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EXHIBIT 2.1
AGREEMENT
AND
PLAN OF MERGER
BETWEEN
CLAREMONT TECHNOLOGY GROUP, INC.
AND
CBSI ACQUISITION CORP. III
AND
COMPLETE BUSINESS SOLUTIONS, INC.
DATED APRIL 8, 1998
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AGREEMENT AND PLAN OF MERGER
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ARTICLE I
THE MERGER
Section 1.1 Effective Time of the Merger................................ 1
Section 1.2 Closing..................................................... 1
Section 1.3 Effects of the Merger....................................... 1
Section 1.4 Directors and Officers...................................... 2
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock................................. 2
(a) Capital Stock of Sub........................................ 2
(b) Cancellation of Treasury Stock and CBSI-Owned Stock......... 2
(c) Exchange Ratios for Claremont Common Stock.................. 2
(d) Closing Value............................................... 3
(e) Conversion Number, Collar................................... 3
(f) Effect of Conversion........................................ 3
(g) Claremont Stock Options..................................... 3
Section 2.2 Exchange of Certificates.................................... 3
(a) Exchange Agent.............................................. 3
(b) Exchange Procedures......................................... 3
(c) Distributions with Respect to Unexchanged Shares............ 4
(d) No Further Ownership Rights in Claremont Common Stock....... 4
(e) No Fractional Shares........................................ 4
(f) Termination of Exchange Fund................................ 4
(g) No Liability................................................ 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CLAREMONT
Section 3.1 Organization, Good Standing, Power, Etc..................... 5
Section 3.2 Power, Due Authorization.................................... 5
Section 3.3 No Consents................................................. 5
Section 3.4 No Conflict................................................. 5
Section 3.5 Securities Matters.......................................... 5
Section 3.6 Brokers..................................................... 5
Section 3.7 SEC Reports................................................. 6
Section 3.8 No Material Change.......................................... 6
Section 3.9 Registration Statement; Proxy Statement/Prospectus.......... 6
Section 3.10 Opinion of Financial Advisor................................ 6
Section 3.11 Agreements, Contracts and Commitments....................... 6
Section 3.12 Litigation.................................................. 7
Section 3.13 Pooling of Interests........................................ 7
Section 3.14 Claremont Capital Structure................................. 7
Section 3.15 Intellectual Property....................................... 7
(i)
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CBSI AND SUB
Section 4.1 Organization, Good Standing, Power, Etc..................... 8
Section 4.2 Merger Stock................................................ 8
Section 4.3 Power, Due Authorization.................................... 8
Section 4.4 No Consents................................................. 8
Section 4.5 No Conflict................................................. 8
Section 4.6 Securities Matters.......................................... 9
Section 4.7 Brokers..................................................... 9
Section 4.8 SEC Reports................................................. 9
Section 4.9 No Material Change.......................................... 9
Section 4.10 Registration Statement; Proxy Statement/Prospectus.......... 9
Section 4.11 Opinion of Financial Advisor................................ 10
Section 4.12 Agreements, Contracts and Commitments....................... 10
Section 4.13 Litigation.................................................. 10
Section 4.14 Pooling of Interests........................................ 10
Section 4.15 CBSI and Sub Capital Structure.............................. 10
Section 4.16 Intellectual Property....................................... 11
ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 Covenants of Claremont...................................... 11
Section 5.2 Covenants of CBSI........................................... 13
Section 5.3 Cooperation................................................. 14
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 No Solicitation............................................. 14
Section 6.2 Proxy Statement/Prospectus; Registration Statement.......... 15
Section 6.3 Consents.................................................... 15
Section 6.4 Shareholder Rights Plan..................................... 15
Section 6.5 Current Nasdaq Quotation.................................... 15
Section 6.6 Access to Information....................................... 15
Section 6.7 Shareholders' Meetings...................................... 15
Section 6.8 Legal Conditions to Merger.................................. 16
Section 6.9 Public Disclosure........................................... 16
Section 6.10 Tax-Free Organization....................................... 16
Section 6.11 Pooling Accounting.......................................... 16
Section 6.12 Affiliate Agreements........................................ 16
Section 6.13 Nasdaq Quotation............................................ 16
Section 6.14 Stock Options............................................... 16
Section 6.15 Brokers or Finders.......................................... 17
Section 6.16 Indemnification............................................. 17
Section 6.17 Additional Agreements; Reasonable Efforts................... 18
Section 6.18 Xxxx Xxxxx Xxxxxx Filings................................... 18
ARTICLE VII
CONDITIONS TO MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... 19
(ii)
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(a) Shareholder Approval........................................ 19
(b) Approvals................................................... 19
(c) Registration Statement...................................... 19
(d) No Injunctions or Restraint; Illegality..................... 19
(e) Pooling Letters............................................. 19
(f) Xxxx Xxxxx Xxxxxx Filings................................... 19
(g) Nasdaq...................................................... 19
Section 7.2 Additional Conditions to Obligations of CBSI and Sub........ 19
(a) Representations and Warranties.............................. 19
(b) Performance of Obligations of Claremont..................... 20
(c) Tax Opinion................................................. 20
(d) Blue Sky Laws............................................... 20
(e) Substantial Continuity of Workforce......................... 20
(f) Employment Agreements by Substantially All Vice
Presidents.................................................. 20
Section 7.3 Additional Conditions to Obligations of Claremont........... 20
(a) Representations and Warranties.............................. 20
(b) Performance of Obligations of CBSI and Sub.................. 20
(c) Tax Opinion................................................. 20
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 Termination................................................. 20
Section 8.2 Effect of Termination....................................... 21
Section 8.3 Fees and Expenses........................................... 21
Section 8.4 Amendment................................................... 22
Section 8.5 Extension; Waiver........................................... 22
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations, Warranties and Agreements... 22
Section 9.2 Waiver...................................................... 23
Section 9.3 Governing Law, Jurisdiction, Fees........................... 23
Section 9.4 Notices..................................................... 23
Section 9.5 Interpretation.............................................. 23
Section 9.6 Counterparts................................................ 23
Section 9.7 Entire Agreement; No Third Party Beneficiaries.............. 24
Section 9.8 Governing Law............................................... 24
Section 9.9 Assignment.................................................. 24
(iii)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 8, 1998,
by and among Complete Business Solutions, Inc., a Michigan corporation ("CBSI"),
CBSI Acquisition Corp. III, a Michigan corporation and a wholly-owned subsidiary
of CBSI ("Sub") and Claremont Technology Group, Inc., an Oregon Corporation
("Claremont").
WHEREAS, the Boards of Directors of CBSI, Sub and Claremont deem it
advisable and in the best interests of each corporation and its respective
shareholders that CBSI and Claremont combine in order to advance the long-term
business interests of CBSI and Claremont;
WHEREAS, the combination of CBSI and Claremont shall be effected by the
terms of this Agreement through a transaction in which Sub will merge with and
into Claremont, Claremont will become a wholly owned subsidiary of CBSI and the
shareholders of Claremont will become shareholders of CBSI (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Effective Time of the Merger. Subject to the provisions of
this Agreement, Articles of Merger in such form as are required by the relevant
provisions of the Oregon Business Corporation Act ("OBCA") (the "Articles of
Merger") and a Certificate of Merger in such form as is required by the relevant
provisions of the Michigan Business Corporation Act ("MBCA") shall be duly
prepared, executed and acknowledged by Sub and Claremont and thereafter
delivered to the Corporation Commissioner of the State of Oregon and the
[Secretary of State?] for the State of Michigan for filing, as provided in the
OBCA and MBCA, as soon as practicable on or after the Closing Date (as defined
in Section 1.2). The Merger shall become effective upon the filing of the
Articles of Merger with the State of Oregon and Certificate of Merger with the
State of Michigan or at such time thereafter as is provided in the Articles of
Merger and Certificate of Merger. (the "Effective Time").
Section 1.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., P.S.T., on a date to be specified by CBSI and Claremont,
which shall be no later than the second business day after satisfaction of the
latest to occur of the conditions set forth in Sections 7.1, 7.2(b) (other than
the delivery of the officers' certificate referred to therein) and 7.3(b)
((other than the delivery of the officers' certificate referred to therein)
(provided that the other closing conditions set forth in Article VII have been
met or waived as provided in Article VII at or prior to the Closing) (the
"Closing Date"), at the offices of Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, LLP, 000
X.X. Xxxxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000, unless another date or place
is agreed to in writing by CBSI and Claremont.
Section 1.3 Effects of the Merger.
(a) At the Effective Time (i) the separate existence of Sub shall cease and
Sub shall be merged with and into Claremont (Sub and Claremont are sometimes
referred to below as the "Constituent Corporations" and Claremont is sometimes
referred to below as the "Surviving Corporation"), (ii) the Articles of
Incorporation of Sub shall be the Articles of Incorporation of the Surviving
Corporation, except that Article I thereof shall be amended to read as follows:
"The name of the corporation (the "Corporation") is Claremont
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Technology Group, Inc.," and (iii) the Bylaws of Sub as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation.
(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock subscriptions
and all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation, and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the Constituent Corporations, and the title to any real estate
vested by deed or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thereafter attach to the Surviving Corporation, and may be
enforced against it to the same extent as if such debts and liabilities had been
incurred by it.
Section 1.4 Directors and Officers. The directors of Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed. Claremont's Senior Vice Presidents and Vice Presidents
will retain their titles, which shall not be regarded as corporate titles unless
expressly so awarded by the Surviving Corporation's Board of Directors following
the merger.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Common Stock, no par value, of Claremont ("Claremont Common Stock") or
capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, no par value, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and CBSI-Owned Stock. All shares
of Claremont Common Stock owned by CBSI, Sub or any other wholly-owned
Subsidiary (as defined below) of CBSI shall be cancelled and retired and
shall cease to exist and no stock of CBSI or other consideration shall be
delivered in exchange therefor. All shares of Common Stock, no par value,
of CBSI ("CBSI Common Stock") owned by Claremont shall remain unaffected by
the Merger. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner (excluding partnerships,
where the general partnership interests held by such party or any
Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one
or more of its Subsidiaries.
(c) Exchange Ratios for Claremont Common Stock. Subject to Section
2.2, each issued and outstanding share of Claremont Common Stock (other
than shares to be cancelled in accordance with Section 2.1(b)) shall be
converted into the right to receive the "Conversion Number" (as defined
below) of fully paid and unassessable shares of CBSI Common Stock (subject
to adjustment for any stock splits,
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stock dividends, recapitalizations, reclassifications and similar events
which affect the Claremont Common Stock or the CBSI Common Stock).
(d) Closing Value. The "Closing Value" shall mean the average of the
per share closing trading prices for CBSI Common Stock (without weighting
for trading volume) for the twenty consecutive trading days the last of
which is the fourth full trading day before the Closing Date.
(e) Conversion Number, Collar. The "Conversion Number" shall be that
number of shares of CBSI common stock equal to $27.00 divided by the
Closing Value. However, if the Closing Value is less than 85% of $38.00,
the Conversion Number shall be fixed at .8359133 shares of CBSI Common
Stock. If the Closing Value is more than 115% of $38.00, the Conversion
Number shall be fixed at .617849 shares of CBSI Common Stock.
(f) Effect of Conversion. All such shares of Claremont Common Stock
when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the applicable number of
shares of CBSI Common Stock (based on the Conversion Number) and any cash
in lieu of fractional shares of CBSI Common Stock to be issued or paid in
consideration therefor pursuant to subsection 2.2(e) upon the surrender of
such certificate in accordance with Section 2.2, without interest.
(g) Claremont Stock Options. At the Effective Time, all
then-outstanding options to purchase Claremont Common Stock issued under
Claremont's 1992 Stock Incentive Plan (the "Claremont Option Plans") will
be assumed by CBSI in accordance with Section 6.13.
Section 2.2 Exchange of Certificates. The procedures for exchanging
outstanding shares of Claremont Common Stock for CBSI Common Stock pursuant to
the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, CBSI shall deposit with
a bank or trust company designated by CBSI and Claremont (the "Exchange
Agent"), for the benefit of the holders of shares of Claremont Common Stock
for exchange in accordance with this Section 2.2, through the Exchange
Agent, certificates representing the shares of CBSI Common Stock (such
shares of CBSI Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund")
issuable pursuant to Section 2.1 in exchange for outstanding shares of
Claremont Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Claremont Common Stock (each a
"Certificate" and collectively, the "Certificates") whose shares were
converted pursuant to Section 2.1 into the right to receive shares of CBSI
Common Stock (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as CBSI and Claremont
may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of CBSI Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by CBSI, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
CBSI Common Stock which such holder has the right to receive pursuant to
the provisions of this Article II, and the Certificate so surrendered shall
immediately be cancelled. In the event of a transfer of ownership of
Claremont Common Stock which is not registered in the transfer records of
Claremont, a certificate representing the proper number of shares of CBSI
Common Stock may be issued to a transferee if the Certificate representing
such Claremont Common Stock is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid.
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(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to CBSI Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the
shares of CBSI Common Stock represented thereby and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to
subsection (e) below until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the
record holder of the certificates representing whole shares of CBSI Common
Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional
share of CBSI Common Stock to which such holder is entitled pursuant to
subsection (e) below and the amount of dividends or other distributions
with a record date after the Effective Time previously paid with respect to
such whole shares of CBSI Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of CBSI
Common Stock.
(d) No Further Ownership Rights in Claremont Common Stock. All shares
of CBSI Common Stock issued upon the surrender for exchange of shares of
Claremont Common Stock in accordance with the terms hereof (including any
cash paid pursuant to subsection (c) or (e) of this Section 2.2) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Claremont Common Stock subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by Claremont on such shares of Claremont Common Stock
in accordance with the terms of this Agreement on or prior to the date
hereof and which remain unpaid at the Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Claremont Common Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this
Section 2.2.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of CBSI Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a shareholder of
CBSI. Notwithstanding any other provision of this Agreement, each holder of
shares of Claremont Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of CBSI
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of CBSI Common Stock
multiplied by the Closing Value.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of Claremont for one year
after the Effective Time shall be delivered to CBSI, upon demand, and any
shareholders of Claremont who have not previously complied with this
Section 2.2 shall thereafter look only to CBSI for payment of their claim
for CBSI Common Stock, any cash in lieu of fractional shares of CBSI Common
Stock, and any dividends or distributions with respect to CBSI Common
Stock.
(g) No Liability. Neither CBSI nor Claremont shall be liable to any
holder of shares of Claremont Common Stock or CBSI Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CLAREMONT
In order to induce CBSI to enter into this Agreement, Claremont warrants to
CBSI and Sub, subject to the matters set forth in the Claremont Disclosure
Letter delivered herewith, as follows:
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Section 3.1 Organization, Good Standing, Power, Etc. Claremont is a
corporation duly organized and validly existing under the laws of the State of
Oregon, has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as now being conducted, and is
duly qualified and in good standing in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on the business, assets
(including intangible assets), financial condition or results of operations
("Material Adverse Effect") of Claremont. Each of Claremont's subsidiaries is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on Claremont.
Section 3.2 Power, Due Authorization. Claremont has the power and
authority to execute and deliver this Agreement and to perform all of its
obligations hereunder in accordance with the terms hereof, and all necessary
corporate action to authorize the consummation of the transactions contemplated
by this Agreement on the part of Claremont has been duly and effectively taken,
including, without limiting the generality of the foregoing, the approval
thereof by the Board of Directors of Claremont, excepting only the approval of
the shareholders of Claremont.
Section 3.3 No Consents. No consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Claremont in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing by CBSI of a Registration
Statement on Form S-4 with the Securities and Exchange Commission ("SEC") in
accordance with the Securities Act of 1933, as amended (the "Securities Act"),
(ii) the filing of the Articles of Merger with the Oregon Corporation
Commissioner, (iii) the filing of a Joint Proxy Statement with the SEC in
accordance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws, and under the federal Xxxx Xxxxx Xxxxxx Premerger Notification
Act, and the laws of any foreign country and (v) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have a Material Adverse Effect on
Claremont.
Section 3.4 No Conflict. Neither the execution and delivery of this
Agreement nor the performance of Claremont's obligations hereunder will (i)
violate any provision of the Articles of Incorporation or Bylaws of Claremont,
(ii) violate any material provision of any applicable statute or law or any
judgment, decree, order, regulation or rule of any court or governmental body
applicable to Claremont, or (iii) constitute a material breach or default (or an
event which, with notice or lapse of time or both, would constitute a material
default) under any material contract, commitment, agreement, lease or other
obligation to which Claremont is a party.
Section 3.5 Securities Matters. Claremont has delivered (or will deliver)
to CBSI copies of the proxy statement and all other written materials sent or
made available or to be sent or made available to the holders of its capital
stock in connection with this Agreement and the Merger. The proxy statement
notice and such other material complied with or will comply in all material
respects with the applicable requirements of the OBCA and applicable federal and
state securities laws and did not (or will not) contain any untrue statement of
a material fact or omit to state any material fact necessary, in light of the
circumstances, in order to make the statements therein not misleading, provided
that in the proxy material delivered or to be delivered to its shareholders,
Claremont has relied or will rely upon CBSI with respect to factual matters
concerning CBSI and Sub contained in such material, and with respect to matters
as to which such reliance is made, Claremont represents and warrants only that
Claremont has or will accurately and completely present such factual matters
concerning CBSI as CBSI provided to it for that purpose.
Section 3.6 Brokers. Other than Xxxxxxxxx, Lufkin & Xxxxxxxx, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Claremont.
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Section 3.7 SEC Reports.
(a) Claremont has filed with the SEC all reports (the "Claremont SEC
Reports") required to be filed by it under the Exchange Act. Claremont has
furnished to CBSI or will furnish to CBSI on request prior to the Closing a copy
of all Claremont SEC Reports. All of the Claremont SEC Reports filed by
Claremont complied in all material respects with the requirements of the
Exchange Act. None of the Claremont SEC Reports contained, as of the respective
dates thereof, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made.
All financial statements contained in the Claremont SEC Reports have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the applicable periods ("GAAP"). Each
consolidated balance sheet included in the Claremont SEC Reports presents fairly
in accordance with GAAP the consolidated financial position of Claremont as of
the date of such balance sheet, and each consolidated statement of operations,
shareholders' equity and cash flows presents fairly in accordance with GAAP the
consolidated results of operations, shareholders' equity and cash flow of
Claremont for the periods then ended.
(b) No event has occurred since December 31, 1997 which requires the filing
of a Claremont SEC Report that has not heretofore been filed and furnished to
CBSI, excepting only the end of the third quarter of Claremont's fiscal year
1998 on March 31, 1998. There are no material liabilities of Claremont that have
not been disclosed in the SEC reports, except as are disclosed in the Disclosure
Letter.
Section 3.8 No Material Change. As of the date hereof, there has been no
material adverse change in Claremont's financial condition, results of
operations, business or prospects since December 31, 1997, nor will there be any
material adverse change in Claremont's financial condition, results of
operations, business or prospects from the date hereof through the Effective
Time except such as are promptly disclosed to CBSI.
Section 3.9 Registration Statement; Proxy Statement/Prospectus. The
written information supplied by Claremont for inclusion in the registration
statement on Form S-4 pursuant to which shares of CBSI Common Stock issued in
the Merger will be registered with the SEC (the "Registration Statement"), shall
not at the time the Registration Statement is declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in the Registration Statement or necessary in order
to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The written
information supplied by Claremont for inclusion in the joint proxy
statement/prospectus to be sent to the shareholders of CBSI and Claremont in
connection with the meeting of Claremont's shareholders to consider this
Agreement and the Merger (the Claremont Shareholders' Meeting") and in
connection with the meeting of CBSI's shareholders (the "CBSI Shareholders'
Meeting") to consider the issuance of shares of CBSI Common Stock pursuant to
the Merger (the "Joint Proxy Statement") shall not, on the date the Joint Proxy
Statement is first mailed to shareholders of Claremont or CBSI, at the time of
the Claremont Shareholders' Meeting and the CBSI Shareholders' Meeting and at
the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it was made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the CBSI
or Claremont Shareholders' Meetings which has become false or misleading. If at
any time prior to the Effective Time any event relating to Claremont or any of
its Affiliates (as defined in Section 6.11), officers or directors should be
discovered by Claremont which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement, Claremont
shall promptly inform CBSI.
Section 3.10 Opinion of Financial Advisor. The financial advisor of
Claremont, Xxxxxxxxx, Lufkin & Xxxxxxxx, has delivered to Claremont an opinion
dated the date of this Agreement to the effect that the aggregate Merger
consideration to be received by the holders of the issued and outstanding Common
Stock of Claremont is fair in the aggregate from a financial point of view to
the equity holders of Claremont as a group.
Section 3.11 Agreements, Contracts and Commitments. Claremont is not in
breach of, nor has it received in writing any claim or threat that it has
breached, any of the terms or conditions of any agreement,
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contract or commitment with any Claremont customer that represents revenue of or
in excess of $250,000 in calendar year 1998 ("Claremont Material Contracts") in
such a manner as would permit any other party to cancel or terminate the same or
would permit any other party to seek material damages from Claremont under any
Claremont Material Contract. Except as set forth on the Claremont Disclosure
Letter, on which all Claremont Material Contracts are listed, each Claremont
Material Contract that has not expired or been terminated is in full force and
effect and is not subject to any material default thereunder of which Claremont
is aware by any party obligated to Claremont pursuant to the Claremont Material
Contract. Claremont's twenty largest revenue customers (as judged from
anticipated 1998 revenue) are listed in the Disclosure Letter. Claremont has no
reason to believe any of its twenty largest customers will terminate its
relationship with Claremont within one year from the date hereof.
Section 3.12 Litigation. Except as described in the Claremont SEC
Reports, there is no action, suit or proceeding, claim, arbitration or
investigation against Claremont pending, or as to which Claremont has received
any written notice of assertion, or as to which Claremont has a reasonable basis
to believe it will be asserted or brought, which is reasonably likely to have a
Material Adverse Effect on Claremont, or a material adverse effect on the
ability of Claremont to consummate the transactions contemplated by this
Agreement.
Section 3.13 Pooling of Interests. Neither Claremont nor any of its
Affiliates has, through the date of this Agreement, taken or agreed to take any
action which would prevent CBSI from accounting for the business combination to
be effected by the Merger as a pooling of interests.
Section 3.14 Claremont Capital Structure.
(a) The authorized capital stock of Claremont consists of 25,000,000 shares
of Common Stock, no par value, and 10,000,000 shares of preferred stock, no par
value ("Claremont Preferred Stock"). As of March 31, 1998, 8,981,240 shares of
Claremont Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Claremont Preferred
Stock were issued and outstanding, (iii) 2,119,468 shares of Claremont Common
Stock were reserved for future issuance pursuant to stock options granted and
outstanding under the Claremont Option Plans, and (iv) no shares of Claremont
Common Stock were reserved for future issuance pursuant to outstanding warrants
to purchase Claremont Common Stock. No material change in such capitalization
has occurred between March 31, 1998, and the date of this Agreement. All shares
of Claremont Common Stock subject to issuance as specified above, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in the Claremont Disclosure Letter, there are
no obligations, contingent or otherwise, of Claremont to repurchase, redeem or
otherwise acquire any shares of Claremont Common Stock or Claremont Preferred
Stock or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity.
(b) Except as set forth in this Section 3.14 or as reserved for future
grants of options under the Claremont Option Plans, there are no equity
securities of any class of Claremont, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 3.14 or in the Claremont
Disclosure Letter, there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which Claremont is a party
or by which it is bound obligating Claremont to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of Claremont
or obligating Claremont to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right, commitment or
agreement. To the best knowledge of Claremont, there are no voting trusts,
proxies or other agreements or understandings with respect to the shares of
capital stock of Claremont.
Section 3.15 Intellectual Property
(a) Claremont owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications for such patents, trademarks, trade names,
service marks and copyrights, processes, formulae, methods, schematics,
technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material that are necessary to conduct the
business of Claremont as currently conducted, or proposed to be conducted, the
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absence of which would be reasonably likely to have a Material Adverse Effect on
Claremont (the "Claremont Intellectual Property Rights").
(b) Claremont is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Claremont Intellectual Property Rights or the intellectual property rights
of any third party, the breach of which would be reasonably likely to have a
Material Adverse Effect on Claremont.
(c) To Claremont's knowledge, all patents, registered trademarks, service
marks and copyrights held by Claremont are valid and subsisting. Except as set
forth on the Claremont Disclosure Letter, Claremont (i) has not been sued in any
suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party; and (ii) has no knowledge that
the manufacturing, marketing, licensing or sale of its products infringes any
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party, which such infringement would reasonably be expected
to have a Material Adverse Effect on Claremont.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CBSI AND SUB
In order to induce Claremont to enter into this Agreement, CBSI and Sub
warrant to Claremont, subject to the matters set forth in the CBSI Disclosure
Letter delivered herewith, as follows:
Section 4.1 Organization, Good Standing, Power, Etc. CBSI is a
corporation duly organized and validly existing under the laws of the State of
Michigan, and Sub is a corporation duly organized and validly existing under the
laws of the State of Oregon. Each of CBSI and Sub has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing in
each jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on CBSI.
Section 4.2 Merger Stock. The shares of common stock of CBSI to be issued
to the shareholders of Claremont in connection with the Merger will have been
duly authorized prior to the effective time by all necessary corporate action by
CBSI and, when issued and delivered by CBSI pursuant to this Agreement, will be
validly issued, fully paid and non-assessable.
Section 4.3 Power, Due Authorization. Each of CBSI and Sub has the power
and authority to execute and deliver this Agreement and to perform all of its
obligations hereunder in accordance with the terms hereof, and all necessary
corporate action to authorize the consummation of the transactions contemplated
by this Agreement on the part of each of CBSI and Sub has been duly and
effectively taken, including, without limiting the generality of the foregoing,
the approval thereof by the Boards of Directors of CBSI and Sub and by CBSI as
the sole shareholder of Sub, excepting only the approval of the Shareholders of
CBSI.
Section 4.4 No Consents. No consent, approval, order or authorization of,
or registration, declaration or filing with any Governmental Entity is required
by or with respect to CBSI or Sub in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
except for (i) the filing by CBSI of a Registration Statement on Form S-4 with
the SEC in accordance with the Securities Act, (ii) the filing of the Articles
of Merger with the Oregon Corporation Commissioner, (iii) the filing of a Joint
Proxy Statement with the SEC in accordance with the Exchange Act, (iv) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal and state securities laws,
and under the federal Xxxx Xxxxx Xxxxxx Premerger Notification Act, and the laws
of any foreign country and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not be
reasonably likely to have a Material Adverse Effect on CBSI or Sub.
Section 4.5 No Conflict. Neither the execution and delivery of this
Agreement nor the performance of CBSI's or Sub's obligations hereunder will (i)
violate any provision of the Articles of Incorporation or Bylaws
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of CBSI or Sub, (ii) violate any material provision of any applicable statute or
law or any judgment, decree, order, regulation or rule of any court or
governmental body applicable to CBSI or Sub, or (iii) constitute a material
breach or default (or an event which, with notice or lapse of time or both,
would constitute a material default) under any material contract, commitment,
agreement, lease or other obligation to which CBSI or Sub is a party.
Section 4.6 Securities Matters. CBSI has delivered (or will deliver) to
Claremont copies of the proxy statement and all other written materials sent or
made available or to be sent or made available to the holders of its capital
stock in connection with this Agreement and the Merger. The proxy statement
notice and such other material complied with or will comply in all material
respects with the applicable requirements of the MBCA and applicable federal and
state securities laws and did not (or will not) contain any untrue statement of
a material fact or omit to state any material fact necessary, in light of the
circumstances, in order to make the statements therein not misleading, provided
that in the proxy material delivered or to be delivered to its shareholders,
CBSI has relied or will rely upon Claremont with respect to factual matters
concerning Claremont contained in such material, and with respect to matters as
to which such reliance is made, CBSI represents and warrants only that CBSI has
or will accurately and completely present such factual matters concerning
Claremont as Claremont provided to it for that purpose.
Section 4.7 Brokers. Other than UBS Securities LLC, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of CBSI.
Section 4.8 SEC Reports.
(a) CBSI has filed with the SEC all reports (the "CBSI SEC Reports")
required to be filed by it under the Exchange Act. All of the CBSI SEC Reports
filed by CBSI complied in all material respects with the requirements of the
Exchange Act. None of the CBSI SEC Reports contained as of the respective dates
thereof, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made.
All financial statements contained in the CBSI SEC Reports have been prepared in
accordance with GAAP consistently applied throughout the applicable periods.
Each consolidated balance sheet included in the CBSI SEC Reports presents fairly
in accordance with GAAP the consolidated financial position of CBSI as of the
date of such balance sheet, and each consolidated statement of operations,
shareholders' equity and cash flows presents fairly in accordance with GAAP the
consolidated results of operations, shareholders' equity and cash flow of CBSI
for the periods then ended.
(b) No event has occurred since December 31, 1997 which requires the filing
of a CBSI SEC Report that has not heretofore been filed and furnished to
Claremont, excepting only the end of the first quarter of CBSI's fiscal year
ending on March 31, 1998. There are no material liabilities of CBSI that have
not been disclosed in the CBSI SEC Reports, except as are disclosed in the
Disclosure Letter.
Section 4.9 No Material Change. As of the date hereof, there has been no
material adverse change in CBSI's financial condition, results of operations,
business or prospects since December 31, 1997, nor will there be any material
adverse change in CBSI's financial condition, results of operations, business or
prospects from the date hereof through the Effective Time except such as are
promptly disclosed to Claremont.
Section 4.10 Registration Statement; Proxy Statement/Prospectus. The
written information supplied by CBSI for inclusion in the Registration Statement
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by CBSI for inclusion in the Joint Proxy Statement shall not, on the
date the Joint Proxy Statement is first mailed to shareholders of CBSI or
Claremont, at the time of the CBSI Shareholders' Meeting and Claremont
Shareholders' Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the
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Joint Proxy Statement not false or misleading, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the CBSI or Claremont Shareholders'
Meetings which has become false or misleading. If at any time prior to the
Effective Time any event relating to CBSI or any of its Affiliates, officers or
directors should be discovered by CBSI which should be set forth in an amendment
to the Registration Statement or a supplement to the Joint Proxy Statement, CBSI
shall promptly inform Claremont.
Section 4.11 Opinion of Financial Advisor. The financial advisor of CBSI,
UBS Securities LLC, has delivered, or will deliver within two business days of
the date hereof, to CBSI an opinion dated the date of this Agreement to the
effect that the financial terms of the Merger are fair to CBSI from a financial
point of view.
Section 4.12 Agreements, Contracts and Commitments. CBSI is not in breach
of,nor has it received in writing any claim or threat that it has breached, any
of the terms or conditions of any agreement, contract or commitment with any
CBSI customer that represents revenue of or in excess of $1,000,000 in calendar
year 1998 ("CBSI Material Contracts") in such a manner as would permit any other
party to cancel or terminate the same or would permit any other party to seek
material damages from CBSI under any CBSI Material Contract. Except as set forth
on the Disclosure Letter, on which all CBSI Material Contracts are listed, each
CBSI Material Contract that has not expired or been terminated is in full force
and effect and is not subject to any material default hereunder of which CBSI is
aware by any party obligated to CBSI pursuant to the CBSI Material Contract.
CBSI's twenty largest revenue customers (as judged from anticipated 1998
revenue) are listed in the Disclosure Letter. CBSI has no reason to believe any
of its twenty largest customers will terminate their relationship with CBSI
within one year from the date hereof.
Section 4.13 Litigation. Except as described in the CBSI SEC Reports,
there is no action, suit or proceeding, claim, arbitration or investigation
against CBSI pending or as to which CBSI has received any written notice of
assertion, or as to which CBSI has a reasonable basis to believe it will be
asserted or brought, which is reasonably likely to have a Material Adverse
Effect on CBSI and its Subsidiaries, taken as a whole, or a material adverse
effect on the ability of CBSI to consummate the transactions contemplated by
this Agreement.
Section 4.14 Pooling of Interests. Neither CBSI nor any of its Affiliates
has, through the date of this Agreement, taken or agreed to take any action
which would prevent CBSI from accounting for the business combination to be
effected by the Merger as a pooling of interests.
Section 4.15 CBSI and Sub Capital Structure.
(a) The authorized capital stock of CBSI consists of 30,000,000 shares of
Common Stock, no par value, and 1,000,000 shares of Preferred Stock, no par
value ("CBSI Preferred Stock"). As of March 31, 1998 (i) 26,996,408 shares of
CBSI Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable, (ii) no shares of CBSI Preferred Stock were issued
and outstanding, (iii) no shares of CBSI Common Stock were held in the treasury
of CBSI or by Subsidiaries of CBSI, (iv) 3,247,454 shares of CBSI Common Stock
were reserved for future issuance pursuant to stock options granted and
outstanding under the CBSI Option Plans, and (v) no shares of CBSI Common Stock
were reserved for future issuance pursuant to outstanding warrants to purchase
CBSI Common Stock. The authorized capital stock of Sub consists of 60,000 shares
of Common Stock, no par value. As of April 7, 1998 there are, and as of Closing
there will be, 100 shares of Sub Common Stock issued and outstanding, all of
which are validly issued, fully paid and nonassessable. No material change in
such capitalization has occurred between March 31, 1998, and the date of this
Agreement. All shares of CBSI Common Stock subject to issuance as specified
above, upon issuance on the terms and conditions specified in the instruments
pursuant to which they were issuable, shall be duly authorized, validly issued,
fully paid and nonassessable. There are no obligations, contingent or otherwise,
of CBSI or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of CBSI Common Stock or the capital stock of any Subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such Subsidiary or any other entity other than
guarantees of bank obligations of Subsidiaries entered into in the ordinary
course of business. All of the outstanding shares of capital stock of each of
CBSI's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares in
the case of foreign
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subsidiaries) are owned by CBSI or another Subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in CBSI's
voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.15 or as reserved for future
grants of options under the CBSI Option Plans or the CBSI Director Option Plan,
there are no equity securities of any class of CBSI or any of its Subsidiaries,
or any security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set forth in this
Section 4.15 or in the CBSI Disclosure Letter, there are no options, warrants,
equity securities, calls, rights, commitments or agreements of any character to
which CBSI or any of its Subsidiaries is a party or by which it is bound
obligating CBSI or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of CBSI or
any of its Subsidiaries or obligating CBSI or any of its Subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. To the best knowledge of CBSI,
there are no voting trusts, proxies or other agreements or understandings with
respect to the shares of capital stock of CBSI.
Section 4.16 Intellectual Property.
(a) CBSI owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights,
and any applications for such patents, trademarks, trade names, service marks
and copyrights, processes, formulae, methods, schematics, technology, know-how,
computer software programs or applications, and tangible or intangible
proprietary information or material that are necessary to conduct the business
of CBSI as currently conducted or proposed to be conducted, the absence of which
would be reasonably likely to have a Material Adverse Effect on CBSI and the
Subsidiaries, taken as a whole (the "CBSI Intellectual Property Rights").
(b) CBSI is not, nor will it be as a result of the execution and delivery
of this Agreement or the performance of its obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to the CBSI
Intellectual Property Rights or any third party's intellectual property rights,
the breach of which would be reasonably likely to have a Material Adverse Effect
on CBSI and its Subsidiaries, taken as a whole.
(c) To CBSI's knowledge, all patents, registered trademarks, service marks
and copyrights held by CBSI are valid and subsisting. Except as set forth in the
CBSI Disclosure Letter, CBSI (i) has not been sued in any suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or other proprietary
right of any third party; and (ii) has no knowledge that the manufacturing,
marketing, licensing or sale of its products infringes any patent, trademark,
service xxxx, copyright, trade secret or other proprietary right of any third
party, which such infringement would be reasonably likely to have a Material
Adverse Effect on CBSI and its Subsidiaries, taken as a whole.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 Covenants of Claremont. During the period from the date of
this Agreement and continuing until the earlier of the termination of the
Agreement or the Effective Time, Claremont shall and shall cause each of its
Subsidiaries (except to the extent that CBSI shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
taxes when due, subject to good faith disputes over such debts or taxes, to pay
or perform other obligations when due, and, to the extent consistent with such
business, use all reasonable efforts consistent with past practices and policies
to preserve intact its present business organization, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Claremont shall
promptly notify CBSI of any material event or occurrence not in the ordinary
course of business of Claremont. Except as expressly contemplated by this
Agreement, subject to Section 6.1, Claremont shall not, and shall not permit its
Subsidiaries to, without the prior written consent of CBSI:
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(a) Accelerate, amend or change the period of exercisability of
options or restricted stock granted under any employee stock plan of such
party or authorize cash payments in exchange for any options granted under
any of such plans except as required by the terms of such plans or any
related agreements in effect as of the date of this Agreement.
(b) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to any Claremont intellectual property, other
than in the ordinary course of business consistent with past practices;
(c) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or 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 capital stock of such party, or purchase or
otherwise acquire, directly or indirectly, any shares of its capital stock
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service by such party;
(d) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of
its capital stock or securities convertible into shares of its capital
stock, or subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than (i) the grant of options
under the Claremont Option Plans consistent with past practices to
employees or consultants and not exceeding in the aggregate 50,000 shares,
(ii) the issuance of shares of Claremont Common Stock issuable upon
exercise of options granted under the Claremont Option Plans, which options
are outstanding on the date hereof, or (ii) the repurchase of shares of
Common Stock from terminated employees pursuant to the terms of outstanding
stock restriction or similar agreements.
(e) Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise
acquire or agree to acquire any assets other than in the ordinary course of
business;
(f) Sell, lease, license or otherwise dispose of any of its properties
or assets which are material, individually or in the aggregate, to the
business of Claremont, except in the ordinary course of business;
(g) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary
or wages of employees in accordance with past practices, (ii) grant any
severance or termination pay to, or enter into any employment or severance
agreement, with any employee, except in accordance with past practices,
(iii) enter into any collective bargaining agreement, (iv) establish,
adopt, enter into or amend in any material respect any bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(h) Revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business;
(i) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others,
other than indebtedness incurred under outstanding lines of credit
consistent with past practice;
(j) Amend or propose to amend its Articles of Incorporation or Bylaws;
or
(k) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (j) above, or any action which is
reasonably likely to make any of Claremont's representations or warranties
contained in this Agreement untrue or incorrect in any material respect on
the date made (to the extent so limited) or as of the Effective Time.
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Section 5.2 Covenants of CBSI. During the period from the date of this
Agreement and continuing until the earlier of the termination of the Agreement
or the Effective Time, CBSI shall, and shall cause its subsidiaries (including
without limitation Sub) (except to the extent that Claremont shall otherwise
consent in writing), to carry on its business in the usual, regular and ordinary
course in substantially the same manner as previously conducted, to pay its
debts and taxes when due subject to good faith disputes over such debts or
taxes, to pay or perform other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it, to the end that its
goodwill and ongoing businesses shall be unimpaired at the Effective Time. CBSI
shall promptly notify Claremont of any event or occurrence not in the ordinary
course of business of CBSI. Except as expressly contemplated by this Agreement,
CBSI shall not (and shall not permit any of its Subsidiaries to), without the
prior written consent of Claremont;
(a) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
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 capital stock of such party, or purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock except from former
employees, directors and consultants in accordance with agreements providing for
the repurchase of shares in connection with any termination of service by such
party;
(b) Transfer or license to any person or entity or otherwise extend, amend
or modify any rights to the CBSI's intellectual property other than in the
ordinary course of business consistent with past practices;
(c) Issue, deliver or sell or authorize or propose the issuance, delivery
or sale of, or purchase or propose the purchase of, any shares of its capital
stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than (i) the grant of options under the CBSI 1996
Stock Option Plan ("CBSI Option Plans") consistent with past practices to
employees or consultants and in an aggregate not exceeding 600,000 shares, or
(ii) the issuance of shares of Common Stock issuable upon exercise of options
granted under the CBSI Option Plans, or (iii) options issued in connection with
a transaction permitted by Section 5.2(d), or (iv) the repurchase of shares of
CBSI Common Stock from terminated employees or consultants;
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division, or otherwise acquire or
agree to acquire any assets, which, in each case, would delay the consummation
of the Merger;
(e) Sell, lease, license or otherwise dispose of any of its properties or
assets which are material, individually or in the aggregate, to the business of
CBSI and its Subsidiaries, taken as a whole, except for lease financing
arrangements and transactions entered into in the ordinary course of business;
(f) Amend or proposed to amend its Articles of Incorporation or Bylaws,
except as contemplated by this Agreement;
(g) Increase or agree to increase the compensation payable or to become
payable to its officers or employees, except for increases in salary or wages of
employees in accordance with past practices, (ii) grant any additional severance
or termination pay to, or enter into any employment or severance agreements
with, officers, (iii) grant any severance or termination pay to, or enter into
any employment or severance agreement, with any employee, except in accordance
with past practices, (iv) enter into any collective bargaining agreement, (v)
except as contemplated by this Agreement, establish, adopt, enter into or amend
in any material respect any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
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(h) Revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business;
(i) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of CBSI or any of its Subsidiaries or guarantee any
debt securities of others, other than indebtedness incurred under outstanding
lines of credit consistent with past practice; or
(j) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (i) above, or any action which is reasonably
likely to make any of CBSI's representations or warranties contained in this
Agreement untrue or incorrect in any material respect on the date made (to the
extent so limited) or as of the Effective Time.
Section 5.3 Cooperation. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of CBSI and Claremont shall
confer on a regular and frequent basis with one or more representatives of the
other party to report operational matters of materiality and the general status
of ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 No Solicitation.
(a) Claremont shall not, directly or indirectly, through any officer,
director, employee, representative or agent, (i) solicit, initiate, or encourage
any inquiries or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, consolidation, business combination,
sale of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving
Claremont, other than the transactions contemplated by this Agreement (any of
the foregoing inquiries or proposals being referred to in this Agreement as an
"Acquisition Proposal"), engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, approve or recommend any Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent Claremont or its Board of Directors from (A) furnishing public
information to, or entering into discussions or negotiations with, any person or
entity in connection with an unsolicited bona fide written Acquisition Proposal
by such person or entity or recommending an unsolicited bona fide written
Acquisition Proposal to the shareholders of Claremont, if and only to the extent
that (1) the Board of Directors of Claremont believes in good faith (after
consultation with its financial adviser) that such Acquisition Proposal would,
if consummated, result in a transaction more favorable to Claremont's
shareholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal") and the Board of Directors of
Claremont determines in good faith after consultation with outside legal counsel
that such action is necessary for Claremont to comply with its fiduciary duties
to shareholders under applicable law, and (2) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such person or entity, such Board of Directors receives from such person or
entity an executed confidentiality agreement with terms no less favorable to
such party than those contained in the Confidentiality Agreement dated March 9,
1998, between CBSI and Claremont (the "Confidentiality Agreement"); or (B)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
(b) Claremont shall notify CBSI in writing immediately after receipt by
Claremont (or its advisors) of any Acquisition Proposal or any request for
nonpublic information in connection with an Acquisition Proposal or for access
to the properties, books or records of Claremont by any person or entity that
informs Claremont that it is considering making, or has made, an Acquisition
Proposal.
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Section 6.2 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practical after the execution of this Agreement, CBSI
and Claremont shall prepare and file with the SEC the Joint Proxy Statement, and
CBSI shall prepare and file with the SEC the Registration Statement, in which
the Joint Proxy Statement will be included as a prospectus. CBSI and Claremont
shall use all reasonable efforts to cause the Registration Statement to become
effective as soon after such filing as practical. Unless otherwise required to
comply with the applicable fiduciary duties of the respective directors of
Claremont and CBSI, determined by such directors in good faith after
consultation with and based upon the advice of independent legal counsel, the
Joint Proxy Statement shall include the recommendation of the Board of Directors
of Claremont in favor of this Agreement and the Merger and the recommendation of
the Board of Directors of CBSI in favor of the issuance of shares of CBSI Common
Stock pursuant to the Merger.
(b) CBSI and Claremont shall make all necessary filings with respect to the
Merger under the Securities Act and the Exchange Act and applicable state blue
sky laws and the rules and regulations thereunder.
Section 6.3 Consents. Each of CBSI and Claremont shall use all reasonable
efforts to obtain all necessary consents, waivers and approvals under any of
CBSI's or Claremont's material agreements, contracts, licenses or leases in
connection with the Merger.
Section 6.4 Shareholder Rights Plan. As soon as possible, and in any
event prior to the Effective Time, Claremont shall take such steps as may be
required and sufficient either to redeem the outstanding rights under its
Shareholder Rights Plan or to amend that plan so as to prevent its application
to this transaction, without cost to CBSI.
Section 6.5 Current Nasdaq Quotation. Each of CBSI and Claremont agrees
to continue the quotation of CBSI Common Stock and Claremont Common Stock,
respectively, on the Nasdaq National Market during the term of the Agreement so
that, to the extent necessary, appraisal rights will not be available to
shareholders of Claremont under Section 60.554 of the OBCA.
Section 6.6 Access to Information. Upon reasonable notice, Claremont and
CBSI shall each (and CBSI shall cause each of its Subsidiaries) to afford to the
officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and records
and, during such period, each of Claremont and CBSI shall (and CBSI shall cause
each of its Subsidiaries) to furnish promptly to the other (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as such other party may reasonably request. Unless otherwise required by law,
the parties will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement. No information or knowledge
obtained in any investigation pursuant to this Section 6.5 shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations or the parties to consummate the Merger.
Section 6.7 Shareholders' Meetings.
(a) Claremont and CBSI each shall call a meeting of its respective
shareholders to be held as promptly as practicable for the purpose of voting, in
the case of Claremont, upon this Agreement and the Merger and, in the case of
CBSI, upon the increase in authorized common stock in order to effect the Merger
and the issuance of shares of CBSI Common Stock pursuant to the Merger (the
"CBSI Voting Proposal"). Subject to Sections 6.1 and 6.2, Claremont and CBSI
will, through their respective Boards of Directors recommend to their respective
shareholders approval of such matters and will coordinate and cooperate with
respect to the timing of such meetings and shall use their best efforts to hold
such meetings on the same day and as soon as practicable after the date hereof.
Unless otherwise required to comply with the applicable fiduciary duties of the
respective directors of Claremont and CBSI, as determined by such directors in
good faith after consultation with and based upon the advice of independent
legal counsel, each party shall use all reasonable efforts to solicit from
shareholders of such party proxies in favor of such matters.
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(b) CBSI shall also propose to its shareholders at the CBSI Shareholders'
Meeting or at an earlier-called meeting, as proposals separate from the CBSI
Voting Proposal, (i) an amendment to the CBSI Articles of Incorporation to
increase the number of authorized shares of CBSI Common Stock to 200,000,000 and
(ii) to increase the number of shares of CBSI Common Stock reserved for issuance
under the CBSI Stock Option Plans by 4,000,000 shares of CBSI Common Stock.
Section 6.8 Legal Conditions to Merger. Each of CBSI and Claremont will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger (which
actions shall include, without limitation, furnishing all information required
in connection with approvals of or filings with any other Governmental Entity)
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Merger. Each of CBSI and Claremont will, and
CBSI will cause its Subsidiaries to, take all reasonable actions necessary to
obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public third party, required to be obtained or made by CBSI or
any of its Subsidiaries or Claremont in connection with the Merger or the taking
of any action contemplated thereby or by this Agreement.
Section 6.9 Public Disclosure. CBSI and Claremont shall agree with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to such agreement, except as may
be required by law.
Section 6.10 Tax-Free Organization. CBSI and Claremont shall each use its
best efforts to cause the Merger to be treated as a reorganization within the
meaning of Section 368(a) of the Code.
Section 6.11 Pooling Accounting. CBSI and Claremont shall each use its
best efforts to cause the business combination to be effected by the Merger to
be accounted for as a pooling of interests. Each of CBSI and Claremont shall use
its best efforts (i) to cause its respective Affiliates not to take any action
that would adversely affect the ability of CBSI to account for the business
combination to be effected by the Merger as a pooling of interests and (ii) to
cause its respective Affiliates to sign and deliver to CBSI a customary "pooling
letter" in form and substance agreed upon by Claremont and CBSI.
Section 6.12 Affiliate Agreements. Upon the execution of this Agreement,
CBSI and Claremont will provide each other with a list of those persons who are,
in CBSI's or Claremont's respective reasonable judgment, "affiliates" of CBSI or
Claremont, respectively, within the meaning of Rule 145 (each such person who is
an "affiliate" of CBSI or Claremont within the meaning of Rule 145 is referred
to as an "Affiliate") promulgated under the Securities Act ("Rule 145"). CBSI
and Claremont shall provide each other such information and documents as
Claremont or CBSI shall reasonably request for purposes of reviewing such list
and shall notify the other party in writing regarding any change in the identity
of its Affiliates prior to the Closing Date. Claremont shall use its best
efforts to deliver or cause to be delivered to CBSI by May 31, 1998 (and in any
case shall deliver to CBSI prior to the Effective Time) from each of the
Affiliates of Claremont, an executed Affiliate Agreement, in form and substance
satisfactory to CBSI and Claremont, by which such Affiliate of Claremont agrees
to comply with the applicable requirements of Rule 145 ("Affiliates Agreement").
CBSI shall be entitled to place appropriate legends on the certificates
evidencing any CBSI Common Stock to be received by such Affiliates of Claremont
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the CBSI Common Stock, consistent with
the terms of the Affiliates Agreements.
Section 6.13 Nasdaq Quotation. CBSI shall use its best efforts to cause
the shares of CBSI Common Stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of issuance,
prior to the Closing Date.
Section 6.14 Stock Options.
(a) At the Effective Time, each outstanding option to purchase shares of
Claremont Common Stock (a "Claremont Stock Option") under the Claremont Option
Plans shall be assumed by CBSI and shall thereafter constitute an option to
acquire, on the same terms and conditions as were applicable under the Claremont
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Stock Option the same number of shares of CBSI Common Stock as the holder of
such Claremont Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Effective Time (rounded down to the nearest whole number), at a price per share
equal to (y) the aggregate exercise price for the shares of Claremont Common
Stock otherwise purchasable pursuant to such Claremont Stock Option divided by
(z) the number of full shares of CBSI Common Stock deemed purchasable pursuant
to such CBSI Stock Option in accordance with the foregoing; provided, however,
that, in the case of any Claremont Stock Option to which Section 422 of the Code
applies ("incentive stock options"), the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424(a) of the
Code.
(b) As soon as practicable after the Effective Time, CBSI shall deliver to
the participants in the Claremont Option Plans appropriate notice setting forth
such participants' rights pursuant thereto and the grants pursuant to the
Claremont Option Plans shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 6.13 after giving effect to
the Merger). CBSI shall comply with the terms of the Claremont Option Plans and
ensure, to the extent required by, and subject to the provisions of, such
Claremont Option Plans, that Claremont Stock Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
(c) CBSI shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of CBSI Common Stock for delivery under Claremont
Stock Options assumed in accordance with this Section 6.13. As soon as
practicable after the Effective Time, CBSI shall file a registration statement
or registration statements on Form S-8 (or any successor or other appropriate
forms), or another appropriate form with respect to the shares of CBSI Common
Stock subject to such options and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, CBSI
shall administer Claremont Stock Options assumed pursuant to this Section 6.13
in a manner that complies with Rule 16b-3 promulgated under the Exchange Act to
the extent the Claremont Option Plans complied with the such rule prior to the
Merger.
Section 6.15 Brokers or Finders. Each of CBSI and Claremont represents,
as to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
Xxxxxxxxx, Xxxxxx & Xxxxxxxx, whose fees and expenses will be paid by Claremont
in accordance with Claremont's agreement with such firm (copies of which have
been delivered by Claremont to CBSI prior to the date of this Agreement), and
except UBS Securities LLC, whose fees and expenses will be paid by CBSI in
accordance with CBSI's agreement with such firm, and each of CBSI and Claremont
agrees to indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any other fees, commissions
or expenses asserted by any person on the basis of any act or statement alleged
to have been made by such party or its Affiliate.
Section 6.16 Indemnification.
(a) Claremont shall and, from and after the Effective Time, CBSI and the
Surviving Corporation shall, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date of this Agreement or who
becomes prior to the Effective Time, an officer, director or employee of
Claremont or any of its Subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer, or employee of Claremont or any of its Subsidiaries, whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities") including, without limitation, all losses, claims,
damages, costs, expenses, liabilities or judgments based in whole or in part on,
or arising in whole or in part out of, or
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pertaining to this Agreement or the transactions contemplated hereby, in each
case to the full extent a corporation is permitted under the OBCA to indemnify
its own directors, officers and employees, as the case may be (Claremont, CBSI
and the Surviving Corporation, as the case may be, will pay expenses in advance
of the final disposition by any such action or proceeding to each Indemnified
Party to the full extent permitted by law upon receipt of any undertaking
contemplated by Section 60.397 of the OBCA). Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Party (whether arising before or after the Effective
Time), (i) the Indemnified Parties may retain counsel satisfactory to them and
Claremont (or them and CBSI and the Surviving Corporation after the Effective
Time, (ii) Claremont (or after the Effective Time, CBSI and the Surviving
Corporation) shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received, and (ii)
Claremont (or after the Effective Time, CBSI and the Surviving Corporation) will
use all reasonable efforts to assist in the vigorous defense of any such matter,
provided that none of Claremont, CBSI or the Surviving Corporation shall be
liable for any settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 6.15, upon learning of
any such claim, action, suit, proceeding or investigation, shall promptly notify
Claremont, CBSI or the Surviving Corporation (but the failure so to notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6.16 except to the extent such failure prejudices such
party), and shall deliver to Claremont (or after the Effective Time, CBSI and
the Surviving Corporation) the undertaking contemplated by Section 60.397 of the
OBCA. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(b) For a period of 6 years after the Effective Time, CBSI shall cause
itself or the Surviving Corporation to use its best efforts to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by Claremont's directors' and officers'
liability insurance policy (a copy of which has heretofore been delivered to
CBSI) on terms and in an amount comparable to those now applicable to directors
and officers of Claremont.
(c) In the event that CBSI or the Surviving Corporation or any of their
respective successors and assigns 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 transfers and conveys all or substantially all
of its property and assets to any person, then, and in each case, proper
provisions shall be made so that the successor and assigns of CBSI and the
Surviving Corporation assume the obligations set forth in this Section 6.15.
(d) The provisions of this Section 6.15 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives, each of whom is an intended third party beneficiary, and may
not be amended, altered or repealed without the written consent of any affected
Indemnified Party.
Section 6.17 Additional Agreements; Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of shareholders of CBSI and
Claremont described in Section 6.6, including cooperating fully with the other
party, including by provision of information. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of the Constituent Corporations, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
Section 6.18 Xxxx Xxxxx Xxxxxx Filings. The parties shall cooperate with
each other such that each is timely provided all necessary information to permit
it to make prompt and complete filings under, and to permit it to comply fully
with, the requirements of the Xxxx Xxxxx Xxxxxx Premerger Notification Act.
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ARTICLE VII
CONDITIONS TO MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the holders of 67% of
the outstanding shares of Claremont Common Stock present or represented at
the Claremont Shareholders' Meeting and the CBSI Voting Proposal shall have
been approved by the affirmative vote of the holders of a majority of the
outstanding shares of CBSI Common Stock present or represented at the CBSI
Shareholders' Meeting.
(b) Approvals. Other than the filing provided for by Section 1.2, all
authorizations, consents, orders or approvals of, or declaration or filings
with, or expirations of waiting periods imposed by, any Governmental Entity
the failure of which to obtain would be reasonably likely to have a
Material Adverse Effect on CBSI and its Subsidiaries, taken as a whole, or
Claremont shall have been filed, occurred or been obtained.
(c) Registration Statement. The Registration Statement shall have
become and shall be effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order.
(d) No Injunctions or Restraint; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger or limiting or
restricting CBSI's conduct or operation of the business of CBSI after the
Merger shall have been issued, nor shall any proceeding brought by a
domestic administrative agency or commission or other domestic Governmental
Entity, seeking any of the foregoing be pending; nor shall there be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger which makes the consummation of
the Merger illegal.
(e) Pooling Letters. CBSI and Claremont shall have received letters
from Xxxxxx Xxxxxxxx, LLP and KPMG Peat Marwick LLP, respectively, each
dated the date of the Joint Proxy Statement and confirmed in writing at the
Effective Time and addressed to CBSI and Claremont, respectively, stating
that the business combination to be effected by the Merger will qualify as
a pooling of interests transaction under generally accepted accounting
principles.
(f) Xxxx Xxxxx Xxxxxx Filings. CBSI and Claremont shall have received
letters from their respective counsel confirming that any necessary filing
under federal antitrust laws has been made and that the transaction has
passed Xxxx Xxxxx Xxxxxx review.
(g) Nasdaq. The shares of CBSI Common Stock to be issued in the
Merger shall have been approved for quotation on the Nasdaq National
Market.
Section 7.2 Additional Conditions to Obligations of CBSI and Sub. The
obligations of CBSI and Sub to effect the Merger are subject to the satisfaction
of each of the following conditions, any of which may be waived in writing
exclusively by CBSI and Sub:
(a) Representations and Warranties. The representations and
warranties of Claremont set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except for
(i) changes contemplated by this Agreement and (ii) where the failure to be
true and correct would not be reasonably likely to have a Material Adverse
Effect on Claremont or a material adverse effect upon the consummation of
the transactions contemplated hereby; and CBSI shall have received a
certificate signed on behalf of Claremont by the president and the chief
financial officer of Claremont to such effect.
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(b) Performance of Obligations of Claremont. Claremont shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date; and CBSI shall
have received a certificate signed on behalf of Claremont by the president
and the chief financial officer of Claremont to such effect.
(c) Tax Opinion. CBSI shall have received a written opinion from
Butzel Long, 000 X. Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 to the
effect that the Merger will be treated for Federal income tax purposes as a
tax-free reorganization within the meaning of Section 368(a) of the Code.
(d) Blue Sky Laws. CBSI shall have received all state securities or
"Blue Sky" permits and other authorizations necessary to issue shares of
CBSI Common Stock pursuant to the Merger.
(e) Substantial Continuity of Workforce. Substantially all of
Claremont's employees as of the date hereof remain employed by Claremont as
of the Closing Date.
(f) Employment Agreements by Substantially All Vice
Presidents. Substantially all of Claremont's Vice President and all
Claremont's Senior Vice President level employees shall have signed
Employment Agreements with Claremont, in substantially the form approved by
CBSI.
Section 7.3 Additional Conditions to Obligations of Claremont. The
obligation of Claremont to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by Claremont:
(a) Representations and Warranties. The representations and
warranties of CBSI and Sub set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, except
for (i) changes contemplated by this Agreement and (ii) where the failure
to be true and correct would not be reasonably likely to have a Material
Adverse Effect on CBSI and its Subsidiaries, taken as a whole, or a
material adverse effect upon the consummation of the transactions
contemplated hereby; and Claremont shall have received a certificate signed
on behalf of CBSI by the chief executive officer and the chief financial
officer of CBSI to such effect.
(b) Performance of Obligations of CBSI and Sub. CBSI and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date; and
Claremont shall have received a certificate signed on behalf of CBSI by the
chief executive officer and the chief financial officer of CBSI to such
effect.
(c) Tax Opinion. Claremont shall have received the opinion of Ater
Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, LLP, counsel to Claremont, to the effect
that the Merger will be treated for Federal income tax purposes as a
tax-free reorganization within the meaning of Section 368(a) of the Code.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.1(b) through 8.1(g), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by the
shareholders of Claremont or CBSI:
(a) by mutual written consent of CBSI and Claremont; or
(b) by either CBSI or Claremont if the Merger shall not have been
consummated by August 31, 1998 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before
such date);
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(c) by either CBSI or Claremont, if a court of competent jurisdiction
or other Governmental Entity shall have issued a nonappealable final order,
decree or ruling or taken any other action, in each case having the effect
of permanently restraining, enjoining or otherwise prohibiting the Merger,
except, if the party relying on such order, decree or ruling or other
action has not complied with its obligations under Section 6.7 of this
Agreement; or
(d) by CBSI, if, at the Claremont Shareholders' Meeting (including any
adjournment or postponement), the requisite vote of the shareholders of
Claremont in favor of this Agreement and the Merger shall not have been
obtained, or by Claremont, if, at the CBSI Shareholders' Meeting (including
adjournment or postponement), the requisite vote of the shareholders of
CBSI in favor of the CBSI Voting Proposal shall not have been obtained; or
(e) by CBSI, if (i) the Board of Directors of Claremont shall have
withdrawn or modified its recommendation of this Agreement or the Merger in
a manner adverse to CBSI or shall have resolved to do any of the foregoing,
for any reason other than the occurrence of an event or discovery of the
falsity of a Representation or Warranty relating to CBSI which has a
Material Adverse Effect on CBSI and its Subsidiaries, taken as a whole;
(ii) the Board of Directors of Claremont shall have recommended to the
shareholders of Claremont an Alternative Transaction (as defined in Section
8.3(d)); or (iii) a tender offer or exchange offer for 15 percent or more
of the outstanding shares of Claremont Common Stock and/or shares of
Claremont Preferred Stock (on an as converted basis) is commenced (other
than by CBSI or an Affiliate of CBSI) and the Board of Directors of
Claremont recommends that the shareholders of Claremont tender their shares
in such tender or exchange offer; or (iv) a tender offer or exchange offer
for a majority of the outstanding shares of Claremont Common Stock and/or
shares of Claremont Preferred Stock (on an as converted basis) is
successfully concluded, whether or not the Board of Directors of Claremont
has recommended that the shareholders of Claremont tender their shares in
such a tender or exchange offer;
(f) by Claremont, if the Board of Directors of CBSI shall have
withdrawn or modified its recommendation of the CBSI Voting Proposal in a
manner adverse to Claremont or shall have resolved to do any of the
foregoing, for any reason other than the occurrence of an event or
discovery of the falsity of a Representation or Warranty relating to
Claremont which has a Material Adverse Effect on Claremont; or
(g) by CBSI or Claremont, if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, which breach shall not have been cured,
in the case of a representation or warranty, prior to the Closing or, in
the case of a covenant or agreement, within 10 business days following
receipt by the breaching party of written notice of such breach from the
other party.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of CBSI,
Claremont, Sub or their respective officers, directors, shareholders or
Affiliates, except as set forth in Section 8.3 and further except to the extent
that such termination results from the willful breach by a party of any of its
representations, warranties, covenants or obligations set forth in this
Agreement; provided that, the provisions of Sections 6.6 (2nd sentence), 6.15
and 8.3 of this Agreement shall remain in full force and effect and survive any
termination of this Agreement.
Section 8.3 Fees and Expenses.
(a) Except as set forth in this Section 8.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Merger is
consummated; provided, however, that CBSI and Claremont shall share equally all
fees and expenses, other than attorneys' fees, incurred in relation to the
printing and filing of the Joint Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
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(b) Claremont shall pay CBSI a termination fee of $10,000,000 upon the
earliest to occur of the following events. In such case, the fee thus due shall
be liquidated damages and shall be the full and complete and final amount due
and owing to CBSI as a result of:
(i) the termination of this Agreement by CBSI pursuant to Section
8.1(e)(ii), (iii), or (iv); or
(ii) the termination of this Agreement by CBSI pursuant to Section
8.1(d) as a result of the failure to receive the requisite vote for
approval of this Agreement and the Merger by the shareholders of Claremont
at the Claremont Shareholders' Meeting if, at the time of such failure,
there shall have been announced an Alternative Transaction or Claremont
shall fail to hold the Claremont Shareholders' Meeting as a result of an
Alternative Transaction.
(c) The fee payable pursuant to Sections 8.3(b) shall be paid within five
business days after the first to occur of the events described in Section
8.3(b)(i) or (ii); provided that, in no event shall Claremont be required to pay
the termination fees to CBSI if, immediately prior to the termination of this
Agreement, CBSI was in breach of any of its material obligations under this
Agreement.
(d) As used in this Agreement, "Alternative Transaction" means either (i) a
transaction pursuant to which any person (or group of persons) other than CBSI
or its respective Affiliates (a "Third Party"), acquires more than 15 percent of
the outstanding shares of Claremont Common Stock and/or shares of Claremont
Preferred Stock (on an as converted basis), pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving Claremont pursuant to which any Third Party acquires more than 15
percent of the outstanding equity securities of Claremont or the entity
surviving such merger or business combination, (iii) any other transaction
pursuant to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of Claremont, and the
entity surviving any merger or business combination including any of them) of
Claremont having a fair market value (as determined by the Board of Directors of
Claremont in good faith) equal to more than 15 percent of the fair market value
of all the assets of Claremont immediately prior to such transaction, or (iv)
any public announcement made directly or indirectly by anyone of a proposal,
plan or intention to do any of the foregoing of which either Claremont or CBSI
has knowledge (and promptly informs the other), or any agreement by Claremont to
engage in any of the foregoing.
Section 8.4 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of Claremont or of CBSI, but, after any such
approval, no amendment shall be made which by law requires further approval by
such shareholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of any party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing and the Effective Time, except for the agreements contained
in Sections 1.3, 1.4, 2.1, 2.2, 6.13, 6.15, 6.16, 6.17, the last sentence of
Section 8.4 and Article IX, and the agreements of the Affiliates of
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Claremont delivered pursuant to Section 6.11. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement.
Section 9.2 Waiver. A waiver of one or more breaches of any clause of
this Agreement shall not act to waive any other breach, whether of the same or
different clauses.
Section 9.3 Governing Law, Jurisdiction, Fees. This Agreement is governed
by the laws of the State of Michigan. Any action brought between the parties may
be brought only in the state or federal courts located in Portland, Oregon, and
in no other place unless the parties expressly agree in writing to waive this
requirement. Each party consents to jurisdiction in that location. Each party
consents to service of process through the method prescribed for notice in this
Agreement. The prevailing party in any suit, action, arbitration, or appeal
filed or held concerning this Agreement shall be entitled to reasonable
attorneys' fees.
Section 9.4 Notices. Notice for each party shall be sent to the person
and address listed below, or to such other person or address as the parties may
from time to time by Notice provide. Notice shall be effective when actually
received by the party this Agreement designates for Notice, if sent by any means
that leaves a hard-copy record in the hands of the recipient. If sent properly
addressed by certified or registered mail, postage prepaid, return receipt
requested, Notice shall be deemed effective on the date the return receipt shows
the Notice was accepted, refused, or returned undeliverable.
(A) IF TO CBSI OR SUB, TO:
Complete Business Solutions, Inc.
00000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx Xxxxxxxx, 00000
Attention: Xxx Xxxxxx, Chief Financial Officer
Attention: Xxx Xxxxxxxx, General Counsel
Phone 000-000-0000
(B) IF TO CLAREMONT, TO:
Claremont Technology Group, Inc.
0000 XX Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxx, President
WITH A COPY TO:
Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, LLP
000 X.X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Section 9.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to April
8, 1998.
Section 9.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.15 are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 9.8 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Oregon without regard to any
applicable conflicts of law.
Section 9.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
IN WITNESS WHEREOF, CBSI, Sub and Claremont have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
CLAREMONT TECHNOLOGY GROUP, INC. COMPLETE BUSINESS SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------------- --------------------------------------
Title: President, Chief Operating Officer Title: President, Chief Executive Officer
---------------------------------- -----------------------------------
Chief Financial Officer
----------------------------------
CBSI ACQUISITION CORP. III
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Title: President
-------------------------------------
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