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AGREEMENT AND PLAN OF MERGER
among
ENGHOUSE SYSTEMS LIMITED
ARIZONA ACQUISITION CORP.
and
SYNTELLECT INC.
Dated as of November 5, 2002
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TABLE OF CONTENTS
ARTICLE I THE OFFER........................................................1
Section 1.1. The Offer.....................................................1
Section 1.2. Company Actions...............................................2
Section 1.3. Directors.....................................................3
Section 1.4. Grant of Option...............................................4
ARTICLE II THE MERGER.......................................................5
Section 2.1. The Merger....................................................5
Section 2.2. Effective Time................................................5
Section 2.3. Certificate of Incorporation and By-laws......................5
Section 2.4. Directors and Officers........................................5
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES...............6
Section 3.1. Effect on Capital Stock.......................................6
Section 3.2. Exchange of Certificates......................................6
Section 3.3. Stock Options.................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................8
Section 4.1. Organization..................................................8
Section 4.2. Capitalization................................................9
Section 4.3. Authority.....................................................9
Section 4.4. Consents and Approvals; No Violations........................10
Section 4.5. SEC Reports and Financial Statements.........................10
Section 4.6. Absence of Certain Changes or Events.........................11
Section 4.7. No Undisclosed Liabilities...................................11
Section 4.8. Information Supplied.........................................11
Section 4.9. Benefit Plans; Employees and Employment Practices............11
Section 4.10. Contracts....................................................13
Section 4.11. Litigation...................................................14
Section 4.12. Compliance with Applicable Law...............................14
Section 4.13. Tax Matters..................................................15
Section 4.14. Environmental................................................17
Section 4.15. State Takeover Statutes......................................18
Section 4.16. Intellectual Property........................................18
Section 4.17. Sale of Products; Performance of Services....................21
Section 4.18. Certain Business Practices...................................21
Section 4.19. Transactions with Affiliates.................................21
Section 4.20. Books and Records............................................21
Section 4.21. Opinion of Financial Advisor.................................22
Section 4.22. Brokers and Finders..........................................22
Section 4.23. Full Disclosure..............................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................22
Section 5.1. Organization.................................................22
Section 5.2. Authority....................................................22
Section 5.3. Consents and Approvals; No Violations........................22
Section 5.4. Information Supplied.........................................23
Section 5.5. Interim Operations of Sub....................................23
Section 5.6. Brokers......................................................23
Section 5.7. Financing....................................................23
ARTICLE VI COVENANTS.......................................................23
Section 6.1. Covenants of the Company.....................................23
Section 6.2. No Solicitation..............................................25
Section 6.3. Stockholder Approval; Preparation of Proxy Statement.........27
Section 6.4. Access to Information........................................28
Section 6.5. Disclosure Supplements.......................................28
Section 6.6. Reasonable Efforts...........................................28
Section 6.7. Certain Litigation...........................................29
Section 6.8. Takeover Statute.............................................29
ARTICLE VII CONDITIONS......................................................29
Section 7.1. Conditions to Each Party's Obligation To Effect the Merger...29
ARTICLE VIII TERMINATION AND AMENDMENT.......................................29
Section 8.1. Termination..................................................29
Section 8.2. Effect of Termination........................................30
Section 8.3. Amendment....................................................30
Section 8.4. Extension; Waiver............................................30
Section 8.5. Expenses.....................................................31
ARTICLE IX MISCELLANEOUS...................................................31
Section 9.1. Nonsurvival of Representations and Warranties................31
Section 9.2. Notices......................................................31
Section 9.3. Interpretation...............................................32
Section 9.4. Counterparts.................................................33
Section 9.5. Entire Agreement; No Third Party Beneficiaries...............33
Section 9.6. Governing Law................................................33
Section 9.7. Publicity....................................................33
Section 9.8. Assignment...................................................33
Section 9.9. Enforcement..................................................33
Section 9.10. Severability.................................................34
CONDITIONS TO THE OFFER..................................................ANNEX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of
November 5, 2002, among Enghouse Systems Limited, an Ontario corporation
("Parent"), Arizona Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and Syntellect Inc., a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent, Sub and the
Company deem it advisable and in the best interests of their respective
stockholders that Parent acquire the Company upon the terms and subject to the
conditions provided for in this Agreement;
WHEREAS, Parent proposes to cause Sub to make a tender offer
(as it may be amended from time to time as permitted under this Agreement, the
"Offer") to purchase all the outstanding shares of Common Stock, par value $0.01
per share (the "Shares" or "Share", when used in the singular), of the Company
at a purchase price (the "Offer Price") of $0.72 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement; and the Board of Directors of the Company has adopted
resolutions approving the Offer and recommending that holders of Shares accept
the Offer;
WHEREAS, the merger of Sub with and into the Company (the
"Merger") upon the terms and subject to the conditions set forth in this
Agreement has been authorized by all necessary corporate action on behalf of
Parent and Sub and has been adopted and declared advisable by the Board of
Directors of the Company; and
WHEREAS, concurrently with the execution of this Agreement and
as an inducement to Parent to enter into this Agreement, (i) Parent, Sub, the
Company and certain stockholders of the Company are entering into a Tender and
Voting Agreement (the "Tender and Voting Agreement") pursuant to which such
stockholders have, among other things, agreed to tender their Shares to Sub in
the Offer, upon the terms and subject to the conditions set forth in the Tender
and Voting Agreement and (ii) the Company has granted Parent an option to
acquire a number of Shares equal to up to 19.9% of the Company's Shares
outstanding immediately prior to the exercise of such option (the "Stock Option
Agreement") upon the terms and subject to the conditions set forth in the Stock
Option Agreement, and each of the Tender and Voting Agreement and the Stock
Option Agreement has been approved by the Board of Directors of the Company.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1. The Offer. (a) Subject to the provisions of this Agreement,
Sub shall commence the Offer as promptly as practicable. The obligation of Sub
to commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in Annex
A (the "Offer Conditions") (any of which may be waived in whole or in part by
Sub in its reasonable discretion, except that Sub shall not waive the Minimum
Condition (as defined in Annex A) without the consent of the Company) and to the
terms and conditions of this Agreement. Sub expressly reserves the right to
modify the terms of the Offer, except that, without the consent of the Company,
Sub shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce
the Offer Price, (iii) amend or add to the Offer Conditions, (iv) except as
provided in the next sentence, extend the Offer, (v) change the form of
consideration payable in the Offer or (vi) amend any other term of the Offer in
any manner
adverse to the holders of the Shares. Notwithstanding the foregoing, Sub may,
without the consent of the Company, (i) extend the Offer, but not beyond January
31, 2003, if at the scheduled or extended expiration date of the Offer any of
the Offer Conditions shall not be satisfied or waived, (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer and (iii) extend the Offer for any reason on one or more occasions
for an aggregate period of not more than 10 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence. Subject to the terms and conditions of the Offer and this
Agreement, Sub shall accept for payment, and pay for, all Shares validly
tendered pursuant to the Offer that Sub becomes obligated to accept for payment,
and pay for, pursuant to the Offer as promptly as practicable after the
expiration of the Offer. Nothing herein shall restrict Sub's ability to provide
a "subsequent offering period" as contemplated by Rule 14d-11 under the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule TO (the "Schedule
TO") with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and all other ancillary offer documents (such
Schedule TO and the documents included therein pursuant to which the Offer will
be made, together with any supplements or amendments thereto, the "Offer
Documents"). Parent and Sub shall cause the Offer Documents to be disseminated
to the holders of Shares as and to the extent required by applicable federal
securities laws. Parent and Sub agree that the Offer Documents shall comply in
all material respects with the Exchange Act, and the rules and regulations
promulgated thereunder and the Offer Documents, on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
covenant is made by Parent or Sub with respect to information supplied by the
Company or any of its stockholders specifically for inclusion or incorporation
by reference in the Offer Documents. Each of Parent, Sub and the Company agree
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and Parent and Sub further agree to take all
steps necessary to cause the Schedule TO as so corrected to be filed with the
SEC and the other Offer Documents as so corrected to be disseminated to the
Company's stockholders, in each case, as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC or dissemination to the stockholders of the Company.
Parent and Sub agree to provide the Company and its counsel any comments,
whether oral or written, that Parent, Sub or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments and to consult with the Company and its counsel prior to
responding to any such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
that Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer.
(d) If, between the date of this Agreement and the date on which
any particular Share is accepted for payment pursuant to the Offer, the
outstanding Shares are changed into a different number or class of shares by
reason of any stock split, division or subdivision of shares, stock dividend,
reverse stock split, consolidation of shares, reclassification, recapitulation
or other similar transaction, then the Offer Price shall be appropriately
adjusted to reflect such change or transaction.
Section 1.2. Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held, duly and unanimously adopted
resolutions (i) approving this Agreement, (ii) approving the Offer and the
Merger (and effecting the other actions referred to in Section 4.15) in
accordance with the
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requirements of the Delaware General Corporation Law ("DGCL"), (iii) determining
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger are fair to, and in the best interests of, the Company and
its stockholders, (iv) recommending that the Company's stockholders accept the
Offer, tender their Shares pursuant to the Offer and approve this Agreement (if
required), and (v) approving the acquisition of Shares by Parent and Sub
pursuant to the Offer, the Tender and Voting Agreement, the Stock Option
Agreement (as applicable) and the other transactions contemplated by this
Agreement, the Tender and Voting Agreement and the Stock Option Agreement. The
Company hereby consents to the inclusion of such recommendation referenced above
in the Offer Documents. The Company has been advised by each of its directors
and executive officers that each such person intends to tender all Shares owned
by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, and the documents
included therein, together with any supplements or amendments thereto, the
"Schedule 14D-9") containing the recommendation described in paragraph (a) and
shall distribute the Schedule 14D-9 to the stockholders of the Company as and to
the extent required by applicable federal securities laws. The Company agrees
that the Schedule 14D-9 shall comply in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder and, on the date filed with the SEC and on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue
statement of 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 light of
the circumstances under which they were made, not misleading, except that no
covenant is made by the Company with respect to information supplied by Parent
or Sub specifically for inclusion in the Schedule 14D-9. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to the Company's stockholders, in each case, as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given reasonable opportunity to review and comment upon the Schedule
14D-9 prior to its filing with the SEC or dissemination to stockholders of the
Company. The Company agrees to provide Parent and its counsel any comments,
whether oral or written, that the Company or its counsel may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
of such comments and to consult with Parent and its counsel prior to responding
to any such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Sub and their agents shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated in accordance with Section
8.1, will, upon request, deliver, and will cause their agents to deliver, to the
Company all copies and any extracts or summaries from such information then in
their possession or control.
Section 1.3. Directors. (a) Effective upon the acceptance for payment of
Shares by Sub pursuant to the Offer, Parent shall be entitled to designate the
number of directors, rounded up to the next
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whole number, on the Board of Directors of the Company that equals the product
of (i) the total number of directors on the Board of Directors of the Company
(giving effect to the election of any additional directors pursuant to this
Section) and (ii) a fraction whose numerator is the aggregate number of Shares
then beneficially owned by Parent (including Shares accepted for payment
pursuant to the Offer), and whose denominator is the total number of Shares then
outstanding. In furtherance thereof, the Company shall take all action necessary
to cause Parent's designees to be elected or appointed to the Company's board of
directors at such time, including increasing the number of directors, and
seeking and accepting resignations of incumbent directors. At such time, to the
extent requested by Parent, the Company will also cause individuals designated
by Parent to constitute the number of members, rounded up to the next whole
number, on (i) each committee of the Board of Directors of the Company and (ii)
each board of directors of each subsidiary of the Company (and each committee
thereof) that represents the same percentage as individuals designated by Parent
to serve on the Board of Directors of the Company. Notwithstanding the
foregoing, if Shares are purchased pursuant to the Offer, there shall be until
the Effective Time at least two members of the Company's Board of Directors who
are directors (but not employees of the Company or any of its subsidiaries) on
the date hereof (the "Continuing Directors"); provided, however, that if at any
time prior to the Effective Time there shall be in office only one Continuing
Director for any reason, the Company's Board of Directors shall cause a person
who is not an officer or employee of the Company, Parent, Sub or any of their
respective subsidiaries or affiliates designated by the remaining Continuing
Director to fill such vacancy (and such person shall be deemed to be a
Continuing Director for all purposes of this Agreement), and if at any time
prior to the Effective Time no Continuing Directors then remain, the other
directors of the Company then in office shall use reasonable efforts to
designate two persons to fill such vacancies who are not officers or employees
or affiliates of the Company, its subsidiaries, Parent, Sub or any of their
respective subsidiaries or affiliates (and such persons shall be deemed to be
Continuing Directors for all purposes of this Agreement).
(b) The Company's obligations to appoint Parent's designees to
the Company's Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions, and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors, as Section 14(f) and Rule
14f-1 of the Exchange Act require in order to fulfill its obligations under this
Section, so long as Parent shall have provided to the Company on a timely basis
the information with respect to Parent and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1 of the Exchange Act. The
provisions of this Section 1.3 are in addition to and shall not limit any rights
which Sub, Parent or any of their affiliates may have as a holder or beneficial
owner of Shares as a matter of applicable law with respect to the election of
directors or otherwise.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time, the affirmative
vote of a majority of the Continuing Directors, or if there shall only be one,
of a Continuing Director, shall be required to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement or (iii) extend the time for performance of
Parent's and Sub's respective obligations under this Agreement.
Section 1.4. Grant of Option. The Company hereby grants to Sub an option
to purchase from the Company such number of Shares as will result in Sub owning
90.1% of the total number of outstanding Shares, at a price per Share equal to
the Offer Price. Such option shall only be exercisable (1) to the extent the
Company has a sufficient number of authorized but unissued Shares and (2)
following the time Sub has accepted Shares for payment pursuant to the Offer and
Parent and its subsidiaries beneficially own at least a majority of the then
outstanding Shares. That portion of the purchase price owing upon exercise of
such option which equals the product of (a) the number of Shares purchased
pursuant to such option multiplied by (b) the par value per Share shall be paid
to the Company in cash by wire transfer or check, and the balance of the
purchase price shall be paid by delivery to the Company of
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a non-interest bearing unsecured demand note of Parent. Such option shall be
exercised by notice from Sub to the Company and Sub shall be the owner of such
Shares immediately following such notice.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions
set forth herein and in accordance with the DGCL, at the Effective Time Sub
shall be merged with and into the Company, the separate existence of Sub shall
thereupon cease and the Company shall continue as the surviving corporation
(hereinafter sometimes referred to as the "Surviving Corporation") and a wholly
owned subsidiary of Parent. The Merger shall have the effects set forth in this
Agreement and in the DGCL.
Section 2.2. Effective Time. Subject to the provisions of this
Agreement, as promptly as practicable (but in no event more than two business
days) after the satisfaction or waiver of the conditions to the Merger (other
than conditions which by their nature are to be satisfied at the Closing (as
defined below), but subject to such conditions) the parties shall (a) file a
certificate of merger (the "Certificate of Merger") or, if applicable, a
certificate of ownership and merger (the "Certificate of Ownership and Merger")
in such form as is required by and executed in accordance with the relevant
provisions of the DGCL and (b) make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger or Certificate of Ownership and Merger, as applicable, is
duly filed with the Secretary of State of the State of Delaware or at such
subsequent time as Parent and the Company shall agree and as shall be specified
in the Certificate of Merger or the Certificate of Ownership and Merger (the
date and time the Merger becomes effective being the "Effective Time"). Prior to
such filing, a Closing (the "Closing") shall be held at the offices of Xxxxxxxx
Chance US LLP, New York, New York. The date of the Closing is sometimes referred
to as the "Closing Date."
Section 2.3. Certificate of Incorporation and By-laws. Unless otherwise
determined by Parent prior to the Effective Time:
(a) the certificate of incorporation of the Surviving
Corporation shall be amended and restated as of the Effective Time to conform to
the certificate of incorporation of Sub as in effect immediately prior to the
Effective Time until thereafter changed or amended in accordance with the
provisions thereof and applicable law, provided that Article I shall provide
that the name of the Surviving Corporation shall be the name of the Company; and
(b) the bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the bylaws of Sub as in effect
immediately prior to the Effective Time until thereafter changed or amended in
accordance with the provisions thereof and applicable law.
Section 2.4. Directors and Officers. Unless otherwise determined by
Parent prior to the Effective Time:
(a) the directors of the Surviving Corporation immediately after
the Effective Time shall be the respective individuals who are directors of Sub
immediately prior to the Effective Time until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be; and
(b) the officers of the Surviving Corporation immediately after
the Effective Time shall be the respective individuals who are officers of the
Company immediately prior to the Effective Time until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any further action on the part of Parent, Sub, the
Company or any stockholder of the Company:
(a) Conversion of Shares. Subject to Section 3.1(d), each issued
and outstanding Share (other than Shares to be canceled in accordance with
Section 3.1(b) hereof) shall be converted into the right to receive the Offer
Price in cash, (the "Merger Consideration"), payable, without interest, to the
holder of such Share, upon surrender, in the manner provided in Section 3.2, of
the certificate that formerly evidenced such Share. All such Shares, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 3.2.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
Share that is owned by the Company or any wholly owned subsidiary of the Company
(or held in the Company's treasury) and each Share that is owned by Parent or
Sub or any of their respective subsidiaries shall be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any Shares held by a person (a "Dissenting
Stockholder") who does not vote to approve the Merger and complies with all the
provisions of the DGCL concerning the right of holders of Shares to dissent from
the Merger and require payment of fair value (as defined in the DGCL) for their
Shares ("Dissenting Shares") shall not be converted as described in Section
3.1(a), but shall be converted into the right to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant to the DGCL.
If, after the Effective Time, such Dissenting Stockholder withdraws his demand
or fails to perfect or otherwise loses his rights as a Dissenting Stockholder to
payment of fair value, in any case pursuant to the DGCL, his Shares shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of any
demands for fair value for Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the prior written
consent of Parent, make any payment with respect to, or settle, offer to settle
or otherwise negotiate, any such demands.
Section 3.2. Exchange of Certificates. (a) Prior to the Effective Time,
Parent shall designate a bank or trust company to act as Exchange Agent in the
Merger (the "Exchange Agent"), and, from time to time on, prior to or after the
Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Exchange Agent cash in amounts and at the times
necessary for the prompt payment of the Merger Consideration upon surrender of
certificates that immediately prior to the Effective Time represented
outstanding Shares ("Certificates").
(b) Exchange Procedure. Promptly after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate (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 a 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
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for the Merger Consideration. Upon surrender of a Certificate to the Exchange
Agent, together with a duly executed letter of transmittal and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share theretofore represented by such Certificate, and
the Certificate so surrendered shall forthwith be canceled.
(c) No Further Ownership Rights in Shares. All Merger
Consideration delivered upon the surrender of Certificates in accordance with
the terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates. Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at all times after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration into
which the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 3.1. No interest will be paid or will accrue on
the cash payable upon the surrender of any Certificate.
(d) Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and thereafter there shall be no
further registration of transfers of the Shares in the records of the Company.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article III.
(e) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Exchange Agent, the posting by such person of a bond or other surety in such
amount as the Exchange Agent may reasonably direct as indemnity against any
claim that may be made with respect to such Certificate and subject to such
other reasonable conditions as the Exchange Agent may impose, the Exchange Agent
shall deliver in exchange for such Certificate the Merger Consideration into
which the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 3.1.
(f) Transferred Certificates. If any payment under this Article
III is to be made to a person other than the person in whose name the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate
surrendered or such person shall establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
(g) Investment. The Exchange Agent shall invest any funds held
by it for purposes of this Section 3.2 as directed by Parent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Parent.
(h) Withholding Tax. Parent and Sub shall be entitled to deduct
and withhold, or cause the Exchange Agent to deduct and withhold, from the Offer
Price or the Merger Consideration payable to a holder of Shares pursuant to the
Offer or the Merger any such amounts as are required under the Internal Revenue
Code of 1986, as amended (the "Code"), or any applicable provisions of state,
local or foreign tax law. To the extent that amounts are so withheld by Parent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Parent or Sub.
(i) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any cash delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. Any portion of the cash that has been made available to the
7
Exchange Agent pursuant to this Section 3.2 that remains unclaimed by the holder
of any Certificate six months after the Effective Time shall be returned to
Parent and any such holder who has not exchanged such holder's Certificate prior
to such time shall thereafter look only to the Surviving Corporation for any
claim for Merger Consideration hereunder.
Section 3.3. Stock Options. The Company has taken all necessary action
so that effective as of the Effective Time, (a) each outstanding employee or
director stock option (the "Options") to purchase Shares granted under the
Company's stock option plans (the "Company Option Plans") and each outstanding
warrant to purchase Shares (a "Warrant"), whether or not then exercisable or
vested, will become fully exercisable and vested, (b) each Option and Warrant
that is then outstanding will be cancelled and (c) in consideration of such
cancellation, and except to the extent that Parent or Sub and the holder of any
such Option or Warrant otherwise agree, the Company (or, at Parent's option,
Sub) will pay to each holder of an Option or Warrant an amount in respect
thereof equal to the product of (x) the excess, if any, of the Offer Price over
the exercise price of each such Option or Warrant and (y) the number of Shares
previously subject to the Option or Warrant immediately prior to its
cancellation (such payment to be net of applicable withholding taxes, if any).
The Company represents that (i) no consent of any holder of an option is
necessary for the transactions contemplated by this Section 3.3, (ii) following
the Effective Time no holder of an Option or Warrant shall have any rights
thereunder other than to receive cash as contemplated by this Section 3.3, and
(iii) following the Effective Time no person shall have any right to acquire any
security of the Surviving Corporation (or any subsidiary thereof) as a result of
any agreement or obligation of the Company or any subsidiary and no person shall
have any rights under any security of the Company or any subsidiary except as
explicitly provided herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), which Company Disclosure Schedule identifies the Section
(or, if applicable, subsection) to which such exception relates, the Company
represents and warrants to Parent and Sub as follows:
Section 4.1. Organization. Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate power
and authority to own, lease or operate its properties and to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect on the
Company. For purposes of this Agreement, a "Material Adverse Effect" means, with
respect to any person, a fact, event or effect which has had, or is reasonably
likely to have, together with all similar or related or other facts, events and
effects, a material adverse effect on the financial condition, prospects,
business, assets or results of operations of such person and its subsidiaries
taken as a whole or on the ability of such person to perform its obligations
hereunder or which would prevent or delay the consummation of the transactions
contemplated hereby. The Company has made available to Parent complete and
correct copies of its certificate of incorporation and by-laws and the
certificate of incorporation and by-laws (or similar organizational documents)
of each of its subsidiaries. The certificate of incorporation of the Company and
the by-laws of the Company are in full force and effect, and the Company is not
in violation of any provisions of its certificate of incorporation or by-laws.
The certificate of incorporation and by-laws of such subsidiary are in full
force and effect, and no subsidiary of the Company is in violation of its
certificate of incorporation or by-laws.
8
Section 4.2. Capitalization. (a) The authorized capital stock of the
Company consists of 25,000,000 Shares and 2,500,000 shares of preferred stock.
At the close of business on November 4, 2002, (i) 11,369,152 Shares were issued
and outstanding, (ii) no shares of preferred stock were issued and outstanding,
(iii) 2,358,392 Shares were issuable upon the exercise of Options to purchase
Shares under the Company Option Plans, and (iv) 30,000 Shares were issuable upon
the exercise of an outstanding Warrant, and (v) 3,322,432 Shares were issued and
held in the treasury of the Company. All outstanding shares of capital stock of
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth above, and for changes since such date
resulting from the exercise of Options outstanding on such date in accordance
with their terms, there are outstanding (x) no shares of capital stock or other
voting securities of the Company, (y) no securities of the Company convertible
into or exchangeable for shares of capital stock or other securities of the
Company, and (z) no options, warrants or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock or other
securities. There are no outstanding obligations of the Company or any
subsidiary to repurchase, redeem or otherwise acquire any securities of the
Company or to vote or to dispose of any shares of the capital stock of any of
the Company's subsidiaries. The Company does not have a "Shareholders Right
Plan" or similar arrangement.
(b) Section 4.2(b) of the Company Disclosure Schedule lists each
outstanding Option and Warrant, the holder thereof, the number of Shares
issuable thereunder and the exercise price thereof.
(c) Section 4.2(c) of the Company Disclosure Schedule lists each
subsidiary of the Company. All the outstanding shares of capital stock of each
such subsidiary are owned by the Company, by another wholly owned subsidiary of
the Company or by the Company and another wholly owned subsidiary of the
Company, free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except for the capital
stock of its subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any entity.
Section 4.3. Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement, the Tender and Voting
Agreement and the Stock Option Agreement, and to consummate the transactions
contemplated hereby and thereby. The Board of Directors of the Company (at a
meeting duly called and held) has, by the unanimous vote of all directors of the
Company determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
Company's stockholders and declared that this Agreement is advisable. The
execution, delivery and performance of this Agreement, the Tender and Voting
Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby, including the consummation by the
Company of the Merger, have been duly authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement, the Tender and Voting
Agreement or the Stock Option Agreement or to consummate the transactions
contemplated hereby or thereby, other than, with respect to the Merger, the
adoption of this Agreement by the holders of a majority of the outstanding
Shares (the "Company Stockholder Approval") (if required) and the filing of the
Certificate of Merger or the Certificate of Ownership and Merger, as applicable.
This Agreement, the Voting and Tender Agreement and the Stock Option Agreement
have been duly executed and delivered by the Company and each such agreement
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with the respective terms of such agreement, except
that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
9
Section 4.4. Consents and Approvals; No Violations. (a) The execution,
delivery and performance by the Company of this Agreement, the Tender and Voting
Agreement and the Stock Option Agreement and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not require any
filing or registration with, notification to, or authorization, permit, consent
or approval of, or other action by or in respect of, any governmental body,
court, agency, official or regulatory or other authority (collectively,
"Governmental Entities") other than (i) the filing of the Certificate of Merger
or the Certificate of Ownership and Merger, as applicable, as contemplated by
Article I hereof, and (ii) compliance with any applicable requirements of the
Exchange Act.
(b) The execution, delivery and performance by the Company of
this Agreement, the Tender and Voting Agreement and the Stock Option Agreement
and the consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of the Company or any
similar organizational documents of any of its subsidiaries, (ii) to the best of
the Company's knowledge, result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default under, or give rise to
any right of termination, amendment, cancellation, acceleration or loss of
benefits under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its subsidiaries under, or require consent
pursuant to, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, permit, concession, franchise, contract,
agreement or other instrument or obligation (a "contract") to which the Company
or any of its subsidiaries is a party or by which any of its properties or
assets may be bound or (iii) to the best of the Company's knowledge, violate any
judgment, order, writ, preliminary or permanent injunction or decree (an
"Order") or any statute, law, ordinance, rule or regulation of any Governmental
Entity (a "Law") applicable to the Company, any of its subsidiaries or any of
their properties or assets, except in the case of clauses (ii) or (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect
on the Company.
Section 4.5. SEC Reports and Financial Statements. (a) The Company has
made available (and with respect to future filings, will make available) via
XXXXX to Parent accurate and complete copies of all registration statements,
proxy statements and other statements, reports, schedules, forms and other
documents filed by the Company with the SEC since December 31, 1999, and all
amendments thereto (the "Company SEC Documents"). All statements, reports,
schedules, forms and other documents required to be filed by the Company with
the SEC since such date have been so filed on a timely basis. The Company SEC
Documents, to the best of the Company's knowledge (a) do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (b) comply in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act of 1933 (the "Securities Act"), as the case may be, and the
applicable rules and regulations of the SEC thereunder. No subsidiary of the
Company is required to make any filings with the SEC.
(b) The financial statements (including any related notes) of
the Company included in the Company SEC Documents comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods covered (except as may be indicated in the notes
thereto, or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments that will
not, individually or in the aggregate, be material in amount) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as at the respective dates thereof and the consolidated results of
the operations and cash flows of the Company and its consolidated subsidiaries
for the periods then ended.
10
Section 4.6. Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed and publicly available prior to the date of
this Agreement (the "Company Filed SEC Documents"), since December 31, 2001, (i)
the Company and its subsidiaries have conducted their respective businesses only
in the ordinary course, (ii) there has not been any Material Adverse Effect with
respect to the Company and (iii) neither the Company nor any subsidiary has
taken any action contemplated by Section 6.1.
Section 4.7. No Undisclosed Liabilities. Except as and to the extent set
forth in the Company Filed SEC Documents, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature whether or not
accrued, contingent or otherwise, and there is no existing condition, situation
or set of circumstances which could be expected to result in such a liability or
obligation, except liabilities or obligations (a) reflected in the Company Filed
SEC Documents or (b) which were incurred since December 31, 2001 and were normal
and recurring expenses incurred in the ordinary course of business and would not
be reasonably expected to have a Material Adverse Effect on the Company.
Section 4.8. Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be filed
by the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the Exchange Act (the "Information Statement") or (iv) the Proxy
Statement, will, in the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer Documents, the Schedule
14D-9 and the Information Statement are filed with the SEC or first published,
sent or given to the Company's stockholders, or, in the case of the Proxy
Statement, at the time the Proxy Statement is first mailed to the Company's
stockholders or at the time of the Stockholders Meeting (as defined in Section
6.3), to the best of the Company's knowledge, 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 light of the
circumstances under which they are made, not misleading. The Schedule 14D-9, the
Information Statement and the Proxy Statement will comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
Section 4.9. Benefit Plans; Employees and Employment Practices. To the
best of the Company's knowledge (a) Section 4.9(a) of the Company Disclosure
Schedule lists each employment, consulting, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock, equity
(or equity-based), leave of absence, layoff, vacation, day or dependent care,
legal services, cafeteria, life, health, medical, dental, vision, welfare,
accident, disability, workmen's compensation or other insurance, severance,
separation, termination, change of control, collective bargaining or other
benefit plan, understanding, agreement, practice, policy or arrangement of any
kind, whether written or oral, and whether or not subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including, but not
limited to, any "employee benefit plan" within the meaning of Section 3(3) of
ERISA (a "Plan"), which the Company or any subsidiary, or any person required at
any relevant time to be aggregated with any of the Company or any subsidiary
under Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (an
"ERISA Affiliate"), sponsors, maintains, has any obligation to contribute to,
has or may have liability under or is otherwise a party to, or which otherwise
provides benefits for employees, former employees, independent contractors or
former independent contractors (or their dependents and beneficiaries) of the
Company or any subsidiary, on the date of this Agreement or at any time
subsequent thereto and on or prior to the Effective Time (each, a "Company
Plan"). The Company has delivered with respect to each such Company Plan, true,
correct, and complete copies of the applicable following documents: (i) all
current Company Plan documents and related trust documents, and any amendment
thereto; (ii) Forms 5500, financial statements, and actuarial reports for the
last three
11
plan years; (iii) the most recently issued Internal Revenue Service
determination letter; (iv) summary plan descriptions and all summaries of
material modifications; and (v) all written communications to employees relating
to such Company Plans.
(b) To the best of the Company's knowledge, each of the Company
Plans is, and its administration (including without limitation, with respect to
reporting and disclosure) is and has been, in compliance with, its terms and
with ERISA, the Code (including, without limitation, all tax rules compliance
with which is required for any intended favorable tax treatment is intended) and
any and all other applicable law. Without limiting any other provision of this
Section 4.9(b), no event has occurred and no condition exists, with respect to
any Plan, that has subjected or could reasonably be expected to subject the
Company or any subsidiary, or any Company Plan or any successor thereto, to any
tax, fine, penalty or other liability (other than a liability arising in the
normal course to make contributions or payments, as applicable, when ordinarily
due under the Company Plans with respect to employees (or, if applicable,
independent contractors) of the Company and its subsidiaries). No event has
occurred and no condition exists, with respect to any Plan that could subject
Parent or any of its affiliates, or any Plan maintained by Parent or any
affiliate (other than an affiliate which becomes such pursuant to the
transactions contemplated by this Agreement) thereof, to any tax, fine, penalty
or other liability, that would not have been incurred by Parent or any of its
affiliates, or any such Plan, but for the transactions contemplated hereby.
(c) Each of the Company Plans which is intended to be
tax-qualified under Section 401(a) of the Code and, if applicable, 401(k) of the
Code has been determined by the Internal Revenue Service to be so qualified and
such determination has not been modified, revoked or limited, and no
circumstances have occurred that would adversely affect the tax-qualified status
of any such Company Plan.
(d) To the best of the Company's knowledge, neither the Company
nor any ERISA Affiliate has ever sponsored, contributed to, maintained or had
any liability (whether contingent or otherwise) under (i) a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) or (ii) an employee benefit plan
that is or was subject to Part 3 of Subtitle B of Title I of ERISA, or Section
412 of the Code, or Title IV of ERISA, nor have any of them ever done so.
(e) There is no suit, action, dispute, claim, arbitration or
legal, administrative or other proceeding or governmental investigation pending,
or threatened, alleging any breach of the terms of any Company Plan or of any
fiduciary duties thereunder or violation of any applicable law with respect to
any such Company Plan.
(f) To the best of the Company's knowledge, none of the Company
or any of its subsidiaries is in default in performing any of its contractual
obligations under any of the Company Plans or any related trust agreement or
insurance contract.
(g) To the best of the Company's knowledge, none of the Company
or any subsidiary, or any "party in interest" (as defined in Section 3(14) of
ERISA) or any "disqualified person" (as defined in Section 4975 of the Code)
with respect to any Company Plan, has engaged in a non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA.
(h) To the best of the Company's knowledge (i) no Company Plan
that is a "welfare benefit plan" as defined in Section 3(1) of ERISA provides
for continuing benefits or coverage for any participant or beneficiary or
covered dependent of a participant after such participant's termination of
employment, except to the extent required by law; (ii) there has been no
violation of Section 4980B of the Code or Sections 601 through 608 of ERISA with
respect to any such Company Plan that could result in any material liability;
and (iii) all Company Plans which provide medical, dental health or long-term
12
disability benefits are fully insured and claims with respect to any participant
or covered dependent under such Company Plan could not result in any uninsured
liability to the Company, any subsidiary or Parent.
(i) No Company Plan covers or otherwise benefits any individuals
other than current or former employees of the Company and its subsidiaries (and
their dependents and beneficiaries).
(j) Neither the Company nor any subsidiary has agreed or
otherwise committed to, whether in writing or otherwise, to increase or improve
the compensation, benefits or terms and conditions of employment or service of
any director, officer, employee or consultant. None of the Company or any
subsidiary maintains any Plan which provides severance or similar benefits to
current or former employees or other service providers. Each such Plan provides
for the unrestricted right of the Company or any subsidiary (as applicable) to
amend or terminate such Plan. The Company will not have any outstanding
liability under the Workers Adjustment and Retraining Notification Act, as
amended, with respect to any events occurring or conditions existing on or prior
to the Effective Time.
(k) (i) There are no material controversies, strikes, work
stoppages or disputes pending or threatened between the Company or any of its
subsidiaries and any current or former employees, (ii) no labor union or other
collective bargaining unit represents or has ever represented any employee of
the Company or any of its subsidiaries with respect to employment by the Company
or such subsidiary and (iii) no organizational effort by any labor union or
other collective bargaining unit currently is under way or threatened with
respect to any employee.
(l) To the best of the Company's knowledge, Section 4.9(l) of
the Company Disclosure Schedule lists each employment, severance, consulting or
other contract or plan with or for the benefit of any officer, director,
employee or agent of the Company or any subsidiary with a "change of control"
provision or that will provide any payment, additional benefits, vesting or
acceleration of benefits or rights or otherwise be affected by the execution of
this Agreement or the consummation of the transactions contemplated hereby.
Section 4.10. Contracts. (a) To the best of the Company's knowledge,
neither the Company nor any of its subsidiaries nor, in the case of (vii) below,
any affiliate of the Company, is a party to or is bound by:
(i) any contract or commitment restricting the Company,
any subsidiary or any of their respective employees from engaging in any
activity or line of business or competing with any person or limiting the
ability of any person to compete with the Company or any subsidiary;
(ii) any agreement, option or commitment or right with,
or held by, any third party to acquire, use or have access to any assets or
properties, or any interest therein, of the Company or any subsidiary;
(iii) any employment, severance or consulting contract
which is material to the business of the Company or its subsidiaries;
(iv) any agreement or commitment not entered into in the
ordinary course of business or any agreement which, if terminated, would
reasonably be expected to result in a Material Adverse Effect;
(v) any material license, sublicense, development,
support or maintenance agreement not entered into in the ordinary course of its
business nor consistent with the Company's standard practices;
(vi) any agreement relating to common or preferred stock
issued by the Company or any subsidiary;
13
(vii) any agreement which provides rights to parties
other than the Company or any subsidiary which are contingent upon a merger,
consolidation or other "change-in-control" of the Company;
(viii) any agreement containing confidentiality and
non-disclosure obligations from the Company which, if violated, could reasonably
be expected to result in a Material Adverse Effect;
(ix) any other agreement that (A)(1) involves the payment
or potential payment, pursuant to the terms of any such agreement, by or to the
Company or any subsidiary of more than $125,000 and (2) cannot be terminated
within 60 calendar days after giving notice of termination without resulting in
any material cost or penalty to the Company or any subsidiary or (B) obligates
the Company to provide services for a period in excess of 90 calendar days
unless such obligation is terminable by the Company without resulting in any
material cost or penalty to the Company or any subsidiary or was entered into in
the ordinary course of business and did not include any extraordinary inducement
to the other party; or
(x) any agreement granting any license or other right to
use the Intellectual Property Rights (as defined below) of the Company, except
to customers in the ordinary course of business.
(b) To the best of the Company's knowledge, the Company has
previously delivered (or made available) true, complete and correct copies of
all such agreements (including all amendments) to Parent (or, in the case of
oral agreements only, true, complete and correct descriptions thereof have been
set forth in Section 4.10 of the Company Disclosure Schedule). To the best of
the Company's knowledge, neither the Company nor any of its subsidiaries, or to
the best knowledge of the Company, any other party, is in violation or breach of
or in default (nor does there exist any condition which upon the passage of time
or the giving of notice would result in a violation or breach of, or constitute
a default under, or give rise to any right of termination, amendment,
cancellation, acceleration or loss of benefits, or result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
subsidiaries) under any contract to which it is a party or by which it or any of
its properties or assets is bound, except for violations, breaches or defaults
that would not have a Material Adverse Effect on the Company. No other party to
any such contract has, to the best knowledge of the Company, alleged that the
Company or any subsidiary is in violation or breach of or in default under any
such contract or has notified the Company or any subsidiary of an intention to
modify any material terms of or not to renew any such contract, where such
events would have a Material Adverse Effect on the Company. No additional
consideration shall be due under such contracts as a result of the Merger and
neither the Company nor any subsidiary is currently renegotiating any such
agreement or paying liquidated damages in lieu thereof.
Section 4.11. Litigation. Except as disclosed in the Company Filed SEC
Documents, there is no suit, claim, action, proceeding or investigation pending
before any Governmental Entity or, to the best knowledge of the Company,
threatened against the Company or any of its subsidiaries that would have a
Material Adverse Effect. Except as disclosed in the Company SEC Documents,
neither the Company nor any of its subsidiaries is subject to any outstanding
Order that would have a Material Adverse Effect on the Company.
Section 4.12. Compliance with Applicable Law. To the best of the
Company's knowledge, the Company and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
"Company Permits"), except for failures to hold such Company Permits that would
not have a Material Adverse Effect on the Company. To the best of the Company's
knowledge, the Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure so to comply would not have a
Material Adverse Effect on the Company. To the best of the Company's knowledge,
the
14
businesses of the Company and its subsidiaries have not been, and are not
being, conducted in violation of any Law, except for violations that would not
have a Material Adverse Effect. No investigation or review by any Governmental
Entity with respect to the Company or any of its subsidiaries is pending or, to
the best knowledge of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct any such investigation or review, other than,
in each case, where the outcome would not have a Material Adverse Effect on the
Company.
Section 4.13. Tax Matters. (a) The Company and each of its subsidiaries
has timely filed all tax returns and reports required to be filed by it. All
such tax returns and reports are complete and correct in all material respects.
The Company and each of its subsidiaries has timely paid (or the Company has
paid on its subsidiaries' behalf) all taxes due with respect to the taxable
periods covered by such tax returns and reports and all other taxes, and the
most recent financial statements contained in the Company Filed SEC Documents
reflect an adequate reserve for all taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(b) Neither the Company nor any of its subsidiaries is under
audit or examination by any taxing authority, and no written or unwritten notice
of such an audit or examination has been received by the Company or its
subsidiaries. Each material deficiency resulting from any audit or examination
relating to taxes by any taxing authority has been timely paid. No material
issues relating to taxes were raised by the relevant taxing authority during any
presently pending audit or examination, and no material issues relating to taxes
were raised by the relevant taxing authority in any completed audit or
examination that can reasonably be expected to recur in a later taxable period.
No tax return or report of the Company or any of its subsidiaries has ever been
under audit or examination by the Internal Revenue Service or other relevant
taxing authority. The Company has not voluntarily extended the relevant statute
of limitations with respect to the U.S. federal tax returns of the Company and
its subsidiaries.
(c) The best of the Company's knowledge, there is no agreement
or other document extending, or having the effect of extending, the period of
assessment or collection of any taxes and no power of attorney with respect to
any taxes has been executed or filed with any taxing authority.
(d) No material Liens for taxes exist with respect to any assets
or properties of the Company or any of its subsidiaries, except for statutory
liens for taxes not yet due.
(e) Neither the Company nor any of its subsidiaries is a party
to or bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority).
(f) To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries will be required to include in a taxable period
ending after the Effective Time taxable income attributable to income that
accrued in a prior taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting, the completed
contract method of accounting, the long-term contract method of accounting, the
cash method of accounting or Section 481 of the Code or comparable provisions of
state or local tax law, domestic or foreign, or for any other reason.
(g) The disallowance of a deduction under Section 162(m) of the
Code for employee remuneration will not apply to any amount paid or payable by
the Company or any of its subsidiaries under any Company Plan or other
compensation arrangement currently in effect.
(h) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any Company Plan or other compensation arrangement currently in
effect would not be characterized as an
15
"excess parachute payment" or a "parachute payment" (as such terms are defined
in Section 280G(b)(1) of the Code).
(i) To the best of the Company's knowledge, the Company has
complied in all respects with all applicable laws, rules and regulations
relating to the payment and withholding of taxes (including, without limitation,
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code
or similar provisions under any foreign federal laws or any state or local laws,
domestic and foreign) and has, within the time and the manner prescribed by law,
withheld from and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under applicable laws.
(j) Neither the Company nor any of its subsidiaries currently is
the beneficiary of any extension of time within which to file any tax return. No
claim has ever been made by an authority in a jurisdiction where any of the
Company or its subsidiaries does not file tax returns that the Company or its
subsidiaries is or may be subject to taxation by that jurisdiction.
(k) Neither the Company nor any of its subsidiaries has filed a
consent under Code Sec. 341(f) concerning collapsible corporations. Neither the
Company nor any of its subsidiaries has been a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). Neither the Company
nor any of its subsidiaries is subject to any accumulated earnings tax or
personal holding Company tax. Each of the Company and its subsidiaries has
disclosed on its federal income tax returns all positions taken therein that
could give rise to a substantial understatement of federal income tax within the
meaning of Code Sec. 6662. Neither the Company nor any of its subsidiaries (A)
has been a member of an Affiliated Group (as defined below) filing a
consolidated federal income tax return (other than an Affiliated Group the
common parent of which was the Company) or (B) has any liability for the taxes
of any person (other than any of the Company and its subsidiaries) under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.
(l) Section 4.13(1) of the Company Disclosure Schedule sets
forth the following information with respect to each of the Company and its
subsidiaries (or, in the case of clause (B) below, with respect to each of the
Company's subsidiaries) as of the most recent practicable date (as well as on an
estimated pro forma basis as of the Closing giving effect to the consummation of
the transactions contemplated hereby) and to the best of the Company's
knowledge: (A) the amount of any excess loss accounts; (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Company or any
of its subsidiary and any limitations thereon; (C) the amount of any deferred
gain or loss allocable to the Company or any of its subsidiaries arising out of
any deferred intercompany transaction; (D) all material elections and consents
relating to tax and agreements with any taxing authorities which are still in
effect; (E) an estimate of the current and accumulated earnings and profits of
such company; (F) any partnership, trust or other entity (other than the Company
and its subsidiaries) in which the Company or its subsidiaries are owners
whether or not such entity is disregarded for tax purposes and (G) all closing
agreements and tax rulings requested or received from any taxing authority.
(m) Neither the Company nor any of its subsidiaries (A) has
participated in an international boycott as defined in Code Section 999; (B) has
been the distributing corporation with respect to a transaction described in
Code Section 355 within the three-year period ending on the date of this
Agreement; (C) has a permanent establishment or office or fixed place of
business outside the country in which it was organized or (D) has an overall
foreign loss described in Code Section 904(f).
(n) None of the assets of the Company or its subsidiaries are
(A) tax exempt use property under Code Section 168(h); (B) tax-exempt bond
financed property under Code Section 168(g); (C) limited use property under
Revenue Procedure 76-30, or (D) treated as owned by any other person
16
under Code Section 168. None of the Company or it subsidiaries is a party (other
than as an investor) to any industrial development bond.
(o) Neither the Company nor any of its subsidiaries own shares
of any controlled foreign corporations as described in Code Section 957, passive
foreign investment company as described in Code Section 1297, or foreign
investment company as described in Code Section 1246.
(p) None of the Company's subsidiaries which are organized
outside the United States (A) have material loss carryovers; (B) have any
investments in United States property as described in Code Section 956; (C) have
any United States real property interests as described in Code Section 897, or
(D) generate material Subpart F income as described in Code Section 952.
(q) To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries which are organized outside the United States are a
(A) controlled foreign corporation as described in Code Section 957; (B) passive
foreign investment Company as described in Code Section 1297; (C) contiguous
country corporation described in Code Section 1504(d); or (D) foreign investment
company described in Code Section 1246.
(r) Neither the Company nor any of its subsidiaries which are
organized outside the United States has made an election under United States law
with respect to its status or classification for United States tax purposes.
(s) None of the Company's subsidiaries which are organized
outside the United States are engaged in the conduct of a trade or business in
the United States or have a branch, office or fixed place of business or
permanent establishment in the United States.
(t) As used in this Agreement,
(i) "Affiliated Group" means any affiliated group within
the meaning of Code Section 1504 (or any similar group defined under a
similar provision of state, local or foreign law);
(ii) "tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment excise, severance,
stamp, occupation, premium, windfall profits, environmental (including
taxes under Code Sec. 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not; and
(iii) "tax return" means any return, declaration, report,
claim for refund, or information return or statement relating to taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 4.14. Environmental. (a) Except to the extent that any of the
following, individually or in the aggregate, would not result in a Material
Adverse Effect on the Company (i) the Company and its subsidiaries comply and
have complied with all applicable Environmental Laws (as defined below), (ii) no
Hazardous Substances (as defined below) are present at or have been disposed on
or released or discharged from, onto or under any of the properties currently
owned, leased, operated or otherwise used by the Company or its subsidiaries
(including soils, groundwater, surface water, buildings or other structures),
(iii) no Hazardous Substances were present at or disposed on or released or
discharged from, onto or under any of the properties formerly owned, leased,
operated or otherwise used by the Company or its subsidiaries during the period
of ownership, lease, operation or use by Company or its subsidiaries, (iv)
neither the Company nor any subsidiary is subject to any liability or obligation
in connection with
17
Hazardous Substances present at any location owned, leased, operated or
otherwise used by any third party, (v) neither the Company nor any subsidiary
has received any notice, demand, letter, claim or request for information
alleging that the Company or any subsidiary is or may be in violation of or
liable under any Environmental Law, (vi) neither the Company nor any subsidiary
is subject to any order, decree, injunction or other directive of any
governmental authority or is subject to any indemnity or other agreement with
any person or entity relating to Hazardous Substances and (vii) there are no
circumstances or conditions involving the Company and its subsidiaries, any
assets (including real property) or businesses previously owned, leased,
operated or otherwise used by Company or its subsidiaries, or any of the assets
(including real property) or businesses of any predecessors of Company or its
subsidiaries that could reasonably be expected to result in any damages or
liabilities to the Company or any subsidiary arising under or pursuant to
Environmental Law or in any restriction on the ownership, use or transfer of any
of the assets of the Company or any subsidiary arising under or pursuant to any
Environmental Law.
(b) As used herein, the term "Environmental Law" means any
international, national, provincial, regional, federal, state, municipal or
local law, regulation, order, judgement, decree, permit, authorization, opinion,
common or decisional law (including, without limitation, principles of
negligence and strict liability) or agency requirement relating to the
protection, investigation or restoration of the environment (including, without
limitation, natural resources) or the health or safety of human or other living
organisms, including, without limitation, the manufacture, introduction into
commerce, export, import, handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) As used herein, the term "Hazardous Substance" means any
element, compound, substance or other material (including any pollutant,
contaminant, hazardous waste, hazardous substance, chemical substance, or
product) that is listed, classified or regulated pursuant to any Environmental
Law, including, without limitation, any petroleum product, by-product or
additive, asbestos, presumed asbestos-containing material, asbestos-containing
material, medical waste, chloroflourocarbon, hydrochloroflourocarbon,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or radon.
Section 4.15. State Takeover Statutes. The Board of Directors of the
Company has adopted this Agreement and approved the Offer, the Tender and Voting
Agreement, the Stock Option Agreement, the acquisition of Shares by Parent and
Sub pursuant to the Offer, the Tender and Voting Agreement, the Stock Option
Agreement (as applicable) and the other transactions contemplated by this
Agreement, the Tender and Voting Agreement and the Stock Option Agreement, and
such adoptions and approvals are sufficient to render inapplicable to the Offer,
the Merger, this Agreement, the Tender and Voting Agreement, the Stock Option
Agreement, the acquisition of Shares by Parent and Sub pursuant to the Offer,
the Tender and Voting Agreement and the Stock Option Agreement (as applicable)
and the other transactions contemplated by this Agreement, the Tender and Voting
Agreement and the Stock Option Agreement, the provisions of Section 203 of the
DGCL and Article Fourteenth of the Company's certificate of incorporation. To
the best knowledge of the Company, no other state takeover statute or similar
Law applies or purports to apply to the Offer, the Merger, this Agreement, the
Tender and Voting Agreement, the Stock Option Agreement, the acquisition of
Shares by Parent and Sub pursuant to the Offer, the Tender and Voting Agreement
and the Stock Option Agreement (as applicable) or any of the transactions
contemplated by this Agreement, the Tender and Voting Agreement or the Stock
Option Agreement. The Company will take all reasonable actions to prevent the
application of such Laws. The Company does not have more than 500 employees
residing in the state of Arizona.
Section 4.16. Intellectual Property. (a) Section 4.16(a) of the Company
Disclosure Schedule sets forth a true, complete and accurate list of all
Intellectual Property Rights (other than trade secrets, know-how and goodwill
attendant to the Intellectual Property Rights and other rights relating to
intellectual property not reducible or not already reduced to schedule form), to
the best of the Company's
18
knowledge, all of the Intellectual Property Rights and licenses and agreements
relating to the Intellectual Property Rights are subsisting in full force and
effect and have not been cancelled, expired or abandoned and are valid and
enforceable, and the Company either owns or has a valid and enforceable
unrestricted right to the Intellectual Property Rights.
(b) To the best of the Company's knowledge, the Company is the
sole and exclusive owner of all right, title and interest in and to the
Intellectual Property Rights, free and clear of all Liens or other restrictions
of any kind whatsoever.
(c) Except for the Intellectual Property Rights, and to the best
of the Company's knowledge, no other intellectual property or intangible
property rights are required for the Company and its subsidiaries to conduct
their business in the ordinary course consistent with past practice, and upon
the date hereof the rights in and to the Intellectual Property Rights will
enable Parent and the Surviving Corporation to fully carry on without
restriction all aspects of the business of the Company and its subsidiaries as
and to the extent such business was carried on by the Company and its
subsidiaries prior to the date hereof.
(d) To the best of the Company's knowledge (i) all registrations
with and applications to Governmental Entities in respect of the Intellectual
Property Rights are valid and in full force and effect, (ii) the Company is in
compliance with all Laws regarding the manufacture, advertising, sale, import,
and export of the Intellectual Property Rights and products incorporating or
made using the same, and (iii) the Company is not in default (or with the giving
of notice or lapse of time or both, will not be in default) in any material
respect under any license, or any other contract or agreement pursuant to which
the Company has been granted a right, to use the Intellectual Property Rights.
(e) To the best of the Company's knowledge (i) all works of
authorship, including, without limitation, the computer software, documentation,
software design, technical and functional specifications, and all other
materials subject to copyright protection, and included in the Intellectual
Property Rights, are original and were either created by employees of the
Company within the scope of their employment or are otherwise works made for
hire or all right, title and interest in and to such works of authorship have
been legally and fully assigned and transferred to the Company, (ii) all rights
in all inventions and discoveries made, developed or conceived by any employee
or independent contractor of the Company, during the course of their employment
(or other retention) by the Company and relating to or included in the
Intellectual Property Rights or made, written, developed or conceived with the
use or assistance of the Company's facilities or resources, or which are the
subject of one or more issued letters patent or applications for letters patent
and which relate to or are included in the Intellectual Property Rights, have
been assigned in writing to the Company; and (iii) all employees and independent
contractors of the Company have signed documents confirming that each of them
will assign to the Company all intellectual property rights made, written,
developed or conceived by them during the course of their employment (or other
retention) by the Company and which relate to or are included in the
Intellectual Property Rights or made, written, developed or conceived with the
use or assistance of the Company's facilities or resources to the extent that
ownership of any such intellectual property rights does not vest in the Company
by operation of law.
(f) Other than with respect to those agreements entered into in
the ordinary course of business and consistent with the Company's standard
practices, (i) Section 4.16(f)(i) of the Company Disclosure Schedule sets forth
a true, accurate and complete list of the agreements, including but not limited
to license agreements, and an identification of relevant particulars thereof and
of all parties thereto under which the Company has obtained or is the
beneficiary of any ownership of, or license right to use, any of the
Intellectual Property Rights, and (ii) Section 4.16(f)(ii) of the Company
Disclosure Schedule sets forth a true, accurate and complete list of the
agreements, including but not limited to license agreements, development
agreements and joint venture agreements, to which the Company is a party and
19
pursuant to which a third party is authorized to use or has obtained any
ownership rights in any of the Intellectual Property Rights.
(g) To the best of the Company's knowledge (i) the use by the
Company or its subsidiaries of each of the Intellectual Property Rights and the
operations of the Company's and its subsidiaries respective businesses as
currently operated do not infringe upon the rights of any other person, (ii) the
Intellectual Property Rights are not being infringed upon by any other person or
its property, (iii) the Company has not received any claim, any cease and desist
or equivalent letter or any other notice of any allegation that any of the
Intellectual Property Rights, or any operations of the Company's or any of its
subsidiaries' businesses as currently operated, infringes upon, misappropriates
or otherwise violates the rights of any third parties, (iv) there has been no
unauthorized use by, disclosure to or by or infringement, misappropriation or
other violation of any of the Intellectual Property Rights by any third party
and/or any current or former officer, employee, independent contractor,
consultant or any other agent of the Company or its subsidiaries, and (v) none
of the Intellectual Property Rights, and none of the operations of the Company's
or any of its subsidiaries' businesses as currently operated, are subject to any
suits, actions, claims or demands of any third party, and no action or
proceeding, whether judicial, administrative or otherwise, has been instituted
or is pending or threatened which challenges or affects the rights of the
Company in the Intellectual Property Rights or with respect to any of the
operations of the Company's or its subsidiaries' respective businesses as
currently operated, and the Company is not aware of any such claim, demand,
action or proceeding which is unasserted with respect to any of the Intellectual
Property Rights or with respect to any of the operations of the Company's or its
subsidiaries' respective businesses as currently operated.
(h) To the best of the Company's knowledge, the documentation
relating to any know-how and/or trade secrets included in the Intellectual
Property Rights (i) is current, accurate, and sufficient in detail and content
to identify and explain such know-how and/or trade secrets and to allow its full
and proper use without reliance on the knowledge or memory of any individual,
and the Company has taken all reasonable precautions to protect the secrecy,
confidentiality and value of such know-how and/or trade secrets, and (ii)
includes all know-how and/or trade secrets necessary for the operation of the
business of the Company and its subsidiaries as currently conducted.
(i) All former and current employees of the Company have
executed written agreements with the Company, including without limitation,
employment contracts and patent disclosure agreements, which in whole or part
relate to and/or contain provisions or covenants relating to: (i) the
nondisclosure and/or confidentiality of the Intellectual Property Rights, and
(ii) non-competition with the Company and its successors and designed to protect
the Intellectual Property Rights.
(j) To the best knowledge of the Company, no employee of the
Company is in violation or breach of any term of any employment contract, patent
disclosure agreement or any other contract or agreement with the Company or any
other party, which breach or violation is a breach or violation of any provision
relating to the nondisclosure or confidentiality of Intellectual Property Rights
or of any non-compete covenants.
(k) As used in this Agreement, "Intellectual Property Rights"
means all of the United States and foreign intellectual property and other
proprietary rights, arising under statutory, common, or other law and whether or
not perfected, owned by or licensed to the Company or its subsidiaries,
including, without limitation: (i) United States and foreign patents, patent
applications (including United States provisional applications and applications
filed pursuant to the Patent Cooperation Treaty), patent disclosures and
inventions and discoveries which may be patentable and improvements thereto,
industrial designs, invention disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, continuing patent applications,
reexaminations, and extensions thereof, any counterparts claiming priority
therefrom and like statutory rights related to the foregoing, (ii) registered
and unregistered trademarks, service marks, trade dress, logos, trade names,
corporate names, business names, internet domain names
20
and general intangibles of like nature, including without limitation other names
and slogans, the registrations and applications for registration thereof, and
the goodwill associated therewith, (iii) United States and foreign copyrights
and works of authorship, and all registrations and applications to register the
foregoing, (iv) all categories of trade secrets, as defined in the Uniform Trade
Secrets Act, and under corresponding foreign statutory and common law,
including, but not limited to, business, technical and know-how information
(collectively, the "Trade Secrets"), (v) computer programs, including any and
all software implementation of algorithms, models and methodologies, whether in
source or object code form, user interfaces, databases and compilations,
including any and all data and collections of data, and all manuals and other
specifications and documentation and all know-how relating thereto, (vi) other
intellectual property rights used in, material to or necessary for the conduct
of the business of the Company and its subsidiaries, (vii) rights of publicity
and privacy relating to the use of names, likenesses, voices, signatures and
biographical information of real persons, and (viii) all licenses and agreements
pursuant to which the Company or any subsidiary has acquired rights in or to any
of the aforementioned Intellectual Property Rights, or agreements pursuant to
which the Company has licensed or transferred the right to use any of the
foregoing.
Section 4.17. Sale of Products; Performance of Services.
(a) To the best of the Company's knowledge, all installation
services, programming services, integration services, repair services,
maintenance services, support services, training services, upgrade services and
other services that have been performed by the Company or any of its
subsidiaries were performed properly and in conformity with the terms and
requirements of all applicable warranties and other contracts in all material
respects and with all applicable Laws.
(b) To the best of the Company's knowledge, since January 1,
2001, no customer or other person has asserted or, to the knowledge of the
Company, threatened to assert any claim against the Company or any of its
subsidiaries, (i) under or based upon any warranty provided on behalf of the
Company or any of its subsidiaries, or (ii) based upon any services performed by
the Company or any of its subsidiaries, other than claims the total cost to
remedy which does not exceed $25,000 with respect to standard maintenance in the
ordinary course of business.
Section 4.18. Certain Business Practices. To the best of the Company's
knowledge, neither the Company nor any of its subsidiaries, and no director,
officer, agent or employee of the Company or any of its subsidiaries, has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
Section 4.19. Transactions with Affiliates. Except as set forth in the
Company Filed SEC Documents, between the date of the Company's last annual
meeting proxy statement filed with the SEC and the date of this Agreement, no
event has occurred that would be required to be reported by the Company pursuant
to Item 404 of Regulation S-K promulgated by the SEC. Section 4.19 of the
Company Disclosure Schedule identifies each person who is (or who may be deemed
to be) an "affiliate" (as that term is used in Rule 145 under the Securities
Act) of the Company as of the date of this Agreement.
Section 4.20. Books and Records. To the best of the Company's knowledge,
the minute books and other similar records of the Company and its subsidiaries
as made available to Parent prior to the execution of this Agreement contain a
true and complete record, in all material respects, of all actions taken at all
meetings and by all written consents in lieu of meetings of the stockholders,
the boards of directors and committees of the boards of directors of the Company
and its subsidiaries.
21
Section 4.21. Opinion of Financial Advisor. The Company has received the
opinion of Alliant Partners (the "Financial Advisor"), dated the date of this
Agreement, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion has been delivered
to Parent.
Section 4.22. Brokers and Finders. No broker, investment banker,
financial advisor or other person, other than the Financial Advisor, the fees
and expenses of which will be paid by the Company (as reflected in an agreement
between such firm and the Company, a copy of which has been delivered to
Parent), is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
Section 4.23. Full Disclosure. To the best of the Company's knowledge,
no representation or warranty by the Company contained in this Agreement
(including, without limitation, the Company Disclosure Schedule) and no
statement contained in any document (including, without limitation, financial
statements and certificates), or other writings furnished by the Company to
Parent or Sub or any of their representatives (excluding financial forecasts,
and other forward looking projections or information) pursuant to the provisions
hereof or identified or referred to in the Company Disclosure Schedule, contains
any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not false or misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 5.1. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not be reasonably expected to prevent or materially delay
the consummation of the Offer or the Merger.
Section 5.2. Authority. Each of Parent and Sub has all requisite
corporate power and authority to execute and deliver this Agreement, and, in the
case of Parent, the Tender and Voting Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement, the Tender and Voting
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub and no other corporate
proceedings on the part of Parent and Sub are necessary to authorize this
Agreement, the Tender and Voting Agreement or the Stock Option Agreement or to
consummate the transactions contemplated hereby or thereby. No vote of Parent
stockholders is required to approve this Agreement, the Tender and Voting
Agreement or the Stock Option Agreement or the transactions contemplated hereby
or thereby. This Agreement has been duly executed and delivered by Parent and
Sub, as the case may be, and constitutes a valid and binding obligation of each
of Parent and Sub enforceable against them in accordance with its terms. The
Tender and Voting Agreement and the Stock Option Agreement have been duly
executed and delivered by Parent and each such agreement constitutes a valid and
binding obligation of Parent enforceable against Parent in accordance with its
terms.
Section 5.3. Consents and Approvals; No Violations. (a) The execution,
delivery and performance by Parent and Sub of this Agreement, and, in the case
of Parent, the Tender and Voting Agreement and the Stock Option Agreement, and
the consummation by Parent and Sub of the transactions
22
contemplated hereby and thereby do not and will not require any filing or
registration with, notification to, or authorization, permit, consent or
approval of, or other action by or in respect of, any Governmental Entities
other than (i) the filing of the Certificate of Merger or the Certificate of
Ownership and Merger, as applicable, as contemplated by Article I hereof, and
(ii) compliance with any applicable requirements of the Exchange Act.
(b) The execution, delivery and performance by Parent and Sub of
this Agreement and the consummation by Parent and Sub of the transactions
contemplated by this Agreement do not and will not (i) conflict with or result
in any breach of any provision of the certificate of incorporation or by-laws of
Parent and Sub, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, amendment, cancellation, acceleration or loss of
benefits under, or result in the creation of any Lien upon any of the properties
or assets of Parent or Sub or any of their subsidiaries under, any of the terms,
conditions or provisions of contract to which Parent or Sub or any of their
subsidiaries is a party or by which any of its properties or assets may be bound
or (iii) violate any Order or Law applicable to Parent or Sub, any of their
subsidiaries or any of their properties or assets, except in the case of clauses
(ii) or (iii) for violations, breaches or defaults that would not reasonably be
expected to prevent or materially delay the consummation of the Offer or the
Merger.
Section 5.4. Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Offer Documents will comply in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
Section 5.5. Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.6. Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Sub.
Section 5.7. Financing. Parent has, or will have, sufficient funds
available to purchase, or to cause Sub to purchase, all the Shares pursuant to
the Offer and the Merger and to pay all fees and expenses payable by Parent or
Sub which are related to the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
Section 6.1. Covenants of the Company. Until such time as Parent's
designees shall constitute a majority of the members of the Board of Directors
of the Company, except as provided in Section 6.1 of the Company Disclosure
Schedule, the Company shall, and shall cause its subsidiaries to,
23
conduct their business in the ordinary course and use all reasonable efforts to
preserve intact their business organizations and relationships with third
parties, keep available the services of their present officers and employees and
preserve their relationships with customers, suppliers and others having
business dealings with the Company and its subsidiaries and prepare and file
required tax returns and pay taxes due. Without limiting the generality of the
foregoing, except as expressly permitted in this Agreement or provided in
Section 6.1 of the Company Disclosure Schedule (identifying the relevant
subsection), from the date hereof until such time as Parent's designees shall
constitute a majority of the members of the Board of Directors of the Company,
the Company shall not, and shall cause its subsidiaries not to:
(a) Dividends; Changes in Stock. (i) declare or pay any
dividends on or make other distributions in respect of any of its capital stock
(except for dividends by a wholly owned subsidiary of the Company to its
parent), (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire, or modify or amend, any shares of capital stock of
the Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(b) Issuance of Securities. issue, deliver, sell, pledge or
encumber, or authorize, propose or agree to the issuance, delivery, sale, pledge
or encumbrance of, any shares of its capital stock or any other security (or any
right to acquire such capital stock or other security) other than the issuance
of Shares upon the exercise of Options or Warrants outstanding on the date of
this Agreement and in accordance with the terms of such Options or Warrants;
(c) Governing Documents. amend or propose to amend its
certificate of incorporation or by-laws (or similar organizational documents);
(d) Acquisitions. acquire or agree to acquire any material
assets (including securities) or merge or consolidate with any person or engage
in any similar transaction;
(e) Dispositions. sell, lease, license, encumber or otherwise
dispose of any of its assets or any interest therein, other than in the ordinary
course or adopt a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization;
(f) Indebtedness. (i) incur or suffer to exist any indebtedness
for borrowed money or guarantee any such indebtedness, guarantee any debt of
others, enter into any "keep-well" or other agreement 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 working capital borrowings
incurred in the ordinary course of business, or (ii) make any loans, advances or
capital contributions to, or investments in, any other person, other than to the
Company or any wholly owned subsidiary of the Company;
(g) Tax Matters. make, revoke or change any tax election or
settle or compromise any tax liability of the Company or any of its
subsidiaries or make any change of the accounting methods used by it unless
required under generally accepted accounting principles in the United States;
(h) Capital Expenditures. make or agree to make any capital
expenditures out of the ordinary course of business;
(i) Discharge of Liabilities. pay, discharge, settle or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business or in accordance
with their terms, of claims, liabilities or obligations recognized or disclosed
in the most recent financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred since the date of such
financial statements in the ordinary course of business;
24
(j) Material Contracts. (i) modify, amend or terminate any
material contract, (ii) waive, release or assign any material rights or claims,
(iii) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement or (iv) except in the ordinary
course of business, enter into any material contracts or transactions;
(k) Benefits Changes. (i) increase the compensation or benefits
of any director, officer, employee or consultant, except for increases to
employees or consultants (but not directors or officers) in the ordinary course
of business, (ii) adopt any new employee Plan or any amendment to an existing
Company Plan that materially increases the cost thereof, (iii) enter into any
employment or consulting agreement with any director, officer, employee or
consultant, (iv) accelerate the payment of compensation or benefits to any
director, officer, employee or consultant or (v) modify or amend any of the
Options or the Company Option Plans;
(l) Insurance. permit any of its properties or assets to fail to
be covered by insurance policies reflecting coverage that is consistent with
prudent industry practices;
(m) Intellectual Property Rights. fail to take, or cause to be
taken, all actions or fail to do, or cause to be done, all things necessary to
register, maintain, and prevent the diminution in value of the Intellectual
Property Rights, including paying all recordation, registration, maintenance and
other fees, responding to all office action or other correspondence from the
United States Patent and Trademark Office, United States Copyright Office, and
all other corresponding governmental offices throughout the world, and paying
all fees necessary to maintain any domain name registrations, and recording all
documents necessary to establish, maintain, transfer, or identify the
Intellectual Property Rights, and protect the secrecy, confidentiality and value
of the Intellectual Property Rights, including all know-how, trade secrets and
source code; or
(n) General. authorize any of, or announce an intention, commit
or agree to take any of, the foregoing actions or any action which would result
in a breach of any representation or warranty of the Company contained in this
Agreement as of the date when made or as of any future date or would result in
any of the Offer Conditions not being satisfied.
Section 6.2. No Solicitation. (a) Unless and until this Agreement has
been terminated pursuant to Section 8.1, the Company shall, and shall cause its
subsidiaries and its and its subsidiaries' officers, directors, employees,
investment bankers, financials advisors, attorneys, accountants, representatives
and agents to, immediately cease any discussions or negotiations with any
parties that may be ongoing with respect to a Takeover Proposal (as hereinafter
defined) and, upon request by Parent, shall request the return or destruction of
all confidential information provided to any such person.
(b) Unless and until this Agreement has been terminated pursuant
to Section 8.1, the Company shall not, and shall cause its subsidiaries and its
and its subsidiaries' officers, directors, employees, investment bankers,
financials advisors, attorneys, accountants, representatives and agents not to,
(i) solicit, initiate, encourage (including by way of furnishing information),
knowingly facilitate or induce (directly or indirectly) any inquiry with respect
to, or the making, submission or announcement of, any proposal that constitutes,
or could reasonably be expected to result in, a proposal or offer for a Takeover
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any person any nonpublic information with respect to, or take any
other action to knowingly facilitate any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to, a Takeover Proposal,
(iii) approve or endorse any Takeover Proposal, or (iv) enter into any letter of
intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Takeover Proposal or transaction
contemplated thereby.
Notwithstanding the foregoing, if, at any time prior to the
acceptance for payment of Shares pursuant to the Offer, the Board of Directors
of the Company (1) determines in good faith, after
25
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law and has (2) provided Parent with at least two business days' notice of its
intention to do so (including in such notice the information required by Section
6.2(e) hereof), the Company may, in response to a Superior Proposal (as defined
below) that was not solicited subsequent to the date hereof and subject to
compliance with this Section 6.2 and the execution by the person making the
Superior Proposal of a confidentiality agreement on customary terms and
conditions, reasonably acceptable to Parent, (x) furnish information with
respect to the Company to the person making the Superior Proposal and (y)
participate in discussions or negotiations with the person making the Superior
Proposal.
(c) For purposes of this Agreement, "Takeover Proposal" means
any inquiry, proposal, offer or expression of interest by any third party
relating a merger, consolidation or other business combination involving the
Company or any subsidiary, or any acquisition of more than 15% of the
consolidated assets of the Company or more than 15% of the Shares, or any
similar transaction. Any material modification of a Takeover Proposal shall
constitute a new Takeover Proposal. For purposes of this Agreement, a "Superior
Proposal" means any bona fide written Takeover Proposal for or in respect of all
outstanding Shares made by a third party on terms which the Board of Directors
of the Company determines in its good faith judgment (after consultation with a
financial advisor of nationally recognized reputation and after taking into
account all terms and conditions of the proposal) to be more favorable, from a
financial point of view, to the Company's stockholders than the Offer and the
Merger (after taking into account any proposal by Parent to amend this
Agreement) and for which financing, to the extent required, is then committed,
which is reasonably capable of being consummated on a prompt basis and which is
not subject to any conditions which are not reasonably expected to be satisfied
on a prompt basis.
(d) Unless and until this Agreement has been terminated pursuant
to Section 8.1, except as set forth in this Section 6.2, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, the approval or recommendation by such Board
of Directors (or any committee of the Board of Directors of the Company) with
regard to any of the Offer, the Merger or this Agreement, the Tender and Voting
Agreement or the Stock Option Agreement, (ii) approve or recommend or take no
position with respect to, or propose to approve or recommend or take no position
with respect to, any Takeover Proposal or (iii) cause the Company to enter into
any agreement related to any Takeover Proposal (other than a confidentiality
agreement contemplated by paragraph (b) above). Unless and until this Agreement
has been terminated pursuant to Section 8.1, the Company agrees not to release
any person from, or waive any provision of, or fail to enforce, any standstill
agreement or similar agreement to which it is a party related to, or that could
affect, a Takeover Proposal. Notwithstanding the foregoing, in the event that
prior to the acceptance for payment of Shares pursuant to the Offer the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors of the Company may, in response to a Superior Proposal that was not
solicited subsequent to the date hereof, (x) withdraw or modify its approval or
recommendation of the Offer, the Merger or this Agreement or (y) subject to the
provisions of Section 8.1(e) hereof, terminate this Agreement and the Tender and
Voting Agreement in order to sign a definitive agreement to implement such
Superior Proposal, but in each such case, only at a time that is after the fifth
business day following Parent's receipt of written notice advising Parent that
the Board of Directors of the Company has received such Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal, only if the Company is in
compliance with this Section 6.2 and only if the Company's Board of Directors
has determined that such proposal is a Superior Proposal, taking into account
any proposals from Parent.
(e) The Company shall immediately advise Parent orally and in
writing of any request for information or of any Takeover Proposal, the material
terms and conditions of such request or
26
Takeover Proposal (including a copy thereof if in writing and any related
documentation or correspondence (including emails)) and the identity of the
person making such request or Takeover Proposal. The Company will immediately
inform Parent of any material change in the details (including amendments or
proposed amendments) of any such request or Takeover Proposal. The Company will
promptly provide to Parent any non-public information provided to any other
person in connection with a Takeover Proposal which was not previously provided
to Parent.
(f) Nothing contained in this Section 6.2 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure to disclose would be inconsistent with applicable law, provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as specifically permitted by Section 6.2(d), withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Offer, the Merger or this Agreement, the Tender and Voting Agreement or the
Stock Option Agreement, or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
Section 6.3. Stockholder Approval; Preparation of Proxy Statement. (a)
If the Company Stockholder Approval is required by law, the Company shall, as
promptly as practicable following the expiration of the Offer, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of obtaining the Company Stockholder Approval. The
Company shall, through its Board of Directors, recommend to its stockholders
that the Company Stockholder Approval be given. Notwithstanding the foregoing,
if Sub or any other subsidiary of Parent shall acquire at least 90% of the
outstanding Shares, the parties shall, at the option and request of Parent, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a Stockholders
Meeting in accordance with the short form merger provisions of the DGCL. Without
limiting the generality of the foregoing, except as specifically permitted by
Section 6.2(d) the Company agrees that its obligations pursuant to the first
sentence of this Section 6.3(a) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal or (ii) the withdrawal or modification by the Board of
Directors of the Company of its approval or recommendation of the Offer, this
Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use all
reasonable efforts to respond to any comments of the SEC or its staff and to
cause the Proxy Statement to be mailed to the Company's stockholders as promptly
as practicable. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. The
Company shall give Parent an opportunity to comment on any correspondence with
the SEC or its staff or any proposed material to be included in the Proxy
Statement prior to transmission to the SEC or its staff and shall not transmit
any such material to which Parent reasonably objects. If at any time prior to
the Stockholders Meeting there shall occur any event that should be set forth in
an amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders such an amendment or supplement. The
Company shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects.
(c) Parent agrees to cause all Shares owned by Parent or any
subsidiary of Parent to be voted in favor of the Company Stockholder Approval.
27
Section 6.4. Access to Information. The Company shall, and shall cause
each of its subsidiaries to, afford to Parent and its officers, employees,
accountants, counsel, agents and other representatives reasonable access during
normal business hours to all of the properties, offices, facilities, personnel,
contracts, commitments and books and records (including tax returns and
supporting work papers) of the Company and its subsidiaries and any report,
schedule or other document filed or received by it pursuant to the requirements
of federal or state securities laws, and shall (and shall cause each of it
subsidiaries to) furnish promptly all information concerning the business,
properties and personnel of Company and its subsidiaries as Parent may
reasonably request. No investigation pursuant to this Section 6.4 shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 6.5. Disclosure Supplements. From time to time prior to the
Effective Time, the Company shall supplement or amend the Company Disclosure
Schedule with respect to any matter hereafter arising or any information
obtained after the date hereof of which, if existing, occurring or known at or
prior to the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Schedule or which is necessary to complete
or correct any information in such schedule or in any representation and
warranty of the Company which has been rendered inaccurate thereby. The Company
shall promptly inform Parent of any claim by a third party that a contract has
been breached, is in default, may not be renewed or that a consent would be
required as a result of the transactions contemplated by this Agreement. For
purposes of determining the satisfaction of the conditions to the consummation
of the transactions contemplated hereby, no such supplement, amendment or
information shall be considered.
Section 6.6. Reasonable Efforts. (a) Each of the parties hereto shall
act in good faith and use all commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable including, but not limited to, (i) the preparation and filing of all
forms, registrations and notices required to be filed to consummate the
transactions contemplated by this Agreement and the taking of such commercially
reasonable actions as are necessary to obtain any requisite approvals, consents,
approvals, licenses, permits, authorizations, registrations, qualifications,
orders, exemptions, waivers or other permissions or actions by, and give all
necessary notices to, and make all filings with, and applications and
submissions to, any third party or Governmental Entity, and (ii) using all
commercially reasonable efforts to cause the satisfaction of all conditions to
Closing. Each party shall promptly consult with the other with respect to,
provide any necessary information with respect to and provide the other (or its
counsel) copies of, all filings made by such party with any Governmental Entity
or any other information supplied by such party to a Governmental Entity in
connection with this Agreement and the transactions contemplated by this
Agreement. Nothing herein shall require any party to divest, sell, dispose of,
hold separate or otherwise take or commit to take any action that limits its
freedom of action with respect to its or its subsidiaries' ability to operate or
retain any of the businesses, product lines or assets of it or any of its
subsidiaries.
(b) Each party hereto shall promptly inform the others of any
communication from any Governmental Entity regarding any of the transactions
contemplated by this Agreement. If any party or affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Entity with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request. Nothing herein
shall require any party to waive any substantial rights or agree to any
substantial limitation on its (or the Surviving Corporation's) operations or to
dispose of any assets.
(c) Parent shall cause Sub to comply with its obligations under
this Agreement.
28
Section 6.7. Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any stockholder of the Company relating to the Offer, the
Merger, this Agreement, the Tender and Voting Agreement or the Stock Option
Agreement, without the prior written consent of Parent. In addition, the Company
shall not voluntarily cooperate with any third party that may hereafter seek to
restrain or prohibit or otherwise oppose the Offer or the Merger and shall
cooperate with Parent and Sub to resist any such effort to restrain or prohibit
or otherwise oppose the Offer or the Merger.
Section 6.8. Takeover Statute. Notwithstanding any other provision in
this Agreement, in no event shall the approval of this Agreement, the Tender and
Voting Agreement, the Stock Option Agreement and the transactions contemplated
hereby or thereby, including the Offer and the Merger, be withdrawn, revoked or
modified by the Company's Board of Directors if such withdrawal, revocation, or
modification would result in Section 203 of the DGCL and Article Fourteenth of
the Company's certificate of incorporation becoming applicable to the
transactions contemplated by this Agreement, the Tender and Voting Agreement or
the Stock Option Agreement. If any other "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Company,
Parent and Sub and the members of their respective Boards of Directors shall
grant such approvals and take such actions as are reasonably necessary so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise shall act to
eliminate or minimize the effects of any such provision, statute or regulation
on the transactions contemplated hereby.
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction of the following conditions:
(a) Company Stockholder Approval. If required by applicable law,
the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No Law or Order issued by any
court of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, provided, however, that each of the parties shall have used reasonable
efforts to prevent the entry of any such Order and to appeal as promptly as
possible any Order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) the Offer shall have expired without the
acceptance for payment of Shares thereunder or (y) Sub shall not have
accepted for payment any Shares pursuant to the
29
Offer prior to January 31, 2003, provided, however, that the right to
terminate this Agreement pursuant to this (b)(i) shall not be available to
any party whose failure to perform any of its obligations under this
Agreement results in the failure of any such condition or if the failure of
such condition results from facts or circumstances that constitute a breach
of representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an
Order or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such Order or other action shall
have become final and nonappealable;
(c) by Parent prior to the purchase of Shares pursuant to the
Offer if the Company shall have breached or failed to perform in any material
respect any representation, warranty, covenant or other agreement contained in
this Agreement that (i) would give rise to the failure of a condition set forth
in paragraph (e) or (g) of Annex A and (ii) cannot be or, if such breach is of a
nature that could be cured by the Company, has not been cured within 20 days
after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraph (d) of Annex A to this Agreement;
(e) by the Company in accordance with Section 6.2(d) in order to
simultaneously enter into a definitive agreement to implement a Superior
Proposal, provided that it has complied with all provisions thereof, including
the notice provisions therein, and that it has paid Parent the termination fee
(including expenses for which Parent has then submitted an invoice) in
accordance with the terms of Section 8.5(b) of this Agreement; or
(f) by the Company prior to the purchase of Shares pursuant to
the Offer if Parent or Sub shall have breached or failed to perform in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach or failure to
perform is incapable of being cured or has not been cured within 20 days after
the giving of written notice to Parent or Sub, as applicable, except, in any
case, such breaches and failures which are not reasonably likely to materially
and adversely affect Parent's or Sub's ability to consummate the Offer or the
Merger.
Section 8.2. Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, provided, however, that the foregoing shall not apply
with respect to the provisions of Section 8.5 which shall survive termination of
this Agreement and nothing herein shall relieve any party for liability for any
willful breach hereof.
Section 8.3. Amendment. This Agreement may be amended by the parties
hereto, by duly authorized action taken, at any time before or after obtaining
the Company Stockholder Approval, but, after the purchase of Shares pursuant to
the Offer, no amendment shall be made which decreases the Merger Consideration
and, after the Company Stockholder Approval, no amendment shall be made which by
law requires further approval by such stockholders without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 8.4. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto may, to the extent legally allowed, subject to Section 8.3,
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part
30
of a party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
Section 8.5. Expenses. (a) Except as otherwise provided in this Section
8.5, each party shall bear its own expenses in connection with the transactions
contemplated by this Agreement.
(b) If this Agreement is terminated (i) pursuant to Section
8.1(c), (ii) pursuant to Section 8.1(d), (iii) pursuant to Section 8.1(e), or
(iv) following the time a third party makes a Takeover Proposal, then the
Company shall pay to Parent a fee of $500,000, plus reimbursement of Parent's
direct and reasonable out-of-pocket expenses in connection with this Agreement
and the transactions contemplated hereby, including Parent's investigation of
the Company and negotiation of this Agreement ("Parent's Expenses"), by wire
transfer of immediately available funds. Such fee shall be paid prior to
termination in the case of clause (iii) and within one business day of
termination otherwise. Such payment shall include reimbursement of Parent's
Expenses if an invoice therefor was received by the Company prior to the making
of such payment, or, if not, reimbursement of Parent's Expenses shall be paid
within two business days of receipt of an invoice from Parent by the Company, by
wire transfer of immediately available funds.
(c) If (i) this Agreement is terminated other than under 8.1(f)
and (ii) no fee is otherwise payable under Section 8.5(b) hereof, then within
one day of the receipt of an invoice therefore, the Company shall reimburse
Parent's Expenses by wire transfer of immediately available funds. If within six
months of a termination described in the preceding sentence a third party makes
a Takeover Proposal, then the Company shall pay Parent a fee of $500,000 plus
Parent's Expenses (except to the extent such expenses have been reimbursed under
the immediately preceding sentence), by wire transfer of immediately available
funds immediately upon the closing of any transaction contemplated by any
Takeover Proposal with such third party. The maximum aggregate fee under this
Section 8.5(c) and under Section 8.5(b) shall be $500,000 plus the reimbursement
of Parent's Expenses.
(d) The Company acknowledges that the agreements contained in
this Section 8.5 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement. Accordingly, if the Company fails to pay any amount due pursuant to
Section 8.5 (b) or Section 8.5(c) when it is required to be paid, and, in order
to obtain such payment, Parent commences a suit which results in a judgment
against the Company for any amount set forth in Section 8.5(b) or Section
8.5(c), the Company shall pay to Parent (i) interest on the amounts due under
Section 8.5(b) or Section 8.5(c) at a rate equal to that rate which is
determined under the provisions of the Company's current line of credit facility
beginning from the date such fee was required to be paid and (ii) its costs and
expenses (including attorneys' fees) in connection with such suit, including any
costs of collection.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
Section 9.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt by the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
31
Enghouse Systems Limited
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx (Xxxxxxx), Xxxxxxx X0X XX0
Xxxxxx
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Xxxxxxxx Chance US LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
Xxxxxxx X. Xxxxx
and
(b) if to the Company, to
Syntellect Inc.
00000 X. Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: President
with a copy to:
Xxxxxx & Xxxxxxxx LLP
Suite 850
The Camelback Esplanade
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Section 9.3. Interpretation. (a) When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated.
(b) 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.
(c) This Agreement is the result of the joint efforts of Parent,
Sub and the Company, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against any party based on any presumption of that party's
involvement in the drafting thereof.
(d) The symbol "$" refers to the United States Dollars.
(e) The words "include", "includes" or "including" shall be
deemed to be followed by the words "without limitation."
32
(f) A "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
(g) The term "ordinary course of business" (or similar terms)
shall be deemed to be followed by the words "consistent with past practice."
(h) An individual will be deemed to have "knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. The Company will be deemed to have "knowledge" of a
particular fact or other matter if a member of the Company's senior management
is actually aware of such fact or other matter.
Section 9.4. 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 two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
Section 9.6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
ANY APPLICABLE CONFLICTS OF LAW.
Section 9.7. Publicity. Except as otherwise required by law, court
process or the rules of any applicable securities exchange or the Nasdaq or as
contemplated or provided elsewhere herein, no party hereto shall issue any press
release or otherwise make any public statement with respect to the transactions
contemplated by this Agreement without prior consultation with the other parties
hereto.
Section 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any wholly owned subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
Section 9.9. Enforcement. THE PARTIES AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT
IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT, IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. THE PARTIES HEREBY (i) SUBMIT TO
THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN THE STATE OF
DELAWARE AND AGREE NOT TO BRING ANY ACTIONS RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT, OTHER THAN TO ENFORCE THE
JUDGMENTS OF SUCH COURTS, (ii) AGREE NOT TO OBJECT TO VENUE IN SUCH COURTS OR TO
CLAIM THAT SUCH FORUM IS INCONVENIENT AND (iii) AGREE THAT NOTICE OR THE SERVICE
OF PROCESS IN ANY
33
PROCEEDING SHALL BE PROPERLY SERVED OR DELIVERED IF DELIVERED IN THE MANNER
CONTEMPLATED BY SECTION 9.2 HEREOF. IN ADDITION, EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING
RELATED TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 9.10. Severability. This Agreement shall be deemed severable;
the invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of the balance of this Agreement
or of any other term hereof, which shall remain in full force and effect. If of
any of the provisions hereof are determined to be invalid or unenforceable, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible.
[SIGNATURE PAGE FOLLOWS]
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
ENGHOUSE SYSTEMS LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and CEO
ARIZONA ACQUISITION CORP.
By: /s/ Xxxx Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President and Secretary
SYNTELLECT INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, CEO and President
SIGNATURE PAGE TO PLAN AND AGREEMENT OF MERGER
35
ANNEX A
Conditions of the Offer
Notwithstanding any other term of the Offer, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered Shares after the termination
or withdrawal of the Offer), to pay for any Shares tendered pursuant to the
Offer unless prior to the Expiration Date (as defined in the Offer) there shall
have been validly tendered a number of Shares which, together with any
outstanding Shares solely owned by Parent or any of its subsidiaries,
constitutes a majority of the outstanding Shares (determined on a fully diluted
basis) (the "Minimum Condition"). Furthermore, notwithstanding any other term of
the Offer or this Agreement, Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for payment
or paid for, and may terminate the Offer if, at any time on or after the date of
this Agreement and prior to the Expiration Date, any of the following conditions
exists (other than as a result of any action or inaction of Parent or any of its
subsidiaries that constitutes a breach of this Agreement):
(a) there shall be threatened, instituted or pending by or
before any Governmental Entity any suit, action or proceeding (i) challenging
the acquisition by Parent or Sub of any Shares under the Offer, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger or
seeking to obtain from the Company, Parent or Sub any damages that are material
in relation to the Company and its subsidiaries taken as a whole, (ii) seeking
to prohibit or materially limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of a material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or to compel the Company and its
subsidiaries, taken as a whole or Parent to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and its
subsidiaries, taken as a whole, in each case as a result of the Offer or any of
the other transactions contemplated by this Agreement, (iii) seeking to impose
material limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company,
(iv) seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company or its subsidiaries or (v) which would have a Material
Adverse Effect on the Company or would result in the payment of substantial
damages;
(b) there shall be any Law or Order enacted, entered, enforced,
promulgated or deemed applicable to the Offer or the Merger, by any Governmental
Entity, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any Material Adverse Effect with
respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have (x) withdrawn or modified in a manner adverse to Parent or
Sub its approval or recommendation of the Offer or the Merger or its adoption of
this Agreement, (y) approved or recommended or taken a neutral position with
respect to any Takeover Proposal, (z) failed to reaffirm its recommendation of
the Offer or the Merger or its adoption of this Agreement within five business
days of being requested by Parent to do so, (ii) a Takeover Proposal is publicly
announced, disclosed or commenced or submitted, made or publicly communicated to
the Board of Directors of the Company and the Company fails to comply with
the requirements of Section 6.2, or (iii) the Board of Directors of the Company
or any committee thereof shall have resolved to take any of the foregoing
actions;
(e) any of the representations and warranties of the Company set
forth in this Agreement shall not be true and correct in any material respect
(without regard to any materiality qualifiers therein), in each case at the date
of the Agreement or at the scheduled or extended expiration of the Offer as if
such representation or warranty were made as of such date;
(f) Parent, the Company and their respective subsidiaries, as
applicable, shall have failed to obtain the consent or approval of any person
whose consent or approval shall be required under any agreement or instrument in
order to permit the consummation of the Offer and the Merger or any of the other
transactions contemplated by this Agreement, except those that the failure to
obtain, would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company if the Closing were to
occur;
(g) the Company shall have failed to perform or comply, in all
material respects, with any agreement, obligation or covenant to be performed or
complied with by it under the Agreement, which failure to perform or comply has
not been cured within five business days after the giving of written notice to
the Company;
(h) there shall not have occurred and be continuing: (i) (A) any
general suspension of trading in, or limitation on prices for, securities on The
New York Stock Exchange or the Nasdaq Stock Market (excluding any organized halt
triggered solely as a result of a specified decrease in a market index or
suspensions or limitations resulting solely from physical damage, technological
or software breakdowns or malfunctions or interference with such exchange not
related to market conditions) or (B) any decline in any of the Dow Xxxxx
Industrial Average, the Standard & Poors Index of 500 Industrial Companies or
the Nasdaq Composite Index in excess of 20% measured from the close of business
on the date of the Agreement; (ii) a declaration by a Governmental Body of a
banking moratorium or any suspension of payments in respect of banks in the
United States; (iii) an act of terrorism or a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or Canada, which in any case could have a Material
Adverse Effect on the Company or Parent or could materially adversely affect
Parent's or Sub's ability to consummate the Offer or the Merger; (iv) any
extraordinary limitation (whether or not mandatory) by any Governmental Entity
on the extension of credit generally by banks or other financial institutions;
or (v) a change in general financial, bank or capital market conditions which
materially and adversely affects the ability of financial institutions in the
United States to extend credit or syndicate loans;
(i) any person, entity or group directly or indirectly acquires
or agrees to acquire, or discloses an intention to acquire beneficial ownership
of securities representing 15% or more of the outstanding securities of any
class of voting securities of the Company; or
(j) the Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their reasonable
discretion. The failure by Parent or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
Terms used but not defined herein shall have the meanings assigned
to such terms in the Agreement to which this Annex A is a part.
2
