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Exhibit (c)(2)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 1, 1999 (this
"Agreement"), by and among IFS AMERICAS, INC., a Delaware corporation
("Parent"), IFS ACQUISITION, INC., a Wisconsin corporation and a wholly-owned
subsidiary of Parent (the "Purchaser"), and EFFECTIVE MANAGEMENT SYSTEMS, INC.,
a Wisconsin corporation (the "Company").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and the Company are entering into an Agreement
and Plan of Merger (as such agreement may hereafter be amended from time to
time, the "Merger Agreement"; capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to them in the Merger Agreement),
which provides, upon the terms and subject to the conditions thereof, for (i)
the commencement by the Purchaser of a tender offer (the "Offer") to purchase,
among other things, all of the issued and outstanding shares of the common
stock, $.01 par value, of the Company ("Common Stock"), at a price per share
equal to the Offer Price and (ii) the subsequent merger of the Purchaser and the
Company (the "Merger"), whereby each share of Common Stock, other than shares
owned directly or indirectly by Parent, the Purchaser or the Company and other
than Dissenting Shares, will be converted into the right to receive in cash the
Offer Price applicable thereto; and
WHEREAS, as a condition to the willingness of the parties to enter into
the Merger Agreement, Parent and the Purchaser have required that the Company
agree, and in order to induce Parent and the Purchaser to enter into the Merger
Agreement, the Company has agreed, to grant the Purchaser an option to purchase
shares of Common Stock, upon the terms and subject to the conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.1 Grant of Stock Option. Subject to the terms and conditions
set forth herein, the Company hereby grants to the Purchaser an irrevocable
option (the "Stock Option") to purchase that number of newly issued shares of
Common Stock (the "Option Shares") equal to the number of shares of Common Stock
that, when added to the number of shares of Common Stock owned by the Purchaser
and its affiliates immediately following consummation of the Offer, shall
constitute 90% of the shares of Common Stock then outstanding on a fully diluted
basis (giving effect to the issuance of the Option Shares) at a purchase price
per Option Share equal to the Offer Price.
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SECTION 1.2 Exercise of Stock Option.
(a) Subject to the conditions set forth in Section 2.1, the
Stock Option may be exercised by the Purchaser, in whole but not in part, at any
one time after the occurrence of the Exercise Event (as defined below) and prior
to the Termination Date (as defined below).
(b) The "Exercise Event" shall occur for purposes of this
Agreement upon the Purchaser's acceptance for payment pursuant to the Offer of
shares of Common Stock constituting at least 75% but less than 90% of the shares
of Common Stock then outstanding on a fully diluted basis (not giving effect to
the Stock Option).
(c) Except as provided in the last sentence of this Section
1.2(c), the "Termination Date" shall occur for purposes of this Agreement upon
the earliest to occur of:
(i) the Effective Time;
(ii) the date that is ten (10) business days after
the occurrence of the Exercise Event; or
(iii) the termination of the Merger Agreement in
accordance with the terms and conditions thereof.
Notwithstanding the occurrence of the Termination Date, the Purchaser shall be
entitled to purchase the Option Shares if it has exercised the Stock Option in
accordance with the terms hereof prior to such occurrence, and the occurrence of
the Termination Date shall not affect any rights hereunder which by their terms
do not terminate or expire prior to or as of such date.
(d) In the event the Purchaser wishes to exercise the Stock
Option, the Purchaser shall send to the Company a written notice (an "Exercise
Notice," the date of which notice is referred to herein as the "Notice Date")
specifying the denominations of the certificate or certificates evidencing the
Option Shares which the Purchaser wishes to receive, the place for the closing
of the purchase and sale pursuant to the Stock Option (the "Closing") and a date
not earlier then three (3) business days nor later then ten (10) business days
from the Notice Date for the Closing (the "Closing Date"); provided, however,
that (i) if the Closing cannot be consummated by reason of any applicable Laws
or orders, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which such restriction on consummation has
expired or been terminated and (ii) without limiting the foregoing, if prior
notification to or approval of any Governmental Entity is required in connection
with such purchase, the Purchaser and the Company shall promptly file the
required notice or application for approval and shall cooperate in the
expeditious filing of such notice or application, and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (A) any required notification period has expired or
been terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. The Company
shall, within two (2)
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business days after receipt of the Exercise Notice, deliver written notice to
the Purchaser specifying the number of Option Shares and the aggregate purchase
price therefor.
ARTICLE II
CLOSING
SECTION 2.1 Conditions to Closing. The obligation of the Company to
deliver Option Shares upon the exercise of the Stock Option is subject to the
following conditions:
(a) All waiting periods, if any, under the HSR Act applicable
to the issuance and delivery of the Option Shares hereunder shall have
expired or have been terminated; and
(b) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent
jurisdiction preventing or prohibiting the exercise of the Stock Option
or the issuance and delivery of the Option Shares in respect of such
exercise.
SECTION 2.2 Closing.
(a) At the Closing, (i) the Company shall deliver to the
Purchaser a certificate or certificates evidencing the applicable number of
Option Shares (in the denominations specified in the Exercise Notice), each such
certificate or certificates being duly executed by the Company and registered in
the name of the Purchaser, and (ii) the Purchaser shall purchase each such
Option Share from the Company at the Offer Price. Payment by the Purchaser of
the Offer Price for each of the Option Shares shall be made by wire transfer of
immediately available funds to an account designated by the Company, in an
amount equal to the sum of the product of (i) the Offer Price and (ii) the total
number of Option Shares delivered at the Closing.
(b) The Company shall pay all expenses, and any and all
Federal, state and local taxes and other charges, that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 2.2.
(c) Certificates evidencing Option Shares delivered hereunder
may include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
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It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Option Shares pursuant to a registered public offering or Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), or any other sale as
a result of which such legend is no longer required.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
(except as otherwise disclosed in writing on the date hereof) as follows:
SECTION 3.1 Organization; Authority Relative to this Agreement. The
Company is a corporation validly existing under the laws of the State of
Wisconsin. The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery by Parent and the Purchaser,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and by general
equitable principles.
SECTION 3.2 Authority to Issue Shares. The Company has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement. All of the
shares of Common Stock issuable under the Stock Option, upon their issuance and
delivery in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable (except as otherwise
provided in Section 180.0622(2)(b) of the WBC), will be delivered free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Purchaser's voting rights, charges,
adverse rights and other encumbrances of any nature whatsoever (other than this
Agreement) and will not be subject to any preemptive rights. Upon the delivery
to the Purchaser by the Company of a certificate or certificates evidencing the
Option Shares, the Purchaser will receive good, valid and marketable title to
the Option Shares.
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ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1 Further Action. The Company shall use its commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
hereunder, including, without limitation, using all reasonable efforts to obtain
all licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser hereby represent and warrant to the Company as
follows:
SECTION 5.1 Organization; Authority Relative to this Agreement. Each of
Parent and the Purchaser is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation. Each of Parent and the
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and the Purchaser and the consummation by Parent and the Purchaser of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and the Purchaser. This
Agreement has been duly and validly executed and delivered by Parent and the
Purchaser and, assuming the due and valid authorization, execution and delivery
by the Company, constitutes a valid and binding obligation of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and by general equitable principles.
SECTION 5.2 Distribution. Any Option Shares the Purchaser purchases
pursuant to this Agreement are being purchased for investment purposes only and
not with a view to any public distribution thereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
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SECTION 6.2 Waiver. Any party hereto may (a) extend the time for or
waive compliance with the performance of any obligation or other act of any
other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 6.3 Fees and Expenses. Except as otherwise provided herein or
in Section 8.02 of the Merger Agreement, all costs, fees and expenses incurred
in connection with this Agreement shall be paid by the party incurring such
expenses.
SECTION 6.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.04 of the Merger Agreement.
SECTION 6.5 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 so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. 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 in a mutually acceptable
manner to the fullest extent permitted by applicable Law in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.
SECTION 6.6 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 6.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of laws thereof.
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SECTION 6.8 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 6.9 Headings. The descriptive headings contained in this
Agreement are included for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.10 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) 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, it being understood that all parties need not sign the
same counterpart.
SECTION 6.11 Entire Agreement. This Agreement constitutes 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
date first written above.
IFS AMERICAS, INC.
("Parent")
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President
IFS ACQUISITION, INC.
(the "Purchaser")
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President
EFFECTIVE MANAGEMENT SYSTEMS, INC.
(the "Company")
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
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