Exhibit 99(a)
==============================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DATA RESEARCH ASSOCIATES, INC.
XXXXXXX ACQUISITION INC.
AND
SIRSI HOLDINGS CORP.
DATED AS OF
MAY 16, 2001
==============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND INTERPRETATION.....................................2
1.1 DEFINITIONS...........................................................2
1.2 INTERPRETATION.......................................................10
ARTICLE II THE OFFER AND MERGER.............................................11
2.1 THE OFFER............................................................11
2.2 COMPANY ACTIONS......................................................12
2.3 DIRECTORS............................................................13
2.4 THE MERGER...........................................................14
2.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION..................14
2.6 EFFECTIVE TIME.......................................................15
2.7 CLOSING..............................................................15
2.8 SUBSEQUENT ACTIONS...................................................15
2.9 SHAREHOLDERS' MEETING................................................15
2.10 MERGER WITHOUT MEETING OF SHAREHOLDERS...............................16
ARTICLE III CONVERSION OF SECURITIES........................................16
3.1 CONVERSION OF CAPITAL STOCK..........................................16
3.2 EXCHANGE OF COMPANY CERTIFICATES.....................................17
3.3 DISSENTING SHARES....................................................19
3.4 COMPANY STOCK OPTION PLANS...........................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................20
4.1 ORGANIZATION; QUALIFICATION..........................................20
4.2 SUBSIDIARIES AND AFFILIATES..........................................21
4.3 CAPITALIZATION.......................................................21
4.4 AUTHORIZATION, VALIDITY OF AGREEMENT, COMPANY ACTION.................22
4.5 BOARD APPROVALS REGARDING TRANSACTIONS...............................23
4.6 VOTE REQUIRED........................................................23
4.7 CONSENTS AND APPROVALS, NO VIOLATIONS................................23
4.8 REPORTS AND FINANCIAL STATEMENTS.....................................24
4.9 BOOKS AND RECORDS....................................................24
4.10 NO UNDISCLOSED LIABILITIES...........................................25
4.11 INTENTIONALLY OMITTED................................................25
4.12 ABSENCE OF CERTAIN CHANGES...........................................25
4.13 LITIGATION...........................................................26
4.14 EMPLOYEE BENEFIT PLANS...............................................27
4.15 TAX MATTERS, GOVERNMENT BENEFITS.....................................30
4.16 TITLE TO PROPERTIES; ENCUMBRANCES....................................32
4.17 LEASES...............................................................33
4.18 ENVIRONMENTAL AND SAFETY MATTERS.....................................33
4.19 INTELLECTUAL PROPERTY................................................33
4.20 EMPLOYMENT MATTERS...................................................36
4.21 COMPLIANCE WITH LAWS.................................................37
4.22 CONTRACTS AND COMMITMENTS............................................37
4.23 CUSTOMERS AND SUPPLIERS..............................................39
4.24 INFORMATION IN SCHEDULE 14D-9........................................39
4.25 INFORMATION IN PROXY STATEMENT.......................................39
4.26 OPINION OF FINANCIAL ADVISOR.........................................39
4.27 ABSENCE OF QUESTIONABLE PAYMENTS.....................................40
4.28 INSIDER INTERESTS....................................................40
4.29 BROKERS OR FINDERS...................................................40
4.30 INSURANCE............................................................41
4.31 EMPLOYEE STOCK PURCHASE PLAN.........................................41
4.32 FULL DISCLOSURE......................................................41
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER............41
5.1 ORGANIZATION.........................................................41
5.2 AUTHORIZATION, VALIDITY OF AGREEMENT, NECESSARY ACTION...............42
5.3 CONSENTS AND APPROVALS, NO VIOLATIONS................................42
5.4 INFORMATION IN OFFER DOCUMENTS.......................................42
5.5 INFORMATION IN PROXY STATEMENT.......................................43
5.6 BROKERS OR FINDERS...................................................43
5.7 LACK OF OWNERSHIP OF SHARES..........................................43
ARTICLE VI COVENANTS........................................................43
6.1 INTERIM OPERATIONS OF THE COMPANY....................................43
6.2 ACCESS; CONFIDENTIALITY..............................................46
6.3 REASONABLE EFFORTS...................................................47
6.4 NO SOLICITATION OF COMPETING TRANSACTION.............................48
6.5 TRANSFER OF MAJOR SHAREHOLDERS' SHARES...............................50
6.6 PUBLICITY............................................................50
6.7 NOTIFICATION OF CERTAIN MATTERS......................................50
6.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION.............................50
6.9 STATE TAKEOVER LAWS..................................................51
6.10 PURCHASER COMPLIANCE.................................................51
6.11 INTENTIONALLY OMITTED................................................51
6.12 EXPENSES.............................................................51
6.13 EMPLOYMENT AGREEMENT.................................................52
6.14 INTERIM ACTIONS......................................................52
6.15 SUBSIDIARY CAPITAL STOCK.............................................52
ARTICLE VII CONDITIONS......................................................52
7.1 SHAREHOLDER APPROVAL.................................................52
7.2 STATUTES; COURT ORDERS...............................................52
7.3 PURCHASE OF SHARES IN OFFER..........................................53
7.4 GOVERNMENTAL APPROVAL................................................53
7.5 PROXY STATEMENT CLEARED..............................................53
ARTICLE VIII TERMINATION....................................................53
8.1 TERMINATION..........................................................53
8.2 EFFECT OF TERMINATION................................................55
ARTICLE IX MISCELLANEOUS....................................................55
9.1 FEES AND EXPENSES....................................................55
9.2 AMENDMENT AND MODIFICATION...........................................57
9.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS..........57
9.4 NOTICES..............................................................57
9.5 COUNTERPARTS.........................................................58
9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.......................58
9.7 SEVERABILITY.........................................................59
9.8 GOVERNING LAW........................................................59
9.9 ENFORCEMENT..........................................................59
9.10 WAIVER OF JURY TRIAL.................................................59
9.11 EXTENSION, WAIVER....................................................60
9.12 ASSIGNMENT...........................................................60
ii
AGREEMENT AND PLAN OF MERGER, dated
as of May 16, 2001 (this "AGREEMENT"), by
and among SIRSI HOLDINGS CORP., a Delaware
corporation ("PARENT"), XXXXXXX ACQUISITION
INC., a Delaware corporation and a
wholly-owned Subsidiary of Parent
("PURCHASER"), and DATA RESEARCH ASSOCIATES,
INC., a Missouri corporation (the
"COMPANY"). Certain capitalized terms used
in this Agreement have the respective
meanings ascribed to them in ARTICLE I.
WHEREAS, the board of directors of each of Parent, Purchaser and the
Company has approved, and deems it fair to, advisable and in the best interests
of its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser make
a cash tender offer to acquire all shares of the issued and outstanding shares
of common stock, $0.01 par value, of the Company, for eleven dollars ($11.00)
per Share, net to the seller in cash, less any required withholding taxes;
WHEREAS, also in furtherance of such acquisition, the board of
directors of each of Parent, Purchaser and the Company have approved this
Agreement and the Transactions in accordance with the MGBCL and the DGCL and
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Company Board has determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the holders of
such Shares and has resolved to recommend that the holders of such Shares accept
the Offer and adopt this Agreement and each of the Transactions upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, as of the date of this Agreement, the Major Shareholders
entered into a Support Agreement with Purchaser, pursuant to which each such
Major Shareholder, subject to the termination rights set forth therein has
agreed (a) to tender all of such Major Shareholder's Shares in the Offer subject
to the terms and conditions set forth in the Support Agreement, (b) vote in
favor of the Merger, (c) grant Purchaser a proxy, and (d) vote against any
Acquisition Proposal;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Purchaser to enter into this Agreement, the Company and the chief
executive officer of the Company are executing and delivering the Employment
Agreement, in substantially the form attached hereto as EXHIBIT A (the
"EMPLOYMENT AGREEMENT"); and
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements in this Agreement, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context clearly requires otherwise:
"ACQUISITION PROPOSAL" means any proposal or offer (a) to acquire
(i) all or a substantial part of the business or properties of the Company or
any Company Subsidiary or any capital stock of the Company or any Company
Subsidiary, whether by merger, tender offer, exchange offer, sale of assets,
consolidation, other business combination, recapitalization, reorganization,
liquidation, dissolution or other transaction involving the Company or any
Company Subsidiary, or any division or operating or principal business unit of
the Company or any Company Subsidiary or (ii) twenty percent (20%) or more of
the capital stock or other equity interests in the Company or any Company
Subsidiary or (b) in respect of one or more transactions which could reasonably
be expected, individually or in the aggregate, to frustrate, prevent or delay
the Offer, the Merger or any other Transaction.
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"AGREEMENT" has the meaning ascribed to it in the forepart of this
Agreement.
"APPLICABLE LAW" means any applicable federal, state, local, foreign
or other treaty, statute, law, directive, ordinance, rule, regulation or Order
of any Governmental Entity or any similar provisions having the force or effect
of law, including no-action letters from the SEC, private letter rulings from
the SEC and other similar rulings.
"APPOINTMENT DATE" means the time the Persons designated by
Purchaser have been elected to, and shall constitute a majority of, the Company
Board pursuant to SECTION 2.3.
"ASSOCIATE" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"BALANCE SHEET" means the most recent audited consolidated balance
sheet of the Company and its Subsidiaries included in the Financial Statements.
"BALANCE SHEET DATE" means the date of the Balance Sheet.
"BENEFIT PLAN" means any employee benefit fund, plan, program,
arrangement and contract (including any "pension" plan, fund or program, as
defined in Section 3(2) of ERISA, and any "employee benefit plan", as defined in
Section 3(3) of ERISA and any plan, program, arrangement or contract providing
for severance; medical, dental or vision benefits; life insurance or death
benefits; disability benefits, sick pay or other wage replacement; vacation,
2
holiday or sabbatical; pension or profit-sharing benefits; stock options or
other equity compensation; bonus or incentive pay or other material fringe
benefits), whether written or not.
"BOARD FRACTION" means a fraction, the numerator of which shall be
the number of Shares which Parent and its Subsidiaries beneficially own at the
time of calculation of the Board Fraction, and the denominator of which shall be
the total number of Shares then outstanding.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks in the City of New York are permitted by law, rule
or regulation to be closed.
"CERTIFICATES OF MERGER" means certificates of merger, to be
reasonably agreed upon by Parent, Purchaser and the Company, to be filed with
the Secretary of the State of Missouri pursuant to the MGBCL and the Secretary
of State of Delaware, as contemplated by SECTION 2.6.
"CLOSING" means the closing referred to in SECTION 2.7.
"CLOSING DATE" means the date and time on which the Closing occurs.
"COMPANY" has the meaning ascribed to it in the forepart of this
Agreement.
"COMPANY AGREEMENT" means any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any Company Subsidiary is a party or by which any of them or any
of their properties or assets may be bound.
"COMPANY BENEFIT PLAN" means any Benefit Plan maintained, sponsored
or contributed to or required to be contributed to by the Company or any Company
Subsidiary.
"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY CERTIFICATE" has the meaning ascribed to it in SECTION
3.1(c).
"COMPANY CUSTOMERS" has the meaning ascribed to it in Section 6.11.
"COMPANY DISCLOSURE SCHEDULE" means the disclosure letter, dated the
date of this Agreement, prepared and signed by the Company and delivered to
Purchaser simultaneously with the execution of this Agreement.
"COMPANY ERISA AFFILIATE" means the Company, any Company Subsidiary
or any other trade or business (whether or not incorporated) that is or was
under "common control" with Company or a Company Subsidiary (within the meaning
of ERISA Section 4001) or with respect to which Company or any Company
Subsidiary could otherwise incur Liability under Title IV of ERISA.
"COMPANY INTELLECTUAL PROPERTY" means all patents, registered
trademarks and material unregistered trademarks, trade names, service marks,
trade dress, Internet domain names, copyrights and any renewal rights therefor,
mask works, technology, supplier lists, trade secrets, proprietary know-how,
computer software programs or applications in both source and
3
object code form, technical documentation of such software programs ("TECHNICAL
DOCUMENTATION"), registrations and applications for any of the foregoing and all
other tangible or intangible proprietary and non-proprietary information or
materials that are or have been used in (including in the development of) the
Company's or any Company Subsidiary's business and/or in any Product, technology
or process (i) currently being or formerly manufactured, published or marketed
by the Company or any Company Subsidiary, or (ii) previously or currently under
development for possible future manufacturing, publication, marketing or other
use by the Company or any Company Subsidiary.
"COMPANY'S KNOWLEDGE," "THE KNOWLEDGE OF THE COMPANY", "THE
KNOWLEDGE OF THE COMPANY AND THE COMPANY SUBSIDIARIES," "BEST KNOWLEDGE OF THE
COMPANY" and similar phrases incorporating the word "know" or "KNOWN" mean, with
respect to any matter in question, the actual knowledge of such matter held by
any (a) executive officer of the Company or any of the Company Subsidiaries
after having made reasonable inquiry and exercised reasonable due diligence and
(b) member of the board of directors of the Company or any of the Company
Subsidiaries.
"COMPANY MATERIAL ADVERSE EFFECT" means any circumstance, change in,
or effect on the Company and the Company Subsidiaries that is, or is reasonably
likely in the foreseeable future to be, materially adverse to the business,
properties, assets, Liabilities, condition (financial or otherwise), operations,
earnings or results of operations of the Company and the Company Subsidiaries,
taking the Company together with the Company Subsidiaries as a whole, or the
ability of the Company to timely consummate any of the Transactions, other than
any change, effect, event or occurrence constituting or relating to (i) the
economy or financial market of the United States or any other region, and (ii)
the Transactions or the announcement thereof.
"COMPANY OPTION" means an option to purchase Shares which has been
granted by the Company and which is outstanding at the Effective Time.
"COMPANY ORGANIZATIONAL DOCUMENTS" has the meaning ascribed to it in
SECTION 4.1.
"COMPANY SEC DOCUMENTS" means each form, report, schedule, statement
and other document filed or required to be filed by the Company through the date
of this Agreement under the Exchange Act or the Securities Act, including any
amendment to such document, whether or not such amendment is required to be so
filed.
"COMPANY STOCK OPTION" has the meaning ascribed to it in SECTION
3.4(a).
"COMPANY STOCK OPTION PLANS" means collectively, the Company's 1992
Stock Option Plan and the Company's 2001 Stock Option Plan.
"COMPANY SUBSIDIARY" means each Person which is a Subsidiary of the
Company.
"COMPANY TERMINATION FEE" means an amount equal to $2,000,000.
"CONFIDENTIALITY AGREEMENT" means a letter agreement, dated February
5, 2001, between the Company and Parent and/or its Affiliates.
4
"CONTINUING DIRECTORS" has the meaning ascribed to it in SECTION
2.3(c).
"COPYRIGHTS" means U.S. and foreign registered and unregistered
copyrights (including those in computer software and databases), moral rights,
rights of publicity and all registrations and applications to register the same.
"CUSTOMER DILIGENCE" has the meaning ascribed to it in SECTION 6.11.
"DGCL" means the Delaware General Corporation Law.
"DISSENTING SHARES" means any Shares as to which the holder thereof
has demanded to receive "fair value" for such Share in accordance with Section
351.455 of the MGBCL and as of the Effective Time has neither effectively
withdrawn nor lost the right to such demand.
"EFFECTIVE TIME" means the date and time at which the Certificate of
Merger is duly filed with the Secretary of State of Missouri or such other date
and time as is agreed upon by the parties and specified in such Certificate of
Merger.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all applicable
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all applicable contractual obligations and all common
law in each case concerning public health and safety, worker health and safety,
pollution or protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE AGENT" has the meaning ascribed to it in SECTION 3.2(A).
"EXPIRATION DATE" means the expiration date of the Offer as it may
be extended in accordance with this Agreement.
"FINANCIAL ADVISOR" has the meaning ascribed to it in SECTION 4.26.
"FINANCIAL STATEMENTS" means each of the audited consolidated
financial statements and unaudited condensed consolidated interim financial
statements of the Company (including any related notes and schedules) included
(or incorporated by reference) in the Company SEC Documents.
"FINANCING LETTERS" means letters delivered to Parent and/or
Purchaser or one or more of their Affiliates from reputable financial
institutions in which such institutions express a Firm Commitment (as defined
below) to provide debt financing to Parent and/or Purchaser that is sufficient
(i) for Purchaser to consummate the Transactions, (after giving effect to the
Company's expected cash and cash equivalents and short-term investments net of
Indebtedness (as set out in paragraph (k) of APPENDIX A)), (ii) for the
refinancing of the Indebtedness under the Sirsi Credit
5
Agreement and (iii) to pay the Transaction Expenses, all on terms and conditions
satisfactory to Parent and customary conditions reasonably satisfactory to the
Company. "FIRM COMMITMENT" means a commitment by a financial institution to
provide financing that is not on a best efforts or reasonable efforts basis and
is not subject to the approval of any committee or board of such institution.
"FOREIGN PLAN" has the meaning ascribed to in SECTION 4.14(p) of
this Agreement.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL ENTITY" means any foreign, federal, state, local or
other government, court, arbitral tribunal, administrative agency or commission
or other governmental or other regulatory authority or agency or any Person
exercising the authority of any of the foregoing.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"IRS" means the United States Internal Revenue Service and any
successor agency performing similar functions under the Internal Revenue Code.
"INBOUND LICENSE AGREEMENTS" has the meaning ascribed to it in
SECTION 4.19(e) of this Agreement.
"INDEBTEDNESS" shall include all obligations in respect of
indebtedness for borrowed money (including interest payable in respect thereof),
obligations incurred, issued or assumed as the deferred purchase price of
property or services other than accounts payable incurred in the ordinary course
of business consistent with past practice, Liabilities of others secured by (or,
for which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured) any Lien on property or assets of the Company or any
Company Subsidiary, capital lease obligations, all prepayment premiums or
penalties resulting from or arising out of the Transactions and obligations in
respect of guarantees of any of the foregoing or any "keep well" or other
agreement to maintain any financial statement condition of another person, in
each case, whether or not matured, liquidated, fixed, contingent, or disputed.
"INDEMNIFIED PARTY" means each present and former officer and
director of the Company or the Company Subsidiaries, and each Person who become
any of the foregoing prior to the Effective Time.
"INTELLECTUAL PROPERTY" means each of the Trademarks, Patents,
Copyrights, Trade Secrets and Licenses.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
"LIABILITIES" means any liability, claim or obligation, whether
known or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become due,
regardless of when asserted.
6
"LICENSES" means all licenses and agreements pursuant to which the
Company has acquired rights in or to any Trademarks, Patents, or Copyrights, or
licenses and agreements pursuant to which the Company has licensed or
transferred the right to use any of the foregoing.
"LIENS" means liens, encumbrances, charges, mortgages, pledges and
other security interests.
"MAJOR SHAREHOLDERS" means the shareholders of the Company listed on
EXHIBIT B attached hereto.
"MERGER" means the merger of Purchaser into the Company referred to
in SECTION 2.4.
"MERGER CONSIDERATION" means an amount of cash equal to the Offer
Price, which amount shall not include interest, regardless of when paid.
"MINIMUM CONDITION" means the condition that, pursuant to the Offer,
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer, not less than that number of Shares which, together with the
Shares owned by Parent and Purchaser on the date hereof, constitutes at least
seventy-five percent (75%) of the Shares outstanding on a fully diluted basis
(after giving effect to the conversion or exercise of all outstanding options,
warrants and other rights and securities exercisable or convertible into Shares,
whether or not exercised or converted at the time of determination), excluding
any Shares held by the Company or any of the Company Subsidiaries).
"MGBCL" means the General and Business Corporation Law of Missouri.
"OFFER" means the cash tender offer to be made by Purchaser pursuant
to SECTION 2.1 to acquire all of the issued and outstanding Shares at the Offer
Price.
"OFFER DEADLINE" has the meaning ascribed to it in SECTION 2.1.
"OFFER DOCUMENTS" means the Offer to Purchase and a form of letter
of transmittal and summary advertisement filed as exhibits to the Schedule TO,
together with any amendments and supplements thereto.
"OFFER PRICE" means eleven dollars ($11.00) per Share, net to the
seller in cash, less any required withholding Taxes, or such increased amount,
if any, as Purchaser may offer to pay as contemplated by SECTION 2.1(a).
"OFFER TO PURCHASE" means the offer to purchase included in the
Schedule TO filed with the SEC pursuant to SECTION 2.1(b).
"ORDERS" means judgments, writs, decrees, compliance agreements,
injunctions or judicial or administrative orders and determinations of any
Governmental Entity.
7
"OUTBOUND LICENSE AGREEMENTS" means license agreements under which
the Company or any of the Company Subsidiaries licenses software or grants other
rights to use or practice any rights under any Intellectual Property.
"PARENT" has the meaning ascribed to it in the forepart of this
Agreement.
"PARENT COMMON STOCK" means shares of common stock, par value $0.01
per share, of Parent.
"PARENT'S DESIGNEES" has the meaning ascribed to in Section 2.3(a).
"PATENTS" means issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"PERMITS" means all permits, licenses, authorizations,
registrations, franchises, approvals, certificates, variances and similar rights
obtained, or required to be obtained, from any Governmental Entity.
"PERSON" means a natural person, partnership (general or limited),
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity or organization.
"PURCHASER" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASER COMMON STOCK" means common stock, par value $.01 per
share, of Purchaser.
"PRODUCT" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce by
or on behalf of the Company or any Company Subsidiary.
"PROXY STATEMENT" means the proxy statement or information
statement, as the case may be, to be filed by the Company with the SEC pursuant
to SECTION 2.9(a)(ii), together with all amendments and supplements thereto and
including the exhibits thereto.
"SCHEDULE TO" means the tender offer statement on Schedule TO filed
by Purchaser with the SEC pursuant to SECTION 2.1(b), together with all
amendments and supplements thereto and including the exhibits thereto.
"SCHEDULE 14D-9" means the Solicitation/Recommendation Statement on
Schedule 14D-9 filed by the Company with the SEC pursuant to SECTION 2.2(a),
together with all amendments and supplements thereto and including the exhibits
thereto.
8
"SEC" means the United States Securities and Exchange Commission or
any successor agency performing similar functions.
"SEVERANCE AGREEMENTS" means employment and severance agreements and
arrangements, as amended through the date of this Agreement, with respect to
employees and former employees of the Company or the Company Subsidiaries.
"SHARES" means shares of common stock, par value $0.01 per share, of
the Company.
"SIRSI CREDIT AGREEMENT" means the Credit Agreement dated as of
September 14, 1999, among Sirsi Holdings Corporation, Sirsi Corporation, Paribas
and the other lenders party thereto, as amended by the Amendment, Consent and
Waiver dated as of October 3, 2000, among such parties and as it may be further
amended, supplemented or restated from time to time.
"SPECIAL MEETING" means the special meeting of shareholders of the
Company referred to in SECTION 2.9(a)(i).
"STATE TAKEOVER STATUTE APPROVAL" means the action taken by the
Company Board referred to in SECTION 4.5 causing Section 351.459 of the MGBCL
not to apply to this Agreement, the Offer and the other Transactions.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary 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 Person or
by any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (b) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such Person does not have a majority of the voting interest in
such partnership).
"SUPERIOR PROPOSAL" means an unsolicited Acquisition Proposal (but
changing the twenty percent (20%) amount in clause (a)(ii) of the definition of
Acquisition Proposal to fifty percent (50%)) not resulting from, arising out of
or otherwise by virtue of any breach of SECTION 6.4(a) which satisfies both
SECTION 6.4(a)(x) and SECTION 6.4(a)(y).
"SUPPORT AGREEMENT" means the Support Agreement, dated as of the
date of this Agreement, by and among the Parent and the Major Shareholders.
"SURVIVING CORPORATION" has the meaning ascribed to it in SECTION
2.4.
"TAX" and "TAXES" mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
governmental authority, including income, gross receipts, excise, property,
sales, gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated, and other
taxes, and shall include (i) interest, penalties or additions attributable
thereto and (ii) the
9
Liability for any such amounts as a result of the membership in a combined,
consolidated, unitary, affiliated or similar group for federal, state, local, or
foreign tax purposes.
"TAX RETURN" means any return, declaration, report, or claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TERMINATION DATE" has the meaning ascribed to it in SECTION 6.1 of
this Agreement.
"TITLE IV PLAN" means a Plan that is subject to Section 302 or Title
IV of ERISA or Section 412 of the Internal Revenue Code.
"TRADEMARKS" means U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same.
"TRADE SECRETS" means all computer software; databases; works of
authorship; mask works; trade secrets and, to the extent protectible as a matter
of law, other confidential information, technology; know-how, proprietary
processes, formulae, algorithms, models, user interfaces, customer lists,
inventions, discoveries, concepts, ideas, techniques, methods, source codes,
object codes, methodologies and, with respect to all of the foregoing, related
confidential data or information.
"TRANSACTION EXPENSES" means all reasonably documented out-of-pocket
expenses incurred by a party in connection with this Agreement and the
Transactions, including fees and expenses of financing sources, attorneys,
accountants and other advisors.
"TRANSACTIONS" means the transactions provided for or contemplated
by this Agreement and the Support Agreement, including the Offer and the Merger.
"VOTING DEBT" means indebtedness having general voting rights and
debt convertible into securities having such rights.
"WARRANT" has the meaning ascribed to it in SECTION 3.4(a).
1.2 INTERPRETATION.
When a reference is made in this Agreement to a section or article, such
reference shall be to a section or article of this Agreement unless otherwise
clearly indicated to the contrary. 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 words "hereof," "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, appendix and schedules of this Agreement unless
otherwise specified. The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall include
all genders and the neuter. Where a word or phrase is defined herein, each of
its other
10
grammatical forms shall have a corresponding meaning. A reference to
any party to this Agreement or any other agreement or document shall include
such party's successors and permitted assigns. A reference to any legislation or
to any provision of any legislation shall include any modification, amendment or
re-enactment thereof, any legislative provision substituted therefor and all
regulations and statutory instruments issued thereunder or pursuant thereto. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement. No prior
draft nor any course of performance or course of dealing shall be used in the
interpretation or construction this Agreement.
ARTICLE II
THE OFFER AND MERGER
2.1 THE OFFER.
(a) If (i) this Agreement has not been terminated in accordance with
SECTION 8.1, (ii) none of the conditions set forth in PARAGRAPHS (A) through (G)
of APPENDIX A to this Agreement other than PARAGRAPH (F) (with respect to the
representations and warranties as of the Expiration Date) and PARAGRAPH (G)
(with respect to obligations to be performed or agreements or covenants to be
performed or complied with after the commencement of the Offer) shall have
occurred (unless waived by Parent in its sole discretion) and (iii) the
Purchaser has received the Financing Letters then, within five Business Days
following Purchaser's receipt of the Financing Letters (the "OFFER Deadline"),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Exchange
Act) the Offer. Subject to the Minimum Condition and subject to satisfaction or
waiver of the other conditions set forth in APPENDIX A to this Agreement,
Purchaser shall consummate the Offer in accordance with its terms and to accept
for payment and pay for Shares tendered pursuant to the Offer promptly after
Purchaser is legally permitted to do so under Applicable Law. The Offer shall be
made by means of the Offer to Purchase and shall be subject only to the Minimum
Condition and the other conditions set forth in APPENDIX A to this Agreement and
shall reflect, as appropriate, the other terms set forth in this Agreement.
Unless previously approved by the Company in writing, no change in the Offer may
be made (i) which decreases the price per Share payable in the Offer, (ii) which
changes the form of consideration to be paid in the Offer, (iii) which reduces
the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (iv) which imposes conditions to the Offer in addition to those set
forth in APPENDIX A hereto or which modifies the conditions set forth in
APPENDIX A in a manner adverse to the holders of Shares, (v) which amends any
other term of the Offer in a manner inconsistent with this Agreement and adverse
to the holders of Shares, or (vi) which extends the expiration of the Offer
beyond thirty (30) Business Days following the initial scheduled Expiration Date
(the initial scheduled Expiration Date being 20 Business Days following the
commencement of the Offer); PROVIDED, HOWEVER, that notwithstanding the
foregoing, subject to SECTION 8.1, if the conditions set forth in APPENDIX A are
not satisfied or, to the extent permitted by this Agreement, waived, Purchaser
will extend the Offer from time to time until the earlier of (i) the
consummation of the Offer and (ii) thirty (30) Business Days in the aggregate
following the initial Expiration Date of the Offer. In addition, Purchaser may
11
increase the Offer Price, and the Offer may be extended to the extent required
by Applicable Law in connection with such increase, in each case without the
consent of the Company. If all of the conditions to the Offer are satisfied or
waived but the number of Shares validly tendered but not withdrawn, together
with the Shares held by Parent and Purchaser, if any, is less than ninety
percent (90%) of the then outstanding number of Shares, then upon the applicable
Expiration Date, Purchaser shall, and Parent shall cause Purchaser to, provide
for "Subsequent Offering Periods" as such term is defined in and in accordance
with Rule 14d-11 under the Exchange Act, for an aggregate period not to exceed
twenty (20) Business Days (for all such extensions) and Purchaser shall, and
Parent shall cause Purchaser to, (i) give the required notice of such extension,
and (ii) immediately accept and promptly pay for all Shares tendered prior to
the date of such extension.
(b) On the date the Offer is commenced, Parent and Purchaser shall file
with the SEC a tender offer statement on Schedule TO with respect to the Offer.
The Schedule TO will include, as exhibits, the Offer to Purchase and a form of
letter of transmittal and summary advertisement.
(c) Parent and Purchaser will take all steps necessary to cause the Offer
Documents to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable securities
laws. Parent and Purchaser, on the one hand, and the Company, on the other hand,
will promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect. Purchaser will take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on each of the Offer Documents before such
Offer Document is filed with the SEC or disseminated to holders of the Shares,
as the case may be. Parent and Purchaser will provide the Company and its
counsel in writing with any comments or other communications, whether written or
oral, that Parent, Purchaser or their counsel may receive from time to time from
the SEC or its staff with respect to the Offer Documents, promptly after the
receipt of such comments or other communications.
2.2 COMPANY ACTIONS.
(a) As soon as practicable on the date the Offer is commenced, the Company
shall file, with the SEC, the Schedule 14D-9, which shall, subject to the
provisions of SECTION 6.4(b), contain the recommendation referred to in SECTION
4.5(c). At the time the Offer Documents are first mailed to the shareholders of
the Company, the Company shall mail or cause to be mailed to the shareholders of
the Company such Schedule 14D-9 together with such Offer Documents. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of the Shares, as and to the extent required by
applicable federal securities laws. Each of the Company, on the one hand, and
Parent and Purchaser, on the other hand, will promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect. The Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before it is filed with the SEC. In addition, the
12
Company agrees to provide Parent, Purchaser and their counsel with any comments,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9, promptly
after the receipt of such comments or other communications.
(b) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listing or computer file containing the names and addresses of
all recordholders of the Shares as of a recent date, and shall furnish Purchaser
with such additional information (including lists of holders of the Shares,
updated upon request, and their addresses, mailing labels and lists of security
positions) and assistance as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Shares.
Except for such steps as are necessary to disseminate the Offer Documents,
Parent and Purchaser shall each hold in confidence the information contained in
any of such labels and lists and the additional information referred to in the
preceding sentence, will use such information only in connection with the Offer,
and, if this Agreement is terminated, will deliver or cause to be delivered to
the Company all copies of such information (and extracts and summaries thereof)
then in its possession or the possession of its agents or representatives.
(c) Solely in connection with the tender and purchase of Shares pursuant
to the Offer and the consummation of the Merger, the Company hereby waives any
and all rights of first refusal it may have with respect to Shares owned by, or
issuable to, any person, other than rights to repurchase unvested shares, if
any, that may be held by persons following exercise of employee stock options.
2.3 DIRECTORS.
(a) Parent shall be entitled to designate such number, rounded up to the
next whole number, of directors of the Company ("PARENT'S DESIGNEES") as is
equal to the product of the total number of directors on the Company Board
(giving effect to the directors designated by Parent pursuant to this sentence)
multiplied by the Board Fraction. The directors so designated by Parent shall
take office immediately after (i) the purchase of and payment for any Shares by
Parent or any of its Subsidiaries as a result of which Parent and its
Subsidiaries own beneficially at least a majority of then outstanding Shares and
(ii) compliance with Section 14(f) of the Exchange Act and Rule 14f thereunder,
whichever shall occur later. The Company shall, upon request of Parent, use its
best efforts promptly either to increase the size of the Company Board or to
secure the resignations of such number of its incumbent directors, or both as is
necessary to enable Parent's Designees to be so elected or appointed to the
Company Board, and the Company shall take all actions available to the Company
to cause Parent's Designees to be so elected or appointed at such time. At such
time, the Company shall, if requested by Parent, also take all action necessary
to cause Parent's Designees to constitute the same Board Fraction of (i) each
committee of the Company Board, (ii) each board of directors (or similar body)
of each Company Subsidiary and (iii) each committee (or similar body) of each
such board of directors.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder in order to fulfill
its obligations under SECTION 2.3(a), including mailing to its shareholders the
information required by such Section 14(f) and Rule
13
14f-1 as is necessary to enable Parent's Designees to be elected or appointed to
the Company Board immediately after the purchase of and payment for any Shares
by Parent or any of its Subsidiaries as a result of which Parent and its
Subsidiaries own beneficially at least a majority of then outstanding Shares.
Parent, Purchaser or any Major Shareholder will supply the Company and be solely
responsible for all information with respect to any of them and their nominees,
officers, directors and Affiliates required to be disclosed by such Section
14(f) and Rule 14f-1. The provisions of this SECTION 2.3 are in addition to and
shall not limit any rights which Purchaser, Parent or any of their Affiliates
may have as a matter of law as a holder or beneficial owner of Shares with
respect to the election of directors or otherwise.
(c) If Parent's Designees are elected or appointed to the Company Board,
then, until the Effective Time, the Company Board shall have at least two
directors who are directors on the date of this Agreement and who are not
executive officers of the Company (the "CONTINUING DIRECTORS"). Notwithstanding
anything in this Agreement to the contrary, in the event that Parent's Designees
constitute a majority of the directors on the Company Board, the affirmative
vote of a majority of the Continuing Directors shall be required after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, to (i) amend or terminate this Agreement by the Company, (ii)
exercise or waive any of the Company's rights, benefits or remedies hereunder if
such exercise or waiver materially adversely affects holders of Shares (other
than Parent or Purchaser), or (iii) take any other action under or in connection
with this Agreement if such action materially adversely affects holders of
Shares (other than Parent or Purchaser).
2.4 THE MERGER.
Subject to the satisfaction or waiver of conditions in this Agreement, at
the Effective Time, the Company and Purchaser shall consummate a merger pursuant
to which (a) Purchaser shall be merged with and into the Company and the
separate corporate existence of Purchaser shall thereupon cease, (b) the Company
shall be the surviving corporation in the Merger (sometimes referred to as the
"SURVIVING CORPORATION") and shall continue to be governed by the laws of the
State of Missouri and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this SECTION 2.4. Pursuant to
the Merger, (x) the articles of incorporation of Company, as in effect
immediately prior to the Effective Time, shall be amended and subsequently
restated to read as set forth in EXHIBIT C hereto and, as so amended, shall be
the articles of incorporation of the Surviving Corporation until thereafter
amended as provided by Applicable Law and such articles of incorporation and (y)
the by-laws of the Company, as in effect immediately prior to the Effective
Time, shall be amended and restated to read as set forth in EXHIBIT D and, as so
amended, shall be the by-laws of the Surviving Corporation until thereafter
amended as provided by Applicable Law, by such certificate of incorporation or
by such by-laws. The Merger shall have the effects specified in the MGBCL and
the DGCL.
2.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
The Purchaser's directors immediately prior to the Effective Time and
Xxxxxxx X. Xxxxxxxxx, and the officers of the Company immediately prior to the
Effective Time and Xxxxxxx X. Xxxxxxxxx shall, from and after the Effective
Time, be the directors and officers, respectively,
14
of the Surviving Corporation until their successors shall have been duly elected
or appointed or qualified or until their earlier death, resignation or removal
in accordance with the certificate of incorporation and the by-laws of the
Surviving Corporation.
2.6 EFFECTIVE TIME.
Parent, Purchaser and the Company will cause the Certificates of Merger to
be executed and filed on the Closing Date (or on such other date as Parent and
the Company may agree) with the Secretary of State of Missouri as provided in
the MGBCL and the Secretary of State of Delaware. The Merger shall become
effective at the Effective Time.
2.7 CLOSING.
The closing of the Merger shall take place at 10 a.m. on a date to be
agreed upon by the parties, and if such date is not agreed upon by the parties,
the Closing shall occur on the second Business Day after satisfaction or waiver
of all of the conditions set forth in ARTICLE VII, at the offices of X'Xxxxxxxx
Graev & Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
2.8 SUBSEQUENT ACTIONS.
If at any time after the Effective Time, the Surviving Corporation will
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of either of
the Company or Purchaser acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Purchaser, all such deeds, bills of sale, instruments of conveyance,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
2.9 SHAREHOLDERS' MEETING.
(a) If required by Applicable Law in order to consummate the Merger, the
Company, acting through its board of directors, shall, in accordance with
Applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders as promptly as practicable following the acceptance for
payment and purchase of Shares by Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the adoption of this
Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use
its reasonable efforts to obtain and furnish the information required to
be included by the SEC in the Proxy Statement and, after consultation with
Parent, to respond promptly to any comments
15
made by the SEC or its staff with respect to the preliminary proxy or
information statement and cause the Proxy Statement to be mailed to its
shareholders, provided, that no amendment or supplement to such Proxy
Statement will be made by the Company without the consent of Parent and
its counsel, which consent shall not be unreasonably withheld or delayed;
(iii) subject to SECTION 6.4, include in the Proxy Statement the
recommendation of the Company Board that shareholders of the Company vote
in favor of the adoption of this Agreement; and
(iv) use its reasonable efforts to solicit from holders of Shares
sufficient proxies to secure adoption of this Agreement and shall take all
other action reasonably necessary or, in the reasonable opinion of Parent,
advisable to secure any vote or consent of shareholders required by
Missouri law to effect the Merger.
(b) Parent will provide the Company with the information concerning Parent
and Purchaser required to be included in the Proxy Statement.
(c) Parent shall vote, or cause to be voted, all Shares owned by Parent,
Purchaser or any of Parent's other Subsidiaries in favor of the adoption of this
Agreement.
2.10 MERGER WITHOUT MEETING OF SHAREHOLDERS.
Notwithstanding SECTION 2.9, in the event that Parent, Purchaser and any
other Subsidiaries of Parent shall acquire in the aggregate a number of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, sufficient to enable Purchaser or the Company to cause
the Merger to become effective without a meeting of shareholders of the Company,
the parties hereto shall, at the request of Parent and subject to the
satisfaction or waiver of all of the conditions set forth in ARTICLE VII, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of shareholders of
the Company, in accordance with Section 351.447 of the MGBCL.
ARTICLE III
CONVERSION OF SECURITIES
3.1 CONVERSION OF CAPITAL STOCK.
As of the Effective Time, by virtue of the Merger and without any further
action on the part of the holders of any Shares or holders of Purchaser Common
Stock:
(a) PURCHASER COMMON STOCK. Each issued and outstanding share of Purchaser
Common Stock shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Share
owned by the Company as treasury stock or by any Company Subsidiary and each
Share owned by Parent,
16
Purchaser or any other wholly owned Subsidiary of Parent (other than shares in
trust accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF SHARES. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with SECTION 3.1(b) and other than any
Dissenting Shares) shall be converted into the right to receive the Offer Price,
payable to the holder thereof, without interest, upon surrender of the
certificate formerly representing such Share (each a "COMPANY CERTIFICATE") in
the manner provided in SECTION 3.2. From and after the Effective Time, all such
converted Shares shall no longer be outstanding and shall be deemed to be
cancelled and retired and shall cease to exist, and each holder of any such
Shares shall cease to have any rights with respect to any Company Certificate
except the right to receive the Merger Consideration therefor, without interest,
upon the surrender of such Company Certificate in accordance with SECTION 3.2 or
the right, if any, to receive payment from the Surviving Corporation of the
"fair value" of such Shares as determined in accordance with Section 351.455 of
the MGBCL.
3.2 EXCHANGE OF COMPANY CERTIFICATES
(a) Parent shall designate a bank or trust company reasonably acceptable
to the Company to act as agent for the holders of the Shares in connection with
the Merger and to receive in trust the funds to which holders of the Shares
shall become entitled pursuant to SECTION 3.1(c) (the "EXCHANGE AGENT"). At or
prior to the Effective Time, Parent or Purchaser shall deposit, or cause to be
deposited, with the Exchange Agent for the benefit of holders of Shares, Company
Stock Options and Warrants, the aggregate consideration to which such holders
shall be entitled at the Effective Time pursuant to SECTION 3.1(c). Such funds
shall be invested as directed by Parent or the Surviving Corporation pending
payment thereof by the Exchange Agent to holders of the Shares in (i) direct
obligations of the United States of America, (ii) obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, (iii) commercial paper rated the highest
quality by either Xxxxx'x Investors Services, Inc. or Standard & Poor's
Corporation, or (iv) certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $500 million.
Earnings from such investments shall be the sole and exclusive property of
Purchaser or the Surviving Corporation, as applicable, and no part of such
earnings shall accrue to the benefit of holders of Shares. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the Merger Consideration
out of such aggregate consideration.
(b) As soon as reasonably practicable after the Effective Time, but in any
event no later than three (3) Business Days thereafter, Parent shall cause the
Exchange Agent to mail to each holder of record of one or more Company
Certificates, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall
pass, only upon delivery of the Company Certificates to the Exchange Agent and
shall be in customary form and contain such other customary provisions as the
Company and the Parent may reasonably agree on and (ii) instructions for use in
effecting the surrender of Company Certificates in exchange for payment of
Merger Consideration. Upon surrender of a Company Certificate for cancellation
to the Exchange Agent, together with such letter of transmittal, duly executed
and such other documents as may be reasonably requested by the Exchange Agent,
the
17
holder of such Company Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each Share formerly represented by such
Company Certificate and the Company Certificate so surrendered shall be
cancelled. If payment of the Merger Consideration is to be made to a Person
other than the Person in whose name the surrendered Company Certificate is
registered, it shall be a condition of payment that the Company Certificate so
surrendered shall be properly indorsed or shall be otherwise in proper form for
transfer and that the Person requesting such payment shall have paid any
transfer and other non-income Taxes required by reason of the payment of the
Merger Consideration to a Person other than the registered holder of the Company
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such Tax either has been paid or is not applicable.
(c) All cash paid upon surrender of the Company Certificates in accordance
with this ARTICLE III shall be deemed to have been paid in full satisfaction of
all rights pertaining to the Shares formerly represented by such Company
Certificates. At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. If, after the Effective
Time, Company Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason except notation thereon that a shareholder of the
Company has elected to exercise its right to appraisal pursuant to the MGBCL,
then such Company Certificates shall be cancelled and exchanged as provided in
this ARTICLE III.
(d) At any time following the first anniversary of the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any funds (including any earnings with respect thereto) which had been
made available to the Exchange Agent and which have not been disbursed to
holders of Company Certificates, and thereafter such holders shall be entitled
to look only to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) and only as general creditors thereof with
respect to the Merger Consideration payable upon due surrender of their Company
Certificates, without any interest thereon. Notwithstanding the foregoing,
neither Parent, the Surviving Corporation nor the Exchange Agent shall be liable
to any holder of a Company Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and the posting by such Person of a bond in such
amount as Parent may reasonably direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will pay
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration (or the Company shall use its reasonable efforts to make such
other arrangements as are necessary to ensure that such Person claiming such
Certificate to be lost, stolen or destroyed and posting such indemnity bond
shall receive the Offer Price in respect of the Shares represented by such
Certificate).
18
3.3 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
Dissenting Shares shall not be converted into or represent a right to receive
Merger Consideration, but the holder thereof shall be entitled to only such
rights as are granted by the MGBCL.
(b) Notwithstanding the provisions of SECTION 3.3(a), if any holder of
Shares who demands "fair value" of Shares under the MGBCL effectively withdraws
or loses (through failure to perfect or otherwise) the right to demand "fair
value", then as of the Effective Time or the occurrence of such event, whichever
later occurs, such holder's Shares shall automatically be converted into and
represent only the right to receive the Merger Consideration as provided in
SECTION 3.1(c), without interest, upon surrender of the Company Certificates
representing such Shares pursuant to SECTION 3.2.
(c) The Company shall give Parent (i) prompt notice of any written demands
for payment of the fair value of any Shares, withdrawals of such demands, and
any other instruments served on the Company pursuant to the MGBCL received by
the Company or any of its directors or officers and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for "fair value"
under the MGBCL. Except with the prior written consent of Parent, the Company
shall not voluntarily make any payment, admissions or statements against
interest with respect to any demands for appraisal, settle or offer to settle
any such demands.
3.4 COMPANY STOCK OPTION PLANS.
(a) As soon as practicable following the date hereof but in no event later
than the Effective Time, the Company (or, if appropriate, Company Board or any
committee administering the Stock Option Plans) shall take action, including
adopting resolutions or taking any other actions, so that each outstanding
option to purchase Shares (a "COMPANY STOCK OPTION") heretofore granted under
the Company Stock Option Plans and each outstanding warrant or other right or
option to purchase Shares (a "WARRANT") in each case outstanding immediately
prior to the date hereof and only in the event that such Stock Option or Warrant
is then exercisable, either (i) shall be canceled at the Effective Time in
exchange for an amount in cash, payable at the time of such cancellation, equal
to the product of (x) the number of Shares subject to such Company Stock Option
or Warrant immediately prior to the Effective Time and (y) the excess of the
Offer Price over the per Share exercise price of such Company Stock Option or
Warrant (the "NET AMOUNT") or (ii) shall be converted immediately prior to the
Effective Time into the right solely to receive the Net Amount; PROVIDED, that
no such cash payment has been made. The Company shall not make, or agree to
make, any payment of any kind to any holder of a Company Stock Option or a
Warrant (except for the payment described above) without the consent of Parent
(which consent will not be unreasonably withheld).
(b) The Surviving Corporation shall continue to be obligated to pay the
Net Amount to holders of any Company Stock Options or Warrants converted in
accordance with SECTION 3.4(a)(ii).
19
(c) The Company shall pay its portion and withhold and deposit the proper
amount of all Federal and state payroll and employment taxes required to be paid
and withheld from the Net Amount.
(d) At the Effective Time, the Company Stock Option Plans and, to the
extent unvested, each outstanding Company Stock Option and Warrant, with an
exercise price as of the Effective Time less than the Offer Price, to the extent
unvested, will become obligations of the Surviving Corporation. Immediately
prior to the Closing, the Company shall deliver to Parent an updated list
substantially similar to that presented in SECTION 4.3(a) OF THE COMPANY
DISCLOSURE SCHEDULE, current as of such date. Each such Company Stock Option and
Warrant shall continue to have, and be subject to, the same terms and conditions
set forth in the Company Stock Option Plans, to the extent applicable, and the
applicable stock option or warrant agreement immediately prior to the Effective
Time, except that such Company Stock Option or Warrant will be exercisable for
an amount in cash equal to the Net Amount upon the earlier of (i) the time that
such Company Stock Option and Warrant becomes vested in accordance with its
terms and (ii) the termination of the employment of the holder of such Company
Stock Option by the Company without cause (as determined in good faith by the
Company Board), in each case provided that the holder of such Company Stock
Option is employed by the Company at the time of such vesting or termination.
(e) Except as set forth in SECTION 3.4(d), all Stock Option Plans shall be
terminated as of the Effective Time and the provisions in any other Benefit Plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
terminated as of the Effective Time. The Company shall ensure that following the
Effective Time, no holder of a Company Stock Option or Warrant or any
participant in any Stock Option Plan shall have any right thereunder to acquire
any capital stock of the Company, Parent or the Surviving Corporation, except as
agreed to otherwise by the Parent.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the Company
represents and warrants to Parent and Purchaser that all of the statements
contained in this ARTICLE IV are true and correct as of the date of this
Agreement (or, if made as of a specified date, as of such date). Each exception
set forth in the Company Disclosure Schedule and each other response to this
Agreement set forth in the Company Disclosure Schedule relates to all sections
of this Agreement.
4.1 ORGANIZATION; QUALIFICATION.
The Company (a) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation; (b) has all
requisite corporate power and authority to carry on its business as it is now
being conducted and to own the properties and assets it now owns; and (c) is
duly qualified or licensed to do business as a foreign corporation in good
20
standing in every jurisdiction in which such qualification is required. The
Company has made available to Parent and Purchaser true, complete and correct
copies of the Company's restated articles of incorporation and by-laws (the
"COMPANY ORGANIZATIONAL DOCUMENTS"), which Company Organizational Documents are
in full force and effect.
4.2 SUBSIDIARIES AND AFFILIATES.
SECTION 4.2 OF THE COMPANY DISCLOSURE SCHEDULE sets forth the name,
jurisdiction of incorporation and authorized and outstanding capital stock of
each Company Subsidiary and the jurisdictions in which each Company Subsidiary
is qualified to do business. The Company does not own, directly or indirectly,
any capital stock or other equity securities of any corporation or have any
direct or indirect equity or ownership interest in any business or other Person,
other than publicly traded securities constituting less than five percent (5%)
of the outstanding equity of the issuing entity. Except as set forth in SECTION
4.2 OF THE COMPANY DISCLOSURE SCHEDULE, all the outstanding capital stock of
each Company Subsidiary is, directly or indirectly, owned (of record and
beneficially) by the Company free and clear of any Liens, restrictions on
transfers (other than restrictions on transfer arising under applicable
securities laws), and is validly issued, fully paid and nonassessable, and there
is no outstanding option, right or agreement of any kind relating to the
issuance, sale or transfer of any capital stock or other equity securities of
any such Company Subsidiary to any Person except the Company. Each Company
Subsidiary (a) is, except as set forth in SECTION 4.2 OF THE COMPANY DISCLOSURE
SCHEDULE, a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation; (b) has all requisite
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; and (c) is duly
qualified or licensed to do business as a foreign corporation in good standing
in every jurisdiction in which such qualification is required. The Company has
made available to Parent complete and correct copies of the certificate or
articles of incorporation, by-laws or similar organizational documents of each
Company Subsidiary, as presently in effect. With respect to any exception to
ownership set forth in SECTION 4.2 OF THE COMPANY DISCLOSURE SCHEDULE, such
Schedule completely and correctly identifies the record and the beneficial owner
of any such shares, whether such record or beneficial owner is an employee,
agent or affiliate of the Company, and any agreement, arrangement or
understanding with the Company or the Company Subsidiary, whether written or
oral, with respect to such ownership.
4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 10,000,000
Shares and 1,000,000 shares of preferred stock, par value $.01 per share. As of
the date of this Agreement, (i) 4,499,521 Shares are issued and outstanding,
(ii) 1,057,149 Shares are issued and held in the treasury of the Company, (iii)
no shares of preferred stock are issued and outstanding, and (iv) 410,950 Shares
are reserved for issuance upon exercise of Company Options under the Company
Stock Option Plans. SECTION 4.3(a) OF THE COMPANY DISCLOSURE SCHEDULE lists the
holder of each outstanding Company Option, the number of Shares for which such
Company Option is exercisable, the exercise price of such Company Option, the
extent to which such Company Option will vest upon consummation of any of the
Transactions and the vesting schedule of such Company Option. Prior to the
Appointment Date, the terms of the Company Stock Option Plans and each Company
Option will provide that any unvested Company Option shall, upon the
21
vesting thereof, become exercisable for the Net Amount. All the outstanding
shares of the Company's capital stock are, and all Shares which may be issued
pursuant to the exercise of outstanding Company Options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable. There is no Voting Debt of the Company or any
Company Subsidiary issued and outstanding. Except as set forth in SECTION 4.3(a)
OF THE COMPANY DISCLOSURE SCHEDULE and above, and except for the Transactions,
as of the date hereof, (x) there is no capital stock of the Company authorized,
issued or outstanding; (y) there is no existing option, warrant, call,
pre-emptive right, subscription or other right, agreement, arrangement,
understanding or commitment of any character, relating to the issued or unissued
capital stock of the Company or any Company Subsidiary, obligating the Company
or any Company Subsidiary to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any Company Subsidiary or securities
convertible into or exchangeable for such shares, equity interests or Voting
Debt, or obligating the Company or any Company Subsidiary to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment; and (z) there is no outstanding
contractual obligation of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company, or
any Company Subsidiary or Affiliate of the Company or to provide funds to make
any investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity or Person. With respect to any exception
to the contractual obligations of the Company set forth in SECTION 4.3(a) OF THE
COMPANY DISCLOSURE SCHEDULE, the schedule completely and correctly identifies
the parties to such obligations and the nature of any relationship of such party
or any third party beneficiary of such obligations to the Company and any
agreement, arrangement or understanding, whether written or oral, with respect
to such relationship.
(b) There is no voting trust or other agreement or understanding to which
the Company or any Company Subsidiary is a party with respect to the voting of
the capital stock of the Company or any Company Subsidiary.
(c) Except as set forth in SECTION 4.3(c) OF THE COMPANY DISCLOSURE
Schedule, no Indebtedness of the Company or any Company Subsidiary contains any
restriction upon (i) the prepayment of any indebtedness of the Company or any
Company Subsidiary, (ii) the incurrence of indebtedness by the Company or any
Company Subsidiary or (iii) the ability of the Company or any Company Subsidiary
to grant any Lien on the properties or assets of the Company or any Company
Subsidiary.
(d) SECTION 4.3(d) OF THE COMPANY DISCLOSURE SCHEDULE sets forth a true,
complete and detailed list of the Company's outstanding Indebtedness.
4.4 AUTHORIZATION, VALIDITY OF AGREEMENT, COMPANY ACTION.
The Company has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement by the
Company and the performance by the Company of its obligations under this
Agreement and the consummation by the Company of the Transactions, have been
duly authorized by the Company Board and, except
22
for obtaining the approval of its shareholders as contemplated by SECTION 2.9,
no other corporate action on the part of the Company or its shareholders is
necessary to authorize the execution and delivery by the Company of this
Agreement or the consummation by it of the Transactions. This Agreement has been
duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery thereof by Parent and Purchaser, this
Agreement is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent such enforcement
may be subject to or limited by (i) bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors rights generally and (ii)
the effect of general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
4.5 BOARD APPROVALS REGARDING TRANSACTIONS.
The Company Board, at a meeting duly called and held, has unanimously (a)
determined that each of the Agreement, the Offer and the Merger are fair to,
advisable and in the best interests of the Company and the shareholders of the
Company, (b) approved the Transactions, (c) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares to Purchaser
pursuant to the Offer and adopt this Agreement, (d) determined to waive any
rights the Company may have under any agreement or otherwise to object to the
transfer to Purchaser as a result of the Offer of all Shares, (e) consented to
the transfer to Purchaser of all such Shares and (f) amended the by-laws of the
Company to expressly provide that Section 351.407 of the MGBCL does not apply to
control share acquisitions and none of the aforesaid actions by the Company
Board has been amended, rescinded or modified. The action taken by the Company
Board constitutes approval of the Merger and the other Transactions by the
Company Board under the provisions of Section 351.459 of the MGBCL such that
Section 351.459 of the MGBCL does not apply to this Agreement or the other
Transactions. Other than disclosing matters as set forth in Sections 409.500 et.
set. of the Revised Statutes of the State of Missouri upon commencement of the
Offer, no other state takeover, antitakeover, moratorium, fair price, interested
shareholder, business combination or similar statute or rule is applicable to
the Merger or the other Transactions.
4.6 VOTE REQUIRED.
The affirmative vote of the holders of at least seventy-five (75%) of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger or adopt this Agreement.
No vote of any class or series of the Company's capital stock is necessary to
approve any of the Transactions other than the Merger Agreement as contemplated
by SECTION 2.9.
4.7 CONSENTS AND APPROVALS, NO VIOLATIONS.
Except for the filings and Permits as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, state securities or
blue sky laws, and the filing of the Certificates of Merger, none of the
execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the Transactions or compliance by the Company
with any of the provisions of this Agreement will (a) conflict with or result in
any breach of any provision of any of the Company Organizational Documents or
similar
23
organizational documents of the Company or any Company Subsidiary, (b) require
any filing with, or Permit of, any Governmental Entity, (c) result in a
violation or breach of, or constitute (with or without due notice or the passage
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or loss of any rights) under, any of the terms,
conditions or provisions of any Company Agreement (except where such violation,
breach or default would not have a Company Material Adverse Effect), (d) violate
any Applicable Law in any material respect, or (e) violate any Order directly
applicable to the Company, any Company Subsidiary or any of their properties or
assets. Except as set forth in SECTION 4.7 OF THE COMPANY DISCLOSURE SCHEDULE,
there is no third party non-governmental consent, notice or approval related to
the Company, any Company Subsidiary or any of their respective assets or
properties required to be obtained prior to the consummation of any of the
Transactions under any material Company Agreement.
4.8 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed with the SEC the Company SEC Documents. As of
their respective dates or, if amended, as of the date of the last such amendment
filed prior to the date of this Agreement, the Company SEC Documents, including
any financial statements or schedules included therein (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading and
(b) complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. None of the Company Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the Financial Statements has been prepared from, and is in
accordance with, the books and records of the Company and the Company
Subsidiaries. The Financial Statements complied, as of their respective dates,
in all material respects with applicable accounting requirements and rules and
regulations of the SEC. The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and subject, in the case of interim condensed consolidated
financial statements, to the absence of certain notes) and fairly present in all
material respects, (i) the consolidated financial position of the Company and
the Company Subsidiaries as of the dates thereof and (ii) the consolidated
results of operations, changes in shareholders equity and cash flows of the
Company and the Company Subsidiaries for the periods presented therein.
4.9 BOOKS AND RECORDS.
The books of account, minute books, stock record books and other records
of the Company and the Company Subsidiaries are complete and correct in all
material respects and have been maintained in accordance with the requirements
of Section 13(b)(2) of the Exchange Act, including an adequate system of
internal controls. The minute books of the Company contain accurate and complete
records of all meetings held of, and corporate action taken by, the
shareholders, the Company Board and committees of the Company Board, and no
meeting of any of such shareholders, the Company Board or such committees has
been held for which minutes have not been prepared and are not contained in such
minute books.
24
4.10 NO UNDISCLOSED LIABILITIES.
Except (a) as disclosed in the Financial Statements and (b) for
Liabilities incurred in the ordinary course of business and consistent with past
practice since the Balance Sheet Date, neither the Company nor any Company
Subsidiary has any material Liability.
4.11 INTENTIONALLY OMITTED.
4.12 ABSENCE OF CERTAIN CHANGES.
Except as set forth in SECTION 4.12 OF THE COMPANY DISCLOSURE SCHEDULE,
since the Balance Sheet Date neither the Company nor any Company Subsidiary has:
(a) suffered any Company Material Adverse Effect or conducted its business
except in the ordinary and usual course consistent with past practice;
(b) incurred any Liabilities except non-material items incurred in the
ordinary course of the business of the Company or the Company Subsidiary and
consistent with past practice, none of which exceeds one hundred thousand
dollars ($100,000) (counting Liabilities arising from one transaction or a
series of similar transactions, and all periodic installments or payments under
any lease or other agreement providing for periodic installments or payments, as
a single Liability), or increased, or experienced any change in any assumptions
underlying or methods of calculating, any bad debt, contingency or other
reserves or allowances;
(c) paid, discharged or satisfied any Liability other than the payment,
discharge or satisfaction in the ordinary course of the business of the Company
or the Company Subsidiary and consistent with past practice of Liabilities
reflected or reserved against in the Balance Sheet or incurred in the ordinary
course of the business of the Company or the Company Subsidiary and consistent
with past practice since the Balance Sheet Date;
(d) permitted or allowed any of its properties or assets (real, personal
or mixed, tangible or intangible) to be subjected to any Lien, except for Liens
for current Taxes not yet due;
(e) written down the value of any inventory (including write-downs by
reason of shrinkage or xxxx-down) or written off as uncollectible any notes or
accounts receivable, except for immaterial write-downs and write-offs in the
ordinary course of the business of the Company or the Company Subsidiary and
consistent with past practice;
(f) cancelled any debt or waived any claim or right of substantial value;
(g) sold, transferred, or otherwise disposed of any of its properties or
assets (real, personal or mixed, tangible or intangible), except in the ordinary
course of the business of the Company or the Company Subsidiary and consistent
with past practice;
25
(h) disposed of or permitted to lapse any right to the use of any
Intellectual Property, or disposed of or disclosed to any Person, other than
representatives of Parent, any trade secret, formula, process, know-how or other
Intellectual Property not yet a matter of public knowledge;
(i) granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee, and no such increase is
customary on a periodic basis or required by agreement or understanding;
(j) made any single capital expenditure or commitment in excess of one
hundred thousand dollars ($100,000) for additions to property, plant, equipment
or intangible capital assets or made aggregate capital expenditures and
commitments in excess of two hundred thousand dollars ($200,000) (on a
consolidated basis) for additions to property, plant, equipment or intangible
capital assets;
(k) declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of the Company or any Company Subsidiary;
(l) made any change in any method of Tax or GAAP accounting or accounting
practice;
(m) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (real, personal or mixed, tangible or intangible) to,
or entered into any agreement or arrangement with, any of its officers or
directors or any Affiliate or Associate of any, of its officers or directors,
except for directors' fees, and compensation to officers at rates not exceeding
the rates of compensation paid during the fiscal year ended September 30, 2000;
(n) accelerated, terminated, made material modifications to, or cancelled,
and no other party has accelerated, terminated, made material modifications to,
or cancelled, any Company Agreement to which the Company is a party or by which
it is bound except where such acceleration, termination, material modification
or cancellation would not have had a Company Material Adverse Effect;
(o) adopted or amended any Benefit Plan, entered into or terminated any
employment or consulting Company Agreement, paid any special bonus or incentive
remuneration to any individual in the Company's employ or service, entered into
or implemented any severance or change in control benefit agreement or program
with any such individual, or made any loans or extensions of credit to any such
individual; or
(p) agreed, whether in writing or otherwise, to take any action described
in this SECTION 4.12.
4.13 LITIGATION.
Except as set forth in SECTION 4.13 OF THE COMPANY DISCLOSURE SCHEDULE,
there is no pending action, suit, inquiry, proceeding or investigation by or
before any Governmental Entity or, to the knowledge of the Company and the
Company Subsidiaries, threatened against or involving the Company or any Company
Subsidiary, or which questions or challenges the
26
validity of this Agreement or any action taken or to be taken by the Company or
any Company Subsidiary pursuant to this Agreement or in connection with the
Transactions. Neither the Company nor any Company Subsidiary is in default under
or in violation of, nor to the knowledge of the Company and the Company
Subsidiaries is there any valid basis for any claim of default under or
violation of, any Company Agreement or commitment or restriction to which the
Company or any Company Subsidiary is a party or by which any of them or any of
their assets is bound except where such default or violation would not have had
a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is subject to any Order directly applicable to the Company or such
Subsidiary which may have an adverse effect on its business practices or on its
ability to acquire any property or conduct its business in any area.
4.14 EMPLOYEE BENEFIT PLANS.
(a) SECTION 4.14 OF THE COMPANY DISCLOSURE SCHEDULE lists each Company
Benefit Plan.
(b) With respect to each Company Benefit Plan, Company has delivered or
made available to Parent a true, complete and correct copy of (i) such Company
Benefit Plan (of, if not written, a written summary of its material terms) and
the most recent summary plan description and summary of material modifications,
if any, related to such Company Benefit Plan, (ii) each trust agreement,
insurance contract or other funding arrangement, (iii) the most recent annual
report (Form 5500) filed with the IRS) (and, if the most recent annual report is
a Form 5500R, the most recent Form 5500C filed with respect to such Company
Benefit Plan), (iv) the most recent actuarial report or financial statement, (v)
the most recent determination letter, if any, issued by the IRS and any pending
request for a determination letter and (vi) each registration statement, Permit
application and prospectus. Neither the Company nor any Company Subsidiary nor,
to the knowledge of the Company and the Company Subsidiaries, any other Person,
has any express or implied commitment, whether legally enforceable or not, to
continue (for any period), modify, change or terminate any Company Benefit Plan,
other than with respect to a modification, change or termination required by
ERISA or the Internal Revenue Code.
(c) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all Applicable Laws, including ERISA
and the Internal Revenue Code (including the prohibited transaction rules
thereunder), and contributions required to be made under the terms of any of the
Company Benefit Plans as of the date of this Agreement have been timely made or,
if not yet due, have been properly reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company SEC Documents
prior to the date of this Agreement. No suit, administrative proceeding, action
or other adverse proceeding or claim has been brought or threatened against or
with respect to any such Company Benefit Plan (other than routine benefits
claims) and there is no pending audit or inquiry by the IRS or United States
Department of Labor with respect to any Company Benefit Plan. No event has
occurred, and, to the knowledge of Company or any Company Subsidiary, there
exists no condition or set of circumstances, that could subject the Company or
any Company Subsidiary to any material Liability (other than for routine benefit
Liabilities) relating in any way to any Company Benefit Plan.
(d) Except as set forth in SECTION 4.14(d) OF THE COMPANY DISCLOSURE
SCHEDULE, each Company Benefit Plan can be amended, discontinued or terminated
at any time (including after
27
the Effective Time) in accordance with its terms, without Liability (other than
(A) Liability for ordinary administrative expenses typically incurred in a
termination event or (B) Liabilities for which sufficient assets are set aside
in a trust or insurance contract to satisfy such Liability or which are
reflected on the Company's most recent consolidated balance sheet).
(e) Each Company Benefit Plan and its related trust that is intended to
qualify under Section 401(a) or 4975(e)(7) and Section 501(a), respectively, of
the Internal Revenue Code has received a favorable determination letter from the
IRS as to such qualified status or has been established under a standardized
prototype plan for which an Internal Revenue Service opinion letter has been
obtained by the plan sponsor and is valid as to the adopting employer and
nothing has occurred that could adversely affect such qualified status.
(f) No Company Benefit Plan is a multiemployer pension plan (as defined in
Section 3(37) of ERISA) or other pension plan subject to Title IV of ERISA or
the minimum funding rules of ERISA or the Internal Revenue Code and no Company
ERISA Affiliate has sponsored or contributed to or been required to contribute
to any such pension plan.
(g) With respect to each Benefit Plan required to be set forth in the
Company Disclosure Schedule that is subject to Title IV of ERISA or the minimum
funding rules of ERISA or the Internal Revenue Code, (i) no reportable event
(within the meaning of Section 4043 of ERISA, other than an event that is not
required to be reported before or within thirty (30) days of such event) has
occurred or is expected to occur, (ii) there was not an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Internal Revenue Code), whether or not waived, as of the most recently ended
plan year of such Benefit Plan; and (iii) there is no "unfunded benefit
liability" (within the meaning of Section 4001(a)(18) of ERISA). No material
Liability under Title IV of ERISA has been incurred by the Company or any other
Company ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to Company or any Company Subsidiary of
incurring or being subject (whether primarily, jointly or secondarily) to a
material Liability thereunder. None of the assets of the Company or any Company
Subsidiary is, or may reasonably be expected to become, the subject of any Lien
arising under ERISA or Section 412(n) of the Internal Revenue Code.
(h) Except as required by Applicable Law, no Company Benefit Plan provides
any of the following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To the knowledge of the Company and the
Company Subsidiaries, the Company and each of the Company Subsidiaries are in
compliance with (i) the requirements of the applicable health care continuation
and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and (ii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996, as amended.
(i) The Company has delivered to Parent true, complete and correct copies
of (i) all employment agreements with officers and all consulting agreements of
the Company and each Company Subsidiary providing for annual compensation in
excess of seven hundred and fifty thousand dollars ($750,000), (ii) all
severance plans, agreements, programs and policies of the Company and each
Company Subsidiary with or relating to their respective employees, directors or
28
consultants, and (iii) all plans, programs, agreements and other arrangements of
the Company and each Company Subsidiary with or relating to their respective
employees, directors or consultants which contain "change of control"
provisions. No payment or benefit which may be required to be made by the
Company or any Company Subsidiary or which otherwise may be required to be made
under the terms of any Company Benefit Plan or other arrangement will constitute
a parachute payment under Internal Revenue Code Section 280G, and except as set
forth in SECTION 4.14(i) OF THE COMPANY DISCLOSURE Schedule, the consummation of
the Transactions will not, alone or in conjunction with any other possible event
(including termination of employment), (i) entitle any current or former
employee or other service provider of the Company or any Company Subsidiary to
severance benefits or any other payment, compensation or benefit (including
forgiveness of indebtedness), except as expressly provided by this Agreement, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation or benefit due any such employee or service provider, alone or in
conjunction with any other possible event (including termination of employment).
(j) Except as set forth in SECTION 4.14(j) OF THE COMPANY DISCLOSURE
SCHEDULE, the execution of, and performance of the Transactions will not (either
along with or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Benefit Plan or agreement that will or may
reasonably be expected to result in any payment (whether severance pay or
otherwise), acceleration, vesting or increase in benefits with respect to any
employee, former employee or director of the Company, or the Company
Subsidiaries, whether or not any such payment would be an "excess parachute
payment" (within the meaning of Section 280G of the Internal Revenue Code).
(k) SECTION 4.14(k) OF THE COMPANY DISCLOSURE SCHEDULE sets forth a list
of all persons who the Company reasonably believes are, with respect to Company
or any Company Subsidiary, "disqualified individuals" (within the meaning of
Section 280G of the Internal Revenue Code and the regulations promulgated
thereunder) as of the date of this Agreement. Within a reasonable period of time
after the last business day of each month after the date of this Agreement and
on or about the date which is five (5) business days prior to the expected
Closing, the Company shall revise SECTION 4.14(k) OF THE COMPANY DISCLOSURE
SCHEDULE to reflect any additional information which the Company reasonably
believes would impact the determination of persons who are, with respect to the
Company or any Company Subsidiary, "disqualified individuals" (within the
meaning of Section 280G of the Internal Revenue Code and the regulations
promulgated thereunder) as of each such date.
(l) Except as set forth in SECTION 4.14(l) OF THE COMPANY DISCLOSURE
SCHEDULE, neither the Company nor to the knowledge of the Company, any other
"disqualified person" or "party in interest" (as defined in Section 4975 of the
Code and Section 3(14) of ERISA, respectively) with respect to a Company Benefit
Plan has breached the fiduciary rules of the ERISA or engaged in a prohibited
transaction which could subject the Company to any tax or penalty imposed under
Sections 4975 of the Code or Section 502 (i), (j) or (l) of ERISA.
(m) The Company has timely deposited and transmitted all amounts withheld
from employees for contributions or premium payments for each Company Benefit
Plan into the appropriate trusts or accounts which are required to be deposited
or transmitted in a manner which is in substantial compliance with Applicable
Law.
29
(n) Each Company Benefit Plan that allows loans to plan participants has
been operated in accordance with its terms, the plan's written loan policy and
all applicable laws.
(o) To the knowledge of the Company, no individual who has been classified
by the Company as a non-employee (such as an independent contractor, leased
employee or consultant) shall have a claim against the Company for eligibility
to participate in any Company Benefit Plan, if such individual is later
reclassified as an employee of the Company.
(p) SCHEDULE 4.14(P) OF THE COMPANY DISCLOSURE SCHEDULE lists each Foreign
Plan. "FOREIGN PLAN" means any employee benefit, pension scheme, retirement,
profit sharing, health, dental, life or disability insurance plan, as well as
any other plan, program or arrangement involving direct or indirect
compensation, under which the Company or any Company Subsidiary has any present
or future obligations or liability on behalf of its employees or former
employees or their dependents and beneficiaries. Each Foreign Plan has been
maintained in good standing with each applicable Governmental Authority. All
contributions have been made with respect to all Foreign Plans on a timely
basis. Neither the Company nor any ERISA Affiliate has incurred any obligation
in connection with the termination of or withdrawal from any Foreign Plan.
4.15 TAX MATTERS, GOVERNMENT BENEFITS.
(a) The Company and each Company Subsidiary have duly filed all Tax
Returns that are required to be filed, and have duly paid or caused to be duly
paid in full all Taxes reflected on such Tax Returns and any other Taxes
required to have been paid. When filed all such Tax Returns were correct and
complete in all material respects and accurately reflected all Liability for
Taxes for the periods covered thereby. All unpaid Taxes owed by the Company and
all Company Subsidiaries relating to periods or portions of periods through the
Balance Sheet Date (whether or not shown on any Tax Return) are reflected on the
Financial Statements. Since the Balance Sheet Date, the Company and the Company
Subsidiaries have not incurred any Liability for any Taxes other than in the
ordinary course of business and such Taxes are properly reflected on the
Company's books and records. Neither the Company nor any Company Subsidiary has
received written notice of any claim made by an authority in a jurisdiction
where the Company or the Company Subsidiary, as the case may be, does not file
Tax Returns, that the Company or the Company Subsidiary is or may be subject to
taxation by that jurisdiction and no basis for such a claim exists. None of the
Company Subsidiaries are required to file Tax Returns or pay any Taxes in the
United States or have any Liabilities with respect to Taxes in the United
States.
(b) The federal income Tax Returns of the Company have been examined by
the applicable Taxing authority (or the applicable statutes of limitation for
the assessment of federal income Taxes for such periods have expired) for all
periods through and including September 30, 1997 and no material deficiencies
were asserted as a result of such examinations that have not been resolved or
fully paid. Neither the Company nor any Company Subsidiary has waived any
statute of limitations in any jurisdiction in respect of Taxes or Tax Returns or
agreed to any extension of time with respect to a Tax assessment or deficiency.
(c) Except as set forth in SECTION 4.15(c) OF THE COMPANY DISCLOSURE
SCHEDULE, no federal, state, local or foreign audit, examination or other
administrative proceeding is pending
30
or, to the knowledge of the Company and the Company Subsidiaries, threatened
with regard to any Taxes or Tax Returns of the Company or of any Company
Subsidiary. There is no dispute or claim concerning any Tax Liability of the
Company or any Company Subsidiary either claimed or raised by any taxing
authority in writing.
(d) The Company is not a party to any Company Agreement that could result,
separately or in the aggregate, in a payment of any "excess parachute payments"
within the meaning of Section 280G of the Internal Revenue Code.
(e) The Company (A) has not filed a consent pursuant to Section 341(f) of
the Internal Revenue Code (or any predecessor provision) (or similar provision
of state, local or foreign law) concerning collapsible corporations, or agreed
to have Section 341(f)(2) of the Internal Revenue Code apply to any disposition
of a "subsection (f) asset" (as such term is defined in Section 341(f)(4) of the
Internal Revenue Code) owned by the Company or (B) is not, nor has ever been, a
(i) "personal holding company" within the meaning of Section 542 of the Internal
Revenue Code (or similar provision of state, local or foreign law), or (ii) a
"passive foreign investment company" within the meaning of Section 1297 of the
Internal Revenue Code.
(f) The Company has at no time been a "United States real property holding
corporation" within the meaning of Section 897(c) of the Internal Revenue Code.
(g) The Company is not a party to any Tax sharing, Tax indemnity or other
agreement or arrangement with any entity not a member of the Company's
consolidated group for federal income Tax purposes.
(h) None of the Company or any Company Subsidiary has been a member of any
affiliated group within the meaning of Section 1504(a) of the Internal Revenue
Code, or any similar affiliated or consolidated group for Tax purposes under
state, local or foreign law (other than a group the common parent of which is
the Company), or has any Liability for Taxes of any Person (other than the
Company and the Company Subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(i) The Company has previously made available to Purchaser true, correct
and complete copies of (i) all federal and state income and payroll Tax Returns
filed by or on behalf of the Company for the years ended September 20, 1998 and
September 30, 1999 and (ii) all ruling requests, private letter rulings, notices
of proposed deficiencies, closing agreements, settlement agreements, and any
similar documents or communication sent or received by the Company and any
Company Subsidiary.
(j) Except as set forth in SECTION 4.15(j) OF THE COMPANY DISCLOSURE
SCHEDULE, none of the Company and nor any Company Subsidiary has been notified
that either the Internal Revenue Service or any other Taxing authority has
raised any issues, or notified the Company or any Company Subsidiary of an
intent to raise such issues, in connection with any Tax Return of the Company
and or Company Subsidiary.
31
(k) The Company and each Company Subsidiary has complied in all respects
with all Applicable Laws relating to the collection or withholding of Taxes
(such as sales Taxes or withholding of Taxes from the wages of employees).
(l) Except as set forth in SECTION 4.15(l) OF THE COMPANY DISCLOSURE
SCHEDULE, neither the Company nor any Company Subsidiary has agreed to, or are
required to, make any adjustments or changes either on, before or after the
Closing Date, to its accounting methods pursuant to Section 481 of the Internal
Revenue Code (or similar provisions of state, local or foreign law), and neither
the Internal Revenue Service nor any other Tax authority has proposed any such
adjustments or changes in the accounting methods of the Company or any Company
Subsidiary.
(m) Neither the Company nor Company Subsidiary will be required to include
in income during a taxable period that ends after the Closing Date any income
that economically accrued and was accounted for prior to the Closing Date by
reason of the installment method of accounting, the completed method of
accounting or otherwise.
(n) Except as set forth in SECTION 4.15(n) OF THE COMPANY DISCLOSURE
SCHEDULE, no Liens for Taxes exist with respect to any assets or properties of
the Company or any Company Subsidiary. There are no Taxes asserted by any Taxing
authority to be due that have not been paid.
(o) Section 4.15(A) OF THE COMPANY DISCLOSURE SCHEDULE lists all the
jurisdictions in which the Company or any Company Subsidiary is required to file
a Tax Return or pay Taxes.
4.16 TITLE TO PROPERTIES; ENCUMBRANCES.
Except as set forth in SECTION 4.16 OF THE COMPANY DISCLOSURE SCHEDULE,
each of the Company and the Company Subsidiaries has good, valid and marketable
title to all the properties and assets which it purports to own (real, personal
and mixed, tangible and intangible) and which are reflected in the Balance
Sheet, and all the properties and assets purchased by the Company and the
Company Subsidiaries since the Balance Sheet Date, in each case free and clear
of all Liens, title defects or objections of any nature whatsoever including,
leases, chattel mortgages, conditional sales contract, collateral security
arrangements and other title or interest retention arrangements, except, with
respect to all such properties and assets: (a) Liens shown on the Financial
Statements as securing specified Liabilities, with respect to which no default
exists; (b) minor imperfections of title, if any, none of which are substantial
in amount, materially detract from the value or impair the use of the property
subject thereto, or impair the operations of the Company or any Company
Subsidiary and which have arisen only in the ordinary course of the business of
the Company or the Company Subsidiary and consistent with past practice since
the Balance Sheet Date; and (c) Liens for current Taxes not yet due. The rights,
properties and other assets presently owned, leased or licensed by the Company
and the Company Subsidiaries and described elsewhere in this Agreement include
all rights, properties and other assets necessary to permit the Company and the
Company Subsidiaries to conduct their businesses in all material respects in the
same manner as their businesses have been conducted prior to the date hereof.
32
4.17 LEASES.
SECTION 4.17 OF THE COMPANY DISCLOSURE SCHEDULE contains a true, correct
and complete list of all material leases pursuant to which the Company or any
Company Subsidiary leases real or personal property. All such leases are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect. There is no existing material default by the Company or any Company
Subsidiary thereunder. No material event of default has occurred which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a material default thereunder; and except as set
forth in SECTION 4.17 OF THE COMPANY DISCLOSURE SCHEDULE, all lessors under such
leases have consented (where such consent is necessary) to the consummation of
the Transactions without requiring modification in the rights or obligations of
the lessee under such leases.
4.18 ENVIRONMENTAL AND SAFETY MATTERS.
Except as disclosed on SECTION 4.18 OF THE COMPANY DISCLOSURE SCHEDULE:
(a) The Company and the Company Subsidiaries have complied and are in
compliance, in all material respects, with all Environmental and Safety
Requirements (including without limitation all Permits and licenses required
thereunder).
(b) None of Company or any Company Subsidiary has received any oral or
written notice of any material violation of, or any material liability
(contingent or otherwise) or obligation under, any Environmental and Safety
Requirements.
(c) To the knowledge of the Company, no facts, events or circumstances
with respect to the past or current operations or facilities of the Company, any
Company Subsidiary or any of their respective predecessors or affiliates
(including without limitation any on-site or off-site disposal or release of, or
contamination by, hazardous materials, substances or wastes) has or would give
rise to any material liability or corrective or remedial obligation under any
Environmental and Safety Requirements.
(d) The Company and the Parent have furnished to the Purchaser all
environmental audits, reports and other material environmental documents
relating to the current and former operations and facilities of the Company and
Company Subsidiaries, which are in their possession, custody or control.
4.19 INTELLECTUAL PROPERTY.
(a) SECTION 4.19(a) OF THE COMPANY DISCLOSURE SCHEDULE contains a true,
correct and complete list of all of the Company's and the Company Subsidiaries'
patents, patent applications, trademarks, trademark applications, trade names,
service marks, service xxxx applications, Internet domain names, Internet domain
name applications, copyrights and copyright registrations and applications and
any other filings and formal actions made or taken pursuant to Federal, state,
local and foreign laws by the Company and/or any Company Subsidiary to protect
its interests in the Company Intellectual Property.
33
(b) TRADEMARKS. All Trademark registrations are currently in compliance in
all material respects with all legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications) other than any requirement that, if not satisfied, would not
result in a cancellation of any such registration or otherwise materially affect
the priority and enforceability of the Trademark in question. No registered
Trademark has been within the last three (3) years or is now involved in any
opposition or cancellation proceeding in the United States Patent and Trademark
Office. To the knowledge of the Company and the Company Subsidiaries, no such
action has been threatened in writing within the one (1)-year period prior to
the date of this Agreement. To the knowledge of the Company and the Company
Subsidiaries, there has been no prior use of any material Trademark by any third
party that confers upon said third party superior rights in any such Trademark.
The Company and the Company Subsidiaries have adequately policed the Trademarks
against third party infringement, and the Trademarks registered in the United
States have been continuously used by the Company or one of the Company
Subsidiaries since the date set forth in, the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or renewal certificates, as the case may be.
(c) PATENTS. All issued Patents are currently in compliance with legal
requirements (including payment of filing, examination, and maintenance fees and
proofs of working or use) other than any requirement that, if not satisfied,
would not result in a revocation or otherwise materially affect the
enforceability of the Patent in question. No Patent has been or is now involved
in any interference, reissue, reexamination or opposing proceeding in the United
States Patent and Trademark Office. To the knowledge of the Company and the
Company Subsidiaries, no such action has been threatened within the one (1)-year
period prior to the date of this Agreement. To the knowledge of the Company and
the Company Subsidiaries, there is no patent or patent application of any person
that invalidates any claim the Company or any of the Company Subsidiaries has in
any issued Patent.
(d) TRADE SECRETS. Without limiting the generality of the foregoing, the
Company and each of the Company Subsidiaries enforces a policy of requiring each
relevant employee, consultant and contractor to execute agreements that contain
provisions designed to prevent unauthorized disclosure of the Company's
confidential information and Trade Secrets. With respect to employees, such
agreements are substantially in the Company's standard forms and also assign to
the Company or such Subsidiary, as the case may be, all rights to any
Intellectual Property relating to the Company's or such Subsidiary's business
that is developed by the employee in the course of his or her activities for the
Company or any of the Company Subsidiaries or is developed during working hours
using the resources of the Company or any such Subsidiary. With respect to
contractors and consultants, the agreements either assign all Intellectual
Property Rights developed pursuant to the agreement or license such rights on
agreed-upon terms. Except under confidentiality obligations, to the knowledge of
the Company and the Company Subsidiaries, there has been no disclosure by the
Company or any Subsidiary of material confidential information or Trade Secrets.
(e) LICENSE AGREEMENTS. SECTION 4.19(e) OF THE COMPANY DISCLOSURE SCHEDULE
sets forth a complete and accurate list of all license agreements granting to
the Company or any of the Company Subsidiaries any material right to use or
practice any rights under any Intellectual Property other than software
commercially available on reasonable terms to any person for a
34
license fee of no more than fifty thousand dollars ($50,000) (collectively, the
"INBOUND LICENSE AGREEMENTS"), indicating for each the title and the parties
thereto and the amount of any future royalty or license fee payable thereunder.
Except as set forth in SECTION 4.19(e) OF THE COMPANY DISCLOSURE SCHEDULE, there
is no material outstanding or, to the knowledge of the Company and the Company
Subsidiaries, threatened dispute or disagreement with respect to any Inbound
License Agreement or any Outbound License Agreement.
(f) OWNERSHIP; SUFFICIENCY OF INTELLECTUAL PROPERTY ASSETS. Except as set
forth in SECTION 4.19(f) OF THE COMPANY DISCLOSURE SCHEDULE, the Company or one
of the Company Subsidiaries owns or possesses adequate licenses or other rights
to use, free and clear of Liens and Orders, all of its Intellectual Property
used in its business. The Intellectual Property identified in SECTION 4.19(a) OF
THE COMPANY DISCLOSURE SCHEDULE, together with the Company's and the Company
Subsidiaries' unregistered copyrights, mask works and Trade Secrets and the
Company's and such Subsidiaries' rights under the licenses granted to the
Company or any of the Company Subsidiaries under the Inbound License Agreements,
constitute all the material Intellectual Property rights used in the operation
of the Company's and the Company Subsidiaries' businesses as they are currently
conducted and are all the Intellectual Property rights necessary to operate such
businesses after the Effective Time in substantially the same manner as such
businesses have been operated by the Company and the Company Subsidiaries prior
thereto.
(g) PROTECTION OF INTELLECTUAL PROPERTY. The Company has taken such steps
as the Company's management believes is necessary to protect the Intellectual
Property of the Company and the Company Subsidiaries.
(h) NO INFRINGEMENT BY THE COMPANY. To the knowledge of the Company and
the Company Subsidiaries, the products used, manufactured, marketed, sold or
licensed by the Company and the Company Subsidiaries, and all Intellectual
Property used in the conduct of the Company's and the Company Subsidiaries'
businesses as currently conducted, do not infringe upon, violate or constitute
the unauthorized use of any valid and enforceable rights owned or controlled by
any third party.
(i) NO PENDING OR THREATENED INFRINGEMENT CLAIMS. Except as set forth in
SECTION 4.19(i) OF THE COMPANY DISCLOSURE SCHEDULE, no litigation is now or,
within the three (3) years prior to the date of this Agreement, was pending and,
to the knowledge of the Company and the Company Subsidiaries, no notice or other
claim in writing has been received by the Company or any of the Company
Subsidiaries within the one (1) year prior to the date of this Agreement, (i)
alleging that the Company any of the Company Subsidiaries has engaged in any
activity or conduct that infringes upon, violates or constitutes the
unauthorized use of the Intellectual Property rights of any third party or (ii)
challenging the ownership, use, validity or enforceability of any Intellectual
Property owned or exclusively licensed by or to the Company. No Intellectual
Property (y) that is owned by the Company or any of the Company Subsidiaries is
subject to any outstanding Order restricting the use, sale, transfer, assignment
or licensing thereof by the Company or any such Subsidiary, or (z) that is the
subject of an Inbound License Agreement is, to the knowledge of the Company and
the Company Subsidiaries, subject to any outstanding judgment, decree,
stipulation or agreement restricting the use, sale, transfer, assignment or
licensing thereof by the Company or any of the Company Subsidiaries, except as
provided in the Inbound License Agreements.
35
(j) NO INFRINGEMENT BY THIRD PARTIES. Except as set forth in SECTION
4.19(j) OF THE COMPANY DISCLOSURE SCHEDULE, to the knowledge of the Company and
the Company Subsidiaries, no third party is misappropriating, infringing,
diluting or violating any Intellectual Property owned or exclusively licensed to
the Company or any of the Company Subsidiaries, and no such claims have been
brought against any third party by the Company or any of the Company
Subsidiaries.
(k) ASSIGNMENT; CHANGE OF CONTROL. Except as set forth in SECTION 4.19(k)
OF THE COMPANY DISCLOSURE SCHEDULE, the execution, delivery and performance by
the Company of this Agreement, and the consummation of the Transactions, will
not result in the loss or impairment of, or give rise to any right of any third
party to terminate or alter, any of the Company's or any of the Company
Subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any Inbound License Agreement or Outbound License Agreement, nor
require the consent of any Governmental Entity or third party in respect of any
such Intellectual Property.
4.20 EMPLOYMENT MATTERS.
(a) The Company and each Company Subsidiary are in compliance in all
material respects with all currently Applicable Laws and regulations relating to
the hiring and retention of all employees, leased employees and independent
contractors, relating to wages, hours, labor, employment and employment
practices, terms and conditions of employment, equal employment opportunity,
collective bargaining and the payment of social security and other taxes, and is
not engaged in any unfair labor practice.. The Company and each Company
Subsidiary have withheld all amounts required by law or by agreement to be
withheld from the wages, salaries, and other payments to employees, and neither
the Company nor any Company Subsidiary is liable for any arrears of wages or any
Taxes or any penalty for failure to comply with any of the foregoing. Neither
the Company nor any Company Subsidiary is liable for any payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for employees (other than routine payments to be made in the normal
course of the business of the Company or the Company Subsidiary and consistent
with past practice). Except as set forth in SECTION 4.20(a) OF THE COMPANY
DISCLOSURE SCHEDULE, there is no pending claim against the Company or any
Company Subsidiary under any workers compensation plan or policy or for
long-term disability. There is no controversy pending or, to the knowledge of
the Company and the Company Subsidiaries, threatened, between the Company or any
Company Subsidiary, on the one hand, and any of their respective employees, on
the other hand, which controversies have resulted, or could reasonably be
expected to result, in an action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity. Neither the Company nor any
Company Subsidiary is a party to any collective bargaining agreement or other
labor union Company Agreement, and neither the Company nor any Company
Subsidiary knows of any activities or proceedings of any labor union in
connection with an attempt to organize any such employees. To the Company's or
any Company Subsidiary's knowledge, no employees of the Company or any Company
Subsidiary are in violation of any term of any employment Company Agreement,
patent disclosure Company Agreement, noncompetition Company Agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or Company Subsidiary because of the
nature of the business conducted or presently proposed to be conducted by the
Company or any Company Subsidiary or
36
to the use of trade secrets or proprietary information of others. No employee of
the Company or any Company Subsidiary has given notice to the Company or any
Company Subsidiary, and neither the Company nor any of the Company Subsidiaries
has knowledge, that any of its employees intends to terminate his or her
employment with the Company or any Company Subsidiary.
(b) SECTION 4.20(b) OF THE COMPANY DISCLOSURE SCHEDULE lists the name,
place of employment, the current annual salary rates, bonuses, deferred or
contingent compensation, pension, accrued vacation, "golden parachute" and other
like benefits paid or payable (in cash or otherwise), the date of employment and
a description of position and job function of each current salaried employee,
officer, director, consultant or agent of the Company or any Company Subsidiary
whose annual compensation exceeded (or, in 2001, is expected to exceed) seventy
five thousand dollars ($75,000).
(c) Except as set forth in SECTION 4.20(c) OF THE COMPANY DISCLOSURE
SCHEDULE, all officers, employees and consultants of the Company and each
Company Subsidiary have signed proprietary rights and confidentiality agreements
in substantially the form set forth in SECTION 4.20(c) OF THE COMPANY DISCLOSURE
SCHEDULE.
4.21 COMPLIANCE WITH LAWS.
The Company and each of the Company Subsidiaries are in compliance in all
material respects with, and have not violated in any material respect any
Applicable Law, and no notice, charge, claim, action or assertion has been
received by the Company or any Company Subsidiary or has been filed, commenced
or, to the knowledge of the Company and the Company Subsidiaries, threatened
against the Company or any Company Subsidiary alleging any such violation. All
Permits required under Applicable Law are in full force and effect.
4.22 CONTRACTS AND COMMITMENTS.
Except as set forth in SCHEDULE 4.22 OF THE DISCLOSURE SCHEDULE:
(a) Except for Company Agreements filed as exhibits to the Company SEC
Documents, neither the Company nor any Company Subsidiary is a party to any
Company Agreements which are material to the Company and the Company
Subsidiaries, taking the Company together with the Company Subsidiaries as a
whole.
(b) There are no Company Agreements or commitments relating to the TAOS
system, whether for installation, delivery, licensing, migration, maintenance or
otherwise (including any Company Agreement relating to the termination,
modification or settlement of any obligations under any such Company Agreement).
(c) There are no Company Agreements relating to any DRA Classic System,
INLEX/3000 System or MultiLIS System, whether for installation, delivery,
licensing, upgrade or otherwise, that have any known material outstanding
monetary obligations (including any Company Agreement relating to the
termination, modification or settlement of any Liabilities under any such
Company Agreement).
37
(d) There is no Company Agreement relating to the maintenance of any DRA
Classic System, INLEX/3000 System or MultiLIS System which has generated revenue
to the Company and/or any Company Subsidiary in the immediately preceding twelve
(12) months in an amount greater than $90,000.
(e) There are no Company Agreements relating to the issuance of
performance bonds, surety bonds, letters of credit or other credit support.
(f) No Company Agreement or commitment of the Company or any Company
Subsidiary has been entered into other than in the normal, ordinary and usual
course of the business of the Company or any Company Subsidiary or is at a price
considered excessive by the Company's management.
(g) There is no Company Agreement, commitment or proposal of the Company
or any Company Subsidiary which continues for a period of more than twelve (12)
months and is intended to result in any loss to the Company or any Company
Subsidiary upon completion or performance thereof.
(h) Neither the Company nor any Company Subsidiary has any outstanding
Company Agreements with any officer, employee, agent, consultant, advisor,
salesperson, sales representative, distributor or dealer that is not cancelable
by it on notice of not longer than thirty (30) days and without Liability,
penalty or premium or any agreement or arrangement providing for the payment of
any bonus or commission based on sales or earnings.
(i) Neither the Company nor any Company Subsidiary has any employment
agreement, or any other agreement that contains any severance or termination pay
Liabilities.
(j) Neither the Company nor any Company Subsidiary is in material default,
nor is there any basis known to the Company or any Company Subsidiary for any
valid claim of material default, under any Company Agreement or commitment which
is material to the Company and the Company Subsidiaries, taking the Company
together with the Company Subsidiaries as a whole.
(k) Neither the Company nor any Company Subsidiary is restricted or
prohibited by any Company Agreement or Order from, directly or indirectly,
carrying on its business anywhere in the world.
(l) Neither the Company nor any Company Subsidiary has any obligation for
Indebtedness, including any guarantee of or agreement to acquire any such debt
obligation, of others.
(m) Neither the Company nor any Company Subsidiary has any outstanding
Indebtedness to any Person other than to the Company or a wholly-owned
Subsidiary of the Company.
(n) Neither the Company nor any Company Subsidiary has any power of
attorney outstanding or any Liability as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any Person,
corporation, partnership, joint venture, association, organization or other
entity.
38
4.23 CUSTOMERS AND SUPPLIERS.
Except as set forth on SCHEDULE 4.23 OF THE COMPANY DISCLOSURE Schedule,
during the last twelve (12) months, neither the Company nor any of the Company
Subsidiaries has received any notice of termination or written threat of
termination from any of the ten (10) largest suppliers to the Company and the
Company Subsidiaries taken as a whole (in terms of Company Liability) or the ten
(10) largest customers of the Company and the Company Subsidiaries taken as a
whole (in terms of annual consolidated sales). Except as set forth on SCHEDULE
4.23 OF THE COMPANY DISCLOSURE SCHEDULE, there has not been any material adverse
change in the business relationship of the Company or any Company Subsidiary
with any customer who accounted for more than three percent (3%) of the
Company's sales (on a consolidated basis) during the last twelve (12) months, or
any supplier from whom the Company and the Company Subsidiaries purchased more
than three percent (3%) of the goods or services (on a consolidated basis) which
it purchased during the same period. SCHEDULE 4.23 OF THE COMPANY DISCLOSURE
SCHEDULE contains copies of all correspondence from or to any customer or
supplier as well as all other documents relating to any of the foregoing
matters.
4.24 INFORMATION IN SCHEDULE 14D-9.
The information supplied by the Company for inclusion in the Offer
Documents, the Schedule 14D-9 will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The Schedule 14D-9
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published or sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading,
except that no representation is made by the Company with respect to statements
made therein based on information furnished by Parent or Purchaser for inclusion
in the Schedule 14D-9.
4.25 INFORMATION IN PROXY STATEMENT.
The Proxy Statement, if any, will not, at the date mailed to Company
shareholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information furnished by Parent or Purchaser for inclusion in
the Proxy Statement. The Proxy Statement will comply in all material respects
with the provisions of the Exchange Act.
4.26 OPINION OF FINANCIAL ADVISOR.
The Company Board has received the oral opinion on the date of this
Agreement of Crescendo Capital Partners, LLC (the "FINANCIAL ADVISOR") and
shall, within ten (10) days after the date of this Agreement, receive the
written opinion of the Financial Advisor, dated the date of
39
this Agreement, to the effect that, as of such date, the consideration to be
received in the Offer and the Merger by the holders of Shares (other than Parent
and Purchaser) is fair to such holder from a financial point of view. A manually
signed, accurate and complete copy of such opinion shall be delivered to
Purchaser and Parent promptly after the Company's receipt thereof. The Company
has been authorized by the Financial Advisor to permit the inclusion of such
opinion in its entirety in the Offer Documents and the Schedule 14D-9 and the
Proxy Statement, so long as such inclusion is in form and substance reasonably
satisfactory to the Financial Advisor and its counsel.
4.27 ABSENCE OF QUESTIONABLE PAYMENTS.
Neither the Company nor any Company Subsidiary nor any current director,
officer, agent, employee or other Person acting on behalf of the Company or any
Company Subsidiary, has used any corporate or other funds for any unlawful
contribution, payment, gift, or entertainment, or made any unlawful expenditure
relating to political activity to government officials or others or established
or maintained any unlawful or unrecorded funds in violation of Section 30A of
the Exchange Act. Neither the Company nor any Company Subsidiary nor any current
director, officer, agent, employee or other Person acting on behalf of the
Company or any Company Subsidiary, has accepted or received any unlawful
contribution, payment, gift or expenditure. The Company and each Company
Subsidiary which is required to file reports pursuant to Section 12 or 15(d) of
the Exchange Act is in compliance with the provisions of Section 13(b) of the
Exchange Act.
4.28 INSIDER INTERESTS.
Except as disclosed in SCHEDULE 4.28 OF THE COMPANY DISCLOSURE SCHEDULE or
the Company SEC Documents filed prior to the date of this Agreement, no present
or former affiliate of the Company has, or since December 31, 1998 has had, (i)
any interest in any property (whether real, personal or mixed and whether
tangible or intangible) used in or pertaining to any of the businesses of the
Company or any of the Company Subsidiaries, (ii) has had business dealings or a
material financial interest in any transaction with the Company or any of the
Company Subsidiaries (other than compensation and benefits received in the
ordinary course of business as an employee or director of the Company or any of
the Company Subsidiaries) or (iii) an equity interest or any other financial or
profit interest in any Person that has had business dealings, or a material
financial interest in any transaction, with the Company or any of the Company
Subsidiaries.
4.29 BROKERS OR FINDERS.
No agent, broker, investment banker, financial advisor or other firm or
Person is or will be entitled to any brokers' or finder's fee or any other
commission or similar fee in connection with any of the Transactions except for
the Financial Advisor. True and correct copies of all agreements between the
Company and the Financial Advisor including any fee arrangements are included in
SECTION 4.29 OF THE COMPANY DISCLOSURE SCHEDULE.
40
4.30 INSURANCE.
SECTION 4.30 OF THE COMPANY DISCLOSURE LETTER sets forth a true and
complete list of all insurance policies carried by, or covering the Company and
the Company Subsidiaries with respect to their businesses, assets and
properties, together with, in respect of each such policy, the name of the
insurer, the policy number, the type of policy, the amount of coverage and the
deductible. True and complete copies of each such policy have previously been
made available to Parent. All such policies are in full force and effect, and no
notice of cancellation has been given with respect to any such policy. All
premiums due on such policies have been paid in a timely manner and the Company
and the Company Subsidiaries have complied in all material respects with the
terms and provisions of such policies. The insurance coverage provided by such
policies is customary for the industries in which the Company and the Company
Subsidiaries operate.
4.31 EMPLOYEE STOCK PURCHASE PLAN.
The Company has terminated its stock purchase plan and such termination
shall be effective as of June 1, 2001.
4.32 FULL DISCLOSURE.
The Company has not failed to disclose to Parent any facts material to the
business, properties, assets, Liabilities, condition (financial or otherwise),
operations, earnings or results of operations of the Company and the Company
Subsidiaries, taking the Company together with the Company Subsidiaries as a
whole. No representation or warranty by the Company in this Agreement and no
statement contained in any document (including financial statements and the
Company Disclosure Schedule), certificate, or other writing furnished or to be
furnished by the Company to Parent, Purchaser or any of their respective
representatives pursuant to this Agreement or in connection with any of the
Transactions, contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company that:
5.1 ORGANIZATION.
Each of Parent and Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation and has all requisite corporate or other power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority,
and
41
governmental approvals would not materially adversely affect the ability of
Parent and Purchaser to timely consummate any of the Transactions.
5.2 AUTHORIZATION, VALIDITY OF AGREEMENT, NECESSARY ACTION.
Each of Parent and Purchaser has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. The execution, delivery and performance by Parent and Purchaser of
this Agreement and the consummation of the Merger and the other Transactions
have been duly authorized by the boards of directors of each of Parent and
Purchaser and by Parent as the sole shareholder of Purchaser, and no other
corporate action on the part of Parent or Purchaser is necessary to authorize
the execution and delivery by Parent and Purchaser of this Agreement or the
consummation of the Transactions. This Agreement has been duly executed and
delivered by Parent and Purchaser, and, assuming due and valid authorization,
execution and delivery by the Company, is a valid and binding obligation of each
of Parent and Purchaser, enforceable against each of them in accordance with its
terms, except to the extent such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors rights generally and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
5.3 CONSENTS AND APPROVALS, NO VIOLATIONS.
Except for the filings and Permits as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, state securities or
blue sky laws and the filing of the Certificates of Merger, none of the
execution, delivery or performance of this Agreement by Parent or Purchaser, the
consummation by Parent or Purchaser of the Transactions or compliance by Parent
or Purchaser with any of the provisions hereof will (a) conflict with or result
in any breach of any provision of the respective certificate of incorporation or
by-laws of Parent or Purchaser; (b) require any filing with any Governmental
Entity or any Permit; (c) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any contract to which Parent, or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound; (d) violate any Applicable Law or (e) violate
any Order applicable to Parent, any of its Subsidiaries or any of their
properties or assets, which would in each case materially adversely affect the
ability of Parent and Purchaser to timely consummate any of the Transactions.
5.4 INFORMATION IN OFFER DOCUMENTS.
The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published or sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, except that no representation is made by
Parent or Purchaser with respect to information furnished by the Company
expressly for inclusion in the Offer Documents.
42
5.5 INFORMATION IN PROXY STATEMENT.
None of the information furnished by Parent or Purchaser for inclusion in
the Proxy Statement will, at the date mailed to shareholders or the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading.
5.6 BROKERS OR FINDERS.
Neither Parent nor any of its Subsidiaries or their respective Affiliates
has entered into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or Person to any brokers' or
finders' fee or any other commission or similar fee in connection with any of
the Transactions for which the Company or any Company Subsidiary would have any
Liability if this Agreement is terminated in accordance with its terms.
5.7 LACK OF OWNERSHIP OF SHARES.
Neither Parent nor any of its Subsidiaries hold any Shares or other
securities convertible into Shares.
ARTICLE VI
COVENANTS
6.1 INTERIM OPERATIONS OF THE COMPANY.
The Company covenants and agrees that, prior to the earlier of the
Appointment Date or the date, if any, on which this Agreement is earlier
terminated pursuant to SECTION 8.1 (the "TERMINATION DATE") as agreed in writing
by Parent, after the date hereof:
(a) the business of the Company and each of the Subsidiaries shall be
conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and the Company and each Company
Subsidiary shall use its commercially reasonable efforts to preserve its
business organization intact in all material respects, keep available the
services of its current executive officers and key employees and maintain its
existing relations with franchisees, customers, suppliers, creditors, business
partners and others having business dealings with it, to the end that the
goodwill and ongoing business of each of them shall be materially unimpaired at
the Effective Time;
(b) neither the Company nor any Company Subsidiary shall: (i) amend any of
the Company Organizational Documents other than as set forth in SECTION 2.4,
(ii) issue, sell, transfer, pledge, dispose of or encumber any shares of any
class or series of its capital stock or Voting Debt, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of any class or series of its capital stock or
any Voting Debt, other than Shares reserved for issuance on the date of this
Agreement pursuant to the exercise of Company Stock Options and Warrants
outstanding on the date of this Agreement, (iii) declare, set aside or pay any
dividend or other distribution payable in cash, stock
43
or property with respect to any shares of any class or series of its capital
stock, (iv) split, combine or reclassify any shares of any class or series of
its stock, or (v) other than the deemed repurchase of Company Stock Options and
Warrants in accordance with SECTION 3.4 of this Agreement, redeem, purchase or
otherwise acquire directly or indirectly any shares of any class or series of
its capital stock, or any instrument or security which consists of or includes a
right to acquire such shares;
(c) neither the Company nor any Company Subsidiary shall (i) incur or
assume any Indebtedness or other Liability, other than in the ordinary and usual
course of business and consistent with past practice, (ii) modify the terms of
any Indebtedness or other Liability, other than modifications of short term debt
in the ordinary and usual course of business and consistent with past practice,
or (iii) modify, amend or terminate any of its material Company Agreement
(including any Company Agreement listed on SECTION 4.22 OF THE COMPANY
DISCLOSURE SCHEDULE) or waive, release or assign any material rights or claims,
except in the ordinary course of business and consistent with past practice;
(d) neither the Company nor any Company Subsidiary shall assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, except as
described in SECTION 6.1(d) OF THE COMPANY DISCLOSURE SCHEDULE as being in the
ordinary course of business and consistent with past practice, (i) make any
loan, advance or capital contribution to, or investment in, any other Person
(other than to or in wholly owned Company Subsidiaries), or (ii) enter into any
material commitment or transaction (including any capital expenditure or
purchase, sale or lease of assets or real estate);
(e) neither the Company nor any Company Subsidiary shall transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any assets other than
in the ordinary and usual course of business and consistent with past practice;
(f) except as otherwise specifically provided in this Agreement or in the
Schedule 14D-9, make or offer to make any change in the compensation payable or
to become payable to any of its officers, directors, employees, agents or
consultants (other than normal recurring increases in wages to employees who are
not officers or directors or Affiliates in the ordinary course of business and
consistent with past practice) or to Persons providing management services, or
enter into or amend any employment, severance, consulting, termination or other
agreement or employee benefit plan or make any loans to any of its officers,
directors, employees, Affiliates, agents or consultants or make any change in
its existing borrowing or lending arrangements for or on behalf of any of such
Persons pursuant to an employee benefit plan or otherwise; or
(g) except as otherwise specifically contemplated by this Agreement or by
the Schedule 14D-9 or as specifically set forth in SECTION 6.1(g) OF THE COMPANY
DISCLOSURE SCHEDULE, (i) pay or make any accrual or arrangement for payment of
any pension, retirement allowance or other employee benefit pursuant to any
existing plan, agreement or arrangement to any officer, director, employee or
Affiliate, (ii) pay, offer to pay or agree to pay or make any accrual or
arrangement for payment to any officers, directors, employees or Affiliates of
the Company or any Company Subsidiary of any amount relating to unused vacation
days (except payments and accruals made in the ordinary course of business
consistent with past practice), or (iii) adopt or pay, grant, issue, accelerate
or accrue salary or other payments or benefits pursuant to any
44
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any director, officer, employee, agent or consultant, whether past or
present, or amend in any material respect any such existing plan, agreement or
arrangement in a manner inconsistent with the foregoing;
(h) except as may be required by Applicable Law or this Agreement, enter
into, adopt or amend or terminate any bonus, special remuneration, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, health, life,
or disability insurance, dependent care, severance or other employee benefit
plan, agreement, trust, fund or other arrangement for the benefit or welfare of
any director, officer, employee or consultant in any manner;
(i) neither the Company nor any Company Subsidiary shall exercise its
discretion or otherwise voluntarily accelerate the vesting of any Company Stock
Option as a result of the Merger, any other "change in control" of the Company
(as defined in the Company Benefit Plans) or otherwise;
(j) neither the Company nor any Company Subsidiary shall revalue in any
material respect 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 consistent with past practice or as required by
generally accepted accounting principles;
(k) neither the Company nor any Company Subsidiary shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to and the prior consent of Parent;
(l) neither the Company nor any Company Subsidiary shall enter into any
Company Agreement or transaction relating to the purchase of assets other than
in the ordinary course of business and consistent with prior practices;
(m) neither the Company nor any Company Subsidiary shall settle or
compromise any pending or threatened suit, action or claim that (i) relates to
the Transactions or (ii) the settlement or compromise of which would involves
more than fifty thousand dollars ($50,000) or that would otherwise be material
to the Company and the Company Subsidiaries, taking the Company together with
the Company Subsidiaries as a whole, or that relates to any Intellectual
Property matters;
(n) neither the Company nor any Company Subsidiary shall pay, purchase,
discharge or satisfy any of its Liabilities, other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice, of Liabilities reflected or reserved against in, or contemplated by,
the Financial Statements;
(o) neither the Company nor any Company Subsidiary will adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
45
(p) neither the Company nor any Company Subsidiary will (i) change any of
the accounting methods used by it unless required by GAAP, (ii) change any of
its policies, procedures or timing of the collection of accounts receivable in
accordance with its historical practices, or (iii) make any material election
relating to Taxes, change any material election relating to Taxes already made,
adopt any material accounting method relating to Taxes, change any material
accounting method relating to Taxes unless required by GAAP or change in the
Internal Revenue Code or the regulations under the Internal Revenue Code, enter
into any closing agreement relating to Taxes, settle any claim or assessment
relating to Taxes or consent to any claim or assessment relating to Taxes or any
waiver of the statute of limitations for any such claim or assessment;
(q) except as otherwise permitted by SECTION 6.4, neither the Company nor
any Company Subsidiary will take, or agree to commit to take, any action that
could or would be reasonably likely to result in any of the conditions to the
Offer set forth in APPENDIX A to this Agreement or any of the conditions set
forth in ARTICLE VII not being satisfied, or would make any representation or
warranty of the Company contained in this Agreement inaccurate in any respect
at, or as of any time prior to, the Effective Time, or that would materially
impair the ability of the Company or the holders of Shares to consummate the
Offer or the Merger in accordance with the terms thereof or materially delay
such consummation; and
(r) neither the Company nor any Company Subsidiary will enter into any
agreement, contract, commitment, understanding or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing (and the Company shall use all reasonable efforts not to
take any action that would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect).
6.2 ACCESS; CONFIDENTIALITY.
The Company shall (and shall cause each Company Subsidiary to) afford to
the officers, employees, accountants, counsel, financing sources and other
authorized representatives of Parent, reasonable access, provided such persons
first contact Xxxxx Xxxxx, to coordinate the logistics of such access and only
contact other Company employees and representatives as Xx. Xxxxx may reasonable
direct, during the period prior to the earlier of the Appointment Date or
Termination Date, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each Company
Subsidiary to) furnish promptly to Parent (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 Parent may
reasonably request. If Xx. Xxxxx ceases to be employed by the Company or is
otherwise unavailable to perform the duties set out in this SECTION 6.2, the
Company shall promptly designate another executive officer of the Company to
perform such duties and shall promptly inform Parent and Purchaser of such
designation. Access shall include the right to conduct such environmental
studies as Parent shall deem appropriate. After the Appointment Date, the
Company shall provide Parent and such Persons as Parent shall designate with all
such information, at anytime as Parent shall reasonably request. Until the
Appointment Date, unless otherwise required by law or in order to comply with
disclosure requirements applicable to the
46
Offer Documents or the Proxy Statement, Parent will hold any such information
which is nonpublic in confidence in accordance with the provisions of the
Confidentiality Agreement.
6.3 REASONABLE EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the conditions set
forth of this Agreement, Parent, Purchaser and the Company agree to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable (subject
to any Applicable Laws) to consummate the Offer and the Merger and make
effective the Merger and the other Transactions as promptly as practicable,
including (i) the preparation and filing of all forms, registrations and notices
required to be filed to consummate the Offer, the Merger and the other
Transactions and the taking of such actions as are necessary to obtain any
requisite approvals, consents, Orders, exemptions or waivers by any third party
or Governmental Entity and (ii) the satisfaction of the other parties'
conditions to Closing. The Company shall reasonably cooperate in Purchaser's
efforts to obtain debt financing that is sufficient to consummate the
Transactions. In addition, no party hereto shall take any action after the date
of this Agreement to materially delay the obtaining of, or result in not
obtaining, any permission, approval or consent from any Governmental Entity
necessary to be obtained prior to Closing. Notwithstanding the foregoing, or any
other covenant herein contained, in connection with the receipt of any necessary
approvals under the HSR Act, neither the Company nor any of the Company
Subsidiaries shall be entitled to divest or hold separate or otherwise take or
commit to take any action that limits Parent's or Purchaser's freedom of action
with respect of, or their ability to retain, the Company or any of the Company
Subsidiaries or any material portions thereof or any of the businesses, Product
lines, properties or assets of the Company or any of the Company Subsidiaries,
without Parent's prior written consent (which may be withheld in Parent's sole
and absolute discretion).
(b) Prior to the Closing, each party shall promptly consult with the other
parties hereto with respect to, provide any necessary information with respect
to, and provide the other parties (or their respective counsel) with copies of,
all filings made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in connection with
this Agreement, the Offer, the Merger and the other Transactions. Each party
hereto shall promptly inform the other of any communication from any
Governmental Entity regarding any of the Transactions. If any party hereto or
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to any of the
Transactions, then such party shall endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request. To the extent
that transfers, amendments or modifications of Permits (including environmental
Permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, the Company shall and shall cause the
Company Subsidiaries to use best efforts to effect such transfers, amendments or
modifications.
(c) The Company and Parent shall file as soon as practicable, but in any
event by no later than five (5) Business Days after the delivery of the
Financing Letters to the Parent, notifications under the HSR Act and respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional
47
information or documentation and respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
Governmental Entity in connection with antitrust matters. Concurrently with the
filing of notifications under the HSR Act or as soon thereafter as practicable,
the Company and Parent shall each request early termination of the HSR Act
waiting period.
(d) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require Parent or Purchaser to commence any litigation against any
entity in order to facilitate the consummation of any of the Transactions or to
defend against any litigation brought by any Governmental Entity seeking to
prevent the consummation of any of the Transactions.
6.4 NO SOLICITATION OF COMPETING TRANSACTION.
(a) From the date hereof until the Termination Date, neither the Company
nor any Company Subsidiary or Affiliate of the Company shall (and the Company
shall cause the officers, directors, employees, representatives and agents of
the Company, each Company Subsidiary and each Affiliate of the Company,
including investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit or initiate or resume (including by way of
furnishing or disclosing non-public information) or take any action designed to
facilitate any discussions, inquiries, negotiations or the making of any
proposals with respect to or concerning any Acquisition Proposal. Nothing
contained in this SECTION 6.4 or any other provision of this Agreement shall
prohibit the Company or the Company Board from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender or exchange offer by
a third party pursuant to Rules 14d-9 and 14e-2 under the Exchange Act
(PROVIDED, that such tender or exchange offer was not solicited, encouraged,
discussed, or continued in contravention of this Agreement and PROVIDED,
FURTHER, that discussions with respect thereto were not required to cease or be
terminated pursuant to this Agreement), or (ii) making such disclosure to the
Company's shareholders where the Company Board determines in good faith, after
having consulted with outside counsel (who may be its regularly engaged outside
counsel), that failure to make such disclosure would violate its fiduciary
duties to the Company's shareholders under Applicable Law, PROVIDED, in each
case, that the Company may not, except as permitted by SECTION 6.4(b) of this
Agreement, withdraw or modify, or propose to withdraw or modify, its position
with respect to the Offer or the Merger or approve or recommend, or propose to
approve or recommend any Acquisition Proposal, or enter into any agreement with
respect to any Acquisition Proposal. Upon execution of this Agreement, the
Company will immediately cease any and all existing activities, discussions or
negotiations with any and all parties conducted heretofore with respect to any
Acquisition Proposal. Notwithstanding the foregoing, prior to the time of
acceptance of Shares for payment pursuant to the Offer, the Company may furnish
information concerning its business, properties or assets to any corporation,
partnership, Person or other entity or group pursuant to appropriate
confidentiality agreements (which shall be no more permissive than the
Confidentiality Agreement and shall permit the disclosure contemplated by this
SECTION 6.4(a)), and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal if:
(x) such entity or group has, on an unsolicited basis,
submitted a bona fide Acquisition Proposal in writing to the Company Board
which the board determines in good faith, consistent with advice of an
independent investment banker, (i) is capable
48
of being and likely to be funded on the disclosed terms and (ii) is likely
to be consummated in accordance with its terms; and
(y) the Company Board determines in good faith that failure to
take such action would violate its fiduciary duties to the Company's
shareholders under Applicable Law (i) based on the advice of the Financial
Advisor or a nationally recognized investment banking firm that the
Acquisition Proposal is superior, from a financial point of view, to the
Offer and the Merger for the Company's common shareholders and (ii) after
having consulted with outside legal counsel).
The Company will promptly (but not later than 24 hours) notify Parent of the
existence of any proposal, discussion, negotiation or inquiry received by the
Company, any Company Subsidiary or any of their respective representatives, and
the Company will promptly (but not later than 24 hours) communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry which it, any
Company Subsidiary or any of their respective representatives may receive (and
will promptly (but not later than 24 hours) provide to Parent copies of any
written materials received by the Company, any Company Subsidiary or their
respective representatives in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry or engaging in such discussion or negotiation, and shall promptly (but
not later than 24 hours) communicate to Parent the status of such proposal,
discussion or inquiry. The Company will simultaneously provide to Parent any
non-public information concerning the Company provided to any other party which
was not previously provided to Parent.
(b) Except as set forth below in this SECTION 6.4(b), neither the Company
Board nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, or take any action in furtherance of the withdrawal or
modification, in a manner adverse to Parent or Purchaser, the approval or
recommendation by such board of directors or any such committee of the Offer,
this Agreement or the Merger, (ii) approve or recommend or propose to approve or
recommend or take any action in furtherance of approval of recommendation of,
any Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, prior to the time of
acceptance for payment of Shares pursuant to the Offer, the Company Board may
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case at any time after
the fifth (5th) Business Day following Parent's receipt of written notice from
the Company advising Parent that the Company Board has received a Superior
Proposal which it intends to accept, specifying the terms and conditions of such
Superior Proposal, identifying the Person making such Superior Proposal, but
only if the Company shall have caused its financial and legal advisors to
negotiate in good faith with Parent to make such adjustments in the terms and
conditions set forth of this Agreement as would enable the Company to proceed
with the Transactions on such adjusted terms. Nothing in this Agreement shall
permit the Company to enter into any agreement, arrangement or understanding
with any third party providing for the payment of fees or reimbursement of
expenses in the event Parent makes a proposal in response to such Superior
Proposal. The Company shall not be entitled to enter into any agreement with
respect to a Superior Proposal unless and until this Agreement is terminated
pursuant to SECTION 8.1 of this
49
Agreement and the Company has paid all amounts due to Parent pursuant to SECTION
9.1 of this Agreement.
6.5 TRANSFER OF MAJOR SHAREHOLDERS' SHARES.
The Company hereby waives any rights the Company may have under any
agreement or otherwise to object to the transfer to Purchaser or Parent of any
or all Shares held by the Major Shareholders and hereby covenants not to consent
to the transfer of any Shares held by the Major Shareholders to any other Person
unless (i) the Company will have obtained the specific, prior written consent of
Parent with respect to any such transfer or (ii) this Agreement shall have been
terminated pursuant to ARTICLE VIII of this Agreement.
6.6 PUBLICITY.
The initial press release with respect to the execution of this Agreement
shall be (i) a joint press release reasonably acceptable to Parent and
acceptable to the Company and (ii) released promptly following the execution of
this Agreement (and, in any event, on the same day as such execution, or if such
execution occurs after 4:00 p.m. EST, prior to 9:00 a.m. on the next Business
Day). Thereafter, until the Appointment Date, or the date this Agreement is
terminated pursuant to ARTICLE VIII of this Agreement (whichever occurs first),
neither the Company, Parent nor any of their respective Affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions without prior
consultation with the other party, except as may be required by law or by any
listing agreement with a national securities exchange or trading market. Parent
will cause the initial press release to be filed with the SEC on a Schedule TO
and the Company will file the initial press release on a Schedule 14d-9, in each
case, on the date of release.
6.7 NOTIFICATION OF CERTAIN MATTERS.
The maker of a representation or warranty contained in this Agreement
shall give prompt notice to the other party, of the occurrence or non-occurrence
of any event the occurrence or non-occurrence of which caused or may cause any
such representation or warranty to be untrue or inaccurate in any material
respect at or prior to the Effective Time and the maker of a covenant, condition
or agreement to be complied with or satisfied by it hereunder shall give prompt
notice to the other party of any material failure of the maker, to comply with
or satisfy any such covenant, condition or agreement, PROVIDED, HOWEVER, that
the delivery of any notice pursuant to this SECTION 6.7 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) For four (4) years after the Effective Time, the Surviving Corporation
(or any successor to the Surviving Corporation) shall indemnify, defend and hold
harmless each Indemnified Party against all losses, damages, Liabilities, costs,
fees and expenses, including reasonable fees and disbursements of counsel and
judgments, fines, losses, Liabilities and amounts paid in settlement (PROVIDED,
that any such settlement is effected with the written consent of Parent or the
Surviving Corporation) arising out of actions or omissions occurring at or prior
to the Effective Time to the full extent permitted under applicable Missouri
law, the
50
terms of the Company's articles of incorporation and the by-laws and in any
agreement, as in effect at the date hereof, PROVIDED, that, in the event any
claim or claims are asserted or made within such four (4)-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance coverage for a period of
not less than four (4) years after the Effective Date, PROVIDED, that Parent may
substitute therefor policies of substantially equivalent coverage and amounts
containing terms no less favorable to such former directors or officers;
PROVIDED, FURTHER, that in no event shall Parent or the Surviving Corporation be
required to pay aggregate premiums for insurance under this SECTION 6.8(b) in
excess of one hundred fifty percent (150%) of the aggregate premiums paid by the
Company in the twelve (12) months prior to the date of this Agreement, on an
annualized basis for such purpose; and PROVIDED, further, that if Parent or the
Surviving Corporation is unable to obtain the amount of insurance required by
this SECTION 6.8(b) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of one hundred fifty percent (150%) of the aggregate
premiums paid by the Company in the twelve (12) months prior to the date of this
Agreement, on an annualized basis for such purpose.
6.9 STATE TAKEOVER LAWS.
Notwithstanding any other provision in this Agreement, in no event shall
the State Takeover Statute Approval be withdrawn, revoked or modified by the
Company Board. If any state takeover statute other than the right to demand
"fair value" in respect of Shares under Section 351.455 of the MGBCL becomes or
is deemed to become applicable to the Agreement, the Offer, the acquisition of
Shares pursuant to the Offer or the Merger or the other Transactions, the
Company, the applicable Company Subsidiary and the Company Board shall take all
action necessary to render such statute inapplicable to all of the foregoing.
6.10 PURCHASER COMPLIANCE.
Parent shall cause Purchaser to comply with all of its payment and other
obligations under or related to this Agreement.
6.11 INTENTIONALLY OMITTED.
6.12 EXPENSES.
Immediately prior to the Appointment Date, the Company will pay all
Transaction Expenses incurred by it and will obtain releases from all of its
attorneys, accountants, consultants, investment bankers, financial advisors and
other representatives providing services in connection with the Transactions,
including the Financial Advisor, with respect to all Transaction Expenses which
are contingent upon the consummation of the Transactions or which relate to
periods prior to the Expiration Date.
51
6.13 EMPLOYMENT AGREEMENT.
Immediately prior to the Effective Time, the employment agreement by and
between Xxxxxxx X. Xxxxxxxxx ("XXXXXXXXX") and the Company, dated as of April
17, 1997, and any other agreement by and between Xxxxxxxxx or any of his
Affiliates and the Company or any Company Subsidiary shall have been terminated,
other than the equipment lease agreement by and between Data Research
Associates, Inc. and Davandy Management, Inc., dated as of April 15, 1991,
without any resulting Liability of the Company or any Company Subsidiary.
6.14 INTERIM ACTIONS.
Neither Parent nor Purchaser will take, or agree to commit to take, any
action that could or would be reasonably likely to result in any of the
conditions to the Offer set forth in APPENDIX A to this Agreement or any of the
conditions set forth in ARTICLE VII not being satisfied, or would make any
representation or warranty of Parent or Purchaser contained in this Agreement
inaccurate in any respect at, or as of any time prior to, the Effective Time, or
that would materially impair the ability of Parent or Purchaser to consummate
the Offer or the Merger in accordance with the terms thereof or materially delay
such consummation.
6.15 SUBSIDIARY CAPITAL STOCK.
Upon the request of Parent, the Company shall use its best efforts to
cause each Person set out in SECTION 4.2 OF THE COMPANY DISCLOSURE SCHEDULE to
sell, convey or otherwise transfer on the Appointment Date any shares of the
capital stock of MultiLIS Europe, S.A. held by such Person to Persons designated
by Parent.
ARTICLE VII
CONDITIONS
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver by both parties at or prior to the
Effective Time of each of the following conditions:
7.1 SHAREHOLDER APPROVAL.
This Agreement shall have been adopted by the requisite vote of the
holders of the Shares, if required by Applicable Law, in order to consummate the
Merger; PROVIDED THAT Parent and Purchaser shall have voted all of their Shares
in favor of the Merger.
7.2 STATUTES; COURT ORDERS.
No statute, rule or regulation shall have been enacted or promulgated by
any Governmental Entity which prohibits the consummation of the Merger, and
there shall be no Order in effect precluding consummation of the Merger. If any
Order is issued, each party shall use its reasonable efforts to remove such
Order.
52
7.3 PURCHASE OF SHARES IN OFFER.
Parent, Purchaser or their Affiliates shall have purchased the Shares
pursuant to the Offer.
7.4 GOVERNMENTAL APPROVAL.
Any governmental or regulatory notices, approvals or other requirements
necessary to consummate the Transactions and to operate the Business after the
Effective Time in all material respects as it was operated prior thereto shall
have been given, obtained or complied with, as applicable, and the applicable
waiting period under the HSR Act shall have expired or been terminated.
7.5 PROXY STATEMENT CLEARED.
The Proxy Statement, if required to be prepared and disseminated to the
Company's shareholders, shall have been cleared by the SEC and shall not be the
subject of any stop order.
ARTICLE VIII
TERMINATION
8.1 TERMINATION.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement and the Transactions may be terminated or abandoned at any time prior
to the Effective Time, whether before or after shareholder approval thereof:
(a) Subject to SECTION 2.3(c), by the mutual written consent of Parent and
the Company;
(b) By either of the Company or Parent:
(i) if the Offer shall have expired without any Shares being
purchased pursuant to the Offer; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this SECTION 8.1(b)(i) 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 Purchaser
to purchase the Shares pursuant to the Offer on or prior to such date
(other than a failure by Purchaser to consummate the Offer solely because
Purchaser failed to receive the financing contemplated by the Financing
Letters);
(ii) if Purchaser shall not have commenced the Offer prior to the
fortieth (40th) Business Day immediately following the date hereof; or
(iii) if any Governmental Entity shall have issued an Order or taken
any other action (which Order or other action the parties hereto shall use
their reasonable efforts to lift), which permanently restrains, enjoins or
otherwise prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such Order shall have become final
and non-appealable; provided however, that the party seeking to
53
terminate this Agreement pursuant to this SECTION 8.1(b)(ii) shall have
used its reasonable efforts to remove such Order.
(c) By the Company:
(i) if Parent has not received the Financing Letters prior to the
thirtieth (30th) Business Day after the date hereof, and none of the
conditions set forth in PARAGRAPHS (A) through and including (G) of
APPENDIX A to this Agreement other than PARAGRAPH (F) (with respect to the
representations and warranties as of the Expiration Date) and PARAGRAPH
(G) (with respect to obligations to be performed or agreements or
covenants to be performed or complied with after the commencement of the
Offer) shall have occurred (unless waived by Parent in its sole
discretion) prior to such date; PROVIDED, that the Company may not
terminate this Agreement pursuant to this SECTION 8.1(c)(i) if the Company
is at such time in material breach of its obligations under this Agreement
or if Purchaser waives its rights under SECTION 8.1(d)(iv);
(ii) if the Company Board determines that it is required to accept a
Superior Proposal in accordance with SECTION 6.4 of this Agreement;
PROVIDED, that the Company has complied with all provisions thereof,
including the notice provisions therein, and that the Company makes
simultaneous payment to Parent of funds as required by SECTION 9.1(b) of
this Agreement; or
(iii) if Parent or Purchaser shall have breached in any material
respect any of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach would prevent
Purchaser from consummating the Offer and cannot be or has not been cured
within thirty (30) days after the giving of written notice by the Company
to Parent or Purchaser, as applicable.
(d) By Parent (on behalf of itself and Purchaser):
(i) if, due to an occurrence, the result of which makes it
impossible to satisfy any of the conditions set forth in APPENDIX A to
this Agreement, Parent, Purchaser, or any of their Affiliates shall have
failed to commence the Offer prior to the fortieth (40th) Business Day
immediately following the date hereof;
(ii) if, prior to the purchase of Shares by Purchaser pursuant to
the Offer, the Company Board shall have withdrawn, modified or changed in
a manner adverse to Parent or Purchaser its approval or recommendation of
the Offer, this Agreement or the Merger or shall have recommended an
Acquisition Proposal or shall have executed a letter of intent, agreement
in principle or definitive agreement relating to an Acquisition Proposal
or similar business combination with a Person (other than Parent,
Purchaser or their Affiliates);
(iii) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached in any material respect any representation,
warranty, covenant or other agreement contained in this Agreement which
gives rise to the failure of a condition set forth in APPENDIX A to this
Agreement and such breach cannot be or has not been cured
54
within thirty (30) days after the giving of written notice by Parent or
Purchaser to the Company; or
(iv) if Parent has not received the Financing Letters prior to the
thirtieth (30th) Business Day after the date hereof.
8.2 EFFECT OF TERMINATION.
In the event of the termination or abandonment of the Transactions by any
party hereto pursuant to the terms of this Agreement, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination or abandonment of the Transactions is
made, and there shall be no Liability on the part of Parent, Purchaser or the
Company except (a) nothing contained herein shall relieve Purchaser, Parent or
the Company of any Liability for any breach of any representation, warranty or
covenant occurring prior to such termination (except that neither Parent nor
Purchaser shall have any Liability if they fail to receive the Financing Letters
or the financing contemplated thereby except as set forth in SECTION 9.1(c)) and
(b) as set forth in SECTIONS 6.2 and 9.1. Notwithstanding anything in this
Agreement to the contrary, ARTICLE IX shall survive the termination of this
Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 FEES AND EXPENSES.
(a) Except as specifically PROVIDED to the contrary in this
Agreement, all costs and expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such
costs and expenses, whether or not the Transactions are consummated.
(b) The Company shall pay to Parent an amount equal to the Company
Termination Fee if:
(i) Parent shall terminate or abandon the Transactions pursuant to
SECTION 8.1(d)(ii) of this Agreement;
(ii) the Company shall terminate or abandon the Transactions
pursuant to SECTION 8.1(c)(ii); or
(iii) (A) prior to the termination of this Agreement, any Person
shall have commenced, communicated to the Company or publicly proposed an
Acquisition Proposal, (B) this Agreement shall have been terminated either
(x) pursuant to SECTION 8.1(b)(i) (and the Minimum Condition shall not
have been satisfied on the Termination Date) or pursuant to either SECTION
8.1(b)(ii) or SECTION 8.1(d)(i) (unless the failure to commence the Offer
which resulted in the termination right pursuant to either SECTION
8.1(b)(ii) or SECTION 8.1(d)(i) constituted a breach of this Agreement by
Purchaser or Parent) or (y) pursuant to SECTION 8.1(d)(iii) and, in the
case of such termination pursuant to SECTION 8.1(d)(iii), the breach
giving rise to such termination (I) is willful or
55
knowing, (II) is of SECTION 6.4 or (III) relates to or arises from (x)
such Acquisition Proposal, (y) an action taken by any third party relating
to or arising from such Acquisition Proposal or (z) the failure by the
Company, any Company Subsidiary or any Major Shareholder to take any
action required to be taken by this Agreement or the Support Agreement
relating to or in connection with such Acquisition Proposal and (C) prior
to the first anniversary of the Termination Date, the Company shall have
consummated or entered into an agreement or letter of intent in respect of
an Acquisition Proposal.
The Company hereby waives any right to set-off or counterclaim against
such amount. The Company Termination Fee shall be paid in same day funds
concurrently with the execution of an agreement or acceptance of an Acquisition
Proposal referred to in SECTION 9.1(b)(iii) or SECTION 9.1(b)(iv) (or upon
consummation if no such agreement is executed and/or no such Acquisition
Proposal is accepted) or any termination or abandonment referred to in SECTION
9.1(b)(i) or SECTION 9.1(b)(ii), as applicable.
The Company and Company Subsidiaries expressly acknowledge that the
agreements contained in this SECTION 9.1(b) are an integral part of the
Transactions, and that, without these agreements, Parent would not enter into
this Agreement. Accordingly, if the Company or any Company Subsidiary fails
promptly to pay the Company Termination Fee, and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
or any Company Subsidiary for the Company Termination Fee, the Company and the
Company Subsidiaries expressly shall be obligated, jointly and severally, to pay
to Parent its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the Company
Termination Fee at the rate of 10% per annum.
(c) If this Agreement is terminated (i) pursuant to SECTION 8.1(b)(i) and
immediately prior to such termination, all of the conditions set forth in
APPENDIX A to this Agreement shall have been satisfied and the sole reason that
Purchaser did not consummate the purchase of the Shares pursuant to the Offer is
that Purchaser did not receive the financing contemplated by the Financing
Letters or (ii) pursuant to SECTION 8.1(c)(i) or SECTION 8.1(d)(iv), then Parent
shall pay to the Company an amount equal to $1,000,000 (the "PARENT TERMINATION
FEE"). In addition, if Parent is required to pay the Parent Termination Fee to
the Company pursuant to clause (i) above, Parent will reimburse the Company for
its reasonable legal fees and expenses incurred in connection with the
negotiation, execution and delivery of the Agreement. Purchaser and Parent
hereby waive any right to set-off or counterclaim against such amount. The
Parent Termination Fee shall be paid in same day funds within ten (10) Business
Days after any such termination.
Parent and Purchaser expressly acknowledge that the agreements
contained in this SECTION 9.1(b) are an integral part of the Transactions, and
that, without these agreements, the Company would not enter into this Agreement.
Accordingly, if Parent or Purchaser fail promptly to pay the Parent Termination
Fee, and, in order to obtain such payment, the Company commences a suit which
results in a judgment against Parent or Purchaser for the Parent Termination
Fee, Parent and Purchaser expressly shall be obligated, jointly and severally,
to pay to the Company its costs and expenses (including attorneys' fees and
expenses) in connection
56
with such suit, together with interest on the amount of the Parent Termination
Fee at the prime rate of 10% per annum.
9.2 AMENDMENT AND MODIFICATION.
Subject to Applicable Law and SECTION 2.3, this Agreement may be amended,
modified and supplemented in any and all respects, whether before or after any
vote of the shareholders of the Company contemplated hereby, by written
agreement of the parties hereto, by action taken by their respective boards of
directors, at any time prior to the Closing Date with respect to any of the
terms contained herein; PROVIDED, HOWEVER, that after the approval of this
Agreement by the shareholders of the Company, no such amendment, modification or
supplement shall reduce the amount or change the form of the Merger
Consideration.
9.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any schedule, instrument or other document delivered pursuant to
this Agreement shall survive the Effective Time except for the agreements set
forth in ARTICLES I, II and III, the provisions of SECTIONS 3.4 and 6.8 and this
ARTICLE IX. The foregoing sentence shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective
Time.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (which is confirmed)
or sent by an internationally recognized overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
Sirsi Holdings Corp.
000 Xxxxxxxxxx Xxxxxx XX
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies (which shall not constitute notice) to:
Seaport Capital Partners II, L.P.
One Seaport Plaza
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
57
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
if to the Company, to:
Data Research Associates, Inc.
0000 Xxxxx Xxxxxx Xxxx
X.X. Xxx 0000
Xx. Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Gallop, Xxxxxxx & Xxxxxx, X.X.
Interco Corporate Tower, 000 X. Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
9.5 COUNTERPARTS.
This Agreement may be executed in one or more counterparts (whether
delivered by facsimile or otherwise), each of which shall be considered one and
the same agreement and shall become effective when two (2) or more counterparts
have been signed by each of the parties and delivered to the other parties.
9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement, the Support Agreements, and the Confidentiality Agreement
(including the documents and the instruments referred to herein and therein)
constitute the entire agreement and supersede all prior agreements,
negotiations, arrangements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof, and are not
intended to confer upon any Person other than the parties hereto and thereto any
rights or remedies hereunder.
58
9.7 SEVERABILITY.
Any term or provision of this Agreement that is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the invalid, void or unenforceable term or provision in any
other situation or in any other jurisdiction. If the final judgment of a court
of competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to and shall, subject to the
discretion of such court, reduce the scope, duration, area or applicability of
the term or provision, to delete specific words or phrases, or to replace any
invalid, void or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision.
9.8 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to the principles of
conflicts of law thereof.
9.9 ENFORCEMENT.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Delaware or in Delaware state court, this being in addition to any other remedy
to which they are entitled at law or in equity. In addition, each of the parties
(a) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the Transactions, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions in any
court other than a Federal court sitting in the State of Delaware or a Delaware
state court.
9.10 WAIVER OF JURY TRIAL.
Each party acknowledges and agrees that any controversy which may arise
under this agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any litigation
directly or indirectly arising out of or relating to this agreement or the
Transactions. Each party certifies and acknowledges that (i) no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver, (ii) each such party understands and has considered the
implications of this waiver, (iii) each such party makes this waiver
voluntarily, and (iv) each such party has been induced to enter into this
agreement by, among other things, the waivers and certifications in this SECTION
9.10.
59
9.11 EXTENSION, WAIVER.
At any time prior to the Effective Time, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties of the
other parties contained in this Agreement or in any document delivered pursuant
to this Agreement or (c) subject to the proviso of SECTION 9.2, waive compliance
by the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
9.12 ASSIGNMENT.
Neither this Agreement not any of the rights, interests or obligations
hereunder shall be assigned by any of the parties (whether by operation of law
or otherwise) without the prior written content of the other parties, except
that Purchaser or Parent may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to an Affiliate thereof without the
consent of any 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.
60
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
DATA RESEARCH ASSOCIATES, INC.
By
-------------------------------------
Name:
Title:
XXXXXXX ACQUISITION INC.
By
-------------------------------------
Name:
Title:
SIRSI HOLDINGS CORP.
By
-------------------------------------
Name:
Title:
APPENDIX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in addition
to (and not in limitation of) Purchaser's rights to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of the Agreement),
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate or amend the
Offer as to any Shares not then paid for, if (i) any applicable waiting period
under the HSR Act has not expired or been terminated, (ii) the Minimum Condition
has not been satisfied, or (iii) at any time on or after the date of the
Agreement and before the Expiration Date (as then extended), any of the
following events shall occur or shall be determined by Purchaser to have
occurred:
(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity (i) seeking to prohibit or impose any material
limitations on Parent's or Purchaser's ownership or operation (or that of any of
their respective Subsidiaries or Affiliates) of all or a material portion of
their or the Company's or any Company Subsidiaries' businesses or assets, or to
compel Parent or Purchaser or their respective Subsidiaries and Affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company, any Company Subsidiaries', Parent's or any of its Subsidiaries,
(ii) challenging the acquisition by Parent or Purchaser of any Shares under the
Offer or pursuant to the Support Agreement, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any of
the other Transactions or the Support Agreement, or seeking to obtain from the
Company, Parent or Purchaser any damages that are material in relation to the
Company and the Company Subsidiaries, taking the Company together with the
Company Subsidiaries as a whole, (iii) seeking to impose material limitations on
the ability of Purchaser, or rendering Purchaser unable, to accept for payment,
pay for or purchase some or all of the Shares pursuant to the Offer or the
Merger, (iv) seeking to impose material limitations on the ability of Purchaser
or Parent effectively to exercise full rights of ownership of the Shares,
including the right to vote the Shares purchased by it on all matters properly
presented to the Company's shareholders or (v) which otherwise is reasonably
likely to have a Company Material Adverse Effect;
(b) there shall be any Applicable Law or Order enacted, entered, enforced,
promulgated or deemed applicable to the Offer or the Merger, or any other action
shall be taken by any Governmental Entity, other than the application to the
Offer or the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or in the
NASDAQ National Market System (excluding suspensions or limitations resulting
solely from computerized trading limit or any intrading suspension due to
circuit breakers from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) a commencement or escalation of a war,
armed hostilities or other international or national calamity directly involving
the United States that has a material adverse effect on bank syndication or
financial markets in the United States, (iv) any limitation (whether or not
mandatory) by any United States or foreign governmental authority on the
extension of credit by banks or other financial institutions, (v) a change in
general financial bank or capital market conditions which materially or
adversely affects the ability of financial institutions in the United States to
extend credit or syndicate loans or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof;
(d) there shall have occurred any Company Material Adverse Effect (or any
development that, insofar as reasonably can be foreseen, is reasonably likely to
result in a Company Material Adverse Effect);
(e) the Company Board or any committee thereof (i) shall have withdrawn,
modified or changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, the Agreement or the Merger, (ii) shall have
recommended the approval or acceptance of an Acquisition Proposal from, or
similar business combination with, a Person other than Parent, Purchaser or
their Affiliates or (iii) shall have executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal from, or similar
business combination with, a Person other than Parent, Purchaser or their
Affiliates;
(f) any of the representations and warranties of the Company contained in
the Agreement shall not be true and correct in all material respects at and as
of the date of the Agreement or at and as of the scheduled Expiration Date with
the same effect as if made at and as of the Expiration Date except to the extent
such representations specifically relate to an earlier date, in which case such
representations shall be true and correct as of such earlier date (in each case,
except for those representations and warranties that contain materiality or
Company Material Adverse Effect qualifications, which shall be true and correct
in all respects), and the Company shall have delivered to Parent and Purchaser a
certificate to such effect, executed by the Chief Executive Officer of the
Company and by the Chief Financial Officer of the Company;
(g) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it prior to the
scheduled Expiration Date under the Agreement;
(h) the Company shall not have delivered to Parent and Purchaser a
certificate to the effect set forth in the immediately preceding clauses (f) and
(g), executed by each of the Chief Executive Officer and the Chief Financial
Officer of the Company;
(i) all consents necessary to the consummation of the Offer or the Merger
including consents from parties to any contract (including the Sirsi Credit
Agreement) and consents from Governmental Entities shall not have been obtained
and be in full force and effect, other than consents the failure to obtain which
would not reasonably be expected to have a Company Material Adverse Effect;
2
(j) the Agreement shall have been terminated in accordance with its terms;
or
(k) the sum of the Company's cash, cash equivalents and short-term
investments (in each case determined in accordance with the Company's historical
practices and in accordance with GAAP) shall be less than $ 18.7 million (prior
to the payment of the Transaction Expenses) and the Company shall have no
obligations in respect of any Indebtedness; or
(l) the Company shall not have received all material third-party consents.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser, may be waived by Parent or Purchaser, in
whole or in part, at any time and from time to time in the reasonable discretion
of Parent or Purchaser. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
3
