o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to § 240.14a-12 |
o | No fee required | |||
þ | Fee computed on table below per Exchange Act Rules l4a-6(i)(l) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
Common stock, par value $0.01 per share, of Ascential Software Corporation | ||||
(2) | Aggregate number of securities to which transaction applies: | |||
(a) 59,678,561 shares of Ascential common stock and 11,932,900 shares of Ascential common stock underlying outstanding options to purchase Ascential common stock, of which 6,396,436 shares underlie options with an exercise price of less than $18.50 (in each case based on the number of outstanding shares and options as of March 16, 2005). | ||||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
The filing fee of $133,956.25 was calculated pursuant to Exchange Act Rule 0-11(c) and is equal to $117.70 per million of the aggregate merger consideration of $1,138,115,934.92. The aggregate merger consideration is calculated as the sum of (a) the product of 59,678,561 shares of Ascential’s common stock and the merger consideration of $18.50 per share in cash and (b) the difference between $18.50 per share and the exercise price per share for each of the 6,396,436 options outstanding to purchase shares of Ascential’s common stock that have an exercise price of less than $18.50 per share. | ||||
(4) | Proposed maximum aggregate value of transaction: | |||
$1,138,115,934.92 | ||||
(5) | Total fee paid: | |||
$133,956.25 | ||||
þ | Fee paid previously with preliminary materials: | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount previously paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: | |||
April 1, 2005 |
Sincerely | |
Peter Gyenes | |
Chairman and Chief Executive Officer |
1. To consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of March 13, 2005, among International Business Machines Corporation, a New York corporation, Ironbridge Acquisition Corp., a Delaware corporation and wholly owned subsidiary of IBM, and Ascential Software Corporation as more fully described in the enclosed proxy statement; | |
2. To consider and vote on any proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposal; and | |
3. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
By Order of the Board of Directors | |
ASCENTIAL SOFTWARE CORPORATION | |
Scott N. Semel | |
Secretary |
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Q: | What am I being asked to vote on? | |
You are being asked to vote to adopt a merger agreement that provides for the proposed acquisition of Ascential by IBM, and to vote to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies in favor of the proposal to adopt the merger agreement in the event that there are not sufficient votes to adopt the merger agreement. The proposed acquisition would be accomplished through a merger of Ironbridge Acquisition Corp., a wholly owned subsidiary of IBM (which we sometimes refer to as “merger sub”), with and into Ascential. As a result of the merger, Ascential will become a wholly-owned subsidiary of IBM and Ascential common stock will cease to be quoted on The NASDAQ National Market, will not be publicly traded and will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). | ||
Q: | What will Ascential’s stockholders receive in the merger? | |
A: | As a result of the merger, our stockholders will receive $18.50 cash, without interest and less any applicable withholding tax, for each share of Ascential common stock they own. For example, if you own 100 shares of Ascential common stock, you will receive $1,850.00 in cash less any applicable withholding tax in exchange for these shares. | |
Q: | What do I need to do now? | |
A: | We urge you to read this proxy statement carefully and to consider how the merger affects you. Then just mail your completed, dated and signed proxy card in the enclosed return envelope as soon as possible, or vote via the Internet or telephone, so that your shares can be voted at the special meeting of our stockholders. If you hold your shares in “street name” follow the instructions from your broker on how to vote your shares. Please do not send in your stock certificates with your proxy. | |
Q: | How does Ascential’s board of directors recommend I vote? | |
A: | At a meeting held on March 11, 2005, Ascential’s board of directors unanimously approved the merger agreement and declared the merger agreement and the merger advisable and in the best interests of Ascential stockholders. Our board of directors unanimously recommends that you vote“FOR”adoption of the merger agreement and“FOR”the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. | |
Q: | What factors did our board of directors consider in making its recommendation? | |
A: | In making its recommendation, our board of directors took into account, among other things, the cash consideration to be received by holders of our common stock in the merger and the current and historical market prices of Ascential common stock; the current and future competitive landscape in the data integration business; the timing of the proposed merger; the status and history of discussions with other potential bidders; the written opinion of our financial advisor, Deutsche Bank Securities Inc.; and the terms of the merger agreement, including our ability to furnish information to, and conduct negotiations with, a third party should we receive a superior proposal. |
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Q: | Who is entitled to vote at the special meeting? | |
A: | Only stockholders of record as of the close of business on March 29, 2005 are entitled to receive notice of the special meeting and to vote the shares of our common stock that they held at that time at the special meeting, or at any adjournments or postponements of the special meeting. | |
Q: | May I vote in person? | |
A: | Yes. If your shares are not held in “street name” through a broker or bank you may attend the special meeting and vote your shares in person, rather than signing and returning your proxy card or voting via the Internet or telephone. If your shares are held in “street name,” you must get a proxy from your broker or bank in order to attend the special meeting and vote. | |
Q: | May I vote via the Internet or telephone? | |
A: | If your shares are registered in your name, you may vote by returning a signed proxy card or voting in person at the special meeting. Additionally, you may submit a proxy authorizing the voting of your shares over the Internet at www.eproxyvote.com/ascl or telephonically by calling 1-877-PRX-VOTE (1-877-779-8683). Proxies submitted over the Internet or by telephone must be received by 11:59 p.m. Eastern Standard Time on April 28, 2005. You must have the enclosed proxy card available, and follow the instructions on such proxy card, in order to submit a proxy over the Internet or telephone. | |
If your shares are held in “street name” through a broker or bank, you may vote by completing and returning the voting form provided by your broker or bank, or by the Internet or telephone through your broker or bank if such a service is provided. To vote via the Internet or telephone through your broker or bank, you should follow the instructions on the voting form provided by your broker or bank. | ||
Q: | What happens if I do not return my proxy card, vote via the Internet or telephone or attend the special meeting and vote in person? | |
The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the shares of our common stock outstanding on the record date. Therefore, if you do not return your proxy card, vote via the Internet or telephone or attend the special meeting and vote in person, or instruct your broker or bank how to vote your shares if your shares are held in “street name,” it will have the same effect as if you voted against the merger. For the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies, abstentions will have no effect on the outcome. | ||
Q: | May I change my vote after I have mailed my signed proxy card? | |
A: | Yes. You may change your vote at any time before your proxy card is voted at the special meeting. If your shares are registered in your name, you can do this in one of three ways. |
• | First, you can deliver to the Secretary of Ascential a written notice bearing a date later than the proxy stating that you would like to revoke your proxy. | |
• | Second, you can complete, execute and deliver to the Secretary of Ascential a new, later-dated proxy card for the same shares. If you submitted the proxy you are seeking to revoke via the Internet or telephone, you may submit this later-dated new proxy using the same method of transmission (Internet or telephone) as the proxy being revoked, provided the new proxy is received by 11:59 p.m. Eastern Standard Time on April 28, 2005. | |
• | Third, you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy. |
Any written notice of revocation or subsequent proxy should be delivered to Ascential Software Corporation at 50 Washington Street, Westborough, Massachusetts 01581, Attention: Secretary, or hand-delivered to our Secretary at or before the taking of the vote at the special meeting. |
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If you have instructed a broker to vote your shares, you must follow directions received from your broker to change those instructions. | ||
Q: | If my broker holds my shares in “street name,” will my broker vote my shares for me? | |
A: | Your broker will not be able to vote your shares without instructions from you. You should instruct your broker to vote your shares following the procedure provided by your broker. Without instructions, your shares will not be voted, which will have the same effect as if you voted against adoption of the merger agreement. Broker non-votes will have no effect on the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. | |
Q: | What should I do if I receive more than one set of voting materials? | |
A: | You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return (or vote via the Internet or telephone with respect to) each proxy card and voting instruction card that you receive. | |
Q: | What happens if I sell my shares of Ascential common stock before the special meeting? | |
A: | The record date for the special meeting is earlier than the date of the special meeting and the date that the merger is expected to be completed. If you transfer your shares of Ascential common stock after the record date but before the special meeting, you will retain your right to vote at the special meeting, but will transfer the right to receive the merger consideration. | |
Q: | Will the merger be taxable to me? | |
A: | Yes. The receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes, and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Generally, for U.S. federal income tax purposes, a stockholder will recognize gain or loss equal to the difference between the amount of cash received by the stockholder in the merger and the stockholder’s adjusted tax basis in the shares of Ascential common stock converted into cash in the merger. If the shares of Ascential common stock are held by a stockholder as capital assets, gain or loss recognized by such stockholder will be capital gain or loss, which will be long-term capital gain or loss if the stockholder’s holding period for the shares of Ascential common stock exceeds one year. Capital gains recognized by an individual upon a disposition of a share of Ascential that has been held for more than one year generally will be subject to a maximum U.S. federal income tax rate of 15% or, in the case of a share that has been held for one year or less, will be subject to tax at ordinary income tax rates. In addition, there are limits on the deductibility of capital losses. Because individual circumstances may differ, you should consult your own tax advisor to determine the particular tax effects to you. See “The Merger — Material United States Federal Income Tax Consequences of the Merger.” | |
Q: | What will holders of Ascential stock options receive in the merger? | |
A: | At least five days prior to the effective time of the merger, each outstanding stock option will automatically accelerate so that each such stock option will become fully exercisable. All stock options not exercised prior to the effective time of the merger will be canceled in the merger, with the holder of each stock option becoming entitled to receive, in full satisfaction of the rights of such holder with respect to such stock options, an amount in cash equal to the excess, if any, of the merger consideration of $18.50 per share over the exercise price per share of Ascential common stock subject to such stock option, multiplied by the number of shares of Ascential common stock subject to such stock option, less any withholding taxes. All amounts payable will be paid at or as soon as practicable following the effective time of the merger, without interest. As of March 29, 2005 there were 6,379,125 outstanding options to purchase shares of our common stock with an exercise price per |
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share that is less than $18.50, the per share merger consideration. See “The Merger Agreement — Treatment of Ascential Stock Options and Other Equity Awards.” | ||
Q: | What will holders of shares of restricted Ascential common stock receive in the merger? | |
A: | Each restricted share outstanding at the effective time of the merger will be converted in the merger into the right to receive the merger consideration of $18.50 in cash, without interest and less any applicable withholding tax. This right to receive cash will be subject to, and payable to the holder of such restricted share in accordance with, the terms of the grant of such restricted share as in effect at the effective time of the merger. See “The Merger Agreement — Treatment of Ascential Stock Options and Other Equity Awards.” | |
Q: | When do you expect the merger to be completed? | |
A: | We are working toward completing the merger as quickly as possible and expect to consummate the merger in the second quarter of 2005. In addition to obtaining stockholder approval, we must satisfy all other closing conditions, including the receipt of regulatory approvals. See “The Merger Agreement — Conditions to Closing.” | |
Q: | Am I entitled to appraisal rights? | |
A: | Yes. As a holder of our common stock, you are entitled to appraisal rights under the Delaware General Corporation Law in connection with the merger if you meet certain conditions, which conditions are described in this proxy statement under the caption “The Merger — Appraisal Rights.” | |
Q: | Should I send in my Ascential stock certificates now? | |
A: | No. After the merger is completed, you will receive written instructions for exchanging your shares of our common stock for the merger consideration of $18.50 in cash, without interest and less any applicable withholding tax, for each share of our common stock you hold. The instructions will provide that, at your election, certificates may be surrendered, and the merger consideration in exchange for the certificates may be collected, by hand delivery. | |
Q: | Who can help answer my questions? | |
A: | If you would like additional copies, without charge, of this proxy statement or if you have questions about the merger, including the procedures for voting your shares, you should contact: |
Ascential Software Corporation | |
Attn: Investor Relations | |
50 Washington Street | |
Westborough, Massachusetts 01581 | |
Innisfree M&A Incorporated | |
501 Madison Avenue, 20th Floor | |
New York, New York 10022 | |
Shareholders, call toll-free: (877) 687-1873 | |
Banks and Brokers, call collect: (212) 750-5833 |
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Ascential Software Corporation | |
50 Washington Street | |
Westborough, Massachusetts 01581 | |
Telephone: (508) 599-7290 |
International Business Machines Corporation | |
New Orchard Road | |
Armonk, New York 10504 | |
Telephone: (914) 499-1900 |
Ironbridge Acquisition Corp. | |
New Orchard Road | |
Armonk, New York 10504 | |
Telephone: (914) 499-1900 |
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• | the business, competitive position, strategy and prospects of Ascential, the risk that we will successfully implement our strategy and achieve our prospects, the competitive position of current and likely competitors in the industry in which we compete, and current industry, economic and market conditions; | |
• | the fact that discussions with potential strategic parties over the last two years and sharing information relating to our business with certain of those entities who entered into confidentiality |
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agreements with us have not resulted in an offer to acquire Ascential or entry into another strategic transaction involving Ascential that we consider to be superior to the offer made by IBM; | ||
• | the risk that if we do not accept IBM’s offer now, we will not have another opportunity to do so; | |
• | the fact that the $18.50 per share in cash to be paid as merger consideration represents approximately a (a) 32.2% premium to the average trading price 180 days prior to March 10, 2005 of $13.99 per share, (b) 42.4% premium to our average enterprise value (market capitalization minus cash) 30 days prior to March 10, 2005 of $452 million, (c) 42.0% over the enterprise value on March 10, 2005 of $453 million, and (d) 19.2% premium to the closing price on March 10, 2005 of $15.52 per share for our common stock on The NASDAQ National Market; | |
• | the financial analysis presented by Deutsche Bank Securities Inc. (“Deutsche Bank”) as well as the written opinion of Deutsche Bank to the effect that, as of that date, and based upon and subject to the considerations described in its opinion, the $18.50 per share in cash consideration to be received by the holders of our common stock pursuant to the merger agreement is fair, from a financial point of view, to such stockholders; Deutsche Bank confirmed its opinion in writing as of the date of the merger agreement and a copy of this opinion is attached to this proxy statement as Annex B; you should read the opinion in its entirety for a description of the procedures followed, assumptions and qualifications made, matters considered, and limitations of the review undertaken, by Deutsche Bank; | |
• | the value of the consideration to be received by Ascential stockholders and the fact that the consideration would be paid in cash, which provides certainty and immediate value to our stockholders; | |
• | the fact that the merger is not subject to any financing condition; | |
• | the possible alternatives to the merger (including the possibility of continuing to operate Ascential as an independent entity and the perceived risks of that alternative), the range of potential benefits to our stockholders of the possible alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, and our board of directors’ assessment that none of such alternatives were reasonably likely to present superior opportunities for Ascential or to create greater value for our stockholders taking into account risks of execution as well as business, competitive, industry and market risks, than the merger; | |
• | the likelihood that the proposed acquisition would be completed, in light of the financial capabilities of, and our prior dealings with, IBM as well as its reputation; and | |
• | the environment and trends in the data integration industry, including industry consolidation and pricing trends. |
• | the fact that we will no longer exist as an independent public company and our stockholders will forgo any future increase in our value that might result from our possible growth; | |
• | the risks and contingencies related to the announcement and pendency of the merger, including the impact of the merger on our employees, customers and our relationships with third parties; | |
• | the conditions to IBM’s obligation to complete the merger and the right of IBM to terminate the merger agreement in certain circumstances; | |
• | the risk that the merger might not receive necessary regulatory approvals and clearances to complete the merger or that governmental authorities could attempt to condition the merger on one or more of the parties’ compliance with certain burdensome terms or conditions; | |
• | the fact that under the terms of the merger agreement, we cannot solicit other acquisition proposals and must pay to IBM a termination fee of $30 million, if the merger agreement is terminated under |
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certain circumstances, which, in addition to being costly, might have the effect of discouraging other parties from proposing an alternative transaction that might be more advantageous to our stockholders than the merger; | ||
• | the fact that the income realized by stockholders as a result of the merger generally will be taxable to our stockholders; | |
• | the interests that certain directors and executive officers of Ascential may have with respect to the merger, in addition to their interests as stockholders of Ascential generally, as described in “The Merger — Interests of Ascential’s Executive Officers and Directors in the Merger;” and | |
• | the fact that, pursuant to the merger agreement, we must generally conduct our business in the ordinary course and we are subject to a variety of other restrictions on the conduct of our business prior to closing of the merger or termination of the merger agreement, which may delay or prevent us from pursuing business opportunities that may arise or preclude actions that would be advisable if we were to remain an independent company. |
• | consider and vote upon a proposal to adopt the merger agreement, | |
• | consider and vote on any proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposal, and | |
• | transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
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• | Pursuant to certain agreements between IBM and each of our executive officers, each of our executive officers will become an employee of IBM following the effective time of the merger. Messrs. Gyenes and McBride will become employees for a 90-day transition period, and Mr. Semel will become an employee for a 180-day transition period, and each will be entitled to receive specified salaries during the transition period and will receive a severance payment at the end of such period. Mr. Fiore will become a regular IBM employee and will be entitled to an annual base salary and retention bonuses and will be eligible to be paid a performance bonus; | |
• | Each of our executive officers is also a party to a restricted stock agreement with us. In accordance with the terms of the restricted stock agreement, in connection with the merger the restricted stock award will be converted into a cash retention award. The agreements which our executive officers have entered into with IBM provide that each executive officer will (absent a voluntary termination without good reason or a termination for cause) receive a payment of the full amount of such retention award upon the expiration of their respective transition period in the case of Messrs. Gyenes, McBride and Semel, and in the case of Mr. Fiore, the payment in respect of his restricted stock will be made in four equal increments on the first four six-month anniversaries of the date the stockholders approve the merger; | |
• | Our executive officers and the members of our board of directors hold, in the aggregate, unvested options with respect to 1,246,387 shares of Ascential common stock. The aggregate cash payment attributable to the unvested options held by our executive officers and the members of our board of directors that will be accelerated in connection with the merger and paid out at closing, will be approximately $3,549,417, assuming all such options remain outstanding at the closing of the merger; | |
• | The merger agreement provides for the continuation of indemnification arrangements, including indemnification insurance, for our current and former directors and executive officers if the merger is completed; and | |
• | We have also agreed with IBM that, prior to the closing of the merger, each of our employees who participates in our annual bonus plans (including the executive officers) may receive a payment equal to his or her target bonus for 2005, pro-rated for the period of the year that has elapsed prior to the closing. |
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• | the proposal to adopt the merger agreement is approved by the requisite stockholder vote at the special meeting; | |
• | the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and any other material approval or waiting period under any other applicable competition, merger control, antitrust or similar law or regulation that is required to complete the merger has been obtained or terminated or has expired; and | |
• | no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition that has the effect of preventing the closing of the merger is in effect. |
• | our representations and warranties made pursuant to the merger agreement that are qualified as to materiality are true and correct (as so qualified), and the representations and warranties that are not so qualified are true and correct in all material respects, in each case as of the date of the merger agreement and as of the closing date of the merger, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date; | |
• | we have performed in all material respects obligations required to be performed by us under the merger agreement at or prior to the closing of the merger; | |
• | there is no pending claim, suit, action or proceeding brought or threatened by any governmental entity that has a reasonable likelihood of success which would: |
• | challenge or seek to restrain or prohibit the consummation of the merger; | |
• | seek to obtain from IBM any damages that are material in relation to the value of us and our subsidiaries, taken as a whole; | |
• | seek to prohibit or limit in any respect, or place any conditions on, the ownership or operation by us or IBM of all or any portion of the business, assets or any product of us or our subsidiaries or IBM or its subsidiaries, or to require any of us to dispose of, license (whether pursuant to an exclusive or nonexclusive license) or hold separate any portion of the business or assets or any products of us and our subsidiaries or IBM and its subsidiaries; | |
• | seek to impose limitations on the ability of IBM to hold, or exercise ownership of, any shares of the stock of the surviving corporation in the merger; or | |
• | restrain the ability of IBM from operating our business immediately following the closing substantially in the manner operated by us prior to the closing; |
• | there is no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition in effect that could reasonably be expected to result, directly or indirectly, in any of the effects described in the immediately preceding bullet point; and | |
• | we have not suffered a material adverse effect since the date of the merger agreement. |
• | IBM’s representations and warranties made pursuant to the merger agreement that are qualified as to materiality are true and correct (as so qualified), and the representations and warranties that are |
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not so qualified are true and correct in all material respects, in each case as of the date of the merger agreement and as of the closing date of the merger, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date; and | ||
• | each of IBM and merger sub has performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date of the merger. |
• | by mutual written consent of IBM, merger sub and us; | |
• | by either IBM or us, if the merger has not been completed by July 13, 2005, for any reason, other than if the merger is not completed by such date because any applicable waiting period under the HSR Act or any other material approval or waiting period under applicable competition, merger control, antitrust or similar law or regulation that is required to complete the merger, is not obtained, terminated or expired but all other conditions have been satisfied, in which case either IBM or we can terminate the merger agreement if the merger is not completed by October 13, 2005; | |
• | by either IBM or us, if any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition having the effect of preventing the closing of the merger is in effect and has become final and nonappealable; | |
• | by either IBM or us, if our stockholders do not adopt the merger agreement at a duly held stockholders meeting; | |
• | by us if (1) any event has occurred which would result in the inability of any condition to our obligations to complete the merger to be satisfied prior to the termination date or (2) IBM has breached in any material respect any of its representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform is capable of being cured by IBM by the termination date, but IBM does not commence to cure such breach or failure within 10 business days after its receipt of written notice from us and diligently pursue such cure thereafter; | |
• | by IBM if (1) any event has occurred which would result in the inability of any condition to IBM’s obligations to complete the merger to be satisfied prior to the termination date, (2) we have breached in any material respect any of our representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform is capable of being cured by us by the termination date, but we do not commence to cure such breach or failure within 10 business days after its receipt of written notice from IBM and diligently pursue such cure thereafter, or (3) any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition having the effects described in the third bullet point under conditions to IBM’s obligation to complete the merger under “Summary — Conditions to Closing of the Merger” above has become final and nonappealable; or | |
• | by IBM in the event that our board of directors or any of its committees takes any of the following actions: |
• | withdraws or modifies in a manner adverse to IBM or merger sub, or proposes publicly to withdraw or modify in a manner adverse to IBM or merger sub, the recommendation or |
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declaration of advisability by our board of directors or any of its committees of the merger agreement or the merger, or resolves or agrees to take any such action; | ||
• | recommends or proposes publicly to recommend the approval or adoption of any other takeover proposal or resolves or agrees to take any such action; or | |
• | fails to publicly reaffirm its recommendation for the adoption of the merger agreement within 10 business days of a written request from IBM to do so. |
• | solicit, initiate or encourage, or take any other action knowingly to facilitate, any takeover proposal or the making of any inquiry or proposal that is reasonably likely to lead to a takeover proposal; or | |
• | enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or otherwise cooperate with, any takeover proposal. |
(1)(a) | a takeover proposal has been made known to us or our stockholders, or any person has announced an intent to make a takeover proposal and thereafter the merger agreement is terminated by either Ascential or IBM because: | |
• | the merger has not been consummated by July 13, 2005 or October 13, 2005, as applicable; | |
• | our stockholders do not adopt the merger agreement at the special meeting; or | |
• | our board of directors fails to publicly reaffirm its recommendation of the adoption of the merger agreement 10 business days after being asked to do so by IBM; and | |
(b) | prior to the date that is 12 months after the date of termination of the merger agreement, we enter into a takeover proposal or a takeover proposal is consummated; or |
(2) | IBM terminated the merger agreement because our board of directors has taken any of the actions described in the first two bullet points under the seventh bullet point under “Termination of the Merger Agreement” above. |
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Ascential | |||||||||
Common Stock | |||||||||
Low | High | ||||||||
Year ended December 31, 2003 | |||||||||
First Quarter | $ | 8.64 | $ | 13.16 | |||||
Second Quarter | 10.56 | 18.00 | |||||||
Third Quarter | 14.51 | 20.34 | |||||||
Fourth Quarter | 18.33 | 26.50 | |||||||
Year ended December 31, 2004 | |||||||||
First Quarter | $ | 20.00 | $ | 27.93 | |||||
Second Quarter | 14.57 | 24.00 | |||||||
Third Quarter | 11.17 | 15.20 | |||||||
Fourth Quarter | 13.10 | 16.31 | |||||||
Year ended December 31, 2005 | |||||||||
First Quarter (through March 30, 2005) | $ | 13.51 | $ | 18.91 |
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Ascential’s | ||||
Common Stock | ||||
Closing Price | ||||
March 11, 2005 | $ | 15.70 | ||
March 30, 2005 | $ | 18.65 |
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• | First, you can deliver to the Secretary of Ascential a written notice bearing a date later than the proxy stating that you would like to revoke your proxy. | |
• | Second, you can complete, execute and deliver to the Secretary of Ascential a new, later-dated proxy card for the same shares. If you submitted the proxy you are seeking to revoke via the Internet or telephone, you may submit this later-dated new proxy using the same method of transmission (Internet or telephone) as the proxy being revoked, provided the new proxy is received by 11:59 p.m. Eastern Standard Time on April 28, 2005. | |
• | Third, you can attend the special meeting and vote in person. Your attendance alone will not revoke your proxy. |
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• | Mr. Gyenes updated the board of directors on developments since its February 18, 2005 meeting, including discussions regarding the status of final issues in the negotiations with IBM. | |
• | A representative of Skadden, Arps outlined the key terms of the merger agreement and legal duties and responsibilities of the board of directors. | |
• | Representatives of Deutsche Bank and management apprised the board of directors of the status of discussions with the other potential strategic partner. | |
• | Representatives of Deutsche Bank then reviewed with our board of directors its financial analyses with respect to the proposed transaction. Following its presentation, Deutsche Bank delivered its oral opinion to our board of directors, later confirmed by a written opinion dated March 13, 2005, that, as of that date and subject to the matters and assumptions set forth in the opinion, the $18.50 per share in cash consideration to be received by the holders of our common stock pursuant to the merger agreement is fair, from a financial point of view, to the holders of our common stock. See “The Merger — Opinion of Ascential’s Financial Advisor.” | |
• | A representative of Skadden, Arps reviewed with the board the final terms of the proposed employment agreements between the executive officers and certain other members of management and IBM which would become effective upon closing of the proposed merger and other interests of management in the transaction. |
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• | the business, competitive position, strategy and prospects of Ascential, the risk that we will successfully implement our strategy and achieve our prospects, the competitive position of current and likely competitors in the industry in which we compete, and current industry, economic and market conditions; | |
• | the fact that discussions with potential strategic parties over the last two years and sharing information relating to our business with certain of those entities who entered into confidentiality agreements with us have not resulted in an offer to acquire Ascential or entry into another strategic transaction involving Ascential that we consider to be superior to the offer made by IBM; | |
• | the risk that if we do not accept IBM’s offer now, we will not have another opportunity to do so; | |
• | the fact that the $18.50 per share in cash to be paid as merger consideration represents approximately a (a) 32.2% premium to the average trading price 180 days prior to March 10, 2005 of $13.99 per share, (b) 42.4% premium to our average enterprise value (market capitalization minus cash) 30 days prior to March 10, 2005 of $452 million, (c) 42.0% over the enterprise value on March 10, 2005 of $453 million, and (d) 19.2% premium to the closing price on March 10, 2005 of $15.52 per share for our common stock on The NASDAQ National Market; | |
• | the financial analysis presented by Deutsche Bank as well as the written opinion of Deutsche Bank to the effect that, as of that date, and based upon and subject to the considerations described in its opinion, the $18.50 per share in cash consideration to be received by the holders of our common stock pursuant to the merger agreement is fair, from a financial point of view, to such stockholders; Deutsche Bank confirmed its opinion in writing as of the date of the merger agreement and a copy of this opinion is attached to this proxy statement as Annex B; you should read the opinion in its |
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entirety for a description of the procedures followed, assumptions and qualifications made, matters considered, and limitations of the review undertaken, by Deutsche Bank; | ||
• | the value of the consideration to be received by Ascential stockholders and the fact that the consideration would be paid in cash, which provides certainty and immediate value to our stockholders; | |
• | the fact that the merger is not subject to any financing condition; | |
• | the possible alternatives to the merger (including the possibility of continuing to operate Ascential as an independent entity and the perceived risks of that alternative), the range of potential benefits to our stockholders of the possible alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, and our board of directors’ assessment that none of such alternatives were reasonably likely to present superior opportunities for Ascential or to create greater value for our stockholders taking into account risks of execution as well as business, competitive, industry and market risks, than the merger; | |
• | the likelihood that the proposed acquisition would be completed, in light of the financial capabilities of, and our prior dealings with, IBM as well as its reputation; and | |
• | the environment and trends in the data integration industry, including industry consolidation and pricing trends. |
• | the fact that we will no longer exist as an independent public company and our stockholders will forgo any future increase in our value that might result from our possible growth; | |
• | the risks and contingencies related to the announcement and pendency of the merger, including the impact of the merger on our employees, customers and our relationships with third parties; | |
• | the conditions to IBM’s obligation to complete the merger and the right of IBM to terminate the merger agreement in certain circumstances; | |
• | the risk that the merger might not receive necessary regulatory approvals and clearances to complete the merger or that governmental authorities could attempt to condition the merger on one or more of the parties’ compliance with certain burdensome terms or conditions; | |
• | the fact that under the terms of the merger agreement, we cannot solicit other acquisition proposals and must pay to IBM a termination fee of $30 million, if the merger agreement is terminated under certain circumstances, which, in addition to being costly, might have the effect of discouraging other parties from proposing an alternative transaction that might be more advantageous to our stockholders than the merger; | |
• | the fact that the income realized by stockholders as a result of the merger generally will be taxable to our stockholders; | |
• | the interests that certain directors and executive officers of Ascential may have with respect to the merger, in addition to their interests as stockholders of Ascential generally, as described in “The Merger — Interests of Ascential’s Executive Officers and Directors in the Merger;” and | |
• | the fact that, pursuant to the merger agreement, we must generally conduct our business in the ordinary course and we are subject to a variety of other restrictions on the conduct of our business prior to closing of the merger or termination of the merger agreement, which may delay or prevent us from pursuing business opportunities that may arise or preclude actions that would be advisable if we were to remain an independent company. |
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• | reviewed certain publicly available financial information and other information concerning Ascential and certain internal analyses and other information furnished to it by Ascential; | |
• | reviewed the reported prices and trading activity for the common stock of Ascential; | |
• | compared certain financial and stock market information for Ascential with similar information for certain companies whose securities are publicly traded; | |
• | reviewed the financial terms of certain recent business combinations which it deemed comparable in whole or in part; | |
• | reviewed the terms of the merger agreement; and | |
• | performed such other studies and analyses and considered such other factors as it deemed appropriate. |
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• | the representations and warranties of Ascential, IBM and merger sub contained in the merger agreement are true and correct; | |
• | Ascential, IBM and merger sub will each perform all of the covenants and agreements to be performed by it under the merger agreement; | |
• | all conditions to the obligations of each of Ascential, IBM and merger sub to consummate the merger will be satisfied without any waiver or modification thereof; | |
• | all material governmental, regulatory or other approvals and consents required in connection with the completion of the transactions contemplated by the merger agreement will be obtained; and | |
• | in connection with obtaining any necessary governmental, regulatory or other approvals and consents, or any amendments, modifications or waivers to any agreements, instruments or orders to which either Ascential or IBM is a party or is subject or by which it is bound, no limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made that would have an adverse effect on Ascential or IBM. |
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• | the range of multiples of Enterprise Value to tax-effected EBIT for the Selected Companies on an estimated calendar year 2005 basis was 18.2x to 29.3x and the range of implied share prices of Ascential common stock based upon such multiples was $14.11 to $17.62 per share; and | |
• | the range of multiples of Share Price to EPS for the Selected Companies on an estimated calendar year 2005 basis was 24.4x to 30.6x and the range of implied share prices of Ascential common stock based upon such multiples was $10.72 to $13.45 per share. |
Announcement Date | Target | Acquiror | ||
2/28/2005 | Retek | SAP/ Oracle | ||
1/25/2005 | Corio Software | IBM | ||
1/27/2005 | MAPICS | Infor Solutions | ||
12/16/2004 | Veritas | Symantec | ||
12/13/2004 | PeopleSoft | Oracle | ||
10/6/2004 | Netegrity | Computer Associates | ||
4/29/2004 | Marimba | BMC | ||
3/3/2004 | Merant Plc | Serena | ||
12/15/2003 | VMWare | EMC | ||
10/14/2003 | Documentum | EMC | ||
7/8/2003 | Legato Systems | EMC | ||
6/1/2003 | J.D. Edwards | PeopleSoft |
• | the range of implied share prices of Ascential common stock based upon multiples of Enterprise Value to forward twelve month tax-effected EBIT for the target companies in the Selected Transactions was $15.30 to $19.30 per share; and |
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• | the range of implied share prices of Ascential common stock based upon multiples of Share Price to forward twelve month EPS for the target companies in the Selected Transactions was $10.58 to $17.60 per share. |
• | the range of implied share prices of Ascential common stock based upon its Enterprise Value on March 10, 2005 and premiums paid over the closing share price for the target companies in the Selected Business Combinations one trading day prior to the announcement of the respective Selected Business Combinations, excluding the first and fourth quartiles, was $16.62 to $20.86 per share; and | |
• | the range of implied share prices of Ascential common stock based upon its Enterprise Value four weeks prior to March 10, 2005 and premiums paid over the closing share price for the target companies in the Selected Business Combinations four weeks prior to the announcement of the respective Selected Business Combinations, excluding the first and fourth quartiles, was $15.13 to $19.10 per share. |
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• | the certificate is properly endorsed or otherwise is in proper form for transfer, and | |
• | the person requesting such payment: |
• | pays any transfer or other taxes resulting from the payment to a person other than the registered holder of the certificate; or | |
• | establishes to us, the surviving corporation in the merger, that the tax has been paid or is not applicable. |
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• | corporate organization and similar corporate matters; | |
• | our subsidiaries; | |
• | our capitalization; | |
• | authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of, and notices to, governmental authorities and third parties relating to, the merger agreement and related matters with respect to Ascential; | |
• | documents Ascential has filed with the Securities and Exchange Commission, the accuracy of certain specified financial statements filed since January 1, 2002 and other information contained in documents we filed with the SEC since January 1, 2002, in certain instances only to the extent any inaccuracy is not reasonably likely to result in a material adverse effect, and its compliance with the Sarbanes-Oxley Act of 2002 and other matters with respect to our internal controls and procedures; | |
• | accuracy of information supplied by Ascential in connection with this proxy statement; | |
• | absence of material adverse effects or material write-downs of material assets, in each case since December 31, 2003, absence of dividends, stock splits, combinations or reclassifications of capital stock, certain employee-related events, changes in financial or tax accounting methods, tax elections or any licensing or other agreement with regard to material intellectual property or rights thereto, in each case since September 30, 2004 through the date of the merger agreement, continuation of pricing, sales, receivables and payables production practice in the ordinary course of business consistent with past practice and the absence of promotional sales or discount activity outside the ordinary course of business, each since December 31, 2003 through the date of the merger agreement; | |
• | certain outstanding, pending and threatened litigation as of the date of the merger agreement; | |
• | certain of our contracts; | |
• | our compliance with applicable laws, judgments and permits; | |
• | absence of changes in our benefit plans, employment agreements and labor relations; | |
• | environmental matters of Ascential; | |
• | matters relating to Ascential’s benefit plans and agreements and the Employee Retirement Income Security Act; | |
• | tax matters with respect to Ascential; | |
• | title to our material properties and tangible assets and rights to leasehold interests; | |
• | our intellectual property; | |
• | applicability of certain state takeover statutes’ requirements to Ascential and its satisfaction of those statutes; | |
• | the inapplicability of certain of our charter provisions and our company rights agreement to the merger; | |
• | the required vote of our stockholders; | |
• | our engagement of, and payment of fees to, brokers, investment bankers and financial advisors, and fees payable by Ascential to other advisors in connection with the merger agreement and the merger; and |
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• | our receipt of a fairness opinion from Deutsche Bank. |
• | their corporate organization and similar corporate matters; | |
• | authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of, and notices to, governmental authorities and third parties relating to, the merger agreement and related matters with respect to IBM and merger sub; | |
• | accuracy of information supplied by IBM or merger sub in connection with this proxy statement; and | |
• | merger sub’s lack of prior operating activity. |
• | the declaration, setting aside or payment of any dividends on, or other distributions in respect of, our capital stock; | |
• | the split, combination or reclassification of our capital stock, or the issuance of any other securities in respect of, in lieu of or in substitution for shares of our capital stock or other equity or voting interests, the purchase, redemption or other acquisition of any of our or our subsidiaries’ securities or issuance, delivery, sale, pledge or other encumbrance of any of our or our subsidiaries’ equity securities (other than the issuance of Ascential common stock upon the exercise of stock options, the granting of stock options in specified circumstances or rights under the ESPP); | |
• | the incurrence, prepayment, amendment, modification or change of any term of any indebtedness; | |
• | the amendment or proposal to amend our or their certificate of incorporation or bylaws or similar organizational documents; | |
• | the acquisition of any business or person or division thereof, or any material assets other than in the ordinary course of business or the acquisition of third party intellectual property other than in the ordinary course of business consistent with past practice; | |
• | the sale, lease or encumbrance of our assets, subject to certain exceptions regarding real property leases; | |
• | loans, capital contributions to, or investments in, any other person, other than us or any of our direct or indirect wholly owned subsidiaries; | |
• | the incurrence of capital expenditures; | |
• | the settlement and discharge of claims; | |
• | the waiver of the right to enforce, release, relinquish, transfer or assign any right of material value or the waiver of a material benefit or granting of consent under a standstill agreement; |
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• | the entry into, amendment, renewal or termination of material contracts, contracts outside the ordinary course of business or certain categories of contracts; | |
• | our benefit plans and benefit agreements; | |
• | any action (or failure to take any action) if such action (or omission) is reasonably likely to result in any of our representations and warranties set forth in the merger agreement that are qualified as to materiality becoming untrue (as so qualified) or any of our representations and warranties that are not so qualified becoming untrue in any material respect; | |
• | adoption or entry into collective bargaining agreement or other labor union contract applicable to employees of Ascential or its subsidiaries, or termination of the employment of any Ascential employee (other than for “cause”) who has the right under any agreement to receive severance payments or similar benefits as a result of such termination; | |
• | the write-down of any of our material assets, including intellectual property or the making of any changes in financial or tax accounting methods, principles or practices, in each case, except as required by GAAP or applicable law; | |
• | engagement in certain activities and practices with the effect of accelerating to prior or subsequent fiscal quarters (including the current fiscal quarter) sales, receivables or payments that would otherwise be expected (based on past practice) to occur in subsequent or prior fiscal quarters, other than in the ordinary course of business consistent with past practice; | |
• | any action or failure to take any action which would result in the material loss or reduction of value of our intellectual property, taken as a whole, except that we are not required to engage in additional research and development activity or commence litigation or similar proceedings with respect to our intellectual property; or | |
• | authorization of any, or commitment, resolution or agreement to take any of, the actions described in the previous bullet points. |
• | solicit, initiate or encourage, or take any other action knowingly to facilitate, any takeover proposal or the making of any inquiry or proposal that is reasonably likely to lead to a takeover proposal; or | |
• | enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or otherwise cooperate with, any takeover proposal. |
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• | withdraw or modify in a manner adverse to IBM or merger sub, or propose publicly to withdraw or modify in a manner adverse to IBM or merger sub, the recommendation or declaration of advisability by our board of directors or any committee of our board of the merger agreement or merger or propose publicly to recommend the adoption or approval of any takeover proposal or resolve or agree to take any such action (any such action being referred to as an “adverse recommendation change”), unless our board of directors or a committee of our board determines in its good faith judgment that the failure to take such action is reasonably likely to result in a breach of its fiduciary duties under applicable law; | |
• | adopt or approve any takeover proposal, or propose the adoption or approval of any takeover proposal or resolve or agree to take any such action; or | |
• | cause or permit us to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (referred to as an “acquisition agreement”) constituting or related to, or which is intended to or is reasonably likely to lead to, any takeover proposal (other than a confidentiality agreement, as discussed above) or resolve or agree to take any such action. |
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• | the proposal to adopt the merger agreement is approved by the requisite stockholder vote at the special meeting; | |
• | the waiting period required under the HSR Act and any other material approval or waiting period under any other applicable competition, merger control, antitrust or similar law or regulation that is required to complete the merger has been obtained or terminated or has expired; and |
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• | no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition that has the effect of preventing the closing of the merger is in effect. |
• | our representations and warranties made pursuant to the merger agreement that are qualified as to materiality are true and correct (as so qualified), and the representations and warranties that are not so qualified are true and correct in all material respects, in each case as of the date of the merger agreement and as of the closing date of the merger, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date; | |
• | we have performed in all material respects obligations required to be performed by us under the merger agreement at or prior to the closing of the merger; | |
• | there is no pending claim, suit, action or proceeding brought or threatened by any governmental entity that has a reasonable likelihood of success which would: |
• | challenge or seek to restrain or prohibit the consummation of the merger; | |
• | seek to obtain from IBM any damages that are material in relation to the value of us and our subsidiaries, taken as a whole; | |
• | seek to prohibit or limit in any respect, or place any conditions on, the ownership or operation by us or IBM of all or any portion of the business, assets or any product of us or our subsidiaries or IBM or its subsidiaries, or to require any of us to dispose of, license (whether pursuant to an exclusive or nonexclusive license) or hold separate any portion of the business or assets or any products of us and our subsidiaries or IBM and its subsidiaries; | |
• | seek to impose limitations on the ability of IBM to hold, or exercise ownership of, any shares of the stock of the surviving corporation in the merger; or | |
• | restrain the ability of IBM from operating our business immediately following the closing substantially in the manner operated by us prior to the closing; |
• | there is no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition in effect that could reasonably be expected to result, directly or indirectly, in any of the effects described in the immediately preceding bullet point; | |
• | we have not suffered a material adverse effect since the date of the merger agreement. |
• | IBM’s representations and warranties made pursuant to the merger agreement that are qualified as to materiality are true and correct (as so qualified), and the representations and warranties that are not so qualified are true and correct in all material respects, in each case as of the date of the merger agreement and as of the closing date of the merger, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date; and | |
• | each of IBM and merger sub has performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date of the merger. |
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• | by mutual written consent of IBM, merger sub and us; | |
• | by either IBM or us, if the merger has not been completed by July 13, 2005 for any reason, other than if the merger is not completed by such date because any applicable waiting period under the HSR Act or any other material approval or waiting period under applicable competition, merger control, antitrust or similar law or regulation that is required to complete the merger, is not obtained, terminated or expired but all other conditions have been satisfied, in which case either IBM or we can terminate the merger agreement if the merger is not completed by October 13, 2005; | |
• | by either IBM or us, if any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition having the effect of preventing the closing of the merger is in effect and has become final and nonappealable; | |
• | by either IBM or us, if our stockholders do not adopt the merger agreement at a duly held stockholders meeting; | |
• | by us if (1) any event has occurred which would result in the inability of any condition to our obligations to complete the merger to be satisfied prior to the termination date or (2) IBM has breached in any material respect any of its representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform is capable of being cured by IBM by the termination date, but IBM does not commence to cure such breach or failure within 10 business days after its receipt of written notice from us and diligently pursue such cure thereafter; | |
• | by IBM if (1) any event has occurred which would result in the inability of any condition to IBM’s obligations to complete the merger to be satisfied prior to the termination date, (2) we have breached in any material respect any of our representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform is capable of being cured by us by the termination date, but we do not commence to cure such breach or failure within 10 business days after its receipt of written notice from IBM and diligently pursue such cure thereafter, or (3) any temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition having the effects described in the third bullet point under conditions to IBM’s obligation to complete the merger under “The Merger Agreement — Conditions to Closing” above has become final and nonappealable; or | |
• | by IBM in the event that our board of directors or any of its committees takes any of the following actions: |
• | withdraws or modifies in a manner adverse to IBM or merger sub, or proposes publicly to withdraw or modify in a manner adverse to IBM or merger sub, the recommendation or declaration of advisability by our board of directors or any of its committees of the merger agreement or the merger or resolves or agrees to take such action; | |
• | recommends or proposes publicly to recommend the approval or adoption of any other takeover proposal or resolves or agrees to take any such action; or | |
• | fails to publicly reaffirm its recommendation for the adoption of the merger agreement within 10 business days of a written request from IBM to do so. |
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(1) (a) | a takeover proposal has been made known to us or our stockholders, or any person has announced an intent to make a takeover proposal and thereafter the merger agreement is terminated by either Ascential or IBM because: |
• | the merger has not been consummated by July 13, 2005 or October 13, 2005, as applicable; | |
• | our stockholders do not adopt the merger agreement at the special meeting; or | |
• | our board of directors fails to publicly reaffirm its recommendation of the adoption of the merger agreement 10 business days after being asked to do so by IBM; and |
(b) | prior to the date that is 12 months after the date of termination of the merger agreement, we enter into a takeover proposal or a takeover proposal is consummated; or |
(2) | IBM terminated the merger agreement because our board of directors (a) withdrew or modified in a manner adverse to IBM or merger sub, or proposed publicly to withdraw or modify in a manner adverse to IBM or merger sub, the recommendation or declaration of advisability by our board of directors or any of its committees of the merger agreement or the merger, or (b) recommended or proposed publicly to recommend the approval or adoption of any other takeover proposal, or resolved or agreed to take any such action. |
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• | general, legal, market, economic or political conditions affecting the industries in which we participate, except where conditions have a materially disproportionate adverse impact on us and our subsidiaries, taken as a whole; | |
• | the pendency or announcement of the merger agreement, including any customer or supplier reaction to the identity of IBM; | |
• | any litigation brought or threatened by stockholders of Ascential or IBM (whether on behalf of Ascential, IBM or otherwise) asserting allegations of a breach of fiduciary duty relating to the merger agreement, violations of securities laws in connection with this proxy statement or otherwise in connection with the merger agreement; | |
• | any action required to comply with the rules and regulations of the SEC or the SEC comment process as such process applies to the proxy statement; | |
• | any decrease in the market price or trading volume of Ascential common stock (it being understood that the underlying cause or causes of any such decrease may be deemed to constitute, in and of itself or themselves, a material adverse effect and may be taken into consideration when determining whether a material adverse effect has occurred); | |
• | Ascential’s failure to meet any internal or published projections, forecasts or revenue or earnings predictions or published industry analyst expectations (it being understood that the underlying cause or causes of any such failure may be deemed to constitute, in and of itself and themselves, a material adverse effect and may be taken into consideration when determining whether a material adverse effect has occurred); or | |
• | any change in applicable accounting requirements or principles which occurs or becomes effective after the date of the merger agreement. |
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Percentage of | ||||||||||
Number of Shares | Common Stock | |||||||||
Name and Address of Beneficial Owner | Beneficially Owned | Outstanding(1) | ||||||||
5% Stockholders | ||||||||||
Merrill Lynch & Co., Inc.(2) | 3,626,306 | 6.1 | % | |||||||
c/o Merrill Lynch Investment Managers, L.P. | ||||||||||
800 Scudders Mill Road | ||||||||||
Plainsboro, New Jersey 08536 | ||||||||||
Directors and Officers | ||||||||||
Peter Gyenes(3) | 1,530,574 | 2.5 | % | |||||||
Robert M. Morrill(4) | 170,734 | * | ||||||||
John J. Gavin, Jr.(5) | 17,500 | * | ||||||||
David J. Ellenberger(6) | 12,500 | * | ||||||||
William J. Weyand(7) | 8,334 | * | ||||||||
Peter Fiore(8) | 710,544 | 1.2 | ||||||||
Robert C. McBride(9) | 266,405 | * | ||||||||
Scott N. Semel(10) | 195,762 | * | ||||||||
All directors and current executive officers as a group (8 people)(11) | 2,912,353 | 4.7 | % |
* | Less than 1%. |
(1) | The percentage of ownership for each person listed in the table above is based on 59,687,118 shares of common stock outstanding as of March 29, 2005, together with applicable options or warrants for such person (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). | |
(2) | Includes 1,074,940 shares of common stock held by Merrill Lynch Investment Managers, L.P. d/b/a Merrill Lynch Investment Managers (“MLIM LP”) and 2,551,366 shares of common stock held by Fund Asset Management, L.P. d/b/a Fund Asset Management (“FAM LP”). Both MLIM LP and FAM LP are indirect wholly owned subsidiaries of Merrill Lynch & Co., Inc. (“ML&Co.”) and |
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according, ML&Co. may be deemed to beneficially own such shares of common stock. MLIM LP and FAM LP are investment advisors registered under Section 203 of the Investment Advisors Act of 1940 and act as investment advisors for certain registered investment companies as well as client accounts. This information is based solely upon information provided by Merrill Lynch Investment Managers, a division of ML&Co., to Ascential on March 17, 2005. |
(3) | Includes 1,271,054 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005. Mr. Gyenes is the Chairman of our board of directors and the Chief Executive Officer of Ascential. | |
(4) | Includes 79,109 shares of common stock held in trust for the benefit of Mr. Morrill’s children. Mr. Morrill and his wife each serve as trustee over such trusts, and Mr. Morrill has shared voting and shared investment power over the shares held therein. Also includes 91,625 shares of common stock issuable upon exercise of outstanding options, which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Morrill is a member of our board of directors. | |
(5) | Consists of 17,500 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Mr. Gavin is a member of our board of directors. | |
(6) | Consists of 12,500 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Mr. Ellenberger is a member of our board of directors. | |
(7) | Consists of 8,334 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Mr. Weyand is a member of our board of directors. | |
(8) | Includes 606,226 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Mr. Fiore is our President. | |
(9) | Includes 196,092 shares of common stock issuable upon exercise of outstanding options, which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Mr. McBride is our Vice President and Chief Financial Officer. |
(10) | Includes 128,878 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). Mr. Semel is our Vice President, General Counsel and Secretary. |
(11) | Includes 2,332,209 shares of common stock issuable upon exercise of outstanding options which are presently exercisable or will become exercisable within 60 days of March 29, 2005 (without giving effect to any possible acceleration of vesting of options pursuant to the merger agreement and regardless of the exercise price of such option and its relation to the merger consideration). |
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Page | ||||||
ARTICLE I | ||||||
The Merger | ||||||
SECTION 1.01. | The Merger | A-7 | ||||
SECTION 1.02. | Closing | A-7 | ||||
SECTION 1.03. | Effective Time of the Merger | A-7 | ||||
SECTION 1.04. | Effects of the Merger | A-7 | ||||
SECTION 1.05. | Certificate of Incorporation and Bylaws | A-7 | ||||
SECTION 1.06. | Directors | A-8 | ||||
SECTION 1.07. | Officers | A-8 | ||||
ARTICLE II Conversion of Securities | ||||||
SECTION 2.01. | Conversion of Capital Stock | A-8 | ||||
SECTION 2.02. | Exchange of Certificates | A-8 | ||||
ARTICLE III Representations and Warranties | ||||||
SECTION 3.01. | Representations and Warranties of the Company | A-10 | ||||
SECTION 3.02. | Representations and Warranties of Parent and Sub | A-30 | ||||
ARTICLE IV Covenants Relating to Conduct of Business | ||||||
SECTION 4.01. | Conduct of Business | A-31 | ||||
SECTION 4.02. | No Solicitation | A-34 | ||||
SECTION 4.03. | Conduct by Parent | A-36 | ||||
ARTICLE V Additional Agreements | ||||||
SECTION 5.01 | Preparation of the Proxy Statement; Stockholders Meeting | A-36 | ||||
SECTION 5.02. | Access to Information; Confidentiality | A-38 | ||||
SECTION 5.03. | Reasonable Best Efforts; Consultation and Notice | A-38 | ||||
SECTION 5.04. | Equity Awards | A-41 | ||||
SECTION 5.05. | Indemnification, Exculpation and Insurance | A-42 | ||||
SECTION 5.06. | Fees and Expenses | A-42 | ||||
SECTION 5.07. | Public Announcements | A-43 | ||||
SECTION 5.08. | Sub Compliance | A-43 | ||||
SECTION 5.09. | Company Rights Agreement | A-43 | ||||
SECTION 5.10. | Certain Pre-Closing Actions | A-43 | ||||
ARTICLE VI Conditions Precedent | ||||||
SECTION 6.01. | Conditions to Each Party’s Obligation to Effect the Merger | A-44 | ||||
SECTION 6.02. | Conditions to Obligations of Parent and Sub | A-44 | ||||
SECTION 6.03. | Conditions to Obligation of the Company | A-45 | ||||
SECTION 6.04. | Frustration of Closing Conditions | A-45 |
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ARTICLE VII Termination, Amendment and Waiver | ||||||
SECTION 7.01. | Termination | A-45 | ||||
SECTION 7.02. | Effect of Termination | A-46 | ||||
SECTION 7.03. | Amendment | A-46 | ||||
SECTION 7.04. | Extension; Waiver | A-46 | ||||
ARTICLE VIII General Provisions | ||||||
SECTION 8.01. | Nonsurvival of Representations and Warranties | A-47 | ||||
SECTION 8.02. | Notices | A-47 | ||||
SECTION 8.03. | Definitions | A-47 | ||||
SECTION 8.04. | Exhibits and Schedules; Interpretation | A-49 | ||||
SECTION 8.05. | Counterparts | A-49 | ||||
SECTION 8.06. | Entire Agreement; No Third-Party Beneficiaries | A-49 | ||||
SECTION 8.07. | Governing Law | A-49 | ||||
SECTION 8.08. | Assignment | A-49 | ||||
SECTION 8.09. | Consent to Jurisdiction | A-49 | ||||
SECTION 8.10. | Waiver of Jury Trial | A-50 | ||||
SECTION 8.11. | Enforcement | A-50 | ||||
SECTION 8.12. | Consents and Approvals | A-50 | ||||
SECTION 8.13. | Severability | A-50 | ||||
EXHIBIT A | Form of Amended and Restated Certificate of Incorporation of the Surviving Corporation |
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Term | Section | |||
Acquisition Agreement | 4.02(b) | |||
Adverse Recommendation Change | 4.02(b) | |||
affiliate | 8.03(a) | |||
Agreement | Preamble | |||
Appraisal Shares | 2.02(g) | |||
Article Seven | 3.01(q) | |||
Benefit Agreements | 3.01(g) | |||
Benefit Plans | 3.01(k)(i) | |||
Certificate | 2.01(c) | |||
Certificate of Merger | 1.03 | |||
Closing | 1.02 | |||
Closing Date | 1.02 | |||
Code | 2.02(f) | |||
Commonly Controlled Entity | 3.01(k)(i) | |||
Company | Preamble | |||
Company Bylaws | 3.01(a) | |||
Company Certificate | 1.05(a) | |||
Company Common Stock | 2.01 | |||
Company Letter | 8.03(b) | |||
Company Personnel | 3.01(g) | |||
Company Preferred Stock | 3.01(c)(i) | |||
Company Product | 8.03(c) | |||
Company Rights | 3.01(c)(i) | |||
Company Rights Agreement | 3.01(c)(i) | |||
Company Stock Plans | 3.01(c)(i) | |||
Confidentiality Agreement | 4.02(a) | |||
Contract | 3.01(d) | |||
Derivative Work | 3.01(p)(iii) | |||
DGCL | 1.01 | |||
Effective Time | 1.03 | |||
Environmental Claim | 3.01(l) | |||
Environmental Laws | 3.01(l) | |||
ERISA | 3.01(m)(i) | |||
ESPP | 3.01(c)(i) | |||
ESPP Offering Period | 5.04(b) | |||
Exchange Act | 3.01(d) | |||
FCC | 5.02(b) | |||
FCC Licenses | 5.02(b) | |||
Filed SEC Documents | 3.01(e)(i) | |||
GAAP | 3.01(e)(i) | |||
Governmental Entity | 3.01(d) | |||
Hazardous Substances | 3.01(l) |
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Term | Section | |||
HSR Act | 3.01(d) | |||
indebtedness | 3.01(c)(v) | |||
Intellectual Property | 3.01(p)(iv) | |||
IRS | 3.01(m)(i) | |||
Judgment | 3.01(d) | |||
knowledge | 8.03(d) | |||
Law | 3.01(d) | |||
Leased Real Property | 3.01(o)(iii) | |||
Legal Restraints | 6.01(c) | |||
Liens | 3.01(b) | |||
made available | 8.03(e) | |||
Major Customer | 3.01(i)(i)(T) | |||
Major Customer Contract | 3.01(i)(i)(T) | |||
Major Supplier | 3.01(i)(i)(U) | |||
Major Supplier Contract | 3.01(i)(i)(U) | |||
Material Adverse Effect | 8.03(f) | |||
Merger | Recitals | |||
Merger Consideration | 2.01(c) | |||
Non-Affiliate Plan Fiduciary | 3.01(m)(ix) | |||
Owned Real Property | 3.01(o)(iii) | |||
Parent | Preamble | |||
Parent Contract | 8.03(g) | |||
Paying Agent | 2.02(a) | |||
Pension Plan | 3.01(m)(i) | |||
Permit | 8.03(h) | |||
Permitted Liens | 3.01(i)(i)(G) | |||
person | 8.03(i) | |||
Post-Signing Returns | 4.01(b) | |||
Primary Company Executives | 3.01(n)(vii) | |||
principal executive officer | 3.01(e)(iii) | |||
principal financial officer | 3.01(e)(iii) | |||
Proxy Statement | 3.01(d) | |||
Release | 3.01(l) | |||
Restricted Shares | 3.01(c)(i) | |||
Restricted Share Cash Amount | 5.04(a)(iii) | |||
SEC | 3.01(d) | |||
SEC Documents | 3.01(e)(i) | |||
Section 262 | 2.02(g) | |||
Securities Act | 3.01(e)(i) | |||
Software | 3.01(p)(iv) | |||
SOX | 3.01(e)(i) | |||
Stockholder Approval | 3.01(s) | |||
Stockholders Meeting | 5.01(c) | |||
Stock Options | 3.01(c)(i) |
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Term | Section | |||
Sub | Preamble | |||
subsidiary | 8.03(j) | |||
Subsidiary | 8.03(k) | |||
Superior Proposal | 4.02(a) | |||
Surviving Corporation | 1.01 | |||
Takeover Proposal | 4.02(a) | |||
Taxes | 3.01(n)(xiii) | |||
Tax Return | 3.01(n)(xiii) | |||
Taxing Authority | 3.01(n)(xiii) | |||
Termination Date | 7.01(b)(i) | |||
Termination Fee | 5.06(b) | |||
Third Party Software | 3.01(p)(iv) | |||
Welfare Plan | 3.01(m)(iv) |
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(a) Capital Stock of Sub. Each issued and outstanding share of common stock of Sub, par value $0.01 per share, shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. | |
(b) Cancelation of Treasury Stock and Parent-Owned Stock. All shares of Company Common Stock that are owned as treasury stock by the Company or owned by Parent or Sub immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist and no consideration shall be delivered or deliverable in exchange therefor. | |
(c) Conversion of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares to be canceled and retired in accordance with Section 2.01(b), (ii) the Appraisal Shares and (iii) Restricted Shares to the extent set forth in Section 5.04(a)(iii)) shall be converted into the right to receive $18.50 in cash, without interest (the “Merger Consideration”). At the Effective Time such shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented any such shares (a “Certificate”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration. The right of any holder of any share of Company Common Stock to receive the Merger Consideration shall be subject to and reduced by the amount of any withholding that is required under applicable tax Law. |
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(a) Organization, Standing and Corporate Power. Each of the Company and its Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization (except, in the case of good standing, for entities organized under the Laws of any jurisdiction that does not recognize such concept), (ii) has all requisite corporate, company or partnership power and authority to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing in each jurisdiction (except, in the case of good standing, any jurisdiction that does not recognize such concept) in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary or desirable, other than where the failure to be so organized, existing, qualified or licensed or in good standing (except in the case of clause (i) above with respect to the Company), individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on the Company. The Company has made available to Parent copies of the Company Certificate and the Second Amended and Restated Bylaws of the Company (the “Company Bylaws”) and the certificate of incorporation and bylaws (or similar organizational documents) of each of its Subsidiaries, in each case as amended to the date of this Agreement. The Company has made available to Parent and its representatives copies of the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of the stockholders, the Board of Directors and each committee of the Board of Directors of the Company and each of its Subsidiaries held since January 1, 2002. | |
(b) Subsidiaries. Section 3.01(b) of the Company Letter sets forth a complete and accurate list of each Subsidiary and its place of organization. All the outstanding shares of capital stock of, or other equity or voting interests in, each such Subsidiary are owned by the Company, by one or more wholly owned Subsidiaries of the Company or by the Company and one or more wholly owned Subsidiaries of the Company, free and clear of all pledges, claims, liens, charges, options to purchase, |
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security interests or other encumbrances of any kind or nature whatsoever other than Taxes not yet due and payable (collectively, “Liens”), except for transfer restrictions imposed by applicable securities Laws and are duly authorized, validly issued, fully paid and nonassessable. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other equity or voting interests in, any person. | |
(c) Capital Structure. (i) The authorized capital stock of the Company consists of 125,000,000 shares of Company Common Stock and 5,000,000 shares of Preferred Stock, par value $0.01 per share of the Company (the “Company Preferred Stock”). At the close of business on March 10, 2005, (A) 59,656,675 shares of Company Common Stock (excluding treasury shares) were issued and outstanding, including 819,000 restricted shares of Company Common Stock that are subject to transfer restrictions and/or subject to forfeiture back to the Company or repurchase by the Company (“Restricted Shares”), (B) 10,258,428 shares of Company Common Stock were held by the Company as treasury shares, (C) 11,955,673 shares of Company Common Stock were subject to outstanding options (other than rights under the Second Restated 1997 Employee Stock Purchase Plan (the “ESPP”)) to acquire shares of Company Common Stock pursuant to the Ardent Software, Inc. 1986 Non-Statutory Stock Option Plan, the Second Restated 1989 Outside Directors Stock Option Plan, the Ardent Software, Inc. 1991 Directors Stock Option Plan, the TSI International Software Ltd. 1993 Stock Option Plan, the Second Restated 1994 Stock Option and Award Plan, the Red Brick Systems, Inc. 1995 Stock Option Plan, the Red Brick Systems, Inc. Supplemental Stock Option Plan, the Ardent Software, Inc. 1995 Non-Statutory Stock Option Plan, the Torrent Systems, Inc. 1995 Equity Incentive Plan, the Novera Software Inc. 1996 Stock Option Plan, the Mercator Software, Inc. 1997 Equity Incentive Plan, the 1997 Non-Statutory Stock Option Plan and the Amended and Restated 1998 Non-Statutory Stock Option and Award Plan (together with any other stock options granted after the date of this Agreement under the Company Stock Plans pursuant to the terms of this Agreement or the Company Letter, the “Stock Options”) (such plans, together with the ESPP, the “Company Stock Plans”) and (D) 1,169,854 shares of Company Common Stock were reserved and available for issuance pursuant to the ESPP. Other than the Company Stock Plans, there is no Contract, plan or other arrangement providing for the grant of options exercisable for or into shares of Company Common Stock by the Company or any of its Subsidiaries. No shares of Company Preferred Stock are issued or outstanding. No shares of Company Common Stock are owned by any Subsidiary. The Company has made available to Parent (A) a complete and accurate list, as of the close of business on March 10, 2005, of all outstanding Stock Options, the number of shares subject to each such Stock Option, the grant dates, exercise prices and vesting schedule of each such Stock Option and the name of the holder thereof and (B) a complete and accurate list, as of the close of business on March 10, 2005, of all Restricted Shares, the grant dates, the names of the holders thereof and the form of Restricted Share grant agreement pursuant to which all Restricted Shares were granted that sets forth the date any forfeiture or repurchase conditions lapse and any repurchase price. As of the date of this Agreement, other than the Stock Options, rights under the ESPP, the Restricted Shares and the Company Series A Participating Preferred Stock purchase rights (the “Company Rights”) issued pursuant to the First Amended and Restated Rights Agreement dated August 12, 1997, as amended, between the Company and EquiServe Trust Company, N.A. (the “Company Rights Agreement”), there are no outstanding rights of any person to receive Company Common Stock under the Company Stock Plans or otherwise, on a deferred basis or otherwise. As of the close of business on March 10, 2005, there were outstanding rights to purchase 49,680 shares of Company Common Stock under the ESPP (assuming the fair market value per share of Company Common Stock on the last day of the ESPP Offering Period will be equal to the Merger Considerati on). As of the last day of the most recent semi-monthly payroll period ending prior to the date of this Agreement, the aggregate amount credited to the accounts of participants in the ESPP was $663,398.31. | |
(ii) Except as set forth in Section 3.01(c)(i), as of the close of business on March 10, 2005, no shares of capital stock of, or other equity or voting interests in, the Company, or options, warrants, shares of deferred stock, restricted stock awards, stock appreciation rights, phantom stock awards or |
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other rights to acquire any such stock or securities or other similar rights that are linked to the value of the Company Common Stock or the value of the Company or any part thereof, in any such case whether or not granted in tandem with a related Stock Option, were issued, reserved for issuance or outstanding. Since March 10, 2005, until the date of this Agreement, (A) there have been no issuances by the Company of shares of capital stock of, or other equity or voting interests in, the Company other than issuances of shares of Company Common Stock pursuant to the exercise of Stock Options or rights under the ESPP, in each case outstanding as of the date of this Agreement and only if and to the extent required by their terms as in effect on the date of this Agreement and (B) there have been no issuances by the Company of options, warrants, shares of deferred stock, restricted stock awards, stock appreciation rights, phantom stock awards, other rights to acquire shares of capital stock or other equity or voting interests from the Company or other rights that are linked to the value of Company Common Stock or the value of the Company or any part thereof, other than rights under the ESPP. | |
(iii) All outstanding shares of capital stock of the Company are, and all shares that may be issued pursuant to the Company Stock Plans will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no (A) bonds, debentures, notes or other indebtedness of the Company or any of its Subsidiaries, and (B) except as set forth in this Section 3.01(c), securities or other instruments or obligations of the Company or any of its Subsidiaries, in each case, the value of which is based upon or derived from any capital or voting stock of the Company or which has or which by its terms may have at any time (whether actual or contingent) the right to vote (or which is convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company or any of its Subsidiaries may vote. Except (A) as set forth above, and (B) for rights under the ESPP, the Company Rights Agreement or the Stock Options in effect as of the date of this Agreement there are no securities, options, warrants, calls, rights, commitments, agreements, instruments, arrangements, understandings, obligations, undertakings or other Contracts to which the Company or any of its Subsidiaries is a party, or by which the Company or any of its Subsidiaries is bound, obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of, or other equity or voting interests in, or securities convertible into, or exchangeable or exercisable for, shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, instrument, arrangement, understanding, obligation, undertaking or other Contract. As of the date of this Agreement and without giving effect to Section 5.04(a), each Stock Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies and the exercise price of each other Stock Option is no less than the fair market value of a share of Company Common Stock as determined on the date of grant of such Stock Option. Except for the Restricted Shares in effect as of the date of this Agreement, there are no outstanding contractual obligations of the Company or any of its Subsidiaries to (A) repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries or (B) vote or dispose of any shares of the capital stock of, or other equity or voting interests in, any of its Subsidiaries. The Company is not a party to any voting agreements with respect to any shares of the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries and, to the knowledge of the Company, as of the date of this Agreement there are no irrevocable proxies and no voting agreements with respect to any shares of the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries. | |
(iv) All Stock Options and Restricted Shares may be treated in accordance with Section 5.04(a). | |
(v) As of the date of this Agreement and excluding any indebtedness of the Company or any Subsidiary to any Subsidiary and any indebtedness of any Subsidiary to the Company, neither the Company nor any of its Subsidiaries has any (A) indebtedness for borrowed money, (B) amounts |
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owing as deferred purchase price for the purchase of any property, (C) indebtedness evidenced by any bond, debenture, note, mortgage, indenture or other debt instrument or debt security, (D) accounts payable to trade creditors and accrued expenses not arising in the ordinary course of business which in the case of this clause (D) are in excess of $1,000,000 in the aggregate, or (E) guarantees with respect to any indebtedness or obligation of a type described in clauses (A) through (D) above of any other person (other than, in the case of clauses (A) through (D), accounts payable to trade creditors and accrued expenses arising in the ordinary course of business) (collectively, “indebtedness”). | |
(d) Authority; Noncontravention. The Company has the requisite corporate power and authority to execute and deliver this Agreement, to consummate the Merger (subject to obtaining the Stockholder Approval) and to comply with the provisions of this Agreement. The execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger and the compliance by the Company with the provisions of this Agreement have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement, to comply with the terms of this Agreement or to consummate the Merger, subject, in the case of the Merger, to obtaining the Stockholder Approval. This Agreement has been duly executed and delivered by the Company and, assuming the due execution and delivery of this Agreement by Parent and Sub, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity. The Board of Directors of the Company, at a meeting duly called and held at which all directors of the Company were present, duly and unanimously adopted resolutions (i) approving and declaring advisable the Merger and this Agreement (ii) declaring that it is in the best interests of the Company’s stockholders that the Company enter into this Agreement and consummate the Merger on the terms and subject to the conditions set forth in this Agreement, (iii) directing that the adoption of this Agreement be submitted to a vote at a meeting of the Company’s stockholders to be held as set forth in Section 5.01(c), and (iv) recommending that the Company’s stockholders adopt this Agreement. The execution and delivery of this Agreement, the consummation of the Merger and compliance by the Company with the provisions of this Agreement do not and 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, cancelation or acceleration of any obligation or to a loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or assets of the Company or any of its Subsidiaries under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under (including any right of a holder of a security of the Company or any of its Subsidiaries to require the Company or any of its Subsidiaries to acquire such security), any provision of (i) the Company Certificate or the Company Bylaws or the certificate of incorporation or bylaws (or similar organizational documents) of any of its Subsidiaries, (ii) any loan or credit agreement, bond, debenture, note, mortgage, indenture, guarantee, lease or other contract, commitment, agreement, instrument, legally binding arrangement, legally binding understanding, obligation, undertaking or license, whether oral or written (each, including all amendments thereto, a “Contract”) or Permit to which the Company or any of its Subsidiaries is a party or bound by or any of their respective properties or assets are bound by or subject to, other than any Parent Contract or (iii) subject to the governmental filings and other matters referred to in the following sentence, any (A) Federal, state or local, domestic or foreign, statute, law, code, ordinance, rule or regulation (each, a “Law”) or (B) Federal, state or local, domestic or foreign, judgment, injunction, order, writ or decree (each, a “Judgment”), in each case, applicable to the Company or any of its Subsidiaries or their respective properties or assets, other than (1) in the case of clauses (ii) and (iii), any such conflicts, violations, breaches, defaults, rights, results, losses, Liens, rights or entitlements that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect on the Company or that individually or in the aggregate are not reasonably likely to (x) impair in any material respect the ability of the Company to perform its obligations under this Agreement or |
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(y) prevent, materially impede or materially delay the consummation of the Merger or (2) in the case of clause (iii)(A), any such conflicts, violations, breaches, defaults, rights, results, losses, Liens, rights or entitlements that had not arisen prior to the date of this Agreement. No consent, approval, order or authorization of, registration, declaration or filing with, or notice to, any Federal, state or local, domestic or foreign, government or any court, administrative agency or commission or other governmental or regulatory authority or agency, domestic or foreign (a “Governmental Entity”), is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger or the compliance by the Company with the provisions of this Agreement, except for (A) the filing of a premerger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and the filings and receipt, termination or expiration, as applicable, of such other approvals or waiting periods required under any other applicable competition, merger control, antitrust or similar Law, (B) the filing with the Securities and Exchange Commission (the “SEC”) of a proxy statement relating to the adoption of this Agreement by the Company’s stockholders (as amended or supplemented from time to time, the “Proxy Statement”) and such reports under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), as may be required in connection with the execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger or the compliance by the Company with the provisions of this Agreement, (C) 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 other states in which the Company or any of its Subsidiaries is qualified to do business, (D) any filings required under the rules and regulations of The Nasdaq Stock Market, Inc. and (E) such other consents, approvals, orders, authorizations, registrations, declarations, filings and notices the failure of which to be obtained or made individually or in the aggregate is not reasonably likely to have a Material Adverse Effect on the Company. | |
(e) SEC Documents. (i)The Company has made available to Parent, or the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC contains in a publicly available format, complete and accurate copies of all reports, schedules, forms, statements and other documents filed with the SEC by the Company since January 1, 2002 (together with all information incorporated therein by reference, the “SEC Documents”). The Company has filed with the SEC each report, schedule, form, statement or other document or filing required by Law to be filed. No Subsidiary is required to file any report, schedule, form, statement or other document with the SEC. As of their respective dates, each of the SEC Documents 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 Documents at the time of filing, and none of the SEC Documents at the time it was filed contained any untrue statement of a material fact or omitted to state 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 filed and publicly available prior to the date of this Agreement (a “Filed SEC Document”) has been revised or superseded by a later filed SEC Document, none of the SEC Documents contains any untrue statement of a material fact or omits to state 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. Each of the financial statements (including the related notes) of the Company included in the SEC Documents complied at the time it was filed as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of filing, had been or will be prepared in accordance with generally accepted accounting principles in effect from time to time in the United States of America (“GAAP”) (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be |
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indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments). Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which individually or in the aggregate have had, or are reasonably likely to have, a Material Adverse Effect. | |
(ii) The Company is in material compliance with the provisions of SOX applicable to it. | |
(iii) 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 as applicable with respect to the SEC Documents, and the statements contained in such certifications were true and accurate as of the date they were made. 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 of its Subsidiaries has outstanding, or has arranged any outstanding, “extensions of credit” to directors or executive officers within the meaning of Section 402 of SOX. | |
(iv) Neither the Company nor any of its Subsidiaries is a party to, or has any legally binding 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 of its subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand 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 of its Subsidiaries in the Company’s or such Subsidiary’s published financial statements or other SEC Documents. | |
(v) The Company’s system of internal controls over financial reporting is reasonably sufficient in all material respects to provide reasonable assurance (A) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, (B) that receipts and expenditures are executed only in accordance with the authorization of management, and (C) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Company’s assets that could materially affect the Company’s financial statements. | |
(vi) 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 in all material respects to ensure that (A) 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 (B) all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding 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. | |
(f) Information Supplied. None of the information included or incorporated by reference in the Proxy Statement will, at the date it is first mailed to the Company’s stockholders, at the time of the Stockholders Meeting or at the time of any amendment or supplement thereof, 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, except that no representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Sub specifically for inclusion or incorporation by reference in the Proxy Statement. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. |
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(g) Absence of Certain Changes or Events. (i) As of the date of this Agreement, since December 31, 2003, the Company and its Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice and there has not been (A) any Material Adverse Effect on the Company or any state of facts, change, development, event, effect, condition or occurrence which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect on the Company or (B) any material write-down by the Company or any of its Subsidiaries of any of the material assets of the Company or any of its Subsidiaries. | |
(ii) As of the date of this Agreement, since September 30, 2004, there has not been (A) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company’s or any of its Subsidiaries’ capital stock or other equity or voting interests, except for dividends by a direct or indirect wholly owned Subsidiary to its parent, (B) any split, combination or reclassification of any of the Company’s or any of its Subsidiaries’ capital stock or other equity or voting interests or any issuance 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, or other equity or voting interests in, the Company or any of its Subsidiaries, (C)(1) any granting by the Company or any of its Subsidiaries to any current or former director, officer or employee of the Company or any of its Subsidiaries (collectively, “Company Personnel”) of any bonus opportunity or any increase in any type of compensation or benefits, except for grants of normal bonus opportunities and normal increases of base compensation or benefits, in each case, prior to the date of this Agreement in the ordinary course of business consistent with past practice, or (2) any payment by the Company or any of its Subsidiaries to any Company Personnel of any bonus, except for bonuses paid or accrued prior to the date of this Agreement in the ordinary course of business consistent with past practice, (D) any granting by the Company or any of its Subsidiaries to any Company Personnel of any severance or termination pay, change in control or similar compensation or benefits or increases therein or of the right to receive any severance or termination pay, change in control or similar compensation or benefits or increases therein, (E) any entry by the Company or any of its Subsidiaries into, or any amendment of, (1) any employment, deferred compensation, change in control, severance, termination, employee benefit, loan, indemnification, stock repurchase, consulting or similar Contract between the Company or any of its Subsidiaries, on the one hand, and any Company Personnel, on the other hand, or (2) any Contract between the Company or any of its Subsidiaries, on the one hand, and any Company Personnel, on the other hand, the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving the Company of the nature contemplated by this Agreement (all such Contracts under this clause (E), including any Contract which is entered into on or after the date of this Agreement, collectively, “Benefit Agreements”), (F) the grant or amendment of any incentive award (including Stock Options, stock appreciation rights, performance units, restricted stock, stock repurchase rights or other stock-based or stock-related awards) or the removal or modification of any restrictions in any such award, (G) any amendment to, or modification of, any Company Stock Plan, (H) any change in financial or tax accounting principles, methods or practices by the Company or any of its Subsidiaries, except insofar as may have been required by a change in GAAP or applicable Law, (I) any material Tax election or change in any material Tax election or any settlement or compromise of any material income Tax liability or (J) any licensing or other agreement with regard to the acquisition or disposition of any material Intellectual Property or rights thereto, other than nonexclusive licenses granted in the ordinary course of the business of the Company and its Subsidiaries. | |
(iii) Since December 31, 2003, each of the Company and its Subsidiaries has continued all pricing, sales, receivables and payables production practices in accordance with the ordinary course of business consistent with past practice and has not engaged in (A) any trade loading practices or any other promotional sales or discount activity with any customers or distributors with the effect 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 |
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(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 of its Subsidiaries 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 this clause (D) in a manner outside the ordinary course of business or inconsistent with past practice. | |
(h) Litigation. Section 3.01(h) of the Company Letter sets forth a complete and accurate list of all claims, actions, suits or judicial, administrative and regulatory proceedings or investigations pending or, to the knowledge of the Company, threatened by or against the Company or any of its Subsidiaries as of the date hereof (i) which involves an amount in controversy in excess of $500,000 (or the equivalent amount in any other applicable currency based on the exchange rate published in the Financial Times (or such other authority agreed by Parent and the Company) on the business day five days prior to the date of this Agreement as the mid-point closing U.S. dollar exchange rate with respect to such currency for the most recent prior business day, (ii) which seeks material injunctive relief, (iii) which may give rise to any legal restraint on or prohibition against or limit the Surviving Corporation’s ability to operate the business of the Company and its Subsidiaries substantially as it was operated immediately prior to the date of this Agreement or (iv) which if resolved in accordance with plaintiff’s demands is reasonably likely to have a Material Adverse Effect on the Company. As of the date hereof, there is no Judgment of any Governmental Entity or arbitrator outstanding against, or, to the knowledge of the Company, investigation, proceeding, notice of violation, order of forfeiture or complaint by any Governmental Entity involving the Company or any of its Subsidiaries that individually or in the aggregate is reasonably likely to have a Material Adverse Effect on the Company. | |
(i) Contracts. (i) Section 3.01(i) of the Company Letter contains a complete and accurate list, as of the date hereof, of: |
(A) each material Contract to which the Company or a Subsidiary is a party (except for any Parent Contract) not made in the ordinary course of business; | |
(B) each Contract (except for any Parent Contract) pursuant to which the Company or any of its Subsidiaries has agreed not to compete with any person or to engage in any activity or business, or pursuant to which any benefit is required to be given or lost as a result of so competing or engaging; | |
(C) each Contract (except for any Parent Contract) to which the Company or a Subsidiary is a party providing for exclusivity or any similar requirement or pursuant to which the Company or any of its Subsidiaries is restricted, with respect to the development, manufacture, marketing or distribution of their respective products or services; | |
(D) each Contract with (1) any affiliate of the Company or any of its Subsidiaries, (2) any Company Personnel, (3) any union or other labor organization or (4) any affiliate of any such person (other than, in each case, (I) offer letters or employment agreements providing solely for “at will” employment with no right to severance benefits except as required by applicable Law, (II) invention assignment and confidentiality agreements relating to the assignment of inventions to the Company or any of its Subsidiaries not involving the payment of money and (III) Benefit Plans and Benefit Agreements; | |
(E) each Contract (except for any Parent Contract) under which the Company or any of its Subsidiaries has incurred any indebtedness (other than accounts payable to trade creditors) having an aggregate principal amount in excess of $300,000; | |
(F) each material Contract (except for this Agreement) to which the Company or a Subsidiary is a party that requires consent, approval or waiver of, or notice to, a Governmental Entity or other third party in the event of or with respect to the Merger, including in order to avoid termination of or loss of a material benefit under any such Contract; |
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(G) each Contract (except for any Parent Contract) to which the Company or a Subsidiary is a party creating or granting a material Lien (including Liens upon material properties acquired under conditional sales, capital leases or other title retention or security devices), other than (1) Liens for Taxes not yet due and payable, that are payable without penalty or that are being contested in good faith and for which adequate reserves have been recorded, (2) Liens for assessments and other governmental charges or liens of landlords, carriers, warehousemen, mechanics and repairmen incurred in the ordinary course of business, in each case for sums not yet due and payable or due but not delinquent or being contested in good faith by appropriate proceedings, (3) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations and (4) Liens that are not reasonably likely to adversely interfere in a material way with the use of assets encumbered thereby (“Permitted Liens”); | |
(H) each material Contract (except for any Parent Contract) containing any provisions (1) with respect to a change in control or similar event with respect to the Company or its Subsidiaries or otherwise having the effect of providing that the consummation of the Merger or the execution, delivery or effectiveness of this Agreement will materially conflict with, result in a material violation or material breach of, or constitute a material default (with or without notice or lapse of time or both) under, such Contract or give rise under such Contract to any right of, or result in, a termination, right of first refusal, material amendment, revocation, cancelation or material acceleration, or a loss of a material benefit or the creation of any material Lien upon any of the material properties or assets of the Company, Parent or any of their respective subsidiaries, or to any increased, guaranteed, accelerated or additional material rights or material entitlements of any person or (2) having the effect of providing that the consummation of the Merger or the execution, delivery or effectiveness of this Agreement will require that a third party be provided with access to source code or that any source code be released from escrow and provided to any third party; | |
(I) each Contract to which the Company or a Subsidiary is a party providing for payments of material royalties or other material license fees to third parties in excess of $200,000 annually that is not terminable on 90 days or less notice; | |
(J) each material Contract granting an end-user customer license to any Company Product that is not limited to the internal use of such customer and its affiliates; | |
(K) each Contract (except for any Parent Contract) pursuant to which the Company or any of its Subsidiaries has been granted any license to Intellectual Property, other than nonexclusive licenses granted in the ordinary course of business of the Company and its Subsidiaries consistent with past practice; | |
(L) each Contract (except for any Parent Contract) to which the Company or a Subsidiary is a party granting the other party to such Contract or a third party “most favored nation” pricing that (1) applies to the Company or any of its Subsidiaries or (2) immediately following the Merger would apply to Parent or any of its subsidiaries other than the Surviving Corporation; | |
(M) each Contract (except for any Parent Contract) pursuant to which the Company or any of its Subsidiaries has agreed to provide any third party with access to source code, other than such Contracts which provide for source code for any Company Product to be put in escrow substantially on the Company’s standard terms and conditions; | |
(N) each Contract to which the Company or a Subsidiary is a party for any joint venture (whether in partnership, limited liability company or other organizational form) or material alliance or similar arrangement; |
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(O) each Contract to which the Company or a Subsidiary is a party with any Governmental Entity other than any Contract which is immaterial to the Company; | |
(P) each material Contract entered into in the last five years in connection with the settlement or other resolution of any suit, claim, action, investigation or proceeding pursuant to which the Company or any of its Subsidiaries have continuing performance obligations; | |
(Q) each Contract (except for any Parent Contract and any Contract for Software maintenance) to which the Company or a Subsidiary is a party providing for future performance by the Company or a Subsidiary in consideration of amounts previously paid; | |
(R) each Contract (except for any Parent Contract) to which the Company or a Subsidiary is a party providing for material liquidated damages; | |
(S) each Contract (except for any Parent Contract and any immaterial Contract) to which the Company or a Subsidiary is a party for professional services engagements for a fixed fee that guarantees a specific result; | |
(T) each Contract between the Company or any of its Subsidiaries and any of the 20 largest customers of the Company and its Subsidiaries (determined on the basis of revenues received by the Company or any of its Subsidiaries in the four consecutive fiscal quarter period ended December 31, 2004 (each such customer, a “Major Customer” and each such Contract, a “Major Customer Contract”); | |
(U) each Contract between the Company or any of its Subsidiaries and any of the 20 largest licensors or other suppliers to the Company and its Subsidiaries (determined on the basis of amounts paid by the Company or any of its Subsidiaries in the four consecutive fiscal quarter period ended December 31, 2004 (each such licensor or other supplier, a “Major Supplier” and each such Contract, a “Major Supplier Contract”); and | |
(V) each Contract (except for any Parent Contract) which has aggregate future sums due to or from the Company or any of its Subsidiaries, taken as a whole, during the period commencing on the date of this Agreement and ending on the 12-month anniversary of this Agreement in excess of $750,000. |
The Company has made available to Parent copies of the Contracts referred to above. Each material Contract (other than real property leases) of the Company or any of its Subsidiaries is in full force and effect (except for those Contracts that have expired or terminated in accordance with their terms) and is a legal, valid and binding agreement of the Company or its Subsidiary, as the case may be and, to the knowledge of the Company, of each other party thereto, enforceable against the Company or such Subsidiary, as the case may be, and, to the knowledge of the Company, against the other party or parties thereto, in each case, in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity. Each of the Company and its Subsidiaries has performed or is performing in all material respects all material obligations required to be performed by it under its material Contracts (other than real property leases) and is not (with or without notice or lapse of time or both) in breach or default in any material respect and as of the date of this Agreement has not waived its right to enforce any material rights or benefits thereunder, and, to the knowledge of the Company, as of the date of this Agreement no other party to any of its material Contracts (other than real property leases) is (with or without notice or lapse of time or both) in breach or default in any material respect thereunder and to the knowledge of the Company, as of the date of this Agreement there has occurred no event giving (with or without notice or lapse of time or both) to others any right of termination, material amendment or cancelation of any such material Contract. | |
(ii) As of the date of this Agreement, since January 1, 2004, none of the Major Customers or Major Suppliers has terminated, failed to renew or requested any material amendment to any of its |
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Major Customer Contracts or Major Supplier Contracts, or any of its existing relationships, with the Company or any of its Subsidiaries. | |
(j) Compliance with Laws. The Company and its Subsidiaries have in effect all material Permits that are necessary for them to own, lease or operate their properties and assets and to carry on their businesses in all material respects as currently conducted. The Company and its Subsidiaries have complied and are in compliance in all material respects with all applicable Laws and Judgments. The execution and delivery of this Agreement by the Company does not, and the consummation of the Merger and compliance with the terms of this Agreement are not reasonably likely to, cause the revocation or cancelation of any material Permit, except for Permits with respect to which the Company furnishes Parent written notice following the date of this Agreement which is sufficiently timely for Parent to prevent any such revocation or cancelation. As of the date hereof, neither the Company nor any of its Subsidiaries has received any written communication during the past three years from any person that alleges that the Company or any of its Subsidiaries is not in compliance in all material respects with, or is subject to liability under, any material Permit, Law or Judgment or relating to the revocation or modification of any material Permit. | |
(k) Absence of Changes in Benefit Plans; Employment Agreements; Labor Relations. (i)Except as disclosed in the Filed SEC Documents, since September 30, 2004, none of the Company or any of its Subsidiaries has terminated, adopted, amended or agreed to terminate, adopt or amend in any material respect any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock appreciation, restricted stock, stock repurchase rights, stock option (including the Company Stock Plans), phantom stock, performance, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding or subject to the Laws of the United States) maintained, contributed to or required to be maintained or contributed to by the Company, any of its Subsidiaries or any other person that, together with the Company, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code or any other applicable Law (each, a “Commonly Controlled Entity”), in each case, providing benefits to any Company Personnel, but not including the Benefit Agreements (all such plans, arrangements and understandings, including any such plan, arrangements or understanding entered into or adopted on or after the date of this Agreement, collectively, “Benefit Plans”) or made any change in the manner in which contributions to any Pension Plans are made or the basis on which such contributions are determined. | |
(ii) There are no collective bargaining or other labor union agreements to which the Company or any of its Subsidiaries is a party or by which it is bound. Since January 1, 2002, neither the Company nor any of its Subsidiaries has encountered any labor union organizing activity, or had any actual or threatened employee strikes, work stoppages, slowdowns or lockouts. None of the employees of the Company or any of its Subsidiaries is represented by any union with respect to his or her employment by the Company or such Subsidiary. Each of the Company and its Subsidiaries is, and since January 1, 2002, has been, in compliance in all material respects with all applicable Laws relating to employment and employment practices, occupational safety and health standards, terms and conditions of employment and wages and hours, and is not, and since January 1, 2002, has not, engaged in any material unfair labor practice. The Company has not received notice of any unfair labor practice charge or complaint against the Company or any of its Subsidiaries which is pending and, to the knowledge of the Company, there is no unfair labor practice charge or complaint against the Company or any of its Subsidiaries threatened, in each case before the National Labor Relations Board or any comparable Governmental Entity. | |
(l) Environmental Matters. Except for any relevant matters disclosed in the Filed SEC Documents, (i) the Company and each of its Subsidiaries are, and since January 1, 2002 have been, in compliance in all material respects with all applicable material Environmental Laws; (ii) as of the date of this Agreement, there are no pending, or to the knowledge of the Company or any of its Subsidiaries, threatened material Environmental Claims against the Company or any of its Subsidiaries; (iii) since January 1, 2002 until the date of this Agreement, neither the Company nor |
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any of its Subsidiaries have received written notice that the Company or any of its Subsidiaries is in non-compliance in any material respect with any Environmental Law or subject to potential liability under any Environmental Law, including potential material liability for the costs of investigating or remediating contaminated property pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, or analogous state Law; (iv) as of the date of this Agreement, for the last four years there have been no material Releases of Hazardous Substances on, at, under or about any properties then owned, leased or operated by the Company or any of its Subsidiaries, and during such period neither the Company nor any of its Subsidiaries has Released, disposed of or arranged for the disposal of Hazardous Substances at any on-site or off-site location; and (v) to the knowledge of the Company, as of the date of this Agreement there are no facts, circumstances or conditions that are reasonably likely to give rise to any liability of, or form the basis of an Environmental Claim against, the Company or any of its Subsidiaries in connection with any Environmental Law. For purposes of this Agreement, the term “Environmental Claim” shall mean any and all administrative, regulatory or judicial actions, suits, orders, demands, directives, claims, liens, investigations, proceedings or notices of noncompliance or violation by or from any person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from (1) the presence or Release of, or exposure to, any Hazardous Materials at any location or (2) the failure to comply with any Environmental Law. For purposes of this Agreement, the term “Environmental Laws” shall mean any applicable Laws, Judgments, enforceable requirements, agreements or Permits issued, promulgated or entered into by any Governmental Entity relating to protection of the environment, natural resources or human health, safety, or to the use, management, disposal, Release or threatened Release of Hazardous Substances. For purposes of this Agreement, the term “Hazardous Substances” shall mean any explosive, radioactive, toxic substances or hazardous wastes, substances or materials (including asbestos or asbestos-containing materials, polychlorinated biphenyls, petroleum and petroleum products). For purposes of this Agreement, the term “Release” shall mean any release, spilling, leaking, pumping, pouring, discharging, emitting, emptying, leaching, injecting, dumping, disposing or migrating into or through the environment. | |
(m) ERISA Compliance. (i) Section 3.01(m)(i) of the Company Letter sets forth a complete and accurate list of all “employee welfare benefit plans” (as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), “employee pension benefit plans” (as defined in Section 3(2) of ERISA) (each, a “Pension Plan”) and all other Benefit Plans and Benefit Agreements that are in effect as of the date of this Agreement. The Company has made available to Parent copies of (A) each Benefit Plan and each Benefit Agreement (or, in the case of any unwritten Benefit Plans or Benefit Agreements, descriptions thereof), (B) the two most recent annual reports on Form 5500 required to be filed with the Internal Revenue Service (the “IRS”) with respect to each Benefit Plan (if any such report was required under applicable Law), (C) the most recent summary plan description for each Benefit Plan for which a summary plan description is required under applicable Law and (D) each trust agreement and group annuity contract relating to any Benefit Plan. Each Benefit Plan has been administered in all material respects in accordance with its terms and applicable Law, including ERISA and the Code. | |
(ii) All Pension Plans intended to be tax qualified have been the subject of determination letters from the IRS with respect to all tax Law changes with respect to which the IRS is currently willing to provide a determination letter to the effect that such Pension Plans are qualified and exempt from United States Federal income Taxes under Sections 401(a) and 501(a), respectively, of the Code, and no determination letter has been revoked (nor, as of the date of this Agreement, has revocation been threatened) and no event has occurred since the date of the most recent determination letter or application therefor relating to any such Pension Plan that is reasonably likely to adversely affect the qualification of such Pension Plan or increase the costs relating thereto or require security under Section 307 of ERISA. All Pension Plans required to have been approved by any foreign |
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Governmental Entity have been so approved, no such approval has been revoked (nor, as of the date of this Agreement, has revocation been threatened) and no event has occurred since the date of the most recent approval or application therefor relating to any such Pension Plan that is reasonably likely to affect any such approval relating thereto or increase the costs relating thereto. The Company has made available to Parent a copy of the most recent determination or approval letter received with respect to each Pension Plan, as well as a copy of each pending application for a determination or approval letter, if any. | |
(iii) Neither the Company nor any Commonly Controlled Entity has maintained, contributed to or been obligated to maintain or contribute to, or has any actual or contingent liability under, any Benefit Plan that is subject to Title IV of ERISA or is otherwise a defined benefit pension plan or that provides for the payment of termination indemnities. | |
(iv) No Benefit Plan or Benefit Agreement that provides welfare benefits (each, a “Welfare Plan”) is funded through a “welfare benefits fund” (as such term is defined in Section 419(e) of the Code), or is self-insured. There are no understandings, agreements or undertakings, written or oral, that would prevent any Welfare Plan (including any Welfare Plan covering retirees or other former employees) from being amended or terminated without material liability to the Company or any of its Subsidiaries on or at any time after the Effective Time. No Welfare Plan provides benefits after termination of employment, except where the cost thereof is borne entirely by the former employee (or his or her eligible dependents or beneficiaries) or as required by Section 4980B(f) of the Code. | |
(v) Section 3.01(m)(v) of the Company Letter sets forth a complete and accurate list, as of the date of this Agreement, of (A) each Benefit Plan and each Benefit Agreement pursuant to which any Company Personnel could become entitled to any additional compensation, severance or other benefits or any acceleration of the time of payment or vesting of any compensation, severance or other benefits as a result of the Merger (alone or in combination with any other event), or any benefits the value of which would be calculated on the basis of the Merger (alone or in combination with any other event), (B) the names of all Company Personnel entitled to severance benefits actually payable as of the Closing Date or upon termination of employment after the Closing Date pursuant to any employment, severance, termination or change in control agreement or arrangement between the Company or any of its Subsidiaries, on the one hand, and such Company Personnel, on the other hand, (C) the category or type of each such severance, termination or change in control benefit to which such Company Personnel is entitled, (D) the aggregate value of each such severance, termination or change in control benefit actually payable as of the Closing Date and each such severance, termination or change in control benefit that would be payable upon termination of employment after the Closing Date and (E) the aggregate value of severance that would be paid to each individual set forth in Section 3.01(m)(v) of the Company Letter upon termination of employment based on the terms of any severance plan or plans applicable to such individual in effect at the Closing Date;provided,however, that in no event shall Section 3.01(m)(v) of the Company Letter be required to set forth (I) any payments attributable to the accelerated vesting of outstanding Stock Options or the conversion of outstanding Restricted Shares, in each case, in accordance with Section 5.04(a), or (II) any obligation to pay cash severance of an amount that is not more than $50,000 to any Company Personnel who is not an officer or director of the Company or its Subsidiaries. Except as set forth in Section 3.01(m)(v) of the Company Letter, no Company Personnel will be entitled to any additional compensation, severance or other benefits or any acceleration of the time of payment or vesting of any compensation, severance or other benefits as a result of the Merger (alone or in combination with any other event) or any benefits the value of which will be calculated on the basis of the Merger (alone or in combination with any other event). Except as set forth in Section 3.01(m)(v) of the Company Letter, the execution and delivery of this Agreement, the consummation of the Merger (alone or in combination with any other event) and compliance by the Company with the provisions of this Agreement do not and will not (A) entitle any Company Personnel to severance, termination or change in control or similar benefits, (B) trigger any funding (through a grantor trust or otherwise) of any compensation, severance or other benefits or the |
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forgiveness of indebtedness owed by any Company Personnel to the Company or any of its affiliates, (C) increase the cost of any Benefit Plan, Benefit Agreement or any other employment arrangement or (D) result in any violation or breach of, or a default (with or without notice or lapse of time or both) under, any Benefit Plan or Benefit Agreement. | |
(vi) The deduction of any amount payable pursuant to the terms of the Benefit Plans or Benefit Agreements will not be subject to disallowance under Section 162(m) of the Code. | |
(vii) As of the date of this Agreement, neither the Company nor any of its Subsidiaries has received written notice of, and, to the knowledge of the Company, there are no, pending investigations by any Governmental Entity with respect to, or pending termination proceedings or other material claims (except claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings against or involving any Benefit Plan or Benefit Agreement or asserting any rights or claims to benefits under, any Benefit Plan or Benefit Agreement. | |
(viii) All contributions, premiums and benefit payments under or in connection with the Benefit Plans or Benefit Agreements that are required to have been made by the Company or any of its Subsidiaries have been timely made. No Pension Plan has an “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived. | |
(ix) With respect to each Benefit Plan, (A) there has not occurred any prohibited transaction in which the Company, any of its Subsidiaries or any of their respective officers, directors or employees or, to the knowledge of the Company, any trustee or other fiduciary or administrator of any Benefit Plan or trust created thereunder, in each case, who is not an officer, director or employee of the Company or any of its Subsidiaries (a “Non-Affiliate Plan Fiduciary”), has engaged that is reasonably likely to subject the Company, any of its Subsidiaries or any of their respective officers, directors or employees or any Non-Affiliate Plan Fiduciary, to the tax or penalty on prohibited transactions imposed by Section 4975 of the Code or the sanctions imposed under Title I of ERISA or any other applicable Law and (B) none of the Company, any of its Subsidiaries or any of their respective officers, directors or employees, or, to the knowledge of the Company, as of the date of this Agreement, any Non-Affiliate Plan Fiduciary, nor any agent of any of the foregoing, has engaged in any transaction or acted in a manner, or failed to act in a manner, that is reasonably likely to subject the Company, any Subsidiary of the Company or, to the knowledge of the Company, as of the date of this Agreement, any Non-Affiliate Plan Fiduciary to any liability for breach of fiduciary duty under ERISA or any other applicable Law. | |
(x) The Company and its Subsidiaries do not have any liability or obligations, including under or on account of a Benefit Plan or Benefit Agreement, arising out of the hiring of persons to provide services to the Company or any of its Subsidiaries and treating such persons as consultants or independent contractors and not as employees of the Company or any of its Subsidiaries. | |
(n) Taxes. (i)Each of the Company and its Subsidiaries has timely filed all material Tax Returns required to be filed by it and all such Tax Returns are complete and accurate in all material respects. Each of the Company and its Subsidiaries has timely paid all material Taxes due and owing, and the most recent financial statements contained in the Filed SEC Documents reflect an adequate reserve for all material Taxes payable by the Company and its Subsidiaries for all taxable periods and portions thereof through the date of such financial statements. | |
(ii) As of the date of this Agreement, no material Tax Return of the Company or any of its Subsidiaries is currently under audit or examination by any taxing authority, and no notice of such an audit or examination has been received by the Company or any of its Subsidiaries. There is no material deficiency, refund litigation, proposed adjustment or matter in controversy with respect to any Taxes due and owing by the Company or any of its Subsidiaries. Each deficiency resulting from any completed audit or examination or concluded litigation relating to Taxes by any Taxing Authority has been timely paid. As of the date of this Agreement, no issues relating to Taxes were raised by the relevant Taxing Authority during any presently pending audit or examination, and no issues relating to |
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Taxes were raised by the relevant Taxing Authority in any completed audit or examination, that are reasonably likely to recur in a later taxable period, except for issues that individually or in the aggregate are not reasonably likely to result in a material liability for the Company or any of its Subsidiaries. | |
(iii) There is no currently effective agreement or other document extending, or having the effect of extending, the period of assessment or collection of any material Taxes and no power of attorney (other than powers of attorney authorizing employees of the Company to act on behalf of the Company) with respect to any material Taxes has been executed or filed with any taxing authority. | |
(iv) No material Liens for Taxes exist with respect to any assets or properties of the Company or any of its Subsidiaries, except for statutory Liens for Taxes not yet due and Liens for Taxes that the Company or any of its Subsidiaries is contesting in good faith through appropriate proceedings and for which adequate reserves have been established. | |
(v) None of the Company or any of its Subsidiaries is a party to or bound by any Tax sharing agreement, Tax indemnity obligation or similar agreement, arrangement or practice with respect to material Taxes (including any advance pricing agreement, closing agreement pursuant to Section 7121 of the Code, or other agreement relating to Taxes with any Taxing Authority). | |
(vi) None of the Company or any of its Subsidiaries will be required to include in a taxable period ending after the Effective Time a material amount of taxable income attributable to income that accrued (for purposes of the financial statements of the Company included in the Filed SEC Documents) in a prior taxable period but was not recognized for Tax purposes in any prior taxable period as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting or Section 481 of the Code or comparable provisions of any Tax Law, or for any other reason (including as a result of prepaid amounts or deferred revenue received on or prior to the Effective Time). | |
(vii) Other than payments that may be made to persons set forth on Section 3.01(n)(vii) of the Company Letter (the “Primary Company Executives”), no amount or other entitlement that could be received (whether in cash or property or the vesting of property) as a result of the Merger by any Company Personnel who is a “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) under any Benefit Plan, Benefit Agreement or other compensation arrangement would be characterized as an “excess parachute payment” (as such term is defined in Section 280G(b)(1) of the Code) and no such disqualified individual is entitled to receive any additional payment (e.g., any tax gross up or other payment) from the Company, the Surviving Corporation or any other person in the event that the excise tax required by Section 4999(a) of the Code is imposed on such disqualified individual. The Company Letter sets forth a complete and accurate list of the Company’s reasonable, good faith estimates of the maximum amount that could be paid to each Primary Company Executive as a result of the Merger (alone or in combination with any other event) under all Benefit Agreements and Benefit Plans. The Company has provided Parent with documentation evidencing the “base amount” (as defined in Section 280G(b)(3) of the Code) for each Primary Company Executive as of the date of this Agreement. | |
(viii) The Company and its Subsidiaries have complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any Laws) and have, within the time and the manner prescribed by Law, withheld from and paid over to the proper taxing authorities all amounts required to be so withheld and paid over under applicable Laws. | |
(ix) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (A) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code in the two years prior to the date of this Agreement or (B) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger. |
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(x) All material related party transactions involving the Company or any of its Subsidiaries are at arm’s length in compliance with Section 482 of the Code and the Treasury Regulations promulgated thereunder. None of the Company or any of its Subsidiaries is a party to any material cost-sharing agreement or similar arrangement which is not a “qualified cost sharing arrangement” within the meaning of U.S. Treasury Regulation Section 1.482-7. All material intercompany payments have been calculated in accordance with U.S. Treasury Regulation Section 1.482-7. Each of the Company and its Subsidiaries has maintained in all material respects all necessary documentation in connection with such related party transactions in accordance with Sections 482 and 6662 of the Code and the Treasury Regulations promulgated thereunder. | |
(xi) Neither the Company nor any of its Subsidiaries (A) is, to the knowledge of the Company, a “passive foreign investment company” within the meaning of Section 1297(a) of the Code and the Treasury Regulations promulgated thereunder or (B) has ever made an election under Section 1362 of the Code to be treated as an S corporation for Federal income Tax purposes or made a similar election under any comparable provision of any Tax Law. | |
(xii) Each of the Company and its Subsidiaries has conducted all aspects of its business materially in accordance with the terms and conditions of all tax rulings and tax concessions that were provided by any relevant taxing authority. | |
(xiii) For purposes of this Agreement, “Taxes” shall include all (A) Federal, state and local, domestic and foreign, income, franchise, property, sales, excise, employment, payroll, social security, value-added, ad valorem, transfer, withholding and other taxes, including taxes based on or measured by gross receipts, profits, sales, use or occupation, tariffs, levies, impositions, assessments or governmental charges of any nature whatsoever, including any interest penalties or additions with respect thereto, and any obligations under any Permits or any Contracts with any other person with respect to such amounts, (B) liability for the payment of any amounts of the types described in clause (A) as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group and (C) liability for the payment of any amounts as a result of an express or implied obligation to indemnify any other person with respect to the payment of any amounts of the type described in clause (A) or (B). For purposes of this Agreement, “Taxing Authority” shall mean any Governmental Entity exercising regulatory authority in respect of any Taxes. For purposes of this Agreement, “Tax Return” shall mean any Federal, State and local, domestic and foreign return, declaration, report, form, claim for refund, disclosure statement (including any statement pursuant to Treasury Regulation Section 1.6011-4(a)), or information, return statement or other document relating to Taxes, including any certificate, schedule or attachment hereto, and including any amendment thereof. | |
(o) Properties. (i) The Company and each of its Subsidiaries has good and marketable title to, or in the case of leased property and tangible assets have valid and enforceable leasehold interests in, all of its material properties (other than Intellectual Property) and tangible assets, except for such properties and tangible assets as are no longer used or useful in the conduct of its businesses or as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants, Taxes that are not yet delinquent and similar encumbrances that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect on the Company. All such material properties (other than Intellectual Property) and tangible assets, other than properties and tangible assets in which the Company or any of its Subsidiaries has a leasehold interest, are free and clear of all Liens, except for Permitted Liens. | |
(ii) The material properties (other than Intellectual Property) and tangible assets owned or leased by the Company and its Subsidiaries, or which they otherwise have the right to use, are sufficient (subject to normal wear and tear) to operate their businesses in substantially the same manner as they are currently conducted by the Company and its Subsidiaries. | |
(iii) Section 3.01(o)(iii) of the Company Letter sets forth a complete and accurate list as of the date of this Agreement of (A) all material real property and interests in real property owned in fee by |
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the Company or any of its Subsidiaries (each such property, an “Owned Real Property”) and (B) as of the date of this Agreement, all material real property and interests in real property leased by the Company or any of its Subsidiaries (each such property, a “Leased Real Property”). | |
(iv) With respect to each Owned Real Property, (A) the Company or a Subsidiary has good and marketable indefeasible fee simple title, free and clear of all Liens except for Permitted Liens, (B) neither the Company nor any Subsidiary has leased or otherwise granted to anyone the right to use or occupy such Owned Real Property or any portion thereof, (C) there are no outstanding options, rights of first offer or rights of first refusal to purchase any such Owned Real Property or any portion thereof or interest therein and (D) to the Company’s knowledge, as of the date of this Agreement there is no condemnation or other proceeding in eminent domain, pending or threatened, affecting such Owned Real Property or any portion thereof or interest therein. | |
(v) With respect to each Leased Real Property, (A) as of the date of this Agreement neither the Company nor any Subsidiary has subleased, licensed or otherwise granted anyone the right to use or occupy such Leased Real Property or any portion thereof and (B) neither the Company nor any Subsidiary has collaterally assigned or granted any other security interest in any such leasehold estate or any interest therein. | |
(vi) Each of the Company and its Subsidiaries is in compliance in all material respects with the terms of all leases to Leased Real Property to which it is a party and under which it is in occupancy, and each such material lease is a legal, valid and binding agreement of the Company or its Subsidiary, as the case may be and, to the knowledge of the Company, of each other party thereto, enforceable against the Company or such Subsidiary, as the case may be, and, to the knowledge of the Company, against the other party or parties thereto, in each case, in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity. Each of the Company and its Subsidiaries enjoys peaceful and undisturbed possession in all material respects under all the leases to Leased Real Property to which it is a party and under which it is in occupancy. | |
(p) Intellectual Property. (i) Section 3.01(p)(i) of the Company Letter sets forth a complete and accurate list of all patents, registered trademarks, tradenames, service marks, registered copyrights and pending applications for any of the foregoing owned by the Company or any of its Subsidiaries as of the date of this Agreement. Section 3.01(p)(i) of the Company Letter sets forth a complete and accurate list of all material Contracts under which the Company or any of its Subsidiaries is either a licensee or licensor of any Material Intellectual Property and which are in effect as of the date of this Agreement, other than (except with respect to licenses or rights referred to in item (ii)(L) below) nonexclusive licenses granted in the ordinary course of business of the Company and its Subsidiaries consistent with past practice. | |
(ii) (A) The Company and each of its Subsidiaries owns, or is licensed or otherwise has the right to use, free and clear of any Liens, all Intellectual Property necessary for or material to the conduct of its business as currently conducted, except where failures to own, be licensed or have rights to use Intellectual Property, individually or in the aggregate, are not reasonably likely to adversely affect the Company or any of its Subsidiaries in any material respect. | |
(B) All material issued patents, pending patent applications, registered trademarks and pending applications therefor, registered tradenames, registered service marks, registered copyrights and pending applications therefor of the Company or any of its Subsidiaries have been duly registered and/or filed, as applicable, with or issued by each applicable Governmental Entity in each applicable jurisdiction, all necessary affidavits of continuing use have been filed, and all necessary maintenance fees have been paid to continue all such rights in effect, except to the extent that the Company has made a business judgment not to continue to register or maintain registered trademarks or registered service marks which are not currently used by the Company or any of its Subsidiaries. |
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(C) To the knowledge of the Company, as of the date of this Agreement none of the Company or any of its Subsidiaries or any of its or their current products or services has infringed upon or otherwise violated, or is infringing upon or otherwise violating, in any material respect the Intellectual Property rights of any third party. | |
(D) As of the date of this Agreement there is no suit, claim, action, investigation or proceeding pending or, to the knowledge of the Company, threatened with respect to, and the Company has not been notified in writing of, any possible infringement or other violation in any material respect by the Company or any of its Subsidiaries or any of its or their current products or services of the Intellectual Property rights of any third party. | |
(E) To the knowledge of the Company, no person or any of its products or services is infringing upon or otherwise violating in any material respect any Intellectual Property rights of the Company or any of its Subsidiaries. | |
(F) Each of the former or current members of management or key personnel of the Company or any of its Subsidiaries, including all former and current employees, agents, consultants and independent contractors who have contributed to or participated in the conception and development of Intellectual Property owned, intended to be owned or used by the Company or any of its Subsidiaries, have assigned or otherwise transferred to the Company all ownership and other rights of any nature whatsoever (to the extent permitted by Law) of such person in any material Intellectual Property owned, intended to be owned or used by the Company or any of its Subsidiaries except where the failure to do so is not reasonably likely to have a material adverse effect on a material product of the Company or its Subsidiaries and none of the former or current members of management or key personnel of the Company or any of its Subsidiaries, including all former and current employees, agents, consultants and independent contractors who have contributed to or participated in the conception and development of Intellectual Property owned, intended to be owned or used by the Company or any of its Subsidiaries, have a valid claim against the Company or any of its Subsidiaries in connection with the involvement of such persons in the conception and development of any material Intellectual Property owned, intended to be owned or used by the Company or any of its Subsidiaries, and no such claim has been asserted or, to the knowledge of the Company, threatened, in each case other than claims that are not reasonably likely to have a material adverse effect on a material product of the Company or its Subsidiaries . To the knowledge of the Company, none of the current employees of the Company or any of its Subsidiaries has any patents issued or applications pending for any device, process, design or invention of any kind now used or needed by the Company or any of its Subsidiaries in furtherance of their business as currently conducted or proposed to be conducted, which patents or applications have not been assigned to the Company or any of its Subsidiaries. | |
(G) To the extent Third Party Software is currently distributed to customers of the Company or any of its Subsidiaries together with the Intellectual Property of the Company or any of its Subsidiaries, (1) all necessary licenses have been obtained, except where the failure to obtain any such license is not reasonably likely to have a material adverse effect on a material product of the Company or its Subsidiaries and (2) no royalties or payments in excess of $200,000 are due (or such royalties and payments are identified in Section 3.01(p)(G) of the Company Letter). | |
(H) None of the source code or other material trade secrets (other than trade secrets with respect to which the Company knowingly made a reasonable business judgment to not keep such trade secrets confidential) of the Company or any of its Subsidiaries has been published or disclosed by the Company or any of its Subsidiaries, except pursuant to a written non-disclosure agreement that is in the standard form used by the Company or similar agreement requiring the recipient to keep such source code or trade secrets confidential, or, to the knowledge of the Company, by any third party to any other third party except pursuant to licenses or other Contracts requiring such third party to keep such trade secrets confidential. The current standard form of non-disclosure agreement used by the Company and its Subsidiaries has been provided to Parent prior to the date of this Agreement. |
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(I) Except as set forth in Section 3.01(p)(I) of the Company Letter, neither the Company nor any of its Subsidiaries has assigned, sold or otherwise transferred ownership of any material issued patent, patent application, registered trademark or application therefor, service mark, registered copyright or application therefor since January 1, 2001. | |
(J) No licenses or rights have been granted to a third party to distribute the source code for, or to use any source code to create Derivative Works of, any product currently marketed by, commercially available from or under development by the Company or any of its Subsidiaries for which the Company possesses the source code. | |
(K) The Company and each of its Subsidiaries have created and have safely stored back-up copies of all the Software of the Company and each of its Subsidiaries. | |
(L) The information that was provided or disclosed by the Company or any of its Subsidiaries to Parent prior to the date of this Agreement with respect to the material obligations or liabilities of the Company or any of its Subsidiaries arising or resulting from the use of the material Intellectual Property of any third party in any of the material products of the Company or any of its Subsidiaries currently marketed by, commercially available from or under development by the Company or any of its Subsidiaries includes all material information (other than information that (1) is publicly available and (2) is reasonably available to Parent) as to the scope, terms and extent of all such material obligations and material liabilities and is accurate in all material respects, except where the failure to include such information or the inaccuracy of such information, individually or in the aggregate, is not reasonably likely to adversely affect the Company or any of its Subsidiaries in any material respect, and neither the Company nor any of its Subsidiaries has, prior to the date of this Agreement, omitted to state any material fact (other than any such fact that (1) is publicly available and (2) is reasonably available to Parent) necessary in order to make such information not misleading in any material respect, except where such omissions, individually or in the aggregate, are not reasonably likely to adversely affect the Company or any of its Subsidiaries in any material respect. | |
(iii) For purposes of this Agreement, “Derivative Work” shall have the meaning set forth in 17 U.S.C. Section 101. | |
(iv) For purposes of this Agreement, “Intellectual Property” shall mean trademarks, service marks, brand names, certification marks, trade dress, assumed names, domain names, trade names and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; inventions, discoveries and ideas, whether patentable or not in any jurisdiction; patents, applications for patents (including divisions, provisionals, continuations, continuations in-part and renewal applications), and any renewals, extensions or reissues thereof, in any jurisdiction; non-public information, trade secrets, know-how, formulae, processes, procedures, research records, records of invention, test information, market surveys, software and confidential information, whether patentable or not in any jurisdiction and rights in any jurisdiction to limit the use or disclosure thereof by any person; writings and other works, whether copyrightable or not in any jurisdiction, and any renewals or extensions thereof; and any claims or causes of action (pending, threatened or which could be filed) arising out of any infringement or misappropriation of any of the foregoing. For purposes of this Agreement, “Software” shall mean all types of computer software programs, including operating systems, application programs, software tools, firmware and software imbedded in equipment, including both object code and source code. The term “Software” shall also include all written or electronic data, documentation, and materials that explain the structure or use of Software or that were used in the development of Software or are used in the operation of the Software including logic diagrams, flow charts, procedural diagrams, error reports, manuals and training materials, look-up tables and databases. For purposes of this Agreement, “Third Party Software” shall mean 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 of its Subsidiaries). |
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(q) State Takeover Statutes; Company Certificate. The approval of the Merger by the Board of Directors of the Company referred to in Section 3.01(d) constitutes the only action necessary to render inapplicable to this Agreement and the Merger, the restrictions (i) on “business combinations” (as defined in Section 203 of the DGCL) set forth in Section 203 of the DGCL and (ii) on “Business Combinations” (as defined in Article Seven of the Company Certificate (“Article Seven”)) set forth in Article Seven, in each case to the extent, if any, such restrictions would otherwise be applicable to this Agreement, the Merger or compliance with the terms of this Agreement. For purposes of Article Seven, the approval of the Board of Directors of the Company referred to in the immediately preceding sentence constitutes the approval of the Merger by the “Disinterested Directors” (as defined in Article Seven) pursuant to Section 3 of Article Seven. No other state takeover or similar statute or regulation or other similar provision of the Company Certificate or the Company Bylaws is applicable to this Agreement, the Merger or compliance with the terms of this Agreement. | |
(r) Company Rights Agreement. The Company has taken all actions necessary to (i) render the Company Rights Agreement inapplicable to this Agreement, the Merger and compliance with the terms of this Agreement, (ii) ensure that (A) none of Parent, Sub or any other subsidiary of Parent is an “Acquiring Person” (as defined in the Company Rights Agreement), (B) a “Distribution Date” or a “Shares Acquisition Date” (as such terms are defined in the Company Rights Agreement) does not occur and (C) the Company Rights to purchase Series A Participating Preferred Stock issued under the Company Rights Agreement do not become exercisable, in the case of clauses (A), (B) and (C), solely by reason of the execution of this Agreement, the consummation of the Merger or compliance with the terms of this Agreement and (iii) provide that the “Expiration Date” (as defined in the Company Rights Agreement) shall occur immediately prior to the Effective Time. | |
(s) Voting Requirements. The affirmative vote at the Stockholders Meeting or any adjournment or postponement thereof of the holders of a majority of the outstanding shares of Company Common Stock in favor of adopting this Agreement (the “Stockholder Approval”) is the only vote of the holders of any class or series of the Company’s capital stock necessary to approve or adopt this Agreement or the consummation of the Merger. | |
(t) Brokers; Schedule of Fees and Expenses. No broker, investment banker, financial advisor or other person, other than Deutsche Bank Securities Inc., 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 Merger based upon arrangements made by or on behalf of the Company. The Company has provided Parent with complete and accurate copies of all agreements under which any such fees or commissions are payable and all indemnification and other agreements related to the engagement of the persons to whom such fees are payable. The fees and expenses of any accountant, broker, financial advisor, consultant, legal counsel or other person retained by the Company in connection with this Agreement or the Merger incurred or to be incurred by the Company in connection with this Agreement and the Merger will not be inconsistent with the fees and expenses set forth in Section 3.01(t) of the Company Letter. | |
(u) Opinion of Financial Advisor. The Board of Directors of the Company has received the written opinion of Deutsche Bank Securities Inc. dated as of the date of this Agreement and addressed to the Board of Directors of the Company, to the effect that, as of the date of this Agreement, and based upon and subject to the limitations, qualifications and assumptions set forth therein, the Merger Consideration to be received by the stockholders of the Company pursuant to this Agreement is fair to such stockholders from a financial point of view, a copy of which letter the Company has disclosed to Parent. |
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(a) Organization. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has all requisite corporate power and authority to carry on its business as now being conducted. | |
(b) Authority; Noncontravention. Parent and Sub have the requisite corporate power and authority to execute and deliver this Agreement, to consummate the Merger and to comply with the provisions of this Agreement. The execution and delivery of this Agreement by Parent and Sub, the consummation by Parent and Sub of the Merger and the compliance by Parent and Sub with the provisions of this Agreement have been duly authorized by all necessary corporate action on the part of Parent and Sub and no other corporate proceedings on the part of Parent or Sub are necessary to authorize this Agreement, to comply with the terms of this Agreement or to consummate the Merger. This Agreement has been duly executed and delivered by Parent and Sub, as applicable, and, assuming the due execution and delivery of this Agreement by the Company, constitutes a valid and binding obligation of Parent and Sub, as applicable, enforceable against Parent and Sub, as applicable, in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws relating to the enforcement of creditors’ rights generally and by general principles of equity. The execution and delivery of this Agreement and the consummation of the Merger and compliance by Parent and Sub with the provisions of this Agreement do not and 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, cancelation or acceleration of any obligation or to a loss of a material benefit under, or result in the creation of any Lien in or upon any of the properties or assets of Parent or Sub under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, any provision of (i) the Certificate of Incorporation or Bylaws of Parent or Sub, (ii) any Contract or Permit to which Parent or Sub is a party or bound by or their respective properties or assets are bound by or subject to or otherwise under which Parent or Sub has rights or benefits or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Law or Judgment, in each case, applicable to Parent or Sub or their respective properties or assets, other than, in the case of clauses (ii) and (iii), any such conflicts, violations, breaches, defaults, rights, losses, Liens or entitlements that individually or in the aggregate are not reasonably likely to impair in any material respect the ability of each of Parent and Sub to perform its obligations under this Agreement or prevent or materially impede or materially delay the consummation of the Merger. No consent, approval, order or authorization of, registration, declaration or filing with, or notice to, any Governmental Entity is required by or with respect to Parent or Sub in connection with the execution and delivery of this Agreement by Parent and Sub, the consummation by Parent and Sub of the Merger or the compliance by Parent and Sub with the provisions of this Agreement, except for (i) the filing of a premerger notification and report form under the HSR Act and the filings and receipt, termination or expiration, as applicable, of such other approvals or waiting periods required under any other applicable competition, merger control, antitrust or similar Law, (ii) 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 other states in which the Company or any of its Subsidiaries is qualified to do business and (iii) such other consents, approvals, orders, authorizations, registrations, declarations, filings and notices, the failure of which to be obtained or made individually or in the aggregate is not reasonably likely to impair in any material respect the ability of each of Parent and Sub to perform its obligations under this Agreement or prevent or materially impede or materially delay the consummation of the Merger. | |
(c) Information Supplied. None of the information supplied or to be supplied by Parent or Sub specifically for inclusion or incorporation by reference in the Proxy Statement will (except to the extent revised or superseded by amendments or supplements contemplated hereby), at the date the Proxy Statement is first mailed to the Company’s stockholders or at the time of the Stockholders |
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Meeting or at the time of any amendment or supplement thereof, 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. | |
(d) Interim Operations of Sub. Sub was formed solely for the purpose of engaging in the Merger and has engaged in no business other than in connection with the Merger. |
(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock or other equity or voting interests, except for dividends by a direct or indirect wholly owned Subsidiary to its parent, (B) split, combine or reclassify any of its capital stock or other equity or voting interests, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity or voting interests, (C) purchase, redeem or otherwise acquire any shares of capital stock or any other securities of the Company or any of its Subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities (including any Stock Options, or Restricted Shares, except pursuant to the forfeiture or repurchase conditions of such Restricted Shares as in effect on the date of this Agreement) or (D) take any action that would result in any amendment, modification or change of any term of any indebtedness (other than accounts payable to trade creditors) of the Company or any of its Subsidiaries; | |
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other equity or voting interests or any securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any such stock, interests or securities or any stock appreciation rights, phantom stock awards or other similar rights that are linked to the value of Company Common Stock or the value of the Company or any part thereof (other than the issuance of shares of Company Common Stock upon the exercise of Stock Options or rights under the ESPP outstanding as of the date of this Agreement and only if and to the extent required by their terms as in effect on the date of this Agreement); | |
(iii) amend or propose to amend its certificate of incorporation or bylaws (or similar organizational documents); | |
(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing all or a substantial portion of the assets of, or by purchasing all or a substantial equity or voting interest in, or by any other manner, any business or person or division thereof, (B) any other assets (other than Intellectual Property) other than immaterial assets acquired in the ordinary course of business or (C) Third Party Software and other Intellectual Property except for Third Party Software and Intellectual Property acquired in the ordinary course of business consistent with past practice for an |
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acquisition price of not more than $50,000 on an individual basis and not more than $250,000 on an aggregate basis; | |
(v) subject to the second sentence of Section 4.01(ix), sell, lease, license, sell and lease back, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its material properties or assets (including any shares of capital stock, equity or voting interests or other rights, instruments or securities), except the licensing of its Intellectual Property and Software and sales of inventory and products or used equipment, in each such case in the ordinary course of business consistent with past practice and except for Permitted Liens or Liens incurred in the ordinary course of business consistent with past practice; | |
(vi) (A) repurchase, prepay or incur any indebtedness other than ordinary course accounts payable to trade creditors or guarantee any indebtedness of another person or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, (B) guarantee any debt securities of another person, enter into any “keep well” or other Contract to maintain any financial statement condition of another person other than the Company or a Subsidiary or enter into any arrangement having the economic effect of any of the foregoing other than such arrangements for the benefit of the Company or any Subsidiary or (C) make any loans, advances or capital contributions to, or investments in, any other person, other than the Company or any direct or indirect wholly owned Subsidiary; | |
(vii) incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith, that in the aggregate are in excess of $1,000,000; | |
(viii) (A) pay, discharge, settle or satisfy any claims (including any claims of stockholders and any stockholder litigation relating to this Agreement or any transaction contemplated by this Agreement or otherwise), liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in the ordinary course of business consistent with past practice or as required by their terms as in effect on the date of this Agreement, of claims, liabilities or obligations (1) reflected or reserved against in the Company’s most recent financial statements contained in the Filed SEC Documents (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the ordinary course of business consistent with past practice or (2) the payment, discharge, settlement or satisfaction of which does not include any obligation (other than the payment of money) to be performed by the Company or its Subsidiaries following the Closing Date and is in an amount of less than $1,000,000 individually or $2,000,000 in the aggregate, (B) waive the right to enforce, relinquish, release, transfer or assign (except for transfer or assignment to the Company or a Subsidiary) any right of material value or (C) waive any material benefits of, or agree to modify in any adverse respect or consent to any matter with respect to which its consent is required under, any standstill or similar Contract to which the Company or any of its Subsidiaries is a party; | |
(ix) enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee) or modify, amend or exercise any right to renew any lease or sublease of real property. Notwithstanding the foregoing, the Company may sublease (as sublessor) or assign leases for properties which the Company does not fully utilize;provided, that in each case (A) such sublease or assignment is consistent with commercial practice and (B) the Company shall have provided Parent with prior written notice of the material terms of the proposed sublease or assignment and not less than 48 hours to comment on such terms; | |
(x) modify or amend in any material respect or accelerate, terminate or cancel any material Contract or waive any right to enforce, relinquish, release, transfer or assign any rights or claims thereunder; | |
(xi) enter into any Contract that is not in the ordinary course of business or that is inconsistent with past practice; |
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(xii) except as required to ensure that any Benefit Plan or Benefit Agreement in effect on the date of this Agreement is not then out of compliance with applicable Law or as specifically required pursuant to this Agreement, (A) adopt, enter into, terminate or amend any Benefit Plan or Benefit Agreement, (B) increase in any manner the compensation or benefits of, or pay any bonus to, any Company Personnel, except as required to comply with any Benefit Plan or Benefit Agreement in effect on the date of this Agreement, (C) pay or provide to any Company Personnel any benefit not provided for under a Benefit Plan or Benefit Agreement as in effect on the date of this Agreement, other than the payment of base compensation in the ordinary course of business consistent with past practice, (D) grant any awards under any Benefit Plan (including the grant of stock options, stock appreciation rights, performance units, restricted stock, stock purchase rights or other stock-based or stock-related awards) or remove or modify existing restrictions in any Benefit Plan or Benefit Agreement or awards made thereunder, (E) take any action to fund or in any other way secure the payment of compensation or benefits under any Benefit Plan or Benefit Agreement, (F) take any action to accelerate the vesting or payment of any compensation or benefits under any Contract, Benefit Plan or Benefit Agreement or (G) make any material determination under any Benefit Plan or Benefit Agreement that is inconsistent with the ordinary course of business or past practice; | |
(xiii) form any subsidiary of the Company; | |
(xiv) enter into any Contract containing any provisions having the effect of providing that the consummation of the Merger or compliance by the Company with the provisions of this Agreement will conflict with, result in any violation or breach of, or constitute a default (with or without notice or lapse of time or both) under, such Contract, or give rise under such Contract to any right of, or result in, a termination, right of first refusal, material amendment, revocation, cancelation or material acceleration, or a loss of a material benefit or the creation of any material Lien upon any of the properties or assets of the Company, Parent or any of their respective subsidiaries, or to any increased, guaranteed, accelerated or additional rights or entitlements of any person, except to the extent such conflicts, results, defaults, rights, losses or entitlements are required as a matter of applicable Law; | |
(xv) enter into any Contract containing any restriction on the ability of the Company or any of its Subsidiaries to assign all or any portion of its rights, interests or obligations thereunder, unless such restriction expressly excludes any assignment to Parent and any of its subsidiaries in connection with or following the consummation of the Merger; | |
(xvi) take any action (or omit to take any action) if such action (or omission) is reasonably likely to result in (A) any representation and warranty of the Company set forth in this Agreement that is qualified as to materiality becoming untrue (as so qualified) or (B) any such representation and warranty that is not so qualified becoming untrue in any material respect; | |
(xvii) except as required by applicable Law, adopt or enter into any collective bargaining agreement or other labor union Contract applicable to the employees of the Company or any of its Subsidiaries or terminate (other than for cause) the employment of any Company Personnel who has an employment, severance or similar agreement or arrangement with the Company or any of its Subsidiaries; | |
(xviii) write-down any of its material assets, including any Intellectual Property, or make any change in any financial or tax accounting principle, method or practice other than those required by GAAP or applicable Law; | |
(xix) engage in (A) any trade loading practices or any other promotional sales or discount activity with any customers or distributors with the effect 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 |
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payments by the Company or any of its Subsidiaries 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 this clause (D) in a manner outside the ordinary course of business or inconsistent with past practice; | |
(xx) take any action or fail to take any action which action or failure to act would result in the material loss or reduction in value of the Intellectual Property, taken as a whole; | |
(xxi) make loans, advances or capital contributions to, or investments in, any other person (other than the Company or a Subsidiary); | |
(xxii) enter into, extend or renew (A) any Contract or amendment thereof which contains any provision listed in Section 3.01(i)(i)(B), (C), (E), (H)(2) or (L)(2), (B) any Contract or amendment thereof that grants any party the right or ability to access, license or use all or a material portion of the Intellectual Property of the Company and its Subsidiaries, other than in the ordinary course of business consistent with past practice or (C) any Contract providing for the services of any dealer, distributor, sales representative or similar representative. Notwithstanding the foregoing, the Company may enter into, extend or renew any Contract providing for the services of any dealer, distributor, sales representative or similar representative,provided, that with respect to this clause (C), in each case (x) such entry, extension or renewal is in the ordinary course of business and is not inconsistent with past practice and (y) the Company shall have provided Parent with prior written notice of the material terms of the proposed Contract, extension or renewal and not less than 48 hours to comment on such terms; | |
(xxiii) enter into any Contract or material amendment to a Contract which contains any provision listed in Section 3.01(i)(i)(F), (G), (I)-(K), (M), (N), (O) or (Q)-(S); | |
(xxiv) authorize any of, or commit, resolve or agree to take any of, the foregoing actions. | |
(b) Certain Tax Matters. During the period from the date of this Agreement to the Effective Time, (i) the Company and each of its Subsidiaries shall timely file all material Tax Returns (“Post-Signing Returns”) required to be filed by each such entity (after taking into account any extensions) and all Post-Signing Returns shall be complete and accurate in all material respects; (ii) the Company and each of its Subsidiaries will timely pay all Taxes due and payable in respect of such Post-Signing Returns; (iii) the Company will accrue a reserve in its books and records and financial statements in accordance with past practice for all Taxes payable by the Company or any of its Subsidiaries for which no Post-Signing Return is due prior to the Effective Time; (iv) the Company and each of its Subsidiaries will promptly notify Parent of any suit, claim, action, investigation, proceeding or audit pending against or with respect to the Company or any of its Subsidiaries in respect of any Tax and will not settle or compromise any such suit, claim, action, investigation, proceeding or audit without Parent’s prior written consent, which consent shall not be unreasonably delayed; (v) none of the Company or any of its Subsidiaries will make or change any material Tax election without Parent’s consent, which consent shall not be unreasonably withheld; and (vi) the Company and each of its Subsidiaries will retain all books, documents and records necessary for the preparation of Tax Returns and Tax audits. | |
(c) Contact Person. Promptly, and in any event within two business days following the execution of this Agreement, Parent shall designate one or more contact persons who are authorized by Parent to consent to any of the matters set forth in this Section 4.01, including e-mail and other contact information for such persons. Notwithstanding Section 8.02 hereof, delivery of notices, requests for consents and other matters provided to such person may be made by e-mail or other electronic format as the parties shall reasonably agree. |
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(A) the occurrence of any matter or event that (1) is, or that is reasonably likely to be, material (individually or in the aggregate) to the business, assets, properties, condition (financial or otherwise), or results of operations of the Company and its Subsidiaries, taken as a whole or (2) is reasonably likely to result in any condition set forth in Article VI not being satisfied; | |
(B) any notice or other communication from any person (other than a Governmental Entity) alleging that the consent of such person is required in connection with the transactions contemplated by this Agreement; | |
(C) any notice or other communication from any Major Customer or Major Supplier to the effect that such Major Customer or Major Supplier is terminating or otherwise materially adversely modifying its relationship with the Company or any of its Subsidiaries as a result of the transactions contemplated by this Agreement; | |
(D) any material notice or other material communication from any Governmental Entity in connection with the Merger, and a copy of any such notice or communication shall be furnished to Parent together with the Company’s written notice; | |
(E) any filing made by the Company with any Governmental entity in connection with the transactions contemplated by this Agreement, and a copy of any such filing shall be furnished to Parent (other than portions of such filing that include confidential information not directly related to the transactions contemplated by this Agreement) together with the Company’s written notice; and | |
(F) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting the Company or any of its Subsidiaries that are material, individually or in the aggregate, or that relate to the consummation of the transactions contemplated by this Agreement; |
(A) the occurrence of any matter or event that is reasonably likely to result in any condition set forth in Article VI not being satisfied; | |
(B) any notice or other communication from any person (other than a Governmental Entity) alleging that the consent of such person is required in connection with the transactions contemplated by this Agreement; | |
(C) any material notice or other material communication from any Governmental Entity in connection with the transactions contemplated by this Agreement, and a copy of any such notice or communication shall be furnished to the Company together with Parent’s written notice; | |
(D) any filing made by Parent with any Governmental entity in connection with the transactions contemplated by this Agreement, and a copy of any such filing shall be furnished to the Company (other than portions of such filing that include confidential information not directly related to the transactions contemplated by this Agreement) together with Parent’s written notice; | |
(E) any notice of any material claims (except claims for benefits payable in the normal operation of Benefits Plans) involving any Benefit Plan or Benefit Agreement; and | |
(F) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting the Company or any of its |
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Subsidiaries that are material or that relate to the consummation of the transactions contemplated by this Agreement; |
(i) (A) not less than five days prior to the Effective Time, each outstanding Stock Option shall automatically accelerate so that each such Stock Option shall become fully exercisable for all shares of Company Common Stock at the time subject to such Stock Option and may be exercised by the holder thereof for any or all of such shares and (B) upon the Effective Time, all outstanding Stock Options shall be canceled, with the holder of each Stock Option becoming entitled to receive, in full satisfaction of the rights of such holder with respect thereto, an amount in cash equal to (x) the excess, if any, of the Merger Consideration over the exercise price per share of Company Common Stock subject to such Stock Option, multiplied by (y) the number of shares of Company Common Stock subject to such Stock Option; provided that all amounts payable pursuant to this clause (i) shall be subject to any required withholding of taxes or proof of eligibility for exemption therefrom and shall be paid at or as soon as practicable following the Effective Time, without interest; | |
(ii) each provision in each Benefit Plan and Benefit Agreement providing for the issuance, transfer or grant of any shares of Company Common Stock or any Stock Options, Restricted Shares or any other interests in respect of any capital stock (including any “phantom” stock or stock appreciation rights) of the Company shall be deleted prior to the Effective Time, and the Company shall ensure, that following the Effective Time, there shall be no rights to acquire shares of Company Common Stock, Stock Options, Restricted Shares or any other interests in respect of any capital stock (including any “phantom” stock or stock appreciation rights) of the Company or the Surviving Corporation; | |
(iii) each Restricted Share outstanding at the Effective Time shall be converted at the Effective Time into the right to receive an amount of cash equal to the Merger Consideration (each, as so adjusted, the “Restricted Share Cash Amount”), which shall be subject to, and payable to the holder of such Restricted Share in accordance with the terms of the grant of such Restricted Share as in effect at the Effective Time; | |
(iv) make such other changes to the Company Stock Plans as Parent and the Company may reasonably agree are appropriate to give effect to the Merger; and | |
(v) except as expressly required pursuant to this Section 5.04, take such action as necessary under the Company Stock Plans to ensure that all restrictions or limitations on transfer and vesting, all forfeiture restrictions, all repurchase rights with respect to the Restricted Shares, to the extent that such restrictions or limitations shall not have already lapsed, and all other terms thereof, shall remain in full force and effect with respect to the corresponding Restricted Share Cash Amounts after giving effect to the Merger, subject to the terms of the grant of such Restricted Shares as in effect at the Effective Time. |
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(a) Stockholder Approval. The Stockholder Approval shall have been obtained. | |
(b) Antitrust. Any waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired and any other material approval or waiting period under any other applicable competition, merger control, antitrust or similar Law shall have been obtained or terminated or shall have expired. | |
(c) No Injunctions or Legal Restraints. No temporary restraining order, preliminary or permanent injunction or other Judgment issued by any court of competent jurisdiction or other legal restraint or prohibition (collectively, “Legal Restraints”) which has the effect of preventing the consummation of the Merger shall be in effect. |
(a) Representations and Warranties. The representations and warranties of the Company contained herein that are qualified as to materiality shall be true and correct (as so qualified), and the representations and warranties of the Company contained herein that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date with the same effect as though made as of the Closing Date, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and chief financial officer of the Company to such effect. | |
(b) Performance of Obligations of the Company. The Company shall have performed in all material respects all its obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect. | |
(c) No Litigation. There shall not be pending any claim, suit, action or proceeding brought or threatened by any Governmental Entity, that has a reasonable likelihood of success (i) challenging or seeking to restrain or prohibit the consummation of the Merger or seeking to obtain from Parent or any of its subsidiaries any damages that are material (individually or in the aggregate) in relation to the value of the Company and its Subsidiaries, taken as a whole; (ii) seeking to prohibit or limit in any respect, or place any conditions on, the ownership or operation by the Company, Parent or all or any of their respective affiliates of all or any portion of the business or assets or any product of the Company or its Subsidiaries or Parent or its subsidiaries or to require any such person to dispose of, license (whether pursuant to an exclusive or nonexclusive license) or hold separate all or any portion of the business or assets or any product of the Company or its Subsidiaries or Parent or its subsidiaries, in each case as a result of or in connection with the transactions contemplated by this Agreement; (iii) seeking to impose limitations on the ability of Parent or any of its affiliates to acquire or hold, or exercise full rights of ownership of, any shares of Company Common Stock or any shares of common stock of the Surviving Corporation, including the right to vote the Company Common Stock or the shares of common stock of the Surviving Corporation on all matters properly presented to the stockholders of the Company or the Surviving Corporation, respectively; or (iv) seeking to (A) prohibit Parent or any of its affiliates from effectively controlling in any respect any of the business or operations of the Company or its Subsidiaries or (B) prevent the Company or |
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its Subsidiaries from operating any of their business in substantially the same manner as operated by the Company and its Subsidiaries prior to the date of this Agreement. | |
(d) Legal Restraint. No Legal Restraint that is reasonably likely to result, directly or indirectly, in any of the effects referred to in clauses (i) through (iv) of paragraph (c) of this Section 6.02 shall be in effect. | |
(e) No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred a Material Adverse Effect on or with respect to the Company. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect. |
(a) Representations and Warranties. The representations and warranties of Parent and Sub contained herein that are qualified as to materiality shall be true and correct (as so qualified), and the representations and warranties of Parent and Sub contained herein that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date with the same effect as though made as of the Closing Date, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date. The Company shall have received a certificate signed on behalf of Parent by an authorized signatory of Parent to such effect. | |
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have performed in all material respects all its obligations required to be performed by them under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Parent by an authorized signatory of Parent to such effect. |
(a) by mutual written consent of Parent, Sub and the Company; | |
(b) by either Parent or the Company: |
(i) if the Merger shall not have been consummated by July 13, 2005 (the “Termination Date”) for any reason;provided,however, that if the Effective Time shall not have occurred by such date by reason of non-satisfaction of any condition set forth in Section 6.01(b) and all other conditions set forth in Article VI have heretofore been satisfied or waived or are then capable of being satisfied, then such date shall automatically be extended to October 13, 2005 (which shall then be the Termination Date); |
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(ii) if any Legal Restraint having the effect set forth in Section 6.01(c) shall be in effect and shall have become final and nonappealable; or | |
(iii) the Stockholders Meeting shall have been held and the Stockholder Approval shall not have been obtained thereat; |
(c) by Parent in the event an Adverse Recommendation Change has occurred; | |
(d) by Parent in the event the Board of Directors of the Company fails to publicly reaffirm its recommendation of the adoption of this Agreement within ten business days of a written request by Parent for such reaffirmation; | |
(e) by Parent if (i) any event shall have occurred which would result in the inability of any condition set forth in Section 6.02 to be satisfied prior to the Termination Date, (ii) the Company shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform is capable of being cured by the Company by the Termination Date, but the Company does not commence to cure such breach or failure within 10 business days after its receipt of written notice thereof from Parent and diligently pursue such cure thereafter, or (iii) any Legal Restraint having any of the effects referred to in clauses (i) through (iv) of Section 6.02(c) shall be in effect and shall have become final and nonappealable; or | |
(f) by the Company, if (i) any event shall have occurred which would result in the inability of any condition set forth in Section 6.03 to be satisfied prior to the Termination Date or (ii) Parent shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform is capable of being cured by Parent by the Termination Date, but Parent does not commence to cure such breach or failure within 10 business days after its receipt of written notice thereof from the Company and diligently pursue such cure thereafter. |
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if to Parent or Sub, to: | |
International Business Machines Corporation | |
New Orchard Road | |
Armonk, NY 10504 | |
Attention: David L. Johnson | |
Facsimile: (914) 499-7803 | |
E-mail: dljohnsn@us.ibm.com | |
with a copy to: | |
Cravath, Swaine & Moore LLP | |
Worldwide Plaza | |
825 Eighth Avenue | |
New York, NY 10019 | |
Attention: Scott A. Barshay, Esq. | |
Facsimile: (212) 474-3700 | |
E-mail: sbarshay@cravath.com | |
if to the Company, to: | |
Ascential Software Corporation | |
50 Washington Street | |
Westborough, MA 01581 | |
Attention: Scott Semel, Esq. | |
Facsimile: (508) 389-8711 | |
E-mail: scott.semel@ascentialsoftware.com | |
with a copy to: | |
Skadden, Arps, Slate, Meagher & Flom LLP | |
One Beacon Street | |
Boston, MA 02108 | |
Attention: Louis A. Goodman, Esq. | |
Facsimile: (617) 573-4822 | |
E-mail: lgoodman@skadden.com |
(a) “affiliate” means, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with such first person. | |
(b) “Company Letter” means the letter dated March 13, 2005 delivered by the Company to Parent. |
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(c) “Company Product” means the current or generally available version of any of the Company’s products listed on Section 8.03(c) of the Company Letter. | |
(d) as it relates to the Company, “knowledge” means, with respect to any matter in question, the actual knowledge after reasonable inquiry and investigation, of the officers of the Company listed on Section 8.03(d) of the Company Letter. | |
(e) as it relates to the Company and/or any of its Subsidiaries, to have “made available” any document means to have included such document (in complete and accurate form) in, and not withdrawn such document from, the electronic “data room” to which Parent was granted access prior to the date of this Agreement. | |
(f) “Material Adverse Effect” on or with respect to the Company means any state of facts, change, development, event, occurrence, action or omission that individually or in the aggregate is reasonably likely to (i) result in a material adverse effect on the business, assets, properties, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole or (ii) result in a material impairment on the ability of Parent to operate the business of the Company and its Subsidiaries immediately after the Closing in substantially the same manner as it was operated immediately prior to the date of this Agreement (other than as a result of any Judgment against Parent or any of its subsidiaries which was in effect as of the date of this Agreement or of any Contract to which Parent or any of its subsidiaries is party);provided,however, that no state of facts, change, development, event, occurrence, action or omission to the extent resulting from any of the following shall be deemed to constitute, in and of itself, a Material Adverse Effect, nor shall it be taken into consideration when determining whether there has occurred a Material Adverse Effect: (A) general, legal, market, economic or political conditions affecting the industries in which the Company participates,provided that such conditions do not have a materially disproportionate adverse impact on the Company and its Subsidiaries, taken as a whole, (B) the pendency or announcement of this Agreement, including without limitation any customer or supplier reaction to the identity of Parent, (C) any litigation brought or threatened by stockholders of the Company or Parent (whether on behalf of the Company, Parent or otherwise) asserting allegations of a breach of fiduciary duty relating to this Agreement, violations of securities Laws in connection with the Proxy Statement or otherwise in connection with this Agreement, (D) any action required to comply with the rules and regulations of the SEC or the SEC comment process as such process applies to the Proxy Statement, (E) any decrease in the market price or trading volume of the Company Common Stock (it being understood that the underlying cause or causes of any such decrease may be deemed to constitute, in and of itself or themselves, a Material Adverse Effect and may be taken into consideration when determining whether there has occurred a Material Adverse Effect), (F) the Company’s failure to meet any internal or published projections, forecasts or revenue or earnings predictions or published industry analyst expectations (it being understood that the underlying cause or causes of any such failure may be deemed to constitute, in and of itself and themselves, a Material Adverse Effect and may be taken into consideration when determining whether there has occurred a Material Adverse Effect) or (G) any change in applicable accounting requirements or principles which occurs or becomes effective after the date of this Agreement. | |
(g) “Parent Contract” means any Contract (i) to which each of (A) the Company or a Subsidiary and (B) Parent or a subsidiary of Parent is a party or (ii) entered into by the Company or a Subsidiary with a third party pursuant to Parent and the Company’s reseller relationships,provided that with respect to this clause (ii), Parent is a party to, or recognizes revenue under, such Contract. | |
(h) “Permit” means any certificate, permit, license, franchise, approval, concession, qualification, registration, certification and similar authorization from any Governmental Entity. | |
(i) “person” means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, Governmental Entity or other entity. |
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(j) a “subsidiary” of any person shall mean any other person (i) more than 50% of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority of such other person are, now or hereafter, owned or controlled, directly or indirectly, by such first person, but such other person shall be deemed to be a subsidiary only so long as such ownership or control exists, or (ii) which does not have outstanding shares or securities with such right to vote, as may be the case in a partnership, joint venture or unincorporated association, but more than 50% of whose ownership interest representing the right to make the decisions for such other person is, now or hereafter, owned or controlled, directly or indirectly, by such first person, but such other person shall be deemed to be a subsidiary only so long as such ownership or control exists. | |
(k) a “Subsidiary” means each subsidiary of the Company. |
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PARENT, |
By | /s/ David L. Johnson |
Name: David L. Johnson |
Title: | Vice President, Corporate Development |
SUB, |
By | /s/ Mark Goldstein |
Name: Mark Goldstein |
Title: | Treasurer |
THE COMPANY, |
By | /s/ Peter Gyenes |
Name: Peter Gyenes |
Title: | Chief Executive Officer |
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A-52
B-1
Very truly yours, | |
/s/Deutsche Bank Securities Inc. | |
DEUTSCHE BANK SECURITIES INC. |
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(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title. | |
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to § § 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: |
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; | |
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; | |
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or | |
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. |
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. |
C-1
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or | |
(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then, either a constituent corporation before the effective date of the merger or consolidation, or the surviving or resulting corporation within ten days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the |
C-2
effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. |
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C-4
ASCENTIAL SOFTWARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
FRIDAY, APRIL 29, 2005
The undersigned hereby appoints Peter Gyenes, Robert C. McBride and Scott N. Semel, and each of them singly, as attorneys of the undersigned, with full power of substitution (the “Proxy Holders”), to vote all shares of stock which the undersigned is entitled to vote at the Special Meeting of Stockholders of Ascential Software Corporation to be held at the Omni Parker House Hotel, Stowe Room, 60 School Street, Boston, Massachusetts 02108 on Friday, April 29, 2005 at 10:00 a.m., local time, and at any adjournment or postponement thereof, with all the powers which the undersigned might have if personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of Stockholders and Proxy Statement, dated April 1, 2005, and hereby expressly revokes any and all proxies heretofore given or executed by the undersigned with respect to the shares of stock represented by this Proxy and by filing this Proxy with the Secretary of the Company, gives notice of such revocation.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE OR VIA THE INTERNET OR TELEPHONE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
See Reverse Side | See Reverse Side | |
[Reverse of Proxy]
ASCENTIAL SOFTWARE CORPORATION
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
Your vote is important. Please vote immediately.
Vote-by-Internet | Vote-by-Telephone | |||
Log on to the Internet and go to | Call toll-free | |||
http://www.eproxyvote.com/ascl | OR | 1-877-PRX-VOTE (1-877-779-8683) |
If you vote over the Internet or by telephone, please do not mail your card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
Please mark | ||||
votes as in | ||||
x | this example. |
This proxy will be voted as directed or, if properly executed and no direction is indicated, will be voted “FOR” the proposal to adopt the Agreement and Plan of Merger and “FOR” the proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of the proposal to adopt the Agreement and Plan of Merger.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOLLOWING:
1. | The proposal to adopt the Agreement and Plan of Merger, dated as of March 13, 2005, among International Business Machines Corporation, a New York corporation, Ironbridge Acquisition Corp., a Delaware corporation and wholly owned subsidiary of IBM, and Ascential Software Corporation. |
FOR | AGAINST | ABSTAIN | ||
o | o | o |
2. | The proposal to adjourn the special meeting to a later date, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes in favor of proposal number 1. |
FOR | AGAINST | ABSTAIN | ||
o | o | o |
In their discretion, the Proxy Holders are authorized to vote upon such other matter(s) which may properly come before the special meeting and any adjournment(s) or postponements thereof.
oMark here for address change and note at left.
Please date and sign exactly as your name or names appear hereon. Corporate or partnership proxies should be signed in full corporate or partnership name by an authorized person. Persons signing in a fiduciary capacity should indicate their full titles in such capacity. If shares are held by joint tenants or as community property, both should sign.
Signature: | Date: | |
Signature: | Date: |