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EXHIBIT 2.1
SULCUS HOSPITALITY TECHNOLOGIES CORP.
Sulcus Centre
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
June 12, 1998
Tridex Corporation
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
The purpose of this letter (the "Letter") is to set forth certain
nonbinding understandings and certain binding agreements between Sulcus
Hospitality Technologies Corp., a Pennsylvania corporation ("Sulcus"), and
Tridex Corporation, a Connecticut corporation ("Tridex"), with respect to a
proposed business combination between Sulcus and Tridex (the "Proposed
Transaction"), on the terms, and subject to the conditions, set forth below.
PART ONE -- NONBINDING PROVISIONS.
THE FOLLOWING NUMBERED PARAGRAPHS OF THIS LETTER (COLLECTIVELY, THE
"NONBINDING PROVISIONS") REFLECT OUR MUTUAL UNDERSTANDING OF THE MATTERS
DESCRIBED IN THEM, BUT EACH PARTY ACKNOWLEDGES THAT THE NONBINDING PROVISIONS
ARE NOT INTENDED TO CREATE OR CONSTITUTE ANY LEGALLY BINDING OBLIGATION OF
SULCUS OR TRIDEX, AND NEITHER SULCUS NOR TRIDEX SHALL HAVE ANY LIABILITY TO THE
OTHER PARTY WITH RESPECT TO THE NONBINDING PROVISIONS. SULCUS AND TRIDEX SHALL
EACH BE BOUND ONLY BY THE BINDING PROVISIONS SET FORTH IN PART TWO BELOW, AND,
IF SUCCESSFULLY NEGOTIATED, EXECUTED AND DELIVERED BY SULCUS AND TRIDEX, THE
TERMS AND CONDITIONS CONTAINED IN A FULLY INTEGRATED, WRITTEN, DEFINITIVE
AGREEMENT (THE "DEFINITIVE AGREEMENT"), AND OTHER RELATED DOCUMENTS PREPARED,
AUTHORED, EXECUTED OR DELIVERED BY AND BETWEEN SULCUS AND TRIDEX.
1. BASIC TRANSACTION. The Proposed Transaction will be a business
combination between Sulcus and Tridex, the result of which will be the ownership
by the current shareholders of Tridex, on the one hand, and Sulcus, on the
other, each of 50% of the outstanding capital stock of the entity resulting from
the Proposed Transaction (the "Resulting Entity"). The structure of the Proposed
Transaction is to be determined based on accounting and other business-related
considerations. It is the expectation of the parties that this will be a
tax-free transaction accounted for as a pooling of interests. The parties intend
that the closing of the Proposed Transaction would occur on or before October
30, 1998, but in no event sooner than five (5) days after the later to occur of
(i) the approval of the Proposed Transaction by the stockholders of Sulcus and
the stockholders of Tridex and (ii) the expiration of the waiting period
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
("HSR") if the parties conclude that a filing thereunder is required (the
"Closing"). In the event an HSR filing is required, the parties shall split the
fee equally.
2. DUE DILIGENCE. Each of Sulcus and Tridex has commenced, and intends
to continue, its due diligence investigation of the prospects, business, assets,
contract rights, liabilities and obligations of Tridex and Sulcus, respectively,
including, without limitation, financial, management, employee, customer, legal,
regulatory and environmental matters (the "Due Diligence Investigation").
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June 12, 1998
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3. PROPOSED FORM OF AGREEMENT. Sulcus and Tridex intend promptly to
begin negotiating to reach a Definitive Agreement containing representations,
warranties, indemnities, conditions, agreements and covenants by each of Sulcus
and Tridex.
4. CONDITIONS TO PROPOSED TRANSACTION. The parties do not intend to be
bound by the Nonbinding Provisions or any provisions covering the same subject
matter until the execution and delivery of the Definitive Agreement, which, if
successfully negotiated, would provide that the Proposed Transaction would be
subject to customary terms and conditions, including, without limitation, the
following:
(a) finalization of employment, non-competition and
confidentiality arrangements between the Resulting Entity and the
management personnel of Sulcus and Tridex, respectively, who would
become key personnel of the Resulting Entity;
(b) receipt of necessary consents and approvals;
(c) absence of any material adverse change in Sulcus's and
Tridex's business, financial condition, profits, prospects, assets or
operations since [last reported fiscal quarter];
(d) absence of pending or threatened litigation regarding the
Definitive Agreement or the transactions to be contemplated thereby;
and
(e) delivery of customary fairness opinions, legal opinions,
closing certificates and other documentation.
5. DEFINITIVE AGREEMENT. Subject to the final sentence of Paragraph B
of Part Two below, Sulcus and Tridex shall negotiate in good faith to arrive at
a mutually acceptable Definitive Agreement for approval, execution and delivery
on the earliest reasonably practicable date.
6. BOARD OF DIRECTORS. The authorized number of directors on the Board
of Directors of the Resulting Entity (the "Board") will be established at nine
(9). Four (4) directors are to be designated by Sulcus (the "Sulcus Directors"),
and five (5) are to be designated by Tridex (the "Tridex Directors"). The Board
will be classified into three classes of Directors, with initial terms expiring
in 1999, 2000 and 2001. For the three (3) years following the Closing, in the
event that any Director so designated for any reason ceases to serve as a member
of the Board during such director's term of office, the resulting vacancy on the
Board will be filled by a majority vote of the remaining Sulcus Directors or
Tridex Directors, as the case may be. Xxxx X. Xxxxxx shall serve as Co-Chairman
and Chief Executive Officer of the Resulting Entity. Xxxx X. Xxxxxx shall serve
as Co-Chairman, President and Chief Operating Officer of the Resulting Entity.
PART TWO -- BINDING PROVISIONS.
UPON EXECUTION BY BOTH SULCUS AND TRIDEX OF THIS LETTER OR COUNTERPARTS
HEREOF, THE FOLLOWING LETTERED PARAGRAPHS OF THIS LETTER (COLLECTIVELY, THE
"BINDING PROVISIONS") WILL CONSTITUTE
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June 12, 1998
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THE LEGALLY BINDING AND ENFORCEABLE AGREEMENT OF SULCUS AND TRIDEX (IN
RECOGNITION OF THE COSTS TO BE BORNE BY SULCUS AND TRIDEX IN PURSUING THIS
PROPOSED TRANSACTION AND FURTHER IN CONSIDERATION OF THEIR MUTUAL UNDERTAKINGS
AS TO THE MATTERS DESCRIBED IN THIS LETTER).
A. NONBINDING PROVISIONS NOT ENFORCEABLE. The Nonbinding Provisions do
not create or constitute any legally binding obligations between Sulcus and
Tridex, and neither Sulcus nor Tridex shall have any liability to the other
party with respect to the Nonbinding Provisions.
B. ACCESS. Tridex shall provide to Sulcus, and Sulcus shall provide to
Tridex, complete access to its facilities, books and records and shall cause the
directors, employees, accountants, and other agents and representatives
(collectively, "Representatives") of Tridex to cooperate fully with Sulcus, and
the Representatives of Sulcus to cooperate fully with Tridex and their
Representatives, as the case may be, in connection with the Due Diligence
Investigation (as described in Paragraph 2 hereof). Neither Sulcus nor Tridex
shall be under any obligation to continue with its Due Diligence Investigation
or negotiations regarding the Definitive Agreement if, at any time, the results
of the Due Diligence Investigation are not satisfactory to Sulcus or Tridex, as
the case may be, for any reason in their sole discretion.
C. EXCLUSIVE DEALING. Except as provided in paragraph D below, until
the earlier of July 31, 1998 or termination of this Letter in accordance with
Paragraph K below, Tridex or Sulcus shall not, directly or indirectly, through
any Representative or otherwise, solicit or entertain offers from, negotiate
with or in any manner encourage, discuss, accept or consider any proposal of any
other person relating to the acquisition of, its assets or business, in whole or
in part, whether through purchase, merger, consolidation, business combination
or otherwise.
D. ALTERNATIVE PROPOSALS. After furnishing prompt notice to the other
party, either Sulcus or Tridex may, directly or indirectly, furnish information
and access, in response to unsolicited requests therefor, to any corporation,
partnership, person or other entity or group, pursuant to appropriate
confidentiality agreements, and may participate in discussions and negotiate
with such corporation, partnership, person or other entity or group concerning
any bona fide, superior proposal to acquire all or any significant portion of
the assets or equity upon a merger, acquisition, consolidation or similar
transaction (an "Alternative Proposal"), provided that the Board of Directors of
the respective party determines in its good faith judgment in the exercise of
its fiduciary duties, after consultation with legal counsel and its financial
advisors, that such action is necessary in furtherance of the best interests of
its stockholders. Either Sulcus or Tridex shall promptly notify the other party
if it shall, on or after the date hereof, have entered into a confidentiality
agreement with any third party in response to any unsolicited request for
information and access in connection with a possible Alternative Proposal.
E. BREAK-UP FEE. In the event that (1) a Definitive Agreement is not
successfully negotiated and entered into, or (2) a Definitive Agreement is
entered into but a Closing does not occur, and, within one (1) year after
termination of this Letter pursuant to Paragraph K(ii) or termination of the
Definitive Agreement, as the case may be, Sulcus or Tridex closes a transaction
relating to the acquisition of a material portion of its assets or business, in
whole or in part, whether through purchase, merger, consolidation, business
combination or otherwise, then, immediately upon such
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June 12, 1998
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closing, Tridex shall pay to Sulcus (if Tridex enters into such alternative
transaction), or Sulcus shall pay to Tridex (if Sulcus enters into such an
alternative transaction), the sum of $2,000,000; provided, however, that no such
payment will be required if (i) the condition set forth in clause (1) occurs due
to Tridex or Sulcus exercising its rights under the last sentence of Paragraph
B, (ii) the condition set forth in clause (2) occurs due to the failure to
obtain the approval of the stockholders of Tridex or Sulcus or any third party
consent; provided, that the executive officers and directors of Tridex and
Sulcus will agree to vote their shares in favor of the Proposed Transaction and
to undertake a best efforts solicitation with respect to the vote to approve the
Proposed Transaction; or (iii) if Tridex or Sulcus is advised by its accountants
that the Proposed Transaction cannot be structured as a tax-free transaction
accounted for as a pooling of interests. Each of the parties acknowledges and
agrees that the provisions for the payment of break-up fees is an integral part
of the Proposed Transaction and that, without this provision, they would not
have entered into this Proposed Transaction. Accordingly, if a break-up fee
shall become due and payable by a party, and such party shall fail to pay such
amount when due pursuant to this paragraph, and, in order to obtain such
payment, suit is commenced, the owing party shall pay reasonable costs and
expenses (including reasonable attorneys' fees) in connection with such suit,
together with interest computed on any amounts determined to be due and payable
pursuant to this paragraph and such costs (computed from the date incurred). The
obligations of the parties under this paragraph shall survive the termination of
the Binding Provisions.
F. CONDUCT OF BUSINESS. Until the Definitive Agreement has been duly
executed and delivered by all of the parties or the Binding Provisions have been
terminated pursuant to Paragraph K hereof, Tridex and Sulcus shall conduct their
business only in the ordinary course.
It is understood and agreed that the Definitive Agreement shall contain
a comprehensive covenant of Tridex and Sulcus regarding the interim operations
of Tridex and Sulcus from the date of the execution and delivery of the
Definitive Agreement through the Closing.
G. DISCLOSURE. Except as and to the extent required by law, without the
prior written consent of the other party, neither Sulcus nor Tridex shall, and
each shall direct its Representatives not to, directly or indirectly, make any
public comment, statement or communication with respect to, or otherwise
disclose or permit the disclosure of the existence of discussions regarding, a
possible transaction between the parties or any of the terms, conditions or
other aspects of the transaction proposed in this Letter.
H. CONFIDENTIALITY. The parties acknowledge and agree that they are
bound by and will act in accordance with the terms and conditions set forth in
the Confidentiality and Non-Disclosure Agreement, dated July 28, 1997, between
Tridex and Sulcus (the "Confidentiality Agreement"). If the Binding Provisions
are terminated pursuant to Paragraph K hereof, Sulcus and Tridex shall promptly
return to Tridex and Sulcus any Confidential Information (as defined in the
Confidentiality Agreement) in its possession.
I. COSTS AND EXPENSES. Except as provided in Paragraph E hereof, Sulcus
and Tridex shall be responsible for and bear all of their own costs and expenses
incurred at any time in connection with pursuing or consummating the Proposed
Transaction.
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J. CONSENTS. Sulcus and Tridex shall cooperate with each other and
proceed, as promptly as is reasonably practicable, to seek to obtain all
necessary consents and approvals from third parties, and to endeavor to comply
with all other legal or contractual requirements for, or preconditions to, the
execution, delivery and consummation of the Definitive Agreement.
K. TERMINATION. The Binding Provisions may be terminated:
(i) by mutual written consent of Sulcus and Tridex; or
(ii) upon written notice by either party to the other party if
the Definitive Agreement has not been executed by July 31, 1998;
provided, however, that the termination of the Binding Provisions shall not
affect the liability of a party for breach of any of the Binding Provisions
prior to the termination. Upon termination of the Binding Provisions, the
parties shall have no further obligations under the Binding Provisions, except
as stated in Paragraphs E, G, and H hereof, which shall survive any such
termination.
Please sign and date this Letter in the space provided below to confirm the
mutual agreements set forth in the Binding Provisions and return a signed copy
to the undersigned.
Very truly yours,
SULCUS HOSPITALITY
TECHNOLOGIES CORP.
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
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Title: Chairman and Chief Executive Officer
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Acknowledged and agreed as
of the 13th day of June, 1998.
TRIDEX CORPORATION
By: /s/ XXXX XXXXXX
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Name: Xxxx X. Xxxxxx
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Title: Chairman and Chief Executive Officer
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