
(b) The Company shall give prompt notice orally and in writing to
Parent, and Parent or Sub shall give prompt notice orally and in
writing to the Company, of any failure of any condition to the Offer
set forth in Annex 1 or any condition to the Merger set forth in
Article 8; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under
this Agreement.
7.4 STOCK OPTIONS
(a) The holder of each vested Company Stock Option that has not been
exercised prior to the Effective Time shall be entitled to receive
an amount of cash equal to the product of the following: (1) the
excess, if any, of (A) the per share Merger Consideration over (B)
the exercise price per share of the Company Common Stock subject to
such Company Stock Option, multiplied by (2) the number of shares of
Company Common Stock issuable pursuant to the vested and unexercised
portion of such Company Stock Option. Any Company Stock Option that
is unvested immediately prior to the Effective Time shall be
terminated and cancelled as of the Effective Time without any
consideration paid in respect thereof. No Company Stock Options
shall be assumed by Parent. No amount greater than the amount
provided under the first sentence of this subparagraph may be paid
to any option holder in respect of any Company Stock Option. All
Company Stock Plans shall be terminated as of the Effective Time.
(b) All amounts payable pursuant to this Section 7.4 shall be subject to
any required withholding of Taxes and shall be paid at or as soon as
practicable following the Effective Time, but in any event within
seven days following the Effective Time, without interest. The
cancellation of Company Stock Options in exchange for the cash
payments described in this Section 7.4 shall be deemed a release of
any and all rights the holder of such Company Stock Options had or
may have had in respect thereof.
(c) The Company Board (or if appropriate, any committee administering
the Company ESPP) has adopted resolutions providing that a new
purchase date for the Purchase Period (as defined in the Company
ESPP) ongoing at the date of this Agreement (the CURRENT PURCHASE
PERIOD) shall be set as of the date immediately preceding the
Effective Time and any Offering Periods (as defined in the Company
ESPP) shall end, and each participant's right to purchase any
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Company Common Stock pursuant to the Company ESPP shall be
converted, as of the date immediately preceding the Effective Time,
into the right to receive an amount of cash equal to (i) (A) the
Merger Consideration minus the Purchase Price (as defined in the
Company ESPP) per share of the Company Common Stock multiplied by
(B) the number of shares of Company Common Stock that such
participant's actual payroll contributions during the Current
Purchase Period up to the date immediately preceding the Effective
Time would have purchased at the Purchase Price plus (ii)
reimbursement of such participant's actual payroll contribution
during the Current Purchase Period up to the date immediately
preceding the Effective Time; provided, however, that the maximum
number of shares that would have been subject to purchase for the
Current Purchase Period shall not exceed 286,434 shares. The Company
ESPP shall terminate immediately following the consummation of such
conversion.
(d) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the
Company Stock Plans) shall take or cause to be taken such actions as
are required to cause (i) the Company Stock Plans to terminate as of
the Effective Time and (ii) the provisions in any other Company
Benefit Plan providing for the issuance, transfer or grant of any
capital stock of the Company to be deleted as of the Effective Time.
(e) In this Agreement:
(i) COMPANY SAR means a stock appreciation right awarded pursuant
to the Retek Inc. 1999 Equity Incentive Plan;
(ii) COMPANY STOCK OPTION means any option to purchase Company
Common Stock granted under any Company Stock Plan; and
(iii) COMPANY STOCK PLANS means the Retek Inc. 1999 Director Stock
Option Plan, the Retek Inc. 1999 Equity Incentive Plan, the
Retek Inc. 1999 Employee Stock Purchase Plan, the Hightouch
Technologies, Inc. 1999 Stock Option Plan, and any other
Company stock option, stock incentive, employee stock purchase
or other equity-based stock plans in effect, in each case as
amended from time to time.
(f) Without limiting the generality of Section 10.7 (Entire Agreement;
No Third-Party Beneficiaries), the provisions of this Section 7.4
shall be limited by and subject to the provisions of Section 10.7.
7.5 INDEMNIFICATION
(a) Parent and Sub agree that all rights to indemnification for all acts
or omissions occurring prior to the Effective Time now existing in
favor of the current or former directors or officers of the Company
and its subsidiaries (the INDEMNIFIED PARTIES) as provided in their
respective certificates of incorporation, by-laws or indemnification
agreements shall survive the Merger and shall continue in full force
and effect in accordance with their terms until the expiration of
the applicable statute of limitations; provided, that in the event
any claim or claims are asserted or made prior to the expiration of
all applicable statutes of limitations, all rights to
indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims.
(b) Parent shall, or shall cause the Surviving Corporation to, maintain
in effect for six years after the Effective Time the current
policies of directors' and officers' liability insurance maintained
by
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the Company and the Company Subsidiaries on the date hereof
(provided that Parent may substitute therefor policies with
reputable and financially sound carriers having at least the same
coverage and amounts thereof and containing material terms and
conditions that are no less advantageous to the persons currently
covered by such policies as the insured) for acts or omissions
occurring at or prior to the Effective Time to the extent that such
liability insurance can be maintained annually at a cost to Parent
not greater than 200% of the current annual premium for the current
Company directors' and officers' liability insurance; provided,
however, that if such insurance cannot be so maintained or obtained
at such cost, Parent shall maintain or obtain as much of such
insurance as can be so maintained or obtained at a cost equal to
200% of the current annual premium of the Company for such
insurance.
7.6 FEES AND EXPENSES
(a) Except as provided below, all fees and expenses incurred in
connection with the Offer, the Merger and the other Transactions
shall be paid by the party incurring such fees or expenses, whether
or not the Offer or the Merger is consummated, except that printing
costs related to the Transactions are to be shared equally between
the Company and Parent.
(b) In the event that:
(i) this Agreement is terminated by the Company pursuant to
Section 9.1(e) or by Parent or Sub pursuant to Section
9.1(d)(i), or
(ii) (A) the Company has knowledge of a Company Takeover Proposal,
(B) a Company Takeover Proposal shall have been made directly
to holders of Company Common Stock or (C) any person has
announced an intention (whether or not conditional) to make a
Company Takeover Proposal, and thereafter this Agreement is
terminated pursuant to Section 9.1(b)(ii), 9.1(c), or
9.1(d)(ii),
and within twelve months of such termination the Company either
enters into an Acquisition Agreement or consummates a Company
Takeover Proposal, then the Company shall promptly, but in no event
later than the date of the earliest such event, pay to Parent a fee
equal to $15,000,000 (the TERMINATION FEE), payable by wire transfer
of same day funds.
(c) The Company acknowledges that the agreements contained in this
Section 7.6 are an integral part of the Transactions, and that,
without these agreements, Parent and Sub would not enter into this
Agreement. Accordingly, if the Company fails promptly to make a
payment due pursuant to this Section 7.6, and, in order to obtain
such payment, Parent or Sub commences a suit that results in a
judgment against the Company, the Company shall pay to Parent and
Sub their reasonable costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest
on the amount set forth in this Section 7.6 at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be
made. The Company acknowledges and agrees that the payment of any
amounts due pursuant to this Section 7.6 shall not constitute the
exclusive remedy of Parent and Sub under this Agreement. Without
limiting the generality of the foregoing, in the event of a breach
or deemed breach by the Company of Section 6.2, Parent and Sub shall
be entitled to the remedies set forth in Section 10.10, including an
injunction, and all other remedies available at law or in equity to
which Parent and Sub are entitled.
(d) In no event shall more than one Termination Fee be payable
hereunder.
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7.7 PUBLIC ANNOUNCEMENTS
Parent and Sub, on the one hand, and the Company, on the other hand, shall
to the extent reasonably practicable consult with each other before
issuing, and provide each other a reasonable opportunity to review and
comment upon, any press release or other public statements with respect to
the Offer, the Merger and the other Transactions and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law, by court
process or by obligations pursuant to any listing agreement with any
national securities exchange.
7.8 TRANSFER TAXES
All stock transfer, real estate transfer, documentary, stamp, recording
and other similar Taxes (including interest, penalties and additions to
any such Taxes) (TRANSFER TAXES) incurred in connection with the
Transactions shall be paid by the party upon whom the primary burden is
placed by the applicable Law. Each party shall cooperate with the other in
preparing, executing and filing any Tax Returns with respect to such
Transfer Taxes, including supplying in a timely manner a complete list of
all real property interests held by the Company and any information with
respect to such property that is reasonably necessary to complete such Tax
Returns.
7.9 STOCKHOLDER LITIGATION
The Company shall give Parent the opportunity to participate at Parent's
expense in the defense or settlement of any stockholder litigation against
the Company and its directors relating to any Transaction and the Company
shall not agree to any such settlement without Parent's consent.
7.10 FURTHER ASSURANCES
At and after the Effective Time, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of the Company or Sub, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of
the Company or Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
7.11 ADDITIONAL AGREEMENT REGARDING BENEFIT PLANS
For a period of one year after the Effective Time, Parent will cause the
Surviving Corporation to provide benefit plans and arrangements to
employees of the Surviving Corporation who were employees of the Company
or the Company Subsidiaries as of the Effective Time that are no less
favorable in the aggregate than the benefit plans and arrangements
(excluding compensation and equity-based plans and arrangements) provided
to such employees as of the date hereof. Parent shall, or shall cause the
Surviving Corporation to (a) waive all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation
and coverage requirements applicable to the employees of the Surviving
Corporation who were employees of the Company or the Company Subsidiaries
as of the Effective Time under any welfare plan in which such employees
are eligible to participate after the Effective Time, to the extent that
such conditions, exclusions and waiting periods would not apply under a
similar plan of the Company in which such employees participated prior to
the Effective Time and (b) provide each such employee with credit for
service with the Company and the Company Subsidiaries under each employee
benefit plan, program, or arrangement in which such employees become
eligible to participate following the Effective Time for purposes of
eligibility to participate and vesting of benefits,
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but not for purposes of benefit accruals, levels or amounts of benefits
including any employer contributions.
8. CONDITIONS PRECEDENT
CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligation of each party to effect the Merger is subject to the
satisfaction or, if permitted by applicable Law, waiver on or prior to the
Closing Date of the following conditions:
(a) STOCKHOLDER APPROVAL. If required by Law, the Company shall have
obtained the Company Stockholder Approval.
(b) ANTITRUST AND OTHER REGULATORY APPROVALS. Any consents, approvals
and filings under any foreign competition and antitrust Law,
including the German Federal Cartel Office, the absence of which
would prohibit the consummation of the Merger, shall have been
obtained or made. All other regulatory approvals required to
consummate the Transactions contemplated hereby whether U.S. or
foreign shall have been obtained and shall be in full force and
effect.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in
effect; provided, however, that prior to asserting this condition,
subject to Section 7.3, the party asserting such condition shall
have used all reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
(d) NO STATUTORY PROHIBITION. No statute, rule or regulation shall have
been enacted or promulgated by any Governmental Entity that
prohibits consummation of the Merger.
(e) PURCHASE OF COMMON STOCK. Sub shall have previously accepted for
payment and paid for shares of Company Common Stock pursuant to the
Offer.
9. TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, whether before or after receipt of
Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if any Governmental Entity issues an order, decree or ruling
or takes any other action permanently enjoining, restraining
or otherwise prohibiting the acceptance for payment of, or
payment for, shares of Company Common Stock pursuant to the
Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
(ii) if as the result of the failure of any of the conditions set
forth in Annex 1 to this Agreement, (A) Sub shall have failed
to commence the Offer within 30 days following the date of
this Agreement or (B) the Offer shall have terminated or
expired in
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accordance with its terms (including after giving effect to
any extensions) without Sub having purchased any shares of
Company Common Stock pursuant to the Offer prior to September
30, 2005, provided, however, that the right to terminate this
Agreement pursuant to this Subsection (ii) shall not be
available to any party whose failure to comply with its
obligations under or breach of this Agreement results in the
failure of any such condition;
(c) by Parent, if any representation or warranty made by the Company in
this Agreement shall not be true and correct, or if the Company
breaches or fails to perform in any material respect any of its
covenants or agreements contained in this Agreement, which failure
to be true and correct, breach or failure to perform (i) would give
rise to the failure of a condition set forth in Annex 1 and (ii)
cannot be or has not been cured within 15 days after the giving of
written notice to the Company of such breach;
(d) by Parent if (i) either Parent or Sub is entitled to terminate the
Offer as a result of the occurrence of any event set forth in
paragraph (e) of Annex 1 to this Agreement or (ii) there shall not
have been validly tendered and not withdrawn prior to the expiration
of the Offer at least a majority of the outstanding shares of
Company Common Stock, on a fully diluted basis, on or prior to such
date;
(e) by the Company, prior to the acceptance for payment of shares of
Company Common Stock pursuant to the Offer, in accordance with
Section 6.2(b); provided, however, that, in order for the
termination of this Agreement pursuant to this subparagraph to be
effective, the Company shall have complied with all of the
provisions of Section 6.2, including the notice provisions therein,
and with all applicable requirements of Section 7.6 including
payment of the Termination Fee; or
(f) by the Company prior to the acceptance of shares of Company Common
Stock for payment pursuant to the Offer, if Parent shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants or agreements contained in
this Agreement and if such failure to perform cannot be or has not
been cured within 15 days after the giving of written notice to
Parent of such breach.
9.2 EFFECT OF TERMINATION
In the event of termination of this Agreement by either the Company or
Parent as provided in Section 9.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part
of Parent, Sub or the Company, other than Section 4.20, Section 5.6,
Section 7.2(b), Section 7.6, this Section 9.2 and Article 10, which
provisions shall survive such termination, and except that nothing in this
Section 9.2 shall relieve a party from liability for fraud or to the
extent that such termination pursuant to Section 9.1 results from the
willful and material breach by a party of any representation, warranty or
covenant set forth in this Agreement.
9.3 AMENDMENT
This Agreement may be amended, supplemented or modified by the parties at
any time before or after receipt of the Company Stockholder Approval;
provided, however, that after receipt of the Company Stockholder Approval,
there shall be made no amendment, supplement or modification that by Law
requires further approval by the stockholders of the Company without the
further approval of such stockholders. This Agreement may not be amended,
supplemented or modified except by an instrument in writing duly executed
and delivered by or on behalf of each of the parties.
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9.4 EXTENSION; WAIVER
At any time prior to the Effective Time, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the
other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to the proviso of Section 9.3,
waive compliance with any of the agreements or conditions contained in
this Agreement. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing
duly executed and delivered by or on behalf of such party. The failure or
delay of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
10. GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES
None of the representations and warranties in this Agreement (including
the Company Disclosure Schedule and the Parent Disclosure Schedule) or in
any instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 10.1 shall not limit any covenant or
agreement of the parties hereto that by its terms contemplates performance
after the Effective Time.
10.2 NOTICES
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given upon receipt (or
upon the next succeeding business day if received after 5 p.m. local time
on a business day or if received on a Saturday, Sunday or United States
holiday) by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
SAP America, Inc.
3999 West Chester Pike
Newtown Square, PA 19073
Attention: Brad C. Brubaker
with a copy to each of:
SAP America, Inc.
3999 West Chester Pike
Newtown Square, PA 19073
Attention: James Mackey
SAP AG
Neurottstrasse 16
69190 Walldorf
Germany
Attention: Michael Junge
and
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Allen & Overy LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: A. Peter Harwich
Eric S. Shube
(b) if to the Company, to:
Retek Inc.
950 Nicollet Mall
Minneapolis, MN 55403
Attention: Thomas F. Carretta
with a copy to:
Faegre & Benson LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Attention: Michael A. Stanchfield
Steven C. Kennedy
10.3 DEFINITIONS
For purposes of this Agreement:
(a) an AFFILIATE, when used with reference to any person, means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with such first person;
(b) a MATERIAL ADVERSE EFFECT on a party means any state of facts,
change, development or occurrence that would reasonably be expected
(i) to be material and adverse to the business, assets, properties,
financial condition or results of operations of the party and the
subsidiaries of the party taken as a whole or (ii) directly or
indirectly to prevent or materially impede or materially delay the
consummation of the Offer or the Merger, except for changes,
developments or occurrences relating to (A) the economy, the
securities markets or the software industry in general that do not
have a significantly disproportionate effect on the party and the
subsidiaries of the party, (B) the public announcement or existence
of this Agreement (including with respect to employees, customers
and prospective customers), (C) acts of terrorism or war (whether or
not declared) or (D) actions or omissions expressly required by this
Agreement or taken with the prior written consent of Parent;
(c) IN THE ORDINARY COURSE OF BUSINESS, with respect to any action,
means such action is:
(i) consistent with the recent past practices of such person and
is taken in the ordinary course of the normal day-to-day
operations of such person; and
(ii) not required to be authorized by the Board of Directors of
such person;
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(d) as it relates to the Company, KNOWLEDGE means, with respect to any
matter in question, the actual knowledge of the Company's directors
and executive officers, including the individuals listed on Section
10.3(d) of the Company Disclosure Schedule;
(e) a PERSON means any individual, firm, corporation, partnership,
company, limited liability company, division, trust, joint venture,
association, Governmental Entity or other entity or organization;
and
(f) a SUBSIDIARY of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least 50% of its Board
of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person.
10.4 INTERPRETATION; COMPANY DISCLOSURE SCHEDULE
(a) When a reference is made in this Agreement to an Article, Section,
Subsection or Schedule, such reference shall be to an Article,
Section or Subsection of, or a Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. The term "or" is not exclusive. The definitions contained
in this Agreement are applicable to the singular as well as the
plural forms of such terms. Any agreement or instrument defined or
referred to herein or in any agreement or instrument that is
referred to herein means such agreement or instrument as from time
to time amended, modified or supplemented, except as otherwise
specified herein. References to a person are also to its permitted
successors and assigns.
(b) Matters reflected in the Company Disclosure Schedule are not
necessarily limited to matters required by this Agreement to be so
reflected. Such additional matters are set forth for informational
purposes and do not necessarily include other matters of a similar
nature. Any matter disclosed in any section of the Company
Disclosure Schedule shall be deemed disclosed with respect to all
Sections of this Agreement to the extent that such disclosure of the
matter is reasonably sufficient to inform Parent of the nature of
the matter. If the same item is required to be disclosed in more
than one section of the Company Disclosure Schedule, such item may
be fully described in the principal section to which such item
relates and incorporated into another section by a specific cross
reference in such other section to the section in which such item is
fully described. Nothing in the Company Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or
warranty made herein unless the Company Disclosure Schedule
identifies the exception with reasonable particularity. Without
limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty
made herein (unless the representation or warranty has to do with
the existence of the document or other item itself or the copy
adequately describes the matter at issue).
10.5 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or Law, or public policy, all
other terms and provisions of this Agreement shall nevertheless remain
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in full force and effect so long as the economic and legal substance of
the Transactions is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable
manner to the end that the Transactions are fulfilled to the extent
possible.
10.6 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
10.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement, taken together with the Company Disclosure Schedule and
the Parent Disclosure Schedule constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the Transactions. For the avoidance of
doubt and without limiting the foregoing, except for the provisions of
Article 3 and Section 7.5 (and only in that case after the Effective
Time), no other provision of this Agreement, including any provision
relating to employee benefits or compensation, shall be deemed to confer
any rights as a third-party beneficiary or otherwise on any person
notwithstanding any principle of contractual interpretation that would
otherwise be deemed to establish or confer such rights.
10.8 GOVERNING LAW
This Agreement (and any claims or disputes arising out of or related
thereto or to the transactions contemplated thereby or to the inducement
of any party to enter therein, whether for breach of contract, tortious
conduct or otherwise and whether predicated on common law, statute or
otherwise) shall in all respects be governed by and construed in
accordance with the Laws of the State of New York, including all matters
of construction, validity and performance, in each case without reference
to any conflict of Law rules that might lead to the application of the
Laws of any other jurisdiction, except to the extent the Laws of Delaware
are mandatorily applicable to the Company Board (including the fiduciary
duties thereof and any actions taken pursuant to Section 6.2), the
stockholders of the Company or the Merger.
10.9 ASSIGNMENT
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation
of Law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly-owned subsidiary
of Parent, but no such assignment shall relieve Sub of any of its
obligations under this Agreement if its transferee does not perform such
obligations. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and assigns.
10.10 ENFORCEMENT; WAIVER OF JURY TRIAL
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to seek an injunction or
injunctions or other appropriate equitable relief to prevent breaches of
this Agreement and to enforce specifically the terms
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and provisions of this Agreement in any federal court located in the State
of Delaware or any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity, and the
parties hereby waive in any such proceeding the defense of adequacy of a
remedy at law and any requirement for the securing or posting of any bond
or any other security relating to such equitable relief. In addition, each
of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute (whether in contract, tort
or otherwise) arises out of this Agreement or any Transaction, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) agrees that it
will not bring any action relating to this Agreement or any Transaction in
any court other than any federal court located in the State of Delaware or
any Delaware state court and (d) waives any right to trial by jury with
respect to any action related to or arising out of this Agreement or any
Transaction.
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SIGNATORIES
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
SAP AMERICA, INC.,
By: /s/ Brad C. Brubaker
---------------------------
Brad C. Brubaker
Authorized Signatory
SAPPHIRE EXPANSION CORPORATION,
By: /s/ James Mackey
---------------------------
James Mackey
President
RETEK INC.,
By: /s/ Martin J. Leestma
--------------------------
Martin J. Leestma
President and Chief Executive Officer
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ANNEX 1
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of Company Common Stock which would represent at
least a majority of the Fully Diluted Shares (the MINIMUM TENDER CONDITION) and
(ii) any waiting period under the HSR Act, the German Federal Cartel Office and
any other similar and necessary foreign approvals or waiting periods applicable
to the purchase of shares of Company Common Stock pursuant to the Offer shall
have expired or been terminated. The term FULLY DILUTED SHARES means all
outstanding securities entitled generally to vote in the election of directors
of the Company on a fully diluted basis, after giving effect to the exercise or
conversion of all options (other than the option granted pursuant to the Top-Up
Option), rights and securities exercisable or convertible into such voting
securities. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to commence the Offer, accept for payment
or, subject as aforesaid, to pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, with the consent of the Company if, at any time on or after the date of
this Agreement and before the acceptance of such shares for payment or the
payment therefor, any of the following conditions exists:
(a) there shall be pending or threatened any suit, action or proceeding by any
Governmental Entity, or pending any suit, action or proceeding that has a
reasonable likelihood of success by any other person, (i) challenging the
acquisition by Parent or Sub of any Company Common Stock, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or any other Transaction or, other than litigation that is set forth in
Section 4.12(a) of the Company Disclosure Schedule, seeking to obtain from
the Company, Parent or Sub or any of their respective subsidiaries or
affiliates any damages that are material in relation to the Company and
the Company Subsidiaries taken as whole, (ii) seeking to prohibit or limit
the ownership or operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries or
affiliates, or to compel the Company, Parent or any of their respective
subsidiaries or affiliates to dispose of or hold separate any material
portion of the business or assets of the Company, Parent or any of their
respective subsidiaries or affiliates, as a result of the Offer, the
Merger or any other Transaction, (iii) seeking to impose limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights
of ownership of, any shares of Company Common Stock, including the right
to vote the Company Common Stock purchased by it on all matters properly
presented to the stockholders of the Company, (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company and the Company
Subsidiaries or (v) other than litigation that is set forth in Section
4.12(a) of the Company Disclosure Schedule, that otherwise individually or
in the aggregate would reasonably be expected to have a Company Material
Adverse Effect;
(b) any Law or Judgment shall have been enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to,
or any Consent or Permit withheld with respect to, (i) Parent, the Company
or any of their respective subsidiaries or affiliates or (ii) the Offer,
the Merger or any other Transaction, in either case by any Governmental
Entity that individually or
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in the aggregate would reasonably be expected to result, directly or
indirectly, in any of the consequences referred to in paragraph (a) above;
(c) since the date of this Agreement, there shall have occurred any event,
change or development that, individually or in the aggregate, has had or
would reasonably be expected to have a Company Material Adverse Effect;
(d) there shall have occurred and be continuing at the time immediately prior
to such obligation of Sub (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States (other than a
shortening of trading hours or any trading halt triggered solely as a
result of a specified increase or decrease in a market index), (ii) any
extraordinary adverse change in the financial markets or major stock
exchange indices in the United States or (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States;
(e) the Company Board or any committee thereof shall have (i) failed to
recommend the Offer or the approval and adoption of this Agreement and the
Merger by the stockholders of the Company or withdrawn or modified the
approval or recommendation of the Company Board or any committee thereof
of this Agreement, the Offer, the Merger or the other Transactions
(including by amendment of the Schedule 14D-9) in a manner adverse to
Parent, (ii) approved or recommended to the stockholders of Company a
Company Takeover Proposal or announced its intention to enter into an
Acquisition Agreement with respect to a Company Takeover Proposal or (iii)
approved or recommended that stockholders of the Company tender their
shares of Company Common Stock into any tender offer or exchange offer
that is a Company Takeover Proposal or is related thereto;
(f) any representation and warranty of the Company in this Agreement shall not
be true and correct (disregarding solely for purposes of this paragraph
(f) any materiality or Company Material Adverse Effect qualifications
therein), which failure to be true and correct, individually or in the
aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect as of the scheduled or extended expiration of the
Offer, except to the extent such representation and warranty expressly
relates to an earlier date (in which case on and as of such earlier date);
(g) any representation and warranty of the Company contained in Section 4.3 or
Section 4.17 of this Agreement that is qualified as to materiality or
material adverse effect shall not be true and correct or any such
representation and warranty that is not so qualified shall not be true and
correct in any material respect, as of the date of this Agreement and as
of the scheduled or extended expiration of the Offer, except to the extent
such representation and warranty expressly relates to an earlier date (in
which case on and as of such earlier date);
(h) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(i) the Company shall have (i) failed to timely file with the SEC its annual
report on Form 10-K including all information required to be disclosed
pursuant to Item 9A of Form 10-K or (ii) failed to include in its annual
report on Form 10-K an unqualified opinion from its auditors on the
Company's financial statements; or
(j) this Agreement shall have been terminated in accordance with its terms.
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The foregoing conditions are for the sole benefit of Sub and Parent and may be
asserted by Sub or Parent regardless of the circumstances giving rise to such
condition or may be waived by Sub and Parent in whole or in part at any time and
from time to time in their sole discretion; provided, however, that the Minimum
Tender Condition may not be waived. The failure by Parent, Sub or any other
affiliate of Parent at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be deemed
an ongoing right that may be asserted at any time and from time to time.
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