EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AUTOMATIC DATA PROCESSING, INC.,
ADP MERGER CORP.
AND
PROBUSINESS SERVICES, INC.
Dated as of January 5, 2003
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER...........................................................1
1.1 THE MERGER...................................................1
1.2 EFFECTIVE TIME; CLOSING......................................1
1.3 EFFECT OF THE MERGER.........................................2
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS......................2
1.5 DIRECTORS AND OFFICERS.......................................2
1.6 EFFECT ON CAPITAL STOCK......................................2
1.7 SURRENDER OF CERTIFICATES....................................4
1.8 DISSENTING SHARES............................................6
1.9 FURTHER ACTION...............................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................7
2.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS;
SUBSIDIARIES.................................................7
2.2 CAPITAL STRUCTURE............................................8
2.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.............9
2.4 SEC FILINGS; FINANCIAL STATEMENTS...........................11
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS........................12
2.6 TAXES.......................................................12
2.7 INTELLECTUAL PROPERTY.......................................13
2.8 COMPLIANCE; PERMITS.........................................14
2.9 LITIGATION..................................................15
2.10 BROKERS' AND FINDERS' FEES..................................15
2.11 TRANSACTIONS WITH AFFILIATES................................15
2.12 EMPLOYEE BENEFIT PLANS......................................15
2.13 ENVIRONMENTAL MATTERS.......................................19
2.14 CONTRACTS...................................................20
2.15 DISCLOSURE..................................................21
2.16 BOARD APPROVAL..............................................21
2.17 FAIRNESS OPINION............................................21
2.18 RIGHTS PLAN.................................................22
2.19 TAKEOVER STATUTES...........................................22
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2.20 VOTE REQUIRED...............................................22
2.21 REAL ESTATE.................................................22
2.22 CUSTOMERS...................................................22
2.23 TRUST FUNDS.................................................23
2.24 INVESTMENT POLICY. ........................................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........25
3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS;
SUBSIDIARIES................................................25
3.2 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS............25
3.3 BROKERS' AND FINDERS' FEES..................................26
3.4 DISCLOSURE..................................................26
3.5 BOARD APPROVAL..............................................27
3.6 AVAILABLE FUNDS.............................................27
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................27
4.1 CONDUCT OF BUSINESS OF THE COMPANY..........................27
ARTICLE V ADDITIONAL AGREEMENTS...............................................30
5.1 PROXY STATEMENT.............................................30
5.2 MEETINGS OF STOCKHOLDERS; BOARD RECOMMENDATION..............31
5.3 ACQUISITION PROPOSALS.......................................32
5.4 CONFIDENTIALITY; ACCESS TO INFORMATION......................34
5.5 PUBLIC DISCLOSURE...........................................34
5.6 REGULATORY FILINGS; REASONABLE BEST EFFORTS.................34
5.7 NOTIFICATION OF CERTAIN MATTERS.............................37
5.8 THIRD-PARTY CONSENTS........................................37
5.9 COMPANY EMPLOYEE PLANS AND EMPLOYEE BENEFITS................37
5.10 INDEMNIFICATION.............................................38
5.11 SECTION 16 MATTERS..........................................39
5.12 MERGER SUB COMPLIANCE.......................................39
5.13 TAX ACCOUNT AND NON-TAX ACCOUNT RECONCILIATION REPORT
AND RELATED DATA............................................39
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ARTICLE VI CONDITIONS TO THE MERGER...........................................40
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER......................................................40
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND
MERGER SUB..................................................40
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.....41
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................42
7.1 TERMINATION.................................................42
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION................44
7.3 FEES AND EXPENSES...........................................44
7.4 AMENDMENT...................................................45
7.5 EXTENSION; WAIVER...........................................45
ARTICLE VIII GENERAL PROVISIONS...............................................45
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............45
8.2 NOTICES.....................................................45
8.3 INTERPRETATION; KNOWLEDGE...................................47
8.4 COUNTERPARTS................................................48
8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES.................48
8.6 SEVERABILITY................................................48
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE........................48
8.8 GOVERNING LAW; JURISDICTION.................................48
8.9 RULES OF CONSTRUCTION.......................................49
8.10 ASSIGNMENT..................................................49
8.11 WAIVER OF JURY TRIAL........................................49
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of January 5, 2003, by and among Automatic Data Processing,
Inc., a Delaware corporation ("PARENT"), ADP Merger Corp., a Delaware
corporation and indirect wholly-owned subsidiary of Parent ("MERGER SUB"), and
ProBusiness Services, Inc., a Delaware corporation (the "COMPANY").
RECITALS
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A. The respective Boards of Directors of Parent, Merger Sub and
the Company have deemed it advisable and in the best interests of their
respective corporations and stockholders to consummate the Merger (as defined in
Section 1.1), on the terms and subject to the conditions set forth in this
Agreement.
B. The respective Boards of Directors of Parent, Merger Sub and
the Company have approved and declared advisable this Agreement and the
transactions contemplated hereby, including the Merger.
C. The Board of Directors of the Company has resolved to
recommend to its stockholders approval and adoption of this Agreement and
approval of the Merger.
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's, the Company's and Merger Sub's respective
willingness to enter into this Agreement, certain stockholders of the Company
are entering into Stockholder Support Agreements in substantially the form
attached hereto as EXHIBIT A (the "STOCKHOLDER AGREEMENTS").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
("DELAWARE LAW"), Merger Sub shall be merged with and into the Company (the
"MERGER"), the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation. The Company, as the
surviving corporation after the Merger, is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the
"CERTIFICATE OF MERGER") (the time of such filing with the Secretary of State of
the State of Delaware (or such later time as may be agreed in writing by the
Company and Parent and specified in the Certificate of Merger) being the
"EFFECTIVE TIME") as soon as practicable on the Closing Date (as defined below).
The closing of the Merger (the "CLOSING") shall take place at the offices of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
XX 00000, at a time and date to be specified by the parties, which shall be no
later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective
Time, the Certificate of Incorporation of the Company shall be the certificate
of incorporation of the Surviving Corporation and shall be amended and restated
in its entirety to be identical to the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, until thereafter
amended in accordance with Delaware Law and as provided in such Certificate of
Incorporation. At the Effective Time, the Bylaws of the Company shall be the
Bylaws of the Surviving Corporation and shall be amended and restated in their
entirety to be identical to the Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time until thereafter amended in accordance with Delaware
Law and as provided in such Bylaws.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or the holders of any
shares of capital stock of the Company, the following shall occur:
(a) COMPANY PREFERRED STOCK. In accordance with Section
4(d) of the Certificate of Designations, Preferences and Rights of the 6.9%
Senior Convertible Preferred Stock filed with the Secretary of State of the
State of Delaware on August 1, 2000 (the "CERTIFICATE OF Designation"), subject
to the election of the holders of two-thirds (2/3) of the Company Preferred
Stock (as defined in Section 2.2(a)) issued and outstanding immediately prior to
the Effective Time (which election has been obtained concurrently with the
execution of this Agreement), each share of Company Preferred Stock (including
shares of Company Preferred Stock issued or issuable immediately prior to the
Closing in accordance with Section 3 of the Certificate of Designation)(other
than shares of Company Preferred Stock to be canceled pursuant to Section 1.6(c)
and any Dissenting Shares (as defined in Section 1.8)), will be canceled and
extinguished and automatically converted into the right to receive $26.50 in
cash (the "PREFERRED PER SHARE LIQUIDATION AMOUNT") (such amount being an amount
equal to the liquidation preference set forth in Section 4(a) of the Certificate
of Designation).
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(b) COMPANY COMMON STOCK. Each share of the Common Stock,
par value $0.001 per share, of the Company (together with the associated Company
Right (as defined in Section 2.2(a)) under the Company Rights Agreement (as
defined in Section 2.2(a)) ("COMPANY COMMON STOCK")) issued and outstanding
immediately prior to the Effective Time (other than any shares of Company Common
Stock to be canceled pursuant to Section 1.6(c) and any Dissenting Shares) will
be canceled and extinguished and automatically converted into the right to
receive $17 per share (the "PER SHARE Amount" and, together with the Preferred
Per Share Liquidation Amount referred to herein as the "MERGER CONSIDERATION").
(c) CANCELLATION OF TREASURY AND PARENT OWNED STOCK. Each
share of Company Common Stock or Company Preferred Stock held by the Company or
Parent or any direct or indirect wholly-owned Subsidiary of the Company or of
Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common
stock, par value $0.01, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and non-assessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
(e) CONVERSION OF DISSENTING SHARES. The holders of
Dissenting Shares, if any, shall be entitled to payment for such shares only to
the extent permitted by and in accordance with the provisions of Delaware Law;
PROVIDED, HOWEVER, that if, in accordance with Delaware Law, any holder of
Dissenting Shares shall forfeit such right to payment of the fair cash value of
such shares, such shares shall thereupon be deemed to have been converted into
and to have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration provided in Section 1.6(a) or Section 1.6(b),
as applicable.
(f) REPURCHASE RIGHTS. The Board of Directors of the
Company, without any further action by Parent, shall take all actions necessary
pursuant to the terms of the Company's 2002 Employee Stock Purchase Plan and the
1997 Employee Stock Purchase Plan (collectively, the "COMPANY PURCHASE PLANS")
to shorten all Offering Periods (as defined in the Company Purchase Plans) such
that all Offering Periods then in progress terminate no later than immediately
prior to the Effective Time.
(g) EMPLOYEE STOCK OPTIONS. Each Company Option or Other
Option (both as defined in Section 2.2(b)) which is outstanding immediately
prior to the Effective Time, whether or not then exercisable or vested, shall by
virtue of the Merger and without any action on the part of the Parent, Merger
Sub, the Company or the holder thereof, be converted into and shall become a
right to receive an amount in cash, without interest, with respect to each share
subject thereto, equal to the excess, if any, of the Per Share Amount over the
per share exercise or purchase price of such Company Option or such Other Option
(such amount being hereinafter referred to as the "OPTION MERGER CONSIDERATION")
and each Company Option and Other Option shall be canceled at the Effective
Time. The payment of the Option Merger Consideration to the holder of a Company
Option or Other Option shall be reduced by any income or employment tax
withholding required under the Code or any provision of state, local or foreign
Tax (as defined in Section 2.6) law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this
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Agreement as having been paid to the holder of such Company Option or Other
Option. The Stock Option Plans (as defined in Section 2.12(a)) shall terminate
at the Effective Time.
(h) ADJUSTMENTS TO THE MERGER CONSIDERATION. The Merger
Consideration shall be adjusted to reflect fully the appropriate effect of any
stock split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Company Common Stock or Company
Preferred Stock), reorganization, recapitalization, reclassification or other
like change with respect to Company Common Stock or Company Preferred Stock
having a record date on or after the date hereof and prior to the Effective
Time.
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent
shall select a bank or trust company reasonably satisfactory to the Company to
act as the exchange agent (the "EXCHANGE AGENT") in the Merger. Prior to the
Effective Time, Parent shall enter into an agreement with Exchange Agent,
reasonably satisfactory to the Company.
(b) PARENT TO PROVIDE CASH. At or promptly following the
Effective Time (and in no event later than one (1) business day following the
Effective Time), Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, cash payable to the stockholders of the
Company pursuant to Section 1.6(a) or Section 1.6(b) in exchange for outstanding
shares of Company Preferred Stock and Company Common Stock, respectively. Any
funds deposited with the Exchange Agent shall hereinafter be referred to as the
"EXCHANGE FUND."
(c) EXCHANGE PROCEDURES. Promptly after the Effective
Time (and in no event later than three (3) business days following the Effective
Time), Parent shall cause the Exchange Agent to mail to each holder of record
(as of the Effective Time) of a certificate or certificates (the "CERTIFICATES")
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock or Company Preferred Stock whose shares were converted into
the right to receive cash pursuant to Section 1.6(a) or Section 1.6(b): (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration to which the holder of such Certificate is entitled pursuant to
Section 1.6(a) or Section 1.6(b) (without limiting the effect of Section
1.7(e)). Upon surrender of Certificates for cancellation to the Exchange Agent,
together with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificates
shall be entitled to receive promptly (and in no event later than three (3)
business days after receipt thereof) in exchange therefor the Merger
Consideration to which the holder of such certificate is entitled pursuant to
Section 1.6(a) or Section 1.6(b) (less any withholding amount with respect to
the shares of Company Common Stock or Company Preferred Stock held by such
holder as provided by Section 1.7(e)), and the Certificates so surrendered shall
forthwith be canceled. No interest shall accrue or be paid on the amounts
payable pursuant to this Article I upon surrender of the Certificates.
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(d) TRANSFERS OF OWNERSHIP. If the payment of the amounts
payable pursuant to Section 1.6(a) or Section 1.6(b) is to be made to a person
other than the person in whose name the surrendered Certificate formerly
evidencing shares of Company Common Stock or Company Preferred Stock, as
applicable, are registered, it will be a condition of payment that the
Certificates so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the Persons (as defined in Section 8.3(d)) requesting
such payment will have paid to Parent or any agent designated by it any transfer
or other Taxes (as defined in Section 2.6) required by reason of the payment of
the amount specified in Section 1.6(a) or Section 1.6(b) to a Person other than
the registered holder of the Certificates surrendered, or established to the
satisfaction of Parent or any agent designated by it that such Tax has been paid
or is not payable.
(e) REQUIRED WITHHOLDING. Each of the Exchange Agent and
the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock or Company Preferred Stock such
amounts as may be required to be deducted or withheld therefrom under the Code
or under any provision of state, local or foreign Tax law or under any other
applicable Legal Requirement (as defined in Section 2.2(d)). To the extent such
amounts are so deducted or withheld, the amount of such consideration shall be
treated for all purposes under this Agreement as having been paid to the Person
to whom such consideration would otherwise have been paid.
(f) NO LIABILITY. Notwithstanding anything to the
contrary in this Section 1.7, neither the Exchange Agent, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of
Company Common Stock or Company Preferred Stock for any amount properly paid to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest the Exchange Fund as directed by Parent on a daily basis; PROVIDED THAT
no such investment or loss thereon shall affect the amounts payable to Company
stockholders pursuant to this Article I. Any interest and other income resulting
from such investment shall become a part of the Exchange Fund, and any amounts
in excess of the amounts payable to Company stockholders pursuant to this
Article I shall promptly be paid to Parent.
(h) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of Certificates six (6)
months after the Effective Time shall, at the request of the Surviving
Corporation, be delivered to the Surviving Corporation or otherwise on the
instruction of the Surviving Corporation, and any holders of the Certificates
who have not surrendered such Certificates in compliance with this Section 1.7
shall after such delivery to the Surviving Corporation look only to the
Surviving Corporation (subject to abandoned property, escheat and similar laws)
for payment, as general creditors thereof, of their claim for the Merger
Consideration, without interest, to which such holders may be entitled pursuant
to Section 1.6(a) or Section 1.6(b). Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of Company Common Stock or Company
Preferred Stock immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Entity (as defined in Section
2.3(c)) shall, to the extent permitted by law, become the property of Parent
free and clear of any claims or interest of any Person previously entitled
thereto.
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(i) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK
OR COMPANY PREFERRED STOCK. At the close of business on the day of the Effective
Time, there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock or Company Preferred
Stock. From and after the Effective Time, the holders of Company Common Stock or
Company Preferred Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock or Company Preferred Stock except as otherwise provided herein or by
applicable law. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent, they shall be canceled and
exchanged for the Merger Consideration, as provided in this Article I, subject
to applicable law in the case of Dissenting Shares. All cash paid upon surrender
of Certificates in accordance with the terms of this Article I shall be deemed
to have been paid in full satisfaction of all rights pertaining to the shares
previously represented by such Certificates.
(k) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event
any Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall pay in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration to which the holder thereof is entitled pursuant to this Article
I; PROVIDED, HOWEVER, that Parent or the Surviving Corporation may, in their
discretion and as a condition precedent to the payment thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as they may reasonably direct as indemnity against any claim that may be
made against Parent, the Company, the Surviving Corporation or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
(l) APPLICABILITY TO DISSENTING SHARES. The provisions of
this Section 1.7 shall also apply to Dissenting Shares that lose their status as
such, except that the obligations of the Exchange Agent under this Section 1.7
shall commence only on the date of such loss of status.
1.8 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to
the contrary, any shares of Company Common Stock and Company Preferred Stock for
which the holder thereof has demanded an appraisal of their value in accordance
with, and has complied in all respects with, Section 262 of Delaware Law
(collectively, the "DISSENTING SHARES") shall not be converted into or represent
the right to receive cash in accordance with Section 1.6(a) or Section 1.6(b),
and the holder or holders of such shares shall be entitled only to such rights
as may be granted to such holder or holders in Section 262 of Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if
any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) such appraisal rights, then, as of the
occurrence of such event, such holder's shares shall no longer be deemed to be
"Dissenting Shares" and such shares shall automatically be converted into and
represent only the right to receive the applicable cash payment provided in
Section 1.6(a) or Section 1.6(b), without interest, upon surrender of the
certificate representing such shares in accordance with Section 1.7.
(c) The Company shall give Parent (i) prompt notice of
any demands for appraisal of any shares of Company Common Stock or Company
Preferred Stock, the withdrawals of such
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demands, and any other instrument served pursuant to Delaware Law and received
by the Company and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
Company shall not, except with the prior written consent of Parent, offer to
make or make any payment with respect to any demands for appraisal of the shares
Company Common Stock or Company Preferred Stock or offer to settle or settle any
such demands.
1.9 FURTHER ACTION. At and after the Effective Time, the officers
and directors of Parent and the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Company and Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of Company and Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, except as
otherwise set forth in writing in appropriately corresponding sections of the
disclosure letter supplied by the Company to Parent dated as of the date hereof
(the "COMPANY DISCLOSURE LETTER"), as follows:
2.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS;
SUBSIDIARIES.
(a) ORGANIZATION; STANDING AND POWER. The Company and
each of its Subsidiaries (as defined below) is a corporation or other
organization duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as now being conducted, except where the
failure of any Subsidiary of the Company to be so organized, existing and in
good standing would not have, individually or in the aggregate, a Material
Adverse Effect (as defined in Section 8.3(c)) on the Company, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure to so
qualify or to be in good standing would not have, individually or in the
aggregate, a Material Adverse Effect on the Company. For purposes of this
Agreement, "SUBSIDIARY," when used with respect to any party, shall mean any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which 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 party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(b) CHARTER DOCUMENTS. The Company has delivered or made
available to Parent: (i) a true and correct copy of the Certificate of
Incorporation (including any Certificate of Designations) and Bylaws of the
Company, each as amended to date (collectively, the "COMPANY CHARTER DOCUMENTS")
and (ii) the certificate of incorporation and bylaws, or like organizational
documents, each as amended to date (collectively, "SUBSIDIARY CHARTER
DOCUMENTS") of each of its Subsidiaries, and each such instrument is in full
force and effect. The Company is not in violation of
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any of the provisions of the Company Charter Documents and each Subsidiary is
not in violation of its respective Subsidiary Charter Documents, except in the
case of a Subsidiary, as would not be material to the Company.
(c) SUBSIDIARIES. Section 2.1(c) of the Company
Disclosure Letter includes all the Subsidiaries of the Company. All the
outstanding shares of capital stock of, or other equity or ownership interests
in, each such Subsidiary have been validly issued and are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens, charges, preemptive rights, mortgages,
encumbrances, options and security interests of any kind or nature whatsoever
(collectively, "LIENS"), including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other equity or ownership interests,
except for restrictions imposed by applicable securities laws.
2.2 CAPITAL STRUCTURE.
(a) CAPITAL STOCK. The authorized capital stock of the
Company consists of: (i) 60,000,000 shares of Company Common Stock, par value
$0.001 per share; (ii) 5,000,000 shares of preferred stock, par value $0.001 per
share, 60,000 of which have been designated as Series A Participating Preferred
Stock ("SERIES A PREFERRED"), all of which will be reserved for issuance upon
exercise of preferred stock purchase rights (the "COMPANY RIGHTS") issuable
pursuant to the preferred stock rights agreement, dated as of August 8, 2001,
between the Company and Xxxxx Fargo Bank, MN N.A., as amended, (the "COMPANY
RIGHTS AGREEMENT"), none of which are issued and outstanding; and 1,800,000 of
which have been designated as 6.9% Senior Convertible Preferred Stock (the
"COMPANY PREFERRED STOCK"). At the close of business on the date hereof: (i)
28,602,857 shares of Company Common Stock were issued and outstanding (plus any
shares of Company Common Stock issued since December 31, 2002 upon the exercise
of Company Options or Other Options (as defined in Section 2.2(b)), (ii) no
shares of Company Common Stock were issued and held by the Company in its
treasury, and (iii) 1,132,075 shares of Company Preferred Stock were issued and
outstanding (plus accrued dividends payable in 203,545 shares of Company
Preferred Stock in accordance with Section 3 of the Certificate of Designation).
All of the outstanding shares of capital stock of the Company are, and all
shares of capital stock of the Company which may be issued as contemplated or
permitted by this Agreement will be, when issued, duly authorized and validly
issued, fully paid and non-assessable and not subject to any preemptive rights.
(b) STOCK OPTIONS. As of the close of business on the
date hereof: (i) 6,158,804 shares of Company Common Stock are subject to
issuance pursuant to outstanding options to purchase Company Common Stock under
the Company Stock Option Plans (as defined in Section 2.12) (the "COMPANY
OPTIONS") (less any such shares issued since December 31, 2002 upon the exercise
of Company Options); (ii) 1,986,066 shares of Company Common Stock are available
for future issuance under the Company Stock Option Plans, (iii) 825,000 shares
of Company Common Stock are reserved for future issuance under the 2002 Company
Employee Stock Purchase Plan and no further shares of Company Common Stock will
be issued under the 1997 Company Employee Stock Purchase Plan, and (iv) no
shares of Company Common Stock are subject to issuance pursuant to outstanding
options, rights or warrants to purchase Company Common Stock issued pursuant to
the Contracts (as defined in Section 2.14) or instruments listed on Section
2.2(b) of the
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Company Disclosure Letter (the "OTHER OPTIONS"). The Company has provided Parent
information describing option activity through December 31, 2002. All shares of
Company Common Stock subject to issuance under the Company Stock Option Plans,
the Company Purchase Plans and the Other Options, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and non-assessable and not
subject to any preemptive rights. There are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate the
vesting of any Company Option as a result of the Merger (whether alone or upon
the occurrence of any additional or subsequent events). There are no outstanding
or authorized stock appreciation, phantom stock, profit participation or other
similar rights with respect to the Company.
(c) VOTING DEBT. No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which stockholders may
vote ("VOTING DEBT") of the Company is issued or outstanding as of the date
hereof.
(d) OTHER SECURITIES. Except as otherwise set forth in
this Section 2.2, there are no securities, options, warrants, calls, rights,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
redeem, repurchase, acquire or pay for or cause to be issued, delivered or sold,
or redeemed, repurchased, acquired or paid for additional shares of capital
stock, Voting Debt, equity interests or other voting securities of the Company
or any of its Subsidiaries, or obligating the Company or any of its Subsidiaries
to issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, Contract, arrangement or undertaking. All outstanding shares
of Company Common Stock and Company Preferred Stock, all outstanding Company
Options and Other Options, and all outstanding shares of capital stock of each
Subsidiary of the Company have been issued and granted in compliance in all
material respects with (i) all applicable securities laws and all other
applicable Legal Requirements (as defined below), (ii) all requirements set
forth in applicable material Contracts and (iii) Company Charter Documents or
Subsidiary Charter Documents. There are no voting trusts or other Contracts to
which the Company or any of its Subsidiaries is a party with respect to the
voting of capital stock of the Company or any of its Subsidiaries. For purposes
of this Agreement: (x) "LEGAL REQUIREMENTS" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, order, edict, decree, rule, regulation,
ruling, judgment or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity; and (y) "CONTRACT" shall mean any written, oral or other
agreement, contract, subcontract, settlement agreement, lease, binding
understanding, instrument, indenture, note, option, warranty, purchase order,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof or
as may hereinafter be in effect.
2.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.
(a) AUTHORITY. The Company has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby has been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate
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proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or to consummate the Merger and the other
transactions contemplated hereby (other than the approval and adoption of this
Agreement and the approval of the Merger by the Company's stockholders and the
filing of the Certificate of Merger pursuant to Delaware Law). This Agreement
has been duly executed and delivered by the Company and, assuming due execution
and delivery by Parent and Merger Sub, constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
(b) NON-CONTRAVENTION. The execution and delivery of this
Agreement by the Company does not, and performance of this Agreement by the
Company will not: (i) conflict with or violate the Company Charter Documents or
any Subsidiary Charter Documents of any Subsidiary of the Company, (ii) subject
to obtaining the approval and adoption of this Agreement and the approval of the
Merger by the Company's stockholders as contemplated in Section 5.2 and
compliance with the requirements set forth in Section 2.3(c), conflict with or
violate any material Legal Requirement applicable to the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries or any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the material properties or assets of the Company or
any of its Subsidiaries pursuant to, any Company Material Contract (as defined
in Section 2.14). Section 2.3(b) of the Company Disclosure Letter lists all
consents, waivers and approvals under any Company Material Contract required to
be obtained in connection with the consummation of the transactions contemplated
hereby, which, if individually or in the aggregate are not obtained, would
result in a Material Adverse Effect on the Company or the Surviving Corporation.
(c) NECESSARY CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with any supranational,
national, state, municipal, local or foreign government, any instrumentality,
subdivision, court, arbitral entity, administrative agency or commission or
other governmental authority or instrumentality, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority (a "GOVERNMENTAL ENTITY") is required to be
obtained or made by the Company in connection with the execution, performance
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for: (i) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company and/or Parent
are qualified to do business, (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
or any foreign laws regulating competition, antitrust, investment or exchange
controls, (iii) the consents listed on Section 2.3(c) of the Company Disclosure
Letter; (iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities or
"blue sky" laws and the securities laws of any foreign country, (v) such
consents, approvals, orders, authorizations, registration, declaration or filing
as may be required by the rules and regulations of The Nasdaq Stock Market, Inc.
and The New York Stock Exchange, Inc., and (vi) such other
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consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to the Company or Parent or materially
adversely affect the ability of the parties hereto to consummate the Merger
within the time frame in which the Merger would otherwise be consummated in the
absence of the need for such consent, approval, order, authorization,
registration, declaration or filings. The consents, approvals, orders,
authorizations, registrations, declarations, waivers and filings set forth in
(i), (ii) and (v) are referred to collectively herein as the "NECESSARY
CONSENTS."
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) SEC FILINGS. The Company has filed all required
registration statements, prospectuses, reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated by
reference) required to be filed by it with the Securities and Exchange
Commission (the "SEC") since January 1, 2000. The Company has made available to
Parent all such registration statements, prospectuses, reports, schedules,
forms, statements and other documents in the form filed with the SEC. All such
required registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including those that the Company may file
subsequent to the date hereof), as amended, are referred to herein as the
"COMPANY SEC REPORTS." As of their respective dates, the Company SEC Reports (i)
were prepared in accordance and complied in all material respects with the
requirements of the Securities Act of 1933, as amended (together with the rules
and regulations thereunder, the "SECURITIES ACT"), or the Securities and
Exchange Act of 1934, as amended (together with the rules and regulations
thereunder, the "EXCHANGE ACT"), as the case may be, applicable to such Company
SEC Reports and (ii) did not at the time they were filed 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 therein, in the
light of the circumstances under which they were made, not misleading, except to
the extent corrected prior to the date hereof by a subsequently filed Company
SEC Report. None of the Company's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) FINANCIAL STATEMENTS. Each of the consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Company SEC Reports (the "COMPANY FINANCIALS"), including each
Company SEC Report filed after the date hereof until the Closing: (i) complied
as to form in all material respects with the published rules and regulations of
the SEC with respect thereto, (ii) was prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited interim financial statements, as may be permitted
by the SEC on Form 10-Q, 8-K or any successor form under the Exchange Act), and
(iii) fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of Company's operations and cash
flows for the periods indicated. The balance sheet of the Company contained in
the Company SEC Reports as of September 30, 2002 is hereinafter referred to as
the "COMPANY BALANCE SHEET." Except as disclosed in the Company Financials,
since the date of the Company Balance Sheet, neither the Company nor any of its
Subsidiaries has any liabilities required under GAAP to be set forth on a
consolidated balance sheet (absolute, accrued, contingent or otherwise) which,
individually or in the aggregate, would have a Material Adverse Effect on the
Company, except for liabilities incurred since the date of the
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Company Balance Sheet in the ordinary course of business consistent with past
practice and liabilities incurred pursuant to this Agreement.
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Company Balance Sheet (a) there has not been any Material Adverse Effect on the
Company, (b) and through the date hereof, the Company and its Subsidiaries have
conducted in all material respects their respective businesses only in the
ordinary course consistent with past practice, except for the negotiation and
execution of this Agreement and (c) through the date hereof, there has not been:
(i) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of the
Company's or any of its Subsidiaries' capital stock, or any purchase, redemption
or other acquisition by the Company or any of its Subsidiaries of any of the
Company's capital stock or any other securities of the Company or its
Subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities, except repurchases of unvested shares at cost in
connection with the termination of the Company's or any of its Subsidiary's
relationship with any Service Provider (as defined in the Company Option Plans)
pursuant to stock option or purchase agreements in effect on the date hereof or
entered into in compliance with this Agreement, or (ii) any split, combination
or reclassification of any of the Company's or any of its Subsidiaries' capital
stock.
2.6 TAXES.
(a) For the purposes of this Agreement, the term "TAX"
or, collectively, "TAXES," shall mean any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts, and any obligations with respect to such amounts
arising as a result of being a member of an affiliated, consolidated, combined
or unitary group for any period or under any agreements or arrangements with any
other Person and including any liability for taxes of a predecessor entity.
Notwithstanding the foregoing, for the purposes of this Section 2.6 and Section
4.1(b)(xii), "Tax" and "Taxes" shall not include any Tax taken into account in
determining Assumed Customer Tax Obligation (as defined in Section 2.23(a)). The
Company and each of its Subsidiaries have filed all material federal, state,
local and foreign returns, estimates, information statements and reports
relating to Taxes ("TAX RETURNS") required to be filed by any of them and all
such Tax Returns are true and correct in all material respects. The Company and
each of its Subsidiaries have timely paid, or have adequately reserved (in
accordance with GAAP) for the payment of, all Taxes required to be paid (whether
or not shown on any Tax Returns), and the most recent financial statements
contained in the Company SEC Reports reflect an adequate reserve (in accordance
with GAAP) for all Taxes payable by the Company and its Subsidiaries through the
date of such financial statements. No material deficiencies for any Taxes have
been asserted or assessed, or, to the Knowledge (as defined in Section 8.3(b))
of the Company, proposed, against the Company or any of its Subsidiaries that
are not subject to adequate reserves (in accordance with GAAP). No audit or
other examination of any
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Tax Return of the Company or any of its Subsidiaries is presently in progress,
nor has the Company or any of its Subsidiaries been notified of any request for
such an audit or other examination.
(b) There are no outstanding agreements extending or
waiving the statutory period of limitations applicable to any claim for, or the
period for the collection or assessment or reassessment of, Taxes due from the
Company or any of its Subsidiaries for any taxable period and no request for any
such waiver or extension is currently pending. There are no Liens for Taxes upon
the assets or properties of the Company or any Subsidiary except for statutory
Liens for current Taxes not yet due. Neither the Company nor any of its
Subsidiaries is a party to any agreement relating to the sharing, allocation or
indemnification of Taxes, or any similar agreement, contract or arrangement,
(collectively, "TAX SHARING AGREEMENTS") or has any liability for Taxes of any
Person (other than members of the affiliated group, within the meaning of
Section 1504(a) of the Code, filing consolidated federal income tax returns of
which the Company is the common parent) under Treasury Regulation ss. 1.1502-6,
Treasury Regulation ss. 1.1502-78 or similar provision of state, local or
foreign law, as a transferee or successor, by Contract, or otherwise. Neither
the Company nor any of its Subsidiaries has executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any similar provision of
state, local or foreign law. Neither the Company nor any of its Subsidiaries is
subject to any private letter ruling of the Internal Revenue Service (the "IRS")
or comparable ruling of any other Tax authority, and there is no currently
pending private letter ruling request to the IRS or comparable ruling request to
any other Tax authority, relating to either the Company or any of its
Subsidiaries. The Company and its Subsidiaries have each withheld (or will
withhold) from their respective employees, independent contractors, creditors,
stockholders and third parties and timely paid to the appropriate Tax authority
proper and accurate amounts in all material respects for all periods ending on
or before the Closing Date in compliance with all Tax withholding and remitting
provisions of applicable laws. No claim in writing has been made by any
Governmental Entity in a jurisdiction where neither the Company nor any of its
Subsidiaries files Tax Returns that it is or may be subject to taxation by that
jurisdiction. The Company and its Subsidiaries have given or otherwise made
available to Parent true, correct and complete copies of all Tax Returns,
examination reports and statements of deficiencies for taxable periods, or
transactions consummated, for which the applicable statutory periods of
limitations have not expired. The Company and its Subsidiaries have, in all
material respects, charged their customers all sales, goods and services, and
other similar Taxes required to be charged under the laws and regulations of all
applicable taxing jurisdictions. All such Taxes have been collected and remitted
to the appropriate Tax authority in a timely manner in all material respects.
2.7 INTELLECTUAL PROPERTY.
(a) NO INFRINGEMENT. The products, services and
operations of the Company do not infringe or misappropriate the Intellectual
Property (as defined below) of any third party where such infringement or
misappropriation, individually or in the aggregate, would have a Material
Adverse Effect on the Company. "INTELLECTUAL PROPERTY" shall mean any or all of
the following and all rights in, arising out of, or associated therewith: (i)
all United States, international and foreign patents and applications therefor
and all reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof, (ii) all inventions (whether patentable or
not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, computer
software programs and all documentation relating to any
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of the foregoing, (iii) all copyrights, copyrights registrations and
applications therefor, and all other rights corresponding thereto throughout the
world, (iv) all industrial designs and any registrations and applications
therefor throughout the world, (v) all mask works and any registrations and
applications therefor throughout the world, (vi) all trade names, logos, URLs,
common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor throughout the world, (vii) all
databases and data collections and all rights therein throughout the world,
(viii) all moral and economic rights of authors and inventors, however
denominated, throughout the world, and (ix) any similar or equivalent rights to
any of the foregoing anywhere in the world. "COMPANY INTELLECTUAL PROPERTY"
shall mean all Intellectual Property owned by the Company and/or used in its
products, services and operations.
(b) NO IMPAIRMENT. The Merger (including the assignment
by operation of law of any Contract to the Surviving Corporation) will not
result in: (i) Parent or any Subsidiary of Parent (other than the Company and
its Subsidiaries, but only to the extent existing prior to the Merger) being
bound by any material non-compete or other material restriction on the operation
of any business of Parent or its Subsidiaries, (ii) Parent or any Subsidiary of
Parent (other than the Company and its Subsidiaries, but only to the extent
existing prior to the Merger) granting any rights or licenses to any material
Intellectual Property of Parent or any Subsidiary of Parent to any third party
(including a covenant not to xxx with respect to any material Intellectual
Property of Parent or any Subsidiary of Parent), or (iii) the termination or
breach of any Contract to which the Company is a party, which termination or
breach would have, individually or in the aggregate, a Material Adverse Effect
on either the Surviving Corporation or Parent, or (iv) the termination or
forfeiture of any Company Intellectual Property.
(c) SCHEDULE. Section 2.7(c) of the Company Disclosure
Letter sets forth, as of the date hereof, a list of all material Company
Intellectual Property described in subsection (i), (iv), (v) and (vi) of Section
2.7(a) and all copyright registrations and applications therefor.
(d) OWNERSHIP AND MAINTENANCE. The Company owns, or
possesses licenses or other valid rights to use, all Company Intellectual
Property which is required or necessary to the conduct of the business of the
Company, except where the lack thereof, individually or in the aggregate, would
not have a Material Adverse Effect on the Company. To the Knowledge of the
Company, no Person is infringing upon or violating any material Company
Intellectual Property. The Company has taken reasonable steps to maintain the
confidentiality of its trade secrets.
(e) PRIVACY. The Company does not use or collect any of
the information it collects from its web site visitors or other parties in an
unlawful manner, or in a manner that violates the Company's privacy policy or
the privacy rights of its customers. The Merger will not violate the Company's
privacy policy or the privacy rights of its customers.
2.8 COMPLIANCE; PERMITS.
(a) COMPLIANCE. Neither the Company nor any of its
Subsidiaries is or has been in conflict with, or in default or in violation of
any Legal Requirement applicable to the Company or any of its Subsidiaries or by
which the Company or any of its Subsidiaries or any of their respective
businesses or properties is bound, except, in each case, or in the aggregate,
for conflicts, violations and defaults that would not have a Material Adverse
Effect on the Company. No material
-14-
investigation or review by any Governmental Entity is pending or, to the
Knowledge of the Company, has been threatened in a writing delivered to the
Company or any of its Subsidiaries, against the Company or any of its
Subsidiaries. There is no judgment, injunction, order or decree binding upon the
Company or any of its Subsidiaries which, individually or in the aggregate, has
or could have a Material Adverse Effect on the Company.
(b) PERMITS. The Company and its Subsidiaries hold, to
the extent legally required, all permits, licenses, authorizations, franchises,
variances, exemptions, orders and approvals from Governmental Entities
("PERMITS") that are required for the operation of the business of the Company
and its Subsidiaries, as currently conducted, the failure to hold which,
individually or in the aggregate, would have a Material Adverse Effect on the
Company (collectively, "COMPANY PERMITS"). As of the date hereof, no suspension
or cancellation of any of the Company Permits is pending or, to the Knowledge of
the Company, threatened. The Company and its Subsidiaries are in compliance in
all material respects with the terms of the Company Permits.
2.9 LITIGATION. Except as set forth in the Company SEC Reports
filed prior to the date hereof, there are no claims, suits, actions or
proceedings pending or, to the Knowledge of the Company, threatened, nor, to the
Knowledge of the Company, any investigation pending or threatened, against the
Company or any of its Subsidiaries, any present or former officer, director or
employee of the Company or any of its Subsidiaries or any other Person for whom
the Company or any of its Subsidiaries may be liable or pursuant to which it may
be obligated to indemnify any such officer, director, employee of Person, before
any Governmental Entity that seeks to restrain, delay, alter or enjoin the
consummation of the transactions contemplated hereby, seeks an award of damages
in connection with this Agreement or any transactions contemplated hereby or
which could, either singularly or in the aggregate with all such claims, actions
or proceedings, be material to the Company. Neither the Company nor any of its
Subsidiaries is subject to any judgment, decree, injunction, rule or order of
any Governmental Entity that has had or would have, individually or in the
aggregate, a Material Adverse Effect on the Company.
2.10 BROKERS' AND FINDERS' FEES. Except for fees payable to Xxxxxxx
Xxxxx & Co. pursuant to an engagement letter dated October 3, 2002, a copy of
which has been provided to Parent, the Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.11 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Reports, since the date of the Company's last proxy statement filed
with the SEC, no event has occurred as of the date hereof that would be required
to be reported by the Company pursuant to Item 404 of Regulation S-K promulgated
by the SEC. Section 2.11 of the Company Disclosure Letter identifies each Person
who is an "affiliate" (as that term is used in Rule 145 promulgated under the
Securities Act) of the Company as of the date hereof.
2.12 EMPLOYEE BENEFIT PLANS.
(a) The employee compensation, severance, termination
pay, deferred compensation, stock or stock-related awards, incentive, fringe,
pension, profit-sharing, savings, retirement,
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employment, consulting, bonus, change-in-control, retention, welfare, cafeteria,
flexible or other benefit plans, programs, policies, commitments, agreements or
other arrangements (whether or not set forth in a written document and
including, without limitation, all "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) under which any employee, former employee, director or
consultant of the Company, any Subsidiary of the Company or any trade or
business (whether or not incorporated) that is a member of a controlled group or
that is under common control with the Company within the meaning of Section 414
of the Code (each an "ERISA AFFILIATE") has any present or future right to
benefits, or with respect to which the Company has or may in the future have
direct or indirect liability, whether contingent or otherwise, are referred to
herein as the "PLANS." Section 2.12(a) of the Company Disclosure Letter contains
a complete and accurate list of each material Plan, including (i) all severance
and employment agreements of the Company with directors or executive officers,
(ii) all severance programs and policies of each of the Company or its
Subsidiaries, (iii) all Plans pursuant to which benefits would, in any respect,
vest or an amount would become payable by virtue of the transactions
contemplated hereby, and (iv) each stock option plan, stock purchase plan,
equity based compensation plan, equity award to any Person (whether payable in
cash, shares or otherwise) (to the extent not issued pursuant to any of the
foregoing plans) or other plan or Contract of any nature with any Person
(whether or not an employee) pursuant to which any stock, option, warrant or
other right to purchase or acquire capital stock of the Company or right to
payment based on the value of the Company capital stock has been granted or
otherwise issued (collectively, "COMPANY STOCK OPTION PLANS"). The Company has
provided or made available to Parent with respect to each Plan, a true, correct
and complete copy thereof and to the extent applicable: (i) the most recent
documents (including all amendments and trusts or other funding instruments
constituting each Plan; (ii) the three most recent annual reports (Form Series
5500 and all schedules and financial statements attached thereto), if any,
required under ERISA or the Code in connection with each Plan; (iii) all IRS
determination, opinion, notification and advisory letters relating to any Plan;
(iv) if the Plan is funded, the most recent periodic accounting of the Plan
assets; (v) the most recent summary plan description, summary of material
modifications and any other written communication (or description of any oral
communications) by the Company or any ERISA Affiliate concerning the extent of
benefits provided under a Plan; (vi) for the last three years all material
correspondence with the IRS and the Department of Labor (the "DOL"); and (vii)
any other document reasonably requested by Parent.
(b) Each Plan has been maintained and administered in
material compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations (foreign or domestic), including
ERISA and the Code, that are applicable to such Plans. No suit, action, Lien or
other litigation (excluding claims for benefits incurred in the ordinary course
of Plan activities) has been brought, or to the Knowledge of the Company is
threatened, against or with respect to any such Plan, except as would not result
in material liability to the Company. There are no audits, inquiries or
proceedings pending by the IRS or the DOL with respect to any Plans. Any Plan
intended to be qualified under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code (i) has either applied for
or obtained a favorable determination, notification, advisory and/or opinion
letter, as applicable, as to its qualified status from the IRS or still has a
remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such letter and to make any amendments
necessary to obtain a favorable determination, and (ii) incorporates or has been
amended to incorporate all provisions required to
-16-
comply with the Tax Reform Act of 1986 and subsequent legislation, unless the
Plan still has a remaining period of time under applicable Treasury Regulations
or IRS pronouncements in which to conform to such legislation, and to the
Knowledge of the Company, there are no facts or circumstances that could
reasonably be expected to cause the loss of such qualification or the imposition
of any material liability, penalty or tax under ERISA, the Code or any other
applicable laws, rules or regulations. With respect to each Plan: (i) all
reports, returns, notices and other documentation that are required to have been
filed with or furnished to the IRS and the DOL, the SEC or any other
Governmental Entity, or to the participants or beneficiaries of such Plan have
been filed or furnished on a timely basis, and (ii) no individual who has
performed services for the Company or its Subsidiaries has been improperly
excluded from participation, except in each case for violations which would not
reasonably be expected to cause material harm to the Company. All contributions
(including all employer contributions and employee salary reduction
contributions) or premium payments required to be made by the Company or its
Subsidiaries in respect of any Plan have been timely paid or accrued, except as
would not result in material liability to the Company. Neither the Company nor
any ERISA Affiliate have any liability, whether contingent or otherwise, with
respect to any plan subject to Title IV of ERISA or Section 412 of the Code
which remains unsatisfied.
(c) Neither the Company, its Subsidiaries nor, to the
Knowledge of the Company, any other "party in interest" or "disqualified person"
with respect to any Plan has engaged in a non-exempt "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of the Code involving
such Plan. To the Knowledge of the Company, no fiduciary has any material
liability for breach of fiduciary duty or any other failure to act or comply
with the requirements of ERISA, the Code or any other applicable laws in
connection with the administration or investment of the assets of any Plan.
(d) Neither the Company nor any ERISA Affiliate has at
any time ever maintained, established, sponsored, participated in, contributed
to, been requested to contribute to, or had any liability, whether contingent or
otherwise, with respect to any "multiemployer plan," as such term is defined in
Section 3(37)(A) of ERISA. Neither the Company nor any ERISA Affiliate have at
any time ever maintained, established, sponsored, participated in, contributed
to, or had any liability, whether contingent or otherwise, with respect to, (i)
any multiple employer plan, or to any plan described in Section 413 of the Code,
(ii) any "multiple-employer welfare arrangement" as defined in Section 3(40) of
ERISA, (iii) a Plan subject to Section 4063 or 4064 of ERISA, or (iv) a Plan
maintained outside of the jurisdiction of the United States. None of the Plans
promises or provides retiree medical or other retiree benefits to any person
except as required by applicable law, including without limitation, coverage
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
(e) Neither the Company nor any of its Subsidiaries is
bound by or subject to (and none of its respective assets or properties is bound
by or subject to) any arrangement with any labor union. No employee of the
Company or any of its Subsidiaries is represented by any labor union or covered
by any collective bargaining agreement and, to the Knowledge of the Company, no
campaign to establish such representation is in progress. There is no pending
or, to the Knowledge of the Company, threatened labor dispute, strike or work
stoppage involving the Company or any of its Subsidiaries and any group of its
employees. The Company is in compliance in all material
-17-
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment and labor practices, terms and
conditions of employment and wages and hours, in each case, with respect to its
current or former employees, except in each case for compliance violations which
would not reasonably be expected to cause material harm to the Company. The
Company has not received written notice of any investigation, charge or
complaint pending before the Equal Employment Opportunity Commission or any
other Governmental Entity regarding an unlawful unemployment practice. The
Company (i) is not barred from any governmental contract by the Office of
Federal Contract Compliance Programs or comparable state agency (the "OFCCP"),
(ii) has not received a notice to show cause from the OFCCP, and (iii) does not
have an action pending with the OFCCP.
(f) Neither any payment or benefit which will or may be
made by the Company or its Subsidiaries, nor the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby (either
alone or in combination of another event) shall (i) result in the payment of any
amount which could be characterized as a "parachute payment," within the meaning
of Code Section 280G(b)(2), (ii) result in any material payment becoming due, or
materially increase the amount of any compensation due, to any current or former
employee of the Company or its Subsidiaries, (iii) materially increase any
benefits otherwise payable under any Plan, (iv) result in the acceleration of
the time of payment or vesting of any such compensation or benefits, or (v)
result in the triggering or imposition of any restrictions or limitations on the
rights of the Company or its Subsidiaries to amend or terminate any Plan.
(g) To the Knowledge of the Company, neither the Company
and its Subsidiaries nor any organization to which the Company or its
Subsidiaries is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction described in Sections 4069 or
4212(c) of ERISA.
(h) Neither the Company nor any of its Subsidiaries have
incurred any material liability or material obligation under the Worker
Adjustment and Retraining Notification Act or any similar state or local law
which remains unsatisfied.
(i) Neither the Company nor any of its Subsidiaries have
direct or indirect liability with respect to any misclassification of any Person
as an independent contractor rather than as an employee, or with respect to any
employee leased from another employer, except as would not result in material
harm to the Company.
(j) Neither the Company nor any of its Subsidiaries is a
party to any Contract or other arrangement which could result in the payment of
material amounts that could be non-deductible by reason of Section 162(m) of the
Code.
(k) Each Plan which is a "group health plan" within the
meaning of Section 5000(b)(1) of the Code and Section 607(l) of ERISA has been
administered in material compliance with, and the Company and its Subsidiaries
have otherwise complied with, (i) the requirements of the Heath Insurance
Portability and Accountability Act of 1996 and the regulations promulgated
thereunder; (ii) the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and the regulations promulgated thereunder; and (iii) the Medicare
Secondary Payor Provisions of Section 1862 of the Social Security Act and the
regulations promulgated thereunder, except, in each case, for
-18-
compliance violations which would not reasonably be expected to cause material
harm to the Company.
(l) No stock or other security issued by the Company or
its Subsidiaries forms or has formed a material part of the assets of any Plan.
(m) Neither the Company nor any ERISA Affiliate has a
contract or commitment, whether legally binding or not, to create any additional
employee benefit or compensation plans, policies or arrangements or, except as
may be required by applicable law, to modify any Plan.
(n) No assets of the Company or its Subsidiaries are
allocated to or held in a "rabbi trust" or other funding vehicle in respect of
any Plan other than one qualified under Section 401(a) of the Code.
(o) No "employee welfare plan" within the meaning of
Section 3(1) of ERISA ("WELFARE PLAN") disclosed in Section 2.12(a) of the
Company Disclosure Letter is a "multiple employer welfare arrangement" as
defined in Section 3(40) of ERISA or self-insured.
2.13 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not, individually
or in the aggregate, result in a Material Adverse Effect on the Company, no
underground storage tanks and no amount of any substance that has been
designated by any Governmental Entity or by applicable Legal Requirement to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including PCBs, asbestos, petroleum, urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws, but excluding office and janitorial supplies, (a "HAZARDOUS
MATERIAL") are present, as a result of the actions of the Company or any of its
Subsidiaries or any affiliate of the Company, or, to the Knowledge of the
Company, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that the Company or any of its Subsidiaries has at any
time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Company: (i) neither the Company nor any of its Subsidiaries has transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of or in a manner which would result
in liability pursuant to, any Legal Requirement in effect on or before the
Closing Date and (ii) neither the Company nor any of its Subsidiaries has
disposed of, transported, sold, used, released, exposed its employees or others
to or manufactured any product containing a Hazardous Material (collectively,
"HAZARDOUS MATERIALS ACTIVITIES") in violation of or in a manner which would
result in liability pursuant to any Legal Requirement.
-19-
2.14 CONTRACTS.
(a) MATERIAL CONTRACTS. For purposes of this Agreement,
"COMPANY MATERIAL CONTRACT" shall mean:
(i) any "material contracts" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the
Company and its Subsidiaries;
(ii) any Contract containing any covenant: (A)
limiting the right of the Company or its Subsidiaries to engage in any material
line of business, make use of any material Intellectual Property or compete with
any Person in any material line of business, or (B) otherwise having an adverse
effect on the right of the Company or any of its Subsidiaries to sell,
distribute or manufacture any material products or services;
(iii) any Contract, or group of Contracts with a
Person (or group of affiliated Persons), the termination or breach of which
would, individually or in the aggregate, have a material adverse effect on any
material division or business unit or other material operating group of product
or service offerings of the Company or otherwise have a Material Adverse Effect
on the Company or any of its Subsidiaries or otherwise have a Material Adverse
Effect on the Company;
(iv) indentures, credit agreements, security
agreements, mortgages, guarantees, promissory notes and Contract relating to or
evidencing indebtedness for borrowed money of the Company or any of its
Subsidiaries (excluding any equipment leases involving aggregate annual payments
of less than $100,000 per lease);
(v) any non-competition agreement or any other
agreement or obligation which limits or purports to limit in any respect the
manner in which, or the localities in which, the business of the Company or any
of its Subsidiaries may be conducted;
(vi) any legal entity in the nature of a
partnership or joint venture, or a material strategic alliance (or any Contract
substantially similar to any of the foregoing);
(vii) any Contract which could prohibit or
materially delay the consummation of the transactions contemplated by this
Agreement;
(viii) any Contract that involves, or to the
Knowledge of the Company is likely to involve, aggregate annual payments to or
from the Company or any of its Subsidiaries of $500,000 (excluding any Contract
with customers of the Company or its Subsidiaries or any Contract governing an
investment made in accordance with the Investment Policy (as defined in Section
4.1(b)(ix))); or
(ix) any material Contract with any present
director or executive officer of the Company or any of its Subsidiaries or any
stockholder who owns or controls 10% or more of the Company's voting stock.
-20-
(b) SCHEDULE. Section 2.14(b) of the Company Disclosure
Letter sets forth a list of all Company Material Contracts to which the Company
or any of its Subsidiaries is a party or by which any of them is bound by as of
the date hereof.
(c) NO BREACH. All Company Material Contracts are valid
and in full force and effect except to the extent they have previously expired
in accordance with their terms or if the failure to be in full force and effect,
individually or in the aggregate, would not be material to the Company. Neither
the Company nor any of its Subsidiaries has violated any provision of, or
committed or failed to perform any act which, with or without notice, lapse of
time or both would constitute a default under the provisions of, any Company
Material Contract, except in each case for those violations and defaults which,
individually or in the aggregate, would not be material to the Company. Neither
the Company nor any of its Subsidiaries has received any written notice from any
other party to any Company Material Contract that it intends to terminate or not
renew such Company Material Contract. To the Company's Knowledge, no such other
party is in violation, breach or default of any Company Material Contract.
2.15 DISCLOSURE. The Proxy Statement (as defined in Section 5.1)
shall not, at the date the Proxy Statement (or any amendment or supplement
thereto) is first mailed to the stockholders of the Company, at the time of the
Stockholders' Meeting (as defined in Section 5.2) and as of the Effective Time,
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
therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders' Meeting which
shall have become false or misleading. The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein about Parent supplied by Parent or any
of Parent's representatives for inclusion or incorporation by reference in the
Proxy Statement.
2.16 BOARD APPROVAL. The Board of Directors of the Company has (i)
at a meeting duly called and held on or prior to the date hereof determined that
this Agreement and the transactions contemplated hereby are advisable and fair
to, and are in the best interest of the Company and its stockholders and
declared the Merger to be advisable, (ii) approved and adopted this Agreement
and the transactions contemplated hereby, including the Merger and the
Stockholder Agreements and the transactions contemplated thereby, which approval
constitutes approval under Section 203 of the Delaware Law such that the Merger,
this Agreement and the other transactions contemplated hereby, are not and shall
not be subject to any restriction pursuant to Section 203 of the Delaware Law,
(iii) resolved to make the Recommendation (as defined in Section 5.2(b)),
subject to the right of the Board of Directors of the Company to withhold,
withdraw, amend, change or modify the Recommendation in accordance with Section
5.3(d), and (iv) directed that this Agreement and the Merger be submitted to the
stockholders of the Company for approval.
2.17 FAIRNESS OPINION. The Company's Board of Directors has
received an opinion from Xxxxxxx, Xxxxx & Co., dated as of January 5, 2003, to
the effect that, as of such date, the Per Share
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Amount is fair from a financial point of view to the holders of outstanding
shares of Company Common Stock. 2.18 RIGHTS PLAN. The Company has taken all
actions necessary to render the Company Rights Agreement inapplicable to the
execution or delivery of this Agreement or the Stockholder Agreements, the
consummation of the Merger pursuant to this Agreement or the consummation of any
other transactions contemplated hereby and a copy of the amendment to such
Company Rights Agreement effecting such change has been provided to Parent.
2.19 TAKEOVER STATUTES. The Board of Directors of the Company has
taken all actions such that this Agreement and the transactions contemplated
hereby and the Stockholder Agreements and the transactions contemplated thereby,
are not and will not be subject to any restrictions under Section 203 of
Delaware Law. No other state takeover statute or similar statute or regulation
applies to or purports to apply to the Merger, the Stockholder Agreements or the
transactions contemplated hereby or thereby.
2.20 VOTE REQUIRED. The only vote of the holders of any class or
series of capital stock of the Company necessary to approve and adopt this
Agreement and approve the Merger is the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock and Company Preferred
Stock (voting together as a single class and on an as-converted to Common Stock
basis).
2.21 REAL ESTATE.
(a) OWNERSHIP OF PREMISES. The Company does not own any
real property.
(b) LEASED PROPERTIES. Section 2.21(b) of the Company
Disclosure Letter is a true, correct and complete schedule of all leases,
subleases, licenses and other agreements (collectively, the "REAL PROPERTY
LEASES") under which the Company uses or occupies or has the right to use or
occupy, now or in the future, any real property (the land, buildings and other
improvements covered by the Real Property Leases being herein called the "LEASED
REAL PROPERTY"). The Company has heretofore delivered to Parent true, correct
and complete copies of all Real Property Leases (including all modifications,
amendments and supplements). There is no material uncured default by the Company
as tenant under any of the Real Property Leases or, to the best of the Company's
Knowledge, by the landlord thereunder. The Company holds the leasehold estate
under and interest in each Real Property Lease free and clear of all Liens,
other than for Liens for taxes not yet due and payable. None of the Leased Real
Property is subleased or sublicensed to any other person or entity.
(c) ENTIRE PREMISES. All of the material land, buildings,
structures and other improvements used by the Company in the conduct of its
business are included in the Leased Real Property.
2.22 CUSTOMERS. Section 2.22 of the Company Disclosure Letter sets
forth a list of (i) the top twenty-five (25) customers of the Company and its
Subsidiaries (established using the projected annualized value per customer
based on revenue for the three (3) month period ended September 30, 2002), (ii)
for each such customer, the amount of the dollar volume established using the
projected annualized value per customer based on revenue for the three (3) month
period ended September 30,
-22-
2002 and (iii) confirmation of whether a written agreement (other than periodic
purchase orders) exists between the Company or any of its Subsidiaries and each
such customer and the effective date of each such written agreement. To the
Knowledge of the Company, as of the date hereof, no Person listed on Section
2.22 of the Company Disclosure Letter within the last twelve months has canceled
or otherwise terminated the relationship of such Person with the Company or any
of its Subsidiaries or has given written notice that it intends to cancel or
otherwise terminate the relationship of such Person with the Company or any of
its Subsidiaries.
2.23 TRUST FUNDS
(a) TRUST TAX FUNDS. All Trust Tax Funds amounts have
been held in segregated tax accounts maintained by the Company or its
Subsidiaries on behalf of their customers (the "TAX ACCOUNTS"). Such amounts are
not commingled with funds of the Company and its Subsidiaries and no amounts
have been paid out of such Tax Accounts other than (i) payments to the
applicable Tax authorities of such Taxes on behalf of such customers, (ii)
payments returning any such amounts (or any portion of such amounts) to such
customers, (iii) the interest income earned on investments which is subsequently
transferred to the Company's corporate cash account or (iv) fees mistakenly
wired by customers to the Tax Accounts which are transferred to the Company's
corporate cash account. To the Knowledge of the Company, the Company and its
Subsidiaries have paid in a timely manner to the applicable Tax authorities all
amounts that are required to be paid to such authorities on behalf of their
customers in respect of all taxable periods then ended, except in the event that
any failure to pay such amount to such authorities was (i) caused solely by the
refusal or inability of the customer to pay such amount to the Company and its
Subsidiaries, (ii) caused solely by the failure of the customer to provide
accurate data to the Company and its Subsidiaries or (iii) in the ordinary
course of business. To the Knowledge of the Company, the Company and its
Subsidiaries have timely filed with the applicable Tax authorities all Tax
Returns that are required to be filed in connection with the Trust Tax Funds
held in the Tax Accounts, except in the event that any failure to timely file
such Tax Returns with such authorities was (i) caused solely by the failure of
the customer to provide in a timely manner the information necessary to make
such filings or (ii) in the ordinary course of business. The aggregate Assumed
Customer Tax Obligations are equal to the sum of (i) the aggregate amount of
Trust Tax Funds held in the Tax Accounts plus (ii) the relevant portion of Tax
Account Receivables (as defined in Section 5.13), if any, with the exception of
the realized loss in value of a financial instrument described in Section 2.23
of the Company Disclosure Letter of which corporate funds will ultimately be
transferred into the Tax Account to remedy the differential. "TRUST TAX FUNDS"
shall mean, with respect to any date, all federal and state payroll, social
security, Medicare, unemployment and other trust Taxes held in Tax Accounts that
were (i) withheld by the Company or its Subsidiaries from the payroll of
employees of, or otherwise collected from, the Company's or its Subsidiaries'
customers in connection with the payroll processing and tax filing services of
the Company and its Subsidiaries prior to such date and (ii) not yet remitted to
the applicable Tax authorities as of such date. "ASSUMED CUSTOMER TAX
OBLIGATIONS" shall mean with respect to any date, obligations of the Company
and/or its Subsidiaries as of such date (i) to remit to the Tax authorities on
behalf of the Company's or its Subsidiaries' customers after such date all
federal and state payroll, social security, Medicare, unemployment and other
trust Taxes that are required to be paid and (ii) to refund to the Company's or
its Subsidiaries' customers after such date any Trust Tax Funds over-impounded
from such customers by the Company and/or its Subsidiaries, in each case, in
connection with the payroll processing and tax
-23-
filing services performed by the Company and/or its Subsidiaries prior to such
date; provided that, for purposes hereof, the Company and/or its Subsidiaries
shall only be regarded as having such an obligation if, and to the extent that,
a customer has paid, or Trust Tax Funds have been over-impounded by, the Company
and/or its Subsidiaries in respect thereof prior to such date. To the Company's
Knowledge, set forth on Section 2.23 of the Company Disclosure Letter, is a true
and correct list as of December 20, 2002 of penalties and interest relating to
assessments with respect to payroll Tax Returns filed on behalf of the clients
of the Company or its Subsidiaries which, at the time the Company received
notice of such assessments, were deemed individually to represent potential
exposure to the Company and it Subsidiaries, or their clients, in excess of
$250,000.
(b) TRUST NON-TAX FUNDS. All Trust Non-Tax Funds amounts
have been held in segregated non-tax accounts maintained by the Company or its
Subsidiaries on behalf of their customers (the "NON-TAX ACCOUNTS"). Such amounts
are not commingled with funds of the Company or its Subsidiaries and no amounts
have been paid out of such accounts other than (i) payments to the applicable
regulatory authorities of such withheld amounts on behalf of such customers or
to authorized recipients or (ii) payments returning any such amounts (or any
portion of such amounts) to such customers. To the Knowledge of the Company, the
Company and its Subsidiaries have paid in a timely manner to the applicable
regulatory authorities (or authorized recipients) all amounts that are required
to be paid to such authorities (or authorized recipients) on behalf of customers
in respect of all payroll periods then ended, except in the event that any
failure to pay such amount to such authorities (or authorized recipients) was
(i) caused solely by the refusal or inability of the customer to pay such amount
to the Company and its Subsidiaries, (ii) caused solely by the failure of the
customer to provide accurate data to the Company and its Subsidiaries or (iii)
in the ordinary course of business. To the Knowledge of the Company, the Company
and its Subsidiaries have timely filed with the applicable regulatory
authorities or authorized recipients all filings, if any, that are required to
be filed in connection with the Trust Non-Tax Funds held in the Non-Tax
Accounts, except in the event that any failure to timely file such filings with
such authorities was (i) caused solely by the failure of the customer to provide
in a timely manner the information necessary to make such filings or (ii) in the
ordinary course of business. The aggregate Assumed Customer Non-Tax Obligations
are equal to the sum of (i) the aggregate amount of Trust Non-Tax Funds held in
the Non-Tax Accounts plus (ii) the relevant portion of Trust Account
Receivables, if any. "TRUST NON-TAX FUNDS" shall mean, with respect to any date,
(a) all customers' employees' net pay (in connection with direct deposit
services or check services) and (b) all workers' compensation or other insurance
premiums or contributions (whether on behalf of the employer or employee) to
401(k) or other similar investment plans that were withheld by the Company or
its Subsidiaries from the payroll of employees of, or otherwise collected from,
the Company's or its Subsidiaries' customers in connection with the payroll
processing services of the Company and its Subsidiaries prior to such date,
which in each case, were not yet remitted to the applicable regulatory
authorities or other authorized recipients as of such date and are held in
Non-Tax Accounts. "ASSUMED CUSTOMER NON-TAX OBLIGATIONS" shall mean with respect
to any date, obligations of the Company and/or its Subsidiaries as of such date
(i) to remit to the applicable regulatory authorities or other authorized
recipients on behalf of the Company's or its Subsidiaries' customers after such
date all workers' compensation or other insurance premiums or contributions
(whether on behalf of employer or employee) to 401(k) or other similar
investment plans or customers' employees' net pay (in connection with direct
deposit services or check services) that are required to be paid and (ii) to
refund to the Company's or its Subsidiaries' customers after such date
-24-
any Trust Non-Tax Funds over-impounded from such customers by the Company and/or
its Subsidiaries, in each case, in connection with the payroll processing
services performed by the Company and/or its Subsidiaries prior to such date;
provided that, for purposes hereof, the Company and/or its Subsidiaries shall
only be regarded as having such an obligation if, and to the extent that, a
customer has paid, or Trust Non-Tax Funds have been over-impounded by, the
Company and/or its Subsidiaries in respect thereof prior to such date.
2.24 INVESTMENT POLICY. The Company is, in all material respects,
in compliance with the terms of the Investment Policy.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, except as
otherwise set forth in writing in appropriately corresponding sections of the
disclosure letter supplied by Parent and Merger Sub to the Company dated as of
the date hereof (the "PARENT DISCLOSURE LETTER"), as follows:
3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS;
SUBSIDIARIES.
(a) ORGANIZATION; STANDING AND POWER. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing would not have a Material Adverse Effect on Parent.
(b) CHARTER DOCUMENTS. Parent has delivered or made
available to the Company (i) a true and correct copy of the Certificate of
Incorporation (including any Certificate of Designations) and Bylaws of Parent,
each as amended to date (collectively, the "PARENT CHARTER Documents"). and of
the Certificate of Incorporation and Bylaws of Merger Sub (collectively, the
"MERGER SUB CHARTER DOCUMENTS"). Such Parent Charter Documents and Merger Sub
Charter Documents are in full force and effect. Parent is not in violation of
any of the provisions of the Parent Charter Documents and Merger Sub is not in
violation of any of the provisions of the Merger Sub Charter Documents.
(c) MERGER SUB. All the outstanding shares of capital
stock of, or other equity interests in Merger Sub have been validly issued and
are fully paid and non-assessable and are owned directly or indirectly by
Parent, free and clear of all Liens, including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests, except for restrictions imposed by applicable securities laws.
3.2 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.
(a) AUTHORITY. Each of Parent and Merger Sub has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
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The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby has been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize the
execution and delivery of this Agreement or to consummate the transactions
contemplated hereby, subject only, with respect to the Merger, to the filing of
the Certificate of Merger pursuant to Delaware Law. This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming due execution and
delivery by the Company, constitutes the valid and binding obligation of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms.
(b) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Parent and Merger Sub does not, and performance of this Agreement
by Parent will not: (i) conflict with or violate the Parent Charter Documents or
the Merger Sub Charter Documents, (ii) subject to compliance with the
requirements set forth in Section 3.2(c), conflict with or violate any material
Legal Requirement applicable to Parent or Merger Sub or by which Parent or
Merger Sub or any of their respective properties is bound or affected, or (iii)
result in any material breach of or constitute a material default (or an event
that with notice or lapse of time or both would become a material default)
under, or impair Parent's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a material Lien on
any of the material properties or assets of Parent or Merger Sub pursuant to,
any material Contract to which Parent or Merger Sub is a party or by which
Parent or Merger Sub or any of their respective properties are bound or
affected, in each case, except as would not individually or in the aggregate,
have a material adverse effect on the ability of Parent or Merger Sub to
consummate the transactions contemplated hereby.
(c) NECESSARY CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with any Governmental
Entity is required to be obtained or made by Parent in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the Necessary Consents and (ii) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to Parent, Merger Sub or the Company or
materially adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby within the time frame in which such
transactions would otherwise be consummated in the absence of the need for such
consent, approval, order, authorization, registration, declaration or filings.
3.3 BROKERS' AND FINDERS' FEES. Except for fees payable to Xxxxxx
Brothers pursuant to an engagement letter entered into by Parent, Parent has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
3.4 DISCLOSURE. None of the information supplied or to be supplied
by or on behalf of Parent or Merger Sub for inclusion or incorporation by
reference in the Proxy Statement, will, at the time the Proxy Statement is first
mailed to the stockholders of the Company, at the time of the Stockholders'
Meeting or as of the Effective Time, 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 therein, in the light of the
circumstances under which they are made, not misleading or
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necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading.
3.5 BOARD APPROVAL. The Board of Directors of Parent has, by
resolutions duly adopted by at a meeting of the Parent's Directors duly called
and held and not subsequently rescinded or modified in any way (the "PARENT
BOARD APPROVAL") has duly approved this Agreement.
3.6 AVAILABLE FUNDS Parent has or has available to it, and will
make available to Merger Sub, all funds necessary to satisfy all of Parent's and
Merger Sub's obligations under this Agreement.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) ORDINARY COURSE. During the period from the date
hereof and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, the Company shall, and shall cause
each of its Subsidiaries to, (except (i) as permitted by the terms of this
Agreement, (ii) as disclosed in Section 4.1 of the Company Disclosure Letter, or
(iii) to the extent that Parent shall otherwise consent in writing (which
consent shall not be unreasonably delayed), carry on the business of the Company
and its Subsidiaries, including but not limited to its Investment Policy in all
material respects, in the ordinary course, consistent with past practice, and
shall use their commercially reasonable efforts to preserve intact their
business, organization and relationships with third parties and to keep
available the services of their officers and employees.
(b) REQUIRED CONSENT. In addition, without limiting the
generality of Section 4.1(a), except as permitted by the terms of this
Agreement, and except as provided in Section 4.1 of the Company Disclosure
Letter, without the prior written consent of Parent (which consent shall not be
unreasonably delayed), during the period from the date hereof and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, the Company shall not do any of the following, and shall not
permit its Subsidiaries to do any of the following:
(i) Enter into any new line of business material
to it and its Subsidiaries taken as a whole;
(ii) Declare, set aside or pay any dividends on
or make any other distributions (whether in cash, stock, equity securities or
property) in respect of any capital stock or split, combine or reclassify any
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock, other than, the
declaration and payment in additional shares of Company Preferred Stock of
quarterly dividends payable to the holders of Company Preferred Stock in
accordance with Section 3 of the Certificate of Designation;
(iii) Purchase, redeem or otherwise acquire,
directly or indirectly, any shares of its capital stock or the capital stock of
its Subsidiaries, except repurchases of unvested shares at cost in connection
with the termination of the Company's or any of its Subsidiary's relationship
with any Service Provider (as defined in the Company Option Plans) pursuant to
stock
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option or purchase agreements in effect on the date hereof or entered into in
compliance with this Agreement;
(iv) Issue, deliver, sell, authorize, pledge or
otherwise encumber any shares of capital stock, Voting Debt or any securities
convertible into shares of capital stock or Voting Debt, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or Voting
Debt or any securities convertible into shares of capital stock or Voting Debt,
or enter into other agreements or commitments of any character obligating it to
issue any such securities or rights, other than: (A) issuances of Company Common
Stock upon the exercise of Company Options existing on the date hereof in
accordance with their present terms or granted pursuant to clause (D) hereof,
(B) issuance of shares of Company Common Stock to participants in the Company
Purchase Plans pursuant to the terms thereof under currently existing
agreements, (C) issuances of Company Common Stock upon the exercise of other
options, warrants or other rights of the Company outstanding on the date hereof
in accordance with their present terms (including cashless exercises), and (D)
grants of stock options to acquire Company Common Stock granted on or after
February 14, 2003 under the Company Stock Option Plans in the ordinary course of
business in connection with annual compensation reviews, promotions or new hires
PROVIDED THAT not more than 75,000 shares of Company Common Stock (net of
cancellations) shall be issued pursuant to this clause (D) in each three month
period commencing on February 14, 2003;
(v) Cause, permit or propose any amendments to
the Company Charter Documents or any of the Subsidiary Charter Documents of its
Subsidiaries;
(vi) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of the
assets of, or by any other manner, any business or any Person or division
thereof, or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its business;
(vii) Enter into any joint ventures, strategic
partnerships or alliances that are material to any of its divisions or business
units;
(viii) Except as previously disclosed in the
Company SEC Reports prior to the date hereof, sell, lease, license, mortgage or
otherwise encumber or dispose of any properties or assets which are material,
individually or in the aggregate, to its business, except in the ordinary course
of business consistent with past practice;
(ix) Make any loans, advances or capital
contributions to, or investments in, any other Person, other than: (A) loans or
investments by it or a Subsidiary of it to or in it or any wholly-owned
Subsidiary of it, (B) employee loans or advances made in the ordinary course of
business consistent with past practice and not to exceed $250,000 in the
aggregate, (C) investments by it or a Subsidiary of it in any other Person (i)
in the ordinary course of business consistent with past practice and not to
exceed $500,000 in the aggregate (provided that none of such transactions
referred to in this clause (C)(i) presents a material risk of delaying the
Merger or making it more difficult to obtain any Necessary Consent) or (ii)
pursuant to the terms of and in accordance with the Company's Investment Policy.
For the purposes of this Agreement, "INVESTMENT POLICY" shall mean the
investment policy of the Company adopted by the Board of Directors of the
Company on July 31, 2002 set forth in Section 4.1(b)(ix) of the Company
Disclosure Letter;
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(x) Except as required by GAAP or the SEC as
concurred in by its independent auditors, make any material change in its
methods or principles of accounting since the date of the Company Balance Sheet;
(xi) Make or change any material Tax election or adopt or change a Tax
accounting method;
(xii) Settle, pay, discharge or satisfy any
material claim (including any Tax claim), action, suit, investigation, audit or
proceeding involving money damages, except (A) in the ordinary course of
business (B) to the extent subject to reserves existing as of the date hereof in
accordance with GAAP, (C) amounts outside the ordinary course of business not to
exceed $500,000 in the aggregate or (D) engaging in any such activities on
behalf of customers of the Company or its Subsidiaries that result in payments
only by such customers, and, except as permitted by subsections (A), (B) or (C),
do not result in any payment obligation or other liability of the Company or any
of its Subsidiaries;
(xiii) Except as required by Legal Requirements,
this Agreement or Contracts currently binding on the Company or its
Subsidiaries, adopt or amend any Plan, Company Purchase Plans, Company Stock
Option Plan or Other Options, or enter into any new, or amend any existing
employment, severance, consulting, salary continuation or other similar Contract
or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business with employees who
are terminable "at will"), pay any special bonus or special remuneration (cash,
equity or otherwise) to any director or employee, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants except (x) payment of
bonuses or increases in salaries or wage rates or fringe benefits to non-officer
employees in the ordinary course of business consistent with past practice or
(y) payments made to Company employees pursuant to Company retention plans in
amounts not to exceed the amounts set forth in Section 4.1 of the Company
Disclosure Letter;
(xiv) Enter into any Contract the effect of which
would be to grant to a third party any actual or potential right of license to
any material Intellectual Property owned by Parent or any of its Subsidiaries;
(xv) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, guarantee any debt securities of another
Person, enter into any "keep well" or other Contract to maintain any financial
statement condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for borrowings under its line of
credit for working capital purposes and the endorsement of checks in the normal
course of business consistent with past practice or make any loans, advances or
capital contributions to, or investments in, any other Person, other than to the
Company or any direct or indirect wholly owned Subsidiary of the Company and
other than travel and entertainment advances to employees in the ordinary course
of business consistent with past practice;
(xvi) Adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or reorganization;
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(xvii) Engage in any transaction with, or enter
into any agreement, arrangement, or understanding with, directly or indirectly,
any of the Company's or its Subsidiaries' affiliates, including, without
limitation, any transactions, agreements, arrangements or understandings with
any affiliate or other Person covered under Item 404 of SEC Regulation S-K that
would be required to be disclosed under such Item 404;
(xviii) Do or permit any licensee or sublicensee
thereof to do any act or knowingly omit to do any act whereby any Company
Intellectual Property may become invalidated, abandoned or dedicated to the
public domain;
(xix) Make any commitment or enter into, or amend,
modify, or terminate, or waive any rights under any Company Material Contract;
or
(xx) Agree in writing or otherwise to take any of
the actions described in (i) through (xix) above.
(c) TAXES. During the period from the date of this
Agreement to the Effective Time, the Company and its Subsidiaries shall:
(i) prepare, in the ordinary course of business
and consistent with past practice (except as otherwise required by law), and
timely file all Tax Returns required to be filed by it (or them) on or before
the Closing Date ("POST SIGNING RETURNS");
(ii) deliver to Parent drafts of the Company's
fiscal year ended June 30, 2002 Tax Return prior to the date (including
extensions) on which such Tax Return is required to be filed; and
(iii) promptly notify Parent of any material
federal, state, local or foreign income or franchise and any other suit, claim,
action, investigation, proceeding or audit pending against or with respect to
the Company or any of its Subsidiaries in respect of any Tax matter, including
(without limitation) Tax liabilities and refund claims.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT. Promptly after execution and delivery of this
Agreement, the Company shall prepare and shall file with the SEC as soon as is
practicable a preliminary Proxy Statement, together with a form of proxy, with
respect to the Stockholders' Meeting at which the stockholders of the Company
will be asked to vote upon and approve this Agreement and the Merger and shall
use reasonable efforts to have the Proxy Statement and form of proxy cleared by
the SEC as promptly as practicable, and promptly thereafter shall mail the
definitive Proxy Statement and form of proxy to stockholders of the Company. The
term "PROXY STATEMENT" shall mean such proxy or information statement and all
amendments or supplements thereto, if any, similarly filed and mailed. Parent
will provide the Company with any information that may be required in order to
effectuate the preparation and filing of the Proxy Statement pursuant to this
Section 5.1. The Company will provide Parent and its counsel with a reasonable
opportunity to review the Proxy Statement prior to its filing. The Company will
respond to, and provide Parent and its counsel with a
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reasonable opportunity to participate in the response of the Company to, any
comments from the SEC and will notify Parent promptly upon the receipt of any
comments from the SEC in connection with the filing of, or amendments or
supplements to, the Proxy Statement. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement, the
Company or Parent, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the SEC and/or mailing to stockholders
of the Company such amendment or supplement. Each of Parent and the Company
shall cooperate and the Company shall provide Parent (and its counsel) with a
reasonable opportunity to review and comment on the Proxy Statement and on any
amendment or supplement to the Proxy Statement prior to filing such with the
SEC, and will provide Parent with a copy of all such filings made with the SEC.
The information provided and to be provided by Parent, Merger Sub and the
Company, respectively, for use in Proxy Statement shall, on the date the Proxy
Statement is first mailed to the Company's stockholders, on the date of the
Stockholders' Meeting and as of the Effective Time, not contain an untrue
statement of a material fact or omit to state any material fact necessary in
order to make such information, in light of the circumstances under which it was
provided, not misleading, and the Company, Parent and Merger Sub each agree to
correct any information provided by it for use in the Proxy Statement which
shall have become false or misleading in any material respect. The Proxy
Statement shall comply as to form in all material respects with all applicable
requirements of federal securities laws.
5.2 MEETINGS OF STOCKHOLDERS; BOARD RECOMMENDATION.
(a) MEETING OF STOCKHOLDERS. Promptly after the execution
of this Agreement, the Company will take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and Bylaws to call, hold and
convene a meeting of its stockholders to consider the adoption and approval of
this Agreement and approval of the Merger (the "STOCKHOLDERS' MEETING") as soon
as practicable after the date hereof. Subject to Section 5.3(d), the Company
will use reasonable efforts to solicit from its stockholders proxies in favor of
the adoption and approval of this Agreement and the approval of the Merger, and
will take all other action necessary or advisable to secure the vote or consent
of its stockholders required by Delaware Law to obtain such approval.
Notwithstanding anything to the contrary contained in this Agreement, the
Company may adjourn or postpone its Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement is provided to its stockholders in advance of a vote on the Merger and
this Agreement or, if as of the time for which the Stockholders' Meeting is
originally scheduled (as set forth in the Proxy Statement) there are
insufficient shares of Company Common Stock or Company Preferred Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of such Stockholders' Meeting.
(b) BOARD RECOMMENDATION. Except to the extent expressly
permitted by Section 5.3(d): (i) the Board of Directors of the Company shall
recommend that its stockholders vote in favor of the adoption and approval of
this Agreement and approval of the Merger (the "RECOMMENDATION"), at the
Stockholders' Meetings, (ii) the Proxy Statement shall include a statement to
the effect that the Board of Directors of the Company has recommended that the
Company's stockholders vote in favor of adoption and approval of this Agreement
and approval of the Merger at the Stockholders' Meeting, and (iii) neither the
Board of Directors of the Company nor any committee thereof shall withdraw,
amend or modify, or propose or resolve to withdraw, amend or modify in a manner
adverse to Parent, the Recommendation.
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5.3 ACQUISITION PROPOSALS.
(a) NO SOLICITATION. The Company agrees that neither it
nor any of its Subsidiaries nor any of their respective officers, directors,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries), and any party to a
Stockholder Agreement shall, and that the Company shall use reasonable efforts
to cause its and its Subsidiaries' other employees and affiliates not to (and
shall not authorize any of them to) directly or indirectly: (i) solicit,
initiate, encourage, knowingly facilitate or induce any inquiry with respect to,
or the making, submission or announcement of, any Acquisition Proposal (as
defined in Section 5.3(f)) with respect to itself, (ii) participate or engage in
any discussions or negotiations regarding, or furnish to any Person any
nonpublic information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any Acquisition Proposal with respect to itself, (iii)
approve, endorse or recommend any Acquisition Proposal with respect to itself
(except to the extent specifically permitted pursuant to Section 5.3(d)), or
(iv) enter into any letter of intent or similar document or any Contract or
commitment contemplating or otherwise relating to any Acquisition Proposal or
transaction contemplated thereby with respect to itself. The Company and its
Subsidiaries and any of their respective officers, directors, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries), and any party to a Stockholder
Agreement will immediately cease, and the Company shall use reasonable efforts
to cause its and its Subsidiaries' other employees and affiliates to cease, any
and all existing activities, discussions or negotiations with any third parties
(other than Parent, Merger Sub and their representatives) conducted heretofore
with respect to any Acquisition Proposal with respect to itself.
(b) NOTIFICATION OF UNSOLICITED ACQUISITION PROPOSALS. As
promptly as practicable and in any event within one (1) business day after
receipt of any Acquisition Proposal or any request for nonpublic information or
inquiry which the Company reasonably believes would lead to an Acquisition
Proposal the Company shall provide Parent with oral and written notice of the
material terms and conditions of such Acquisition Proposal, request or inquiry,
and the identity of the Person or group making any such Acquisition Proposal,
request or inquiry. The Company shall, upon receipt of an Acquisition Proposal,
request or inquiry, provide Parent as promptly as practicable oral and written
notice setting forth the terms of any material amendments or proposed material
amendments of any such Acquisition Proposal, request or inquiry.
(c) SUPERIOR OFFERS. Notwithstanding anything to the
contrary contained in Section 5.3(a), in the event that, prior to the adoption
and approval of this Agreement and the Merger by the required vote of the
stockholders of the Company, the Company receives an unsolicited, bona fide
written Acquisition Proposal with respect to itself from a third party that its
Board of Directors has in good faith concluded (after consultation with its
outside legal counsel and its financial advisor), is, or is reasonably likely to
result in, a Superior Offer (as defined in Section 5.3(f)) and the Company has
complied in full with all its obligations under Section 5.3(a) in connection
with such Acquisition Proposal, it may then take the following actions:
(i) Furnish nonpublic information to the third
party making such Acquisition Proposal, PROVIDED THAT (A) (1) concurrently with
furnishing any such nonpublic information to such party, it gives Parent written
notice of its intention to furnish nonpublic
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information and (2) it receives from the third party an executed confidentiality
agreement in substantially the form of the Confidentiality Agreement (as defined
in Section 5.4) prior to taking any action under clause (1) above and (B)
contemporaneously with furnishing any such nonpublic information to such third
party, it furnishes such nonpublic information to Parent (to the extent such
nonpublic information has not been previously so furnished);
(ii) Engage in negotiations with the third party
with respect to the Acquisition Proposal, PROVIDED THAT concurrently with
entering into negotiations with such third party, it gives Parent oral and
written notice of the its intention to enter into negotiations with such third
party; and
(iii) Approve or recommend, or propose to approve
or recommend, any Superior Offer and enter into any agreement with respect
thereto; provided, in each such case, that the Company has terminated this
Agreement pursuant to Section 7.1(g).
Nothing in this Section 5.3(c) shall relieve the Company from its
obligation to comply with Section 5.3(b).
(d) CHANGES OF RECOMMENDATION. The Board of Directors of
the Company may not withhold, withdraw, amend or modify the Recommendation (any
of the foregoing actions, whether by a Board of Directors or a committee
thereof, a "CHANGE OF RECOMMENDATION"), unless, prior to the adoption and
approval of this Agreement and the Merger by the required vote of the
stockholders of the Company, the Board of Directors has concluded in good faith,
after consultation with its outside legal counsel, that such Change of
Recommendation is required by its fiduciary obligations to its stockholders
under Delaware Law.
(e) COMPLIANCE WITH TENDER OFFER RULES. Nothing contained
in this Agreement shall prohibit either party or its respective Board of
Directors from taking and disclosing to its stockholders a position contemplated
by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
(f) CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms shall have the following meanings:
(i) "ACQUISITION PROPOSAL," with respect to a
party, shall mean any offer or proposal or public announcement of a proposal or
plan, relating to any transaction or series of related transactions involving:
(A) any purchase from such party or acquisition by any Person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a fifteen percent (15%) interest in the total
outstanding voting securities of such party or any of its Subsidiaries, directly
or indirectly, or any tender offer or exchange offer that if consummated would
result in any Person or group beneficially owning fifteen percent (15%) or more
of the total outstanding voting securities of such party or any of its
Subsidiaries, directly or indirectly, or any merger, consolidation, business
combination or similar transaction involving such party or any of its
Subsidiaries, (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than fifteen percent (15%) of the
assets of such party (including its Subsidiaries taken as a whole), directly or
indirectly, or (C) any liquidation or dissolution of such party; and
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(ii) "SUPERIOR OFFER," with respect to a party,
shall mean an unsolicited, bona fide written offer made by a third party to
acquire, directly or indirectly, pursuant to a tender offer, exchange offer,
merger, consolidation or other business combination, all or substantially all of
the assets of such party or a majority of the total outstanding voting
securities of such party and as a result of which the stockholders of such party
immediately preceding such transaction would hold less than fifty percent (50%)
of the equity interests in the surviving or resulting entity of such transaction
or any direct or indirect parent or subsidiary thereof, on terms that the Board
of Directors of such party has in good faith concluded (after consultation with
its outside legal counsel and its financial adviser) (i) to be more favorable
from a financial point of view, to such party's stockholders (in their
capacities as stockholders) than the terms provided pursuant to this Agreement,
(ii) the conditions to the consummation of which are reasonably capable of being
satisfied and (iii) financing for which, to the extent required, is then
committed or in the good faith judgment of the Board of Directors of the Company
(after consultation with its independent financial advisors) reasonably
available.
5.4 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) CONFIDENTIALITY. The parties acknowledge that the
Company and Parent have previously executed a Non-Disclosure Agreement dated
November 1, 2002 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms
and Parent will hold, and will cause its directors, officers, employees, agents
and advisors (including attorneys, accountants, consultants, bankers and
financial advisors) to hold, any Evaluation Material (as defined in the
Confidentiality Agreement) confidential in accordance with the terms of the
Confidentiality Agreement.
(b) ACCESS TO INFORMATION. The Company will afford Parent
and Parent's accountants, counsel and other representatives reasonable access
during normal business hours to its properties, books, records and personnel
during the period prior to the Effective Time to obtain all information
concerning its business, including the status of product development efforts,
properties, results of operations and personnel, as Parent or its
representatives may reasonably request, and, during such period, upon request by
Parent, the Company shall, and shall cause each of its Subsidiaries to, furnish
promptly to Parent a copy of any report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities laws; PROVIDED, HOWEVER, that the Company may
restrict the foregoing access to the extent that any law, treaty, rule or
regulation of any Governmental Entity applicable to the Company requires the
Company or its Subsidiaries to restrict or prohibit access to any such
properties or information.
5.5 PUBLIC DISCLOSURE. Neither the Company, Parent nor any of
their respective affiliates shall issue or cause the publication of any press
release or other public announcement with respect to the this Agreement or the
other transactions contemplated hereby without the prior written consent of the
other party, except as may be required by law or by any listing agreement with,
or the policies of, a national securities exchange in which circumstance
reasonable efforts to consult with the other party will still be required to the
extent practicable.
5.6 REGULATORY FILINGS; REASONABLE BEST EFFORTS.
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(a) REGULATORY FILINGS. Each of Parent, Merger Sub and
the Company shall coordinate and cooperate with one another and shall each use
reasonable best efforts to comply with, and shall each refrain from taking any
action that would impede compliance with, all Legal Requirements, and as
promptly as practicable after the date hereof, each of Parent, Merger Sub and
the Company shall make all filings, notices, petitions, statements,
registrations, submissions of information, application or submission of other
documents required by any Governmental Entity in connection with the Merger and
the other transactions contemplated hereby, including, without limitation: (i)
Notification and Report Forms with the United States Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice ("DOJ") as required by the HSR Act, (ii) any other filing necessary to
obtain any Necessary Consent, (iii) filings under any other comparable
pre-merger notification forms required by the merger notification or control
laws of any applicable jurisdiction, as agreed by the parties hereto, and (iv)
any filings required under the Securities Act, the Exchange Act, any applicable
state or securities or "blue sky" laws and the securities laws of any foreign
country, or any other Legal Requirement relating to the Merger. Each of Parent,
Merger Sub and the Company shall comply as promptly as practicable with any
request for additional information, documents or other materials received by
such party hereto or any of its Subsidiaries or affiliates from any Governmental
Entity. Each of Parent and the Company will cause all documents that it is
responsible for filing with any Governmental Entity under this Section 5.6(a) to
comply in all material respects with all applicable Legal Requirements.
(b) EXCHANGE OF INFORMATION. Parent, Merger Sub and the
Company each shall promptly supply the other with any information which may be
required in order to effectuate any filings or application pursuant to Section
5.6(a). Except where prohibited by applicable Legal Requirements, and subject to
the Confidentiality Agreement, each of the Company and Parent shall consult with
outside counsel to the other prior to taking a position with respect to any such
filing, shall permit outside counsel to the other to review and discuss in
advance, and consider in good faith the views of the other in connection with
any analyses, appearances, presentations, memoranda, briefs, white papers,
arguments, opinions and proposals before making or submitting any of the
foregoing to any Governmental Entity by or on behalf of any party hereto in
connection with any investigations or proceedings in connection with this
Agreement, the Merger or the other transactions contemplated hereby (including
under any antitrust or fair trade Legal Requirement), coordinate with outside
counsel to the other in preparing and exchanging such information and promptly
provide outside counsel to the other with copies of all filings, presentations
or submissions (and a summary of any oral presentations) made by such party to
any Governmental Entity in connection with this Agreement, the Merger or the
other transactions contemplated hereby, PROVIDED THAT with respect to any such
filing, presentation or submission, each of Parent and the Company need not
supply outside counsel to the other with copies (or in case of oral
presentations, a summary) to the extent that any law, treaty, rule or regulation
of any Governmental Entity applicable to such party requires such party or its
Subsidiaries to restrict or prohibit access to any such properties or
information.
(c) NOTIFICATION. Each of Parent, Merger Sub and the
Company will notify the other promptly upon the receipt of: (i) any comments
from any officials of any Governmental Entity in connection with any filings
made pursuant hereto and (ii) any request by any officials of any Governmental
Entity for amendments or supplements to any filings made pursuant to, or
information provided to comply in all material respects with, any Legal
Requirements. Whenever any event
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occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 5.6(a), Parent, Merger Sub or the Company, as
the case may be, will promptly inform the other of such occurrence and cooperate
in filing with the applicable Governmental Entity such amendment or supplement.
(d) REASONABLE BEST EFFORTS. Subject to the express
provisions of Section 5.2 and Section 5.3 hereof and upon the terms and subject
to the conditions set forth herein, each of the parties agrees to use reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including using reasonable best efforts to accomplish the following: (i) the
taking of all reasonable acts necessary to cause the conditions precedent set
forth in Article VI to be satisfied, (ii) the obtaining of all necessary actions
or non-actions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, including all Necessary Consents, (iv) the defending
of any suits, claims, actions, investigations or proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, the Company and its Board of Directors shall, if any
takeover statute or similar Legal Requirement is or becomes applicable to this
Agreement or any of the transactions contemplated by this Agreement, use
reasonable best efforts to ensure that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
Legal Requirement on this Agreement and the transactions contemplated hereby.
(e) LIMITATION ON DIVESTITURE. Notwithstanding anything
in this Agreement to the contrary, nothing contained in this Agreement shall be
deemed to require Parent or the Company or any Subsidiary or affiliate thereof
to take or agree to take any Action of Material Divestiture (as defined below)
which would be reasonably likely to materially adversely impact the benefits
expected to be derived by Parent and its Subsidiaries (on a combined basis with
the Company and its Subsidiaries) as a result of the transactions contemplated
hereby or would be reasonably likely to materially adversely affect Parent and
its Subsidiaries (on a combined basis with the Company and its Subsidiaries)
following the Merger. For purposes of this Agreement, an "ACTION OF MATERIAL
DIVESTITURE" shall mean executing or carrying out agreements or submitting to
Legal Requirements providing for a material license, material sale or other
material disposition of any assets or categories of assets that are material to
the combined business of Parent's employer services business and the Company or
the holding separate of Company capital stock or imposing or seeking to impose
any material limitation on the ability of Parent, the Company or any of their
respective Subsidiaries to own such assets or to acquire, hold or exercise full
rights of ownership of the Company's business or
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on the ability of Parent to conduct the combined business of Parent's employer
services business and the Company.
5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent and Parent shall give prompt notice to the Company, of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate or any failure of the Company, Parent or Merger Sub, as the
case may be, to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, such that, (A) in the case of the Company, the conditions set forth
in Section 6.2(a) or Section 6.2(b) would not be satisfied or (B) in the case of
Parent or Merger Sub, the conditions set forth in Section 6.3(a) or Section
6.3(b) would not be satisfied; PROVIDED, HOWEVER, that the delivery of any
notice pursuant to this Section 5.7 shall not limit or otherwise affect the
remedies available hereunder to any of the parties sending or receiving such
notice..
5.8 THIRD-PARTY CONSENTS. As soon as practicable following the
date hereof, Parent and the Company will each use reasonable efforts to obtain
(i) all Necessary Consents and (ii) all consents, waivers and approvals under
any Company Material Contract as may be required to be obtained in connection
with the Merger.
5.9 COMPANY EMPLOYEE PLANS AND EMPLOYEE BENEFITS.
(a) For the twelve (12) month period following the
Effective Time, Parent will provide to employees of the Company or any
Subsidiary of the Company who are employed by Parent or any Subsidiary of Parent
after the Effective Time (the "CONTINUING EMPLOYEES") compensation (excluding
bonuses, commissions, stock options, restricted stock, other forms of equity
compensation and benefits) that is comparable to the compensation (excluding
bonuses, commissions, stock options, restricted stock, other forms of equity
compensation and benefits) provided to the Continuing Employees prior to the
execution of this Agreement. For the twelve (12) month period following the
Effective Time, Parent will maintain a severance pay practice for the benefit of
each Continuing Employee that is no less favorable than the severance pay
practice provided by the Company as of the date of this Agreement. On and after
the Effective Time, Parent and/or any Subsidiary of Parent shall provide to the
Continuing Employees participation in benefit plans offered to similarly
situated employees of Parent that are no less favorable than the Plans (the
"PARENT Plans"). Parent shall take all necessary actions to provide that
Continuing Employees will receive full credit for years of service with the
Company and any of its Subsidiaries under the Parent Plans to the extent taken
into account for such purposes under the Plans prior to the Effective Time
(other than with respect to benefit accrual under tax qualified plans)). Parent
and/or any Subsidiary of Parent shall give credit under those of its Parent
Plans that are welfare benefit plans for all amounts credited toward deductibles
and out-of-pocket maximums, and time accrued against applicable waiting periods,
by Continuing Employees (including their eligible dependents), in respect of the
calendar year in which the Effective Time occurs. Parent and/or any Subsidiary
of Parent shall waive all requirements for evidence of insurability and
pre-existing conditions otherwise applicable to the Continuing Employees under
the Parent Plans in which such Continuing Employees become eligible to
participate on or following the Effective Time.
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(b) Parent agrees that at the Effective Time, Company
Employees may participate in the employee stock purchase plan sponsored by
Parent (the "PARENT ESPP"), subject to the terms and conditions of the Parent
ESPP, and that service with the Company shall be treated as service with Parent
for determining eligibility of the Continuing Employees under the Parent ESPP.
5.10 INDEMNIFICATION.
(a) INDEMNITY. From and after the Effective Time, Parent
will, and will cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification and
exculpation provisions in favor of the current or former directors or officers
of the Company (the "INDEMNIFIED PARTIES") under the Certificate of
Incorporation or Bylaws of the Company and any agreement between an Indemnified
Party and the Company or a Subsidiary of the Company as in effect as of the date
hereof that is listed in Section 5.10(a) of the Company Disclosure Letter. The
Certificate of Incorporation and Bylaws of the Surviving Corporation will
contain provisions with respect to exculpation and indemnification that are at
least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of the Company as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at any time prior to the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) INSURANCE. For a period of six (6) years after the
Effective Time, Parent will cause the Surviving Corporation to maintain in
effect the current policies of directors' and officers' liability insurance
maintained by the Company covering those persons (but only those persons) who
are currently covered by such policies; PROVIDED, HOWEVER, that in no event will
the Surviving Corporation be required to pay an annual premium on such insurance
policy that is greater than 200% of the annual premium currently payable by the
Company for such coverage and PROVIDED, FURTHER, that notwithstanding the
foregoing, in the event such coverage is no longer available (or is only
available for an amount in excess of 200% of the annual premium currently paid
by the Company for such coverage) Parent shall nevertheless be obligated to
provide such coverage as may be obtained for such 200% amount. Parent may,
however, satisfy its obligations under the first sentence of this Section
5.10(b) by purchasing a "tail" policy under the Company's existing directors'
and officers' insurance policy which (i) has an effective term of six (6) years
from the Effective Time, (ii) covers those persons (but only those persons) who
are currently covered by the Company's directors' and officers' insurance policy
in effect as of the date hereof, and (iii) contains terms and conditions
(including, coverage amounts) which are no less advantageous that those
contained in the terms and conditions of the Company directors' and officers'
insurance policies in effect as of the date hereof. The Company shall take all
actions necessary or advisable under its existing directors' and officers'
insurance policy to permit Parent to satisfy its obligations hereunder,
including but not limited to triggering any "tail" policy.
(c) THIRD-PARTY BENEFICIARIES. This Section 5.10 is
intended to be for the benefit of, and shall be enforceable by the Indemnified
Parties and their heirs and personal representatives and shall be binding on
Parent and the Surviving Corporation and its successors and assigns. In the
event Parent or the Surviving Corporation or its successor or assign (i)
consolidates with or merges
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into any other Person and shall not be the continuing or surviving corporation
or entity in such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any Person, then, and in each case, proper
provision shall be made so that the successor and assign of Parent or the
Surviving Corporation, as the case may be, honor the obligations set forth with
respect to Parent or the Surviving Corporation, as the case may be, in this
Section 5.10.
5.11 SECTION 16 MATTERS. Prior to the Effective Time, Parent and
the Company shall take all such steps as may be required (to the extent
permitted under applicable law) to cause any dispositions of Company Common
Stock (including derivative securities with respect to Company Common Stock) or
acquisitions of Parent Common Stock (including derivative securities with
respect to Parent Common Stock) resulting from the transactions contemplated by
Article I of this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act.
5.12 MERGER SUB COMPLIANCE. Parent shall cause Merger Sub to comply
with all of Merger Sub's obligations under or relating to this Agreement. Merger
Sub shall not engage in any business which is not in connection with the Merger
or other transactions contemplated hereby.
5.13 TAX ACCOUNT AND NON-TAX ACCOUNT RECONCILIATION REPORT AND
RELATED DATA. The Company has delivered to Parent, in a form reasonably
acceptable to Parent, (A) (i) a Tax Account Reconciliation Report as of December
31, 2002 and (ii) a statement of the Assumed Customer Tax Obligations, Tax Trust
Funds, Tax Account Receivables (shown in aggregate, as well as by aging
category, e.g., 30 to 90 days, 91 to 180, 181 to 360, and one year or older) and
the Tax Fund Investment Portfolio (showing market value adjustments) balances,
each as of December 31, 2002, for each customer of the Company or its
Subsidiaries and (B) a Non-Tax Bank Account Reconciliation Report as of December
31, 2002. "TAX ACCOUNT RECONCILIATION REPORT" shall mean a reconciliation report
comparing the aggregate amounts of the Tax Trust Funds and Tax Account
Receivables to the Assumed Customer Tax Obligations for each customer. "NON-TAX
BANK ACCOUNT RECONCILIATION REPORT" shall mean a report demonstrating the
reconciliation of the cash disbursement ledger to the bank account for only the
COBRA account, the flexible spending account (FSA), the health and welfare
account (H&W) and the ProCheck business account. "TAX ACCOUNT RECEIVABLES" shall
mean, with respect to any date, any amounts owed to the Company or its
Subsidiaries by its customers as of such date relating to previously assumed and
fulfilled Assumed Customer Tax Obligations, including, but not limited to, (i)
rejected Collection Items in Transit, (ii) items payable to the Company or its
Subsidiaries by its customers for reimbursement of overdeposits by Tax
authorities (for which the customer has received earlier credit or upon which it
has relinquished any claim) or (iii) any other amounts owed to the Company or
its Subsidiaries by customers for the past funding of bona fide Assumed Customer
Tax Obligations. A "COLLECTION ITEM IN TRANSIT" shall mean a pre-approved
electronic impound from a customer's bank account that was processed via an
automated clearing house network or reverse wire transfer initiated through the
Company's or its Subsidiaries' banks but that is not yet settled. "TAX FUND
INVESTMENT PORTFOLIO" shall mean that portion of the Tax Trust Funds invested in
bonds, securities, mutual funds, and other non-cash financial instruments.
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of the Company.
(b) NO ORDER. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Legal Requirement (whether temporary, preliminary or permanent) which (i) is in
effect and (ii) has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger; PROVIDED, HOWEVER, that prior to
invoking this condition, the party so invoking this condition shall have
complied with its obligations under Section 5.6.
(c) HSR ACT. All waiting periods (and any extension
thereof) under the HSR Act relating to the transactions contemplated hereby will
have expired or terminated early.
(d) NECESSARY CONSENTS. All Necessary Consents required
to execute, deliver and perform this Agreement and to consummate the Merger
shall have been obtained or made.
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company contained in Article II of the Agreement (A) that
are qualified by the phrase "Material Adverse Effect" shall each be true and
correct in all respects and (B) that are not so qualified shall be true and
correct in all respects, in the case of (A) and (B) as of the date of this
Agreement and as of the Effective Time with the same force and effect as if made
as of such date, except (i) with respect to (B) any such representations and
warranties in each case, or in the aggregate with other representations and
warranties that are not qualified by the phrase "Material Adverse Effect", as
does not constitute a Material Adverse Effect on the Company; (ii) for changes
contemplated by this Agreement; and (iii) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject, if applicable, to the
Material Adverse Effect on the Company limitation set forth in the preceding
clause (i)) as of such particular date) (it being understood that, for purposes
of determining the accuracy of the representations and warranties described in
(B), all materiality qualifications and other qualifications based on the word
"material" contained in such representations and warranties shall be
disregarded) Parent shall have received a certificate to such effect signed on
behalf of the Company by an authorized senior executive officer of the Company.
(b) AGREEMENTS AND COVENANTS. The Company has performed
or complied in all material respects with the covenants, obligations and
agreements required by this Agreement to be
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performed or complied with by it at or prior to the Closing Date. Parent and
Merger Sub shall have received a certificate with respect to the foregoing
signed on behalf of the Company by an authorized senior executive officer of the
Company.
(c) LITIGATION MATTERS. There shall not have been any
suit or proceeding by any Governmental Entity against Parent, the Company,
Merger Sub or any of their respective Subsidiaries, that would result in Parent
being required to take any action described in Section 5.6(e).
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent contained in Article III hereof (A) that are qualified
by the phrase "Material Adverse Effect" shall each be true and correct in all
respects and (B) that are not so qualified shall be true and correct in all
respects, in the case of (A) and (B) as of the date of this Agreement and as of
the Effective Time with the same force and effect as if made as of such date,
except (i) with respect to (B) any such representations and warranties in each
case, or in the aggregate with other representations and warranties that are not
qualified by the phrase "Material Adverse Effect", as does not constitute a
Material Adverse Effect on Parent; (ii) for changes contemplated by this
Agreement; and (iii) for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct (subject, if applicable, to the Material Adverse Effect on Parent
limitation set forth in the preceding clause (i)) as of such particular date)
(it being understood that, for purposes of determining the accuracy of the
representations and warranties described in (B), all materiality qualifications
and other qualifications based on the word "material" contained in such
representations and warranties shall be disregarded). The Company shall have
received a certificate with respect to the foregoing signed on behalf of Parent,
with respect to the representations and warranties of Parent, by an authorized
senior executive officer of Parent and a certificate with respect to the
foregoing signed on behalf of Merger Sub, with respect to the representations
and warranties of Merger Sub, by an authorized officer of Merger Sub.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall
have performed or complied in all material respects with the covenants,
obligations and agreements required by this Agreement to be performed or
complied with by them at or prior to the Closing Date. The Company shall have
received a certificate with respect to the foregoing signed on behalf of Parent,
with respect to the covenants of Parent, by an authorized senior executive
officer of Parent and a certificate with respect to the foregoing signed on
behalf of Merger Sub, with respect to the covenants of Merger Sub, by an
authorized officer of Merger Sub.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided below,
whether before or after the requisite approval of the stockholders of the
Company:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and the Company;
(b) by either Parent or the Company, if the Merger shall
not have been consummated on or before May 31, 2003 (which date shall be
extended to September 30, 2003, in the event that all waiting periods (and any
extension thereof) under the HSR Act relating to the Merger shall not have
expired or been terminated on or prior to May 31, 2003) (the "END DATE");
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
Section 7.1(b) shall not be available to any party whose action or failure to
act has been the principal cause of or resulted in the failure of the Merger to
occur on or before the End Date, and such action or failure to act constitutes a
material breach of this Agreement;
(c) (i) by either the Company or Parent if any court of
competent jurisdiction or other Government Entity shall have issued an order,
decree, or ruling enjoining or otherwise prohibiting the transaction
contemplated by this Agreement and such order, decree or ruling shall have
become final and non-appealable (unless such order, decree, or ruling has been
withdrawn, reversed, or otherwise made inapplicable); or (ii) by the Company if
any litigation or proceeding is pending before any court of competent
jurisdiction or has been threatened to be instituted by any Person or
governmental body, which in the good faith judgment of the Board of Directors of
the Company is reasonably likely to result in an order, decree, or ruling
enjoining, prohibiting, seeking substantial damages in respect of, or impairing
the benefits of the transactions contemplated by this Agreement;
(d) by Parent (at any time prior to the adoption and
approval of this Agreement and the Merger by the required vote of the
stockholders of the Company) if a Triggering Event (as defined below in this
Section 7.1) with respect to the Company shall have occurred;
(e) by the Company by written notice to Parent, upon a
breach of any representation, warranty, covenant or agreement on the part of
Parent or Merger Sub set forth in this Agreement, or if any representation or
warranty of Parent or Merger Sub shall have become untrue or inaccurate, which
untruths, inaccuracies or breach would give rise to the failure of a condition
set forth in Section 6.3(a) or 6.3(b); PROVIDED THAT if such untruth or
inaccuracy in Parent's or Merger Sub's representations and warranties or breach
by Parent or Merger Sub is curable by Parent or Merger Sub prior to the End Date
through the exercise of reasonable efforts, then the Company may not terminate
this Agreement under this Section 7.1(e) prior to such End Date, PROVIDED THAT
Parent continues to exercise reasonable efforts to cure such untruthfulness,
inaccuracy or breach through the End Date (it being understood that the Company
may not terminate this Agreement pursuant to this paragraph (e) if it shall have
materially breached this Agreement or if such untruthfulness, inaccuracy or
breach by Parent or Merger Sub is cured prior to the End Date);
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(f) by Parent by written notice to the Company, upon a
breach of any representation, warranty, covenant or agreement on the part of the
Company set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue or inaccurate, which untruths, inaccuracies or
breach would give rise to the failure of a condition set forth in Section 6.2(a)
or 6.2(b) PROVIDED THAT if such untruth or inaccuracy in the Company's
representations and warranties or breach by the Company is curable by the
Company prior to the End Date through the exercise of reasonable efforts, then
Parent may not terminate this Agreement under this Section 7.1(f) prior to the
End Date, PROVIDED THAT the Company continues to exercise reasonable efforts to
cure such untruthfulness, inaccuracy or breach through the End Date (it being
understood that Parent may not terminate this Agreement pursuant to this
paragraph (f) if it shall have materially breached this Agreement or if such
untruthfulness, inaccuracy or breach by the Company is cured prior to the End
Date);
(g) by the Company, if the Company receives a Superior
Offer; PROVIDED THAT, (i) the Company shall have notified Parent in writing
prior to terminating this Agreement pursuant to this Section 7.1(g) that the
Company has received a Superior Offer and intends to terminate this Agreement
pursuant to this Section 7.1(g), attaching the most current version of such
Superior Offer to such notice, (ii) the Company shall have afforded Parent the
reasonable opportunity to make a revised offer (including by negotiating the
terms of such offer with Parent) and Parent shall not have made, within three
(3) business days after receipt of the Company's written notice of its intention
to terminate this Agreement pursuant to this Section 7.1(g), an offer that the
Board of Directors of the Company determines in good faith to be more favorable
to the Company's stockholders than such Superior Offer and (iii) the Company
shall simultaneously with its termination hereunder make all payments required
by Section 7.3(b); and
(h) by either the Company or Parent if the required
approval of the stockholders of the Company contemplated by this Agreement shall
not have been obtained by reason of the failure to obtain the required vote at a
meeting of the Company stockholders duly convened therefore or at any
adjournment thereof; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 7.1(h) shall not be available to the Company where
the failure to obtain the Company stockholder approval shall have been caused by
the action or failure to act of the Company and such action or failure to act
constitutes a material breach by the Company of this Agreement.
For the purposes of this Agreement, a "TRIGGERING EVENT," with respect
to the Company, shall be deemed to have occurred if: (i) its Board of Directors
or any committee thereof shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to Parent the Recommendation, (ii) it
shall have failed to include the Recommendation in the Proxy Statement, (iii)
its Board of Directors or any committee thereof shall have approved or
recommended any Acquisition Proposal, or (iv) a tender or exchange offer
relating to its securities shall have been commenced by a Person unaffiliated
with the Company and it shall not have sent to its securityholders pursuant to
Rule 14e-2 promulgated under the Securities Act, within ten (10) business days
after such tender or exchange offer is first published, sent or given, a
statement disclosing that the Board of Directors of the Company recommends
rejection of such tender or exchange offer.
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7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Except as
otherwise set forth in Section 7.1(g), any termination of this Agreement under
Section 7.1 above will be effective immediately upon the delivery of a valid
written notice of the terminating party to the other party hereto. In the event
of the termination of this Agreement as provided in Section 7.1, this Agreement
shall be of no further force or effect, except (i) as set forth in Section
5.4(a), this Section 7.2, Section 7.3 and Article VIII, each of which shall
survive the termination of this Agreement and (ii) nothing herein shall relieve
any party from liability for any willful breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated.
(b) PAYMENTS.
(i) PAYMENT BY THE COMPANY. In the event that
this Agreement is terminated by Parent or the Company, as applicable, pursuant
to Section 7.1(d) or (g) the Company shall promptly, but (except as set forth in
Section 7.1(g)) in no event later than two (2) business days after the date of
such termination, pay Parent a fee equal to $25 million in immediately available
funds.
(ii) PAYMENT BY PARENT. In the event that this
Agreement is terminated by Parent or the Company (A) pursuant to Section 7.1(c)
primarily as a result of issues relating to the antitrust or competition laws of
any applicable jurisdiction or (B) pursuant to Section 7.1(b) in the event the
applicable waiting period under the HSR Act not having expired or terminated
then, in any such event, Parent shall promptly, but in no event later than two
(2) business days after the date of such termination, pay the Company a fee
equal to $25 million in immediately available funds.
(iii) INTEREST AND COSTS; OTHER REMEDIES. Each of
Parent and the Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and the Company would not
enter into this Agreement; accordingly, if the Company or Parent fails to pay in
a timely manner the amounts due pursuant to Section 7.3(b)(i) or Section
7.3(b)(ii), respectively, and, in order to obtain such payment, Parent or the
Company, as applicable, makes a claim that results in a judgment against the
Company (in the case of non-payment under Section 7.3(b)(i)) or Parent (in the
case of non-payment under Section 7.3(b)(ii)) for the amounts set forth in
Section 7.3(b)(i) or Section 7.3(b)(ii), respectively, the Company (in the case
of non-payment under Section 7.3(b)(i)) or Parent (in the case of non-payment
under Section 7.3(b)(ii)) shall pay to the other party its reasonable costs and
expenses (including reasonable attorneys' fees and expenses) in connection with
such suit, together with interest on the amounts set forth in Section 7.3(b)(i)
or Section 7.3(b)(ii), as applicable, at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made. Payment of the fees
described in this Section 7.3(b) shall not be in lieu of damages incurred in the
event of breach of this Agreement.
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7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Boards of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the stockholders of the Company,
PROVIDED, after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further stockholder approval. This
Agreement may not be amended except by execution of an instrument in writing
signed on behalf of each of Parent, Merger Sub and the Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time
either party hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company, Parent and Merger Sub contained
in this Agreement, or any instrument delivered pursuant to this Agreement, shall
terminate at the Effective Time, and only the covenants or agreements that by
their terms survive the Effective Time and this Article VIII shall survive the
Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed duly given (i) on the date of delivery if
delivered personally, (ii) on the date of confirmation of receipt (or, the first
business day following such receipt if the date is not a business day) of
transmission by telecopy or telefacsimile, or (iii) on the date of confirmation
of receipt (or, the first business day following such receipt if the date is not
a business day) if delivered by a nationally recognized courier service. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(a) if to Parent or Merger Sub, to:
Automatic Data Processing, Inc.
Xxx XXX Xxxxxxxxx
Xxxxxxxx, XX 00000-0000
Attention: President, Employer Services Group
Facsimile: (000) 000-0000
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with a copy to:
Automatic Data Processing, Inc.
Xxx XXX Xxxxxxxxx
Xxxxxxxx, XX 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
ProBusiness Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a section of this Agreement unless otherwise
indicated. For purposes of this Agreement, the words "INCLUDE," "INCLUDES" and
"INCLUDING," when used herein, shall be deemed in each case to be followed by
the words "without limitation." The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. When reference is made herein
to "THE BUSINESS OF" an entity, such reference shall be deemed to include the
business of all such entity and its Subsidiaries, taken as a whole.
(b) For purposes of this Agreement, the term "KNOWLEDGE"
means, with respect to a party hereto, with respect to any matter in question,
that any of the Chief Executive Officer, Chief Financial Officer, General
Counsel, Chief Information Officer or Executive Vice President for Operations,
has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL
ADVERSE EFFECT," when used in connection with an entity, means any change,
event, violation, inaccuracy, circumstance or effect (any such item, an
"EFFECT") that is materially adverse to the business, properties, assets,
financial condition or results of operations of such entity taken as a whole
with its Subsidiaries (or, if such entity is the Company, the Company taken as a
whole with its Subsidiaries or Parent taken as a whole with its Subsidiaries);
PROVIDED, HOWEVER, that, in no event shall any of the following be deemed to
constitute, nor shall any of the following be taken into account in determining
whether there has been or will be, a Material Adverse Effect on any entity: (A)
any Effect resulting from compliance with the terms and conditions of this
Agreement, (B) any Effect resulting from the announcement or pendency of the
Merger (including, without limitation, any (x) actions by clients or
competitors, (y) loss of personnel or clients, or (z) the delay or cancellation
of orders for services and products), (C) any change in such entity's stock
price or trading volume, (D) any failure by such entity to meet revenue or
earnings projections, (E) any Effect that results from changes affecting any of
the industries in which such entity operates generally or the United States
economy generally, (F) any Effect that results from changes affecting general
worldwide economic or capital market conditions, (G) in the case of the Company
only, any Effect that results from investments in any other Person made in
accordance with the Company's Investment Policy, (H) any Effect that results
from changes in laws after the date hereof, or (I) any Effect resulting from an
outbreak or escalation of hostilities involving the United States, the
declaration by the United States of a national emergency or war, or the
occurrence of any acts of terrorism.
(d) For purposes of this Agreement, the term "PERSON"
shall mean any individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization,
entity or Governmental Entity.
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8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the Company Disclosure
Letter and the Parent Disclosure Letter (i) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement and (ii) are not
intended to confer upon any other Person any rights or remedies hereunder,
except as specifically provided, following the Effective Time, in Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the greatest extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE.
(a) OTHER REMEDIES. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy. The parties hereto 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.
(b) SPECIFIC PERFORMANCE. It is accordingly agreed that
the parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law thereof. Each party hereby (a) irrevocably and
unconditionally submits to the exclusive jurisdiction of the Delaware Court of
Chancery, with respect to all actions and proceedings arising out of or relating
to this Agreement and the transaction contemplated hereby, (b) agrees that all
claims with respect to any such action or proceeding shall be heard and
determined in such courts and agrees not to commence an action or proceeding
relating to this Agreement or the transactions contemplated hereby except in
such courts, (c) irrevocably and unconditionally
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waives any objection to the laying of venue of any action or proceeding arising
out of this Agreement or the transactions contemplated hereby and irrevocably
and unconditionally waives the defense of an inconvenient forum, (d) consents to
service of process upon him, her or it by mailing or delivering such service to
the address set forth in Section 8.2 hereof, and (e) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties; PROVIDED, HOWEVER, that Parent or Merger Sub can
assign any of their respective rights and obligations to any direct or indirect
wholly-owned Subsidiary of Parent, but no such assignment shall relieve Parent
or Merger Sub, as the case may be, of its obligations hereunder. Any purported
assignment in violation of this Section 8.10 shall be void. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER
SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
PROBUSINESS SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
ADP MERGER CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
AUTOMATIC DATA PROCESSING, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and CEO
****AGREEMENT AND PLAN OF MERGER****
