Exhibit (d)(3)
AGREEMENT AND PLAN OF MERGER
dated as of
June 22, 2003
among
COMSHARE, INCORPORATED
GEAC COMPUTER CORPORATION LIMITED
and
CONDUCTOR ACQUISITION CORP.
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS ................................................ 1
Section 1.01. Definitions. ......................................... 1
ARTICLE 2 THE OFFER .................................................. 5
Section 2.01. The Offer. ........................................... 5
Section 2.02. Company Action. ...................................... 7
Section 2.03. Directors. ........................................... 8
Section 2.04. Top-Up Option. ....................................... 9
ARTICLE 3 THE MERGER ................................................. 11
Section 3.01. The Merger. .......................................... 11
Section 3.02. Conversion of Shares. ................................ 12
Section 3.03. Surrender and Payment ................................ 12
Section 3.04. Stock Options ........................................ 13
Section 3.05. Stock Purchase Plan .................................. 13
Section 3.06. Adjustments .......................................... 13
Section 3.07. Withholding Rights ................................... 13
Section 3.08. Lost, Stolen or Destroyed Certificates ............... 14
ARTICLE 4 THE SURVIVING CORPORATION .................................. 14
Section 4.01. Articles of Incorporation ............................ 14
Section 4.02. Bylaws ............................................... 14
Section 4.03. Directors and Officers ............................... 14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY .............. 14
Section 5.01. Corporate Existence and Power ........................ 14
Section 5.02. Corporate Authorization .............................. 15
Section 5.03. Governmental Authorization. .......................... 15
Section 5.04. Non-contravention .................................... 15
Section 5.05. Capitalization. ...................................... 16
Section 5.06. Subsidiaries. ........................................ 17
Section 5.07. SEC Filings. ......................................... 17
Section 5.08. Financial Statements. ................................ 18
Section 5.09. Disclosure Documents. ................................ 18
Section 5.10. Absence of Certain Changes ........................... 19
Section 5.11. No Undisclosed Material Liabilities. ................. 20
Section 5.12. Compliance with Laws and Court Orders ................ 21
Section 5.13. Litigation ........................................... 21
Section 5.14. Finders' Fees ........................................ 21
Section 5.15. Taxes ................................................ 21
Section 5.16. Employee Benefit Plans. .............................. 22
Section 5.17. Antitakeover Statutes and Rights Agreement. .......... 25
Section 5.18. Intellectual Property ................................ 26
Section 5.19 Title and Condition of Properties .................... 28
Section 5.20 Insurance ............................................ 28
Section 5.21 Certain Contracts. ................................... 28
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Section 5.22 Employment Matters. .................................. 29
Section 5.23 Voting Requirements .................................. 29
Section 5.24. Disclaimer of Other Representations and Warranties ... 30
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT ................... 30
Section 6.01. Corporate Existence and Power ........................ 30
Section 6.02. Corporate Authorization .............................. 30
Section 6.03. Governmental Authorization ........................... 30
Section 6.04. Non-contravention .................................... 31
Section 6.05. Disclosure Documents. ................................ 31
Section 6.06. Finders' Fees ........................................ 32
Section 6.07. Financing ............................................ 32
ARTICLE 7 COVENANTS OF THE COMPANY ................................... 32
Section 7.01. Conduct of the Company ............................... 32
Section 7.02. Shareholder Meeting; Proxy Material .................. 35
Section 7.03. Access to Information ................................ 35
Section 7.04. No Solicitation; Other Offers. ....................... 35
Section 7.05. Rights Agreement; Takeover Statutes .................. 37
Section 7.06. Section 16 Matters ................................... 37
ARTICLE 8 COVENANTS OF PARENT ........................................ 37
Section 8.01. Confidentiality ...................................... 37
Section 8.02. Obligations of Merger Subsidiary ..................... 38
Section 8.03. Voting of Shares ..................................... 38
Section 8.04. Director and Officer Liability ....................... 38
Section 8.05. Employee Benefits after the Merger. .................. 39
Section 8.06. Financing ............................................ 41
ARTICLE 9 COVENANTS OF PARENT AND THE COMPANY ........................ 41
Section 9.01. Commercially Reasonable Efforts. ..................... 41
Section 9.02. Certain Filings ...................................... 42
Section 9.03. Public Announcements ................................. 42
Section 9.04. Further Assurances ................................... 42
Section 9.05. Merger Without Meeting of Shareholders ............... 42
ARTICLE 10 CONDITIONS TO THE MERGER .................................. 42
Section 10.01. Conditions to Obligations of Each Party ............. 42
ARTICLE 11 TERMINATION ............................................... 43
Section 11.01. Termination ......................................... 43
Section 11.02. Effect of Termination ............................... 45
Section 11.03. Fees and Expenses ................................... 45
ARTICLE 12 MISCELLANEOUS ............................................. 46
Section 12.01. Notices ............................................. 46
Section 12.02. Survival of Representations and Warranties .......... 47
Section 12.03. Amendments; No Waivers. ............................. 47
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Section 12.04. Successors and Assigns .............................. 47
Section 12.05. Governing Law ....................................... 47
Section 12.06. Jurisdiction ........................................ 47
Section 12.07. Waiver of Jury Trial ................................ 48
Section 12.08. Counterparts; Effectiveness; Benefit ................ 48
Section 12.9. Entire Agreement .................................... 48
Section 12.10. Captions ............................................ 48
Section 12.11. Severability ........................................ 48
Section 12.12. Specific Performance ................................ 48
Section 12.13. No Prejudice ........................................ 49
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of June 22, 2003, is among
Comshare, Incorporated, a Michigan corporation (the "COMPANY"), Geac Computer
Corporation Limited, a corporation governed by the Canada Business Corporations
Act ("PARENT"), and Conductor Acquisition Corp., a Michigan corporation and an
indirect wholly owned subsidiary of Parent ("MERGER SUBSIDIARY").
RECITALS
WHEREAS, the Board of Directors of each of Parent and Merger Subsidiary
has determined that it is advisable and in the best interests of Parent and
Merger Subsidiary to engage in a transaction whereby Merger Subsidiary will
acquire the Company on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF Directors")
has, after considering the long-term prospects and interests of the Company and
its shareholders, determined that it is advisable and in the best interests of
the Company and its shareholders to engage in a transaction whereby Merger
Subsidiary will acquire the Company on the terms and subject to the conditions
set forth in this Agreement; and
WHEREAS, Parent, Merger Subsidiary and the Company wish to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Merger Subsidiary and the Company hereby agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"ACQUISITION PROPOSAL" means any offer or proposal for, or any inquiry or
indication of interest in, (i) any sale, lease, exchange, mortgage, transfer or
other disposition of 50% or more of the consolidated assets of the Company and
its Subsidiaries, (ii) any acquisition or purchase of an equity interest in the
Company representing in excess of 15% of the power to vote for the election of
the directors of the Company, or any tender offer or exchange offer for equity
securities of the Company as a result of which the offeror would hold such an
equity interest in the Company, (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company, or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 50% of the consolidated
assets of the Company, (iv) a plan of liquidation or extraordinary dividend
relating to more than 50% of its total assets or (v) the repurchase by the
Company or its Subsidiary of more than 50% of the outstanding Shares, in each
case other than the Transactions (as defined in Section 2.02(a)).
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person; for purposes hereof "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"ANTITRUST LAW" means the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act, the HSR Act, the
Federal Trade Commission Act, and all other federal, state and foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Detroit, Michigan are authorized
or required by law to close.
"BENEFICIALLY OWNED" means, with respect to any Shares held by any Person,
that such Person is the beneficial owner of such Shares as defined in Rule 13d-3
promulgated under the 1934 Act.
"CODE" means the Internal Revenue Code of 1986.
"FULLY DILUTED SHARES" means all outstanding Shares on a fully diluted
basis, after giving effect to the exercise, conversion or termination of all
options, warrants, rights and securities exercisable or convertible into the
Shares.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976.
"KNOWLEDGE" of any Person that is not an individual means the actual
conscious knowledge of such Person's executive officers.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, claim, security interest or encumbrance of any kind or nature
whatsoever in respect of such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any change,
result, effect, event, occurrence or state of facts (or any development that has
had or is reasonably likely to have any change or effect) that is or would
reasonably be expected to be materially adverse to the business, financial
condition, assets, liabilities or results of operations or prospects of such
Person and its Subsidiaries, taken as a whole, or which is or would reasonably
be expected to be materially adverse to the ability of such Person to consummate
the Transactions; provided, however, that none of the following shall be deemed
in itself, either alone or in combination to constitute, and none of the
following shall be taken into account in determining whether there
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has been, a Material Adverse Effect: (i) any such effect resulting from or
arising in connection with this Agreement or the Transactions or the execution
or announcement hereof, (ii) changes in circumstances or conditions affecting
the industry in which the Company and its Subsidiaries operate or affecting
software companies in general, (iii) changes in general economic, regulatory or
political conditions or in financial or securities markets in the United States
or elsewhere, (iv) changes in generally accepted accounting principles or (v)
any change in the price at which the Shares are publicly traded. The failure of
a Person to meet any particular revenue or earnings forecast or estimate for any
period ending after the date of this Agreement, including estimates prepared by
equity analysts or other third parties, as well as internal forecasts prepared
by management of such Person, shall not, in and of itself, be deemed to
constitute a Material Adverse Effect.
"MICHIGAN LAW" means the Michigan Business Corporation Act.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
"SHARES" means the shares of common stock, $1.00 par value, of the
Company.
"STOCK OPTION" means an employee or director stock option to purchase
Shares under any employee or director stock option or compensation plan or
arrangement of the Company, not including the Stock Purchase Plan (as defined in
Section 3.05) or the Top-Up Option.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
legal entity of which such Person controls (either alone or through or together
with any other Subsidiary) more than 50% of the capital stock or other ownership
interests, the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
"THIRD PARTY" means a Person, as defined in this Agreement, other than
Parent or any of its Affiliates.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder. Any reference to dollar amounts shall be to United States dollars.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
---- -------
Acquisition Proposal............................... 7.04
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Agreement.......................................... Annex A
Board of Directors................................. Recitals
Certificates....................................... 3.03
Company Copyrights................................. 5.18
Company Disclosure Documents....................... 5.09
Company Financial Advisor.......................... 2.02(a)
Company Marks...................................... 5.18
Company Patents.................................... 5.18
Company Proxy Statement............................ 5.03
Company SEC Documents.............................. 5.07
Company Secret Information......................... 5.18
Company Securities................................. 5.05
Company Shareholder Meeting........................ 7.02
Company Subsidiary Securities...................... 5.06
Comshare Plan...................................... 8.05
Confidentiality Agreement.......................... 7.03
Determination Time................................. Annex A
DOJ................................................ 9.01
Disclosure Schedule................................ Article 5
Effective Time..................................... 3.01
Employee Plans..................................... 5.16
ERISA.............................................. 5.16
Exchange Agent..................................... 3.03
Expenses........................................... 11.03
Foreign Plans...................................... 5.16
Foreign Retirement Plan............................ 5.16
Foreign Welfare Plan............................... 5.16
FTC................................................ 9.01
GAAP............................................... 5.08
Governmental Entity................................ 5.03
Indemnified Person................................. 8.04
Independent Directors.............................. 2.03
Information Statement ............................. 5.09
Intellectual Property.............................. 5.18
Material Contract.................................. 5.21
Merger............................................. 3.01
Merger Consideration............................... 3.02
Minimum Condition.................................. 2.01
Offer.............................................. 2.01
Offer Documents.................................... 2.01
Offer Price........................................ 2.01
Parent Plans....................................... 8.05
Parent's 401(k) Plan............................... 8.05
Preferred Stock.................................... 5.05
Required Cash Amount............................... 6.07
Rights............................................. 2.01
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Rights Agreement................................... 2.01
Schedule 14D-9..................................... 2.02
Schedule TO........................................ 2.01
Stock Purchase Plan................................ 3.05
Subsequent Offering Period......................... 2.01
Superior Proposal.................................. 7.04
Surviving Corporation.............................. 3.01
Surviving Corporation New Plans.................... 8.05
Takeover Statute................................... 5.17(a)
Taxes.............................................. 5.15
Taxing Authority................................... 5.15
Tax Return......................................... 5.15
Termination Fee.................................... 11.03
Top-Up Closing..................................... 2.04
Top-Up Exercise Event.............................. 2.04
Top-Up Option...................................... 2.04
Top-Up Option Shares............................... 2.04
Top-Up Response Date............................... 2.04
Top-Up Termination Date............................ 2.04
Transactions....................................... 2.02
U.K. Pension Plan.................................. 5.16
Uncertificated Shares.............................. 3.03
Voting Agreement................................... 5.05(d)
Welfare Plan....................................... 5.16
ARTICLE 2
THE OFFER
Section 2.01. The Offer.
(a) As promptly as practicable after the date hereof, but in no
event later than July 3, 2003, Merger Subsidiary shall commence (within the
meaning of Rule 14d-2(a) under the ▇▇▇▇ ▇▇▇) an offer (the "OFFER") to purchase
any and all of the outstanding Shares, together with the Series A Preferred
Stock purchase rights (the "RIGHTS") attached thereto issued pursuant to the
Rights Agreement, dated as of September 16, 1996, between the Company and
Computershare Investor Services LLC, as successor to KeyBank National
Association, Key Corp Shareholder Services, Inc. and ▇▇▇▇▇▇ Trust and Savings
Bank's corporate trust business, as Rights Agent (the "RIGHTS AGREEMENT"), at a
price of $4.60 per Share (the "OFFER PRICE"), net to the seller in cash, subject
to reduction for any applicable withholding taxes and, if such payment is to be
made other than to the registered holder, any applicable stock transfer taxes
payable by such holder. 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 that,
together with the Shares then owned by Parent or any of its Subsidiaries,
represents at least a majority of the Fully Diluted Shares (the "MINIMUM
CONDITION"), and Merger Subsidiary shall not be required to accept for payment
or pay for any Shares, and may terminate the Offer, if, on the expiration date
of the Offer (as extended in
5
accordance with this Section 2.01), (i) the Minimum Condition has not been met,
or (ii) the other conditions set forth in Annex A hereto have not been
satisfied.
(b) Merger Subsidiary expressly reserves the right to waive the
Minimum Condition or any of the other conditions to the Offer and to make any
change in the terms or conditions of the Offer; provided that no change or
waiver may be made that, without the prior written consent of the Company,
waives the Minimum Condition, 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 herein or is
otherwise adverse to the holders of the Shares, or waives the condition that by
the Determination Time any applicable waiting period under the HSR Act or any
laws, rules or regulations analogous to the HSR Act existing in foreign
jurisdictions has expired or been terminated. Notwithstanding anything in this
Agreement to the contrary, without the consent of the Company, Merger Subsidiary
shall have the right to extend the Offer beyond the initial expiration date in
the following events: (i) from time to time, but in no event later than October
1, 2003, if, at the initial expiration date (or extended expiration date of the
Offer, if applicable), one or more of the conditions to the Offer (other than
the Minimum Condition, to which this clause does not apply) shall not have been
satisfied or waived, until such conditions are satisfied or waived; (ii) for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Offer or any period required by
applicable United States' law; or (iii) if all of the conditions to the Offer
are satisfied or waived but the number of Shares validly tendered and not
withdrawn is less than ninety percent (90%) of the then outstanding number of
Shares, for a subsequent offering period (the "SUBSEQUENT OFFERING PERIOD")
consistent with Rule 14d-11 of the 1934 Act, provided that Merger Subsidiary
shall accept and pay for all shares validly tendered and not withdrawn as soon
as reasonably practicable prior to the date of such extension, shall otherwise
meet the requirements of Rule 14d-11 under the 1934 Act in connection with such
extension and shall waive any condition to the consummation of the Merger, other
than the condition in Section 10.01(c), that may fail to be satisfied during
such extension. In addition, Parent and Merger Subsidiary agree that Merger
Subsidiary shall, if requested by the Company, (i) from time to time extend the
Offer if, at the initial expiration date (or any extended expiration date of the
Offer, including pursuant to this sentence, if applicable), no conditions to the
Offer other than the conditions set forth in clause (a) or clause (b) of Annex A
then excuse performance by Merger Subsidiary under Annex A, for twenty (20)
Business Days after such previously scheduled expiration date or (ii) provide a
Subsequent Offering Period if there shall be validly tendered and accepted by
Merger Subsidiary a number of Shares that, together with the Shares then owned
by Parent or any of its Subsidiaries, represents at least eighty percent (80%),
but not more than ninety percent (90%), of the Shares outstanding. Upon the
satisfaction or waiver of all conditions to the Offer and subject to the terms
and conditions of this Agreement, Merger Subsidiary will, and Parent will cause
Merger Subsidiary to, accept for payment, purchase and pay for, in accordance
with the terms of the Offer, all Shares and associated Rights validly tendered
and not withdrawn pursuant to the Offer as soon as reasonably practicable after
the expiration of the Offer. Parent shall provide or cause to be provided to
Merger Subsidiary all of the funds necessary to purchase any Shares that Merger
Subsidiary becomes obligated to purchase pursuant to the Offer or during the
Subsequent Offering Period as soon as reasonably practicable after the
expiration of the Offer.
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(c) The Company will not tender in response to the Offer any Shares
that are held by the Company in its treasury or that are owned, directly or
indirectly, by the Company or any of its subsidiaries.
(d) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary and Parent shall file with the SEC a Tender Offer Statement on
Schedule TO (the "SCHEDULE TO") with respect to the Offer, which will contain
the offer to purchase and form of the related letter of transmittal and summary
advertisement (such Schedule TO and such documents included therein pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "OFFER DOCUMENTS"). The Offer Documents will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Merger Subsidiary with respect to information supplied by the Company in
writing for inclusion in the Offer Documents. 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 such information shall have
become false or misleading in any material respect. Parent and Merger Subsidiary
each agrees to take all steps necessary to cause the Schedule TO as so corrected
to be filed with the SEC and the other Offer Documents as so corrected 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
an opportunity to review and comment on the Offer Documents (and any amendments
thereto) prior to their being filed with the SEC or disseminated to the holders
of Shares. Parent and Merger Subsidiary shall provide the Company and its
counsel with any comments or other communications, whether written or oral, that
Parent, Merger Subsidiary or their counsel may receive from time to time from
the SEC or its staff with respect to the Offer Documents promptly after receipt
of such comments or other communications. In the event that this Agreement has
been terminated pursuant to Article 11, Parent and Merger Subsidiary shall
promptly terminate the Offer without accepting any Shares for payment.
Section 2.02. Company Action.
(a) The Company hereby consents to the Offer and represents that the
Board of Directors, at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including, without limitation, the Offer, the Merger and the purchase of the
Shares and associated Rights contemplated by the Offer (collectively, the
"TRANSACTIONS") are fair to and in the best interests of the Company's
shareholders, (ii) approved and adopted this Agreement and the Transactions,
including the Offer and the Merger, in accordance with the requirements of
Michigan Law and (iii) subject to Section 7.04(d), resolved to recommend
acceptance of the Offer and approval and adoption of the Agreement and the
Merger by its shareholders. The Company further represents that Bryant Park
Capital, Inc. (the "COMPANY FINANCIAL ADVISOR") has delivered to the Board of
Directors its opinion to the effect that, as of the date of this Agreement, the
consideration to be paid in the Offer and the Merger is fair, from a financial
point of view, to the holders of Shares (other than Parent and its Affiliates),
and has authorized the Company, as of the date of this Agreement, to permit the
inclusion of
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such opinion in the Company Disclosure Documents and the Company Proxy
Statement, provided that such inclusion is in form and substance reasonably
satisfactory to the Company Financial Advisor and its independent counsel. The
Company will promptly furnish Parent with a list of its shareholders, 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 true and correct as of the most
recent practicable date, and will provide to Parent such additional information
(including, without limitation, updated lists of shareholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in connection with the Offer. Except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger in accordance with applicable law, Parent and Merger
Subsidiary and each of their Affiliates, associates, employees, agents and
representatives shall hold in confidence the information contained in any such
lists, labels, listings or files in accordance with the terms of the
Confidentiality Agreement and shall otherwise comply with the requirements of
such agreement.
(b) As soon as practicable after the time that the Offer is commenced,
the Company shall file with the SEC and disseminate to holders of Shares, in
each case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") that shall reflect the
recommendations of the Board of Directors referred to above. The Schedule 14D-9
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or Merger Subsidiary in writing for inclusion in the Schedule 14D-9. The
Company, Merger Subsidiary and Parent 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 an opportunity to review and comment
on the Schedule 14D-9 prior to its being filed with the SEC. The Company agrees
to provide to Parent and its counsel any comments or other communications which
the Company or its counsel may receive from the staff of the SEC with respect to
the Schedule 14D-9 promptly after receipt thereof. Parent, Merger Subsidiary and
the Company each hereby agree to provide promptly such information necessary to
prepare the exhibits and schedules to the Schedule 14D-9 and the Offer Documents
as the respective party responsible therefore may reasonably request.
Section 2.03. Directors.
(a) Effective upon the acceptance for payment pursuant to the Offer of a
number of Shares that satisfies the Minimum Condition, Parent shall be entitled
to designate the number of directors, rounded up to the next whole number, on
the Board of Directors that equals the product of (i) the total number of
directors on the Board of Directors (giving effect to the
8
election of any additional directors pursuant to this Section) and (ii) the
percentage that the number of Shares Beneficially Owned by Parent (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 Board of Directors, including, without
limitation, increasing the number of directors. At such time, the Company will
also use its best efforts to cause individuals designated by Parent to
constitute the number of members, rounded up to the next whole number, on each
committee of the Board other than the committee of Independent Directors
described in Section 2.03(d) that represents the same percentage as such
individuals represent on the Board.
(b) Anything to the contrary contained herein notwithstanding, if
Parent's designees are appointed or elected to the Board of Directors, until the
Effective Time the Board of Directors shall have at least two (2) directors who
are directors on the date hereof and who are neither officers or employees of
the Company nor officers, shareholders, affiliates or associates (within the
meaning of the 1933 Act and ▇▇▇▇ ▇▇▇) of Parent or persons having any other
material relationship with the Parent (one or more such directors being referred
to as the "INDEPENDENT DIRECTORS"); provided that if less than two (2)
Independent Directors remain, the other directors shall designate persons to
fill the vacancies who meet the foregoing criteria, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement.
(c) The Company's obligations to appoint Parent's designees to the Board
of Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions, and shall
include in the Schedule 14D-9 such information with respect to the Company and
its officers and directors, as Section 14(f) and Rule 14f-1 require in order to
fulfill its obligations under this Section. Parent shall 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.
(d) Following the election or appointment of Parent's designees pursuant
to Section 2.03(a) and until the Effective Time, the approval of a majority of
the Independent Directors, acting as a committee of the Board of Directors
pursuant to Section 528 of Michigan Law, shall be required to authorize (and
such authorization shall constitute the authorization of the Board of Directors
and no other action on the part of the Company, including any action by any
other director of the Company, shall be required to authorize) any termination
of this Agreement by the Company, any amendment of this Agreement requiring
action by the Board of Directors (other than Section 2.04(e)(iii)), any
extension of time for performance of any obligation or action hereunder by
Parent or Merger Subsidiary, any waiver of compliance with any of the agreements
or conditions contained herein for the benefit of the Company (other than
Section 2.04(e)(iii)), any action as to which the consent or agreement of the
Company is required under this Agreement, and the assertion or enforcement of
the Company's rights under this Agreement to object to (i) failure to consummate
the Merger for failure of a condition contained herein for the benefit of the
Company to be satisfied or (ii) a termination of this Agreement under Article
11.
Section 2.04. Top-Up Option.
9
(a) The Company hereby grants to the Merger Subsidiary an irrevocable
option (the "TOP-UP OPTION"), such Top-Up Option to be exercisable only on or
after the Determination Time, to purchase that number of Shares (the "TOP-UP
OPTION SHARES") equal to the lowest number of Shares that, when added to the
number of Shares owned by the Merger Subsidiary at the time of such exercise,
shall constitute one share more than 90% of the Shares then outstanding
(assuming the issuance of the Top-Up Option Shares and the exercise of all
outstanding exercisable options to purchase Shares with an exercise price less
than the Offer Price), at a price per share equal to the Offer Price; provided,
however, that the Top-Up Option shall not be exercisable unless immediately
after such exercise the Merger Subsidiary would own more than 90% of the Shares
then outstanding; and provided, further, that in no event shall the Top-Up
Option be exercisable for a number of shares in excess of the Company's then
authorized but unissued Shares (giving effect to Shares reserved for issuance
under Stock Options as though they were outstanding).
(b) The Merger Subsidiary may exercise the Top-Up Option, in whole but
not in part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date. The "TOP-UP TERMINATION
DATE" will occur upon the earliest to occur of the following: (i) the Effective
Time; (ii) the termination of this Agreement pursuant to its terms, (iii) ten
(10) business days after the occurrence of a Top-Up Exercise Event, unless
Merger Subsidiary has notified the Company of its intent to exercise the Top-Up
Option in accordance with the terms and conditions of this Agreement; and (iv)
ten (10) business days after the Top-Up Response Date (as defined below) unless
the Top-Up Closing (as defined below) has previously occurred.
(c) For purposes of this Agreement, a "TOP-UP EXERCISE EVENT" shall
occur only upon Merger Subsidiary's acceptance for payment pursuant to the Offer
of Shares or acquisition of Shares constituting at least 80% of the Shares then
outstanding.
(d) In the event Merger Subsidiary wishes to exercise the Top-Up Option,
Merger Subsidiary shall so notify the Company, in writing, and shall set forth
in such notice (i) the number of Shares that are expected to be owned by Merger
Subsidiary immediately preceding the purchase of the Top-Up Option Shares and
(ii) the place and time for the closing of the purchase of the Top-Up Option
Shares (the "TOP-UP CLOSING"). The Company shall, as soon as practicable
following receipt of such notice, notify Merger Subsidiary, in writing (the date
of such notice being the "TOP-UP RESPONSE DATE"), of the number of Shares then
outstanding and the number of Top-Up Option Shares. At the Top-Up Closing,
Merger Subsidiary shall pay the Company the aggregate price required to be paid
for the Top-Up Option Shares and the Company shall cause to be issued to Merger
Subsidiary a certificate representing the Top-Up Option Shares.
(e) The obligation of the Company to deliver Top-Up Option Shares upon
the exercise of the Top-Up Option is subject to the following conditions: (i)
any applicable waiting period under the HSR Act and regulations analogous to the
HSR Act existing in foreign jurisdictions relating to the issuance of the Top-Up
Option Shares will have expired or been terminated; (ii) no provision of any
applicable law or regulation and no judgment, injunction, or decree shall
prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Option
Shares in respect of any such exercise; and (iii) delivery of the Top-Up Option
Shares would not
10
require the approval of the Company's shareholders pursuant to the rules and
regulations of The Nasdaq Stock Market.
(f) Parent and Merger Subsidiary understand that the Shares which Merger
Subsidiary may acquire upon exercise of the Top-Up Option will not be registered
under the 1933 Act and will be issued in reliance upon an exemption thereunder
for transactions not involving a public transaction. Merger Subsidiary is, or
will be upon the purchase of the Top-Up Option Shares, an Accredited Investor,
as defined in Rule 501 of Regulation D promulgated under the 1933 Act. Merger
Subsidiary agrees that the Top-Up Option and the Top-Up Option Shares to be
acquired upon exercise of the Top-Up Option are being and will be acquired by
Merger Subsidiary for the purpose of investment and not with a view to or for
resale in connection with any distribution thereof within the meaning of the
1933 Act.
(g) Certificates evidencing Top-Up Option Shares delivered hereunder
may, at the Company's election, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR ANY EXEMPTION
THEREFROM.
ARTICLE 3
THE MERGER
Section 3.01. The Merger.
(a) At the Effective Time, Merger Subsidiary shall be merged (the
"MERGER") with and into the Company in accordance with Michigan Law, whereupon
the separate existence of Merger Subsidiary shall cease, and the Company shall
be the surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable, but in no event later than two business
days, after satisfaction or, to the extent permitted hereunder, waiver of all
conditions to the Merger, the Company and Merger Subsidiary will file a
certificate of merger with the Michigan Department of Consumer and Industry
Services Corporation, Securities and Land Development Bureau and make all other
filings or recordings required by Michigan Law in connection with the Merger.
The Merger shall become effective at such time (the "EFFECTIVE Time") as the
certificate of merger is duly filed with the Michigan Department of Consumer and
Industry Services Corporation, Securities and Land Development Bureau or at such
later time as is specified in the certificate of merger.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Michigan Law.
11
Section 3.02. Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b), each Share
outstanding immediately prior to the Effective Time, together with the Rights
attached thereto, shall be converted into the right to receive $4.60 in cash or
any higher price paid for each Share in the Offer, without interest (the "MERGER
CONSIDERATION");
(b) each Share owned by Parent or any of its Subsidiaries immediately
prior to the Effective Time shall be canceled, and no payment shall be made with
respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share 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.
Section 3.03. Surrender and Payment
(a) Prior to the Effective Time, Parent shall appoint an agent (the
"EXCHANGE AGENT") reasonably acceptable to the Company for the purpose of
exchanging (i) certificates representing Shares (the "CERTIFICATES") or (ii)
uncertificated Shares (the "UNCERTIFICATED SHARES") for the Merger
Consideration. At the Effective Time, Parent will deposit with the Exchange
Agent the Merger Consideration to be paid in respect of the 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 and
instructions (which shall specify that the delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the Certificates or
transfer of the Uncertificated Securities to the Exchange Agent) for use in such
exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon (i) surrender
to the Exchange Agent of a Certificate, together with a properly completed
letter of transmittal, or (ii) receipt of an "agent's message" by the Exchange
Agent (or other such evidence, if any, of transfer as the Exchange Agent may
reasonably request) in the case of a book-entry transfer of Uncertificated
Shares, the Merger Consideration payable for each Share represented by such
Certificate or for each Uncertificated Share. Until so surrendered, each such
Certificate or Uncertificated Share shall represent after the Effective Time 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 Person in whose name the surrendered Certificate or the
transferred Uncertificated Share is registered, it shall be a condition to such
payment that (i) either the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer or such Uncertificated
Share shall be properly transferred and (ii) 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
Certificate or Uncertificated Share or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
12
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates or
Uncertificated Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration provided for, and in
accordance with the procedures set forth, in this Article 3.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares one year after
the Effective Time shall be returned to Parent, upon demand, and any such holder
who has not exchanged Shares for the Merger Consideration in accordance with
this Section 3.03 prior to that time shall thereafter look only to Parent for
payment of the Merger Consideration in respect of such Shares without any
interest thereon. 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, escheat or similar laws.
Section 3.04. Stock Options. At or immediately prior to the Effective Time, each
outstanding Stock Option, whether or not vested or exercisable and without
regard to any agreements qualifying the right to retain or exercise any such
option or award, shall be canceled, and the Surviving Corporation shall pay each
holder of any such option at or promptly after the Effective Time for each such
option an amount in cash determined by multiplying (a) the excess, if any, of
the Merger Consideration per Share over the applicable exercise price or base
price, if any, of such option by (b) the number of Shares underlying such
option. Notwithstanding the foregoing, with respect to any Person subject to
Section 16(a) of the 1934 Act, any Merger Consideration to be paid to such
Person in accordance with this Section 3.04 shall be paid as soon as practicable
after the first day payment can be made without liability to such Person under
Section 16(b) of the 1934 Act.
Section 3.05. Stock Purchase Plan. The current purchase period under the
Company's employee stock purchase plan (the "STOCK PURCHASE PLAN") will end on
June 30, 2003. The Company will not commence any new purchase period under the
Stock Purchase Plan for a period of six months, commencing July 1, 2003. No
member of the Board of Directors will be permitted to elect to have their fees
for service as a director of the Company paid in Shares for a period of six
months, commencing July 1, 2003.
Section 3.06. Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding Shares shall
occur, including by reason of any reclassification, recapitalization, stock
split or combination, exchange or readjustment of Shares, or stock dividend
thereon with a record date during such period, the cash payable pursuant to the
Offer, the Merger Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted.
Section 3.07. Withholding Rights. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article 3 such amounts as it is required
to deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of
13
which the Surviving Corporation or Parent, as the case may be, made such
deduction and withholding.
Section 3.08. Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will pay, in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration to be paid in respect of the
Shares represented by such Certificate, as contemplated by this Article.
ARTICLE 4
THE SURVIVING CORPORATION
Section 4.01. Articles of Incorporation. The articles of incorporation of the
Company in effect at the Effective Time shall be the articles of incorporation
of the Surviving Corporation until amended in accordance with applicable law.
Section 4.02. Bylaws. The bylaws of the Company in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended in accordance
with applicable law.
Section 4.03. 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
Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except as set forth in
the disclosure schedule delivered by the Company to Parent and attached hereto
(the "DISCLOSURE SCHEDULE"), with specific reference to the section or
subsections of this Agreement to which the exception stated in such disclosure
relates, or as disclosed in the Company SEC Documents:
Section 5.01. Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Michigan and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company has heretofore delivered to Parent
true and complete copies of the articles of incorporation and bylaws of the
Company as currently in effect.
14
Section 5.02. Corporate Authorization. The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby are within the Company's corporate powers and, except for
the affirmative vote of the holders of a majority of the outstanding Shares in
connection with the consummation of the Merger (if required by law), have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
Section 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no consent, notice to, permit,
approval, order or authorization of, or action by or in respect of, or
registration, declaration or filing with, any governmental body, court, agency,
official, commission or authority, domestic or foreign (a "GOVERNMENTAL
ENTITY"), other than (i) the filing of a certificate of merger with respect to
the Merger with the Michigan Department of Consumer and Industry Services,
Corporation, Securities and Land Development Bureau and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (ii) compliance with any applicable requirements of the HSR Act
and of laws, rules and regulations analogous to the HSR Act existing in foreign
jurisdictions, including but not limited to the European Union and the United
Kingdom, (iii) the filing with the SEC of (a) the Schedule 14D-9, (b) a proxy
statement of the Company relating to the approval by the Company's stockholders
of this Agreement (as amended or supplemented from time to time, the "COMPANY
PROXY STATEMENT"), if required, and (c) compliance with any applicable
requirements of the 1934 Act and any other applicable securities or takeover
laws, whether state or foreign, as may be required in connection with this
Agreement and the Transactions, (iv) compliance with the rules and regulations
of The Nasdaq Stock Market, Inc., (v) in connection with any state or local tax
which is attributable to the beneficial ownership of the Company's or its
Subsidiaries' real property, if any, (vi) as may be required by any applicable
state securities or "blue sky" laws, (vii) such filings, consents, approvals,
orders, registrations and declarations as 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 assets, and (viii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
Section 5.04. Non-contravention. The execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the articles of incorporation or bylaws
of the Company, (ii), assuming compliance with the matters referred to in
Section 5.03, contravene, conflict with or result in a violation or breach of
any provision of any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree, (iii), require any consent or other
action by any Person under, constitute a default under, or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or any of its
Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of
15
its Subsidiaries or any license, franchise, permit, certificate, approval or
other similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries that would not otherwise be
permitted to be terminated, cancelled, accelerated, changed or lost, or (iv)
result in the creation or imposition of any Lien on any asset of the Company or
any of its Subsidiaries, except for such contraventions, conflicts and
violations referred to in clause (ii), and for such failures to obtain any such
consent or other action, default, termination, cancellation, acceleration,
change, loss or Lien referred to in clauses (iii) and (iv), that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or materially to impair the ability of the Company
to consummate the transactions contemplated by this Agreement.
Section 5.05. Capitalization.
(a) The authorized capital stock of the Company consists of 20,000,000
Shares and 5,000,000 shares of preferred stock, no par value per share
("PREFERRED STOCK"). No shares of Preferred Stock are outstanding. As of June 9,
2003, there were outstanding (i) 10,671,114 Shares and (ii) Stock Options, other
than options outstanding under the Stock Purchase Plan, to purchase an aggregate
of 1,617,001 Shares (of which Stock Options to purchase an aggregate of 797,336
Shares were exercisable), as to which the holders, dates of grant, exercise
prices and vesting schedules are as set forth in Section 5.05(a) of the
Disclosure Schedule. Upon the acceptance for payment pursuant to the Offer of a
number of Shares that satisfies the Minimum Condition, each outstanding Stock
Option, by its terms or under the terms of the stock option plan or other
written compensatory plan or arrangement pursuant to which it was granted, and
without any corporate action on the part of the Company, its Board of Directors
or any committee thereof, will automatically become exercisable in full. Since
June 9, 2003, there have been no issuances of shares of the capital stock of the
Company or any other securities of the Company. All Shares outstanding as of the
date hereof have been duly authorized and validly issued and are fully paid and
nonassessable. All Shares issuable upon exercise of outstanding Stock Options or
pursuant to the Stock Purchase Plan have been duly authorized and, when issued,
will have been validly issued and will be fully paid and nonassessable.
(b) Except as described in Section 5.05(a) or as set forth in Section
5.05(b) of the Disclosure Schedule, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights (including, without
limitation, any subscriptions, warrants, calls, stock appreciation rights,
commitments or agreements of any character) to acquire from the Company or other
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "COMPANY SECURITIES"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities. Neither the Company nor any of
its Subsidiaries has adopted a shareholder rights plan or similar plan or
arrangement, other than the Rights Agreement.
(c) There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of the Company may vote.
16
(d) Except as set forth in Section 5.05(d) of the Disclosure Schedule,
other than the Voting and Tender Agreement of even date herewith among Parent,
Merger Subsidiary and each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Codec Systems Limited and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, (the "VOTING AGREEMENT"), there are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the Company or any of
the Subsidiaries.
Section 5.06. Subsidiaries.
(a) Each Subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Each such Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. All Subsidiaries of the
Company and their respective jurisdictions of incorporation are identified in
the Company SEC Documents.
(b) Except as set forth in Section 5.06(b) of the Disclosure Schedule,
all of the outstanding capital stock of, or other voting securities or ownership
interests in, each Subsidiary of the Company (other than director qualifying
shares) is owned by the Company, directly or indirectly, free and clear of any
Lien and free of any other limitation or restriction (including any restriction
on the right to vote, sell or otherwise dispose of such capital stock or other
voting securities or ownership interests), except for such limitations or
restrictions arising under applicable securities or other laws. There are no
outstanding (i) securities of the Company or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company or (ii) options or other
rights to acquire from the Company or any of its Subsidiaries, or other
obligation of the Company or any of its Subsidiaries to issue, any capital stock
or other voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in, any Subsidiary of the Company (the items
in clauses (i) and (ii) being referred to collectively as the "COMPANY
SUBSIDIARY SECURITIES"). Other than securities representing an investment of
less than 2% in any publicly traded company and the capital stock or other
ownership interests of its Subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity. There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the Company Subsidiary Securities.
Section 5.07. SEC Filings.
(a) The Company has filed with the SEC all reports, schedules, forms,
statements and other documents required to be filed by the Company with the SEC
since July 1, 2000 (collectively, the "COMPANY SEC DOCUMENTS").
17
(b) As of its filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act or the
1934 Act, as the case may be and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Document.
(c) As of its filing date, each Company SEC Document filed pursuant to
the 1934 Act did 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.
(d) Each Company SEC Document filed pursuant to the 1933 Act, as of its
filing date, or, in the case of each Company SEC Document that is a registration
statement or an amendment thereto, as of the date such statement or amendment
became effective, did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
Section 5.08. Financial Statements.
The financial statements of the Company included in the Company SEC
Documents, in each case:
(i) comply as to form in all material respects with the
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto,
(ii) have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes to
such financial statements) and
(iii) 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 and the absence of notes in the case of any
unaudited interim financial statements).
Section 5.09. Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC or
required to be distributed or otherwise disseminated by the Company to its
shareholders in connection with the Transactions including, without limitation,
the Schedule 14D-9, the information statement to be filed by the Company in
connection with the Offer pursuant to Rule 14f-1 promulgated under the Exchange
Act (as amended or supplemented from time to time, the "INFORMATION STATEMENT")
and the Company Proxy Statement, if any, to be filed with the SEC in connection
with the Merger, and any amendments or supplements thereto, when filed,
distributed or disseminated, as applicable (collectively, the "COMPANY
DISCLOSURE DOCUMENTS"), collectively, will comply as to form in all material
respects with the applicable requirements of the 1934 Act and the rules and
regulations thereunder.
18
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company and at the
time such shareholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), the Schedule
14D-9, and the Information Statement at the respective times such documents and
any amendments or supplements thereto are filed with the SEC and at the time of
any distribution or dissemination thereof to shareholders of the Company, 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. The
representations and warranties contained in this Section 5.09(b) will not apply
to statements or omissions included in the Company Disclosure Documents based
upon information furnished to the Company in writing by or on behalf of Parent
or Merger Subsidiary specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent in writing specifically for
use in the Offer Documents, at the time of the filing thereof with the SEC and
at the time of any distribution or dissemination thereof to shareholders of the
Company, 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.
Section 5.10. Absence of Certain Changes. Since March 31, 2003, the business of
the Company and its Subsidiaries has been conducted only in the ordinary course
consistent with past practices and there has not been:
(a) any event, change, occurrence or development that has had or would
reasonably be expected to have, individually, a Material Adverse Effect on the
Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, 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,
or other ownership interests in, the Company or any of its Subsidiaries (other
than ordinary course open market purchases made in connection with the Company's
profit sharing plan);
(c) any amendment of any material term of any outstanding security of
the Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money that is material to the
Company and its Subsidiaries, taken as a whole, other than (i) under the
Company's existing credit facility, (ii) between the Company and its
Subsidiaries or between two or more of the Company's Subsidiaries or (iii)
otherwise in the ordinary course of business and in amounts and on terms
consistent with past practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset of the Company or its Subsidiaries, other
than in the ordinary course of
19
business consistent with past practices, if the Lien would reasonably be
expected to have a Material Adverse Effect on the Company;
(f) any making of any material loan, advance or capital contributions to
or investment in any Person other than (i) loans, advances or capital
contributions to or investments in its wholly-owned Subsidiaries, or by its
wholly-owned Subsidiaries to or in the Company or other Subsidiaries of the
Company or (ii) other loans, advances, capital contributions or investments made
in the ordinary course of business consistent with past practices;
(g) any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company or any of its Subsidiaries,
except for any such change required by reason of a concurrent change in GAAP,
Regulation S-X under the 1934 Act or other applicable law or regulation;
(h) any (i) grant of any severance or termination pay to any director or
officer of the Company or any of its Subsidiaries, (ii) material increase in
benefits payable to any officer or director of the Company or any of its
Subsidiaries under any existing, severance or termination pay policies or
employment agreements, (iii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director or officer of the Company or any of its
Subsidiaries, (iv) establishment, adoption or amendment (except as required by
applicable law) of any collective bargaining, bonus, profit-sharing, thrift,
pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any director,
officer or employee of the Company or any of its Subsidiaries other than the
Company's management severance plan, or (v) increase in compensation, bonus or
other benefits payable to any director or officer of the Company or any of its
Subsidiaries, other than, in the case of any of clauses (i) through (v), in the
ordinary course of business consistent with past practice; or
(i) except as set forth in Section 5.10(i) of the Disclosure Schedule,
any other action taken by the Company that would have been prohibited under
Section 7.01 hereof.
Section 5.11. No Undisclosed Material Liabilities.
(a) There are no liabilities or obligations of the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, which would be required to be reflected
on a balance sheet, or in the notes thereto, prepared in accordance with GAAP,
other than:
(i) liabilities or obligations disclosed or provided for in any
of the Company SEC Documents or set forth in the Disclosure Schedule;
(ii) liabilities or obligations incurred since March 31, 2003 in
the ordinary course of business consistent with past practice;
(iii) liabilities or obligations arising under this Agreement; and
(iv) liabilities or obligations that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
20
(b) Except as disclosed in the Disclosure Schedule or in the Company SEC
Documents, neither the Company nor any Subsidiary maintains any "off-balance
sheet arrangement," within the meaning of Item 303 of Regulation S-K of the SEC,
which either has or is reasonably likely to have, a current or future effect on
the Company's financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material.
Section 5.12. Compliance with Laws and Court Orders. Since July 1, 2000, the
Company and each of its Subsidiaries has been in compliance with all applicable
laws, statutes, ordinances, rules, regulations, judgments, injunctions, orders
or decrees, except for failures to comply or violations that have not had and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
Section 5.13. Litigation. There is no action, suit, investigation or proceeding
pending, or, to the Knowledge of the Company, threatened, against the Company,
any of its Subsidiaries, any present or former officer, director or employee of
the Company or any of its Subsidiaries or any other Person for whom the Company
or any such Subsidiary may be liable, or any of their respective properties
before any court or arbitrator or before or by any governmental body, agency or
official, domestic or foreign, as to which there is a reasonable likelihood that
such action, suit, investigation or proceeding will be resolved in a manner
adverse to the Company or any of its Subsidiaries, except where such adverse
resolution would not reasonably be expected to have a Material Adverse Effect on
the Company, 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 which has had any such effect.
Section 5.14. Finders' Fees. Except for the Company Financial Advisor, there is
no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission from the Company or
any of its Subsidiaries in connection with the Transactions.
Section 5.15. Taxes. Except as set forth in Schedule 5.15 of the Disclosure
Schedule:
(a) the Company and each of its Subsidiaries has filed all Tax Returns
required to be filed by it, has paid (or has caused to be paid) all Taxes which
have become due and payable by it and has made adequate provision in reserves
established in its financial statements and accounts for all Taxes which have
accrued but are not yet due and payable, except with respect to matters
contested in good faith or where the failure to file Tax Returns, pay Taxes or
provide adequate reserves for Taxes would not reasonably be expected to have a
Material Adverse Effect on the Company;
(b) there are no Liens or encumbrances for Taxes on any of the assets of
the Company or any of its Subsidiaries which Liens or encumbrances would
reasonably be expected to have a Material Adverse Effect on the Company;
(c) 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; and
21
(d) no federal, state, local or foreign audits or administrative
proceedings are pending or, to the Company's Knowledge, threatened, with regard
to any Taxes or any Tax Return of the Company or its Subsidiaries which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
"TAXES" mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, transfer and recording
taxes, fees and charges, and any other taxes, assessment or similar charges
imposed by the IRS or any taxing authority (whether domestic or foreign
including any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)) (a "TAXING
AUTHORITY"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "TAX RETURN" means any report, return, document, declaration or
other information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
Section 5.16. Employee Benefit Plans.
(a) Section 5.16 of the Disclosure Schedule lists each material
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and each other material
employment, consulting, bonus or other incentive compensation, salary
continuation during any absence from active employment for disability or other
reasons, supplemental retirement, cafeteria benefit (Section 125 of the Code) or
dependent care (Section 129 of the Code), sick days, tuition assistance, club
membership, employee discount, employee loan, or vacation pay, severance,
deferred compensation, incentive, fringe benefit, change in control, retention,
stock option, restricted stock or other compensatory plan, policy, agreement or
arrangement (including, without limitation, any collective bargaining agreement)
that (i) is currently, or has since July 1, 2000 been maintained, administered,
contributed to or required to be contributed to by the Company or any of its
Subsidiaries or to which the Company or any Subsidiary is, or has since July 1,
2000 been a party, and (ii) covers any current or former officer, director or
employee of the Company or any of its Subsidiaries (collectively, the "EMPLOYEE
PLANS"). The Company has delivered to Parent (i) accurate and complete copies of
all Employee Plan documents and all other material documents relating thereto,
including (if applicable) all documents establishing or constituting any related
trust, annuity contract, insurance contract or other funding instruments, and
summary plan descriptions relating to said Employee Plans, (ii) accurate and
complete copies of the most recent financial statements and actuarial reports
with respect to all Employee Plans for which financial statements or actuarial
reports are required or have been prepared, and (iii) accurate and complete
copies of all annual reports and summary annual reports for all Employee Plans
(for which annual reports are required) prepared since January 1, 2000. The
Company has also delivered to Parent complete copies of other current plan
summaries, employee booklets,
22
personnel manuals and other material documents or written materials concerning
the Employee Plans that are in possession of the Company or any Subsidiary as of
the date hereof. Neither the Company nor any Subsidiary has ever maintained or
contributed to any "defined benefit plans" as defined in Section 3(35) of ERISA,
nor do any of them have a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA).
(b) Each Employee Plan intended to qualify under Section 401(a) of the
Code has been determined by the Internal Revenue Service to so qualify, and the
trusts created thereunder have been determined to be exempt from tax under
Section 501(a) of the Code; copies of all determination letters have been
delivered to the Parent; and nothing has occurred since the date of such
determination letters which is likely to cause the loss of such qualification or
exemption, or result in the imposition of any material excise tax or income tax
on unrelated business income under the Code or ERISA with respect to any
Employee Plan.
(c) With respect to any Employee Plan covered by Title I of ERISA, no
non-exempt transaction prohibited by Section 406 of ERISA or Section 4975 of the
Code has occurred which will cause the Company to incur a liability under ERISA
or the Code that would reasonably be expected to have a Material Adverse Effect
on the Company. All material contributions required to be made under any
Employee Plan as of the date hereof have been made or, if required by U.S.
generally accepted accounting principles, provided for on the Company's
financial statements.
(d) Neither the Company nor any Subsidiary of the Company, nor any of
their directors, officers, employees or agents, nor any trustee or administrator
of any trust created under the Employee Plans, has engaged in or been a party to
any "prohibited transaction" as defined in Section 4975 of the Code and Section
406 of ERISA which could subject the Company or its Subsidiaries, directors or
employees or the Employee Plans or the trusts relating thereto or any party
dealing with any of the Employee Plans or trusts to any tax or penalty on
"prohibited transactions" imposed by Section 4975 of the Code.
(e) Except as specifically provided in this Agreement or as set forth in
the Disclosure Schedule, no employee or former employee of the Company or any
Subsidiary will become entitled to any material bonus, severance or similar
benefit (including acceleration of vesting or exercise of an incentive award) as
a result of the Transactions contemplated hereby, and there is no contract, plan
or arrangement covering any employee or former employee of the Company or any
Subsidiary that, individually or collectively, could reasonably be expected to
give rise to a payment that would not be deductible by Parent, the Company or
any Subsidiary by reason of Sections 280G or 162(m) of the Code or require
payment of an excise tax under Section 4999 of the Code.
(f) There are no pending or, to the Knowledge of the Company, threatened
actions, suits, proceedings, or claims against or relating to any Employee Plans
other than routine benefit claims by persons entitled to benefits thereunder,
nor is any Employee Plan the subject of any pending (or to the Knowledge of the
Company, any threatened) investigation or audit by the Internal Revenue Service
or Department of Labor. No event has occurred, and there exists no condition or
set of circumstances, which presents a material risk of a partial termination
(within the meaning of Section 411(d)(3) of the Code) of any Employee Plan. With
respect to any
23
Company Plan that is qualified under Section 401(k) of the Code, individually
and in the aggregate, no event has occurred, and to the Knowledge of the
Company, there exists no condition or set of circumstances in connection with
which the Company could be subject to any liability that is reasonably likely to
have a Company Material Adverse Effect (except liability for benefits claims and
funding obligations payable in the ordinary course) under ERISA, the Code or any
other applicable law. All employee contributions, including elective deferrals,
to the Company's 401(k) plan have been segregated from Company's general assets
and deposited into the trust established pursuant to the 401(k) plan in a timely
manner in accordance with the "plan asset" regulations of the Department of
Labor.
(g) Neither the Company nor any Subsidiary has liability (contingent or
otherwise) under Section 4069 of ERISA by reason of a transfer of an underfunded
pension plan.
(h) With respect to any Employee Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA (a "WELFARE PLAN") and
except as set forth in the Disclosure Schedule, (i) each Welfare Plan for which
contributions are claimed by the Company as deductions under any provision of
the Code is in material compliance with all applicable requirements pertaining
to such deduction, and (ii) any Employee Plan that is a group health plan
(within the meaning of Section 4980B(g)(2) of the Code) complies, and has
complied, with all of the applicable material requirements of COBRA, the Family
Medical Leave Act of 1993, the Health Insurance and Portability and
Accountability Act of 1996, the Women's Health and Cancer Rights Act of 1996,
the Newborns' and Mothers' Health Protection Act of 1996, or any similar
provisions of state law applicable to employees of the Company or any Company
Subsidiary. The Company has no welfare benefit fund (within the meaning of
Section 419 of the Code) related to a Welfare Plan. None of the Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
person except as required by applicable law, and neither the Company or any
Company Subsidiary has represented, promised or contracted (whether in oral or
written form) to provide such retiree benefits to any employee, former employee,
director, consultant or other person, except to the extent required by statute.
Except as set forth in Section 5.16(h) of the Disclosure Schedule, no Employee
Plan or employment agreement provides health benefits that are not insured
through an insurance contract. Except as set forth in Section 5.16(h) of the
Disclosure Schedule, each Employee Plan is amendable and terminable unilaterally
by the Company at any time, and no Employee Plan, plan documentation or
agreement, summary plan description or other written communication distributed
generally to employees by its terms prohibits Company from amending or
terminating any such Employee Plan.
(i) Foreign Employee Benefit Plans. Section 5.16(i) of the Disclosure
Schedule lists each material non-governmental plan maintained, or contributed
to, by or on behalf of any Subsidiary applicable to employees of a business
located outside of the United States (a "FOREIGN RETIREMENT PLAN") and each
non-governmental welfare benefit plan maintained or contributed to by or on
behalf of any Subsidiary applicable to employees of a business located outside
of the United States( a "FOREIGN WELFARE PLAN"). Except as set forth in the
Disclosure Schedule, each such Foreign Retirement Plan and Foreign Welfare Plan
(collectively, the "FOREIGN PLANS") has been administered, in all material
respects, in compliance with its terms and the requirements of all applicable
laws and regulations, and all required contributions to each Foreign Plan have
been made. Except as set forth in the Disclosure Schedule, there are no
24
inquiries or investigations by any foreign governmental body, and no termination
proceedings against any Foreign Plan or the assets thereof that would have a
Material Adverse Effect on the Company. Except as set forth in the Disclosure
Schedule, there are no actions, suits or claims (other than routine benefit
claims by persons entitled to benefits thereunder) pending or, to the Company's
Knowledge, threatened against any Foreign Plan or the assets thereof which would
have a Material Adverse Effect on the Company. Except as set forth in the
Disclosure Schedule, there are no material unfunded obligations under any
Foreign Plan providing benefits after termination of employment to any employee
or former employee. With respect to the defined benefit plan of the Company's
United Kingdom subsidiary (the "U.K. PENSION PLAN") which was frozen on April 1,
1997: (i) there are no further benefits accruing under the U.K. Pension Plan;
(ii) the Company has delivered to the Parent an actuarial report which fairly
presents in all material respects the financial condition and funding status of
said Plan as of the date of such report, including any unfunded liabilities
under said Plan at that time, and subsequent to the date of said report there
has been no adverse change in the funding status or financial condition of said
U.K. Pension Plan; (iii) the Company has delivered to the Parent a schedule
setting forth each annual contribution made to the U.K. Pension Plan for the
prior ten years by the Company or any Subsidiary of the Company and a schedule
prepared by the actuaries for the U.K. Pension Plan setting forth projections,
as of the date of the report, for annual contribution obligations with respect
to said U.K. Plan in the future; and (iv) the Company has delivered to the
Parent copies of all material correspondence and reports and any other material
information in its or a Subsidiary's possession (whether issued by a
governmental authority or actuaries and other third parties retained by the
Company or any Subsidiary with respect to the U.K. Pension Plan) relating to the
amount for which the Company or any Subsidiary is or could be liable with
respect to the U.K. Pension Plan
Section 5.17. Antitakeover Statutes and Rights Agreement.
(a) The Company has taken all action necessary, if any, to exempt the
Offer, the Merger and this Agreement and the Transactions from the provisions of
Section 775 through 784 of Michigan Law in order to render the provisions of
such statutes requiring supermajority approval of certain business combinations
are inapplicable to Shares acquired by Parent, Merger Sub or their Affiliates
pursuant to the Offer and the Merger. The Company has taken all action necessary
to opt out of Sections 790 through 799 of Michigan Law in order to render the
provisions of such statutes restricting voting rights of "control shares"
inapplicable to Shares acquired by Parent, Merger Subsidiary or their Affiliates
pursuant to the Offer and the Merger. No other anti-takeover, control share
acquisition, fair price, moratorium or other similar statute (each, a "TAKEOVER
STATUTE") applies or purports to apply to this Agreement, the Offer, the Merger,
the Voting Agreement, the Top-Up Option or the Transactions.
(b) The Company has taken all action necessary to render the Rights
inapplicable to the Transactions, including the Offer and the Merger. Without
limiting the generality of the foregoing, the Rights Agreement has been amended
by all necessary action to (i) render the Rights Agreement inapplicable to this
Agreement, the Offer, the Merger, the Voting Agreement, the Top-Up Option and
the Transactions, (ii) ensure that (x) none of Parent, Merger Subsidiary or
their Affiliates is an "Acquiring Person" (as defined in the Rights Agreement)
by virtue of the execution, delivery, announcement or performance of this
Agreement, the Offer, the Merger, the Voting Agreement, the Top-Up Option or the
Transactions and (y) none of a "Distribution Date",
25
a "Share Acquisition Date", or a "Triggering Event"(as such terms are defined in
the Rights Agreement) occurs by reason of the execution, delivery, announcement,
consummation or performance of this Agreement, the Offer, the Merger, the Voting
Agreement, the Top-Up Option or the Transactions, and such amendment by its
terms may not be further amended by the Company without the prior written
consent of Parent in its sole discretion.
Section 5.18. Intellectual Property. As used herein, the term "INTELLECTUAL
PROPERTY" shall mean all intellectual property rights which are material to the
conduct of the business of the Company or one of its Subsidiaries as it is
currently conducted or as proposed to be conducted by the Company or any of its
Subsidiaries anywhere in the world, including, without limitation: (i) all
trademarks, service marks, trade names, business names, Internet domain names,
trade dress and slogans, and the goodwill associated therewith, and all
registrations or applications for registration thereof (collectively, the
"COMPANY MARKS"); (ii) all patents and patent applications (collectively, the
"COMPANY PATENTS"); (iii) all copyrights, database rights and moral rights in
both published works and unpublished works, including software, user and
training manuals, marketing and promotional materials, internal reports,
business plans and any other expressions, mask works, firmware and videos,
whether registered or unregistered, and all registrations or applications for
registration thereof (collectively, the "COMPANY COPYRIGHTS"); and (iv)
information which is considered by the Company to be confidential and
proprietary, including trade secrets, know-how, customer lists, technical
information, proprietary information, technologies, processes and formulae,
software, data, plans, drawings and blue prints, whether tangible or intangible
and whether stored, compiled, or memorialized physically, electronically,
photographically, or otherwise (collectively, the "COMPANY SECRET INFORMATION").
For purposes of this Section 5.18, "software" means any and all: (w) computer
programs and applications, including any and all software implementations of
algorithms, models and methodologies, whether in source code or object code, (x)
databases and compilations, including any and all data and collections of data,
whether machine readable or otherwise, (y) descriptions, flow-charts library
functions, algorithms, architecture, structure, display screens and development
tools, and other information, work product or tools used to design, plan,
organize or develop any of the foregoing and (z) all documentation, including
user manuals and training materials, relating to any of the foregoing.
(a) Except as set forth in Section 5.18(a) of the Disclosure Schedule,
the Company or one of its Subsidiaries, as applicable: (i) owns all right, title
and interest in and to all of the Intellectual Property, free and clear of all
Liens, or (ii) is licensed to use or otherwise possesses legally valid and
enforceable rights to use each item of Intellectual Property that it does not so
own. The Company and its Subsidiaries have made all necessary filings and
recordations to protect and maintain their interests in the Intellectual
Property except where the failure to make such filings or recordations would not
have a Material Adverse Effect on the Company. No Person has notified the
Company in writing that any of the products, services or technology used, sold,
offered for sale or licensed or proposed for use, sale, offer for sale or
license by the Company or any of its Subsidiaries infringes any intellectual
property rights of any Person.
(b) To the Knowledge of the Company: (i) all the Company Patents are
valid and subsisting and all filings due to be made on the applications and all
maintenance fees, annuities and the like required to be paid before the date
hereof have been paid; (ii) none of the issued
26
Company Patents is being or has been infringed; and (iii) neither the validity
nor the enforceability of any of the Company Patents has been challenged by any
Person.
(c) To the Knowledge of the Company: (i) all the Company Marks are valid
and subsisting and, with respect to registrations and applications for
registration thereof, all filings and payments due to be made or paid before the
date hereof have been paid; (ii) none of the Company Marks is being or has been
infringed or diluted, (iii) none of the Company Marks has been opposed or
challenged and no proceeding has been commenced or threatened that would seek to
prevent the use by the Company or any of its Subsidiaries of any Company ▇▇▇▇;
and (iv) all uses of Company Marks are in conformance with applicable statutory
and common law so as not to compromise the strength or validity of the Company
Marks or the goodwill associated therewith.
(d) To the Knowledge of the Company: (i) all the Company Copyrights,
whether or not registered, are valid and enforceable; (ii) none of the Company
Copyrights is being or has been infringed, or its validity challenged or
threatened in any way; and (iii) no proceeding has been commenced or threatened
that would seek to prevent the use by the Company or any of its Subsidiaries of
any of their products or services, or any other software, including source code
or object code, or other written expression used in the business of the Company
or any of its Subsidiaries as currently conducted or as proposed to be
conducted.
(e) The Company and its Subsidiaries have taken reasonable measures to
protect the secrecy, confidentiality and value of the Company Secret
Information. To the Knowledge of the Company, the Company Secret Information has
not been used, divulged or appropriated for the benefit of any Person (other
than the Company or any of its Subsidiaries). To the Knowledge of the Company,
none of the Company Secret Information is subject to any material adverse claim.
(f) To the Knowledge of the Company, no Company Intellectual Property
asset is subject to any outstanding order, proceeding (other than pending
proceedings pertaining to applications for patent or trademark or copyright
registration), or stipulation restricting in any manner the licensing thereof by
the Company or any of its Subsidiaries.
(g) To the Knowledge of the Company, none of its employees, contractors,
agents and consultants is obligated under any contract, covenant or other
agreement or commitment, or subject to any judgment, decree or order of any
court or administrative agency, that would interfere with the efforts of such
employee, contractor, agent or consultant to promote the interests of the
Company or any Subsidiary or that would conflict with the business of the
Company or any Subsidiary as presently conducted or proposed to be conducted by
them. Neither the Company nor any of its Subsidiaries has any written agreement
with any employee, contractor, agent or consultant as a result of which any such
employee, contractor, agent or consultant may have rights to any material
portion of the Intellectual Property. Neither the Company nor any Subsidiary has
entered into any agreement to indemnify any other Person including, but not
limited to, any employee, contractor, agent or consultant of the Company or such
Subsidiary, against any charge of infringement, misappropriation or misuse of
any intellectual property, other than indemnification of customers,
distributors, agents, suppliers or licensors in connection with the sale or
licensing to customers, in the ordinary course of business, of products of the
Company and its Subsidiaries.
27
(h) All employees, contractors, agents and consultants of the Company or
any of its Subsidiaries who are or were involved in the creation of Intellectual
Property have executed a standard assignment of inventions agreement to vest in
the Company or any of its Subsidiaries exclusive ownership of any Intellectual
Property, except where the failure to have executed such an agreement will not
have a Material Adverse Effect. All employees, contractors, agents and
consultants of the Company or any of its Subsidiaries who have or have had
access to the Company Secret Information executed a standard nondisclosure
agreement to protect the confidentiality of the Company Secret Information,
except where the failure to have executed such an agreement will not have a
Material Adverse Effect. The Company or such Subsidiary have in their possession
copies of all such agreements, except where the failure to have copies shall not
have a Material Adverse Effect.
(i) Without limiting the generality of the foregoing, except as set
forth in Section 5.18(i) of the Disclosure Schedule, all the software that the
Company or any of its Subsidiaries license or otherwise make available to
customers and all Intellectual Property therein was: (i) developed by employees
of the Company within the scope of their employment and their obligation to
assign inventions and patents therein; (ii) developed by independent contractors
or consultants who assigned all of their right, title and interest in and to
that software to the Company or (iii) otherwise acquired by the Company from a
third party by contract.
Section 5.19 Title and Condition of Properties. Except for the Intellectual
Property (title to which is described in Section 5.18), the Company or one of
its Subsidiaries (a) has good and marketable title to or a valid leasehold
interest under a real property or a capitalized lease in all assets reflected on
the Company's balance sheet as of March 31, 2003, free and clear of all Liens,
except for (i) assets disposed of in the ordinary course of business since such
date, (ii) Liens disclosed in the Disclosure Schedule or in the Company SEC
Documents, (iii) Liens or imperfections of title which are not, individually,
material in character, amount or extent and which do not materially detract from
the value or materially interfere with the present or presently contemplated use
by the Company of the assets subject thereto or affected thereby, (iv) Liens
arising under conditional sale or title retention agreements, real property
leases, equipment leases or lease purchase agreements or (v) Liens arising in
the ordinary course of business (including, but not limited to, Liens for Taxes
or governmental charges or levies, Liens of mechanics, carriers, workmen and
repairmen, Liens incurred in connection with workmen's compensation,
unemployment insurance, social security and other like laws, Liens to secure the
performance of letters of credit, bids, tenders sales contracts, leases,
statutory obligations, surety, appeal and performance bonds and similar Liens)
for amounts which are not delinquent, except such Liens as are being contested
in good faith, and (b) has a valid leasehold or other interest in all other
assets used by it in its business, except in each case for exceptions to the
foregoing that would not, individually, reasonably be expected to have a
Material Adverse Effect on the Company.
Section 5.20 Insurance. The Company and its Subsidiaries have paid all premiums
due under their respective insurance policies and are not in default with
respect to their obligations under any such policies other than any default that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
Section 5.21 Certain Contracts.
28
(a) As of the date hereof, except as set forth in the Disclosure
Schedule or in the Company SEC Documents, neither the Company nor any of its
Subsidiaries is a party to or bound by any Material Contracts. As used in this
Agreement "MATERIAL CONTRACT" shall mean a material contract as defined in Item
601(b)(10) of Regulation S-K of the SEC.
(b) Neither the Company nor any of its Subsidiaries is, or has any
Knowledge that any other party thereto is, or asserts in writing that the
Company or any of its Subsidiaries is, in default in any respect under any
Material Contract, except for such defaults as have not had and are not
reasonably expected to have a Material Adverse Effect on the Company, and there
has not occurred, to the Knowledge of the Company, any event that with the lapse
of time or the giving of notice or both would constitute such a default.
Section 5.22 Employment Matters.
(a) Neither the Company nor any of its Subsidiaries is a party to any
labor or collective bargaining agreement, and no employees of the Company or any
of its Subsidiaries are represented by any labor organization. Within the
preceding three years, there have been no representation or certification
proceedings, or petitions seeking a representation proceeding, pending or, to
the Knowledge of the Company, threatened in writing to be brought or filed with
the National Labor Relations Board or any other labor relations tribunal or
authority. Within the preceding three years, to the Knowledge of the Company,
there have been no organization activities involving the Company or any of its
Subsidiaries in respect of any group of employees of the Company or any of its
Subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations, or material grievances or other material labor disputes pending
or, to the Knowledge of the Company, threatened in writing against or involving
the Company or any of its Subsidiaries. There are no unfair labor practice
charges, grievances, or complaints pending or, to the Knowledge of the Company,
threatened in writing by or on behalf of any employee or group of employees of
the Company or its Subsidiaries that, if individually or collectively resolved
against the Company or its Subsidiaries, would have a Material Adverse Effect on
the Company.
(c) There are no complaints, charges, or claims against the Company or
its Subsidiaries pending or, to the Knowledge of the Company, threatened to be
brought or filed with any Governmental Entity based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by the Company or its Subsidiaries that, in each
case, would have a Material Adverse Effect on the Company.
(d) There has been no "mass layoff" or "plant closing" as defined by the
federal Worker Adjustment, Retraining and Notification Act in or any similar
state statute in respect of the Company or its Subsidiaries within the six
months prior to the Effective Date.
Section 5.23 Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve this Agreement and
the Transactions, unless the Merger may be consummated in accordance with
Section 711 of Michigan Law, in which case no such vote of the Company's
stockholders is required.
29
Section 5.24. Disclaimer of Other Representations and Warranties. The Company
does not make, and has not made, any representations or warranties in connection
with the Offer or the Merger other than those expressly set forth herein. It is
understood that any data, any financial information or any memoranda or offering
materials or presentations (including but not limited to the Confidential
Information Memorandum dated January 2003) are not and shall not be deemed to be
or to include representations or warranties of the Company. Except as expressly
set forth herein, no Person has been authorized by the Company to make any
representation or warranty relating to the Company or any Subsidiary thereof or
their respective businesses, or otherwise in connection with the Offer or the
Merger and, if made, such representation or warranty may not be relied upon as
having been authorized by the Company.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
Section 6.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent. Since the date of its
incorporation, Merger Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement or in connection with
arranging any financing required to consummate the Transactions.
Section 6.02. Corporate Authorization. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the Transactions are within the corporate powers of
Parent and Merger Subsidiary and 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 each of Parent and Merger Subsidiary and
constitutes a valid and binding obligation of each of Parent and Merger
Subsidiary, enforceable against each of Parent and Merger Subsidiary in
accordance with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
Section 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the Transactions require no
action by or in respect of, or filing, with, any governmental body, agency,
official or authority, domestic or foreign, other than (i) the filing of the
Offer Documents with the SEC, and compliance with applicable federal securities
laws in connection therewith, (ii) the filing of a certificate of merger with
respect to the Merger with the Michigan Department of Consumer and Industry
Services, Corporation, Securities and Land Development Bureau and appropriate
documents with the relevant authorities of other states in which Parent is
qualified to do business, (iii) compliance with any applicable requirements of
the HSR Act and of laws, rules and regulations analogous to the HSR Act existing
in foreign
30
jurisdictions, including but not limited to the European Union and the United
Kingdom, (iv) filing with the SEC of the Schedule TO and compliance with any
applicable requirements of the 1934 Act and any other applicable securities or
takeover laws, whether state or foreign, as may be required in connection with
this Agreement and the Transactions, (v) compliance with the rules and
regulations of The Toronto Stock Exchange, (vi) as may be required by any
applicable state securities or "blue sky" laws, (vii) such filings, consents,
approvals, orders, registrations and declarations as may be required under the
laws of any foreign country in which Parent or Merger Subsidiary conducts any
business or owns any assets, and (viii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or Merger Subsidiary.
Section 6.04. Non-contravention. The execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the Transactions do not and will not (i) contravene,
conflict with, or result in any violation or breach of any provision of the
articles of incorporation or bylaws of Parent or Merger Subsidiary, (ii),
assuming compliance with the matters referred to in Section 6.03, contravene,
conflict with, or result in any violation or breach of any provision of any law,
rule, regulation, judgment, injunction, order or decree or (iii) require any
consent or other action by any Person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which Parent or Merger
Subsidiary is entitled under any provision of any agreement or other instrument
binding upon Parent or Merger Subsidiary, except for such contraventions,
conflicts and violations referred to in clause (ii), and for such failures to
obtain any such consent or other action, default, termination, cancellation,
acceleration, change or loss referred to in clause (iii), that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or materially to impair the ability of Parent or Merger
Subsidiary to consummate the Transactions.
Section 6.05. Disclosure Documents.
(a) The information with respect to Parent and any of its Subsidiaries
that Parent furnishes to the Company 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 (i) in the
case of the Company Proxy Statement, as supplemented or amended, if applicable,
at the time such Company Proxy Statement or any amendment or supplement thereto
is first mailed to shareholders of the Company and at the time such shareholders
vote on adoption of this Agreement and at the Effective Time, and (ii) in the
case of any Company Disclosure Document other than the Company Proxy Statement,
at the time of the filing of such Company Disclosure Document or any supplement
or amendment thereto with the SEC and at the time of any distribution or
dissemination thereof to the Company's shareholders.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not 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
31
circumstances under which they were made, not misleading, provided that this
representation and warranty will not apply to statements or omissions included
in the Offer Documents based upon information furnished to Parent or Merger
Subsidiary in writing by the Company specifically for use therein.
Section 6.06. Finders' Fees. Except for Yorkton Securities, Inc., whose fees
will be paid by Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent or any of its Affiliates who might be entitled to any fee or commission
from the Company or any of its Affiliates upon consummation of the Transactions.
Section 6.07. Financing (a) Parent has all funds necessary to enable it to
purchase all of the Shares outstanding on a fully-diluted basis and to pay all
related fees and expenses pursuant to the Offer and the Merger (such amount, the
"REQUIRED CASH AMOUNT"); and
(b) Upon consummation of the transaction contemplated by this Agreement,
the Surviving Corporation (i) will not become insolvent, (ii) will not be left
with unreasonably small capital and (iii) will not have incurred debts beyond
its ability to pay such debts as they mature.
ARTICLE 7
COVENANTS OF THE COMPANY
The Company agrees that:
Section 7.01. Conduct of the Company. From the date hereof until the Effective
Time, the Company and its Subsidiaries shall conduct their business in the
ordinary course consistent with past practice and shall use all commercially
reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, without the prior
written consent of Parent (which consent shall not be unreasonably withheld),
the Company shall not:
(i) make, declare, set aside or pay any dividend or other distribution
with respect to any shares of its capital stock, other than dividends and other
distributions paid by any Subsidiary to the Company or any other wholly-owned
Subsidiary of the Company;
(ii) adjust, 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;
(iii) directly or indirectly repurchase, redeem or otherwise acquire any
shares of capital stock or other securities of, or other ownership interests in,
the Company or any of its Subsidiaries;
(iv) issue, deliver or sell any shares of any class or series of its
capital stock, or any securities convertible into or exercisable or exchangeable
for shares of any class or series of its capital stock, other than issuances
pursuant to the exercise of Stock Options that are outstanding on the date
hereof or pursuant to the Stock Purchase Plan;
32
(v) except as otherwise contemplated by this Agreement, adopt or
implement any amendment to its articles of incorporation or bylaws or other
comparable organizational documents or any plan of consolidation, merger or
reorganization or amend the terms of its outstanding securities;
(vi) acquire or agree to acquire (A) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (B) any assets for
consideration exceeding $200,000 in any one instance, except purchases in the
ordinary course of business consistent with past practice;
(vii) transfer, sell, lease, license, mortgage or otherwise encumber or
voluntarily subject to any Lien or otherwise dispose of any of its properties or
assets for consideration exceeding $200,000 in any one instance, except sales in
the ordinary course of business;
(viii) except for the items currently contracted for by the Company and
the items contemplated by the Company's capital expenditure budget made
available to Parent, make or agree to make any new capital expenditure or
expenditures in excess of $200,000;
(ix) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities, or guarantee any debt securities of
another Person, except for the endorsement of checks in the normal course of
business and the extension of credit in the normal course of business, or make
any loans, advances or capital contributions to, or investments in, any other
Person, other than to any direct or indirect wholly-owned Subsidiary or in
accordance with past practice;
(x) enter into or adopt any new, or amend or renew any existing,
Employee Plan, or any collective bargaining agreement, other than as required by
law or as required to consummate the Transactions;
(xi) except to the extent required by the terms of written employment
agreements as in effect on the date of this Agreement and previously disclosed
to Parent, increase the compensation payable to or to become payable to, or
pension or other fringe benefits or perquisites to its present or former
directors, employees, officers or consultants, except for increases in the
ordinary course of business consistent with past practice in the salaries or
wages of present employees, other than officers or directors, such increases not
to exceed 4% in any individual case;
(xii) enter into any contract of employment (other than contracts
terminable by the Company without liability immediately following the Closing)
or any severance, retention or similar agreement, except for agreements with new
employees entered into in the ordinary course of business and providing for
annual base and bonus compensation not to exceed $200,000;
(xiii) pay, agree to pay or award any employee bonuses other than those
paid in accordance with the terms and conditions and in the amounts of bonus
arrangements disclosed in writing to Parent prior to the date of this Agreement
in respect of the fiscal year ended June 30, 2003, or forgive any officer or
employee loan;
33
(xiv) adopt any change, other than as required by the SEC, changes in
U.S. generally accepted accounting principles or applicable law, in its
accounting policies, procedures or practices;
(xv) (A) make any Tax election, (B) settle or compromise any material
income Tax liability; or
(xvi) discharge, settle or satisfy any disputed claim, litigation,
arbitration, disputed liability or other controversy (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the discharge or
satisfaction in the ordinary course of business consistent with past practice or
in accordance with their terms, of liabilities reflected or reserved against in,
or contemplated by, the most recent consolidation financial statements (or the
notes thereto) included in the Company SEC Reports or incurred since March 31,
2003 in the ordinary course of business consistent with past practice, or waive
any material benefits of, or agree to modify in any material respect, any
confidentiality, standstill or similar agreements to which the Company or any of
its Subsidiaries is a party; provided, however, that the discharge or settlement
of any disputed claim, liability or other controversy in the amount of less than
$25,000 shall in no event be prohibited by the foregoing;
(xvii) cancel or terminate any material insurance policy naming the
Company or any Subsidiary as a beneficiary or loss payable payee to be canceled
or terminated;
(xviii) enter into any Material Contract, other than in the ordinary and
usual course of business consistent with past practice, or terminate, renew or
amend in any material respect any of the Material Contracts ;
(xix) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its Subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Company or any
successor thereto, from engaging or competing in any line of business or in any
geographic area;
(xx) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the Merger or an otherwise
permitted by this Agreement);
(xxi) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary;
(xxii) make or agree to make any commitment or investment or enter into
any contract which obligates the Company or any of its Subsidiaries to make
payments exceeding $200,000, except in the ordinary course consistent with past
practice;
(xxiii) renew or terminate any significant agreement relating to the
distribution of the Company's products outside the United States;
(xxiv) enter into, or agree or commit to enter into, any agreement,
contract, commitment or arrangement that if completed would be in contravention
of any of the foregoing; or
34
(xxv) Except as otherwise contemplated by Sections 5.17 and 7.05, redeem
the Rights or amend or terminate the Rights Agreement, except in connection with
any action permitted by Section 7.04(d) or as required by any statute, rule,
regulation, injunction, order or decree of any Governmental Entity.
Section 7.02. Shareholder Meeting; Proxy Material. The Company shall cause a
meeting of its shareholders (the "COMPANY SHAREHOLDER MEETING") to be duly
called and held as soon as reasonably practicable after consummation of the
Offer for the purpose of voting on the approval and adoption of this Agreement
and the Merger, unless Michigan Law does not require a vote of shareholders of
the Company for consummation of the Merger. In connection with such meeting, the
Company will (i) promptly prepare and file with the SEC, will use all
commercially reasonable efforts to have cleared by the SEC and will thereafter
mail to its shareholders as promptly as practicable the Company Proxy Statement
and all other proxy materials for such meeting, (ii) use all commercially
reasonable efforts to obtain the necessary approvals by its shareholders of this
Agreement and the Transactions and (iii) otherwise comply with all legal
requirements applicable to such meeting. The Company shall give Parent and its
counsel the opportunity to review the Company Proxy Statement and all amendments
and supplements thereto, prior to their being filed with the SEC. The Company
will notify Parent promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and will promptly supply
Parent with reports of all oral communications and copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Company Proxy Statement or
the Merger. If at any time prior to the Company Stockholder Meeting there shall
occur any event that should be set forth in an amendment or supplement to the
Company Proxy Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company will not mail any
Company Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
Section 7.03. Access to Information. From the date hereof until the Effective
Time and subject to applicable law and the Confidentiality Agreement dated as of
April 24, 2003 between the Company and Parent (the "CONFIDENTIALITY AGREEMENT"),
the Company shall (i) give Parent, its counsel, financial advisors, auditors and
other authorized representatives reasonable access to the offices, properties,
books and records of the Company and the Subsidiaries, (ii) 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 (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives of the Company and its
Subsidiaries to cooperate with Parent in its investigation of the Company and
its Subsidiaries, other than information or documentation relating to
Acquisition Proposals made by Third Parties. Any investigation pursuant to this
Section shall be conducted in such manner as not to interfere unreasonably with
the conduct of the business of the Company and its Subsidiaries.
Section 7.04. No Solicitation; Other Offers.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, and shall use its best efforts to ensure that its officers, directors or
employees, or any investment bankers,
35
consultants or other advisors or agents retained by it or any of its
Subsidiaries do not solicit, initiate or intentionally encourage the submission
of any Acquisition Proposal or engage in discussions or negotiations or furnish
to any Person any information with respect to an Acquisition Proposal or
knowingly facilitate any effort or attempt to make an Acquisition Proposal. The
Company shall, and shall cause its Subsidiaries and the directors, employees and
other advisors or agents of the Company and its Subsidiaries to, cease
immediately and cause to be terminated all activities, discussions and
negotiations, if any, with any Persons conducted prior to the date hereof with
respect to any Acquisition Proposal and, to the extent within its power, request
that all information concerning the Company and its Subsidiaries in the
possession of such Persons and their affiliates, representatives and advisors be
returned to the Company or destroyed. Nothing contained in this Agreement shall
prevent the Board of Directors from complying with Rule 14d-9 or Rule 14e-2
under the 1934 Act with respect to any Acquisition Proposal or making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors, after consultation with and advice from outside legal
counsel, failure to make such disclosure would constitute a breach of the
fiduciary duties of the Board of Directors under applicable law or otherwise
violate applicable law.
(b) Notwithstanding the first sentence of Section 7.04(a), the Company
may negotiate or otherwise engage in discussions with, and furnish nonpublic
information to, any Person in response to an unsolicited Acquisition Proposal by
such Person if (i) the Board of Directors determines in good faith after
consultation with and advice from the Company Financial Advisor or a financial
advisor of nationally recognized reputation, that such Acquisition Proposal may
result in a Superior Proposal and (ii) such Person executes a confidentiality
agreement no less favorable to the Company than the Confidentiality Agreement
(including the standstill provisions thereof).
(c) The Company shall notify Parent of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) as promptly as practicable (but in no case
later than 24 hours after its receipt, and in any event before providing any
information to or entering into discussions or negotiations with any person in
connection with the Acquisition Proposal); shall promptly provide Parent with a
copy of any written Acquisition Proposal or amendments or supplements thereto;
shall promptly inform Parent of the status of any discussions or negotiations
with such a third party and any material changes to the terms and conditions of
such Acquisition Proposal; and shall promptly deliver to Parent a copy of any
information delivered to such person which has not previously been delivered by
the Company to Parent.
(d) Except as permitted by the second sentence of this Section 7.04(d),
neither the Board of Directors nor any committee thereof shall (1) withdraw or
modify, or publicly propose to withdraw or modify, in a manner adverse to
Parent, its recommendation to its stockholders, or take any action not
explicitly permitted by this Agreement that would be inconsistent with, its
approval of the Offer and the Merger, (2) approve or recommend, or publicly
propose to approve or recommend, any Acquisition Proposal or (3) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or similar agreement or document related to any Acquisition Proposal.
Notwithstanding the foregoing, the Board of Directors shall be permitted (1) not
to recommend to its stockholders acceptance of the Offer and/or approval and
adoption of this Agreement and the Merger, (2) to withdraw, or modify in a
manner adverse to
36
Parent, its recommendation to its stockholders, (3) to approve or recommend any
Superior Proposal or (4) to terminate this Agreement in accordance with Section
11.01(c)(ii) below and in connection therewith enter into an agreement with
respect to such Superior Proposal, but only if (y) the Company has received an
Acquisition Proposal which the Board of Directors determines in good faith after
consultation with and advice from the Company Financial Advisor or other
financial advisor of nationally recognized reputation constitutes a Superior
Proposal and (z) the Board of Directors of the Company determines in good faith,
after consultation with and advice from outside legal counsel, that the failure
to take such action would not be consistent with its fiduciary duties under
applicable law.
(e) For purposes of this Agreement:
"Superior Proposal" means any bona fide written Acquisition
Proposal, not solicited by the Company or by any affiliate or agent
of the Company, which contains no financing contingency, or for
which financing is reasonably determined to be available by the
Board of Directors, and which the Board of Directors determines in
good faith, after consultation with and advice from the Company
Financial Advisor or other financial advisor of nationally
recognized reputation, and taking into account all the terms and
conditions of the Acquisition Proposal is more favorable to the
Company's stockholders (in their capacities as stockholders) from a
financial point of view than the Offer and Merger.
Section 7.05. Rights Agreement; Takeover Statutes. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 5.17) necessary (including redeeming the Rights immediately prior to the
Effective Time or amending the Rights Agreement) in order to render the Rights
inapplicable to this Agreement, the Offer, the Merger, the Voting Agreement, the
Top-Up Option or the Transactions. If any Takeover Statute is or may become
applicable to this Agreement, the Offer, the Merger, the Voting Agreement, the
Top-Up Option or the Transactions, each of Parent and the Company and their
respective Boards of Directors shall grant such approvals and take such lawful
actions as are necessary to ensure that such transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement, the Offer,
the Merger, the Voting Agreement, the Top-Up Option and the Transactions, as
applicable, and otherwise act to eliminate or minimize the effects of such
statute and any regulations promulgated thereunder on such transactions.
Section 7.06. Section 16 Matters. Prior to the Effective Time, the Company shall
take all such steps as may be required to cause any dispositions of Shares in
the Merger by each individual who is subject to the reporting requirements under
Section 16(a) of the 1934 Act with respect to the Company to be exempt under
Rule 16b-3 promulgated under the 1934 Act.
ARTICLE 8
COVENANTS OF PARENT
Parent agrees that:
Section 8.01. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, Parent will hold, and will cause its officers,
directors, employees, accountants,
37
counsel, consultants, advisors and agents to hold, in confidence, all documents
and information concerning the Company or any of its Subsidiaries furnished to
Parent or its Affiliates in connection with the Transactions in accordance with
the terms of the Confidentiality Agreement.
Section 8.02. 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 8.03. Voting of Shares. Parent agrees to vote or cause to be voted all
Shares Beneficially Owned by Parent, the Merger Subsidiary or their Affiliates
in favor of adoption of this Agreement at the Company Shareholder Meeting.
Section 8.04. Director and Officer Liability. Parent shall cause the Surviving
Corporation, and the Surviving Corporation hereby agrees, to do the following:
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless each present and former officer and director
of the Company and of any Subsidiary of the Company (each an "INDEMNIFIED
PERSON") in respect of acts or omissions occurring at or prior to the Effective
Time to the fullest extent permitted by Michigan Law or provided under the
Company's articles 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.
(b) The Surviving Corporation shall pay all expenses, including
reasonable fees and expenses of counsel, that an Indemnified Person may incur in
enforcing the indemnity and other obligations provided for in this Section 8.04.
The Indemnified Person shall be entitled to control the defense of any action,
suit, investigation or proceeding with counsel of his or her own choosing
reasonably acceptable to the Surviving Corporation and the Surviving Corporation
shall cooperate in the defense thereof, provided that the Surviving Corporation
shall not be liable for the fees of more than one counsel for all Indemnified
Persons, other than local counsel, in any one jurisdiction, unless a conflict of
interest shall be caused thereby, and provided further that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
(c) At the date on which Merger Subsidiary accepts for payment pursuant
to the Offer a number of Shares that satisfies the Minimum Condition (the
"Cut-Off Date"), Parent shall arrange for the Company to obtain, and following
the Effective Date the Surviving Corporation shall maintain in effect, a fully
paid officers' and directors' liability insurance policy in respect of acts or
omissions occurring prior to the Cut-Off Date covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount that are no less
favorable than those of such policy in effect on the date hereof and extending
for a period of six years from the Cut-Off Date. The Board of Directors shall
promptly determine in good faith and shall confirm in writing to Parent whether
the officers' and directors' liability insurance provided, or proposed to be
provided, by the Surviving Corporation is accepted to constitute insurance that
is no less favorable as aforesaid, provided that any time after the Cut-Off
Date, any determination to such effect must include the approval of a majority
of the Independent Directors, and if so approved, shall be binding on
38
Parent, the Surviving Corporation and all Indemnified Persons. On or after the
Cut-Off Date, the Parent shall provide or cause the Company to provide the
Independent Directors the same coverage under an officers' and directors'
liability insurance policy in respect of acts or omissions occurring on or after
the Cut-Off Date as are provided to members of the Board of Directors designated
by Parent under Section 2.03.
(d) The obligations of the Surviving Corporation under this Section 8.04
shall be joint and several obligations of Parent and the Surviving Corporation.
(e) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 8.04.
(f) The rights of each Indemnified Person under this Section 8.04 shall
be in addition to any rights such Person may have under the articles of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
Michigan Law or any other applicable laws. These rights shall survive
consummation of the Merger and are intended to benefit, and shall be enforceable
by, each Indemnified Person and may not be changed as to an Indemnified Person
without the consent of the Indemnified Person.
Section 8.05. Employee Benefits after the Merger.
(a) For at least one year from and after the Effective Time, Parent
shall cause the Surviving Corporation to provide those of its and its
Subsidiaries' employees who were employed by the Company or its Subsidiaries
immediately prior to the completion of the Offer with compensation at least as
favorable, in the aggregate, as the compensation provided by the Company and its
Subsidiaries to such employees immediately prior to the date hereof, and
benefits that are substantially equivalent in the aggregate to those that are
provided to employees of Parent having comparable levels of responsibility. The
preceding sentence shall not preclude the Parent or the Surviving Corporation or
its Subsidiaries at any time following the Effective Time from terminating the
employment of any Company employee nor from terminating or amending any Employee
Plan in accordance with its terms and applicable law and such benefits.
(b) Parent shall, or shall cause the Surviving Corporation to, give each
Company employee full credit in respect of his or her employment with the
Company or its Subsidiaries prior to the Effective Time for purposes of
eligibility, vesting, level of benefits and service, other than benefit accrual
under any defined benefit plans, under any new employee benefit plans offered by
the Surviving Corporation after the Merger ("SURVIVING CORPORATION NEW PLANS")
or any benefit plan maintained by Parent in which the Company employee is
permitted to participate ("PARENT PLANS") (to the extent that the corresponding
Benefit Plan currently provided to Company employees gave such credit).
39
(c) From and after the Effective Time, Parent will, or will cause the
Surviving Corporation to, (i) cause any pre-existing conditions or limitations
and eligibility waiting periods (only to the extent such limitations or waiting
periods did not apply to the Company employees under the Benefit Plans) under
any group health plans of Parent, or any group health plans constituting
Surviving Corporation New Plans, in which Company employees are permitted to
participate to be waived with respect to the Company employees and their
eligible dependents and (ii) give each Company employee credit for the plan year
in which the Effective Time occurs toward applicable deductibles and annual
out-of-pocket limits under group health plans of Parent or group health plans
constituting Surviving Corporation New Plans for expenses incurred prior to the
Effective Time under the Benefit Plans.
(d) From and after the Effective Time, Parent will, and will cause the
Surviving Corporation to, honor, without modification, perform all acts and pay
all amounts required or due under or with respect to each Benefit Plan and each
agreement which relates to any current or former employee of the Company and its
Subsidiaries or the terms of any such employee's employment or termination of
employment, including, without limitation, all employment, retention, change of
control, employment protection, severance, termination, consulting, deferred
compensation, executive pension and retirement, welfare and fringe benefit
agreements, plans and programs, except for any modification to any such Benefit
Plan or agreement to the extent permitted in accordance with Section 8.05(a).
(e) Parent acknowledges and agrees that the consummation of the
Transactions will constitute a "change of control" of the Company for purposes
of each Benefit Plan and each program, policy and agreement covering any current
or former employee of the Company and its Subsidiaries and, accordingly agrees
to, and agrees to cause the Surviving Corporation to, honor all provisions under
such Benefit Plans, programs, policies and agreements relating to a change of
control.
(f) Notwithstanding the foregoing, nothing in this Section 8.05 shall
preclude Parent from seeking to (i) modify any employment agreement with the
consent of the affected employee or employees or (ii) modify any Benefit Plan to
the extent such modification is permitted by the terms of such Benefit Plan and
is consistent with Section 8.05(a).
(g) It is the intention of the parties hereto that, as soon as the
Parent determines that it is administratively feasible to do so after the
Effective Time, the Profit Sharing Plan of Comshare, Incorporated (the "COMSHARE
PLAN") shall be merged into the Parent's tax-qualified 401(k) Plan (the
"PARENT'S 401(K) PLAN") in accordance with the terms and conditions of Section
414(l) of the Code; provided, however, that the Parent, prior to the Effective
Time, has determined in its sole discretion that the Comshare Plan is in
compliance in all material respects with the provisions of ERISA and the Code
and that the merger of said Plans would not result in any undue administrative
burden for the Parent, including but not limited to incompatible assets and
protected rights and features with respect to the Comshare Plan. At the Parent's
request the Company shall terminate the Comshare Plan by resolution adopted
prior to the Determination Time, to become effective immediately prior to the
Merger Subsidiary acquiring 80% or more of the combined voting power of all
classes of capital stock of the Company or 80% or more of the value of shares of
all classes of capital stock of the Company, on terms acceptable to the Parent
and shall simultaneously amend the Comshare Plan to the extent necessary to
comply with all
40
applicable law to the extent not previously amended. The Parent agrees that the
Parent will cause the Parent's 401(k) Plan to accept direct rollovers of
"eligible rollover distributions" within the meaning of Section 402(c) of the
Code (including, but not limited to, outstanding plan loans) made with respect
to the Company's employees pursuant to the Comshare Plan by reason of the
transactions contemplated by this Agreement. Rollover amounts contributed to
Parent's 401(k) Plan in accordance with this Section 8.05(g) shall be held in a
separate rollover account which shall at all times be 100% vested and shall be
invested in accordance with the provisions of the Parent's 401(k) Plan.
Section 8.06. Financing. Parent shall provide the Required Cash Amount to Merger
Subsidiary no later than the dates on which Merger Subsidiary is required to
make payments of the Required Cash Amount under this Agreement.
ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
Section 9.01. Commercially Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement and subject to
the fiduciary duties under applicable law of the directors of the Company (as
determined by such directors in good faith), Company and Parent will use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Transactions, including but
not limited to making all filings with the SEC necessary to consummate such
transactions. In furtherance and not in limitation of the foregoing, each of
Parent and Company agrees to make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the Transactions as promptly
as practicable and in any event within ten business days of the date hereof and
to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and to take all other
actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable. Anything to the
contrary in the foregoing notwithstanding, the parties hereby agree that no
party hereto will be required to take or commit itself to take any action,
including, without limitation, the proposing, negotiating, committing to or
effecting, by consent decree, "hold separate" order or otherwise, the sale,
divestiture or disposition of assets or businesses of Parent (or any of its
Subsidiaries, including the Surviving Corporation), if such action would limit
Parent or its Subsidiaries' freedom of action with respect to, or its ability to
retain, one or more of its Subsidiaries' businesses, product lines or assets
after the Effective Date.
(b) In connection with the efforts referenced in Section 9.01(a) to
obtain all requisite approvals and authorizations for the Transactions under the
HSR Act or any other Antitrust Law, each of Parent and Company shall use all
commercially reasonable efforts to (i) cooperate in all respects with each other
in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the "FTC"), the Antitrust
41
Division of the Department of Justice (the "DOJ") or any other governmental
authority and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
Transactions and (iii) permit the other party to review any material
communication given by it to, and consult with each other in advance of any
meeting or conference with, the FTC, the DOJ or any such other governmental
authority or, in connection with any proceeding by a private party, with any
other Person.
Section 9.02. Certain Filings. The Company and Parent shall cooperate with one
another (i) in connection with the preparation of the Company Disclosure
Documents and the Offer Documents, (ii) in determining whether any action by or
in respect of, or filing with, any governmental body, agency, official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the Transactions and (iii) in taking such actions or
making any such filings, furnishing information required in connection therewith
or with the Company Disclosure Documents or the Offer Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
Section 9.03. Public Announcements. Parent and the Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or the Transactions and, except as may be required by
applicable law or any listing agreement with The Nasdaq Stock Market, Inc. or
any national securities exchange, will not issue any such press releases or make
any such public statement prior to such consultation.
Section 9.04. Further Assurances. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
Section 9.05. Merger Without Meeting of Shareholders. If Parent, Merger
Subsidiary or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto agree
to take all necessary and appropriate action to cause the Merger to be effective
as soon as practicable after the acceptance for payment and purchase of Shares
pursuant to the Offer without a meeting of shareholders of the Company in
accordance with Michigan Law.
ARTICLE 10
CONDITIONS TO THE MERGER
Section 10.01. Conditions to 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:
42
(a) if required by Michigan Law, this Agreement shall have been approved
and adopted by the shareholders of the Company in accordance with Michigan Law;
(b) any applicable waiting period under the HSR Act or comparable period
under the Antitrust Laws of other applicable jurisdictions relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger upon
the terms contemplated hereby; and
(d) Merger Subsidiary shall have purchased Shares pursuant to the Offer.
ARTICLE 11
TERMINATION
Section 11.01. Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either the Company or Parent:
(i) if any court or Governmental Entity shall have issued an order
(other than a temporary restraining order), decree or ruling or taken any other
action (which order, decree, ruling or other action the parties hereto shall use
their commercially reasonable efforts, subject to Section 9.01 hereof, to lift)
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; or
(ii) if (x) the Offer shall have expired without any Shares being
purchased therein or (y) Parent or Merger Subsidiary shall not have accepted for
payment, and paid for, all Shares tendered pursuant to the Offer by October 1,
2003, provided that the right to terminate this Agreement under this Section
11.01(b)(ii) shall not be available to any party whose breach of this Agreement
has been the cause of, or resulted in, the failure of Parent or Merger
Subsidiary to purchase the Shares pursuant to the Offer;
(iii) any Person, other than Parent, Merger Subsidiary or their
Affiliates, consummates a tender offer or other transaction pursuant to which
such Person becomes the beneficial owner of more than fifty (50%) percent of the
then outstanding Shares.
(c) by the Company:
(i) if Parent and/or Merger Subsidiary fails to commence the Offer
as provided in Section 2.01 hereof; provided, that the Company may not terminate
this Agreement pursuant to this Section 11.01(c)(i) if the Company is at such
time in breach of its obligations under this Agreement so as to (A) cause a
Material Adverse Effect on the Company or (B)
43
prevent or materially hinder or delay the purchase of the Shares pursuant to the
Offer or the Merger;
(ii) in connection with its entering into a definitive agreement
with respect to a Superior Proposal, to the extent otherwise permitted by this
agreement, if (x) the Company provides written notice to Parent and Merger
Subsidiary of the material terms and conditions of an Acquisition Proposal which
the Board of Directors has determined in good faith, after consultation with and
advice from the Company Financial Advisor or other financial advisor of
nationally recognized reputation and outside legal counsel, constitutes a
Superior Proposal, (y) on or after the third Business Day following delivery of
such written notice, the Board of Directors reasonably determines, based upon
the advice of such financial advisor, that any proposal made by Parent and
Merger Subsidiary in writing with respect to the Offer, within such time period,
supplementing the terms and conditions of the Offer, is not at least as
favorable to the Company and the Company's stockholders as the terms and
conditions of such Acquisition Proposal specified in (i) above; or
(iii) if (x) Parent or Merger Subsidiary shall have breached or
failed to perform in all material respects any of their obligations under this
Agreement, or any of the representations and warranties of the Parent or Merger
Subsidiary contained in this Agreement shall not be true in all material
respects as of the date of this Agreement or at any time prior to the Effective
Date as if made at and as of such time (except as to any representation or
warranty which speaks as of a specific date, which must be untrue as of such
date) and (y) such breach or failure to perform obligations, or failure of the
representations and warranties to be true, cannot be or has not been cured, in
all material respects, within 15 days after the giving of written notice to
Parent or Merger Subsidiary.
(d) by Parent:
(i) if, due to an occurrence, not resulting from a breach by Parent
or Merger Subsidiary of their obligations hereunder, which makes it impossible
to satisfy any of the conditions set forth in Annex A hereto, Parent or Merger
Subsidiary shall have failed to commence the Offer in the time period provided
in Section 2.01 hereof; or
(ii) if, prior to the consummation of the Offer, the Company shall
have breached any representation, warranty, covenant or other agreement
contained in this Agreement which (y) gives rise to the failure of a condition
set forth in paragraph (c) or (d) of Annex A hereto and (z) cannot be or has not
been cured, in all material respects, within the later of 15 days after the
giving of written notice to the Company or the initial expiration of the Offer
(or such later date upon which the Offer shall expire in accordance with Section
2.01 of the Agreement); or
(iii) if, whether or not permitted to do so, the Board of Directors
shall have withdrawn or modified in a manner adverse to Parent or Merger
Subsidiary, or shall have failed, at the written request of Parent, to reaffirm
within 5 Business Days after the request, its approval or recommendation of the
Offer, the Merger or the Agreement, or shall have approved or recommended any
Acquisition Proposal; or
44
(iv) if, whether or not permitted to do so, the Company shall have
entered into a written acquisition agreement agreeing to an Acquisition
Proposal, including a Superior Proposal otherwise entered into in accordance
with the terms of this Agreement.
Section 11.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 11.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Subsidiary or the Company, other
than the provisions of Section 7.04(b), Section 8.01, this Section 11.02,
Section 11.03, and Article 12 (other than Section 12.02); provided that if such
termination shall result from the (i) failure of either party to perform a
covenant or agreement hereof or (ii) breach by Parent of its representation
contained in Section 6.07(a), such party shall be fully liable for any and all
liabilities and damages incurred or suffered by the other party as a result of
such failure or breach.
Section 11.03. Fees and Expenses
(a) If (i) Parent terminates this Agreement pursuant to Section 11.01(d)
(iv) or (ii) the Company terminates this Agreement pursuant to Section
11.01(c)(ii), or either party terminates this Agreement pursuant to Section
11.01(b)(iii), then, in any such case, the Company shall pay, or cause to be
paid to Parent, at the time of termination, a termination fee in the amount of
One Million Eight Hundred Fifty Thousand ($1,850,000) Dollars (the "TERMINATION
FEE") plus an amount equal to Parent's actual and reasonably documented
out-of-pocket expenses incurred by Parent after the date hereof in connection
with the Offer, the Merger, this Agreement and the consummation of the
Transactions, including, without limitation, the fees and out-of-pocket expenses
payable to all banks, investment banking firms and other financial institutions
and their respective agents and counsel incurred in connection with acting as
Parent's financial advisor with respect to the Transactions, up to an aggregate
of Seven Hundred Fifty Thousand ($750,000) Dollars (the "Expenses"). (Wherever
the capitalized term "Expenses" is used in this Agreement, it shall refer to
Expenses up to Seven Hundred Fifty Thousand ($750,000) Dollars.)
(b) Any payments required to be made pursuant to this Section 11.03
shall be made by wire transfer of same day funds to an account designated by
Parent. The Company acknowledges that the agreements contained in this Section
11.03 are an integral part of the Transactions, and that, without these
agreements Parent would not have entered into this Agreement; accordingly, if
the Company fails to promptly pay the amount due pursuant to Section 11.03, and,
in order to obtain such payment, Parent commences a suit (i) which results in a
judgment against the Company for the fee set forth in this Section 11.03, the
Company shall pay to Parent, and (ii) in the event that Parent does not
substantially prevail in such suit, the Parent shall pay to the Company, its
costs and expenses (including attorneys' fees) in connection with such suit,
together with interest from the date of termination of this Agreement on the
amounts owed at the prime rate of ▇▇▇▇▇▇ Trust and Savings Bank in effect from
time to time during such period.
(c) Except as otherwise provided herein, all fees and expenses incurred
in connection with the Offer, the Merger, this Agreement and the Transactions
shall be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
45
(d) In the event the Company is required to pay Parent any amount
pursuant to this Section 11.03, such payment shall be Parent's and Merger
Subsidiary's exclusive remedy for Company's termination and/or breach of the
Agreement.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Purchaser, to:
Geac Computer Company Limited
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with copies (which shall not constitute notice) to:
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Commerce Court West
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
World Trade Center West
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
If to the Company, to:
Comshare Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
46
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
Section 12.02. Survival of Representations and Warranties. The representations
and warranties and agreements contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time, except
for the agreements contained herein (including in Sections 8.04 and 8.05) and
any other agreement that by their terms apply or are to be performed in whole or
in part after the Effective Time.
Section 12.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in
the case of a waiver, by each party against whom the waiver is to be effective,
provided that, after the adoption of this Agreement by the shareholders of the
Company and without their further approval, no such amendment or waiver shall
reduce the amount or change the kind of consideration to be received in exchange
for the Shares.
(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 12.04. 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 each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent or
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Section 12.05. Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Michigan (regardless of the laws that
might be applicable under principles of conflicts of law).
Section 12.06. Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the Transactions
47
may be brought in any federal court located in the State of Michigan or any
Michigan state court, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party by notice as provided in Section
12.01 shall be deemed effective service of process on such party.
Section 12.07. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 12.08. Counterparts; Effectiveness; Benefit. 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.
Except as provided in Sections 8.04 and 8.05, no provision of this Agreement is
intended to confer any rights, benefits, remedies, obligations or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns.
Section 12.9. Entire Agreement. This Agreement and the Confidentiality Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
Section 12.10. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
Section 12.11. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the Transactions be consummated
as originally contemplated to the fullest extent possible.
Section 12.12. Specific Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement or to enforce
specifically the performance of the terms and provisions hereof, in addition to
any other remedy to which they are entitled at law or in equity.
48
Section 12.13. No Prejudice. This Agreement has been jointly prepared and
negotiated by the parties hereto and the terms hereof shall not be construed in
favor of or against any party on account of its participation in such
preparation.
[Signatures on next page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMSHARE, INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and CEO
GEAC COMPUTER CORPORATION LIMITED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
CONDUCTOR ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Agreement and Plan of Merger (the "AGREEMENT") of
which this Annex A is a part. Notwithstanding any other provision of the Offer,
Merger Subsidiary shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the 1934 Act (relating to the obligation of Merger Subsidiary to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for any tendered Shares and (subject to any such rules or
regulations) may delay the acceptance for payment of or the payment for any
tendered Shares and (except as provided in the Agreement) amend or terminate the
Offer without accepting for payment any tendered shares if (i) there are not
validly tendered (and not properly withdrawn) prior to the expiration date for
the Offer (as extended in accordance with Section 2.01(b) of this Agreement)
(the "DETERMINATION TIME") that number of Shares which, when added to any such
Shares owned by Parent or any of its affiliates, will at least satisfy the
Minimum Condition, (ii) by the Determination Time any applicable waiting period
under the HSR Act or any laws, rules or regulations analogous to the HSR Act
existing in foreign jurisdictions has not expired or been terminated, (iii)
prior to the Determination Time the Agreement shall have been terminated in
accordance with its terms or (iv) at the Determination Time any of the following
events shall have occurred and be continuing:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity (i) seeking to prohibit or impose any material
limitations on Parent's or Merger Subsidiary's ownership or operation (or that
of any of their respective subsidiaries or affiliates) of all or a material
portion of the Company's businesses or assets, (ii) seeking to compel Parent or
Merger Subsidiary or their respective subsidiaries and affiliates to dispose of
or hold separate any material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, (iii) challenging the acquisition by
Parent or Merger Subsidiary of any Shares pursuant to the Offer or the Merger,
(iv) seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other Transactions, (v) seeking to
obtain from the Company any damages as a result of the Offer or the Merger that
would be reasonably expected to have a Material Adverse Effect on the Company,
(vi) rendering Merger Subsidiary unable, to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer and the Merger, or
(vii) seeking to impose material limitations on the ability of Merger Subsidiary
or Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's stockholders; or
(b) there has been any statute, rule, regulation, injunction, order or
decree enacted, enforced, promulgated, issued or deemed applicable to the Offer
or the Merger by any Governmental Entity that results in any of the consequences
referred to in clauses (i) or (ii) of paragraph (a) above; or
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(c) any representation or warranty of the Company contained in the
Agreement (disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar standard or
qualification) shall not be true and correct in all respects as of the
Determination Time, as if made at and as of such time (except to the extent that
any such representation or warranty, by its terms, is expressly limited to a
specific date, in which case such representation or warranty shall not be true
and correct as of such date), and the failure of such representation or warranty
to be true and correct would reasonably be expected to have a Material Adverse
Effect on the Company, provided that such breach is incapable of being cured or
has not been cured prior to the initial expiration date of the Offer (or such
later date upon which the Offer shall expire in accordance with Section 2.01 of
the Agreement); or
(d) the Company shall have failed to perform or comply with any of its
obligations, covenants or agreements contained in the Agreement required to be
performed or complied with at or prior to the Determination Time, and such
failure would reasonably be expected to have a Material Adverse Effect on the
Company, provided that such failure to perform or comply is incapable of being
cured or has not been cured prior to the initial expiration date of the Offer
(or such later date upon which the Offer shall expire in accordance with Section
2.01 of the Agreement); or
(e) the Board of Directors or any committee thereof (i) shall have
withdrawn or modified in a manner adverse to Parent or Merger Subsidiary
(including by amendment of the Schedule 14D-9) its approval or recommendation of
the Offer, the Merger or the Agreement or recommended or approved any
Acquisition Proposal or (ii) shall fail to reaffirm its approval or
recommendation of the Offer, the Merger Agreement or the Merger, after Merger
Subsidiary's written request that it do so within 5 Business Days after the
request, or (iii) shall have resolved to do any of the foregoing,
and, in the reasonable good faith judgment of Parent or Merger Subsidiary,
the condition or event described in the foregoing paragraphs (a) through (f),
regardless of the circumstances giving rise to such event or condition, makes it
inadvisable to proceed with the Offer or the acceptance for payment of or
payment for the Shares; provided, in any such case, that Merger Subsidiary and
Parent have performed all of their respective obligations under Section 9.01
herein.
The foregoing conditions (x) are for the sole benefit of Parent and Merger
Subsidiary and (y) may be asserted by Parent and Merger Subsidiary, and, except
for the (1) Minimum Condition or (2) expiration or termination or any applicable
waiting period under the HSR Act or foreign laws, and otherwise subject to the
terms of the Agreement, may be waived by Parent and Merger Subsidiary, in whole
or in part, at any time and from time to time, in the sole discretion of Parent
and Merger Subsidiary. The failure of Parent or Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, and each right shall be deemed a continuing right which may be asserted
at any time and from time to time. Should the Offer be terminated pursuant to
the foregoing provisions, all tendered Shares not theretofore accepted for
payment pursuant thereto shall forthwith be returned to the tendering
stockholders.
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