EXHIBIT (c)(1)
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
among
Sterling Software, Inc.
Sterling Software Acquisition Corp.
and
Information Advantage, Inc.
dated as of July 15, 1999
________________________________________________________________________________
TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER .................................................................................. 2
Section 1.1 The Offer............................................................... 2
Section 1.2 Offer Documents......................................................... 3
Section 1.3 Company Actions......................................................... 3
Section 1.4 Directors............................................................... 4
ARTICLE II
THE MERGER.................................................................................. 6
Section 2.1 The Merger.............................................................. 6
Section 2.2 Closing................................................................. 6
Section 2.3 Effective Time.......................................................... 6
Section 2.4 Effects of the Merger................................................... 6
Section 2.5 Certificate of Incorporation; Bylaws.................................... 6
Section 2.6 Directors; Officers..................................................... 7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES................................................................................ 7
Section 3.1 Effect on Capital Stock................................................. 7
Section 3.2 Stock Options and Warrants.............................................. 8
Section 3.3 Payment for Shares...................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.............................................................. 10
Section 4.1 Representations and Warranties of Company............................... 10
Section 4.2 Representations and Warranties of Parent and Purchaser.................. 27
ARTICLE V
CONDUCT OF BUSINESS OF COMPANY.............................................................. 28
Section 5.1 Conduct of Business of Company.......................................... 28
ARTICLE VI
ADDITIONAL COVENANTS........................................................................ 31
Section 6.1 Company Stockholders Meeting; Preparation of the Proxy Statement;
Short-Form Merger....................................................... 31
Section 6.2 Access to Information; Confidentiality.................................. 32
Section 6.3 Reasonable Best Efforts................................................. 32
Section 6.4 Public Announcements.................................................... 33
Section 6.5 No Solicitation; Acquisition Proposals.................................. 33
Section 6.6 Consents, Approvals and Filings ......................................... 35
Section 6.7 Employee Benefit Matters................................................. 35
Section 6.8 Indemnification; Directors' and Officers' Insurance...................... 36
Section 6.9 Board Action Relating to Stock Option Plans, Warrants and ESPP........... 37
Section 6.10 ......................................................................... 38
ARTICLE VII
CONDITIONS PRECEDENT......................................................................... 38
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger............... 38
Section 7.2 Conditions to Parent's or Purchaser's Obligation to Effect the Merger.... 39
ARTICLE VIII
TERMINATION.................................................................................. 39
Section 8.1 Termination.............................................................. 39
Section 8.2 Effect of Termination.................................................... 40
ARTICLE IX
GENERAL PROVISIONS........................................................................... 40
Section 9.1 Nonsurvival of Representations and Warranties............................ 40
Section 9.2 Fees and Expenses........................................................ 41
Section 9.3 Definitions.............................................................. 41
Section 9.4 Amendment and Modification............................................... 42
Section 9.5 Extension; Waiver........................................................ 43
Section 9.6 Notices.................................................................. 43
Section 9.7 Interpretation........................................................... 44
Section 9.8 Entire Agreement; Third-Party Beneficiaries.............................. 44
Section 9.9 Governing Law............................................................ 44
Section 9.10 Assignment............................................................... 44
Section 9.11 Enforcement.............................................................. 45
Section 9.12 Severability............................................................. 45
Section 9.13 Counterparts............................................................. 45
EXHIBIT A - Conditions to the Offer
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of July 15, 1999 (this
"Agreement"), is made and entered into among Sterling Software, Inc., a Delaware
corporation ("Parent"), Sterling Software Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent ("Purchaser"), and Information
Advantage, Inc., a Delaware corporation ("Company").
RECITALS:
A. The Board of Directors of Parent and the respective Boards of
Directors of Purchaser and Company have determined that it would be advisable
and in the best interests of their respective stockholders for Parent to acquire
Company by means of a merger of the Purchaser with and into Company (the
"Merger"), on the terms and subject to the conditions set forth in this
Agreement.
B. To effectuate the acquisition, Parent and Company each desire that
Parent cause Purchaser to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.01 per share, of Company (the
"Shares") (including the associated Series A Junior Participating Preferred
Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement
between Company and Norwest Bank Minnesota, National Association, dated as of
March 1, 1999 (the "Company Rights Agreement")) on the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2) and the Board of Directors of Company has approved, by a unanimous
vote of the directors present at the meeting, such tender offer and is
recommending (subject to the limitations contained herein) that Company's
stockholders accept the tender offer and tender their Shares pursuant thereto.
C. Concurrently with the execution and delivery of this Agreement and as
a condition to Parent's and Purchaser's willingness to enter into this
Agreement, Parent and Purchaser have entered into separate Stockholder
Agreements, dated as of the date hereof (the "Stockholder Agreements"), with
each of the Principal Stockholders (as defined in Section 9.3), pursuant to
which each Principal Stockholder has (x) agreed, among other things, to vote all
Shares owned by such Principal Stockholder in favor of the Merger and (y)
granted to Parent an option to purchase all Shares owned by such Principal
Stockholder.
D. Parent, Purchaser and Company desire to make certain representations
and warranties and to enter into certain covenants in connection with the Offer
(as defined in Section 1.1) and the Merger and also to prescribe various
conditions to the consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and covenants contained in this Agreement, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that none of the events set forth
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in Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the public
announcement of the execution and delivery of this Agreement), Parent shall
cause Purchaser to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to
purchase (the "Offer") all outstanding Shares at a price of $6.50 per share, net
to the seller in cash (as paid pursuant to the Offer, the "Offer
Consideration"). The obligation of Parent and Purchaser to commence the Offer,
to consummate the Offer and to accept for payment and to pay for Shares validly
tendered in the Offer and not withdrawn shall be subject only to those
conditions set forth in Exhibit A hereto.
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(b) Without the prior written consent of Company, Purchaser shall not
(and Parent shall cause Purchaser not to) (i) decrease or change the form of the
Offer Consideration or decrease the number of Shares sought pursuant to the
Offer, (ii) impose additional conditions to the Offer, (iii) extend the
expiration date of the Offer beyond the initial expiration date of the Offer
(which shall be the 20/th/ business day from commencement of the Offer), except
(A) as required by applicable law, (B) that if immediately prior to the
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer constitute more than 75% and less than 90%
of the outstanding Shares, Purchaser may extend the Offer for one or more
periods not to exceed an aggregate of fifteen business days, notwithstanding
that all conditions to the Offer are satisfied as of such expiration date of the
Offer, and (C) that if any condition to the Offer has not been satisfied or
waived, Purchaser may, in its sole discretion, extend the expiration date of the
Offer for one or more periods provided, that the expiration date of the Offer
may not be extended beyond October 31,1999, (iv) waive the condition (the
"Minimum Condition") that there shall be validly tendered and not withdrawn
prior to the time the Offer expires a number of Shares which when added to the
number of Shares which Parent, Purchaser or any other Subsidiary of Parent
"beneficially owns" (within the meaning of Rule 13d-3 under the Exchange Act),
constitutes at least a majority of the Shares outstanding on a fully-diluted
basis on the date of purchase ("on a fully-diluted basis" meaning, as of any
date, the number of Shares outstanding, together with the Shares which Company
may be required to issue pursuant to warrants, options or obligations
outstanding at that date under employee stock or similar benefit plans or
otherwise whether or not vested or then exercisable), or (v) amend any term or
other condition of the Offer in any manner materially adverse to holders of
Shares; provided, however, that, except as set forth above and subject to
applicable legal requirements, Purchaser may waive any condition to the Offer
other than the Minimum Condition in its sole discretion; and provided further
that the Offer may be extended in connection with an increase in the
consideration to be paid pursuant to the Offer so as to comply with applicable
rules and regulations of the United States Securities and Exchange Commission
(the "SEC"). Purchaser shall, on the terms and subject to the prior satisfaction
or waiver of the conditions of the Offer, accept for payment, and pay for, in
accordance with the terms and subject to the conditions of the Offer, all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration date thereof.
Section 1.2 Offer Documents. (a) On the date of commencement of the
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Offer, Parent and Purchaser shall file or cause to be filed with the SEC a
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to
the Offer which shall contain the offer to purchase and related letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively, and with any supplements or
amendments thereto, the "Offer Documents"). Company will promptly supply to
Parent and Purchaser in writing, for inclusion in the Offer Documents, all
information concerning Company required under the Exchange Act and the rules and
regulations thereunder to be included in the Offer Documents.
(b) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to Company's shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or the Purchaser
with respect to information supplied by Company in writing for inclusion in the
Offer Documents. Each of Parent and the Purchaser further agrees to take all
steps necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of Parent, Purchaser and Company shall
promptly correct any information provided by them for use in the Offer Documents
if and to the extent that such information shall be or have become false or
misleading in any material respect, and Parent and Purchaser shall take all
lawful action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Shares as and to the
extent required by applicable law. Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents and any
amendments thereto prior to the filing thereof with the SEC.
Section 1.3 Company Actions. (a) Company hereby approves of and consents
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to the Offer and represents and warrants that (i) its Board of Directors (at a
meeting duly called and held) has (A) unanimously (of
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those directors present at the meeting) determined that each of this Agreement,
the Stockholder Agreements, the Offer and the Merger are advisable and fair to
and in the best interests of Company and its stockholders, (B) unanimously (of
those directors present at the meeting) approved this Agreement, each of the
Stockholder Agreements and the transactions contemplated hereby and thereby,
including the Offer and the Merger, and such approval is sufficient to render
Section 203 of the Delaware General Corporation Law (the "DGCL") inapplicable to
this Agreement, each of the Stockholder Agreements and the transactions
contemplated hereby and thereby, including the Offer and the Merger, and (C)
resolved (subject to the limitations herein contained) to recommend acceptance
of the Offer and adoption of this Agreement by the holders of Shares, and (ii)
BancBoston Xxxxxxxxx Xxxxxxxx Inc. has delivered to the Board of Directors of
Company its opinion that the Offer Consideration to be received by the holders
of Shares in the Offer and Merger is fair, from a financial point of view, to
such holders.
(b) Company shall file with the SEC, simultaneously with the filing
by Parent and Purchaser of the Schedule 14D-1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any supplements or amendments
thereto, the "Schedule 14D-9") containing such recommendations of the Board of
Directors of Company in favor of the Offer and the adoption of this Agreement.
Each of Parent and Purchaser will promptly supply to Company in writing, for
inclusion in the Schedule 14D-9, all information concerning Parent's Designees
(as such term is defined in Section 1.4 hereof), as required by Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder, and Company shall include such
information in the Schedule 14D-9. The Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Company with respect to information supplied by Parent or Purchaser in
writing for inclusion in the Schedule 14D-9. Company further agrees to take all
steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of Company, Parent and Purchaser shall
promptly correct any information provided by them for use in the Schedule 14D-9
if and to the extent that such information shall be or have become false or
misleading in any material respect and Company shall take all lawful action
necessary to cause the Schedule 14D-9 as so corrected to be filed promptly with
the SEC and disseminated to the holders of Shares as and to the extent required
by applicable law. Parent, Purchaser and their counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC.
(c) In connection with the Offer, Company shall promptly furnish
Parent and Purchaser with mailing labels, security position listings and all
available listings or computer files containing the names and addresses of the
record holders of Shares as of the latest practicable date and shall furnish
Parent and Purchaser with such information and assistance (including updated
lists of stockholders, mailing labels and lists of security positions) as Parent
and Purchaser or their agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Purchaser shall, and shall use commercially reasonable
efforts to cause each of their affiliates, associates, partners, employees,
agents and advisors to, hold in confidence the information contained in such
labels, lists and files, shall use such information only in connection with the
Offer and the Merger and, if this Agreement is terminated in accordance with its
terms, shall deliver promptly to Company (or destroy and certify to Company the
destruction of) all copies of such information (and any copies, compilations or
extracts thereof or based thereon) then in their possession or under their
control.
Section 1.4 Directors. (a) Promptly after (i) the purchase of and
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payment for any Shares by Purchaser or any of its affiliates pursuant to the
Offer as a result of which Purchaser and its affiliates own beneficially at
least a majority of then outstanding Shares and (ii) compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall
occur later, Parent shall be entitled to designate such number of directors (the
"Parent Designees"), rounded up to the next whole number, on Company's Board of
Directors as is equal to
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the product of the total number of directors on such Board (after giving effect
to any increase in the size of such Board pursuant to this Section 1.4)
multiplied by the percentage that the number of Shares beneficially owned by
Purchaser at such time (including Shares so accepted for payment) bears to the
total number of Shares then outstanding. In furtherance thereof, Company shall,
upon request of Parent, use its best efforts promptly either to increase the
size of its Board of Directors or to secure the resignations of such number of
its incumbent directors, or both, as is necessary to enable such Parent
Designees to be so elected or appointed to Company's Board of Directors, and
Company shall take all actions available to Company to cause such Parent
Designees to be so elected or appointed. At such time, Company shall, if
requested by Parent, also take all action necessary to cause the Parent
Designees to constitute at least the same percentage (rounded up to the next
whole number) as is on Company's Board of Directors of (i) each committee of
Company's Board of Directors, (ii) each board of directors (or similar body) of
each Subsidiary (as defined in Section 9.3) of Company and (iii) each committee
(or similar body) of each such board.
(b) Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.4(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 (or,
at Parent's request, including such information in the Schedule 14D-9 initially
filed with the SEC and distributed to the stockholders of Company) as is
necessary to enable Parent's designees to be elected to Company's Board of
Directors. Parent or Purchaser will supply to Company in writing and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of this Section 1.4 are in addition to and shall not
limit any rights which Purchaser, 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) Notwithstanding the provisions of this Section 1.4, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the Effective
Time (as defined in Section 2.3 hereof) be, directors of the Company who were
directors of the Company on the date hereof (the "Continuing Directors"),
provided that, if the number of Continuing Directors shall be reduced below two
for any reason, the remaining Continuing Director may designate a person to fill
such vacancy who shall be deemed to be a Continuing Director for all purposes of
this Agreement, or if no Continuing Directors then remain, the other directors
of Company then in office shall designate two persons to fill such vacancies who
will not be officers or employees or affiliates of Company, Parent or either of
their subsidiaries and such persons shall be deemed to be Continuing Directors
for all purposes of this Agreement. From and after the time, if any, that
Parent's designees constitute a majority of Company's Board of Directors and
prior to the Effective Time, any amendment or modification of this Agreement,
any amendment to Company's Certificate of Incorporation or By-Laws inconsistent
with this Agreement, any termination of this Agreement by Company, any extension
of time for performance of any of the obligations of Parent or Purchaser
hereunder, any waiver of any condition to Company's obligations hereunder or any
of Company's rights hereunder or other action by Company hereunder may be
effected only by the action of a majority of the Continuing Directors of
Company, which action shall be deemed to constitute the action of any committee
specifically designated by the Board of Directors of Company to approve the
actions contemplated hereby and the full Board of Directors of Company;
provided, that, if there shall be no Continuing Directors, such actions may be
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effected by majority vote of the entire Board of Directors of Company.
ARTICLE II
THE MERGER
Section 2.1 The Merger. On the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the DGCL, the Merger shall be
effected and the Purchaser shall be merged with and into Company at the
Effective Time. At the Effective Time, the separate existence of Purchaser
shall cease and
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Company shall continue as the surviving corporation (as such, the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware.
Section 2.2 Closing. Unless this Agreement shall have been terminated
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and the transactions contemplated hereby shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the conditions
set forth in Article VII, the closing of the Merger (the "Closing") will take
place as soon as practicable, but in no event later than 10:00 a.m. on the
second business day (the "Closing Date") following satisfaction or waiver of all
of the conditions set forth in Article VII, other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions, at the offices of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, unless another date, time
or place is agreed to by the parties hereto.
Section 2.3 Effective Time. On the Closing Date (or on such other date
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as Parent and Company may agree), the parties hereto shall file with the
Secretary of State of the State of Delaware (the "Delaware State Secretary") a
certificate of merger and any other appropriate documents, executed in
accordance with the relevant provisions of the DGCL, and shall make all other
filings or recordings required under the DGCL and other applicable law in
connection with the Merger. The Merger shall become effective upon the filing
of the certificate of merger with the Delaware State Secretary, or at such later
time as is specified in the certificate of merger (the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the effects set
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forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all property of
Company and Purchaser shall vest in the Surviving Corporation, and all
liabilities and obligations of Company and Purchaser shall become liabilities
and obligations of the Surviving Corporation.
Section 2.5 Certificate of Incorporation; Bylaws. At the Effective Time,
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(a) the certificate of incorporation of Purchaser as in effect at the Effective
Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the provisions thereof and applicable law and (b) the bylaws
of Purchaser as in effect at the Effective Time shall, from and after the
Effective Time, be the bylaws of the Surviving Corporation until thereafter
changed or amended in accordance with the provisions thereof and applicable law.
Section 2.6 Directors; Officers. From and after the Effective Time, (a)
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the directors of Purchaser shall be the directors of the Surviving Corporation,
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 Company shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
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
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the Merger and without any action on the part of any holder of Shares or any
other shares of capital stock of Company or Purchaser:
(a) Common Stock of Purchaser. Each share of common stock, par
-------------------------
value $0.01 per share, of Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
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(b) Cancellation of Treasury Shares. Each Share issued and
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outstanding immediately prior to the Effective Time that is owned by Company
(other than shares in trust accounts, managed accounts, custodial accounts and
the like that are beneficially owned by third parties) shall automatically be
canceled and retired and shall cease to exist, and no cash or other
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Shares. Each share of Company Common Stock
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(including the associated Rights) issued and outstanding immediately prior to
the Effective Time (other than Shares to be canceled and retired in accordance
with Section 3.1(b), shares held by any Subsidiary of Company and any Dissenting
Shares (as defined in Section 3.1(d)) shall be converted into the right to
receive the Offer Consideration, payable to the holder thereof, without any
interest thereon (the "Merger Consideration"), less any required withholding
taxes, upon surrender and exchange of a Certificate (as defined in Section 3.3).
(d) Dissenting Shares. Notwithstanding anything in this Agreement to
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the contrary, Shares issued and outstanding immediately prior to the Effective
Time held by any person who has the right to demand, and who properly demands,
an appraisal of such Shares ("Dissenting Shares") in accordance with Section 262
of the DGCL (or any successor provision) shall not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect or
otherwise loses such holder's right to such appraisal, if any. If, after the
Effective Time, such holder fails to perfect or loses any such right to
appraisal, each such Share of such holder shall be treated as a Share that had
been converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 3.1(c). At the Effective Time, any
holder of Dissenting Shares shall cease to have any rights with respect thereto,
except the rights provided in Section 262 of the DGCL (or any successor
provision) and as provided in the immediately preceding sentence. Company shall
give prompt notice to Parent of any demands received by Company for appraisal of
Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
Section 3.2 Stock Options and Warrants.
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(a) At the Effective Time, each then-outstanding option to purchase
Shares (collectively, the "Options") under Company's 1992 Stock Option Plan,
1997 Equity Incentive Plan, IQ 1993 Stock Option Plan, IQ 1987 Stock Option Plan
and IQ 1994 Non-Employee Directors Stock Option Plan, as each of such plans has
been amended from time to time (collectively, the "Stock Option Plans"), whether
or not then exercisable or fully vested, shall be assumed by Parent and shall
constitute an option (a "Substitute Option") to acquire, on substantially the
same terms and subject to substantially the same conditions as were applicable
under such Option, including without limitation term, vesting, exercisability,
status as an "incentive stock option" (if applicable) under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and termination
provisions, the number of shares of common stock, par value $0.10 per share
("Parent Common Stock") of Parent, rounded down to the nearest whole share,
determined by multiplying the number of Shares subject to such Option
immediately prior to the Effective Time by the Conversion Factor (as defined
below), at an exercise price per share of Parent Common Stock (increased to the
nearest whole cent) equal to the exercise price per Share subject to such Option
divided by the Conversion Factor; provided, however, that in the case of any
Option to which Section 421 of the Code applies by reason of its qualification
as an incentive stock option under Section 422 of the Code, the conversion
formula shall be adjusted if necessary to comply with Section 424(a) of the
Code. For purposes of this Agreement "Conversion Factor" means the Offer
Consideration divided by the average closing price per share of Parent Common
Stock on the NYSE (as defined in Section 9.3) for the five consecutive trading
days ending on the trading day immediately prior to the Closing Date.
(b) Company shall use its best efforts to obtain all necessary
waivers, consents or releases from holders of Options under the Stock Option
Plans and take any such other action as may be reasonably necessary to give
effect to the transactions contemplated by Section 3.2(a).
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(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Substitute Options pursuant to the terms set forth in Section
3.2(a). As soon as practicable but in any event within fifteen days after the
Effective Time, the shares of Parent Common Stock subject to Substitute Options
will be covered by an effective registration statement on Form S-8 (or any
successor form) or another appropriate form and Parent shall use its reasonable
best efforts to maintain the effectiveness of such registration statement for so
long as the Substitute Options remain outstanding. In addition, Parent shall
use all reasonable efforts to cause the shares of Parent Common Stock subject to
Substitute Options to be listed on the NYSE and such other exchanges as Parent
shall determine.
(d) Parent and Purchaser shall not assume or continue any outstanding
warrants to purchase Shares (the "Warrants"). The parties hereto shall take all
appropriate action to provide that, in accordance with the respective terms of
the Warrants, at or prior to the Effective Time, each holder of an outstanding
Warrant shall be entitled to receive an amount in cash equal to the product of
(i) the excess, if any, of the Offer Consideration over the per share exercise
price of such Warrant and (ii) the number of shares subject to such Warrant.
Section 3.3 Payment for Shares.
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(a) Payment Fund. Concurrently with the Effective Time, Parent shall
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deposit, or shall cause to be deposited, with or for the account of a bank or
trust company designated by Parent, which shall be reasonably satisfactory to
Company (the "Paying Agent"), for the benefit of the holders of Shares, cash in
an amount sufficient to pay the aggregate Merger Consideration payable upon the
conversion of Shares pursuant to Section 3.1(c) (the "Payment Fund").
(b) Letters of Transmittal; Surrender of Certificates. As soon as
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reasonably practicable after the Effective Time, Parent shall instruct the
Paying Agent to mail to each holder of record (other than Company or any of its
Subsidiaries or Parent, Purchaser or any other Subsidiary of Parent) of a
certificate or certificates that, immediately prior to the Effective Time,
evidenced outstanding Shares (the "Certificates"), (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent, and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the holder
of such Certificate shall be entitled to receive in exchange therefor cash in an
amount equal to the product of (i) the number of Shares theretofore represented
by such Certificate and (ii) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. No interest shall be paid or accrued on
any cash payable upon the surrender of any Certificate. If payment is to be made
to a person other than the person in whose name the surrendered Certificate 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 surrendered Certificate or established to the satisfaction of
Parent and the Surviving Corporation that such taxes have been paid or are not
applicable.
(c) Cancellation and Retirement of Shares; No Further Rights. As of
--------------------------------------------------------
the Effective Time, all Shares (other than Shares to be canceled in accordance
with Section 3.1(b)) issued and outstanding immediately prior to the Effective
Time shall cease to be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of any such Shares shall cease
to have any rights with respect thereto or arising therefrom (including without
limitation the right to vote), except the right to receive the Merger
Consideration, without interest, upon surrender of such Certificate in
accordance with Section 3.3(b), and until so surrendered, each such Certificate
shall represent for all purposes only the right to receive the Merger
Consideration, without interest. The Merger Consideration paid upon the
surrender for exchange of Certificates in accordance with the
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terms of this Section 3.3 shall be deemed to have been paid in full satisfaction
of all rights pertaining to the Shares theretofore represented by such
Certificates.
(d) Investment of Payment Fund. The Paying Agent shall invest the
--------------------------
Payment Fund, as directed by Parent, in (i) direct obligations of the United
States of America, (ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either Xxxxx'x
Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates
of deposit, bank repurchase agreements or bankers' acceptances of commercial
banks with capital exceeding $500 million. Any net earnings with respect to the
Payment Fund shall be the property of and paid over to Parent as and when
requested by Parent.
(e) Termination of Payment Fund. Any portion of the Payment Fund
---------------------------
which remains undistributed to the holders of Certificates for 180 days after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Certificates that have not theretofore complied with this Section 3.3 shall
thereafter look only to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration.
(f) No Liability. None of Parent, Purchaser, the Surviving
------------
Corporation or the Paying Agent shall be liable to any person in respect of any
payments or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to five years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as defined in Section
4.1(c)), any amounts payable in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(g) Withholding Rights. Parent and Purchaser shall be entitled to
------------------
deduct and withhold, or cause to be deducted or withheld, from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares or
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of
applicable state, local or foreign tax law. To the extent that amounts are so
deducted and withheld, such deducted and withheld amounts shall be treated for
all purposes of this Agreement as having been paid to such holders in respect of
which such deduction and withholding was made
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Company. Except as set
-----------------------------------------
forth in the Disclosure Schedule (as defined in Section 9.3), Company represents
and warrants to Parent and Purchaser that all of the statements contained in
this Article IV are true and correct as of the date of this Agreement (or, if
made as of a specified date, as of such date). Each exception set forth in the
Disclosure Schedule and each other response to this Agreement set forth in the
Disclosure Schedule is identified by reference to, or has been grouped under a
heading referring to, a specific individual Section of this Agreement and
relates only to such Section, except to the extent that one section of the
Disclosure Schedule specifically refers to another section thereof.
(a) Organization, Standing and Corporate Power. Each of Company and
------------------------------------------
each Subsidiary of Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Company and each Subsidiary of Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where
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the failure to be so qualified or licensed could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect (as defined in
Section 9.3) on Company. Company has delivered to Parent true, complete and
correct copies of the certificate of incorporation and bylaws or comparable
governing documents of Company and each Subsidiary of Company, in each case as
amended to the date of this Agreement. A true, correct and complete list of all
Subsidiaries of Company, together with the jurisdiction of incorporation of each
such Subsidiary and the percentage of each such Subsidiary's capital stock owned
by Company or another Subsidiary, is set forth in Section 4.1(a) of the
Disclosure Schedule.
(b) Authority; Noncontravention. Company has the requisite corporate
---------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Company, subject, in the case of the Merger, to the adoption of this
Agreement by its stockholders as contemplated by Section 6.1(a). This Agreement
has been duly executed and delivered by Company and, assuming that this
Agreement constitutes a valid and binding obligation of Parent and Purchaser,
constitutes a valid and binding obligation of Company, enforceable against
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to general principles of
equity. Except as specified in Section 4.1(b) of the Disclosure Schedule, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, (i) conflict with any of the provisions of the certificate of incorporation
or bylaws of Company or the comparable governing documents of any Subsidiary of
Company, in each case as amended to the date of this Agreement, (ii) subject to
the governmental filings and other matters referred to in Section 4.1(c),
conflict with, result in a breach of or default (with or without notice or lapse
of time, or both) under, or give rise to a material obligation, a right of
termination, cancellation or acceleration of any obligation or a loss of a
material benefit under, or require the consent of any person under, any
indenture or other agreement, permit, concession, franchise, license or similar
instrument or undertaking to which Company or any of its Subsidiaries is a party
or by which Company or any of its Subsidiaries or any of their respective assets
is bound or affected, or (iii) subject to the governmental filings and other
matters referred to in Section 4.1(c), contravene any domestic or foreign law,
rule or regulation or any order, writ, judgment, injunction, decree,
determination or award currently in effect, which, in the case of clauses (ii)
and (iii) above would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company.
(c) Consents and Approvals. No consent, approval or authorization of,
----------------------
or declaration or filing with, or notice to, any domestic or foreign
governmental agency or regulatory authority (a "Governmental Entity") which has
not been received or made is required by or with respect to Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Company or the consummation by Company of the transactions contemplated
hereby, except for (i) the filing of premerger notification and report forms
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9 and, if
required by applicable law, the Proxy Statement (as defined in Section 6.1(b)),
(B) such reports under the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby, (iii) the filing of the
certificate of merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business, (iv) such other consents, approvals, authorizations,
filings or notices as are specified in Section 4.1(c) of the Disclosure
Schedule, and (v) any other consents, approvals, authorizations, filings or
notices the failure to make or obtain which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
(d) Capital Structure. The authorized capital stock of Company
-----------------
consists solely of (i) 60,000,000 Shares and (ii) 5,000,000 shares of preferred
stock, par value $.01 per share ("Preferred Shares"). At the close of business
on July 15, 1999: (i) 25,381,011 Shares were issued and outstanding, (ii) no
Preferred Shares were issued and outstanding, (iii) 4,765,810 Shares were
reserved for issuance pursuant to outstanding Options granted under the Stock
Option Plans, (iv) 550,000 Shares were reserved for issuance under the 1997
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Employee Stock Purchase Plan of which the Company expects not more than 225,000
Shares to be issued for the accumulation period beginning on July 1, 1999 and
ending on or about the Effective Date (the "ESPP"), (v) 30,000 Shares were
reserved for issuance upon the exercise of the outstanding Warrants, (vi)
500,000 shares of Series A Junior Participating Preferred Stock were reserved
for issuance pursuant to the Company Rights Agreement and (vii) no Shares were
held by Company in its treasury. Except as set forth in the immediately
preceding sentence, at the close of business on July 13, 1999, no shares of
capital stock or other equity securities of Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Company are
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as specified above or in Section 4.1(d) of the
Disclosure Schedule, neither Company nor any Subsidiary of Company has or is
subject to or bound by or, at or after the Effective Time will have or be
subject to or bound by, any outstanding option, warrant, call, subscription or
other right (including any preemptive right), agreement or commitment which (i)
obligates Company or any Subsidiary of Company to issue, sell or transfer, or
repurchase, redeem or otherwise acquire, any shares of the capital stock of
Company or any Subsidiary of Company, (ii) restricts the transfer of any shares
of capital stock of Company or any of its Subsidiaries, or (iii) relates to the
voting of any shares of capital stock of Company or any of its Subsidiaries. No
bonds, debentures, notes or other indebtedness of Company or any Subsidiary of
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which the stockholders of
Company or any Subsidiary of Company may vote are issued or outstanding. Section
4.1(d) of the Disclosure Schedule accurately sets forth information regarding
the current exercise price, date of grant and number of granted Options for each
holder of Options pursuant to any Stock Option Plan. Except as specified in
Section 4.1(d) of the Disclosure Schedule, all of the outstanding shares of
capital stock of each Subsidiary of Company have been duly authorized, validly
issued, fully paid and nonassessable and are owned by Company, by one or more
Subsidiaries of Company or by Company and one or more such Subsidiaries, free
and clear of Liens (as defined in Section 9.3).
(e) SEC Documents. Company has filed all required reports, schedules,
-------------
forms, statements and other documents with the SEC since December 17, 1997 (such
reports, schedules, forms, statements and other documents being hereinafter
referred to as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents as of
such dates contained any untrue statements of a material fact or omitted 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. The consolidated financial statements of Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may otherwise be indicated in the notes
thereto) and fairly present the consolidated financial position of Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end audit
adjustments).
(f) Absence of Certain Changes or Events; No Undisclosed Material
-------------------------------------------------------------
Liabilities.
-----------
(i) Except as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed SEC Documents") or
specified in Section 4.1(f) of the Disclosure Schedule, since the date of the
most recent audited financial statements included in the Filed SEC Documents,
Company and its Subsidiaries have conducted their businesses only in the
ordinary course, and there has not been: (A) a Material Adverse Effect on
Company; (B) any declaration, setting aside or payment of any dividend or other
distribution in respect of shares of Company's capital stock, or any redemption
or other acquisition by Company of any shares of its capital stock; (C) any
increase in the rate or terms of compensation payable or to become payable by
Company or its Subsidiaries to their directors, officers or key employees,
except increases occurring
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in the ordinary course of business consistent with past practice; (D) any entry
into, or increase in the rate or terms of, or amendment or modification to, any
bonus, insurance, severance, pension or other employee or retiree benefit plan,
payment, agreement or arrangement made to, for or with any such directors,
officers or key employees, except increases occurring in the ordinary course of
business consistent with past practices or as required by applicable law; (E)
any entry into any agreement, commitment or transaction by Company or any of its
Subsidiaries which is material to Company and its Subsidiaries taken as a whole,
except for agreements, commitments or transactions entered into in the ordinary
course of business consistent with past practice; (F) any change by Company in
accounting methods, principles or practices, except as required or permitted by
generally accepted accounting principles; (G) any write-off or write-down of, or
any determination to write-off or write-down, any asset of Company or any of its
Subsidiaries or any portion thereof which write-off, write-down or determination
exceeds $50,000 individually or $250,000 in the aggregate, other than accounts
receivable write-offs for which the Company has adequately reserved; (H) any
announcement or implementation of any reduction in force, lay-off, early
retirement program, severance program or other program or effort concerning the
termination of employment of employees of Company or its Subsidiaries; or (I)
any announcement of or entry into any agreement, commitment or transaction by
Company or any of its Subsidiaries to do any of the things described in the
preceding clauses (A) through (H) otherwise than as expressly provided for
herein.
(ii) Except as disclosed in the Filed SEC Documents or specified in
Section 4.1(f) of the Disclosure Schedule and liabilities incurred in the
ordinary course of business consistent with past practice, since the date of the
most recent financial statements included in the Filed SEC Documents, there are
no liabilities of Company or its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, due, to become due, determined, determinable or
otherwise, having or which would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company.
(g) Certain Information. Subject to Parent's and Purchaser's
-------------------
fulfillment of their respective obligations with respect thereto, the Schedule
14D-9 and the Proxy Statement will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law and will conform in all material
respects with the requirements of the Exchange Act and any other applicable law,
and neither the Schedule 14D-9 nor the Proxy Statement will, at the respective
times they are filed with the SEC or published, sent or given to Company's
stockholders, 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; provided, however, that no representation or warranty is hereby
made by Company with respect to any information supplied by Parent or Purchaser
in writing for inclusion in, or with respect to Parent or Purchaser information
derived from Parent's public SEC filings which is included or incorporated by
reference in, the Schedule 14D-9 or the Proxy Statement. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in, or which may be deemed to be incorporated by reference in, any
of the Offer Documents will, at the respective times the Offer Documents are
filed with the SEC or published, sent or given to Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event with respect to Company, or with
respect to any information supplied by Company for inclusion in any of the Offer
Documents, shall occur which is required to be described in an amendment of, or
a supplement to, any of the Offer Documents, Company shall so describe the event
to Parent.
(h) Real Property; Other Assets. Company owns no real property and
---------------------------
has not in the last 3 years owned any real property.
(i) Company or one of its Subsidiaries has good and marketable title
to each of the assets reflected in the latest balance sheet of Company included
in the Filed SEC Documents (other than any such assets disposed of or consumed
in the ordinary course of business or as specified in Section 4.1(h)(ii) of the
Disclosure Schedule) free and clear of all Liens except (A) those reflected or
reserved against in the latest balance
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sheet of Company included in the Filed SEC Documents, (B) taxes and general and
special assessments not in default and payable without penalty and interest, (C)
other Liens that individually or in the aggregate would not have a Material
Adverse Effect on Company and (D) other Liens as are specified in Section
4.1(h)(ii) of the Disclosure Schedule.
(ii) Company has heretofore made available to Parent true,
correct and complete copies of all leases, subleases and other agreements (the
"Real Property Leases") under which Company or any of its Subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property or facility which involve aggregate annual payments in excess of
$50,000 (the "Leased Real Property"), including all modifications, amendments
and supplements thereto. Except in each case where the failure would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company and except as specified in Section 4.1(h)(iii) of the
Disclosure Schedule: (A) Company or one of its Subsidiaries has a valid and
subsisting leasehold interest in each parcel of Leased Real Property free and
clear of all Liens and each Real Property Lease is in full force and effect, (B)
all rent and other sums and charges payable by Company or its Subsidiaries as
tenants thereunder are current in all material respects, (C) no termination
event or condition or uncured default of a material nature on the part of
Company or any such Subsidiary or, to Company's knowledge, the landlord, exists
under any Real Property Lease, and (D) Company or one of its Subsidiaries is the
sole undisputed lessee of each Leased Real Property, is in actual possession
thereof and is entitled to quiet enjoyment thereof in accordance with the terms
of the applicable Real Property Lease.
(i) Software.
--------
(i) Section 4.1(i)(i) of the Disclosure Schedule sets forth
under the caption "Owned Software" a true, correct and complete list of all
computer programs (source code or object code) owned by Company or any
Subsidiary of Company, including without limitation any computer programs in the
development or testing phase (collectively, the "Owned Software"), and Section
4.1(i)(i) of the Disclosure Schedule sets forth under the caption "Licensed
Software" a true, correct and complete list of all computer programs (source
code or object code) licensed to Company or any Subsidiary of Company by any
third party (other than any off-the-shelf computer program that is so licensed
under a shrink wrap license) (collectively, the "Licensed Software" and,
together with the Owned Software, the "Software").
(ii) Except as specified in Section 4.1(i)(ii) of the Disclosure
Schedule, Company, directly or through its Subsidiaries, has good, marketable
and exclusive title to, and the valid and enforceable power and unqualified
right to sell, license, lease, transfer, use or otherwise exploit, all versions
and releases of the Owned Software and all copyrights thereof, free and clear of
all Liens. Company, directly or through its Subsidiaries, is in actual
possession of (A) the source code and object code for each computer program
included in the Owned Software and (B) the object code and, to the extent
required for the effective use of the Software as currently used in Company's
business or as offered or represented to Company's customers or potential
customers, the source code, for each computer program included in the Licensed
Software. Company, directly or through its Subsidiaries, is in possession of all
other documentation (including without limitation all related engineering
specifications, program flow charts, installation and user manuals) and know-how
required for the effective use of the Software as currently used in Company's
business or as offered or represented to Company's customers or potential
customers. The Software constitutes all of the computer programs necessary to
conduct Company's business as now conducted, and includes all of the computer
programs used in the development, marketing, licensing, sale or support of the
products and the services presently offered by Company. Except as specified in
Section 4.1(i)(ii) of the Disclosure Schedule or pursuant to agreements entered
into in the ordinary course of business or made available to Purchaser or its
representatives, no person other than Company and its Subsidiaries has any right
or interest of any kind or nature in or with respect to the Owned Software or
any portion thereof or any rights to sell, license, lease, transfer, use or
otherwise exploit the Owned Software or any portion thereof.
(iii) Section 4.1(i)(iii) of the Disclosure Schedule sets forth a
true, correct and complete
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list, by computer program, of (A) all persons other than Company and its
Subsidiaries that have been provided with the source code or have a right to be
provided with the source code (including any such right that may arise after the
occurrence of any specified event or circumstance, either with or without the
giving of notice or passage of time or both) for any of the Owned Software, and
(B) all source code escrow agreements relating to any of the Owned Software
(setting forth as to any such escrow agreement the source code subject thereto
and the names of the escrow agent and all other persons who are actual or
potential beneficiaries of such escrow agreement), and identifies with
specificity all agreements and arrangements pursuant to which the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby would entitle any third party or parties to
receive possession of the source code for any of the Owned Software or any
related technical documentation. Except as specified in Section 4.1(i)(iii) of
the Disclosure Schedule, no person (other than Company and its Subsidiaries and
any person that is a party to a contract referred to in clause (v) of the first
sentence of Section 4.1(l) that restricts such person from disclosing any
information concerning such source code) is in possession of, or has or has had
access to, any source code for any computer program included in the Owned
Software.
(iv) There are no defects in any computer program included in the
Software that would adversely affect the functioning thereof in accordance with
any published specifications therefor or which would cause the Software to fail
to be Year 2000 compliant. Without limiting the generality of the foregoing, all
of the Software and computer equipment of the Company and its Subsidiaries has
the following properties and capabilities: (A) the capability to correctly
recognize and accurately process dates expressed as a four-digit number (or the
binary equivalent or other machine readable iteration thereof) (collectively,
the "Four-Digit Dates"); (B) the capability to accurately execute calculations
using Four-Digit Dates; (C) the functionality (both on-line and batch),
including entry, inquiry, maintenance and update, to support processing
involving Four-Digit Dates; (D) the capability to generate interfaces and
reports that support processing involving Four-Digit Dates; (E) the capability
to generate and successfully transition, without human intervention, into the
year 2000 using the correct system date and to thereafter continue processing
with Four-Digit Dates; and (F) the capability to provide correct results in
forward and backward data calculations spanning century boundaries, including
the conversion of pre-2000 dates currently stored as two-digit dates; provided,
however, that no representation or warranty is made as to the effect that
defects in computer programs, hardware or systems provided by third parties (or
the inability of any such programs, hardware or systems, other than those
contemplated by the documentation for the Software to be used in conjunction
with the Software, to properly exchange date data with the Software) may, when
used in conjunction with the Software, have on the foregoing capabilities.
Except as specified in Section 4(1)(i)(iv) of the Disclosure Schedule, the
Company has made no representations, warranties or disclosures of any sort
regarding the Company's, any Subsidiary's, or any of the Software's Year 2000
compliance. The Company and its Subsidiaries have received warranties or
otherwise adequate assurance of Year 2000 compliance from its material providers
of products and services. Each computer program included in the Software is in
machine readable form and contains all current revisions. Section 4.1(i)(iv) of
the Disclosure Schedule sets forth a true, correct and complete list of any
current developments or maintenance efforts with respect to the Owned Software,
including without limitation the development of new computer programs,
enhancements or revisions to existing computer programs included in the Owned
Software and software fixes in progress for any person to whom or to which
Company or a Subsidiary of Company has sold, licensed, leased, transferred or
otherwise furnished Software or related products or services.
(v) Except as specified in Section 4.1(i)(v) of the Disclosure
Schedule, none of the sale, license, lease, transfer, use, reproduction,
distribution (other than non-exclusive license agreements for which the Company
made royalty payments to a third party for the use of Licensed Software of less
than $25,000 as to each such agreement during the preceding twelve (12) month
period and non-exclusive distribution agreements for which the Company paid
commissions to a third party in conjunction with the license by the Company of
Software to a third party of less than $100,000 as to each such agreement during
the preceding twelve (12) month period), modification or other exploitation by
Company, any Subsidiary of Company or any of their respective
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successors or assigns of any version or release of any computer program included
in the Software obligates or will obligate Company, any Subsidiary of Company or
any of their respective successors or assigns to pay any royalty, fee or other
compensation to any other person.
(vi) Except as specified in Section 4.1(i)(vi) of the Disclosure
Schedule, neither Company nor any of its Subsidiaries markets, or has marketed,
and none of them has supported or is obligated to support, any Licensed
Software.
(vii) Except as specified in Section 4.1(i)(vii) of the
Disclosure Schedule, no agreement, license or other arrangement pertaining to
any of the Software (including without limitation any development, distribution,
marketing, user or maintenance agreement, license or arrangement) to which
Company or any Subsidiary of Company is a party will terminate or become
terminable by any party thereto as a result of the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
(j) Intellectual Property.
---------------------
(i) Section 4.1(j)(i) of the Disclosure Schedule sets forth a
true, correct and complete list (including, to the extent applicable,
registration, application or file numbers) of all patents, trademarks, trade
names, service marks, domain names and registered copyrights and material non-
registered copyrights used by Company or any Subsidiary of Company in connection
with the conduct of Company's business, and all registrations of or applications
for registration of any of the foregoing, including any additions thereto or
extensions, continuations, renewals or divisions thereof (setting forth the
registration, issue or serial number and a description of the same)
(collectively, together with all trade dress, trade secrets, processes,
formulae, designs, know-how and other intellectual property rights that are so
used, the "Intellectual Property"). Parent has heretofore been furnished with
true, correct and complete copies of each U.S. and foreign registration or
application for U.S. and foreign registration covering any of the Intellectual
Property which is registered with, or in respect of which any application for
registration has been filed with, any Governmental Entity. All such
registrations and applications are valid and subsisting, in full force and
effect, and have not been cancelled, expired or abandoned. Company is listed in
the records of the appropriate Governmental Entity or foreign government
equivalent entity as the sole owner of record for each such application and
registration.
(ii) The Intellectual Property includes all of the intellectual
property rights owned or licensed by Company and its Subsidiaries that are
reasonably necessary to conduct Company's business as it is now conducted or is
expected to be conducted, and includes all of the intellectual property rights
owned by or licensed to Company and its Subsidiaries that are used in the
development, marketing, licensing or support of the Software. Except as
specified in Section 4.1(j)(ii) of the Disclosure Schedule, (A) Company,
directly or through its Subsidiaries, has good, marketable and exclusive title
to, and the valid and enforceable power and unqualified right to use, the
Intellectual Property free and clear of all Liens and (B) no person or entity
other than Company and its Subsidiaries has any right or interest of any kind or
nature in or with respect to the Intellectual Property or any portion thereof or
any rights to use, market or exploit the Intellectual Property or any portion
thereof other than pursuant to agreements entered into in the ordinary course of
business or made available to Purchaser or its representatives.
(iii) Company and its Subsidiaries take reasonable measures to
protect the confidentiality of its material trade secrets, know-how or other
confidential information, including requiring employees, independent contractors
and licensees having access thereto to execute written non-disclosure agreements
that adequately protect Company's and its Subsidiaries' proprietary interests in
and to such trade secrets, know-how and other confidential information.
(k) No Infringement.
---------------
c-1-15
(i) Except as specified in Section 4.1(k) of the Disclosure
Schedule, neither the existence nor the sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation by Company, any
Subsidiary of Company or any of their respective successors or assigns of any
Software or Intellectual Property, as such Software or Intellectual Property, as
the case may be, is or was, or is currently contemplated to be, sold, licensed,
leased, transferred, used or otherwise exploited by such persons, does, did or
will (i) infringe on any patent, trademark, copyright or other right of any
other person, (ii) constitute a misuse or misappropriation of any trade secret,
know-how, process, proprietary information or other right of any other person,
or (iii) entitle any other person to any interest therein, or right to
compensation from Company, any Subsidiary of Company or any of their respective
successors or assigns, by reason thereof (it being understood and agreed that,
insofar as the foregoing representation and warranty relates to Software and
Intellectual Property that is licensed to Company or any Subsidiary of Company
by any third party, such representation and warranty is made only to Company's
knowledge). Except as specified in Section 4.1(k) of the Disclosure Schedule,
neither Company nor any of its Subsidiaries has received any complaint,
assertion, threat or allegation or otherwise has notice of any lawsuit, claim,
demand, proceeding or investigation involving matters of the type contemplated
by the immediately preceding sentence or is aware of any facts or circumstances
that could reasonably be expected to give rise to any such lawsuit, claim,
demand, proceeding or investigation. Except as specified in Section 4.1(k) of
the Disclosure Schedule, there are no restrictions on the ability of Company,
any Subsidiary of Company or any of their respective successors or assigns to
sell, license, lease, transfer, use, reproduce, distribute, modify or otherwise
exploit any Software or Intellectual Property.
(ii) Except as specified in Schedule 4.1(k)(ii) of the
Disclosure Schedule, Company and its Subsidiaries are not aware of any
Infringement, misappropriation or other violation of any Software or
Intellectual Property, and no lawsuit, claim, demand, proceeding or
investigation has been brought by Company or any of its Subsidiaries against any
third party.
(l) Material Contracts. There have been made available to Parent and
------------------
its representatives true, correct and complete copies of all of the following
contracts to which Company or any of its Subsidiaries is a party or by which any
of them is bound (collectively, the "Material Contracts"): (i) contracts with
any directors and officers required to file beneficial ownership statements
pursuant to Section 16 of the Exchange Act; (ii) contracts pursuant to which
Company or any of its Subsidiaries licenses other persons to use the Software
(other than shrink wrap licenses) and pursuant to which other persons license
Company or any of its Subsidiaries to use the Licensed Software; (iii) contracts
(A) for the sale of any of the assets of Company or any of its Subsidiaries,
other than contracts entered into in the ordinary course of business or (B) for
the grant to any person of any preferential rights to purchase any of its
assets; (iv) contracts which restrict Company or any of its Subsidiaries from
competing in any line of business or with any person in any geographical area or
which restrict any other person from competing with Company or any of its
Subsidiaries in any line of business or in any geographical area; (v) contracts
which restrict Company or any of its Subsidiaries from disclosing any
information concerning or obtained from any other person or which restrict any
other person from disclosing any information concerning or obtained from Company
or any of its Subsidiaries; (vi) indentures, credit agreements, security
agreements, mortgages, guarantees, promissory notes and other contracts relating
to the borrowing of money; (vii) contracts with any stockholders of Company;
(viii) acquisition, merger, asset purchase or sale agreements; (ix) agreements,
arrangements, transactions or understandings with any Affiliate that would be
required to be disclosed under Item 404 of Regulation S-K under the Securities
Act; (x) contracts which contain a "change in control" or similar provision;
and (xi) all other agreements, contracts or instruments entered into outside of
the ordinary course of business or which are material to Company. Except as
specified in Section 4.1(l) of the Disclosure Schedule, all of the Material
Contracts are in full force and effect and are the legal, valid and binding
obligation of Company and/or its Subsidiaries, enforceable against them in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity); except that the representations in this
sentence are made to the knowledge of Company as to clauses 4.1(l)(ii) and (v).
Except as specified in Section 4.1(l) of the Disclosure Schedule, neither
Company nor any of its Subsidiaries is in breach or default in any material
respect under any
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Material Contract nor, to the knowledge of Company, is any other party to any
Material Contract in breach or default thereunder in any material respect;
except that the representations in this sentence are made to the knowledge of
the Company as to clauses 4.1(l)(ii) and (v).
(m) Litigation, etc. Except as disclosed in the Filed SEC Documents
---------------
or in Section 4.1(m) of the Disclosure Schedule, (i) there is no suit, claim,
action, proceeding (at law or in equity) or investigation pending or, to the
knowledge of Company, threatened against Company or any of its Subsidiaries
before any court or other Governmental Entity, and (ii) neither Company nor any
of its Subsidiaries is subject to any outstanding order, writ, judgement,
injunction, decree or arbitration order or award that, in any such case
described in clauses (i) and (ii), has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
As of the date hereof, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Company, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by this
Agreement.
(n) Compliance with Applicable Laws. All federal, state, local and
-------------------------------
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for each
of Company and its Subsidiaries to own, lease or operate its properties and
assets and to carry on its business as now conducted have been obtained or made,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or default would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. Company and its Subsidiaries are in compliance with
all applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity except where the failure to comply would not reasonably be
expected to have a Material Adverse Effect on Company, and neither Company nor
any of its Subsidiaries has received notification within the past three years of
any asserted present or past failure to so comply.
(o) Environmental Laws. Except as specified in Section 4.1(o) of the
------------------
Disclosure Schedule and as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company: (A)
neither Company nor any of its Subsidiaries has violated or is in violation of
any Environmental Law (as defined in Section 9.3); (B) none of the Owned Real
Property or Leased Real Property (including without limitation soils and surface
and ground waters) are contaminated with any Hazardous Substance (as defined in
Section 9.3) in quantities which require investigation or remediation under
Environmental Laws; (C) neither Company nor any of its Subsidiaries is liable
for any off-site contamination; (D) neither Company nor any of its Subsidiaries
has any liability or remediation obligation under any Environmental Law; (E) no
assets of Company or any of its Subsidiaries are subject to pending or
threatened Liens under any Environmental Law; (F) Company and its Subsidiaries
have all Permits required under any Environmental Law ("Environmental Permits");
and (G) Company and its Subsidiaries are in compliance with their respective
Environmental Permits.
(p) Taxes. Except as specified in Section 4.1(p) of the Disclosure
-----
Schedule:
(i) Each of Company and each Subsidiary of Company (and any
affiliated, consolidated, combined or unitary group of which Company or any
Subsidiary of Company is or was a member) has (A) timely filed all federal,
state, local and foreign Tax Returns (as hereinafter defined) required to be
filed by or for it in respect of any Taxes (as hereinafter defined) except where
failure to file would not have a Material Adverse Effect, and all such Tax
Returns filed are true, correct and complete in all material respects, (B)
liabilities for Taxes not yet due and payable as of the date of Company's most
recent financial statements included in the Filed SEC Documents that do not
exceed the reserves established on such financial statements for the payment of
such Taxes except where such excess would not have a Material Adverse Effect,
(C) complied in all material respects with the applicable laws, rules and
regulations relating to withholding and payment of all Taxes and other amounts
required to be so withheld and paid over except to the extent that a reserve for
such Taxes is reflected on the balance sheet that is part of the most recent
financial statements included in the Filed SEC Documents; and (D) timely paid
all Taxes that are currently due and payable except for those contested in good
faith and for which adequate reserves have been established in Company's most
recent financial statements included on the
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Filed SEC Documents and except where failure to pay such Taxes would not have a
Material Adverse Effect.
(ii) The Tax Returns of Company, each of its Subsidiaries and
any affiliated, consolidated, combined or unitary group that includes Company or
any of its Subsidiaries either have been examined and settled with the
appropriate Tax authority or, to the knowledge of Company, closed by virtue of
the expiration of the applicable statute of limitations for all taxable years
through and including the taxable year ending January 31, 1995, and (B) except
for alleged deficiencies which have been finally and irrevocably resolved,
neither Company nor any of its Subsidiaries have received formal (or, to the
knowledge of Company, informal) notification that any deficiency for any Taxes,
the amount of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company, has been or will be proposed,
asserted or assessed against Company or any of its Subsidiaries by any federal,
state, local or foreign taxing authority or court with respect to any period.
(iii) Neither Company nor any of its Subsidiaries has (A)
executed or entered into with the IRS or any other taxing authority any
agreement or other document that continues in force and effect beyond the
Effective Time and that extends or has the effect of extending the period for
assessments or collection of any federal, state, local or foreign Taxes, (B)
executed or entered into with the IRS or any other taxing authority any closing
agreement or other similar agreement (nor has Company or any of its Subsidiaries
received any ruling, technical advice memorandum or similar determination)
affecting the determination of Taxes required to be shown on any Tax Return not
yet filed, or (C) requested any extension of time to be granted to file after
the Effective Time any Tax Return required by applicable law to be filed by it.
(iv) Neither Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Company or any of its
Subsidiaries. None of the assets of Company or any of its Subsidiaries is
required to be treated as being owned by any other person pursuant to the "safe
harbor" leasing provisions of Section 168(f)(8) of the Internal Revenue Code of
1954 as formerly in effect.
(v) Neither Company nor any of its Subsidiaries (i) is a party
to, is bound by or has any obligation under any tax sharing agreement or similar
agreement or arrangement other than one that is solely between Company and one
or more of its Subsidiaries or (ii) has any liability for Taxes of any party
(other than Company or any of its Subsidiaries) under Treasury Regulation
Section 1.1502-6 or any similar provision of state, local or foreign law, as a
transferee or successor, by contract or otherwise.
(vi) Neither Company nor any of its Subsidiaries has agreed to
make, nor is it required to make, any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise and, to the
knowledge of Company, the IRS has not proposed any such adjustment or change in
accounting method.
(vii) Neither Company nor any of its Subsidiaries is, or has
been, a United States Real Property Holding Corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(viii) Except for the group of which Company is presently a
member, Company has never been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code, other than as a common parent
corporation, and each of Company's Subsidiaries has never been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, except where Company was the common parent of such affiliated group.
(ix) Neither Company nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted, or by reason of the
transactions contemplated in this Agreement would
C-1-18
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(x) There are no Tax Liens upon any asset or property of
Company or any of its Subsidiaries except liens for Taxes not yet due and
payable.
(xi) No power of attorney currently in force has been granted
by Company or any of its Subsidiaries concerning any Tax matter.
(xii) Neither Company nor any of its Subsidiaries has made a
disclosure on a federal income Tax Return pursuant to Section 6662 of the Code.
(xiii) No audits or other administrative proceedings or court
proceedings are presently pending or, to Company's knowledge, threatened with
regard to any Taxes or Tax Return of the Company, any of its Subsidiaries or any
affiliated, consolidated, combined or unitary group of which Company or any
Subsidiary of Company is a member (other than those being contested in good
faith and for which adequate reserves have been established) and no material
issues have been raised by any Tax authority in connection with any Tax or Tax
Return.
For purposes of this Agreement, the term " Taxes" means all taxes,
charges, fees, levies or other assessments, including, without limitation, all
income, gross receipts, excise, property, sales, use, occupation, transfer,
license, ad valorem, gains, profits, gift, estimated, social security,
unemployment, disability, premium, recapture, credit, payroll, withholding,
severance, stamp, capital stock, franchise and other taxes or similar charges of
any kind imposed by any governmental entity, including any interest and
penalties on or additions to or in respect of a failure to comply with any
requirement relating to any Tax Return; provided, however, that Taxes shall not
mean any of the above taxes or charges resulting from, attributable to, or
otherwise arising out of intercompany transactions. For purposes of this
Agreement, the term " Tax Return" means any report, return or other information
or document required to be supplied to a Tax authority or jurisdiction in
connection with Taxes, including, without limitation, combined, unitary or
consolidated returns for any group of entities. Notwithstanding any other
provision in this Section 4.1, the Company is making no representation regarding
taxes or charges resulting from, attributable to, or otherwise arising out of
intercompany transactions.
(q) Benefit Plans. Section 4.1(q) of the Disclosure Schedule sets
-------------
forth a true, correct and complete list of all the employee benefit plans (as
that phrase is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that are sponsored or maintained by
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with Company would be deemed a "single employer"
within the meaning of Code Sections 414(b), (c), or solely with respect to
matters relating to Code Section 412 or ERISA Sections 302 or 4007, Code Section
414(m) or to which Company or an ERISA Affiliate contributes, is required to
contribute, or is a party, whether written or oral, for the benefit of any
current or former employee, officer or director of Company or any of its
Subsidiaries ("Company ERISA Plans") and any other benefit or compensation plan,
program or arrangement maintained or contributed to (or to which Company has any
obligation to contribute) for the benefit of any current or former employee,
officer or director of Company or any of its Subsidiaries ("Benefits
Arrangements") (Company ERISA Plans and Benefits Arrangements shall be referred
to as "Company Plans"). Company has furnished or made available to Parent and
its representatives a true, correct and complete copy of every document pursuant
to which each Company Plan is established or operated and any amendments thereto
(including the most recent summary plan descriptions), a written description of
any Company Plan for which there is no written document, the three most recent
annual reports on Treasury Form 5500, financial statements and actuarial
valuations, if required under ERISA, with respect to each Company Plan, and the
most recent determination letter received from the IRS with respect to each
Company ERISA Plan intended to qualify under Section 401(a) of the Code. Except
as specified in Section 4.1(q) of the Disclosure Schedule:
C-1-19
(i) none of Company ERISA Plans is a "multiemployer plan" as
defined in Section 3(37) of ERISA, nor is any Company ERISA Plan a plan
described in Section 4063(a) of ERISA;
(ii) none of Company Plans provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any of its Subsidiaries for
periods extending beyond their respective dates of retirement or other
termination of service, other than (A) coverage mandated by applicable law,
including continuation of medical coverage as required by Code Section 4980B,
(B) death benefits under any Company ERISA Plan which is an employee pension
benefit plan as defined in ERISA Section 3(2) or (C) benefits the full cost of
which is borne by the current or former employee (or his beneficiary);
(iii) none of Company Plans provides for payment of a benefit,
the increase of a benefit amount, the payment of a contingent benefit or the
acceleration of the payment or vesting of a benefit determined or occasioned, in
whole or in part, by reason of the execution of this Agreement or the
consummation of the transactions contemplated by this Agreement;
(iv) neither Company nor any of its Subsidiaries has an
obligation to adopt, or is considering the adoption of, any new benefit or
compensation plan, program or arrangement or, except as required by law, the
amendment of an existing Company Plan;
(v) each Company ERISA Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS that it is so qualified and nothing has occurred since the date of the
most recent favorable determination letter that could reasonably be expected to
adversely affect the qualified status of such Company ERISA Plan;
(vi) each Company Plan has been operated and administered in
all material respects in accordance with its terms and the requirements of all
applicable law, including but not limited to ERISA and the Code, and no
"prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of
the Code has occurred with respect to any Company ERISA Plan;
(vii) neither Company nor any of its Subsidiaries or members of
their "controlled group" has incurred any direct or indirect liability under
ERISA or the Code in connection with the termination of, withdrawal from or
failure to fund, any Company ERISA Plan or other retirement plan or arrangement,
and no fact or event exists that could reasonably be expected to give rise to
any such liability;
(viii) neither Company nor any ERISA Affiliate is now, or has
been during the preceding five (5) years, the sponsor of any pension plans
subject to Title IV of ERISA;
(ix) Company is not aware of any pending, threatened or
anticipated claims by or on behalf of any Company Plan, by any employee covered
under such Company Plan, or otherwise involving any such Company Plan (other
than routine claims for benefits); and
(x) None of the Company Plans provides for benefits or other
participation therein, and Company has received no claims or demands for
participation in or benefits under any Company Plan, by any individual
classified or treated by Company as an independent contractor; provided,
however, that the failure of the representations set forth in clauses (v), (vi),
(vii), (ix) and (x) to be true and correct shall not be deemed to be a breach of
any such representation unless such failures could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
(r) Absence of Changes in Benefit Plans. Except as disclosed in the
-----------------------------------
Filed SEC Documents or in Section 4.1(r) of the Disclosure Schedule, since the
date of the most recent audited financial statements included in the Filed SEC
Documents, neither Company nor any of its Subsidiaries has adopted or agreed to
C-1-20
adopt any collective bargaining agreement or any Company Plan.
(s) Labor Matters.
-------------
(i) Except as specified in Section 4.1(s)(i) of the Disclosure
Schedule, neither Company nor any of its Subsidiaries is a party to any
employment, labor or collective bargaining agreement, and there are no
employment, labor or collective bargaining agreements which pertain to employees
of Company or any of its Subsidiaries. Company has heretofore made available to
Parent true, complete and correct copies of the agreements set forth in Section
4.1(s)(i) of the Disclosure Schedule, together with all amendments,
modifications, supplements or side letters affecting the duties, rights and
obligations of any party thereunder.
(ii) No employees of Company or any of its Subsidiaries are
represented by any labor organization and, to the knowledge of Company, no labor
organization or group of employees of Company or any of its Subsidiaries has
made a pending demand for recognition or certification. There are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority and, to the knowledge of Company, there are no
organizing activities involving Company or any of its Subsidiaries pending with
any labor organization or group of employees of Company or any of its
Subsidiaries.
(iii) Except as specified in Section 4.1(s)(iii) of the
Disclosure Schedule, there are no (A) unfair labor practice charges, grievances
or complaints pending or threatened in writing by or on behalf of any employee
or group of employees of Company or any of its Subsidiaries, or (B) complaints,
charges or claims against Company or any of its Subsidiaries pending, or
threatened in writing to be brought or filed, with any Governmental Entity or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment of any individual by Company or
any of its Subsidiaries.
(t) Brokers. No broker, investment banker, financial advisor or other
-------
person, other than BancBoston Xxxxxxxxx Xxxxxxxx Inc., the fees and expenses of
which will be paid by Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Company.
(u) Written Opinion of Financial Advisor. Company has received the
------------------------------------
written opinion of BancBoston Xxxxxxxxx Xxxxxxxx Inc., dated July 15, 1999 (a
true, correct and complete copy of which has been delivered to Parent by
Company), to the effect that, based upon and subject to the matters set forth
therein and as of the date thereof, the Offer Consideration and the Merger
Consideration to be received by the holders of Shares in the Offer and the
Merger, respectively, is fair, from a financial point of view, to such holders
and such opinion has not been withdrawn or modified.
(v) Voting Requirements. In the event that Section 253 of the DGCL is
-------------------
inapplicable and unavailable to effectuate the Merger, the affirmative vote of
the holders of a majority of the outstanding Shares entitled to vote at the
Stockholders Meeting (as defined in Section 6.1(a)) with respect to the adoption
of this Agreement is the only vote of the holders of any class or series of
Company's capital stock or other securities required in connection with the
consummation by Company of the Merger and the other transactions contemplated
hereby to be consummated by Company. The restrictions contained in Section 203
of the DGCL are not applicable to this Agreement, the Stockholder Agreements and
the transactions contemplated hereby and thereby, including the Offer, the
Merger and the acquisition of Shares pursuant to the Stockholder Agreements. No
other state takeover statute or similar statute applies or purports to apply to
the Offer, the Merger or the other transactions contemplated hereby.
(w) Company Rights Agreement. Company and its Board of Directors have
------------------------
taken all action to amend the Company Rights Agreement (the "Rights Amendment")
which may be necessary under the Company Rights Agreement so that the Offer and
the execution and delivery of this Agreement (and any
C-1-21
amendments thereto by the parties hereto) and the Stockholder Agreements, and
the consummation of the Merger and the transactions contemplated hereby and by
the Stockholder Agreements, will not cause (i) Parent or Purchaser to constitute
an "Acquiring Person" (as defined in the Company Rights Agreement), (ii) a
"Distribution Date," or "Shares Acquisition Date" (each as defined in the
Company Rights Agreement) or an event as described in clauses (a)-(c) of Section
13 of the Company Rights Agreement to occur or (iii) the Rights (as defined in
the Company Rights Agreement) to become exercisable pursuant to Section
11(a)(ii) thereof or otherwise. The Rights Amendment is sufficient to render the
Rights inoperative with respect to the acquisition of Shares by Parent,
Purchaser or their affiliates pursuant this Agreement, the Offer and/or the
Stockholder Agreements. As a result of the Rights Amendment, the Rights shall
not be exercisable upon or at any time after the acceptance for payment of
Shares pursuant to the Offer and/or the purchase of, or right to acquire, Shares
pursuant to the Stockholder Agreements. A true and correct copy of the Rights
Amendment has been delivered to Parent.
Section 4.2 Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser represent and warrant to Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
------------------------------------------
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated.
(b) Authority; Noncontravention. Parent and Purchaser have the
---------------------------
requisite corporate power and authority to enter into this Agreement. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated hereby
have been duly authorized by the Executive Committee of the Board of Directors
of Parent and the Board of Directors of Purchaser and have been duly approved by
Parent as sole stockholder of Purchaser, and no other corporate proceedings on
the part of Parent or Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Parent and Purchaser and, assuming this
Agreement constitutes a valid and binding obligation of Company, constitutes a
valid and binding obligation of each of Parent and Purchaser, enforceable
against each such party in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby and compliance with the
provisions of this Agreement will not (i) conflict with any of the provisions of
the certificate of incorporation or bylaws of Parent or Purchaser, in each case
as amended to the date of this Agreement, (ii) subject to the governmental
filings and other matters referred to in Section 4.2(c), conflict with, result
in a breach of or default (with or without notice or lapse of time, or both)
under, or give rise to a material obligation, a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which Parent or Purchaser is a party or by which Parent or
Purchaser or any of their respective assets is bound or affected, or (iii)
subject to the governmental filings and other matters referred to in Section
4.2(c), contravene any law, rule or regulation, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, in the
case of clauses (ii) and (iii) above, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(c) Consents and Approvals. No consent, approval or authorization
----------------------
of, or declaration or filing with, or notice to, any Governmental Entity which
has not been received or made is required by or with respect to Parent or
Purchaser in connection with the execution and delivery of this Agreement by
Parent or Purchaser or the consummation by Parent or Purchaser, as the case may
be, of any of the transactions contemplated hereby, except for (i) the filing of
premerger notification and report forms under the HSR Act, (ii) the filing with
the SEC of (A) the Schedule 14D-1 and (B) such reports under the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby, (iii) the filing of the certificate of merger with the
Delaware State Secretary and appropriate documents with the relevant authorities
of other states in which Company is qualified to do business, and (iv) any other
consents, approvals,
C-1-22
authorizations, filings or notices the failure to make or obtain which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
(d) Certain Information. Subject to Company's fulfillment of its
-------------------
obligations hereunder with respect thereto, the Offer Documents will contain (or
will be amended in a timely manner so as to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law and will conform
in all material respects with the requirements of the Exchange Act and any other
applicable law, and the Offer Documents will not, at the respective times they
are filed with the SEC or published, sent or given to Company's stockholders,
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; provided, however, that no representation or warranty is hereby made
by Parent or Purchaser with respect to any information supplied by Company in
writing for inclusion in, or with respect to Company information derived from
Company's public SEC filings which is included or incorporated by reference in
the Offer Documents. None of the information supplied or to be supplied by
Parent or Purchaser for inclusion or incorporation by reference in, or which may
be deemed to be incorporated by reference in, the Schedule 14D-9 or the Proxy
Statement will, at the respective times the Schedule 14D-9 and the Proxy
Statement are filed with the SEC or published, sent or given to Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect to
Parent or Purchaser, or with respect to any information supplied by Parent or
Purchaser for inclusion in the Schedule 14D-9 or the Proxy Statement, shall
occur which is required to be described in an amendment of, or a supplement to,
such document, Parent or Purchaser shall so describe the event to Company.
(e) Financing. Parent and Purchaser collectively have cash on hand
in an aggregate amount sufficient to enable Parent and Purchaser to pay in full
(i) the Offer Consideration, (ii) the Merger Consideration, and (iii) all fees
and expenses payable by Parent and Purchaser in connection with this Agreement
and the transactions contemplated hereby
ARTICLE V
CONDUCT OF BUSINESS OF COMPANY
Section 5.1 Conduct of Business of Company. Except as expressly provided
------------------------------
for herein, during the period from the date of this Agreement to the Effective
Time, Company shall, and shall cause each of its Subsidiaries to, act and carry
on its business only in the ordinary course of business consistent with past
practice and, to the extent consistent therewith, use reasonable efforts to
preserve intact its current business organizations, keep available the services
of its current key officers and employees and preserve the goodwill of those
engaged in material business relationships with Company, and to that end,
without limiting the generality of the foregoing, Company shall not, and shall
not permit any of its Subsidiaries to, without the prior consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, securities or other property) in
respect of, any of its outstanding capital stock (other than, with respect to a
Subsidiary of Company, to its corporate parent), (B) split, combine or
reclassify any of its outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its outstanding capital stock, or (C) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares;
(ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible or exchangeable
securities, other than upon the exercise of Options and Warrants outstanding on
the date of this Agreement;
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(iii) amend its certificate of incorporation, bylaws or other
comparable charter or organizational documents or amend or redeem the Company
Rights Agreement;
(iv) directly or indirectly acquire, make any investment in, or make
any capital contributions to, any person other than in the ordinary course of
business consistent with past practice;
(v) make any new capital expenditure or expenditures in excess of
$50,000 individually, or $250,000 in the aggregate, other than the specific
capital expenditures disclosed and set forth on Schedule 5.1 of Company
Disclosure Schedule;
(vi) amend or terminate any Material Contract where such amendment
or termination would have a Material Adverse Affect on Company, or waive,
release or assign any material rights or claims;
(vii) directly or indirectly sell, pledge or otherwise dispose of
or encumber any of its properties or assets that are material to its business,
except for sales, pledges or other dispositions or encumbrances in the ordinary
course of business consistent with past practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, other than indebtedness owing to or
guarantees of indebtedness owing to Company or any direct or indirect wholly
owned Subsidiary of Company or (B) make any loans or advances to any other
person, other than to Company or to any direct or indirect wholly owned
Subsidiary of Company and other than routine advances to employees consistent
with past practice, except, in the case of clause (A), for borrowings under
existing credit facilities described in the Filed SEC Documents in the ordinary
course of business consistent with past practice;
(ix) grant or agree to grant to any officer, employee or consultant
any increase in wages or bonus, severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, or establish any new
compensation or benefit plans or arrangements, or amend or agree to amend any
existing Company Plans, except as may be required under existing agreements or
by law;
(x) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits;
(xi) enter into or amend any employment, consulting, severance or
similar agreement with any individual other than consulting agreements entered
into in the ordinary course of business involving payments in the aggregate for
all such consulting agreements not in excess of $50,000 in any month and not
with a term in excess of 90 days;
(xii) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization or any agreement relating to an Acquisition
Proposal (as defined in Section 6.5(d));
(xiii) make or rescind any tax election or settle or compromise any
Tax liability of Company or of any of its Subsidiaries;
(xiv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (x) of any such
claims, liabilities or obligations in the ordinary course of business and
consistent with past practice or (y) of claims, liabilities or obligations
reflected or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of Company and its consolidated Subsidiaries;
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(xv) make any change in any method of accounting or accounting
practice or policy (including any method, practice or policy relating to Taxes),
except as required by any changes in generally accepted accounting principles or
as otherwise required by law;
(xvi) settle any action, suit, claim, investigation or proceeding
(legal, administrative or arbitrative) in an amount in excess of $50,000 (other
than the settlement of the IQ class action (Xxxxxx Xxxxxx v. IQ Software
Corporation, et al., N.D. Georgia, No. 1-97-CV3203) consistent with the terms of
the Memorandum of Understanding, dated February 5, 1999);
(xvii) permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated without notice
to Parent, except in the ordinary course of business and consistent with past
practice;
(xviii) enter into any agreement, understanding or commitment that
restrains, limits or impedes Company's ability to compete with or conduct any
business or line of business, including, but not limited to, geographic
limitations on Company's activities;
(xix) plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other program or effort
concerning the termination of employment of employees of Company or its
Subsidiaries;
(xx) accelerate the collection of any account receivable or delay
the payment of any account payable, or otherwise reduce the assets or increase
the liabilities of Company or any of its Subsidiaries otherwise than in the
ordinary course of business consistent with past practice, in any such case with
the purpose or effect of using the resulting increase in the cash flow of
Company or any of its Subsidiaries to reduce the total indebtedness of Company
and its Subsidiaries for money borrowed;
(xxi) take any action that would result in (i) any of its
representations and warranties set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions to the Offer set forth in Exhibit A not being satisfied; or
(xxii) authorize any of, or commit or agree to take any of, the
foregoing actions in respect of which it is restricted by the provisions of this
Section 5.1.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 Company Stockholders Meeting; Preparation of the Proxy
------------------------------------------------------
Statement; Short-Form Merger.
----------------------------
(a) As soon as practicable following the acceptance for payment of
and payment for Shares by Purchaser in the Offer, if required by law to
consummate the Merger, Company shall take all action necessary, in accordance
with the DGCL, the Exchange Act and other applicable law and its certificate of
incorporation and bylaws to convene and hold a special meeting of the
stockholders of Company (the "Stockholders Meeting") for the purpose of
considering and voting upon this Agreement and to solicit proxies pursuant to
the Proxy Statement) in connection therewith. The Board of Directors of Company
shall recommend that the holders of Shares vote in favor of the adoption of this
Agreement at the Stockholders Meeting and shall cause such recommendation to be
included in the Proxy Statement. At the Stockholders Meeting, Parent and
Purchaser shall cause all of the Shares owned by them to be voted in favor of
the adoption of this Agreement.
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(b) Company, if requested by Parent, shall prepare and file with the
SEC a proxy statement or information statement (together with any supplement or
amendment thereto, the "Proxy Statement") relating to the Stockholders Meeting
in accordance with the Exchange Act and the rules and regulations thereunder.
Parent, Purchaser and Company will cooperate with each other in the preparation
of the Proxy Statement. Without limiting the generality or effect of the
foregoing, Company shall use its reasonable efforts to respond to all SEC
comments with respect to the Proxy Statement and, subject to compliance with SEC
rules and regulations, to cause the Proxy Statement to be mailed to Company's
stockholders at the earliest practicable date. Each of Parent and Purchaser
shall promptly supply to Company in writing, for inclusion in the Proxy
Statement, all information concerning Parent and Purchaser required under the
Exchange Act and the rules and regulations thereunder to be included in the
Proxy Statement.
(c) Notwithstanding the foregoing clauses (a) and (b), in the event
that Purchaser or any other wholly owned Subsidiary of Parent shall acquire at
least 90% of the outstanding Shares in the Offer, the parties hereto shall, at
the request of Purchaser, take all necessary actions to cause the Merger to
become effective, as soon as practicable after the expiration of the Offer,
without a meeting of stockholders of Company, in accordance with Section 253 of
the DGCL.
(d) Parent shall: (i) cause Purchaser promptly to submit this
Agreement for adoption by its sole stockholder; (ii) cause the outstanding
shares of capital stock of Purchaser to be voted in favor of the adoption of
this Agreement; and (iii) cause to be taken all additional actions necessary for
Purchaser to adopt this Agreement.
Section 6.2 Access to Information; Confidentiality. Company shall, and
--------------------------------------
shall cause each of its Subsidiaries to, afford to Parent and its officers,
employees, counsel, financial advisors and other representatives access during
the period prior to the Effective Time to all of Company's and its Subsidiaries'
properties, books, contracts, commitments, Returns, personnel and records and,
during such period, Company shall, and shall cause each of its Subsidiaries to,
furnish as promptly as practicable to Parent such information concerning
Company's and its Subsidiaries' businesses, properties, financial condition,
operations and personnel as Parent may from time to time request. Any such
investigation by Parent shall not affect the representations or warranties of
Company contained in this Agreement. Except as required by law, Parent and
Company will hold, and will use its best efforts to cause its directors,
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any non-public information obtained from
the other in confidence to the extent required by, and in accordance with the
provisions of, the letter agreement, dated June 9, 1999 (the "Letter
Agreement"), between Parent and Company with respect to confidentiality and
other matters.
Section 6.3 Reasonable Best Efforts. On the terms and subject to the
-----------------------
conditions set forth in this Agreement, each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and do, or
cause to be done, and assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated hereby, including the satisfaction of the respective
conditions set forth in Article VII.
Section 6.4 Public Announcements. Parent and Purchaser, on the one hand,
--------------------
and Company, on the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release, SEC filing (including without limitation the Offer Documents, the
Schedule 14D-9 and the Proxy Statement) or other public statements with respect
to the transactions contemplated hereby, including the Offer and Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, by court
process or by obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.5 No Solicitation; Acquisition Proposals. (a) Company shall
--------------------------------------
not, nor shall it permit any of its Subsidiaries to, nor shall it authorize (and
shall use its best efforts not to permit) any affiliate, officer,
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director or employee of, or any investment banker, attorney or other advisor or
representative of, Company or any of its Subsidiaries to, (i) solicit or
initiate, or encourage, directly or indirectly, any inquiries relating to, or
the submission of, any Acquisition Proposal, (ii) participate in any discussions
or negotiations regarding any Acquisition Proposal, or in connection with any
Acquisition Proposal, or furnish to any Person any information or data with
respect to or access to the properties of Company or any of its Subsidiaries, or
take any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
or (iii) enter into any agreement with respect to any Acquisition Proposal or
approve or resolve to approve any Acquisition Proposal; provided, that nothing
-------- ----
contained in this Section 6.5 or any other provision hereof shall prohibit
Company or Company's Board of Directors from (i) taking and disclosing to
Company's stockholders a position with respect to a tender or exchange offer by
a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act, or (ii) making such disclosure to Company's stockholders as, in the good
faith judgment of Company's Board of Directors, after consultation with outside
counsel, is required under, or is necessary to comply with, applicable law,
provided that Company may not, except as permitted by Section 6.5(b), withdraw
-------- ----
or modify, or propose to withdraw or modify, its position with respect to the
Offer or the Merger or approve or recommend, or propose to approve or recommend
any Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal. Upon execution of this Agreement, Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, Company may furnish information concerning its
business or its Subsidiaries, properties or assets to any person or group and
may negotiate and participate in discussions and negotiations with such person
or group concerning an Acquisition Proposal, provided that such person or group
shall have entered into a confidentiality agreement, the confidentiality
provisions of which shall be no more favorable to such third party than those
provided for in the Letter Agreement, if:
(x) such Person or group has submitted a Superior Proposal; and
(y) in the opinion of Company's Board of Directors, determined
only after consulting with independent legal counsel to Company, such
action is required to discharge the Board's fiduciary duties to Company's
stockholders under applicable law and the failure to provide such
information or access or to engage in such discussions or negotiations
would cause Company's Board of Directors to violate its fiduciary duties to
Company's stockholders under applicable law.
Company will promptly (but in no case later than 24 hours) notify Parent in
writing of the existence of any proposal, discussion, negotiation or inquiry
received by Company regarding any Acquisition Proposal, and Company will
immediately communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive regarding any Acquisition Proposal
(and will promptly provide to Parent copies of any written materials received by
Company in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry or engaging in
such discussion or negotiation. Company will promptly provide to Parent any
non-public information concerning Company provided to any other person in
connection with any Acquisition Proposal which was not previously provided to
Parent. Company will keep Parent informed of the status and details of any such
Acquisition Proposal and of any amendments or proposed amendments to any
Acquisition Proposal and of the status of any discussions or negotiations
relating to any Acquisition Proposal and will promptly (but in no case later
than 24 hours) notify Parent of any determination by Company's Board of
Directors that a Superior Proposal has been made.
(b) Except as set forth in this Section 6.5(b), neither the Board of
Directors of Company nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation by the Board of Directors of Company of the Offer,
this Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, subject to
compliance with the provisions of this Section 6.5, prior to the time of
acceptance for payment of Shares pursuant to the Offer, Company's Board of
Directors may withdraw or modify its approval
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or recommendation of the Offer, this Agreement or the Merger, approve or
recommend a Superior Proposal, or enter into an agreement with respect to a
Superior Proposal, in each case at any time after the third business day
following Parent's receipt of written notice (including by facsimile) from
Company advising Parent that the Board of Directors of Company has received a
Superior Proposal which it intends to accept, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal.
(c) Nothing in this Section 6.5, and no action taken by the Board of
Directors of Company pursuant to this Section 6.5, will (i) permit Company to
enter into any agreement providing for any transaction contemplated by an
Acquisition Proposal for as long as this Agreement remains in effect or (ii)
affect in any manner any other obligation of Company under this Agreement.
(d) For purposes of this Agreement, "Acquisition Proposal" means any
bona fide offer, proposal or other indication of interest regarding any of the
following (other than the transactions provided for in this Agreement involving
Company): (i) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction involving the Company or any
of its Subsidiaries; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or a significant portion of the assets of Company
and its Subsidiaries, taken as a whole, in a single transaction or series of
related transactions; (iii) any purchase or tender offer or exchange offer for
15% percent or more of the outstanding shares of capital stock of Company or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing. For
purposes of this Agreement, "Superior Proposal" means an unsolicited Acquisition
Proposal on terms which the Board of Directors of Company determines in good
faith to be more favorable to Company's stockholders than the Offer and the
Merger (based on advice of Company's independent financial advisor that the
value of the consideration provided for in such proposal is superior to the
value of the consideration provided for in the Offer and the Merger), for which
financing, to the extent required, is then committed or which, in the good faith
reasonable judgment of the Board of Directors of Company, based on advice from
Company's independent financial advisor, is reasonably capable of being financed
by such third party and which, in the good faith reasonable judgment of the
Board of Directors of Company, is reasonably likely to be consummated within a
period of time not materially longer in duration than the period of time
reasonably believed to be necessary to consummate the Offer and the Merger.
Section 6.6 Consents, Approvals and Filings. Upon the terms and subject
-------------------------------
to the conditions hereof, each of the parties hereto shall (a) make promptly its
respective filings, and thereafter make any other required submissions, under
the HSR Act and the Exchange Act, with respect to the Offer, the Merger and the
other transactions contemplated hereby and (b) use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Offer, the Merger and the other
transactions contemplated hereby, including without limitation using its
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with Company and its Subsidiaries as are necessary for the
consummation of the Offer, the Merger and the other transactions contemplated
hereby and to fulfill the conditions to the Offer and the Merger; provided,
however, that in no event shall Parent or any of its Subsidiaries be required to
agree or commit to divest, hold separate, offer for sale, abandon, limit its
operation of or take similar action with respect to any assets (tangible or
intangible) or any business interest of it or any of its Subsidiaries (including
without limitation the Surviving Corporation after consummation of the Offer or
the Merger) in connection with or as a condition to receiving the consent or
approval of any Governmental Entity (including without limitation under the HSR
Act). In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such action.
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Section 6.7 Employee Benefit Matters.
------------------------
(a) From and after the Effective Time, Parent shall, and shall cause
its Subsidiaries (including the Surviving Corporation) to, honor and provide for
payment of all accrued obligations and benefits under all Company Plans and
employment or severance agreements disclosed in the Disclosure Schedule between
Company and persons who are or had been employees of Company or any of its
Subsidiaries at or prior to the Effective Time ("Covered Employees"), all in
accordance with their respective terms.
(b) From and after the Effective Time, Parent shall, and shall cause
its Subsidiaries (including the Surviving Corporation) to, provide Covered
Employees who remain in the employ of Company or any such Subsidiary of Company
employee benefits that are reasonably comparable in the aggregate to the
employee benefits provided to similarly situated employees of Parent or any such
Subsidiary who are not Covered Employees. To the extent that Covered Employees
are included in any benefit plan of Parent or its Subsidiaries, Parent agrees
that the Covered Employees shall receive credit under such plan (other than any
such plan providing for sabbaticals) for service prior to the Effective Time
with Company and its Subsidiaries to the same extent such service was counted
under similar Company Plans for purposes of eligibility, vesting, eligibility
for retirement (but not for benefit accrual) and, with respect to vacation,
disability and severance, benefit accrual. To the extent that Covered Employees
are included in any medical, dental or health plan other than the plan or plans
they participated in at the Effective Time, Parent agrees that any such plans
shall not include pre-existing condition exclusions, except to the extent such
exclusions were applicable under the similar Company Plan at the Effective Time,
and shall provide credit for any deductibles and co-payments applied or made
with respect to each Covered Employee in the calendar year of the change.
(c) Notwithstanding anything in this Agreement to the contrary, from
and after the Effective Time, the Surviving Corporation will have sole
discretion over the hiring, promotion, retention, firing and other terms and
conditions of the employment of employees of the Surviving Corporation. Except
as otherwise provided in this Section 6.7, nothing herein shall prevent Parent
or the Surviving Corporation from amending or terminating any Company Plan in
accordance with its terms.
Section 6.8 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) For a period of six years after the Effective Time, the
provisions with respect to indemnification set forth in the certificate of
incorporation and bylaws of Purchaser as in effect on the date of this Agreement
(true, correct and complete copies of which have been provided to Company) shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of Company in respect of actions
or omissions occurring at or prior to the Effective Time (including without
limitation the transactions contemplated by this Agreement), unless such
modification is required by law.
(b) Notwithstanding Section 6.8(a) above, from and after the
Effective Time, Parent shall, or shall cause the Surviving Corporation to,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of Company (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including reasonable attorneys' fees and
expenses), liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be unreasonably
withheld) incurred in connection with any threatened or actual action, suit or
proceeding based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director or officer of Company
("Indemnified Liabilities"), including all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, this Agreement or
the transactions contemplated hereby, in each case, to the full extent that a
corporation is permitted under the DGCL to indemnify its own directors or
officers, as the case may be. In the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Party, the
indemnifying party shall assume and direct all aspects of the defense thereof,
including settlement, and the Indemnified Party shall cooperate in the
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vigorous defense of any such matter. The Indemnified Party shall have a right to
participate in (but not control) the defense of any such matter with its own
counsel and at its own expense. The indemnifying party shall not settle any such
matter unless (i) the Indemnified Party gives prior written consent, which shall
not be unreasonably withheld, or (ii) the terms of the settlement provide that
the Indemnified Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Indemnified
Party and the settlement discharges all rights against Indemnified Party with
respect to such matter. In no event shall the indemnifying party be liable for
any settlement effected without its prior written consent. Any Indemnified Party
wishing to claim indemnification under this Section 6.8(b), upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly notify
Parent and the Surviving Corporation (but the failure so to notify shall not
relieve the indemnifying party from any liability which it may have under this
Section 6.8(b) except to the extent such failure prejudices such indemnifying
party), and shall deliver to Parent and the Surviving Corporation the
undertaking contemplated by Section 145(e) of the DGCL. The Indemnified Parties
as a group will be represented by a single law firm with respect to each such
matter unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties. The rights to indemnification under this Section 6.8(b)
shall continue in full force and effect for a period of six years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any Indemnified Liabilities asserted or made within such period shall
continue until the disposition of such Indemnified Liabilities.
(c) For a period of two years after the Effective Time Parent shall
cause to be maintained in effect policies of directors' and officers' liability
insurance, for the benefit of those persons who are covered by Company's
directors' and officers' liability insurance policies at the Effective Time,
providing coverage with respect to matters occurring prior to the Effective Time
that is at least equal to the coverage provided under Company's current
directors' and officers' liability insurance policies, to the extent that such
liability insurance can be maintained at an annual cost to Parent not greater
than 150 percent of the premium for the current Company directors' and officers'
liability insurance; provided that if such insurance cannot be so maintained at
such cost, Parent shall maintain as much of such insurance as can be so
maintained at a cost equal to 150 percent of the current annual premiums of
Company for such insurance.
Section 6.9 Board Action Relating to Stock Option Plans, Warrants and
---------------------------------------------------------
ESPP.
----
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of Company (or, if appropriate, any committee administering a
Stock Option Plan) shall adopt such resolutions and take such actions as may be
required to cause each outstanding Option to be automatically converted, at the
Effective Time, into a Substitute Option in accordance with Section 3.2 and
shall make such other changes to the Stock Option Plans as it deems appropriate
to give effect to the Merger (subject to the approval of Parent, which shall not
be unreasonably withheld).
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of Company (or, if appropriate, any committee administering
any Warrants) shall adopt such resolutions and take such actions as may be
required to cause each holder of an outstanding Warrant to be automatically
entitled to receive an amount in cash equal to the product of (i) the excess, if
any, of the Offer Consideration over the per share exercise price of such
Warrant and (ii) the number of shares subject to such Warrant.
(c) Company and Parent agree that the "offering period" and
"accumulation period" under the ESPP each shall terminate not later than five
business days prior to the Effective Time, and Company agrees to cause any
appropriate notices to be given to participants under the ESPP. No further
"offering period" or "accumulation period" under the ESPP shall be created. In
addition, the Board shall cause the ESPP to be terminated as of the Effective
Time.
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Section 6.10 Certain Agreements. Company agrees to use its best efforts
------------------
to enforce any "standstill" provisions or similar restrictions on Acquisition
Proposals by any third party and so long as this Agreement is in effect shall
not amend or waive any such "standstill" provision.
ARTICLE VII
CONDITIONS PRECEDENT
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 or written waiver on or prior to the Closing Date of the
following conditions:
(a) Completion of the Offer. Purchaser shall have accepted for
-----------------------
payment and paid for all Shares validly tendered in the Offer and not withdrawn;
provided, however, that neither Parent nor Purchaser may invoke this condition
if Purchaser shall have failed to purchase Shares so tendered and not withdrawn
in violation of the terms of this Agreement or the Offer.
(b) Stockholder Approval. This Agreement shall have been adopted by
--------------------
the affirmative vote of the holders of the requisite number of shares of capital
stock of Company if such vote is required pursuant to Company's certificate of
incorporation, the DGCL or other applicable law.
(c) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, the party so invoking this condition shall have
complied with its obligations under Section 6.3 and Section 6.6 and the parties
hereto shall have used commercially reasonable efforts to lift or remove such
order, injunction, restraint or prohibition.
(d) HSR Act. All necessary waiting periods under the HSR Act
-------
applicable to the Merger shall have expired or been earlier terminated.
Section 7.2 Conditions to Parent's or Purchaser's Obligation to Effect the
--------------------------------------------------------------
Merger. The obligation of Parent and/or Purchaser to effect the Merger shall
------
be subject to the satisfaction or written waiver on or prior to the Closing Date
of the following condition: No outstanding Option shall entitle the holder
thereof, at the Effective Time or thereafter, to purchase any capital stock of
Company
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of Company:
(a) By the mutual written consent of Parent and Company; provided,
--------
however, that if Parent shall have a majority of the directors pursuant to
-------
Section 1.4, such consent of Company may only be given if approved by the
Continuing Directors.
(b) By either Parent or Company if (i) a statute, rule or executive
order shall have been enacted, entered or promulgated prohibiting the
transactions contemplated hereby on the terms contemplated by this Agreement or
(ii) any Governmental Entity shall have issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action the parties
hereto shall use their reasonable best efforts to lift),
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in each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree, ruling or other action
shall have become final and non-appealable.
(c) By either Parent or Company if the Offer shall not have been
consummated on or before October 31, 1999; provided, however, that the party
-------- -------
seeking to terminate this Agreement pursuant to this Section 8.1(c) shall not
have breached in any material respect its obligations under this Agreement.
(d) by Company:
(i) if Company has entered into an agreement with respect to a
Superior Proposal or has approved or recommended a Superior Proposal in
accordance with Section 6.5(b), provided Company has complied with all
provisions of Section 6.5, including the notice provisions therein, and that it
simultaneously terminates this Agreement and makes simultaneous payment to the
Parent of the Termination Fee and the Expenses (as such terms are defined in
Section 9.2); or
(ii) if Parent or Purchaser shall have terminated the Offer or
the Offer expires without Parent or Purchaser, as the case may be, purchasing
any Shares pursuant thereto; provided that Company may not terminate this
Agreement pursuant to this Section 8.1(d)(ii) if Company is in material breach
of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following the
date of the initial public announcement of the Offer; provided, that Company may
not terminate this Agreement pursuant to this Section 8.1(d)(iii) if Company is
in material breach of this Agreement; or
(iv) if there shall be a material breach by either Parent or
Purchaser of any of their representations, warranties covenants or agreements
contained in this Agreement, except where such breach does not have a material
adverse effect on the ability of Parent or Purchaser to consummate the Offer or
the Merger.
(e) By Parent or Purchaser:
(i) (A) if prior to the purchase of the shares pursuant to the
Offer, the Board of Directors of Company shall have withdrawn, or modified or
changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
recommended or approved, or taken a neutral position with respect to, an
Acquisition Proposal or upon request of Parent, shall fail to reaffirm its
approval and recommendation of the Offer, the Merger Agreement, or the Merger;
or
(B) if there shall have been a material breach by the
Company of any provision of Section 6.5; or
(ii) if Parent or Purchaser shall have terminated the Offer
without Parent or Purchaser purchasing any Shares thereunder due to a failure to
satisfy any of the conditions set forth on Exhibit A, provided that Parent or
--------
Purchaser may not terminate this Agreement pursuant to this Section 8.1(e)(ii)
if Parent or Purchaser is in material breach of this Agreement; or
(iii) if there shall be a material breach by Company of any of
its representations, warranties, covenants or agreements contained in this
Agreement.
Section 8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Company or Parent or Purchaser as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Purchaser or Company, other than
the provisions of Section 4.1 (t), Section 6.2, Section 6.4, this Section 8.2
and Article IX and except to the extent that such
C-1-32
termination results from the material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this Agreement
ARTICLE IX
GENERAL PROVISIONS
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. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 Fees and Expenses. (a) Except as provided in Section 9.2(b)
-----------------
below, all fees and expenses incurred in connection with the Offer, the Merger,
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) If (x) Parent or Purchaser terminates this Agreement
pursuant to Section 8.1(e)(i), or (y) Company terminates this Agreement pursuant
to Section 8.1(d)(i), then in each case, Company shall pay, or cause to be paid
to Parent, at the time of termination, an amount equal to $6,500,000 (the
"Termination Fee") and an amount equal to Parent's and Purchaser's actual and
reasonably documented out-of-pocket expenses incurred by Parent or Purchaser in
connection with the Offer, the Merger, this Agreement and the consummation of
the transactions contemplated hereby in an amount not to exceed $850,000 (the
"Expenses"). In addition, if this Agreement is terminated by Parent pursuant to
Section 8.1(e)(iii) and if Company shall within ninety (90) days after such
termination enter into an agreement with respect to an Acquisition Proposal,
Company shall pay to Parent the Termination Fee and Expenses concurrent with
entering into any such agreement. Any payments required to be made pursuant to
this Section 9.2 shall be made by wire transfer of same day funds to an account
designated by Parent.
Section 9.3 Definitions. For purposes of this Agreement:
-----------
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "business day" means any day other than Saturday, Sunday or any
other day on which banks in the City of New York are required or permitted to
close;
(c) "Disclosure Schedule" means the disclosure schedule delivered by
Company to Parent and Purchaser simultaneously with the execution of this
Agreement;
(d) "Environmental Laws" means any federal, state or local law
relating to: (i) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (iii) otherwise relating to
pollution of the environment or the protection of human health;
(e) "Hazardous Substances" means: (i) those substances defined in or
regulated under the following federal statutes and their state counterparts, as
each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products including crude oil and any fractions thereof;
(iii)
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natural gas, synthetic gas and any mixtures thereof; (iv) radon; (v) any other
contaminant; and (vi) any substance with respect to which any Governmental
Entity requires environmental investigation, monitoring, reporting or
remediation;
(f) "knowledge" means the actual knowledge of any executive officer of
Company or Parent, as the case may be, after making due inquiry under the
circumstances;
(g) "Liens" means, collectively, all pledges, claims, liens, charges,
mortgages, conditional sale or title retention agreements, hypothecations,
collateral assignments, security interests, easements and other encumbrances of
any kind or nature whatsoever;
(h) a "Material Adverse Effect" with respect to any person means any
event, change, occurrence, effect, fact or circumstance having, or which would
reasonably be expected to have, a material adverse effect on (i) the ability of
such person to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby or (ii) the condition (financial or otherwise),
assets, liabilities (actual or contingent), properties, results of operations,
cash flows, value or business of such person and its Subsidiaries taken as a
whole;
(i) the "NYSE" means the New York Stock Exchange;
(j) a "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(k) "Principal Stockholders" means Norwest Equity Partners, Xxxxxx
Xxxx Ventures, LLP and St. Xxxx Venture Capital, Inc., Company's directors and
certain of the Company's executive officers;
(l) a "Subsidiary" of any person means any other person of which (i)
the first mentioned person or any Subsidiary thereof is a general partner, (ii)
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such other person is held by the first
mentioned person and/or by any one or more of its Subsidiaries, or (iii) at
least 50% of the equity interests of such other person is, directly or
indirectly, owned or controlled by such first mentioned person and/or by any one
or more of its Subsidiaries.
Section 9.4 Amendment and Modification. Subject to applicable law, this
---------------------------
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of Company contemplated
hereby, by written agreement of the parties hereto (which in the case of Company
shall include approvals as contemplated in Section 1.4(c)), at any time prior to
the Closing Date with respect to any of the terms contained herein; provided,
--------
however, that after the approval of this Agreement by the stockholders of
-------
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration or otherwise adversely affect the
rights of stockholders.
Section 9.5 Extension; Waiver. At any time prior to the Effective Time,
-----------------
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c)
subject to Section 9.4, waive compliance with any of the agreements or
conditions of the other parties contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in a written instrument executed and delivered by a duly authorized
officer 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 such rights.
Section 9.6 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier
C-1-34
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to Parent or to Purchaser, to
Sterling Software, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxx X. XxXxxxxxx, Xx.
SVP, General Counsel & Secretary
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(ii) if to Company, to
Information Advantage, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx
President and CEO
Telecopy: (000)000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx and Xxxxxx, P.A.
2400 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000)000-0000
and
Gunderson, Dettmer, Stough, Villeneuve, Franklin
and Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Section 9.7 Interpretation. When a reference is made in this Agreement
--------------
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning
C-1-35
or interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
Section 9.8 Entire Agreement; Third-Party Beneficiaries. This Agreement
-------------------------------------------
constitutes the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (except for the Letter Agreement referenced in
the last sentence of Section 6.2). Other than the provisions of Section 6.8,
this Agreement is not intended to confer upon any person (including without
limitation any employees or former employees of Company), other than the parties
hereto, any rights or remedies.
Section 9.9 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.10 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment without
such prior written consent shall be null and void, except that Parent and/or
Purchaser may assign this Agreement to any direct or indirect wholly owned
Subsidiary of Parent without the prior consent of Company; provided that Parent
and/or Purchaser, as the case may be, shall remain liable for all of its
obligations under this Agreement. 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 9.11 Enforcement. 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. Accordingly, 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 the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the personal jurisdiction
of the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware) in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (iii) shall not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than the Court of Chancery in and for New Castle
County in the State of Delaware (or, if such court lacks subject matter
jurisdiction, any appropriate state or federal court in New Castle County in the
State of Delaware).
Section 9.12 Severability. Whenever possible, each provision or portion
------------
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 9.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
STERLING SOFTWARE, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President and CEO
STERLING SOFTWARE ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President
INFORMATION ADVANTAGE, INC.
By: /s/ Xxxxx Xxxx
-----------------------------
Name: Xxxxx Xxxx
Title: President and CEO
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EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement and Plan of Merger (the "Agreement") of which this
Exhibit A is a part. Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may amend the Offer consistent with
the terms of the Agreement or terminate the Offer and not accept for payment any
tendered Shares, if (i) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares which, when
added to the Shares, if any, beneficially owned by Parent or Purchaser, would
constitute at least a majority of the Shares outstanding on a fully diluted
basis on the date of purchase ("on a fully-diluted basis" meaning, as of any
date, the number of Shares outstanding, together with the Shares which Company
may be required to issue pursuant to warrants, options or obligations
outstanding at that date under employee stock or similar benefit plans or
otherwise whether or not vested or then exercisable) (the "Minimum Condition"),
(ii) any applicable waiting period under the HSR Act has not expired or been
terminated, or (iii) at any time on or after the date of the Merger Agreement
and prior to the Expiration Date, any of the following events shall occur or
shall be determined by Parent or Purchaser to have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding (i) seeking to prohibit or impose any material limitations on
Parent's or Purchaser's ownership or operation (or that of any of their
respective Subsidiaries or affiliates) of all or a material portion of their or
Company's businesses or assets, (ii) seeking to compel Parent or Purchaser or
their respective Subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of Company or Parent and their
respective Subsidiaries, in each case taken as a whole, (iii) challenging the
acquisition by Parent or Purchaser of any Shares pursuant to the Offer, (iv)
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the transactions contemplated by the
Agreement, (v) seeking to obtain from Company any damages (including damages
against Company's directors or officers for which they may seek indemnification
from Company) that would be reasonably likely to have a Material Adverse Effect
on Company, (vi) seeking to impose material limitations on the ability of
Purchaser, or rendering Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer and the Merger, (vii)
seeking to impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by Purchaser or
Parent on all matters properly presented to Company's stockholders, or (viii)
which otherwise is reasonably likely to have a Material Adverse Effect on
Company or, as a result of the transactions contemplated by the Merger
Agreement, Parent and its Subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through
(viii) of paragraph (a) above; or
(c) the representations and warranties of Company set forth in the
Agreement which are not qualified by "materiality" or "Material Adverse Effect"
shall not be true and accurate in all material respects, and the representations
and warranties that are qualified by "materiality" or "Material Adverse Effect"
shall not be true and accurate in all respects, in each case as of the date of
consummation of the Offer as though made on or as of such date (except for those
representations and warranties that address matters only as of a particular date
or only with respect to a specific period of time which need only be true and
accurate as of such date or with respect to such period) or Company shall have
breached or failed to perform or comply in any material respect
with any material obligation, agreement or covenant required by the Agreement to
be performed or complied with by it; or
(d) there shall have occurred any event, change, occurrence, effect
or circumstance which has had individually or in the aggregate, a Material
Adverse Effect on Company other than a Material Adverse Effect resulting
principally from the announcement of the Offer or the Merger; provided, however,
that if the Company's software license revenue (recognized by the Company in
accordance with generally accepted accounting principles, consistently applied)
for the fiscal quarter ending July 31, 1999 ("Current License Revenue") is
greater than the software license revenue publicly reported by the Company for
the quarter ended April 30, 1999, then such Current License Revenue shall not be
taken into account in determining whether there is or could be a Material
Adverse Effect; or
(e) Company's Board of Directors (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, (ii) shall have recommended or remained neutral with
respect to an Acquisition Proposal, (iii) shall have adopted any resolution to
effect any of the foregoing, or (iv) upon request of Parent, shall fail to
reaffirm its approval or recommendation of the Offer, the Merger Agreement, or
the Merger; or
(f) the Merger Agreement shall have been terminated in accordance
with its terms; or
(g) the Principal Stockholders shall have failed to comply with their
obligations under the Stockholder Agreements;
which in the sole good faith judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by Parent
or Purchaser) giving rise to such condition makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may (except for the Minimum Condition) be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent or Purchaser. The failure by Parent or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
