EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 7, 1996
AMONG
COMPUTER ASSOCIATES INTERNATIONAL, INC.,
TSE-TSEHESE-STAESTSE, INC.
AND
CHEYENNE SOFTWARE, INC.
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER
SECTION 1.1. The Offer................................................. 1
SECTION 1.2. Company Action............................................ 2
SECTION 1.3. Directors................................................. 2
ARTICLE II
THE MERGER
SECTION 2.1. The Merger................................................ 3
SECTION 2.2. Conversion of Shares...................................... 3
SECTION 2.3. Surrender and Payment..................................... 4
SECTION 2.4. Dissenting Shares......................................... 5
SECTION 2.5. Stock Options............................................. 5
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation.............................. 6
SECTION 3.2. Bylaws.................................................... 6
SECTION 3.3. Directors and Officers.................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 1.1. Representations and Warranties of the
Company............................................ 6
(a) Organization, Standing and Corporate Power............... 6
(b) Subsidiaries............................................. 7
(c) Capital Structure........................................ 7
(d) Authority; Noncontravention.............................. 7
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities............................. 8
(f) Disclosure Documents..................................... 9
(g) Absence of Certain Changes or Events..................... 9
(h) Litigation............................................... 10
(i) Absence of Changes in Stock and Benefit Plans............ 11
(j) Participation and Coverage in Benefit Plan............... 11
(k) ERISA Compliance......................................... 11
(l) Taxes ................................................ 12
(m) State Takeover Statutes; Rights Agreement................ 13
(n) Brokers; Schedule of Fees and Expenses................... 13
(o) Permits; Compliance with Laws............................ 13
(p) Contracts; Debt Instruments.............................. 14
(q) Opinion of Financial Advisor............................. 15
(r) Interests of Officers and Directors...................... 15
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(s) Technology............................................... 15
(t) Change of Control........................................ 16
SECTION 4.2. Representations and Warranties of Parent
and Merger Subsidiary.............................. 16
(a) Organization, Standing and Corporate Power............... 16
(b) Authority; Noncontravention.............................. 16
(c) Disclosure Documents..................................... 17
(d) Brokers ................................................ 17
(e) Delaware Law............................................. 18
(f) Financing................................................ 18
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business....................................... 18
SECTION 5.2. Stockholder Meeting; Proxy Material....................... 20
SECTION 5.3. Access to Information..................................... 20
SECTION 5.4. Other Offers.............................................. 20
SECTION 5.5. State Takeover Statutes; Rights Agreement................. 20
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary.......................... 21
SECTION 6.2. Voting of Shares.......................................... 21
SECTION 6.3. Indemnification........................................... 21
SECTION 6.4. Employees................................................. 21
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts;
Notification......................................... 22
SECTION 7.2. Public Announcements...................................... 23
SECTION 7.3. Confidentiality........................................... 23
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of
Each Party........................................... 24
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ARTICLE IX
TERMINATION
SECTION 9.1. Termination............................................... 24
SECTION 9.2. Effect of Termination..................................... 25
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and
Warranties.......................................... 25
SECTION 10.2. Notices.................................................. 25
SECTION 10.3. Amendments; No Waivers................................... 26
SECTION 10.4. Fees and Expenses........................................ 26
SECTION 10.5. Successors and Assigns................................... 27
SECTION 10.6. Governing Law............................................ 27
SECTION 10.7. Counterparts; Effectiveness;
Interpretation......................................... 27
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AGREEMENT AND PLAN OF MERGER dated as of October 7, 1996
among Computer Associates International, Inc., a Delaware
corporation ("Parent"), Tse-tsehese-staestse, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent
("Merger Subsidiary"), and Cheyenne Software, Inc., a
Delaware corporation (the "Company").
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the
date hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence an offer (the "Offer") to
purchase all of the outstanding shares of common stock, par value $.01 per share
(the "Shares"), including the associated Rights (defined below in Section
4.1(c)) of the Company at a price of $30.50 per Share (including such associated
Rights), net to the seller in cash. The Offer shall be subject to the condition
that there shall be validly tendered in accordance with the terms of the Offer
prior to the expiration date of the Offer and not withdrawn a number of Shares
which, together with the Shares then owned by Parent and Merger Subsidiary,
represents at least a majority of the total number of outstanding Shares,
assuming the exercise of all outstanding options, rights and convertible
securities (if any) and the issuance of all Shares that the Company is obligated
to issue (such total number of outstanding Shares being hereinafter referred to
as the "Fully Diluted Shares") (the "Minimum Condition") and to the other
conditions set forth in Annex I hereto. Parent and Merger Subsidiary expressly
reserve the right to waive the conditions to the Offer; provided that, without
the written consent of the Company, no change may be made which changes the form
of consideration to be paid, decreases the price per Share or the number of
Shares sought in the Offer, imposes conditions to the Offer in addition to those
set forth in Annex I, changes or waives the Minimum Condition, extends the Offer
(except as set forth in the following sentence), or makes any other change to
any condition to the Offer set forth in Annex I which is adverse to the holders
of Shares. Subject to the terms of the Offer in this Agreement and the
satisfaction (or waiver to the extent permitted by this Agreement) of the
conditions to the Offer, Merger Subsidiary shall accept for payment all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the applicable expiration date of the Offer and shall pay for all such
Shares promptly after acceptance; provided that Merger Subsidiary may extend the
Offer if, at the scheduled expiration date of the Offer or any extension thereof
any of the conditions to the Offer shall not have been satisfied, until such
time as such conditions are satisfied or waived, and Merger Subsidiary may
extend the Offer for a further period of time of not more than 20 business days
to meet the objective (which is not a condition to the Offer) that there be
validly tendered, in accordance with the terms of the Offer, prior to the
expiration date of the Offer (as so extended) and not withdrawn a number of
Shares, which together with Shares then owned by Parent and Merger Subsidiary,
represents at least 90% of the Fully Diluted Shares. Subject to Section 9.1, if
the condition set forth in clause (ii) of the first paragraph of Annex I is not
satisfied as of the date the Offer would otherwise have expired, Merger
Subsidiary shall extend the Offer until the earlier of (i) the date that
is 30 days after the first scheduled expiration date and (ii) the date the
condition set forth in clause (ii) of the first paragraph of Annex I is
satisfied.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall (i) file with the SEC (defined below in
Section 4.1(a)) a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer which will contain the offer to purchase and
form of the related letter of transmittal (together with any supplements
or amendments thereto, collectively the "Offer Documents") and (ii) cause
the Offer Documents to be disseminated to holders of Shares. Parent,
Merger Subsidiary and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect.
Parent and Merger Subsidiary agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-1 prior to its being
filed with the SEC.
SECTION 1.2. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (defined below in
Section 2.1), are fair to and in the best interest of the Company's
stockholders, (ii) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, which approval
satisfies in full the requirements of Section 203 of the General Corporation Law
of the State of Delaware (the "Delaware Law"), and (iii) unanimously resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders. The Company further represents that Lazard
Freres & Co. LLC has delivered to the Company's Board of Directors its opinion
that the consideration to be paid in the Offer and the Merger is fair to the
holders of Shares from a financial point of view. The Company has been advised
that all of its directors and executive officers presently intend either to
tender their Shares pursuant to the Offer or to vote in favor of the Merger. The
Company will promptly furnish Parent and Merger Subsidiary with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case as of
the most recent practicable date, and will provide to Parent and Merger
Subsidiary such additional information (including, without limitation, updated
lists of stockholders, mailing labels and lists of securities positions) and
such other assistance as Parent or Merger Subsidiary may reasonably request in
connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced the
Company will file with the SEC and disseminate to holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which shall reflect the recommendations of the Company's Board of Directors
referred to above, subject to the fiduciary duties of the Board of Directors of
the Company as advised in writing by Wachtell, Lipton, Xxxxx & Xxxx, counsel to
the Company. The Company, Parent and Merger Subsidiary each agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC.
SECTION 1.3. Directors. (a) Effective upon the acceptance for payment
by Merger Subsidiary of a majority of the Shares pursuant to the Offer, Parent
shall be entitled to designate the number of directors, rounded up to the next
whole number, on the Company's Board of Directors that equals the product of (i)
the total number of directors on the Company's Board of Directors (giving effect
to the election of any additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by Parent or Merger Subsidiary
(including Shares accepted for payment) bears to the total number of Shares
outstanding, and the Company shall take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors,
including, without limitation, increasing the number of directors, or seeking
and accepting resignations of
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incumbent directors, or both; provided that, prior to the Effective Time
(defined below in Section 2.1), the Company's Board of Directors shall
always have one member who is neither a designee nor an affiliate of Parent
or Merger Subsidiary nor an employee of the Company (an "Independent Director").
If the number of Independent Directors is reduced below one for any reason
prior to the Effective Time, the departing Independent Director shall
be entitled to designate a person to fill such vacancy. No action proposed
to be taken by the Company to amend or terminate this Agreement or waive
any action by Parent or Merger Subsidiary shall be effective without the
approval of the Independent Director. At such times, the Company will use its
best efforts to cause individuals designated by Parent to constitute the same
percentage as such individuals represent on the Company's Board of Directors of
(x) each committee of the Board, (y) each board of directors of each subsidiary
(defined below in Section 4.1(a)) and (z) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (defined below
in Section 4.1(d)) and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.3. Parent will supply to the Company in writing
and be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "Merger") with and into the Company in accordance with the
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "Surviving
Corporation").
(b) The closing of the Merger (the "Closing") shall take place on the
later of (x) November 30, 1996 and (y) the first business day on which all of
the conditions set forth in Article VIII hereof shall be fulfilled or waived in
accordance with this Agreement. As soon as practicable following the Closing,
the Company and Merger Subsidiary will file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by Delaware Law in connection with the Merger. The Merger
shall become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of Delaware or, with the consent of the
Independent Director, at such later time as is specified in the certificate of
merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or
owned by Parent, Merger Subsidiary or any subsidiary of either of them
immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share
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of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation; and
(c) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section 2.2(a) or
as provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$30.50 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration").
SECTION 2.3. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint a bank or trust company (the "Exchange Agent") for the
purpose of exchanging certificates representing Shares for the Merger
Consideration. Parent will make available to the Exchange Agent, as needed, the
Merger Consideration to be paid in respect of the Shares (the "Exchange Fund").
For purposes of determining the Merger Consideration to be made available,
Parent shall assume that no holder of Shares will perfect his right to appraisal
of his Shares. Promptly after the Effective Time, Parent will send, or will
cause the Exchange Agent to send, to each holder of Shares at the Effective Time
a letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Exchange Agent).
The Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided in this Section 2.3. The Exchange Fund shall not be used for
any other purpose, except as provided in this Agreement.
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares and such other documents as
may be reasonably requested, will be entitled to receive the Merger
Consideration payable in respect of such Shares. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article II.
(e) Any portion of the Exchange Fund made available to the Exchange
Agent pursuant to Section 2.3(a) that remains unclaimed by the holders of Shares
six months after the Effective Time shall be returned to Parent, upon demand,
and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section 2.3 prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by
holders of
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Shares immediately prior to such time as such amounts would otherwise escheat
to or become property of any governmental entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear of any claims or
interest of any person previously entitled hereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Parent, upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal. If
after the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.5. Stock Options. (a) At the Effective Time, each of the
then outstanding Company Options (defined below) shall by virtue of the Merger,
and without any further action on the part of any holder thereof, become fully
exercisable and vested and be assumed by Parent and converted into an option to
purchase that number of shares of common stock, par value $.10 per share
("Parent Common Stock"), of Parent determined by multiplying the number of
Shares subject to such Company Option at the Effective Time by the quotient
obtained by dividing (x) $30.50 by (y) the average closing price of Parent
Common Stock on the New York Stock Exchange Composite Tape for the 20
consecutive trading days immediately prior to the Effective Time (such quotient,
the "Conversion Number"), at an exercise price per share of Parent Common Stock
equal to the quotient obtained by dividing (x) the exercise price per Share of
such Company Option immediately prior to the Effective Time by (y) the
Conversion Number. If the foregoing calculation results in an assumed Company
Option being exercisable for a fraction of a share of Parent Common Stock, then
the number of shares of Parent Common Stock subject to such option shall be
rounded down to the nearest whole number of shares. Except as otherwise set
forth in this Section 2.5, the term, status as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder (the "Code"), if applicable, and all other terms and
conditions of the Company Options will, to the extent permitted by law and
otherwise reasonably practicable, be unchanged. The Company shall take, or cause
to be taken, all actions which are necessary, proper or advisable under the
Stock Plans to make effective the transactions contemplated by this Section 2.5.
"Company Options" means any option granted, and not exercised or expired, to a
current or former employee, director or independent contractor of the Company or
any of its subsidiaries or any predecessor thereof to purchase Shares pursuant
to any stock option, stock bonus, stock award, or stock purchase plan, program,
or arrangement of the Company or any of its subsidiaries or any predecessor
thereof (collectively, the "Stock Plans") or any other contract or agreement
entered into by the Company or any of its subsidiaries.
(b) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
pursuant to the terms set forth in this Section 2.5. Parent shall cause the
shares of Parent Common Stock issuable upon exercise of the assumed Company
Options to be registered, or to be issued pursuant to a then effective
registration statement, no later than 90 days after the Effective Time on Form
S-8 promulgated by the SEC and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements for so
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long as such assumed Company Options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, Parent shall administer
the Company Options assumed pursuant to this Section 2.5 in a manner that
complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but
shall have no responsibility for such compliance by the Company or its
predecessors.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to the name of the Company.
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation, and (ii) the officers
of the Merger Subsidiary at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Merger Subsidiary as follows:
(a) Organization, Standing, and Corporate Power. Each of the Company
and each of its Significant Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and each of
its Significant Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) could not reasonably be expected
to have a material adverse effect on the financial condition, business or
results of operations of the Company and its subsidiaries taken as a whole
except that occurrences due solely to a disruption of the Company's or its
subsidiary's businesses solely as a result of the announcement of the execution
of this Agreement and the transactions proposed to be consummated by this
Agreement shall be excluded from consideration for purposes of the effect of an
action or inaction on the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). The Company has delivered to Parent complete and
correct copies of its Certificate of Incorporation and By-Laws and the
certificates of incorporation and by-laws of its Significant Subsidiaries which
are incorporated in the United States, in each case as amended to the date of
this Agreement. For purposes of this Agreement, a "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or
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indirectly by such first person; and a "Significant Subsidiary" means any
subsidiary of a person that constitutes a significant subsidiary of such
person within the meaning of Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC").
(b) Subsidiaries. Section 4.1(b) of the disclosure schedule delivered
by the Company to Parent and Merger Subsidiary prior to the execution of this
Agreement (the "Disclosure Schedule") lists each subsidiary of the Company and
its respective jurisdiction of incorporation and indicates whether such
subsidiary is a Significant Subsidiary. All the outstanding shares of capital
stock of each such subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company, by another subsidiary of the Company
or by the Company and another such subsidiary, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock), other than such Liens, limitations or
restrictions arising in the ordinary and normal course under applicable law.
Except for the capital stock of its subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). At the time of
execution of this Agreement, (i) 37,711,424 shares of Common Stock were issued
and outstanding, including associated Preferred Share Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996
(the "Rights Agreement"), between the Company and Continental Stock Transfer and
Trust Company, as Rights Agent (the "Rights Agent"), (ii) no shares of Preferred
Stock were issued and outstanding, (iii) 2,343,900 shares of Common Stock were
held by the Company in its treasury or by any of the Company's subsidiaries, and
(iv) 5,003,136 shares of Common Stock were reserved for issuance pursuant to
outstanding Company Options. Except as set forth above, at the time of execution
of this Agreement, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are, and all shares which may be issued pursuant
to the Stock Plans will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Other than the
Shares, there are not any bonds, debentures, notes or other indebtedness or
securities of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as set forth above and in Section
4.1(c) of the Disclosure Schedule, there are not any securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them 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 or other voting securities of the Company or of 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, arrangement or undertaking. There are no outstanding
rights, commitments, agreements, arrangements or undertakings of any kind
obligating the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock or other voting securities of the
Company or any of its subsidiaries or any securities of the type described in
the two immediately preceding sentences (other than in connection with the
exercise of outstanding Company Options). The Company has
delivered to Parent complete and correct copies of the Stock Plans and all forms
of Company Options. Section 4.1(c) of the Disclosure Schedule sets forth a
complete and accurate list of all Company Options outstanding as of the date of
this Agreement and the exercise price of each outstanding Company Option.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, except for any
required approval by the Company's
-7-
stockholders in connection with the consummation of the Merger, to consummate
the transactions contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Company, except for
any required approval by the Company's stockholders in connection with the
consummation of the Merger. This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes a valid
and binding agreement of Parent and Merger Subsidiary, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets, of the Company
or any of its subsidiaries under, (i) the Certificate of Incorporation or
By-Laws of the Company or the comparable charter or organizational documents of
any of its Significant Subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clause (ii) or (iii) above, any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate could not reasonably be expected to (A) have a Material Adverse
Effect, (B) impair the ability of the Company to perform its obligations under
this Agreement or (C) prevent or materially delay consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with or exemption by
(collectively, "Consents") any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
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 or the consummation
by the Company of the transactions contemplated by this Agreement, except for
(i) the filing of a premerger notification and report form by the Company under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), (ii) compliance with any
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act"), (iii) the filing of a
certificate of merger in accordance with Delaware Law and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (iv) such notices, filings and consents as may be required under
relevant state property transfer laws, and (v) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as (A) may be
required under the laws of any foreign country in which the Company or any
of its subsidiaries conducts any business or owns any property or assets
or (B) as to which the failure to obtain or make could not reasonably be
expected to (x) have a Material Adverse Effect or (y) prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
(e) SEC Documents; Financial Statements; No Undisclosed Liabilities.
The Company has filed all required reports, schedules, forms, statements and
other documents with the SEC since July 1, 1993 (the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), or the Exchange Act, as the case
may be, applicable to such SEC Documents, and none of the SEC Documents
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. The financial statements of the Company included in the SEC
Documents comply as to form in all material
-8-
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the Company
Filed SEC Documents, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) and there is no existing condition, situation
or set of circumstances which are required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto, except for liabilities
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(f) Disclosure Documents. (i) Each document required to be filed by
the Company with the SEC in connection with the transactions contemplated by
this Agreement (the "Company Disclosure Documents"), including, without
limitation, the Schedule 14D-9, the proxy or information statement of the
Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(ii) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement and at the
time of any distribution thereof, such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.1(f)(ii) will not apply to statements
or omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger Subsidiary specifically
for use therein.
(iii) The information with respect to the Company or any subsidiary
that the Company furnishes to Parent or Merger Subsidiary in writing
specifically for use in the Offer Documents will not, at the time of the filing
thereof, at the time of any distribution thereof and at the time of the
consummation of the Offer, 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 made therein, in the light of the circumstances
under which they were made, not misleading.
(g) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this Agreement
(the "Company Filed SEC Documents") and in Section 4.1(g) of the Disclosure
Schedule, since June 30, 1996, the Company has conducted its business only in
the ordinary course consistent with past practice, and there has not been (i)
any event, occurrence or development of a state of circumstances which has had
or could reasonably be expected to have a Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock or any repurchase, redemption or other acquisition by the Company
or any of its subsidiaries of any outstanding shares of capital stock or other
securities of the Company or any of its subsidiaries, (iii) any split,
combination or reclassification of any of its capital stock or any issuance or
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the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (iv) (A) 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 of any increase in
compensation or benefits or severance or termination pay or benefits, except in
the ordinary course of business consistent with past practice or as was required
under employment, severance or termination agreements or plans in effect as of
June 30, 1996, or (B) any entry by the Company or any of its subsidiaries into
any employment, deferred compensation, severance or termination agreement with
any such current or former director, officer or employee, except in the ordinary
course of business consistent with past practice, (v) any damage, destruction or
loss, whether or not covered by insurance, that has had or could have a Material
Adverse Effect, (vi) any change in accounting methods, principles or practices
by the Company or any of its subsidiaries, except insofar as may have been
required by a change in generally accepted accounting principles, (vii) any
amendment of any material term of any outstanding security of the Company or any
of its subsidiaries, (viii) any incurrence, assumption or guarantee by the
Company or any of its subsidiaries of any indebtedness for borrowed money in the
amount of more than $1,000,000 in the aggregate, (ix) any creation or assumption
by the Company or any of its subsidiaries of any Lien on any asset other than in
the ordinary course of business consistent with past practice, but in no event
in the amount of more than $500,000 for any one transaction or $1,000,000 in the
aggregate, (x) any making of any loan, advance or capital contributions to or
investment in any person other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more than
$500,000 for any one transaction or $1,000,000 in the aggregate and other than
investments in marketable securities made in the ordinary course of business
consistent with past practice, (xi) any transaction or commitment made, or any
contract or agreement entered into, by the
Company or any of its subsidiaries relating to its assets or business (including
the acquisition or disposition of any assets or the merger or consolidation with
any person) or any relinquishment by the Company or any of its subsidiaries of
any contract or other right, in either case, material to the Company and its
subsidiaries taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practice and those contemplated
by this Agreement, but (without the consent of Parent which shall not be
unreasonably withheld or delayed) in no event representing commitments on behalf
of the Company or any of its subsidiaries of more than $500,000 for any
transaction or $1,000,000 for any series of transactions, (xii) any material
labor dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any of its subsidiaries, which employees were not subject to a
collective bargaining agreement at June 30, 1996, or any material lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees or (xiii) any agreement, commitment, arrangement or undertaking by the
Company or any of its subsidiaries to perform any action described in clauses
(i) through (xii).
(h) Litigation. Except as disclosed in the Company Filed SEC Documents
or in Section 4.1(h) of the Disclosure Schedule, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to (i) have a Material Adverse Effect,
(ii) impair the ability of the Company to perform its obligations under this
Agreement or (iii) prevent or materially delay the consummation of the Offer,
the Merger or any of the other transactions contemplated by this Agreement, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future would
have, any such effect. Section 4.1(h) of the Disclosure Schedule sets forth as
of the date hereof, with respect to any pending suit, action or proceeding to
which the Company or any its subsidiaries is a party and which involves claims
which if adversely determined would exceed $500,000, the forum, the parties
thereto, the subject matter thereof and the amount of damages claimed.
-10-
(i) Absence of Changes in Stock and Benefit Plans. Except as disclosed
in the Company Filed SEC Documents or Section 4.1(i) of the Disclosure Schedule,
since June 30, 1996, there has not been (i) any adoption or amendment by the
Company or any of its subsidiaries of any Stock Plan or any acceleration,
amendment or change of the period of exercisability or vesting of any Company
Options or restricted stock, stock bonus or other awards under the Stock Plans
(including any discretionary acceleration of the exercise periods or vesting by
the Company's Board of Directors or any committee thereof or any other persons
administering a Stock Plan) or authorization of cash payments in exchange for
any Company Options, restricted stock, stock bonus or other awards granted under
any of such Stock Plans; or (ii) any adoption or amendment by the Company or any
of its subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, stock appreciation
right, retirement, vacation, severance, disability, death benefit,
hospitalization, medical, workers' compensation, supplementary unemployment
benefits or other plan, arrangement or understanding providing benefits to any
current or former employee, officer or director of the Company or any of its
subsidiaries or any beneficiary thereof entered into, maintained or contributed
to, as the case may be, by the Company or any of its subsidiaries (collectively,
"Benefit Plans") where the expense of such Benefit Plan, or amendment thereto,
as the case may be, is material, other than those Benefit Plans maintained
outside of the United States primarily for the benefit of persons substantially
all of whom are non-resident aliens with respect to the United States
("Foreign Benefit Plans").
(j) Participation and Coverage in Benefit Plan. Except for amendments
and other actions described in Section 4.1(i) of the Disclosure Schedule, except
with respect to changes required by applicable law, and except as disclosed in
the Company Filed SEC Documents or Section 4.1(j) of the Disclosure Schedule,
there has been no written interpretation or announcement (whether or not
written) by the Company or any of its subsidiaries relating to, or change in
employee participation or coverage under, any Benefit Plan, other than a Foreign
Benefit Plan, which would increase materially the expense of maintaining such
Benefit Plan above the level of the expense incurred in respect thereof for the
fiscal year ended on June 30, 1996.
(k) ERISA Compliance. (i) Section 4.1(k) of the Disclosure Schedule
contains a list of (A) all "employee pension benefit plans" (defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), "employee welfare benefit plans" (defined in Section 3(l) of ERISA)
and all other Benefit Plans maintained, or contributed to, by the Company or any
of its subsidiaries or ERISA affiliates (defined below) for the benefit of any
current or former employees, officers or directors of the Company or any of its
subsidiaries or ERISA affiliates or under which the Company or any of its
subsidiaries or ERISA affiliates has any liability other than Foreign Benefit
Plans ("U.S. Benefit Plans") and (B) all Stock Plans. For purposes of this
Agreement, "ERISA affiliate" of the Company means any person which, together
with the Company or any of its subsidiaries, would be treated as a single
employer under Section 414 of the Code. The only Benefit Plans described in
clause (A) of the preceding sentence which constitute an "employee pension
benefit plan" defined in Section 3(2) of ERISA (the "Pension Plans") are
identified as such in Section 4.1(k) of the Disclosure Schedule.
(ii) Each material U.S. Benefit Plan has been maintained and
administered in compliance in all material respects with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations, and is, to the extent required by applicable law or contract, fully
funded without having any material deficit or material unfunded actuarial
liability. Any Benefit Plan intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified and,
except as set forth in Section 4.1(k) of the Disclosure Schedule, nothing has
occurred to cause the loss of such qualified status except where such occurrence
could reasonably be expected to be cured without the incurrence by the Company
of any liability or expense that would be material to the Company and its
subsidiaries.
-11-
(iii) No Benefit Plan is covered by Title IV of ERISA or Section 412
of the Code. Neither the Company nor any of its subsidiaries has incurred or
expects to incur any liability under Title IV of ERISA that has not already been
satisfied or any liability or penalty under Section 4975 or 4980B of the Code or
Section 502(i) of ERISA that has not already been satisfied.
(iv) Except as disclosed in Section 4.1(k)(iv) of the Disclosure
Schedule, there are no pending or anticipated claims against or otherwise
involving any of the Benefit
Plans and no suit, action or other litigation has been brought against or with
respect to any Benefit Plan (excluding, in each case, claims for benefits
incurred in the ordinary course of Benefit Plan activities) which would be
material to the Company and its Subsidiaries.
(v) All material contributions, reserves or premium payments required
to be made as of the date hereof to or with respect to the Benefit Plans have
been made or provided for except to the extent failure to do so would not impair
the continued operation of the relevant Benefit Plan.
(vi) Except as required by law or as disclosed in Section 4.1(k)(vi)
of the Disclosure Schedule, neither the Company nor any of its subsidiaries has
any material obligations for post-retirement or post-termination health and life
benefits under any U.S. Benefit Plan.
(l) Taxes. As used in this Agreement, "tax" or "taxes" shall include
all Federal, state, local and foreign income, property, sales, excise and other
taxes, tariffs or governmental charges or assessments of any nature whatsoever
as well as any interest, penalties and additions thereto. Except as disclosed in
Schedule 4.1(l) of the Disclosure Schedule:
(i) The Company and each of its subsidiaries have timely filed all tax
returns, statements, reports and forms required to be filed with any tax
authority and in accordance with all applicable laws. All such tax returns are
correct and complete in all material respects. All taxes owed by the Company and
any of its subsidiaries (whether or not shown on any tax return) have been paid
other than where failure to do so could reasonably be expected to be cured
without the incurrence by the Company of any material liability. There are no
material Liens on any of the assets of the Company or any of its subsidiaries
that arose in connection with any failure (or alleged failure) to pay any tax.
(ii) The Company and each of its subsidiaries has withheld and timely
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party other than where failure to do so could
reasonably be expected to be cured without the incurrence by the Company of any
material liability.
(iii) Neither the Company nor any of its subsidiaries expect any
authority to assess any additional taxes against the Company or any of its
subsidiaries for any period for which tax returns have been filed. No dispute or
claim concerning any tax liability of the Company or any of its subsidiaries has
been proposed or claimed in writing by any authority.
(iv) Neither the Company nor any of its subsidiaries has waived any
statute of limitations in respect of taxes or agreed to any extension of time
with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has filed a
consent pursuant to Section 341(f) of the Code concerning collapsible
corporations. Neither the Company nor any of its subsidiaries is a party to any
tax allocation or sharing agreement. Neither the Company nor any of its
subsidiaries has any material liability for the taxes of any person (other than
the Company and any of its
-12-
subsidiaries that is currently a member of the Company's affiliated group
filing a consolidated federal income tax return) under Treas. Reg. Sect.
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(vi) As of the date of the most recent financial statements included
in the Company Filed SEC Documents, the unpaid taxes of the Company and its
subsidiaries did not exceed the liability for taxes (rather than any reserve for
deferred taxes established to reflect timing differences between book and tax
income) set forth on the face of such financial statements.
(vii) Neither the Company nor any of its subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code (or
similar provisions of other law or regulations) in its current or in any future
taxable period by reason of a change in accounting method; nor does the Company
or any of its subsidiaries have any knowledge that the Internal Revenue Service
(or other taxing authority) has proposed or is considering proposing, any such
change in accounting method. Neither the Company nor any of its subsidiaries is
a party to any agreement, contract, or arrangement that, individually or
collectively, could give rise to the payment of any material amount (whether in
cash or property, including Shares) that would not be deductible pursuant to the
terms of Sections 162(a)(1), other than amounts which may be required to be
capitalized pursuant to Section 263 or other applicable sections of the Code,
162(m), 162(n) or 280G of the Code.
(m) State Takeover Statutes; Rights Agreement. (i) The Board of
Directors of the Company has approved the Offer, the Merger and this Agreement,
and such approval is sufficient to render inapplicable to the Offer, the Merger,
this Agreement and the other transactions contemplated hereby, the provisions of
Section 203 of Delaware Law. To the best of the Company's knowledge, no other
"fair price", "moratorium", "control share acquisition", or other anti-takeover
statute or similar statute or regulation, applies or purports to apply to the
Offer, the Merger, this Agreement or any of the other transactions contemplated
hereby.
(ii) The Company has delivered to Parent a complete and correct copy
of the Rights Agreement, including all amendments and exhibits thereto. The
Company has taken, and as soon as possible after the date hereof (but in no
event later than two business days after the date hereof), the Rights Agent will
take, all actions necessary or appropriate to amend the Rights Agreement to
ensure that the execution of this Agreement, the announcement or making of the
Offer, the acquisition of Shares pursuant to the Offer and the Merger and the
other transactions contemplated in this Agreement will not cause Parent or any
of its affiliates to be considered an Acquiring Person (defined in the Rights
Agreement), the occurrence of a Distribution Date or Shares Acquisition Date
(each defined in the Rights Agreement) or the separation of the Rights from the
underlying Shares, and will not give the holders thereof the right to acquire
securities of any party hereto.
(n) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Lazard Freres & Co. LLC
and Broadview Associates LLC, the fees and expenses of which will be paid by the
Company (and a copy of whose engagement letters and a calculation of the fees
that would be due thereunder has been provided to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its subsidiaries.
Assuming consummation of the Offer and the Merger, no such engagement letter
obligates the Company to continue to use their services or pay fees or expenses
in connection with any future transaction.
(o) Permits; Compliance with Laws. Each of the Company and its
subsidiaries has in effect all federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
-13-
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit except for the absence of Permits
and for defaults under Permits which absence or defaults, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
The Company and its subsidiaries have been, and are, in compliance in all
material respects with all applicable statutes, laws or material ordinances,
regulations, rules, judgments, decrees or orders of any Governmental Entity, and
neither the Company nor any of its subsidiaries has received any notice from any
Governmental Entity or any other person that either the Company or any of its
subsidiaries is in violation of, or has violated, in any material respect any
applicable statutes, laws or material ordinances, regulations, rules, judgments,
decrees or orders.
(p) Contracts; Debt Instruments. (i) Except as otherwise disclosed in
Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule, neither the Company nor any
of its subsidiaries is a party to or subject to:
(A) any union contract, or any employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement
providing for future payments, written or oral, with any current or
former officer, consultant, director or employee which (1) exceeds
$200,000 per annum or (2) requires aggregate annual payments or total
payments over the life of such agreement, contract or arrangement to
such current or former officer, consultant, director or employee in
excess of $100,000 or $250,000, respectively, and is not terminable by
it or its subsidiary on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(B) any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of
revenues of $1,000,000 per annum or more with other persons;
(C) any lease for real or personal property in which the amount
of payments which the Company is required to make on an annual basis
exceeds $1,000,000;
(D) to the Company's knowledge, any material agreement, contract,
policy, license, Permit, document, instrument, arrangement or commitment
which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired or adversely
affected by reason of the execution of this Agreement, the closing of
the Offer or the Merger, or the consummation of the other transactions
contemplated hereby;
(E) any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment that limits in any material
respect the freedom of the Company or any subsidiary of the Company to
compete in any line of business or with any person or in any geographic
area or which would so limit in any material respect the freedom of
the Company or any subsidiary of the Company after the Effective
Time; or
(F) any other agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment not made in the ordinary
course of business which is material to the Company and its subsidiaries
taken as a whole.
(ii) Neither the Company nor any subsidiary of the Company is in
default in any material respect under the terms of any exclusive license or
distribution agreement or arrangement that, by its terms, provides for payments
to the Company or any of its subsidiaries of $500,000 or more per annum. To the
knowledge of the Company, as of the date hereof, none of the parties to any of
the contracts identified in Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule
or otherwise disclosed in the
-14-
Company Filed SEC Documents has terminated, or in any way expressed an intent
to materially reduce or terminate the amount of, its business with the Company
or any of its subsidiaries in the future.
(iii) Set forth in Section 4.1(p)(iii) of the Disclosure Schedule is
(A) a list of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments pursuant to which any indebtedness of the
Company or any of its subsidiaries in an aggregate principal amount in excess of
$500,000 is outstanding or may be incurred and (B) the respective principal
amounts currently outstanding thereunder. For purposes of this Section
4.1(p)(iii), "indebtedness" shall mean, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (B) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such person upon which interest charges are customarily paid,
(D) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (E) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (F) all capitalized lease obligations of such person,
(G) all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof), (I) all letters of
credit issued for the account of such person (excluding letters of credit issued
for the benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such person to
purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(K) all guarantees and arrangements having the economic effect of a guarantee of
such person of any indebtedness of any other person.
(q) Opinion of Financial Advisor. The Company has received the opinion
of Lazard Freres & Co. LLC, dated the date hereof, a copy of which has been or,
within three business days of the date hereof, will be provided to Parent, to
the effect that, as of such date, the consideration to be paid in the Offer and
the Merger is fair to the Company's stockholders from a financial point of view.
(r) Interests of Officers and Directors. None of the Company's or any
of its subsidiaries' officers or directors has any interest in any property,
real or personal, tangible or intangible, including inventions, patents,
copyrights, trademarks, trade names, trade secrets or knowhow, used in or
pertaining to the business of the Company or that of its subsidiaries, or any
supplier, distributor or customer of the Company or any of its subsidiaries,
except for the normal rights of a stockholder and rights under existing employee
benefit plans and except for any such interest which would not be required to be
disclosed under the Exchange Act.
(s) Technology. (i) The Company and its subsidiaries exclusively own,
or are licensed to use, the rights to all patents, trademarks, trade names,
service marks, copyrights and any applications therefor, maskworks, net lists,
schematics, inventories, technology, trade secrets, source codes, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that in any material respect are used or
proposed by the Company to be used in the business of the Company and any of its
subsidiaries as currently conducted or proposed by the Company to be conducted
(the "Company Intellectual Property Rights"). Section 4.1(s)(i) of the
Disclosure Schedule lists, as of the date hereof, all material: (A) patents,
trademarks, trade names, service marks, registered and unregistered copyrights,
and any applications therefor included in the Company Intellectual Property
Rights, the Company's currently marketed software products and a list of which,
if any, of such products have been registered for copyright protection with the
United States Copyright Office and any foreign offices; and (B) licenses and
other agreements to which the Company or any of its subsidiaries is a party and
pursuant to which the Company or any of its subsidiaries is
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authorized to use any Company Intellectual Property Right. Neither the Company
nor any of its subsidiaries is, or as a result of the execution, delivery or
performance of the Company's obligations hereunder will be, in material
violation of, or lose any rights pursuant to, any material license or agreement
described in Section 4.1(s) of the Disclosure Schedule.
(ii) As of the date hereof, no claims with respect to the Company
Intellectual Property Rights have been asserted or, to the knowledge of the
Company, are threatened by any person nor does the Company or any subsidiary of
the Company know of any valid grounds for any bona fide claims against the use
by the Company or any subsidiary of the Company of any Company Intellectual
Property Rights. All granted and issued patents and all registered trademarks
and service marks listed in Section 4.1(s)(i) of the Disclosure Schedule and all
copyrights held by the Company or any of its subsidiaries are valid, enforceable
and subsisting. To the Company's knowledge, as of the date hereof, there has not
been and there is not any material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any third
party, employee or former employee.
(iii) No Company Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has entered into any agreement to
indemnify any other person against any charge of infringement of any Company
Intellectual Property Right, except infringement indemnities agreed to in the
ordinary course included as part of the Company's license agreements. Neither
the Company nor any of its subsidiaries has entered into any agreement granting
any third party the right to bring infringement actions with respect to, or
otherwise to enforce rights with respect to, any Company Intellectual Property
Right owned by the Company. The Company and its subsidiaries have the exclusive
right to file, prosecute and maintain all applications and registrations with
respect to the Company Intellectual Property Rights owned by the Company.
(t) Change of Control. Except as set forth in Section 4.1(i),
4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in or increase in any material respect the amount of any payment
or benefit (including a payment or benefit contingent on the occurrence of one
or more events including, without limitation, termination of employment)
becoming due to any current or former employee, director or independent
contractor of the Company or any of its subsidiaries, from the Company or any of
its subsidiaries under the terms of any Stock Plan, Benefit Plan or employment
or change of control agreement, or (ii) result in the acceleration of the time
of payment, exercise or vesting of any such payment or benefits.
SECTION 4.2. Representations and Warranties of Parent and Merger
Subsidiary. Parent and Merger Subsidiary represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Merger Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to carry on its business as now being conducted.
(b) Authority; Noncontravention. Parent and Merger Subsidiary have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Merger Subsidiary. This Agreement has been duly executed
and delivered by Parent and Merger Subsidiary and, assuming this Agreement
constitutes a valid and binding agreement of the Company, constitutes a valid
and binding obligation of such party,
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enforceable against such party in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination or cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws
of Parent or Merger Subsidiary or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or Merger Subsidiary or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent,
Merger Subsidiary or any other subsidiary of Parent or their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (A) have a material adverse effect on Parent and its
subsidiaries taken as a whole, (B) impair the ability of Parent and Merger
Subsidiary to perform their respective obligations under this Agreement or (C)
prevent the consummation of any of the transactions contemplated by this
Agreement. No Consent is required by or with respect to Parent, Merger
Subsidiary or any other subsidiary of Parent in connection with the
execution and delivery of this Agreement or the consummation by
Parent or Merger Subsidiary, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the filing
of a premerger notification and report form under the HSR Act, (ii)
compliance with any applicable requirements of the Exchange Act, (iii) the
filing of a certificate of merger in accordance with Delaware Law and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iv) such notices, filings and consents as
may be required under relevant state property transfer laws and (v) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as (A) may be required under the laws of any foreign country in which
the Company or any of its subsidiaries conducts any business or owns any
property or assets or (B) as to which the failure to obtain or make could not
reasonably be expected to (x) have a Material Adverse Effect or (y) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
(c) Disclosure Documents. (i) The information with respect to Parent
and its subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain, any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (A) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (B) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of the filing thereof and at the time of any distribution thereof.
(ii) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
apply to statements or omissions in the Offer Documents based upon information
furnished to Parent or Merger Subsidiary in writing by the Company specifically
for use therein.
(d) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection
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with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Merger Subsidiary.
(e) Delaware Law. As of the time immediately prior to the execution of
this Agreement, neither Parent nor any of its subsidiaries was (i) an
"interested stockholder", as such term is defined in Section 203 of the Delaware
Law or (ii) an Acquiring Person under the Rights Agreement.
(f) Financing. Parent will provide or cause to be provided to Merger
Subsidiary the funds necessary to consummate the Offer and the Merger in
accordance with their terms and the terms of this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business. During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior written
approval of Parent:
(a)(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by any direct or indirect wholly owned subsidiary of the Company
to its parent, (ii) split, combine or reclassify any of its capital stock 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 (iii) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities (other than in connection with
the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Shares upon the
exercise of Company Options outstanding on the date of this Agreement in
accordance with their terms on such date);
(c) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(d)(i) mortgage or otherwise encumber or subject to any Lien, any of
the Company Intellectual Property Rights or any other material properties or
assets, (ii) except in the ordinary course of business consistent with past
practice and pursuant to existing contracts or commitments, sell, lease,
transfer or otherwise dispose of any of the Company Intellectual Property Rights
or any other material properties or assets, or (iii) except in the ordinary
course of business consistent with past practice or pursuant to existing
contracts or commitments, license any of the Company Intellectual Property
Rights;
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(e) make or agree to make any new capital expenditures individually in
excess of $250,000;
(f) make any material tax election (unless required by law) or settle
or compromise any material income tax liability;
(g) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice and in accordance with their terms, of (i)
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or (ii) liabilities incurred in the
ordinary course of business consistent with past practice, or, subject to the
fiduciary duties of the Board of Directors of the Company as advised in writing
by Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(h) commence a lawsuit other than (i) for the routine collection of
bills or (ii) to enforce this Agreement or (iii) in such cases where the Company
in good faith determines that the failure to commence suit would result in a
material impairment of a valuable aspect of the Company's business, provided
that the Company consults with Parent prior to filing such suit;
(i)(i) enter into or amend any employment agreement, (ii) enter into
any customer sale or license agreement with non-standard terms or at discounts
from list prices from that typically granted to similarly situated customers in
accordance with past practice; provided that such action with respect to a
customer sale or license agreement that is immaterial in amount and term will
not be deemed to violate this provision if the Company has (A) used its best
efforts to ensure compliance with this provision and (B) taken prompt corrective
action in the event of a violation sufficient to ensure that no similar
violation will occur in the future, (iii) pay commissions to sales employees
except pursuant to quarterly draws consistent with past practice or on the basis
of executed customer contracts with respect to products actually delivered to
customers, (iv) without the consent of Parent which shall not be unreasonably
withheld or delayed, enter into any contract or series of related contracts in
excess of $500,000 for any contract or $1,000,000 for any series of related
contracts, (v) enter into or amend any agreement or arrangement for professional
services or advice except in the ordinary course of business consistent with
past practice, (vi) enter into any customer agreements providing for product
replacements except in the ordinary course of business consistent with past
practice or (vii) make any determination as to amounts payable under any plan,
arrangement, or agreement, providing for discretionary incentive compensation or
bonus to any officer, director, employee or independent contractor of the
Company or any of its subsidiaries;
(j) hire additional employees except in accordance with existing
budgets; provided that the aggregate number of employees of the Company and its
subsidiaries shall not be increased by more than eight percent per quarter over
the number of employees on the date of this Agreement;
(k) authorize any of, or commit or agree to take any of, the foregoing
actions; or
(l)(i) take or agree or commit to take any action that would make any
representation or warranty of the Company hereunder inaccurate in any respect
at, or as of any time prior to, the Effective Time or (ii) omit or agree or
commit to omit to take any action necessary to prevent any such representation
or warranty from being inaccurate in any respect at any such time.
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SECTION 5.2. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable following Merger
Subsidiary's acquisition of Shares in the Offer for the purpose of voting on the
approval and adoption of this Agreement and the Merger unless a vote of
stockholders of the Company is not required by Delaware Law. The Directors of
the Company shall, subject to their fiduciary duties as advised in writing by
Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with such meeting, the Company (i) will promptly prepare and file
with the SEC, will use all reasonable efforts to have cleared by the SEC and
will thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (ii) subject to
the fiduciary duties of the Board of Directors of the Company as advised in
writing by Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, will use its
best efforts to obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby and (iii) will otherwise
comply with all legal requirements applicable to such meeting.
SECTION 5.3. Access to Information. From the date hereof until the
Effective Time, the Company will give Parent, its counsel, financial advisors,
auditors and other authorized representatives access (during normal business
hours and upon reasonable notice) to the offices, properties, books and records
of the Company and the subsidiaries, will furnish to Parent, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such persons may reasonably request
and will instruct the Company's employees, counsel and financial advisors to
cooperate with Parent in its investigation of the business of the Company and
the subsidiaries; provided that no investigation pursuant to this Section 5.3
shall affect any representation or warranty given by the Company to Parent
hereunder.
SECTION 5.4. Other Offers. Until the termination of this Agreement,
the Company and its subsidiaries will not, and will not authorize or permit the
officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal (defined below) or (ii) subject
to the fiduciary duties of the Board of Directors of the Company under
applicable law, as advised in writing by Wachtell, Lipton, Xxxxx & Xxxx, counsel
to the Company, engage in negotiations with, or disclose any nonpublic
information relating to the Company or any of its subsidiaries or afford access
to the properties, books or records of the Company or any of its subsidiaries
to, any person that has advised the Company or otherwise publicized the fact
that such person may be considering making, or that has made, an Acquisition
Proposal; provided, nothing herein shall prohibit the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act. The Company will promptly notify Parent after receipt of
any Acquisition Proposal or any notice that any person is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries or for access to the properties, books or
records of the Company or any of its subsidiaries by any person that has advised
the Company or otherwise publicized the fact that such person may be considering
making, or that has made, an Acquisition Proposal and will keep Parent informed
of the status and details of any such Acquisition Proposal, indication or
request. For purposes of this Agreement, "Acquisition Proposal" means any offer
or proposal for, or any written indication of interest in, a merger or other
business combination involving the Company or any of its subsidiaries or the
acquisition of any significant equity interest in, or a significant portion of
the assets of, the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement.
SECTION 5.5. State Takeover Statutes; Rights Agreement. (a) If any
"fair price", "control share acquisition", "moratorium" or other anti-takeover
statute, or similar statute or regulation shall become applicable to the Offer,
the Merger or this Agreement, or any other transactions contemplated hereby, the
Company and its Board of Directors shall take all action necessary to ensure
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that the Offer, the Merger and the other transactions contemplated hereby, may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger and the other transactions contemplated hereby.
(b) Except as otherwise provided in Section 4.1(m)(ii), the Company
shall not redeem the Rights or amend (other than to delay the Distribution Date
or to render the Rights inapplicable to the Offer and the Merger) or terminate
the Rights Agreement prior to the Effective Time unless required to do so by a
court of competent jurisdiction.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in this Agreement.
SECTION 6.2. Voting of Shares. Parent agrees to make a quorum and vote
all Shares acquired in the Offer or otherwise beneficially owned by it in favor
of adoption of this Agreement at the Company Stockholder Meeting.
SECTION 6.3. Indemnification. For six years after the Effective Time,
Parent will indemnify and hold harmless the present and former officers,
directors, employees and agents of the Company (the "Indemnified Parties") in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent provided under the Company's certificate of incorporation and bylaws in
effect on the date hereof; provided that such indemnification shall be subject
to any limitation imposed from time to time under applicable law. For four years
after the Effective Time, Parent will cause the Surviving Corporation to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring on or prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy on
terms substantially similar to those of such policy in effect on the date
hereof, provided that in satisfying its obligation under this Section, Parent
shall not be obligated to cause the Surviving Corporation to pay premiums in
excess of 105% of the amount per annum the Company paid in its last full fiscal
year, which amount has been disclosed to Parent and if the Surviving Corporation
is unable to obtain the insurance required by this Section 6.3, it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter relating to
the Merger, the Offer or this Agreement occurring on or prior to the Effective
Time, Parent shall pay as incurred such Indemnified Party's reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith.
SECTION 6.4. Employees. (a) Parent agrees to honor in accordance with
their terms all Benefit Plans (including employment agreements) previously
delivered to Parent and all accrued benefits vested thereunder; it being
understood and agreed that nothing in this Section 6.4(a) shall prevent Parent
from terminating any such Benefit Plan in accordance with its terms. For
purposes of this Section 6.4(a), any Benefit Plan that is a Company Filed SEC
Document shall be deemed to have been delivered to Parent.
(b) Parent agrees to provide employees of the Company and its
subsidiaries retained by Parent with employee benefits in the aggregate no less
favorable than those benefits provided to Parent's similarly situated employees;
provided that Parent shall be under no obligation to retain any employee or
group of employees of the Company or its subsidiaries.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification. (a)
Each of Parent and the Company shall (i) promptly make or cause to be made the
filings required of such party or any of its subsidiaries under the HSR Act with
respect to the transactions contemplated by this Agreement, (ii) comply at the
earliest practicable date with any request under the HSR Act for additional
information, documents, or other material received by such party or any of its
subsidiaries from the Federal Trade Commission or the Department of Justice or
any other Governmental Entity in respect of such filings or such transactions,
and (iii) cooperate with the other party in connection with any such filing and
in connection with resolving any investigation or other inquiry of any such
agency or other Governmental Entity under any Antitrust Laws (defined below)
with respect to any such filing or any such transaction. Each party shall
promptly inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings or any such transaction. Neither party shall participate in any
meeting with any Governmental Entity in respect of any such filings,
investigation, or other inquiry without giving the other party notice of the
meeting and, to the extent permitted by such Governmental Entity, the
opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under the HSR
Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, and, if by mutual agreement, Parent and the
Company decide that litigation is in their best interests, each of Parent and
the Company shall cooperate and use all reasonable efforts vigorously to contest
and resist any such action or proceeding and to have vacated, lifted, reversed,
or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary, or permanent (each an "Order"), that is in effect
and that prohibits, prevents, or restricts consummation of any such
transaction. Each of Parent and the Company shall use all reasonable
efforts to take such action as may be required to cause the expiration
of the notice periods under the HSR Act or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution
of this Agreement.
(c) Subject to the fiduciary duties of the Board of Directors of the
Company as advised in writing by Wachtell, Lipton, Xxxxx & Xxxx, counsel to the
Company, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Company Disclosure Documents and the Offer Documents, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
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(d) Notwithstanding anything to the contrary in Section 7.1(a), (b) or
(c), (i) neither Parent nor any of its subsidiaries shall be required to divest
any of their respective businesses, product lines or assets, (ii) neither Parent
nor any of its subsidiaries shall be required to take or agree to take any other
action or agree to any limitation that could reasonably be expected to have a
material adverse effect on the business, assets, financial condition, results of
operations or prospects of Parent and its subsidiaries taken as a whole or of
Parent combined with the Surviving Corporation after the Effective Time, (iii)
neither the Company nor its subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect, and (iv) no party shall be required
to agree to the imposition of or to comply with, any condition, obligation or
restriction on Parent or any of its subsidiaries or on the Surviving Corporation
or any of its subsidiaries of the type referred to in clause (a) or (b) of Annex
I and (v) neither Parent nor Merger Subsidiary shall be required to waive any of
the conditions to the Offer set forth in Annex I or any of the conditions to the
Merger set forth in Section VIII.
(e) Each party shall give prompt notice to the other parties upon
learning of (i) any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it
to comply with or satisfy in any respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting it or any of
its subsidiaries (x) which, in the case of the Company, if pending on
the date of this Agreement would have been required to have been
disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l) or
4.1(s) or (y) in the case of any party, which relate to the consummation
of the transactions contemplated by this Agreement.
SECTION 7.2. Public Announcements. Parent and Merger Subsidiary, on
the one hand, and the Company, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Offer and the Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement will be
in the form previously agreed to by the parties.
SECTION 7.3. Confidentiality. Parent and its subsidiaries will hold,
and will cause their Representatives (defined in the Confidentiality Agreement,
dated October 1, 1996 (the "Confidentiality Agreement"), between Parent and the
Company) to hold, any Evaluation Material
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(defined in the Confidentiality Agreement) (including any stockholder
information provided pursuant to this Agreement) in confidence in accordance
with the terms of the Confidentiality Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if required by Delaware Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such Law;
(ii) any applicable waiting period under the HSR Act relating
to the Merger shall have expired;
(iii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of
the Merger;
(iv) Parent or Merger Subsidiary shall have purchased Shares in an
amount equal to at least the Minimum Condition pursuant to the Offer;
and
(v) other than the filing of the certificate of merger in
accordance with Delaware Law, all Consents required to permit the
consummation of the Merger including those set forth in Sections 4.1(d)
and 4.2(b) shall have been filed, occurred or been obtained (other than
any such Consents the failure to file, occur or obtain in the aggregate,
could not reasonably be expected to (i) have a Material Adverse Effect
or (ii) prevent or materially delay the consummation of the Merger).
ARTICLE IX
TERMINATION
SECTION 9.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not
been consummated by April 7, 1997 (provided that the party seeking to
terminate this Agreement shall not have breached its obligations under
this Agreement in any material respect);
(c) by either the Company or Parent, if there shall be any
law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is entered
and such judgment, injunction, order or decree shall become final and
nonappealable;
(d) by either the Company or Parent, (x) if Parent shall
have failed to commence the Offer within five business days following
the date of this Agreement (provided that Parent shall not be entitled
to terminate this Agreement pursuant to this sub-clause (x) as a
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result of its breach of this Agreement), (y) if Parent or Merger
Subsidiary shall not have purchased any Shares pursuant to the Offer
prior to February 21, 1997 or (z) if the Offer shall have been
terminated without Parent or Merger Subsidiary having purchased any
Shares pursuant to the Offer;
(e) by Parent, upon the occurrence of any Trigger
Event described in clauses (i) through (iii) of Section 10.4(b); or
(f) by the Company, upon the occurrence of any Trigger
Event described in clause (i) of Section 10.4(b).
SECTION 9.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in Sections 7.3, 10.4 and 10.6
shall survive the termination hereof.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 10.2. Notices. All notices, requests and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) or by
telecopy (with copies by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Subsidiary, to
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx
President and
Chief Operating Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: 000-000-0000
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(b) if to the Company, to
Cheyenne Software, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxxxxx, Xxx Xxxx 00000
Attention: XxxXxxx Xxxx
Chairman and Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: 000-000-0000
SECTION 10.3. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Parent and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company, no such amendment
or waiver shall, without the further approval of such stockholders, alter or
change (i) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company, (ii) any term of the certificate of
incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.4. Fees and Expenses.
(a) Except as otherwise provided in this Section, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately available
funds, promptly, but in no event later than two business days, after the
termination of this Agreement as a result of the occurrence of any of the events
set forth below (a "Trigger Event") in an amount equal to (x) $37,500,000, in
the case of the occurrence of a Trigger Event described in clause (i) or (iii)
below and (y) $20,000,000, in the case of the occurrence of a Trigger Event
described in clause (ii) below:
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal;
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(ii) the Company shall have breached or failed to perform in any
respect any of its obligations, covenants or agreements under this
Agreement or any representation or warranty of the Company set forth in
this Agreement (other than any breaches or failures to perform or comply
that, in the aggregate, do not have a Material Adverse Effect); or
(iii) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or this Agreement.
(c) If this Agreement is terminated as a result of the occurrence of a
Trigger Event, in addition to any amounts paid or payable by the Company to
Parent pursuant to Section 10.4(b), the Company shall assume and pay, or
reimburse Parent for, all fees payable and expenses incurred by Parent
(including the fees and expenses of its counsel) in connection with this
Agreement and the transactions contemplated hereby, up to a maximum of
$5,000,000.
SECTION 10.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more of
Parent or any of its wholly owned subsidiaries, the right to purchase Shares
pursuant to the Offer, but any such transfer or assignment will not relieve
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
SECTION 10.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, except that
the consummation and effectiveness of the Merger shall be governed by, and
construed in accordance with, Delaware Law.
SECTION 10.7. Counterparts; Effectiveness; Interpretation. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
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The parties hereto have caused this Agreement to be signed by their
respective authorized officers as of the date first written above.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By:/s/ Xxxxxx Xxxxx
________________________
Name: Xxxxxx Xxxxx
Title: President and Chief Operating Officer
TSE-TSEHESE-STAESTSE, INC.
By:/s/ Xxxxxx Xxxxx
________________________
Name: Xxxxxx Xxxxx
Title: President
CHEYENNE SOFTWARE, INC.
By:/s/ XxxXxxx Xxxx
________________________
Name: XxxXxxx Xxxx
Title: Chairman and Chief Executive Officer
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ANNEX I
Notwithstanding any other provision of the Offer, Parent and Merger
Subsidiary shall not be required to accept for payment or pay for any Shares,
and may terminate the Offer, if (i) by the expiration of the Offer, the Minimum
Condition shall not have been satisfied, (ii) by the expiration of the Offer,
the applicable waiting period under the HSR Act shall not have expired or been
terminated, or (iii) at any time on or after October 7, 1996 and prior to the
acceptance for payment of Shares pursuant to the Offer, any of the following
conditions exist:
(a) there shall be instituted or pending any action or proceeding
by any Governmental Entity or by any other person, domestic or foreign,
before any Governmental Entity or arbitrator, (i) challenging or seeking
to make illegal, to delay materially or otherwise directly or indirectly
to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Parent or Merger
Subsidiary or the consummation by Parent or Merger Subsidiary of the
Merger, seeking to obtain material damages or otherwise directly or
indirectly relating to the transactions contemplated by this Agreement,
the Offer or the Merger, (ii) seeking to restrain or prohibit Parent's
or Merger Subsidiary's ownership or operation (or that of their
respective subsidiaries or affiliates) of all or any material portion of
the business or assets of the Company and its subsidiaries, taken as a
whole, or of Parent and its subsidiaries, taken as a whole, or to compel
Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, (iii) seeking to impose material
limitations on the ability of Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Parent or any of its subsidiaries or affiliates on
all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Parent or any of its subsidiaries or
affiliates of any Shares, or (v) that otherwise, in the judgment of
Parent, is likely to materially adversely affect the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole;
provided that, in the case of any instituted or pending action or
proceeding described in this subsection (a) above by a person other than
a Governmental Entity, there is a substantial probability of a
determination material and adverse to Parent or any of its subsidiaries
or the Company or any of its subsidiaries in such action or proceeding;
or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to this Agreement, the Offer or
the Merger, by any Governmental Entity or arbitrator other than the
application of the waiting period provisions of the HSR Act to this
Agreement, the Offer or the Merger, that, in the judgment of Parent, is
likely, directly or indirectly, to result in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a
prospective change) in the business, financial condition or results of
operations of the Company or any of its subsidiaries that, in the
reasonable judgment of Parent, is or is likely to have a Material
Adverse Effect; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the American Stock Exchange, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any material limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which would reasonably be
expected to have a Material Adverse Effect or prevent (or materially
delay) the consummation of the Offer or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, a material
acceleration or worsening thereof; or
(e) any Consent (other than the filing of a certificate of merger
or approval by the stockholders of the Company of the Merger (if
required by Delaware Law)) required to be filed, occurred or been
obtained by the Company or any of its subsidiaries or Parent of any of
its subsidiaries (including Merger Subsidiary) in connection with the
execution and delivery of this Agreement, the Offer and the consummation
of the transactions contemplated by this Agreement shall not have been
filed, occurred or been obtained (other than any such Consents the
failure to file, occur or obtain in the aggregate, could not reasonably
be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the Offer or the Merger); or
(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this
Agreement, or any of the representations and warranties of the Company
set forth in this Agreement that is qualified as to materiality shall
not be true when made or at any time prior to consummation of the Offer
as if made at and as of such time, or any of the representations and
warranties set forth in this Agreement that is not so qualified shall
not be true in any material respect when made or at any time prior to
the consummation of the Offer as if made at and as of such time; or
(g) this Agreement shall have been terminated in accordance with
its terms; or
(h) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or this Agreement;
or
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle with respect to any Acquisition Proposal;
which, in the sole judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Merger Subsidiary)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may be asserted by Parent in its sole discretion regardless of
the circumstances (including any action or omission by Parent or Merger
Subsidiary) giving rise to any such condition or (other than the Minimum
Condition) may be waived by Parent and Merger Subsidiary in their sole
discretion in whole at any time or in part from time to time. The failure
by Parent or Merger Subsidiary at any time to exercise its rights under any
of the foregoing conditions shall not be deemed a waiver of any such right;
the waiver
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of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right
which may be asserted at any time or from time to time. Any determination
by Parent concerning the events described in this Section will be final and
binding upon all parties.
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