Exhibit 2.1
AGREEMENT AND PLAN OF MERGER, DATED AS OF FEBRUARY 14, 2000,
AMONG COMPUTER ASSOCIATES INTERNATIONAL, INC., A DELAWARE
CORPORATION ("PARENT"), SILVERSMITH ACQUISITION CORP.,
A DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF
PARENT ("MERGER SUBSIDIARY"), AND STERLING SOFTWARE, INC.,
A DELAWARE CORPORATION (THE "COMPANY").
INTRODUCTION
The Board of Directors of each of Parent, Merger Subsidiary and
the Company have unanimously approved the acquisition of the Company by
Parent and Merger Subsidiary.
In furtherance of such acquisition, it is proposed that Merger
Subsidiary shall make an exchange offer (the "Offer") to exchange shares of
common stock, par value $.10 per share ("Parent Common Stock"), of Parent
for all of the issued and outstanding shares of common stock, par value
$.10 per share (the "Company Common Stock"), of the Company (the "Shares"),
including the associated Rights (defined in Section 4.1(c)), in accordance
with the terms provided in this Agreement.
The parties to this Agreement intend that, to the extent that
the Offer and the Merger qualify as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations promulgated thereunder, this
Agreement constitutes a plan of reorganization.
Simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent
and Merger Subsidiary to enter into this Agreement, Parent and certain
stockholders of the Company (collectively, the "Stockholders") are entering
into an agreement (the "Tender Agreement") pursuant to which the
Stockholders will agree to tender for exchange all of their Shares in the
Offer, to vote to adopt and approve this Agreement and to take certain
other actions in furtherance of the transactions contemplated by this
Agreement upon the terms and subject to the conditions set forth in the
Tender Agreement.
Parent, Merger Subsidiary and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the Offer and the other transactions contemplated by this Agreement
and also to prescribe various conditions to the Offer and the other
transactions contemplated by this Agreement.
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Provided that (i) this Agreement
shall not have been terminated in accordance with Section 9.1 and (ii) none
of the events set forth in Annex I hereto shall have occurred or be
existing, Merger Subsidiary shall, as promptly as practicable after the
date hereof, commence the Offer. Each Share (including the associated
Right) accepted by Merger Subsidiary in accordance with the Offer shall be
exchanged for the right to receive from Merger Subsidiary that number of
fully paid and nonassessable shares of Parent Common Stock equal to the
Exchange Ratio. For purposes of this Agreement, "Exchange Ratio" shall mean
0.5634; provided that if the Average Parent Trading Price (x) is less than
$63.10, then, unless Parent makes the Cash Election (defined below), the
Exchange Ratio shall equal the quotient of (A) $35.55 divided by (B) the
Average Parent Trading Price, or (y) is greater than $77.12, then the
Exchange Ratio shall equal the quotient of (A) $43.45 divided by (B) the
Average Parent Trading Price, calculated in each case to the nearest ten
thousandth (i.e., four decimal places (.xxxx)). If the Average Parent
Trading Price is less than $63.10, Parent (in its sole discretion by giving
the Company notice thereof by no later than the close of business on the
business day immediately succeeding the day on which the Average Parent
Trading Price is determined) may elect (the "Cash Election") to reduce the
Exchange Ratio that would otherwise be in effect by paying in cash (such
amount of cash per Share, the "Cash Election Amount") all or any portion of
the excess of (x) $35.55 over (y) the product of (A) 0.5634 and (B) the
Average Parent Trading Price. If Parent makes the Cash Election, the
Exchange Ratio shall be adjusted to equal the quotient of (x) the excess of
(A) $35.55 over (B) the Cash Election Amount divided by (y) the Average
Parent Trading Price. As used in this Agreement, the term "Average Parent
Trading Price" shall mean the ten trading day average of the daily average
of the high and low sales price per share of Parent Common Stock on the New
York Stock Exchange, Inc. (the "NYSE") composite tape (as reported in The
Wall Street Journal, or, if not reported therein, any other authoritative
source) ending on the trading day immediately preceding the day on which
the later to occur of (x) the waiting period under the HSR Act (defined
below in Section 4.1(d)) and any other applicable Antitrust Laws (defined
below in Section 7.2(b)) the expiration or termination of which is a
condition to the Offer applicable to the Offer expires or terminates and
(y) the Form S-4 (defined below in Section 1.1(b)) becomes effective under
the Securities Act (defined below in Section 4.1(e)). The initial
expiration date of the Offer shall be the twentieth business day following
commencement of the Offer. The Offer shall be subject to the condition that
there shall be validly tendered in accordance with the terms of the Offer
prior to the expiration date of the Offer and not withdrawn a number of
Shares which, together with the Shares then owned by Parent and Merger
Subsidiary, represents at least a majority of the total number of
outstanding Shares, assuming the exercise of all outstanding options,
rights and convertible securities (if any) and the issuance of all Shares
that the Company is obligated to issue (such total number of outstanding
Shares being hereinafter referred to as the "Fully Diluted Shares") (the
"Minimum Condition") and to the other conditions set forth in Annex I
hereto. Parent and Merger Subsidiary expressly reserve the right to waive
the conditions to the Offer and to make any change in the terms or
conditions of the Offer; provided that, without the written consent of the
Company, no change may be made which changes the form or amount of
consideration to be paid (other than in connection with the Cash Election
described above or by adding consideration), imposes conditions to the
Offer in addition to those set forth in Annex I, changes or waives the
Minimum Condition, extends the Offer (except as set forth in the following
two sentences), or makes any other change to any condition to the Offer set
forth in Annex I which is adverse to the holders of Shares. Subject to the
terms of the Offer and this Agreement and the satisfaction (or waiver to
the extent permitted by this Agreement) of the conditions to the Offer,
Merger Subsidiary shall accept for payment all Shares validly tendered and
not withdrawn pursuant to the Offer as soon as practicable after the
applicable expiration date of the Offer and shall pay for all such Shares
promptly after acceptance; provided that (x) Merger Subsidiary may (or, if
the conditions set forth in clause (1), (2), (3) or (4), or subclause (a),
(b), (c) or (d) of clause (5), of Annex I exist, shall) extend the Offer
for extension periods not in excess of 15 business days if, at the
scheduled expiration date of the Offer or any extension thereof, any of the
conditions to the Offer shall not have been satisfied, until such time as
such conditions are satisfied or waived (provided that, if at any scheduled
expiration date, all of the conditions to the Offer have been satisfied or
waived other than the Minimum Condition, Merger Subsidiary shall only be
required to extend the Offer for an additional 20 business days following
such scheduled expiration date; provided further that Merger Subsidiary
shall not be required to extend the Offer if there is no reasonable
possibility of all of the conditions to the Offer being satisfied on or
before September 30, 2000), and (y) Merger Subsidiary may extend the Offer
if and to the extent required by the applicable rules and regulations of
the Securities and Exchange Commission (the "SEC"). In addition, Merger
Subsidiary may extend the Offer after the acceptance of Shares thereunder
for a further period of time by means of a subsequent offering period under
Rule 14d-11 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of not more than 20 business days to meet the
objective (which is not a condition to the Offer) that there be validly
tendered, in accordance with the terms of the Offer, prior to the
expiration date of the Offer (as so extended) and not withdrawn a number of
Shares, which together with Shares then owned by Parent and Merger
Subsidiary, represents at least 90% of the Fully Diluted Shares.
Notwithstanding anything to the contrary set forth herein, no certificates
or scrip representing fractional shares of Parent Common Stock shall be
issued in connection with the exchange of Parent Common Stock for Shares
upon consummation of the Offer, and in lieu thereof each tendering
stockholder who would otherwise be entitled to a fractional share of Parent
Common Stock in the Offer will be paid an amount in cash equal to the
product obtained by multiplying (A) the fractional share interest such
holder (after taking into account all shares of Company Common Stock held
at the Effective Time by such holder) would otherwise be entitled by (B)
the closing price for a share of Parent Common Stock as reported on the
NYSE Composite Transaction Tape (as reported in the Wall Street Journal,
or, if not reported thereby, any other authoritative source) on the date
Merger Subsidiary accepts Shares for exchange in the Offer.
(b) As soon as practicable after the date of this Agreement,
Parent shall prepare and file with the SEC a registration statement on Form
S-4 to register the offer and sale of Parent Common Stock pursuant to the
Offer (the "Form S-4"). The Form S-4 will include a preliminary prospectus
containing the information required under Rule 14d-4(b) promulgated under
the Exchange Act (the "Preliminary Prospectus"). As soon as practicable on
the date of commencement of the Offer, Parent and Merger Subsidiary shall
(i) file with the SEC a Tender Offer Statement on Schedule TO with respect
to the Offer which will contain or incorporate by reference all or part of
the Preliminary Prospectus and form of the related letter of transmittal
(together with any supplements or amendments thereto, collectively the
"Offer Documents") and (ii) cause the Offer Documents to be disseminated to
holders of Shares. Parent, Merger Subsidiary and the Company each agree
promptly to correct any information provided by it for use in the Form S-4
or the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect. Parent and Merger Subsidiary agree
to take all steps necessary to cause the Offer Documents as so corrected to
be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule TO, the Form S-4 and the Offer Documents
prior to its being filed with the SEC.
SECTION 1.2. Company Action. (a) The Company hereby consents to
the Offer and represents that its Board of Directors, at a meeting duly
called and held, has unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger
(defined below in Section 2.1), are advisable and are fair to and in the
best interest of the Company's stockholders, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer and the
Merger, and the Tender Agreement and the transactions contemplated thereby,
which approval constitutes approval under Section 203 of the General
Corporation Law of the State of Delaware (the "Delaware Law") such that the
Offer, the Merger, this Agreement and the Tender Agreement and the other
transactions contemplated hereby and thereby are not and shall not be
subject to any restriction of Section 203 of Delaware Law, and (iii)
resolved to recommend acceptance of the Offer and approval and adoption of
this Agreement and the Merger by the Company's stockholders (the
recommendations referred to in this clause (iii) are collectively referred
to in this Agreement as the "Recommendations"). The Company further
represents that Xxxxxxx Xxxxx & Co. ("Xxxxxxx Sachs") has rendered to the
Company's Board of Directors its opinion that the consideration to be
received by the Company's stockholders pursuant to this Agreement is fair
to such stockholders from a financial point of view. The Company has been
advised that all of its directors and executive officers presently intend
to tender their Shares pursuant to the Offer. The Company will promptly
furnish Parent and Merger Subsidiary pursuant to the terms of their
Confidentiality Agreements with a list of its stockholders, mailing labels
and any available listing or computer file containing the names and
addresses of all record holders of Shares and lists of securities positions
of Shares held in stock depositories, in each case as of the most recent
practicable date, and will provide to Parent and Merger Subsidiary such
additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such
other assistance as Parent or Merger Subsidiary may reasonably request in
connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced, the Company will file with the SEC and disseminate to holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") which shall reflect the Recommendations; provided that
the Board of Directors of the Company may withdraw, modify or change such
Recommendations if but only if (i) it believes in good faith, based on such
matters as it deems relevant, including the advice of the Company's
financial advisors, that a Superior Proposal (defined in Section 5.5(b)
hereof) has been made and (ii) it has determined in good faith, after
consultation with outside legal counsel that the withdrawal, modification
or change of such Recommendation is, in the good faith judgment of the
Board of Directors, required by the Board to comply with its fiduciary
duties imposed by Delaware Law. The Company, Parent and Merger Subsidiary
each agree promptly to correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect. The Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its
counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 prior to its being filed with the SEC.
SECTION 1.3. Directors. (a) Effective upon the acceptance for
payment by Merger Subsidiary of a majority of the Shares pursuant to the
Offer (the "Appointment Time"), Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company's
Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors (giving effect to the
election of any additional directors pursuant to this Section) and (ii) the
percentage that the number of Shares owned by Parent or Merger Subsidiary
(including Shares accepted for payment) bears to the total number of Shares
outstanding, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of
directors, or seeking and accepting resignations of incumbent directors, or
both; provided that, prior to the Effective Time (defined below in Section
2.3), the Company's Board of Directors shall always have at least two
members who were directors of the Company prior to consummation of the
Offer (each, a "Continuing Director"). If the number of Continuing
Directors is reduced to less than two for any reason prior to the Effective
Time, the remaining and departing Continuing Directors shall be entitled to
designate a person to fill the vacancy. At such times, the Company will use
its best efforts to cause individuals designated by Parent to constitute
the same percentage as such individuals represent on the Company's Board of
Directors of (x) each committee of the Board, (y) each board of directors
of each subsidiary (defined below in Section 4.1(a)) and (z) each committee
of each such board. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company's
Board of Directors prior to the Effective Time, the affirmative vote of the
Continuing Directors shall be required for the Company to (a) amend or
terminate this Agreement or agree or consent to any amendment or
termination of this Agreement, (b) waive any of the Company's rights,
benefits or remedies hereunder, (c) extend the time for performance of
Parent's and Merger Subsidiary's respective obligations hereunder, or (d)
approve any other action by the Company which is reasonably likely to
adversely affect the interests of the stockholders of the Company (other
than Parent, Merger Subsidiary and their affiliates (other than the Company
and its subsidiaries)), with respect to the transactions contemplated by
this Agreement.
(b) The Company's obligations to appoint designees to the Board
of Directors shall be subject to Section 14(f) of the Exchange Act and Rule
14f-l promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule 14f-l in order to fulfill its
obligations under this Section 1.3 and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors
as is required under Section 14(f) and Rule 14f-l to fulfill its
obligations under this Section 1.3. Parent will supply to the Company in
writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the relevant
provisions of Delaware Law, Merger Subsidiary shall be merged with and into
the Company (the "Merger") at the Effective Time. Following the Merger, the
separate corporate existence of Merger Subsidiary shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Merger Subsidiary in accordance with Delaware Law.
SECTION 2.2. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Section 8.1, at the offices of
Xxxxxxxxx & Xxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another date or place is agreed to in writing by the parties hereto
(such date upon which the Closing occurs, the "Closing Date").
SECTION 2.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable following the satisfaction or waiver of
the conditions set forth in Article VIII, the parties shall file a
certificate of merger or other appropriate documents (the "Certificate of
Merger") executed in accordance with the relevant provisions of Delaware
Law and shall make all other filings or recordings required under Delaware
Law. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such other
time as Parent and the Company shall agree and specify in the Certificate
of Merger (the time the Merger becomes effective, the "Effective Time").
SECTION 2.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the Delaware Law.
SECTION 2.5. Certificate of Incorporation and By-Laws. (a) The
certificate of incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be amended as of the Effective Time so that
the Fourth Article of such certificate of incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock
which the corporation shall have authority to issue is 1,000 shares of
common stock, par value $.10 per share.", and that the Ninth Article of
such certificate of incorporation is deleted in its entirety, and, as so
amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) Subject to Section 6.2, the By-Laws of Merger Subsidiary as
in effect at the Effective Time shall be the By-Laws of the Surviving
Corporation, until changed or amended.
SECTION 2.6. Directors. The directors of Merger Subsidiary at
the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their successors
are duly elected and qualified.
SECTION 2.7. Officers. The officers of Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their successors are
duly elected and qualified.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.1. Effect on Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of
any shares of Company Common Stock or any shares of capital stock of Merger
Subsidiary:
(a) Capital Stock of Merger Subsidiary. Each issued and
outstanding share of the capital stock of Merger Subsidiary shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.10 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock that is owned by the Company or by any
subsidiary of the Company and each share of Company Common Stock that is
owned by Parent, Merger Subsidiary or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
3.2(f), each issued and outstanding share of Company Common Stock (other
than shares to be canceled in accordance with Section 3.1(b) or shares as
to which appraisal rights, if any, have been exercised in accordance with
Section 3.3) shall be converted into the right to receive (the "Merger
Consideration") such number of fully paid and nonassessable shares of
Parent Common Stock as is equal to the Exchange Ratio and, if Parent has
made the Cash Election in connection with the Offer, an amount in cash
equal to the Cash Election Amount. As of the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration and any cash in lieu of fractional
shares of Parent Common Stock to be issued in exchange therefor upon
surrender of such certificate in accordance with Section 3.2(f) and any
dividends or other distributions to which such holder is entitled pursuant
to Section 3.2(c), in each case, without interest.
(d) Adjustment of Exchange Ratio. In the event Parent changes
(or establishes a record date for changing) the number of shares of Parent
Common Stock issued and outstanding prior to the Effective Time as a result
of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction
with respect to the outstanding Parent Common Stock and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio and the
Parent stock prices for determining any adjustments thereto and
calculations thereof shall be proportionately adjusted to reflect such
stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares of similar transaction.
SECTION 3.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall
enter into an agreement with such bank or trust company as may be
designated by Parent, and reasonably acceptable to the Company (the
"Exchange Agent"), which shall provide that Parent shall deposit with the
Exchange Agent as of the Effective Time, for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this
Article III, through the Exchange Agent, as well as any cash payable in
connection with the Merger pursuant to the Cash Election (if Parent has
made such Cash Election) certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto with a record date after
the Effective Time, any Excess Shares (defined in Section 3.2(f)) and any
cash (including cash proceeds from the sale of the Excess Shares) payable
in lieu of any fractional shares of Parent Common Stock being hereinafter
referred to as the "Exchange Fund") issuable or payable pursuant to Section
3.1 in exchange for outstanding shares of Company Common Stock, as well as
any cash payable in connection with the Merger pursuant to the Cash
Election (if Parent has made such Cash Election). For purposes of
determining the number of shares of Parent Common Stock and amount of cash,
if applicable, to be deposited by Parent in the Exchange Fund, Parent shall
assume that no holder of Shares will perfect such holder's right to
appraisal of such holders Shares, if any.
(b) Exchange Procedure. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 3.1, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in a form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 3.1, cash in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 3.2(f) and any dividends or other distributions to which such
holder is entitled pursuant to Section 3.2(c), and the Certificate so
surrendered shall be canceled. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, payment may be made to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and
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 such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. At
any time after the Effective Time, each Certificate shall be deemed to
represent only the right to receive upon surrender the Merger Consideration
into which the shares of Company Common Stock shall have been converted
pursuant to Section 3.1, cash in lieu of any fractional shares of Parent
Common Stock as contemplated by Section 3.2(f) and any dividends or other
distributions to which such holder is entitled pursuant to Section 3.2(c),
in each case, without interest thereon.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 3.2(f), in each case until
the surrender of such Certificate in accordance with this Article III.
Subject to the effect of applicable escheat laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificate
representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of any cash payable in lieu of a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 3.2(f) and the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Parent Common
Stock and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior
to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender of Certificates in accordance
with the terms of this Article III (including any cash paid pursuant to
Section 3.2(f)) shall be deemed to have been paid in full satisfaction of
all rights pertaining to the shares of Company Common Stock represented by
such Certificates, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article III.
(e) Termination of Exchange Fund; No Liability. Any portion of
the Exchange Fund which remains undistributed to the holders of the
Certificates for twelve months after the Effective Time shall be delivered
to Parent, upon demand, and any holders of the Certificates who have not
theretofore complied with this Article III shall thereafter look only to
Parent for payment of their claim for Merger Consideration, any dividends
or distributions with respect to Parent Common Stock and any cash in lieu
of fractional shares of Parent Common Stock. None of Parent, Merger
Subsidiary, the Company or the Exchange Agent shall be liable to any person
in respect of any shares of Parent Common Stock, any dividends or
distributions with respect thereto, any cash in lieu of fractional shares
of Parent Common Stock or any cash from the Exchange Fund, in each case
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificate shall not have been
surrendered prior to one year after the Effective Time (or immediately
prior to such date on which any amounts payable pursuant to this Article
III would otherwise escheat to or become the property of any Governmental
Entity (as defined in Section 4.1(d)), any such amounts shall, to the
extent permitted by applicable escheat law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any
person previously entitled thereto. Any portion of the Merger Consideration
deposited in the Exchange Fund pursuant to this Section 3.2 in
consideration of Shares for which appraisal rights, if any, have been
perfected shall be returned to Parent, upon demand.
(f) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates pursuant to this Article III, no
dividend or distribution of Parent shall relate to such fractional share
interests and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (A) the number of
whole shares of Parent Common Stock delivered to the Exchange Agent by
Parent pursuant to Section 3.2(a) over (B) the aggregate number of whole
shares of Parent Common Stock to be distributed to former holders of
Company Common Stock pursuant to Section 3.2(b) (such excess being herein
called the "Excess Shares"). Following the Effective Time, the Exchange
Agent shall, on behalf of former stockholders of the Company, sell the
Excess Shares at then-prevailing prices on the NYSE, and in round lots to
the extent practicable. The Exchange Agent shall use reasonable efforts to
complete the sale of the Excess Shares as promptly following the Effective
Time as, in the Exchange Agent's sole judgment, is practicable consistent
with obtaining the best execution of such sales in light of prevailing
market conditions. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates formerly representing Company
Common Stock, the Exchange Agent shall hold such proceeds in trust for such
holders (the "Common Shares Trust"). The Surviving Corporation shall pay
all commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the Common Shares Trust to which each former
holder of Company Common Stock is entitled, if any, by multiplying the
amount of the aggregate net proceeds comprising the Common Shares Trust by
a fraction, the numerator of which is the amount of the fractional share
interest to which such former holder of Company Common Stock is entitled
(after taking into account all shares of Company Common Stock held at the
Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all former holders
of Company Common Stock are entitled.
(iii) Notwithstanding the provisions of Section 3.2(f)(ii),
Parent may elect at its option, exercised prior to the Effective Time, in
lieu of the issuance and sale of Excess Shares and the making of the
payments hereinabove contemplated, to pay each former holder of Company
Common Stock an amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such former holder (after taking
into account all shares of Company Common Stock held at the Effective Time
by such holder) would otherwise be entitled by (B) the closing price for a
share of Parent Common Stock as reported on the NYSE Composite Transaction
Tape (as reported in The Wall Street Journal, or, if not reported thereby,
any other authoritative source) on the Closing Date, and, in such case, all
references herein to the cash proceeds of the sale of the Excess Shares and
similar references shall be deemed to mean and refer to the payments
calculated as set forth in this Section 3.2(f)(iii).
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates formerly
representing Company Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such
holders of Certificates formerly representing Company Common Stock subject
to and in accordance with the terms of Section 3.2(c).
(g) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent, on a
daily basis in reasonably prudent investments. Any interest and other
income resulting from such investments shall be paid to Parent.
(h) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the applicable
Merger Consideration with respect thereto and, if applicable, any unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof and any cash in lieu of fractional shares, in each case
pursuant to this Agreement.
SECTION 3.3. Dissenting Shares. Notwithstanding Section 3.1(c),
if Parent has made the Cash Election or if the Merger is effectuated
pursuant to Section 253 of the Delaware Law, Shares outstanding immediately
prior to the Effective Time and held by a holder who has demanded appraisal
for such Shares in accordance with Delaware Law shall not be converted into
a right to receive the Merger Consideration, unless such holder fails to
perfect or withdraws or otherwise loses his right to appraisal. If after
the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the
right to participate in all negotiations and proceedings with respect to
such demands. The 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 3.4. Company Options. (a) Parent and the Company shall
take all actions necessary to provide that each outstanding option to
purchase shares of Company Common Stock granted under any stock option
plan, program or agreement to which the Company or any of its subsidiaries
is a party (collectively, the "Stock Plans") to an individual listed in
Section 3.4 of the Company Disclosure Schedule (defined in Section 4.1(b))
("Management Options") shall become fully vested and exercisable as of
immediately prior to the consummation of the Offer and shall become and
represent, effective as of the consummation of the Offer, an option to
acquire the number of shares of Parent Common Stock (a "Parent Management
Option"), rounded up to the nearest whole share, determined by multiplying
(i) the number of shares of Company Common Stock subject to such Management
Option immediately prior to the consummation of the Offer by (ii) the
Option Exchange Ratio (as hereinafter defined), at an exercise price per
share of Parent Common Stock (increased to the nearest whole cent) equal to
the exercise price per share of such Management Option divided by the
Option Exchange Ratio; provided, however, that in the case of any
Management 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. Following the consummation of the Offer, each
Parent Management Option shall be exercisable upon the same terms and
conditions as were applicable to the related Management Option immediately
prior to the consummation of the Offer. The Option Exchange Ratio shall be
the sum of the Exchange Ratio plus, in the event of a Cash Election, the
number determined by dividing the amount of cash consideration per share of
Company Common Stock that would be included in the Merger Consideration by
the Average Parent Trading Price.
(b) Notwithstanding Section 3.4(a), upon an election by the
holder of a Management Option (made pursuant to a written notice to the
Company not less than two days prior to the consummation of the Offer),
such holder's Management Option shall be canceled upon the consummation of
the Offer and the holder shall receive, in consideration of such
cancellation, an amount in cash payable as soon as practicable following
the cancellation of such Management Option equal to the product of (A) the
excess, if any, of (x) the Cancellation Price (as hereinafter defined) over
(y) the per share exercise price of such Management Option multiplied by
(B) the number of shares of Company Common Stock subject to such Management
Option. Any such payment shall be further reduced by any income tax or
employment tax withholding required under the Internal Revenue Code of
1986, as amended (the "Code"). The Cancellation Price shall be (x) the
Option Exchange Ratio multiplied by (y) the Average Parent Trading Price.
(c) Parent and the Company shall take all actions necessary to
provide that each outstanding option, other than a Management Option, to
purchase shares of Company Common Stock ("Company Options") granted under a
Company Option Plan shall become and represent, effective as of the
consummation of the Offer, an option to acquire the number of shares of
Parent Common Stock (a "Parent Option"), rounded up to the nearest whole
share, determined by multiplying (i) the number of shares of Company Common
Stock subject to such Company Option immediately prior to the consummation
of the Offer by (ii) the Option Exchange Ratio, at an exercise price per
share of Parent Common Stock (increased to the nearest whole cent) equal to
the exercise price per share of such Company Option divided by the Option
Exchange Ratio; provided, however, that in the case of any Company 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. After the consummation of the Offer, each Parent Option shall be
exercisable upon the same terms and conditions as were applicable to the
related Company Option immediately prior to the consummation of the Offer.
(d) The Company and Parent agree that each of the Stock Plans
and the stock option plans of Parent ("Parent Stock Plans") shall be
amended, to the extent necessary, to reflect the transactions contemplated
by this Agreement, including, but not limited to the conversion of shares
of Company Common Stock held or to be awarded or paid pursuant to such
benefit plans, programs or arrangements into shares of Parent Common Stock
on a basis consistent with the transactions contemplated by this Agreement.
(e) Parent shall (i) reserve for issuance the number of shares
of Parent Common Stock that will become subject to the benefit plans,
programs and arrangements referred to in this Section 3.4, (ii) issue or
cause to be issued the appropriate number of shares of Parent Common Stock
pursuant to applicable plans, programs and arrangements, upon the exercise
or maturation of rights existing thereunder on the Effective Time or
thereafter granted or awarded, and (iii) as soon as practicable following
the date of this Agreement (and in any event no later than the date of the
consummation of the Offer), prepare and file with the SEC and use its
reasonable best efforts to have declared effective prior to consummation of
the Offer a registration statement on Form S-8 (in respect of the Company's
Amended and Restated 1996 Stock Option Plan and 1999 Employee Stock Option
Plan) registering a number of shares of Parent Common Stock necessary to
fulfill Parent's obligations under this Section 3.4 and covering the
exercise of the Parent Options and Parent Management Options and the sale
or other transfer of the shares of Parent Common Stock issued upon exercise
of such options. Such registration statements shall be kept effective (and
the current status of the prospectus required thereby shall be maintained)
for at least as long as any Parent Option or Parent Management Option
remains outstanding.
(f) As soon as practicable after the consummation of the Offer,
Parent shall deliver to the holders of Parent Options or Parent Management
Options appropriate notices setting forth such holders' rights pursuant to
the respective Stock Plans and the agreements evidencing the grants of such
options and that such options and the related agreements shall be assumed
by Parent and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 3.4).
(g) Notwithstanding the foregoing provisions of this Section
3.4, the Company's Amended and Restated Employee Stock Purchase Plan (the
"ESPP") shall operate in accordance with its terms in connection with the
Offer and the Merger.
(h) Parent and the Company shall take all such steps as may be
required to cause the transactions contemplated by this Section 3.4 and any
other dispositions of equity securities of the Company (including
derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who is a director or officer of the Company to be exempt under
Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the No-Action Letter dated January 12, 1999, issued by the
SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company.
Each exception set forth in the Company Disclosure Schedule (defined below
in Section 4.1(b)) to the representations and warranties in this Section
4.1 and each other response to this Agreement set forth in the Company
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 Company Disclosure Schedule specifically refers to another
section thereof. Except as set forth in the Company Disclosure Schedule,
the Company represents and warrants to Parent and Merger Subsidiary as
follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and each of its Significant Subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate or other power and authority, as the case may be, to carry on its
business as now being conducted. Each of the Company and each of its
subsidiaries 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 the failure to
be so qualified or licensed (individually or in the aggregate) could not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business, assets or results of operations of the
Company and its subsidiaries taken as a whole except that occurrences due
solely to a disruption of the Company's or its subsidiaries' businesses
solely as a result of the announcement of the execution of this Agreement
and the transactions proposed to be consummated by this Agreement shall be
excluded from consideration for purposes of the effect of an action or
inaction on the Company and its subsidiaries taken as a whole (a "Company
Material Adverse Effect"). The Company has delivered or made available to
Parent complete and correct copies of its certificate of incorporation and
by-laws and the certificates of incorporation and by-laws of its
Significant Subsidiaries, in each case as amended to the date of this
Agreement. For purposes of this Agreement, a "subsidiary" of any person
means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect
at least a majority of its Board of Directors or other governing body (or,
if there are no such voting interests, 50% or more of the equity interests
of which) is owned directly or indirectly by such first person; a "person"
means an individual, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization or other
entity; and a "Significant Subsidiary" means any direct or indirect
subsidiary of the Company that has annual revenues or total assets of at
least $10 million.
(b) Subsidiaries. Section 4.1(b) of the disclosure schedule
delivered by the Company to Parent and Merger Subsidiary prior to the
execution of this Agreement (the "Company Disclosure Schedule") lists each
subsidiary of the Company and its respective jurisdiction of incorporation
and indicates whether such subsidiary is a Significant Subsidiary. All the
outstanding shares of capital stock of each such subsidiary have been
validly issued and are fully paid and nonassessable and are owned by the
Company, by another subsidiary of the Company or by the Company and another
such subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose
of such capital stock). Except for the capital stock of its subsidiaries,
the Company does not own, directly or indirectly, any capital stock or
other ownership interest in any person.
(c) Capital Structure. The authorized capital stock of the
Company consists of 250,000,000 shares of Company Common Stock and
10,000,000 shares of preferred stock, par value $.10 per share (the
"Company Preferred Stock"). As of February 9, 2000, (i) 82,499,131 shares
of Company Common Stock were issued and outstanding (which number could be
understated by up to 12,162 Shares issuable upon Company Options which were
recently exercised), including associated Preferred Share Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of
December 16, 1996 (the "Rights Agreement"), between the Company and The
First National Bank of Boston, as Rights Agent, (ii) no shares of Company
Preferred Stock were issued and outstanding, (iii) 5,885,115 shares of
Company Common Stock were held by the Company in its treasury or by any of
the Company's subsidiaries, (iv) 22,353,364 shares of Company Common Stock
were reserved for issuance pursuant to the Stock Plans (of which 20,416,405
are subject to outstanding Company Options) and (v) 2,343,973 shares of
Company Common Stock were reserved for issuance pursuant to the ESPP.
Except as set forth above and except for the Company Preferred Stock
issuable upon exercise of the Rights, at the time of execution of this
Agreement, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of the Company are, and all shares which may be
issued pursuant to the Stock Plans will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no outstanding bonds, debentures, notes or other
indebtedness or securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote. Except as set
forth above, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is
bound obligating the Company or any of its subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, or undertaking. There are no outstanding
rights, commitments, agreements, or undertakings of any kind obligating the
Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock or other voting securities of the
Company or any of its subsidiaries or any securities of the type described
in the two immediately preceding sentences. The Company has delivered or
made available to Parent complete and correct copies of the Stock Plans and
all forms of Company Options. Section 4.1(c) of the Company Disclosure
Schedule sets forth a complete and accurate list of all Company Options
outstanding as of the date of this Agreement and the exercise price of each
outstanding Company Option.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
the approval of this Agreement by the affirmative votes of holders of a
majority of the outstanding shares of Company Common Stock (unless such
approval is not required to effectuate the Merger pursuant to Section 253
of the Delaware Law) (the "Company Shareholder Vote") with respect to the
Merger, to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of the Company, subject, in the case of the Merger if required
under Delaware Law, to approval of this Agreement by the Company
Shareholder Vote. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any of its subsidiaries under, (i) the certificate of incorporation or
by-laws of the Company or the comparable charter or organizational
documents of any of its Significant Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the
Company or any of its subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate could not
reasonably be expected to (x) have a Company Material Adverse Effect, (y)
impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with or exemption
by (collectively, "Consents") any Federal, state or local government or any
court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any applicable filings under similar foreign antitrust or
competition laws and regulations, (ii) the filing with the SEC of (A) the
Schedule 14D-9, (B) a proxy statement relating to the Company Stockholders
Meeting (defined below in Section 7.1(b)) (as amended or supplemented from
time to time, the "Company Proxy Statement"), and (C) such reports under
the Exchange Act and the Securities Act, as may be required in connection
with this Agreement and the Tender Agreement and the transactions
contemplated hereby and thereby, (iii) such filings as may be required
under state securities or "blue sky" laws, (iv) 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 the
Company is qualified to do business, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to be made or obtained individually or in the
aggregate could not reasonably be expected to (x) have a Company Material
Adverse Effect, (y) impair the Company's ability to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation of
the transactions contemplated by this Agreement.
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities. The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since October 1, 1996 (the
"Company SEC Documents"). As of their respective dates, the Company 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 Company SEC Documents, and none
of the Company SEC Documents when filed contained any untrue statement 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 financial
statements of the Company included in the Company SEC Documents as of their
respective dates 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
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position of the 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
statements, to normal and recurring year-end audit adjustments not material
in amount). Except as reflected in the financial statements of the Company
included in the Company Filed SEC Documents, neither the Company nor any of
its subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which are required by generally
accepted accounting principles to be set forth on a consolidated balance
sheet of the Company and its consolidated subsidiaries or in the notes
thereto other than any liabilities and obligations incurred since September
30, 1999 in the ordinary course of business or which, individually or in
the aggregate, are not expected to have a Company Material Adverse Effect.
(f) Information Supplied. Neither the Schedule 14D-9, nor any
of the information supplied or to be supplied by the Company or its
subsidiaries or representatives for inclusion or incorporation by reference
in the Form S-4, the Post-Effective Amendment (defined below in Section
7.1(a)) or the Offer Documents will, at the respective times any such
documents or any amendments or supplements thereto are filed with the SEC,
are first published, sent or given to shareholders or become effective
under the Securities Act, 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 not misleading. The Company Proxy
Statement will not, at the time the Company Proxy Statement is first mailed
to the Company's shareholders or, at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Schedule 14D-9 and the Company Proxy
Statement will comply as to form in all material respects with the
requirements of all applicable laws, including the Exchange Act and the
rules and regulations thereunder. No representation or warranty is made by
the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Merger Subsidiary
specifically for inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents") or in Section 4.1(g) of the
Company Disclosure Schedule and except as expressly contemplated by this
Agreement, since September 30, 1999, the Company and its subsidiaries have
conducted their business only in the ordinary course consistent with past
practice, and there has not been (i) as of the date of this Agreement, any
event, occurrence or development which has had or could reasonably be
expected to have a Company Material Adverse Effect, (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of the Company's capital stock
or any repurchase, redemption or other acquisition by the Company or any of
its subsidiaries of any outstanding shares of capital stock or other
securities of the Company or any of its subsidiaries, (iii) any split,
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv) (A) any
granting by the Company or any of its subsidiaries to any current or former
director, officer or employee of the Company or any of its subsidiaries of
any increase in compensation or benefits (including the acceleration in the
exercisability of options to purchase, or in the vesting of, Company Common
Stock (or other property)), except in the ordinary course of business
consistent with past practice or as was required under employment
agreements in effect as of September 30, 1999, (B) any granting by the
Company or any of its subsidiaries to any such director, officer or
employee of any increase in severance or termination pay (including the
acceleration in the exercisability of options to purchase, or in the
vesting of, Company Common Stock (or other property)), except as was
required under employment, severance or termination agreements or plans in
effect as of September 30, 1999, or (C) any entry by the Company or any of
its subsidiaries into any employment, deferred compensation, severance or
termination agreement with any such current or former director, officer or
employee, (v) any damage, destruction or loss, whether or not covered by
insurance, that has had or could reasonably be expected to have a Company
Material Adverse Effect, (vi) any change in accounting methods, principles
or practices by the Company or any of its subsidiaries, (vii) any amendment
of any material term of any outstanding security of the Company or any of
its subsidiaries, (viii) any incurrence, assumption or guarantee by the
Company or any of its subsidiaries of any indebtedness for borrowed money
other than in the ordinary course of business consistent with past
practice, but in no event in the amount of more than $1,000,000 in the
aggregate, (ix) any creation or assumption by the Company or any of its
subsidiaries of any Lien on any asset other than in the ordinary course of
business consistent with past practice, but in no event in the amount of
more than $500,000 for any one transaction or $1,000,000 in the aggregate,
(x) any making of any loan, advance or capital contributions to or
investment in any person other than (A) loans, advances or capital
contributions to or investments in wholly-owned subsidiaries or entities
that became wholly-owned subsidiaries made in the ordinary course of
business consistent with past practice and (B) investments made in
accordance with the Company's investment guidelines, a copy of which has
been made available to Parent, and in the ordinary course of business
consistent with past practice, (xi) any transaction or commitment made, or
any contract or agreement entered into, by the Company or any of its
subsidiaries relating to its assets or business (including the acquisition
or disposition of any assets or the merger or consolidation with any
person) or any relinquishment by the Company or any of its subsidiaries of
any contract or other right, in either case, material to the Company and
its subsidiaries taken as a whole, other than transactions and commitments
in the ordinary course of business consistent with past practice and those
contemplated by this Agreement, but in the case of transactions or
commitments outside of the ordinary course of business in no event
representing commitments on behalf of the Company or any of its
subsidiaries of more than $500,000 for any transaction and $1,000,000 for
any series of transactions, (xii) except as set forth in Section 4.1(g) of
the Company Disclosure Schedule, as of the date hereof, any change in
policy or practice for licensing Company software to third parties, through
discounts or similar practices, lengthening the term of licenses or
changing the basis of pricing, (xiii) any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of
its subsidiaries, which employees were not subject to a collective
bargaining agreement at September 30, 1999, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to such
employees or (xiv) any agreement, commitment, arrangement or undertaking by
the Company or any of its subsidiaries to perform any action described in
clauses (i) through (xiii) above.
(h) Litigation. Except as disclosed in the Company Filed SEC
Documents or in Section 4.1(h) of the Company Disclosure Schedule, there is
no suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries (and
the Company is not aware of any basis for any such suit, action or
proceeding) that, individually or in the aggregate, could reasonably be
expected to (i) have a Company Material Adverse Effect, (ii) impair the
ability of the Company to perform its obligations under this Agreement or
(iii) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries having, or
which, insofar as reasonably can be foreseen, in the future would have, any
such effect. Section 3.1(h) of the Company Disclosure Schedule sets forth,
with respect to any pending suit, action or proceeding to which the Company
or any its subsidiaries is a party and which involves claims which if
adversely determined would exceed $2,000,000, the forum, the parties
thereto, the subject matter thereof and the amount of damages claimed.
(i) Absence of Changes in Stock and Benefit Plans. Except as
disclosed in Section 4.1(g) and (i) of the Company Disclosure Schedule or
as expressly permitted by this Agreement, since September 30, 1999, there
has not been (i) any acceleration, amendment or change of the period of
exercisability or vesting of any Company Options or restricted stock, stock
bonus or other awards under the Stock Plans (including any discretionary
acceleration of the exercise periods or vesting by the Company's Board of
Directors or any committee thereof or any other persons administering a
Stock Plan) or authorization of cash payments in exchange for any Company
Options, restricted stock, stock bonus or other awards granted under any of
such Stock Plans or (ii) any adoption or amendment by the Company or any of
its subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, stock
appreciation right, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, workers' compensation, supplementary
unemployment benefits or other plan, arrangement or understanding (whether
or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any of its subsidiaries or
any beneficiary thereof entered into, maintained or contributed to, as the
case may be, by the Company or any of its subsidiaries (collectively,
"Benefit Plans").
(j) Participation and Coverage in Benefit Plan. Except with
respect to changes required by law, there has been no adoption of,
amendment to, written interpretation or announcement (whether or not
written) by the Company or any of its subsidiaries relating to, or change
in employee participation or coverage under, any Benefit Plan which would
increase materially the expense of maintaining such Benefit Plan above the
level of the expense incurred in respect thereof for the fiscal year ended
on September 30, 1999.
(k) ERISA Compliance. (i) Section 4.1(k) of the Company
Disclosure Schedule contains a list of all "employee pension benefit plans"
(defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), "employee welfare benefit plans" (defined in
Section 3(l) of ERISA) and all other material Benefit Plans maintained, or
contributed to, by the Company or any of its subsidiaries or ERISA
affiliates (defined below) for the benefit of any current or former
employees, officers or directors of the Company or any of its subsidiaries
or ERISA affiliates or under which the Company or any of its subsidiaries
or ERISA affiliates has any material liability. The Company has delivered
or made available to Parent complete and correct copies of (A) each
material Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof) and all amendments thereto and written
interpretations thereof, (B) the most recent summary plan description for
each material Benefit Plan for which such summary plan description is
required and (C) each trust agreement and group annuity or insurance
contract relating to any Benefit Plan. For purposes of this Agreement,
"ERISA affiliate" of the Company means any person which, together with the
Company or any of its subsidiaries, would be treated as a single employer
under Section 414 of the Code. The only Benefit Plans which individually or
collectively would constitute an "employee pension benefit plan" defined in
Section 3(2) of ERISA (the "Pension Plans") are identified as such in
Section 4.1(k) of the Company Disclosure Schedule.
(ii) Each Benefit Plan has been maintained and administered
in compliance with its terms in all material respects and with the
requirements prescribed by any and all applicable statutes, orders, rules
and regulations, and is, to the extent required by applicable law or
contract, fully funded without having any deficit or unfunded actuarial
liability. Any Benefit Plan intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified and nothing has occurred that could reasonably be expected to
cause the loss of such qualified status.
(iii) No Benefit Plan is covered by Title IV of ERISA and
no contributions to any Benefit Plan are required under Section 412 of the
Code. Neither the Company nor any of its subsidiaries has incurred or
reasonably expects to incur any liability under Title IV of ERISA or
Section 4975 of the Code or any material liability or penalty under Section
4980B of the Code or Section 502(i) of ERISA.
(iv) To the knowledge of the Company, there are no pending
or anticipated material claims against or otherwise involving any of the
Benefit Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Benefit Plan activities) has
been brought against or with respect to any Benefit Plan.
(v) All material contributions, reserves or premium
payments, required to be made as of the date hereof to or with respect to
the Benefit Plans have been made or provided for.
(vi) Except as required by law, neither the Company nor any
of its subsidiaries has any obligations for post-retirement or
post-termination health and life benefits under any Benefit Plan.
(l) Taxes. As used in this Agreement, "tax" or "taxes" shall
include all Federal, state, local and foreign income, property, sales,
excise and other taxes, tariffs or governmental charges or assessments of
any nature whatsoever as well as any interest, penalties and additions
thereto. Except as set forth in Section 4.1(l) of the Company Disclosure
Schedule:
(i) The Company and each of its subsidiaries have timely
filed all tax returns, statements, reports and forms required to be filed
with any tax authority (collectively, the "Tax Returns") and in accordance
with all applicable laws. All such tax returns are correct and complete in
all respects. All taxes shown as due and payable on the Tax Returns have
been paid and all other taxes of the Company or any of its subsidiaries
have been adequately reserved for in the financial statements included in
the Company Filed SEC Documents. There are no Liens on any of the assets of
the Company or any of its subsidiaries that arose in connection with any
failure (or alleged failure) to pay any tax.
(ii) The Company and each of its subsidiaries has withheld
and timely paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(iii) No dispute or claim concerning any tax liability of
the Company or any of its subsidiaries has been proposed or claimed in
writing or, to the knowledge of the Company, threatened by any authority.
The Company has provided Parent with correct and complete copies of its
Federal income tax returns for taxable years ending September 30, 1994
through September 30, 1998, and examination reports, and statements of
deficiencies with respect to Federal income taxes, if any, assessed against
or agreed to by the Company and any of its subsidiaries with respect to
Federal income taxes for taxable years ending September 30, 1994 through
September 30, 1998.
(iv) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of taxes or agreed to any
extension of time with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has
filed a consent pursuant to Section 341(f) of the Code concerning
collapsible corporations. Neither the Company nor any of its subsidiaries
is a party to any tax allocation or sharing agreement. Neither the Company
nor any of its subsidiaries has any liability for the taxes of any person
(other than the Company and any of its subsidiaries that is currently a
member of the Company's affiliated group filing a consolidated federal
income tax return) under Treas. Reg. ss.1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(vi) As of the date of the most recent financial statements
included in the Company Filed SEC Documents, the unpaid taxes of the
Company and its subsidiaries did not exceed the liability for taxes (rather
than any reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the face of such
financial statements.
(vii) Neither the Company nor any of its subsidiaries is
required to include in income any adjustment pursuant to Section 481(a) of
the Code (or similar provisions of other law or regulations) in its current
or in any future taxable period by reason of a change in accounting method
nor does the Company or any of its subsidiaries have any knowledge that the
Internal Revenue Service (or other taxing authority) has proposed or is
considering proposing, any such change in accounting method.
(viii) Neither the Company nor any of its subsidiaries is a
party to any agreement, contract, or arrangement that, individually or
collectively, could give rise to the payment of any amount (whether in cash
or property, including Company Common Stock) that would not be deductible
pursuant to the terms of Section 162(m), 280G or, to the knowledge of the
Company, 162(a)(i) of the Code.
(ix) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (A) in the two years prior to the date of this Agreement, or
(B) in a distribution that could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of
the Code) in conjunction with the Offer or the Merger, or both.
(m) Voting Requirements. In the event that Section 253 of the
Delaware Law is inapplicable and unavailable to effectuate the Merger, the
Company Shareholder Vote is the only vote of the holders of the Company's
capital stock necessary to approve and adopt this Agreement and the
transactions contemplated hereby.
(n) State Takeover Statutes; Rights Agreement. (i) The Board of
Directors of the Company has approved this Agreement and the Tender
Agreement and the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement and the Tender Agreement, and
such approval constitutes approval of this Agreement and the Tender
Agreement and the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement and the Tender Agreement by the
Board of Directors of the Company under the provisions of Section 203 of
Delaware Law and represents all the action necessary to ensure that such
Section 203 does not apply to Parent in connection with the Offer, the
Merger and the other transactions contemplated by this Agreement and the
Tender Agreement. To the knowledge of the Company, no other "fair price",
"moratorium", "control share acquisition", or other anti-takeover statute
or similar statute or regulation, applies or purports to apply this
Agreement or the Tender Agreement, or the Offer, the Merger or the other
transactions contemplated by this Agreement and the Tender Agreement.
(ii) The Company has amended, or will amend within two
business days of the date of this Agreement, the Rights Agreement to
provide that neither Parent nor any of its affiliates will become an
Acquiring Person (defined in the Rights Agreement), that no Distribution
Date or Shares Acquisition Date (each defined in the Rights Agreement) will
occur, and that the Rights will not separate from the underlying shares of
Company Common Stock or give the holders thereof the right to acquire
securities of any party hereto, in each case as a result of the execution,
delivery or performance of this Agreement or the Tender Agreement or the
consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement or the Tender Agreement.
(o) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Xxxxxxx
Xxxxx and Broadview International L.L.C., the fees and expenses of which
will be paid by the Company (and a copy of whose engagement letter and a
calculation of the fees that would be due thereunder has been provided to
Parent), is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement or the Tender Agreement based upon
arrangements made by or on behalf of the Company or any of its
subsidiaries. No such engagement letter obligates the Company to continue
to use the services or pay fees or expenses in connection with any future
transaction.
(p) Permits; Compliance with Laws; Environmental Matters. (i)
Each of the Company and its subsidiaries has in effect all Federal, state,
local and foreign governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights ("Permits")
necessary for it to own, lease or operate its properties and assets and to
carry on its business as now conducted, and there has occurred no default
under any such Permit, except for the absence of Permits and for defaults
under Permits which absence or defaults, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect.
The Company and its subsidiaries have been, and are, in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments,
decrees or orders of any Governmental Entity, and neither the Company nor
any of its subsidiaries has received any notice from any Governmental
Entity or any other person that either the Company or any of its
subsidiaries is in violation of, or has violated, any applicable statutes,
laws, ordinances, regulations, rules, judgments, decrees or orders, except
such failures to comply or violations as, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect.
(ii) Neither the Company nor any of its subsidiaries has
(i) placed, held, located, released, transported or disposed of any
Hazardous Substance (defined below) on, under, from or at any of the
Company's or any of its subsidiaries' properties or any other properties,
other than in a manner that could not, in all such cases taken individually
or in the aggregate, reasonably be expected to have or result in a Company
Material Adverse Effect, (ii) any knowledge of the presence of any
Hazardous Substances that have been released into the environment on, under
or at any of the Company's or any of its subsidiaries' properties other
than that which could not reasonably be expected to have or result in a
Company Material Adverse Effect, or (iii) received any written notice (A)
of any violation of any applicable statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity relating to any
matter of pollution, protection of the environment or environmental
regulation or control or regarding Hazardous Substances (collectively,
"Environmental Laws") that has not been resolved or settled with the
relevant Governmental Entity, (B) of the institution or pendency of any
suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any such violation, (C) requiring the
response to or remediation of Hazardous Substances at or arising from any
of the Company's or any of its subsidiaries' properties or any other
properties, (D) alleging non-compliance by the Company or any of its
subsidiaries with the terms of any permit required under any Environmental
Law in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment of a material amount
for response to or remediation of Hazardous Substances at or arising from
any of the Company's or any of its subsidiaries' properties or any other
properties. For purposes of this Agreement, the term "Hazardous Substance"
shall mean any material defined as toxic or hazardous, including any
petroleum and petroleum products, under any applicable Environmental Law.
(q) Contracts; Debt Instruments. (i) Except as otherwise
disclosed in Section 4.1(q)(i)(A)-(E) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to or subject
to:
(A) any union contract, or any employment, consulting,
severance, termination, or indemnification agreement, contract or
arrangement providing for future payments, written or oral, with any
current or former officer or director which (1) exceeds $200,000 per
annum or (2) requires aggregate annual payments or total payments
over the life of such agreement, contract or arrangement to such
current or former officer, consultant, director or employee in excess
of $200,000 or $500,000, respectively, and is not terminable by it or
its subsidiary on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(B) any joint venture contract or similar arrangement or
any other agreement not in the ordinary course of business which has
involved or is expected to involve a sharing of revenues of
$1,000,000 per annum or more with other persons;
(C) any lease for real or personal property in which the
amount of payments which the Company is required to make on an annual
basis exceeds $1,000,000;
(D) to the knowledge of the Company, any material
agreement, contract, policy, license, Permit, document, instrument,
arrangement or commitment involving revenues to the Company in excess
of $2,000,000 which has not been terminated or performed in its
entirety and not renewed which may be, by its terms, terminated by
reason of the execution of this Agreement or the Tender Agreement or
the consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement or the Tender Agreement; or
(E) any agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment that provides for an
express non-competition covenant with any person or in any geographic
area and which limits in any material respect the ability of the
Company to compete in its current business lines.
(ii) All contracts, policies, agreements, leases, licenses,
Permits, documents, instruments, arrangements and other commitments listed
in Section 4.1(q)(i)(A)-(E) and Section 4.1(q)(iv) of the Company
Disclosure Schedule or otherwise disclosed in the Company Filed SEC
Documents are valid and binding agreements of the Company or a subsidiary
of the Company and are in full force and effect, and neither the Company,
any of its subsidiaries nor, to the knowledge of the Company, any other
party thereto, is in default in any material respect under the terms of any
such contract, plan, arrangement, agreement, lease, license, Permit,
instrument or other commitment.
(iii) Neither the Company nor any subsidiary of the Company
is in default in any material respect under the terms of any exclusive
license or distribution agreement or arrangement that, by its terms,
provides for payments to the Company or any of its subsidiaries of
$1,000,000 or more per annum, or any other material license or distribution
agreement or arrangement. To the knowledge of the Company, none of the
parties to any of the contracts identified in Section 4.1(q)(i)(A)-(E) of
the Company Disclosure Schedule or otherwise disclosed in the Company Filed
SEC Documents has terminated, or materially reduced the amount of its
business with the Company or any of its subsidiaries in the future.
(iv) Set forth in Section 4.1(q)(iv) of the Company
Disclosure Schedule is (A) a list of all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and instruments pursuant
to which any indebtedness of the Company or any of its subsidiaries in an
aggregate principal amount in excess of $5,000,000 is outstanding or may be
incurred and (B) the respective principal amounts currently outstanding
thereunder. For purposes of this Section 4.1(q)(iv), "indebtedness" shall
mean, with respect to any person, without duplication, (A) all obligations
of such person for borrowed money, or with respect to deposits or advances
of any kind to such person, (B) all obligations of such person evidenced by
bonds, debentures, notes or similar instruments, (C) all obligations of
such person upon which interest charges are customarily paid, (D) all
obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person, (E) all
obligations of such person issued or assumed as the deferred purchase price
of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the
ordinary course of such person's business), (F) all capitalized lease
obligations of such person, (G) all obligations of others secured by any
Lien on property or assets owned or acquired by such person, whether or not
the obligations secured thereby have been assumed, (H) all obligations of
such person under interest rate or currency swap transactions (valued at
the termination value thereof), (I) all letters of credit issued for the
account of such person (excluding letters of credit issued for the benefit
of suppliers to support accounts payable to suppliers incurred in the
ordinary course of business), (J) all obligations of such person to
purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar securities or
property, and (K) all guarantees and arrangements having the economic
effect of a guarantee of such person of any indebtedness of any other
person.
(r) Title to Properties. (i) Each of the Company and its
subsidiaries has good and marketable title to, or valid leasehold interests
in, all its properties and assets, free and clear of all Liens, except for
defects in title, easements, restrictive covenants and similar encumbrances
or impediments that, in the aggregate, do not and could not reasonably be
expected to have a Company Material Adverse Effect.
(ii) Each of the Company and its subsidiaries has complied
in all material respects with the terms of all leases to which it is a
party and under which it is in occupancy, and all such leases are in full
force and effect. Each of the Company and each of its subsidiaries enjoys
peaceful and undisturbed possession under all such leases.
(s) Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxxx Xxxxx dated the date hereof, a copy of which has been or
promptly will be provided to Parent, to the effect that, as of such date,
the consideration to be received by the Company's stockholders pursuant to
this Agreement is fair to the Company's stockholders from a financial point
of view.
(t) Interests of Officers and Directors. Except as described in
the Company Filed SEC Documents and except for agreements or transactions
between or among the Company and its subsidiaries on the one hand and
Sterling Commerce, Inc. and its subsidiaries on the other hand and except
as set forth in Section 4.1(t) of the Company Disclosure Schedule, none of
the Company's officers or directors has any material direct or indirect
interest in any material property, real or personal, tangible or
intangible, including inventions, patents, copyrights, trademarks, trade
names, trade secrets or know-how, used in or pertaining to the business of
the Company or that of its subsidiaries, or any supplier, distributor or
customer of the Company or any of its subsidiaries, except for the normal
rights of a stockholder and rights under existing employee benefit plans.
(u) Software. (i) "Owned Software" shall mean all computer
programs (source code or object code) owned by the Company or any
subsidiary of the Company, including without limitation any computer
programs in the development or testing phase. "Licensed Software" shall
mean all computer programs (source code or object code) licensed to the
Company or any subsidiary of the Company by any third party (other than any
off-the-shelf computer program that is so licensed under a shrink wrap
license) (the Licensed Software and the Owned Software, the "Software").
(ii) Except as specified in Section 4.1(u)(ii) of the
Company Disclosure Schedule, Company, directly or through its subsidiaries,
has good, marketable and exclusive title to, and the valid power and right
to sell, license, lease, transfer, use or otherwise exploit, all of the
Owned Software and all copyrights thereof, free and clear of all Liens. The
Company, directly or through its subsidiaries, is in actual possession of
or has necessary control over (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 use of the Software as currently used
in the Company's business or as offered to the Company's customers or
potential customers, the source code, for each computer program included in
the Licensed Software. The Company, directly or through its subsidiaries,
is in possession of or has necessary control over all documentation
(including without limitation all related engineering specifications,
program flow charts, installation and user manuals) and know-how required
for the use of the Software as currently used in the Company's business or
as offered to the Company's customers or potential customers. The Software
constitutes all of the computer programs necessary to conduct the Company's
business as now conducted. Except as specified in Section 4.1(u)(ii) of the
Company Disclosure Schedule or pursuant to agreements entered into in the
ordinary course of business or made available to Merger Subsidiary or its
representatives, no person other than the Company and its subsidiaries has
any material 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) Since the Company and its subsidiaries have owned the
Owned Software, the Company and its subsidiaries have disclosed source code
to the Owned Software only pursuant to confidentiality terms that
reasonably protect the Company's rights in such Owned Software. Except as
disclosed in accordance with such confidentiality agreements or valid
source code escrow agreements, no person (other than Company and its
subsidiaries) is in possession of any source code for any computer program
included in the Owned Software.
(iv) There are no material defects in (a) any Licensed
Software included in the Owned Software, or (b) in the Owned Software, in
each case of the currently Company supported versions thereof, that would
substantially adversely affect the functioning thereof in accordance with
any published specifications therefor or which would cause the foregoing
Software to fail to be Year 2000 compliant. For the purposes of this
Section, "Year 2000 Compliant" shall mean: (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 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. Other than in the ordinary course of business, the
Company has made no representation, 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 not received notices
from its material providers of products and services of non Year 2000
Compliance.
(v) Except as set forth in Section 4.1(u) of the Company
Disclosure Schedule, none of the sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation by the
Company, any subsidiary of the Company or any of their respective
successors or assigns of any version or release of any computer program
included in the Software obligates or will obligate the Company, any
subsidiary of the Company or any of their respective successors or assigns
to pay any royalty, fee or other compensation to any other person other
than in amounts that are not material in the aggregate.
(vi) Except as specified in Section 4.1(u)(vi) of the
Company Disclosure Schedule, neither the Company nor any of its
subsidiaries markets and none of them is obligated to the licensor of the
Licensed Software to support (other than Level One), any Licensed Software.
(vii) Except as specified in Section 4.1(u)(vii) of the
Company Disclosure Schedule, no material 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 the Company or any subsidiary of the
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. Section
4.1(u)(vii) of the Company Disclosure Schedule sets forth the general
licensing policies of the Company and its subsidiaries by category of
Software.
(v) Intellectual Property. (i) For purposes of this Section
4.1(v), "Intellectual Property" shall mean all patents, trademarks, trade
names, service marks, and domain names and registered copyrights and
material non-registered copyrights used by the Company or any subsidiary of
the Company in connection with the conduct of the 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, together with all trade dress, trade
secrets, processes, formulae, designs, know-how and other intellectual
property rights that are so used. Parent has heretofore been furnished with
a true and correct summary of each U.S. and foreign registration or
application for U.S. and foreign registration of patents, trademarks and
tradenames which is registered with, or in respect of which any application
for registration has been filed with, any Governmental entity, dated
January 31, 2000, entitled Client Status Report and Status of Patent
Applications Authorized by Sterling Software, Inc. dated January 31, 2000.
All such registrations and applications are valid and subsisting, in full
force and effect, and have not been cancelled, expired or abandoned (except
as otherwise noted in such reports). The 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 the Company and its
subsidiaries that are reasonably necessary to conduct the Company's
business as it is now conducted, and includes all of the intellectual
property rights owned by or licensed to the Company and its subsidiaries
that are used in the development, marketing, licensing or support of the
Software. Except as specified in Section 4.1(v)(ii) of the Company
Disclosure Schedule, (A) the Company, directly or through its subsidiaries,
has good, marketable and exclusive title to, and the valid power and right
to use, the Intellectual Property owned by the Company or its subsidiaries
free and clear of all Liens and (B) no person or entity other than the
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.
(iii) The Company and its subsidiaries take reasonable
measures to protect the confidentiality of its material trade secrets,
know-how or other confidential information, including by generally
requiring employees, independent contractors and licensees having access
thereto to execute written non-disclosure agreements that adequately
protect the Company's and its subsidiaries' proprietary interests in and to
such trade secrets, know-how and other confidential information.
(w) No Infringement. (i) Except as specified in Section
4.1(w)(i) of the Company Disclosure Schedule, neither the existence nor the
sale, license, lease, transfer, use, reproduction, distribution,
modification or other exploitation by the Company, any subsidiary of the
Company 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 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 the Company,
any subsidiary of the 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 the Company or any subsidiary of
the Company by any third party, or as it relates to patents and trademarks,
such representation and warranty is made only to the Company's knowledge).
Except as specified in Section 4.1(w)(i) of the Company Disclosure
Schedule, neither the 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 lawsuit, claim, demand, proceeding or investigation. Except as
specified in Section 4.1(w)(i) of the Company Disclosure Schedule, there
are no material restrictions on the ability of the Company, any subsidiary
of the 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(w)(ii) of the
Company Disclosure Schedule, the Company and its subsidiaries are not aware
of any material infringement, misappropriation or other violation of any
Software or Intellectual Property, and no lawsuit, claim, demand,
proceeding or investigation brought by the Company or any of its
subsidiaries with respect to Owned Software is pending against any third
party.
(x) Change of Control. Except as described in Section 4.1(x) of
the Company Disclosure Schedule, the execution and delivery of this
Agreement and the Tender Agreement and the consummation of the transactions
contemplated hereby and thereby will not (i) result in any payment
(including severance, unemployment compensation, tax gross-up, bonus or
otherwise) becoming due to any current or former director, employee or
independent contractor of the Company or any of its subsidiaries, from the
Company or any of its subsidiaries under any Stock Plan, Benefit Plan,
agreement or otherwise, (ii) materially increase any benefits otherwise
payable under any Stock Plan, Benefit Plan, agreement or otherwise or (iii)
result in the acceleration of the time of payment, exercise or vesting of
any such benefits.
SECTION 4.2. Representations and Warranties of Parent and
Merger Subsidiary. Parent and Merger Subsidiary jointly and severally
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
and Merger Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Merger Subsidiary 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 the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to have
a material adverse effect on the condition (financial or otherwise),
business, assets or results of operations of Parent and its subsidiaries
taken as a whole (a "Parent Material Adverse Effect"). Parent has provided
the Company with complete and correct copies of its and Merger Subsidiary's
certificate of incorporation and by-laws.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Parent consists of 1,100,000,000 shares of
Parent Common Stock and 500,000 shares of preferred stock, par value $.10
per share ("Parent Preferred Stock"). At the close of business on February
7, 2000, (i) 541,972,678 shares of Parent Common Stock were issued and
outstanding including associated Preferred Share Purchase Rights issued
pursuant to the Rights Agreement, dated June 18, 1991 and amended as of May
17, 1995, between the Company and The Chase Manhattan Bank (as successor to
Manufacturers Hanover Trust Company), as Rights Agent, (ii) no shares of
Parent Preferred Stock were issued and outstanding, (iii) 89,008,601 shares
of Parent Common Stock were held by Parent in its treasury, and (iv)
approximately 87,179,000 shares of Parent Common Stock were reserved for
future issuance pursuant to Parent's various stock option and stock
purchase plans described in, or incorporated by reference in, the Parent
SEC Documents (defined below in Section 4.2(d)). Except as set forth above,
at the close of business on February 7, 2000 and except for the Parent
Preferred Stock issuable upon exercise of the Preferred Share Purchase
Rights described above, no shares of capital stock or other voting
securities of Parent were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of Parent are, and all shares which may
be issued pursuant to this Agreement will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. As of the date of this Agreement, there are outstanding no bonds,
debentures, notes or other indebtedness of Parent having the right to vote
(or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of Parent may vote. As of the
date of this Agreement, the authorized capital stock of Merger Subsidiary
consists of 1,000 shares of common stock, par value $.01 per share, all of
which have been validly issued, are fully paid and nonassessable and are
owned by Parent free and clear of any Liens.
(c) Authority; Noncontravention. Parent and Merger Subsidiary
have the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Parent and
Merger Subsidiary and the consummation by Parent and Merger Subsidiary of
the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of Parent and Merger
Subsidiary. This Agreement has been duly executed and delivered by Parent
and Merger Subsidiary and constitutes a valid and binding obligation of
Parent and Merger Subsidiary, enforceable against each of them in
accordance with its terms. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of
the properties or assets of Parent or any of its subsidiaries under, (i)
the certificate of incorporation or by-laws of Parent or Merger Subsidiary,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to Parent or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger
Subsidiary or any other subsidiary of Parent or their respective properties
or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate could not reasonably be expected to (x) have a Parent
Material Adverse Effect, (y) impair the ability of Parent and Merger
Subsidiary to perform their respective obligations under this Agreement or
(z) prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement. No Consent is required by or with respect
to Parent or Merger Subsidiary in connection with the execution and
delivery by Parent and Merger Subsidiary of this Agreement or the
consummation by Parent or Merger Subsidiary of the transactions
contemplated by this Agreement, except for (i) the filing of a premerger
notification and report form by Parent under the HSR Act and any applicable
filings under similar foreign antitrust or competition laws and
regulations, (ii) the filing with the SEC of (A) the Form S-4, (B) the
Offer Documents, and (C) such reports under the Exchange Act as may be
required in connection with this Agreement, the Tender Agreement and the
transactions contemplated hereby and thereby, (iii) such filings as may be
required under state securities or "blue sky" laws, (iv) 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 the
Company is qualified to do business, (v) such filings with and approvals of
the NYSE to permit the shares of Parent Common Stock that are to be issued
upon consummation of the Offer and in the Merger to be listed on the NYSE,
and (vi) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made or
obtained individually or in the aggregate could not reasonably be expected
to (x) have a Parent Material Adverse Effect, (y) impair the Parent's or
Merger Subsidiary's ability to perform its obligations under this Agreement
or (z) prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
(d) SEC Documents; Financial Statements; No Undisclosed
Liabilities. Parent has filed all required reports, forms and other
documents with the SEC since April 1, 1996 (the "Parent SEC Documents"). As
of their respective dates, the Parent SEC Documents complied in all
material respects with the requirements of 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 Parent SEC Documents, and none of
the Parent SEC Documents contained any untrue statement 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 financial
statements of Parent included in the Parent SEC Documents as of their
respective dates 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
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved and fairly present in all material
respects the consolidated financial position of Parent 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 statements, to normal and recurring year-end audit adjustments
not material in amount).
(e) Information Supplied. Neither the Offer Documents or the
Form S-4 or the Post-Effective Amendment, nor any of the information
supplied or to be supplied by Parent or its subsidiaries or representatives
for inclusion or incorporation by reference in the Schedule 14D-9 or the
Company Proxy Statement will, at the respective times any such documents or
any amendments or supplements thereto are filed with the SEC, are first
published, sent or given to shareholders or become effective under the
Securities Act or, in the case of the Company Proxy Statement, at the time
of the Company Stockholders Meeting, 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 not misleading. The
Offer Documents and the Form S-4 and the Post-Effective Amendment will
comply as to form in all material respects with the requirements of all
applicable laws, including the Securities Act and the Exchange Act, as
applicable, and the rules and regulations thereunder. No representation or
warranty is made by Parent or Merger Subsidiary with respect to statements
made or incorporated by reference therein based on information supplied by
the Company for inclusion or incorporation by reference therein.
(f) Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Documents filed and publicly available prior to the date
of this Agreement (the "Parent Filed SEC Documents"), from September 30,
1999 to the date of this Agreement, there has not been any event,
occurrence or development of a state of circumstances that has had or could
reasonably be expected to have a Parent Material Adverse Effect.
(g) Litigation. Except as disclosed in the Parent Filed SEC
Documents, as of the date of this Agreement, there is no suit, action or
proceeding pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to (i) have a Parent Material
Adverse Effect, (ii) impair the ability of Parent to perform its
obligations under this Agreement or (iii) prevent or materially delay the
consummation of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any of its subsidiaries
having, or which is reasonably likely to have, any such effect.
(h) Compliance with Applicable Laws. As of the date of this
Agreement, each of Parent and its subsidiaries has in effect all Permits
necessary for it to own, lease or operate its properties and assets and to
carry on its business as now conducted, and there has occurred no default
under any such Permit, except for the absence of Permits and for defaults
under Permits which absence or default, individually or in the aggregate,
could not reasonably be expected to have a Parent Material Adverse Effect.
As of the date of this Agreement, Parent and its subsidiaries have been,
and are, in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, except for such
failures to comply or violations as, individually or in the aggregate,
could not reasonably be expected to have a Parent Material Adverse Effect.
(i) Brokers. No broker, investment banker, financial advisor or
other person, other than Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx"), the fees and expenses of which will be paid by Parent, is
entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement or the Tender Agreement based upon arrangements made by or on
behalf of Parent or Merger Subsidiary.
(j) No Prior Activities; Assets of Merger Subsidiary. Merger
Subsidiary was formed solely for the purpose of the Merger and engaging in
the transactions contemplated hereby. As of the date hereof and the
Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated hereby and activities, agreements or arrangements in
connection with the transactions contemplated hereby, Merger Subsidiary has
not and will not have (i) incurred, directly or indirectly through any of
its subsidiaries or affiliates, any obligations or liabilities, (ii)
engaged in any business or activities of any type or kind whatsoever or
(iii) entered into any agreements or arrangements with any person.
(k) Opinion of Financial Advisor. Parent has received the
opinion of Xxxxxx Xxxxxxx dated the date hereof, a copy of which has been
or promptly will be provided to the Company, to the effect that, as of such
date, the Exchange Ratio is fair to Parent from a financial point of view.
(l) Share Ownership. As of the date of this Agreement, none of
Parent, Merger Subsidiary nor any of their direct or indirect subsidiaries
owns any shares of Common Stock of the Company.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business. Except as expressly provided
in this Agreement or as set forth in Section 5.1 of the Company Disclosure
Schedule or with the prior written consent of Parent, during the period
from the date of this Agreement to the Appointment Time, the Company shall,
and shall cause its subsidiaries to, carry on their respective businesses
in the usual, regular and ordinary course in substantially the same manner
as heretofore conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and
preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to
the end that their goodwill and ongoing businesses shall be unimpaired at
the Effective Time. Except as expressly provided in this Agreement or as
set forth in Section 5.1 of the Company Disclosure Schedule, without
limiting the generality of the foregoing, during the period from the
execution and delivery of this Agreement to the Appointment Time, the
Company shall not, and shall not permit any of its subsidiaries to:
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned
subsidiary of the Company to its parent, (ii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries (other than
internal restructuring of wholly owned subsidiaries consistent with past
practice) or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of Company Common Stock (1) upon the exercise of Company Options
outstanding on the date of this Agreement, (2) pursuant to the ESPP in
accordance with its present terms and not in violation of this Agreement,
or (3) pursuant to the Rights Agreement);
(c) amend the Company's or any Significant Subsidiary's
certificate of incorporation, by-laws or other comparable charter or
organizational documents;
(d) acquire or agree to acquire (including by merger,
consolidation or acquisition of stock or assets) any business, including
through the acquisition of any interest in any corporation, partnership,
joint venture, association or other business organization or division
thereof;
(e) (i) mortgage or otherwise encumber or subject to any Lien
or, except in the ordinary course of business consistent with past practice
or pursuant to existing contracts or commitments, sell, lease, transfer or
otherwise dispose of any of the Company Intellectual Property Rights or any
other material properties or assets or (ii) except in the ordinary course
of business consistent with past practice or pursuant to existing contracts
or commitments, license any of the Company Intellectual Property Rights;
(f) make or agree to make any new capital expenditures which in
the aggregate are in excess of $500,000;
(g) make any material tax election (unless required by law) or
settle or compromise any material income tax liability;
(h) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice and in accordance
with their terms, of (i) liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Company Filed SEC Documents,
(ii) liabilities incurred in the ordinary course of business consistent
with past practice, or (iii) other liabilities or obligations not to exceed
in the aggregate $2,500,000 or waive the benefits of, or agree to modify in
any manner, any confidentiality, standstill or similar agreement to which
the Company or any of its subsidiaries is a party;
(i) commence a lawsuit other than (i) for the routine
collection of amounts owed or (ii) in such cases where the Company in good
faith determines that the failure to commence suit would result in a
material impairment of a valuable aspect of the Company's business,
provided that the Company consults with Parent prior to filing such suit;
(j) (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company
or any of its subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business (or to
refund existing or maturing indebtedness) consistent with past practice and
except for intercompany indebtedness between the Company and any of its
wholly owned subsidiaries or between such subsidiaries, or (ii) make any
loans, advances or capital contributions to, or investments in, any other
person;
(k) (i) enter into or amend any employment agreement with any
executive or , other than in the ordinary course of business, any other
employee, (ii) enter into any agreement pursuant to which the Company or
any of its subsidiaries will provide services for a term of more than 30
days at a fixed or capped price or otherwise pursuant to terms that are not
consistent with agreements entered into by the Company or any of its
subsidiaries in the ordinary course of business, (iii) enter into any
customer sale or license agreement on terms outside the ordinary course of
business as disclosed in Section 5.1(k)(iii) of the Company Disclosure
Schedule, (iv) pay commissions to sales employees except on the basis of
executed customer contracts with respect to products actually delivered to
customers, (v) other than customer licenses and sales contracts, enter into
any contract or series of related contracts in excess of $500,000, (vi)
enter into or amend any agreement or arrangement for obtaining professional
services or advice involving payments of more than $200,000 to any one
service provider (provided that this clause (vi) does not apply to legal
services or advice obtained in connection with the transactions
contemplated by this Agreement), (vii) enter into any product swap
transactions that would be in violation of generally accepted accounting
principles, (viii) make any determination as to amounts payable under any
plan, arrangement, or agreement, providing for discretionary incentive
compensation or bonus to any officer, director, employee or independent
contractor of the Company or any of its subsidiaries, or (ix) enter into or
adopt, or amend any agreement, arrangement, or Benefit Plan so as to
increase the liability (whether or not contingent) of the Company or Parent
or any of their subsidiaries in respect of compensation or benefits except
as may be required by applicable law; or
(l) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 5.2. State Takeover Statutes. The Company and its Board
of Directors shall (i) take all reasonable actions necessary to ensure that
no "fair price", "control share acquisition", "moratorium" or other
anti-takeover statute, or similar statute or regulation, is or becomes
applicable to this Agreement or the Tender Agreement, or the Offer, the
Merger or any of the other transactions contemplated hereby or thereby and
(ii) if any "fair price", "control share acquisition", "moratorium" or
other anti-takeover statute, or similar statute or regulation, becomes
applicable to this Agreement or the Tender Agreement, or the Offer, the
Merger or any other transaction contemplated hereby or thereby, take all
action necessary to ensure that the Offer, the Merger and the other
transactions contemplated hereby and thereby, may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger
and the other transactions contemplated hereby and thereby.
SECTION 5.3. Access to Information. Subject to applicable law,
the Company shall, and shall cause each of its subsidiaries to, afford to
Parent, and to Parent's officers, employees, accountants, counsel,
financial advisers and other representatives, full access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel (including
for the purpose of interviewing such personnel in connection with the
integration process) and records and their accounts' work papers and,
during such period, the Company shall, and shall cause each of its
subsidiaries to, furnish promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws,
(ii) a copy of each material tax return, report and information statement
filed by it during such period, and (iii) all other information concerning
its business, assets, properties and personnel as Parent may reasonably
request; provided that no investigation pursuant to this Section 5.3 shall
affect any representation or warranty given by the Company to Parent
hereunder.
SECTION 5.4. Affiliates. Within 10 days after the date of this
Agreement, the Company shall deliver to Parent a letter identifying all
persons who are to the Company's knowledge "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use
reasonable efforts to cause each such person to deliver to Parent at least
five business days prior to the initial expiration of the Offer, a written
agreement covering Rule 145 matters in customary form and reasonably
acceptable to Parent and the Company (an "Affiliates Agreement") from each
such person.
SECTION 5.5. No Solicitation by the Company. (a) From the date
of this Agreement until the Effective Time or, if earlier, the termination
of this Agreement in accordance with its terms, the Company shall not
(whether directly or indirectly through advisors, agents or other
intermediaries), and the Company shall cause its and its subsidiaries'
respective officers, directors, advisors, representatives and other agents
not to, directly or indirectly, (i) solicit, initiate or knowingly
encourage, or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal or (ii) participate or engage in
substantive discussions or negotiations with, or disclose or provide any
non-public information relating to the Company or its subsidiaries or
afford access to the properties, books or records of the Company or its
subsidiaries to, any person (including any "person" as defined in Section
13(d)(3) of the Exchange Act) that has made an Acquisition Proposal or with
or to any Person in contemplation of an Acquisition Proposal or (iii) enter
into any agreement or agreement in principle providing for or relating to
an Acquisition Proposal; provided, however, that if and only if (A) a
person has submitted an unsolicited written Acquisition Proposal (under
circumstances in which the Company has complied with its obligations under
this Section 5.5(a)) to the Company's Board of Directors, (B) the Company's
Board of Directors believes in good faith, based on such matters as it
deems relevant, including the advice of the Company's financial advisor,
that such Acquisition Proposal is a Superior Proposal and (C) the Company's
Board of Directors determines in good faith, based on such matters as it
deems relevant, including consultation with the Company's outside legal
counsel, that engaging in such negotiations or discussions or providing
such information is required to satisfy the fiduciary duties of the Board
of Directors of the Company under Delaware Law, then the Company may
furnish information to such person with respect to the Company and its
subsidiaries (so long as the Company has entered into a customary
confidentiality agreement with such party) and participate in negotiations
and discussions with such person regarding such Acquisition Proposal;
provided further that, after the third business day following Parent's
receipt of written notice advising Parent that the Company's Board of
Directors is prepared to accept such Superior Proposal, which notice
specifies the material terms and conditions of such Superior Proposal and
identifies the person making such Superior Proposal, the Board of Directors
of the Company may, in response to a Superior Proposal which was not
solicited by the Company and which did not otherwise result from a breach
of this Section 5.5(a), terminate this Agreement, if the Board of Directors
of the Company determines in good faith, based on such matters as it deems
relevant, including consultation with the Company's outside legal counsel,
that it is required to do so in order to comply with its fiduciary duties
to the Company's stockholders under Delaware Law, and, concurrently with
such termination, causes the Company to pay the fee payable pursuant to
Section 9.5(a) hereof by reason thereof. Nothing contained in this
Agreement shall prohibit the Company or the Company's Board of Directors
from taking and disclosing to the 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(a) promulgated under the Exchange Act or from making any
disclosure required by applicable law or, in the case of the Company's
Board of Directors, making any other disclosure to the Company's
stockholders that the Company's Board of Directors determines in good faith
is required to be made to satisfy the fiduciary duties of the Company's
Board of Directors under Delaware Law. The Company shall immediately cease
and cause to be terminated and shall cause its affiliates and subsidiaries
and its or their respective officers, directors, employees, representatives
or agents, to terminate all existing discussions or negotiations, if any,
with any persons conducted heretofore with respect to, or that could
reasonably be expected to lead to, an Acquisition Proposal.
(b) For purposes of this Agreement, "Acquisition Proposal"
shall mean any inquiry, proposal or offer from any person (other than
Parent, Merger Subsidiary or any of their affiliates) relating to any
merger, consolidation, recapitalization, liquidation or other direct or
indirect business combination, involving the Company or any Significant
Subsidiary or the issuance or acquisition of shares of capital stock or
other equity securities of the Company or any Significant Subsidiary
representing 15% or more (by voting power) of the outstanding capital stock
of the Company or such Significant Subsidiary or any tender or exchange
offer that if consummated would result in any person, together with all
affiliates thereof, beneficially owning shares of capital stock or other
equity securities of the Company or any Significant Subsidiary representing
15% or more (by voting power) of the outstanding capital stock of the
Company or such Significant Subsidiary, or the acquisition, license,
purchase or other disposition of a substantial portion of the technology,
business or assets of the Company or any Significant Subsidiary outside the
ordinary course of business or inconsistent with past practice and the term
"Superior Proposal" means any bona fide Acquisition Proposal which is on
terms that the Board of Directors of the Company determines in its good
faith judgment (after receipt of the advice of a financial advisor of
nationally recognized reputation) provides for consideration which would
exceed the value of the consideration provided for in the Offer and the
Merger, after taking into account all relevant factors, including any
conditions to such Acquisition Proposal, the timing of the closing thereof,
the risk of nonconsummation, the ability of the person making the
Acquisition Proposal to finance the transaction contemplated thereby and
any required governmental or other consents, filings and approvals.
(c) In addition to the other obligations of the Company set
forth in this Section 5.5, the Company shall promptly advise Parent orally
and in writing of any request for information with respect to any
Acquisition Proposal, or any inquiry with respect to or which is reasonably
likely to result in an Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the
identity of the person making the same. The Company shall inform Parent on
a prompt basis of the status and content of any discussions regarding any
Acquisition Proposal with a third party and as promptly as practicable of
any change in the price, structure or form of the consideration or material
terms of and conditions regarding the Acquisition Proposal.
SECTION 5.6. Litigation. The Company shall give Parent the
opportunity to participate in the defense of any litigation against the
Company and/or its directors relating to the transactions contemplated by
this Agreement and the Tender Agreement.
SECTION 5.7. Rights Agreement. Except as expressly required by
this Agreement, the Company shall not, without the prior consent of Parent,
amend the Rights Agreement or take any other action with respect to, or
make any determination under, the Rights Agreement, including a redemption
of the Rights or any action to facilitate an Acquisition Proposal.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Listing. Parent shall use its reasonable best
efforts to cause the Parent Common Stock to be issued upon the consummation
of the Offer and in the Merger and to be issuable upon exercise of Parent
Options and Parent Management Options to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as practicable
after the date hereof, and in any event prior to the Appointment Time.
SECTION 6.2. Indemnification. (a) For six years after the
Effective Time, Parent and the Surviving Corporation will indemnify and
hold harmless (including advancement of expenses) the current and former
directors and officers of the Company in respect of acts or omissions
occurring on or prior to the Effective Time to the extent provided in the
Company's certificate of incorporation, by-laws and indemnity agreements in
effect on the date hereof; provided that such indemnification shall be
subject to any limitation imposed from time to time under applicable law.
Parent will cause to be maintained for a period of not less than two years
from the Effective Time the Company's current directors' and officers'
insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O
Insurance") for all persons who are directors and officers of the Company
on the date of this Agreement, so long as the annual premium therefor would
not be in excess of the amount per annum the Company paid in its last full
fiscal year, which amount has been disclosed to Parent, on terms and
conditions substantially similar to the existing D&O Insurance. If the
existing D&O Insurance cannot be maintained, expires or is terminated or
canceled during such two-year period, Parent will use reasonable efforts to
cause to be obtained as much D&O Insurance as can be obtained for the
remainder of such period for an annualized premium not in excess of the
amount per annum the Company paid in its last full fiscal year, on terms
and conditions substantially similar to the existing D&O Insurance. It is
understood that, unless made by a court, any determination as to whether a
person seeking indemnification pursuant to this Section 6.2 has met any
applicable legal standard for indemnification shall be made by a committee
consisting of at least two of Parent's independent directors.
(b) In the event Parent or the Surviving Corporation or any of
their successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) transfers or conveys all or
substantially all its properties and assets to any person, then, and in
each such case, to the extent necessary to effectuate the purposes of this
Section 6.2, proper provision shall be made so that the successors and
assigns of Parent and the Surviving Corporation assume the obligations set
forth in this Section 6.2; provided that, in the case of any such
assignment by Parent or the Surviving Corporation, Parent and the Surviving
Corporation shall remain liable for all of their respective obligations
under this Agreement.
SECTION 6.3. Obligations of Merger Subsidiary. Parent will take
all action necessary to cause Merger Subsidiary to perform its obligations
under this Agreement (including ensuring that Merger Subsidiary will at the
appropriate times have sufficient shares of Parent Common Stock and funds
to consummate the Offer and the Merger in accordance with the terms hereof)
and to consummate the Offer and the Merger on the terms and conditions set
forth in this Agreement.
SECTION 6.4. Voting of Shares. Parent and Merger Subsidiary
agree to make a quorum and vote all Shares acquired in the Offer or
otherwise beneficially owned by them in favor of approval and adoption of
this Agreement and the Merger at the Company Stockholders Meeting.
SECTION 6.5. Employees. (a) Parent agrees to honor in
accordance with their terms all Benefit Plans and all employment and
severance agreements in each case listed in Section 6.5 of the Company
Disclosure Schedule (or filed as exhibits to the Company Filed SEC
Documents), and all accrued benefits vested thereunder; it being understood
and agreed that nothing in this Section 6.5(a) shall prevent Parent from
terminating any Benefit Plan or other agreement in accordance with its
terms.
(b) Parent agrees to provide employees of the Company and its
subsidiaries retained by Parent with employee benefits in the aggregate no
less favorable than those benefits provided to Parent's similarly situated
employees; provided that Parent shall be under no obligation to retain any
employee or group of employees of the Company or its subsidiaries.
(c) For purposes of all employee benefit plans, programs and
arrangements maintained by or contributed to by Parent and its subsidiaries
(including, after the Closing, the Surviving Corporation), Parent shall, or
shall cause its subsidiaries to, cause each such plan, program or
arrangement to treat the prior service with the Company and its affiliates
of each person who is an employee or former employee of the Company or its
subsidiaries immediately prior to the Closing (a "Company Employee") (to
the same extent such service is recognized under analogous plans, programs
or arrangements of the Company or its affiliates prior to the Closing) as
service rendered to Parent or its subsidiaries, as the case may be, for
purposes of eligibility to participate in and vesting thereunder (but not
benefit accrual); provided, however, that such crediting of service shall
not operate to duplicate any benefit or the funding of such benefit.
Company Employees shall also be given credit for any deductible or
co-payment amounts paid in respect of the plan year in which the Closing
occurs, to the extent that, following the Closing, they participate in any
other plan for which deductibles or co-payments are required. Parent shall
also cause each Parent benefit plan to waive any preexisting condition
which was waived under the terms of any Benefit Plan immediately prior to
the Closing or waiting period limitation which would otherwise be
applicable to a Company Employee on or after the Closing. Parent shall
recognize any accrued but unused vacation and sabbatical time of the
Company Employees as of the Closing Date, in accordance with the terms of
such Company policies and Parent shall cause the Company and its
subsidiaries to provide such vacation and sabbatical time in accordance
with the terms of such Company policies but in no event will Parent be
obligated to extend or enlarge the benefits available under such Company
policies.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. Shareholder Approval; Preparation of S-4 and Proxy
Statement/Prospectus. (a) If approval of the Company's stockholders is
required by applicable law in order to consummate the Merger other than
pursuant to Section 253 of Delaware Law, following the acceptance for
exchange of Shares pursuant to the Offer, Parent and the Company shall, as
soon as practicable following the acceptance of Shares pursuant to the
Offer, prepare and the Company shall file with the SEC the Company Proxy
Statement and Parent and the Company shall prepare and Parent shall file
with the SEC a post-effective amendment to the Form S-4 (the
"Post-Effective Amendment") for the offer and sale of the Parent Common
Stock pursuant to the Merger and in which the Company Proxy Statement will
be included as a prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Post-Effective Amendment declared effective
under the Securities Act as promptly as practicable after such filing. The
Company will use all reasonable efforts to cause the Company Proxy
Statement to be mailed to the Company's stockholders as promptly as
practicable after the Post-Effective Amendment is declared effective under
the Securities Act. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to
be taken under any applicable state securities laws in connection with the
issuance of Parent Common Stock in the Offer and the Merger and the Company
shall furnish all information concerning the Company and the holders of
capital stock of the Company as may be reasonably requested in connection
with any such action and the preparation, filing and distribution of the
Company Proxy Statement. No filing of, or amendment or supplement to, or
correspondence to the SEC or its staff with respect to, the Post-Effective
Amendment will be made by Parent, or the Company Proxy Statement will be
made by the Company, without providing the other party a reasonable
opportunity to review and comment thereon. Parent will advise the Company,
promptly after it receives notice thereof, of the time when the
Post-Effective Amendment has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of
the qualification of the Parent Common Stock issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Post-Effective Amendment or comments thereon and
responses thereto or requests by the SEC for additional information. The
Company will advise Parent, promptly after it receives notice thereof, of
any request by the SEC for the amendment of the Company Proxy Statement or
comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their respective
affiliates, officers or directors, should be discovered by the Company or
Parent which should be set forth in an amendment or supplement to either of
the Post-Effective Amendment or the Company Proxy Statement, so that any of
such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
the party which discovers such information shall promptly notify the other
parties hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company.
(b) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger, the Company shall
establish, prior to or as soon as practicable following the date upon which
the Post-Effective Amendment becomes effective, a record date (which shall
be prior to or as soon as practicable following the date upon which the
Post-Effective Amendment becomes effective) for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") for the purpose of considering and taking action upon this
Agreement and the Merger and (with the consent of Parent) such other
matters as may in the reasonable judgment of the Company be appropriate for
consideration at the Company Stockholders Meeting. Once the Company
Stockholders Meeting has been called and noticed, the Company shall not
postpone or adjourn the Company Stockholders Meeting (other than for the
absence of a quorum) without the consent of Parent. Subject to the
Company's right, pursuant to Section 1.2(b) hereof, to withdraw or modify
the Recommendations, the Board of Directors of the Company shall include in
the Post-Effective Amendment and the Company Proxy Statement a copy of the
Recommendations as such Recommendations pertain to the Merger and this
Agreement. Notwithstanding the foregoing, if approval of the Company's
stockholders is required by applicable law in order to consummate the
Merger, the Board of Directors of the Company shall submit this Agreement
and the Merger for approval to the Company's stockholders whether or not
the Board of Directors of the Company determines in accordance with Section
1.2(b) after the date hereof that this Agreement and the Merger are no
longer advisable and recommends that the stockholders of the Company reject
it. Unless the Board of Directors of the Company has withdrawn its
recommendation of this Agreement and the Merger in compliance with this
Section 1.2(b), the Company shall use its reasonable best efforts to
solicit from stockholders of the Company proxies in favor of this Agreement
and the Merger and shall take all other actions necessary or advisable to
secure the vote or consent of stockholders required by Delaware Law to
effect the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b) above, in
the event that Merger Subsidiary shall acquire at least 90% of the
outstanding Shares in the Offer, the parties hereto shall 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 the Company, in accordance with Section 253 of Delaware
Law.
SECTION 7.2. HSR Act Filings; Reasonable Efforts; Notification.
(a) Each of Parent and the Company shall (i) promptly make or cause to be
made the filings required of such party or any of its subsidiaries under
the HSR Act and any other Antitrust Laws with respect to the Offer, the
Merger and the other transactions contemplated by this Agreement and the
Tender Agreement, (ii) comply at the earliest practicable date with any
request under the HSR Act or such other Antitrust Laws for additional
information, documents, or other material received by such party or any of
its subsidiaries from the Federal Trade Commission or the Department of
Justice or any other Governmental Entity in respect of such filings, the
Offer, the Merger or such other transactions, and (iii) cooperate with the
other party in connection with any such filing and in connection with
resolving any investigation or other inquiry of any such agency or other
Governmental Entity under any Antitrust Laws with respect to any such
filing, the Offer, the Merger or such other transactions. Each party shall
promptly inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity
regarding any such filings, the Offer, the Merger or such other
transactions. Neither party shall participate in any meeting with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party notice of the meeting and, to the
extent permitted by such Governmental Entity, the opportunity to attend and
participate.
(b) Each of Parent and the Company shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the Offer, the Merger or any other
transactions provided for in this Agreement or the Tender Agreement under
the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the
Federal Trade Commission Act, as amended, and any other federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or
proceeding is instituted (or threatened to be instituted) challenging the
Offer, the Merger or any other transactions provided for in this Agreement
or the Tender Agreement as violative of any Antitrust Law, and, if by
mutual agreement, Parent and the Company decide that litigation is in their
best interests, each of Parent and the Company shall cooperate and use all
reasonable efforts vigorously to contest and resist any such action or
proceeding and to have vacated, lifted, reversed, or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent (each an "Order"), that is in effect and that prohibits,
prevents, or restricts consummation of the Offer, the Merger or any such
other transactions. Each of Parent and the Company shall use all reasonable
efforts to take such action as may be required to cause the expiration of
the notice periods under the HSR Act or other Antitrust Laws with respect
to the Offer, the Merger and such other transactions as promptly as
possible after the execution of this Agreement.
(c) Each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Offer, the Merger, and the other
transactions contemplated by this Agreement and the Tender Agreement,
including (i) the obtaining of all other necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of
the Form S-4, the Offer Documents, the Schedule 14D-9 and, if necessary,
the Merger S-4 and the Company Proxy Statement, and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement and the Tender Agreement.
(d) Notwithstanding anything to the contrary in Section 7.2(a),
(b) or (c), (i) neither Parent nor any of its subsidiaries shall be
required to divest any of their respective businesses, product lines or
assets, (ii) neither Parent nor any of its subsidiaries shall be required
to take or agree to take any other action or agree to any limitation that
could reasonably be expected to have an adverse effect on the business,
assets, condition (financial or otherwise), results of operations or
prospects of Parent and its subsidiaries taken as a whole or of Parent
combined with the Surviving Corporation after the Effective Time, (iii)
neither the Company nor its subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree
to take any other action or agree to any limitation that could reasonably
be expected to have a Company Material Adverse Effect, (iv) no party shall
be required to agree to the imposition of or to comply with, any condition,
obligation or restriction on Parent or any of its subsidiaries or on the
Surviving Corporation or any of its subsidiaries of the type referred to in
subclause (a) or (b) of clause (5) of Annex I or Section 8.1(c) and (v)
neither Parent nor Merger Subsidiary shall be required to waive any of the
conditions to the Offer set forth in Annex I or any of the conditions of to
the Merger set forth in Article VIII.
(e) The Company shall give prompt notice to Parent, and Parent
or Merger Subsidiary shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent
or Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement or
the Tender Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated
by this Agreement or the Tender Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting it or any of
its subsidiaries which, if pending on the date of this Agreement
would have been required to have been disclosed pursuant to Section
4.1 or 4.2 or which relate to the consummation of the transactions
contemplated by this Agreement or the Tender Agreement.
SECTION 7.3. Public Announcements. Parent and Merger
Subsidiary, on the one hand, and the Company, on the other hand, will
consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Offer and the 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, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement will be in
the form previously agreed to by the parties.
SECTION 7.4. Confidentiality. Each of Parent and the Company
will hold, and will cause its Representatives (defined in the
Confidentiality Agreements, each dated February 8, 2000 (the
"Confidentiality Agreements"), each between Parent and the Company) to
hold, any Evaluation Material (defined in the Confidentiality Agreements)
in confidence in accordance with the terms of the relevant Confidentiality
Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligations of each party to effect the Merger
are subject to the satisfaction or, to the extent permitted by applicable
law, waiver on or prior to the Closing Date of each of the following
conditions:
(a) Shareholder Approval. If required by Delaware Law, this
Agreement and the Merger shall have been approved and adopted by the
Company Shareholder Vote.
(b) Purchase of Shares in the Offer. Merger Subsidiary shall
have accepted for exchange and exchanged all of the Shares tendered
pursuant to the Offer unless the failure to consummate the Offer is the
result of a willful and material breach of this Agreement by the party
asserting such condition.
(c) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in effect
preventing or prohibiting consummation of the Merger.
(d) Form S-4. The Form S-4 or the Post-Effective Amendment, as
the case may be, shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop
order, if any.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER, FEES AND EXPENSES
SECTION 9.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
this Agreement and the Merger by the shareholders of the Company or Merger
Subsidiary:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall have expired or been terminated in
accordance with the terms of this Agreement without Parent or Merger
Subsidiary having accepted for exchange any Shares pursuant to the
Offer (provided that Parent and Merger Subsidiary shall not be
permitted to terminate this Agreement if the Offer is terminated or
expires without Shares being accepted for exchange in violation of
this Agreement);
(ii) if the Offer shall not have been consummated on or
before September 30, 2000, unless the failure to consummate the Offer
is the result of a willful and material breach of this Agreement by
the party seeking to terminate this Agreement;
(iii) if the Merger shall not have been consummated as a
result of any condition thereto in Article VIII being incapable of
being satisfied; or
(iv) if any statute, rule, regulation, injunction or decree
having the effects set forth in subclause (a) or (b) of clause (5) of
Annex A shall be in effect and shall have become final and
nonappealable;
(c) by Parent, upon the occurrence of any Trigger Event
described in clauses (i) through (iv) of Section 9.5(a); or
(d) by the Company, in accordance with Section 5.5(a); provided
that, in order for the termination of this Agreement pursuant to this
clause (d) to be deemed effective, the Company shall have complied with all
provisions of Section 5.5.
SECTION 9.2. Effect of Termination. Except for any willful and
material breach of this Agreement by any party hereto (which breach and
liability therefor shall not be affected by the termination of this
Agreement), if this Agreement is terminated by either the Company or Parent
as provided in Section 9.1, this Agreement shall become void and have no
further effect, without any liability or obligation on the part of Parent,
Merger Subsidiary or the Company, other than the provisions of Section
4.1(o), Section 4.2(i), Section 7.4, this Section 9.2, Section 9.5 and
Sections 10.5 and 10.6.
SECTION 9.3. Amendment. Subject to Section 1.3(a), this
Agreement may be amended by the parties at any time before or after any
required approval of the transactions contemplated by this Agreement by the
shareholders of the Company; provided, however, that, after any such
approval, there shall not be made any amendment that by law requires
further approval by such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
SECTION 9.4. Extension; Waiver. Subject to Section 1.3(a), 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
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.3, waive compliance
with any of the agreements or conditions contained in this Agreement. Any
such extension or waiver shall be valid only if set forth in an instrument
in writing signed by each of the parties hereto. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.5. Fees and Expenses.
(a) The Company agrees to pay Parent a fee in immediately
available funds equal to $175,000,000.00 promptly, but in no event later
than one business day, after the termination of this Agreement (or such
later date as may apply in the case of clause (i) below) as a result of the
occurrence of any of the events set forth below (a "Trigger Event"):
(i) the Company shall have received an Acquisition
Proposal, and at any time prior to, or within one year after (unless
this Agreement is terminated pursuant to Section 9.1(a) or Section
9.1(b)(iv)), the termination of this Agreement, the Company shall
have entered into, or shall have publicly announced its intention to
enter into, an agreement or an agreement in principle (other than a
confidentiality agreement permitted by Section 5.5) with respect to
any Acquisition Proposal;
(ii) any person or group (defined in Section 13(d)(3) of
the Exchange Act) (other than Parent or any of its subsidiaries)
shall have become the beneficial owner (defined in Rule 13d-3
promulgated under the Exchange Act) of at least 15% of the
outstanding Company Common Stock or shall have acquired, directly or
indirectly, at least 15% of the assets of the Company and its
subsidiaries;
(iii) the Company shall have breached or failed to perform
in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would give rise to the failure of a
condition set forth in subclause (c) or (d) of clause (5) of Annex I,
and (B) is incapable of being or has not been cured by the Company
within 10 calendar days after giving written notice to the Company of
such breach or failure to perform; or
(iv) (1) the Board of Directors of the Company (or any
committee thereof) shall have withdrawn or materially modified or
amended in a manner adverse to Parent or Merger Subsidiary its
approval or recommendation of the Offer, the Merger or this Agreement
or its approval of the entry by Parent or Merger Subsidiary into the
Tender Agreement, or shall have failed to make such favorable
recommendation, or (2) the Board of Directors of the Company (or any
committee thereof) shall have recommended to the shareholders of the
Company any Acquisition Proposal or shall have resolved to, or
publicly announced an intention to, do so.
(b) Except as set forth in this Section 9.5, all fees and
expenses incurred in connection with the Offer and the Merger, this
Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the Offer or
the Merger is consummated; provided, that if the Offer is not consummated,
expenses incurred in connection with the printing and mailing of the
documents distributed or to be distributed to stockholders of the Company,
all SEC and other regulatory filing fees with respect to the Form S-4 and
the NYSE listing fee with respect to the listing of Parent Company Stock to
be issued in the Offer and the Merger shall be shared equally by Parent and
the Company; provided, further, that if this Agreement is terminated as a
result of the occurrence of a Trigger Event, in addition to any amounts
paid or payable by the Company to Parent pursuant to Section 9.5(a), the
Company shall assume and pay, or reimburse Parent for, all reasonably
documented out-of-pocket fees payable and expenses incurred by Parent
(including the fees and expenses of its counsel) in connection with this
Agreement and the transactions contemplated hereby, up to a maximum of
$10,000,000.00 (which amount shall include the fees and expenses allocated
to or paid by the Company pursuant to the proviso of the immediately
preceding sentence).
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. 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 10.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
SECTION 10.2. Notices. All notices, requests and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof
of delivery) or by telecopy (with copies by overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Subsidiary, to
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
(b) if to the Company, to
Sterling Software, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Sterling Software, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. XxXxxxxxx, Xx.
Fax: 000-000-0000
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
SECTION 10.3. 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 reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation".
References herein to the "knowledge of the Company" shall mean the
knowledge of the executive officers of the Company after reasonable
inquiry.
SECTION 10.4. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 10.5. Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Confidentiality Agreement (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement and (b) except for the provisions of Articles I, II and III
and Section 6.2 is not intended to confer upon any person other than the
parties any rights or remedies hereunder.
SECTION 10.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
EXCEPT THAT THE CONSUMMATION AND EFFECTIVENESS OF THE MERGER AND THE
PROVISIONS OF THIS AGREEMENT WHICH ARE MANDITORILY GOVERNED BY DELAWARE LAW
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, DELAWARE LAW.
SECTION 10.7. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, 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; any instrument
purporting to make such assignment shall be void. 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 10.8. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 10.9. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
Parent, Merger Subsidiary and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and
General Counsel
SILVERSMITH ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
STERLING SOFTWARE, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
ANNEX I
Conditions to the Offer
Notwithstanding any other provision of the Offer, subject to
the terms of this Agreement, Merger Subsidiary shall not be required to
accept for exchange or exchange or deliver any shares of Parent Common
Stock for, (subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Merger
Subsidiary's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer)) any Shares tendered, if by the
expiration of the Offer (as it may be extended in accordance with the
requirements of Section 1.1), (1) the Minimum Condition shall not have been
satisfied, (2) the applicable waiting period under the HSR Act and any
other applicable Antitrust Laws shall not have expired or been terminated,
(3) the Form S-4 shall not have become effective under the Securities Act
or shall be the subject of any stop order or proceedings seeking a stop
order, (4) the shares of Parent Common Stock to be issued in the Offer and
the Merger shall not have been approved for listing on the NYSE, subject to
official notice of issuance, or (5) at any time on or after the date of
this Agreement and prior to the acceptance for exchange of Shares pursuant
to the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any Governmental Entity, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly
to restrain or prohibit the making of the Offer, the acceptance for
exchange of, or the exchange or delivery of shares of Parent Common
Stock for, some of or all the Shares by Parent or Merger Subsidiary
or the consummation by Parent or Merger Subsidiary of the Merger,
seeking to obtain material damages or otherwise directly or
indirectly relating to the transactions contemplated by the Tender
Agreement, this Agreement, the Offer or the Merger, (ii) seeking to
restrain or prohibit Parent's or Merger Subsidiary's ownership or
operation (or that of their respective subsidiaries or affiliates) of
all or any portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Parent and its subsidiaries,
taken as a whole, or to compel Parent or any of its subsidiaries or
affiliates to dispose of or hold separate all or any portion of the
business or assets of the Company and its subsidiaries, taken as a
whole, or of Parent and its subsidiaries, taken as a whole, (iii)
seeking to impose limitations on the ability of Parent or any of its
subsidiaries or affiliates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote any Shares acquired or owned by Parent or any of its
subsidiaries or affiliates on all matters properly presented to the
Company's stockholders or (iv) seeking to require divestiture by
Parent or any of its subsidiaries or affiliates of any Shares; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Tender Agreement,
this Agreement, the Offer or the Merger, by any Governmental Entity
that, in the judgment of Parent, is reasonably likely, directly or
indirectly, to result in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above, subject as
aforesaid; or
(c) the Company shall have breached or failed to perform in any
material respect any of its covenants, obligations or agreements
under this Agreement (other than Section 5.1(k)), or the Company
shall have breached Section 5.1(k) such that the aggregate of all
such breaches would materially and adversely affect the Company and
its subsidiaries taken as a whole or Parent; or
(d) the representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality shall not be
true and correct as of the date of this Agreement and as of the
expiration of the Offer (including any extension thereof) (except to
the extent expressly made as of an earlier date, in which case as of
such date), or any of the representations and warranties set forth in
this Agreement that are not so qualified shall not be true and
correct in any material respect as of the date of this Agreement and
as of the expiration of the Offer (except to the extent expressly
made as of an earlier date, in which case as of such date); provided
that this condition shall not be deemed to exist unless any such
breaches of representation or warranty (without regard to any
"materiality" or "Company Material Adverse Effect" or similar
qualifier or threshold), individually or in the aggregate, has had or
could reasonably be expected to have, a Company Material Adverse
Effect; or
(e) this Agreement shall have been terminated in accordance
with its terms; or
(f) (1) the Board of Directors of the Company (or any committee
thereof) shall have withdrawn or materially modified or amended in a
manner adverse to Parent or Merger Subsidiary its approval or
recommendation of the Offer, the Merger or this Agreement, or its
approval of the entry by Merger Subsidiary into the Tender Agreement,
or shall have failed to make such favorable recommendation or (2) the
Board of Directors of the Company (or any committee thereof) shall
have recommended to the shareholders of the Company any Acquisition
Proposal or shall have resolved to, or publicly announced an
intention to, do so; or
(g) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle (other than a confidentiality agreement permitted by
Section 5.5 of this Agreement) with respect to any Acquisition
Proposal; or
(h) any person or group (defined in Section 13(d)(3) of the
Exchange Act) (other than Parent or any of its subsidiaries) shall
have become the beneficial owner (defined in Rule 13d-3 promulgated
under the Exchange Act) of at least 15% of the outstanding Shares or
shall have acquired, directly or indirectly, at least 15% of the
assets of the Company and its subsidiaries;
which, in the good faith judgment of Parent in any such case, and
regardless of the circumstances (including any action or omission by Parent
or Merger Subsidiary) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for exchange or exchange.
The foregoing conditions are for the sole benefit of Parent and
Merger Subsidiary and may be asserted by Parent regardless of the
circumstances (including any action or omission by Parent or Merger
Subsidiary) giving rise to any such condition or (other than the Minimum
Condition) may, subject to the terms of this Agreement, be waived by Parent
and Merger Subsidiary in their reasonable discretion in whole at any time
or in part from time to time. The failure by Parent or Merger Subsidiary at
any time to exercise its rights under any of the foregoing conditions shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances, and each such right
shall be deemed an ongoing right which may be asserted at any time or from
time to time.
AGREEMENT AND PLAN OF MERGER
Dated as of February 14, 2000
Among
COMPUTER ASSOCIATES INTERNATIONAL, INC.,
SILVERSMITH ACQUISITION CORP.
And
STERLING SOFTWARE, INC.
TABLE OF CONTENTS
Page
INTRODUCTION..............................................................1
ARTICLE I
THE OFFER
SECTION 1.1. The Offer..................................................1
SECTION 1.2. Company Action.............................................4
SECTION 1.3. Directors..................................................5
ARTICLE II
THE MERGER
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 and By-Laws...................6
SECTION 2.6. Directors..................................................7
SECTION 2.7. Officers...................................................7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.1. Effect on Capital Stock....................................7
(a) Capital Stock of Merger Subsidiary............................7
(b) Cancellation of Treasury Stock and Parent-Owned Stock.........7
(c) Conversion of Company Common Stock............................7
(d) Adjustment of Exchange Ratio..................................7
SECTION 3.2. Exchange of Certificates...................................8
(a) Exchange Agent................................................8
(b) Exchange Procedure............................................8
(c) Distributions with Respect to Unexchanged Shares..............9
(d) No Further Ownership Rights in Company Common Stock...........9
(e) Termination of Exchange Fund; No Liability....................9
(f) No Fractional Shares.........................................10
(g) Investment of Exchange Fund..................................11
(f) Lost Certificates............................................11
SECTION 3.3. Dissenting Shares.........................................11
SECTION 3.4. Company Options...........................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company.............14
(a) Organization, Standing and Corporate Power...................14
(b) Subsidiaries.................................................14
(c) Capital Structure............................................15
(d) Authority; Noncontravention..................................15
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities................................................17
(f) Information Supplied.........................................17
(g) Absence of Certain Changes or Events.........................18
(h) Litigation...................................................19
(i) Absence of Changes in Stock and Benefit Plans................19
(j) Participation and Coverage in Benefit Plan...................20
(k) ERISA Compliance.............................................20
(l) Taxes........................................................21
(m) Voting Requirements..........................................22
(n) State Takeover Statutes; Rights Agreement....................22
(o) Brokers; Schedule of Fees and Expenses.......................23
(p) Permits; Compliance with Laws; Environmental Matters.........23
(q) Contracts; Debt Instruments..................................24
(r) Title to Properties..........................................26
(s) Opinion of Financial Advisor.................................26
(t) Interests of Officers and Directors..........................26
(u) Software.....................................................26
(v) Intellectual Property........................................28
(w) No Infringement..............................................29
(x) Change of Control............................................30
SECTION 4.2. Representations and Warranties of Parent and Merger
Subsidiary..............................................30
(a) Organization, Standing and Corporate Power...................30
(b) Capital Structure............................................30
(c) Authority; Noncontravention..................................31
(d) SEC Documents; Financial Statements; No Undisclosed
Liabilities................................................32
(e) Information Supplied.........................................32
(f) Absence of Certain Changes or Events.........................32
(g) Litigation...................................................32
(h) Compliance with Applicable Laws..............................33
(i) Brokers......................................................33
(j) No Prior Activities; Assets of Merger Subsidiary.............33
(k) Opinion of Financial Advisor.................................33
(l) Share Ownership..............................................33
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business.......................................34
SECTION 5.2. State Takeover Statutes...................................36
SECTION 5.3. Access to Information.....................................36
SECTION 5.4. Affiliates................................................36
SECTION 5.5. No Solicitation by the Company............................37
SECTION 5.6. Litigation................................................38
SECTION 5.7. Rights Agreement..........................................38
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Listing...................................................39
SECTION 6.2. Indemnification...........................................39
SECTION 6.3. Obligations of Merger Subsidiary..........................40
SECTION 6.4. Voting of Shares..........................................40
SECTION 6.5. Employees.................................................40
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. Shareholder Approval; Preparation of S-4 and Proxy
Statement/Prospectus....................................41
SECTION 7.2. HSR Act Filings; Reasonable Efforts; Notification.........42
SECTION 7.3. Public Announcements......................................44
SECTION 7.4. Confidentiality...........................................45
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1. Conditions to Each Party's Obligation To Effect the
Merger..................................................45
(a) Shareholder Approval.........................................45
(b) Purchase of Shares in the Offer..............................45
(c) No Injunctions or Restraints.................................45
(d) Form S-4.....................................................45
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER, FEES AND EXPENSES
SECTION 9.1. Termination...............................................45
SECTION 9.2. Effect of Termination.....................................46
SECTION 9.3. Amendment.................................................46
SECTION 9.4. Extension; Waiver.........................................46
SECTION 9.5. Fees and Expenses.........................................47
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and Warranties.............48
SECTION 10.2. Notices...................................................48
SECTION 10.3. Interpretation............................................49
SECTION 10.4. Counterparts..............................................49
SECTION 10.5. Entire Agreement; No Third-Party Beneficiaries............50
SECTION 10.6. GOVERNING LAW.............................................50
SECTION 10.7. Assignment................................................50
SECTION 10.8. Enforcement...............................................50
SECTION 10.9. Severability..............................................50
Annex IConditions to the Offer
