EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
by and among
EAGLE POINT SOFTWARE CORPORATION,
JB ACQUISITIONS LLC
and
TALON ACQUISITION CORP.
Dated as of July 12, 2001
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of July 12, 2001 (this
"Agreement"), is made and entered into by and among Eagle Point Software
Corporation, a Delaware corporation (the "Company"), JB Acquisitions LLC, an
Iowa limited liability company ("Parent"), and Talon Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub").
Merger Sub and the Company are hereinafter sometimes collectively referred to
as the "Constituent Corporations."
WITNESSETH:
WHEREAS, Xxxx X. Xxxxx ("Xxxxx") desires to acquire the entire equity
interest in the Company and has formed Parent and Merger Sub for the purpose of
effecting such transaction; and
WHEREAS, the respective Boards of Directors of the Company and Merger Sub
have each approved, and deem advisable and in the best interests of their
respective stockholders, and the Company, Parent and Merger Sub have approved,
the merger of Merger Sub with and into the Company, with the Company being the
surviving corporation, in accordance with the General Corporation Law of the
State of Delaware (the "Delaware Act") and upon the terms and subject to the
conditions set forth in this Agreement (such transaction is referred to as the
"Merger"), as a result of which the Company will be the surviving corporation
and will become a wholly owned subsidiary of Parent; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with, and
establish various conditions precedent to, the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. At the Effective Time (as defined in Section 1.2)
and upon the terms and subject to the conditions of this Agreement and the
Certificate of Merger (as defined in Section 1.2 hereof), Merger Sub shall be
merged with and into the Company, the separate corporate existence of Merger
Sub shall cease, and the Company shall continue as the surviving corporation
(sometimes hereinafter referred to as the "Surviving Corporation").
Section 1.2. Effective Time. On the Closing Date (as defined in Section
3.1), a copy of the Certificate of Merger, attached hereto as Exhibit A (the
"Certificate of Merger"), shall be executed and filed by the Company and Merger
Sub with the Secretary of State of the State of Delaware. The Merger shall
become effective on the date on which the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware or at such later time as
is mutually agreed by the parties and specified in the Certificate of Merger
(the "Effective Time").
Section 1.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in Section 259 of the Delaware Act. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges and powers of the Constituent
Corporations shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Constituent Corporations shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.4. Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things
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are necessary or desirable to vest, perfect or confirm of record or otherwise
in the Surviving Corporation its right, title or interest in, to or under any
of the rights, properties or assets of, and assume the liabilities of, either
of the Constituent Corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either the Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of such corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in, and
the assumption of the liabilities of, the Surviving Corporation or otherwise to
carry out this Agreement.
Section 1.5. Certificate of Incorporation; By-Laws; Officers and Directors.
(a) Unless otherwise determined by Parent prior to the Effective Time, at
the Effective Time the Certificate of Incorporation of the Surviving
Corporation shall be in the form attached hereto as Exhibit B until thereafter
amended as provided by law and such Certificate of Incorporation.
(b) Unless otherwise determined by Parent prior to the Effective Time, the
By-Laws of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the By-Laws of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation of the Surviving Corporation
and such By-Laws.
(c) Unless otherwise determined by Parent prior to the Effective Time, the
officers of Merger Sub in office at the Effective Time shall be and constitute
the officers of the Surviving Corporation, each holding the same office in the
Surviving Corporation as he or she held in Merger Sub for the terms elected or
until their respective successors shall be elected or appointed and qualified.
(d) Unless otherwise determined by Parent prior to the Effective Time, the
directors of Merger Sub in office at the Effective Time shall be and constitute
the directors of the Surviving Corporation, each holding the same directorship
in the Surviving Corporation as he or she held in Merger Sub for the terms
elected or until their respective successors shall be elected or appointed and
qualified.
ARTICLE II.
TREATMENT OF SHARES
Section 2.1. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, the Company, Merger
Sub or the holder of any of the following securities:
(a) Each share (collectively, the "Shares") of common stock, par value
$0.01 per share, of the Company ("Company Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than (i) any
Shares owned by Biver, Parent, Merger Sub or the Company or any direct or
indirect subsidiary of Parent, Merger Sub or the Company, (ii) any Shares
owned by Xxxxxx X. Xxxx ("Xxxx") and Xxxxxx X. Xxxxxx ("Xxxxxx") and (iii)
any Dissenting Shares (as defined in Section 2.2(a)) shall be canceled and
extinguished and be converted into the right to receive $6.40 (the "Per
Share Amount"), in cash payable to the holder thereof, without interest,
upon surrender of the certificate representing such Share in accordance
with Section 2.3.
(b) All Shares of Company Common Stock owned by Xxxx or his affiliates
(including trusts created by him) immediately prior to the Effective Time,
which number shall not exceed an aggregate of 953,704 Shares and of which
at least 78,125 Shares will be owned personally by Xxxx, shall be canceled
and extinguished and be converted into the right to receive, upon surrender
of the certificate representing such Shares in accordance with Section 2.3,
(i) the Per Share Amount in cash payable to the holders thereof,
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without interest, with respect to each Share owned by Xxxx or his
affiliates in excess of 78,125 Shares and
(ii) a seven-year subordinated note payable to Xxxx, in the form attached
hereto as Exhibit C, in the principal amount of $500,000 with respect to
78,125 Shares held by Xxxx.
(c) 381,480 Shares of Company Common Stock owned by Xxxxxx immediately
prior to the Effective Time shall be canceled and extinguished and be
converted into the right to receive, upon surrender of the certificate
representing such Shares in accordance with Section 2.3, (i) an aggregate
of $2,191,472 in cash payable to Xxxxxx, without interest, and (ii) a
seven-year subordinated note payable to Xxxxxx, in the form attached hereto
as Exhibit D, in the principal amount of $250,000.
(d) Each Share held in the treasury of the Company and each Share owned
by Biver, Parent, Merger Sub or any direct or indirect Subsidiary (as
defined in Section 4.1) of Parent, Merger Sub or the Company immediately
prior to the Effective Time shall be canceled and extinguished, and no
payment or other consideration shall be made with respect thereto.
(e) Each share of common stock, no par value, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of common
stock, no par value, of the Surviving Corporation.
Section 2.2. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder who has demanded and perfected his demand for appraisal
of his Shares in accordance with Section 262 of the Delaware Act and as of the
Effective Time has neither effectively withdrawn nor lost his right to such
appraisal ("Dissenting Shares"), shall not be converted into or represent a
right to receive cash pursuant to Section 2.1, but the holder thereof shall be
entitled to only such rights in respect thereof as are granted by Section 262
of the Delaware Act.
(b) Notwithstanding the provisions of subsection (a) of this Section 2.2, if
any holder of Shares who demands appraisal of his Shares pursuant to Section
262 of the Delaware Act shall effectively withdraw or lose (through failure to
perfect or otherwise) his right to appraisal, then as of the Effective Time or
the occurrence of such event, whichever later occurs, such holder's Shares
shall automatically be converted into and represent only the right to receive
cash as provided in Section 2.1(a), without interest thereon, upon surrender of
the certificate or certificates representing such Shares in accordance with
Section 2.3.
(c) The Company shall give Parent (i) prompt notice of any written demands
for fair value, withdrawals of such demands for fair value, and any other
instruments served pursuant to Section 262 of the Delaware Act received by the
Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under Section 262 of the Delaware Act.
The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for fair value or
offer to settle or settle any such demands.
Section 2.3. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, the Company and Parent jointly shall
designate a bank or trust company to act as agent for the holders of Shares
(the "Exchange Agent") to receive the funds necessary to make the payments
contemplated by Section 2.1(a). At the Effective Time, Parent or Merger Sub
shall deposit, or cause to be deposited (including from available cash balances
at the Company), in trust with the Exchange Agent for the benefit of holders of
Shares described in Section 2.1(a), the aggregate consideration to which such
holders shall be entitled at the Effective Time pursuant to Section 2.1(a).
(b) After the Effective Time, each holder of a certificate or certificates
representing any Shares canceled upon the Merger pursuant to Section 2.1(a) may
surrender such certificate or certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such certificate or certificates on
such holder's behalf
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for a period ending one year after the Effective Time. Parent and Merger Sub
agree that as promptly as practicable after the Effective Time the Surviving
Corporation shall cause the distribution to holders of record of such Shares as
of the Effective Time appropriate materials to facilitate such surrender. Upon
the surrender of certificates representing such Shares, the Surviving
Corporation shall cause the Exchange Agent to pay the holder thereof in
exchange therefor cash in an amount equal to the Per Share Amount multiplied by
the number of Shares represented by such certificate. Until so surrendered,
each such certificate (other than certificates representing Dissenting Shares)
shall represent solely the right to receive the aggregate consideration
relating thereto as provided in Section 2.1(a).
(c) From and after the Closing, each holder of a certificate or certificates
representing any Shares canceled upon the Merger pursuant to Section 2.1(b) or
(c) may surrender such certificate or certificates to the Surviving Corporation
and the Surviving Corporation shall immediately pay and deliver to the holder
of such certificates in exchange therefor (i) cash, in same day funds, and the
appropriate subordinated note as described in Section 2.1(b) and (c), as
applicable and (ii) the duly executed personal guarantees of Biver and his
spouse in the form attached hereto as Exhibit E. Until so surrendered, each
such certificate (other than certificates representing Dissenting Shares) shall
represent solely the right to receive the aggregate consideration relating
thereto as provided in Section 2.1(b) or (c), as applicable.
(d) If payment of cash in respect of canceled Shares is to be made to a
Person other than the Person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate
or instrument surrendered or shall have established to the satisfaction of the
Surviving Corporation or the Exchange Agent that such tax either has been paid
or is not payable.
(e) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall not be any further registration of transfer of any
shares of capital stock thereafter on the records of the Company. From and
after the Effective Time, the holders of certificates evidencing ownership of
the Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided for
herein or by applicable law. If, after the Effective Time, certificates for
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided in Sections 2.1(a), (b) and (c) and
Sections 2.3(b) and (c). No interest shall accrue or be paid on any cash
payable upon the surrender of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares.
(f) Promptly following the date which is one year after the Effective Time,
the Exchange Agent shall deliver to the Surviving Corporation all cash
(including any interest received with respect thereto), certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate representing Shares (other than certificates representing
Dissenting Shares) shall be entitled to look only to the Surviving Corporation
(subject to applicable abandoned property, escheat and similar laws) and only
as general creditors thereof with respect to the aggregate consideration
payable under Section 2.1 upon due surrender of their certificates, without any
interest or dividends thereon. Notwithstanding the foregoing, neither Parent,
the Surviving Corporation nor the Exchange Agent shall be liable to any holder
of a certificate representing Shares for the consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) The consideration paid in the Merger shall be net to the holder of
Shares in cash, subject to reduction only for any applicable federal back-up
withholding or, as set forth in Section 2.3(d), stock transfer taxes payable by
such holder.
Section 2.4. Company Stock Plans.
(a) Prior to the Effective Time, the Board of Directors of the Company (or
the committee of the Board of Directors administering the Company Stock Plans
(as defined in Section 4.3)) shall adopt such resolutions,
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including a resolution interpreting the relevant provisions of the Company
Stock Option Plans as providing that following the Effective Time no Company
Option (as defined in Section 2.4(b)) shall be exercisable for shares of
Company Common Stock, and shall take such other actions as are required to
approve the transactions contemplated by this Section 2.4 and Section 6.1(c).
The Company shall use reasonable efforts to obtain the consents of the holders
of Company Options to the transactions contemplated by Section 2.4(b).
(b) The Company shall use reasonable efforts to ensure that, immediately
prior to the Effective Time, (x) each outstanding option to acquire shares of
Company Common Stock (the "Company Options") granted under either of the
Company Stock Option Plans (as defined in Section 4.3), whether or not then
exercisable or vested, shall become fully exercisable and vested, (y) each
Company Option which is then outstanding shall be canceled and (z) in
consideration of such cancellation, and except to the extent that Parent and
the holder of any such Company Option otherwise agree in writing, the Company
(or, at Parent's option, Parent or the Surviving Corporation) shall pay in cash
to such holders of Company Options an amount in respect thereof equal to (but
not greater than) the product of (A) the excess, if any, for each Company
Option, of the Per Share Amount over the per share exercise price thereof and
(B) the number of shares of Company Common Stock then subject thereto (such
payment to be net of applicable withholding taxes).
(c) Except as otherwise agreed to in writing by the parties to this
Agreement, the Company shall use reasonable efforts to ensure that, after
giving effect to the foregoing, following the Effective Time, (i) no Company
Option shall be exercisable for shares of Company Common Stock and (ii) no
holder of Company Options or any participant in the Company Stock Plans or any
other such plans, programs or arrangements shall have any right thereunder to
acquire any equity securities (or any interests therein) of the Company, the
Surviving Corporation or any Subsidiary thereof.
ARTICLE III.
THE CLOSING
Section 3.1. Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxxx, Xxxxx 0000, Xxx
Xxxxxx, XX 00000 at 10:00 A.M., Des Moines time, on the second business day
immediately following the date on which the last of the conditions set forth in
Article VIII hereof is fulfilled or waived, or at such other time, date and
place as Parent and the Company shall mutually agree (the "Closing Date"), and
will be effective as of the Effective Time. The parties shall deliver to each
other the documents required to be delivered pursuant to Article VIII hereof at
the Closing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except as set forth in the Disclosure Schedule delivered by the Company to
Parent and Merger Sub on the date hereof (the "Company Disclosure Schedule")
(which Company Disclosure Schedule sets forth the exceptions to the
representations and warranties contained in this Article IV under captions
referencing the Sections to which such exceptions apply):
Section 4.1. Organization and Qualification. The Company and each of the
Company Subsidiaries is a corporation or other entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority and has
been duly authorized by all necessary approvals and orders to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary other
than in such jurisdictions where the failure to so qualify and be in good
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standing, when taken together with all other such failures, would not have a
material adverse effect on the business, operations, properties, assets,
financial condition, or the results of operations of the Company and the
Company Subsidiaries taken as a whole or on the consummation of the
transactions contemplated by this Agreement (any such material adverse effect,
a "Company Material Adverse Effect"). The term "Subsidiary" of a Person shall
mean any corporation or other entity (including partnerships and other business
associations and joint ventures) in which such Person directly or indirectly
owns at least a majority of the voting power represented by the outstanding
capital stock or other voting securities or interests having voting power under
ordinary circumstances to elect a majority of the directors or similar members
of the governing body, or otherwise to direct the management and policies, of
such corporation or entity, and the term "Company Subsidiary" shall mean a
Subsidiary of the Company.
Section 4.2. Subsidiaries. Section 4.2 of the Company Disclosure Schedule
sets forth a list of all the Company Subsidiaries, including the name of each
such entity, a brief description of the principal line or lines of business
conducted by each such entity and the interest of the Company and the Company
Subsidiaries therein. Except as set forth in Section 4.2 of the Company
Disclosure Schedule, (i) all of the issued and outstanding shares of capital
stock of each Company Subsidiary are validly issued, fully paid, nonassessable
and free of preemptive rights and are owned, directly or indirectly, by the
Company, free and clear of any liens, claims, encumbrances, security interests,
charges and options of any nature whatsoever, and (ii) there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
pledges, security interests, encumbrances, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating the Company or any Company Subsidiary to issue, deliver
or sell, pledge, grant a security interest or encumber, or cause to be issued,
delivered or sold, pledged or encumbered or a security interest to be granted
on, shares of capital stock of any Company Subsidiary or obligating the Company
or any Company Subsidiary to grant, extend or enter into any such agreement or
commitment.
Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, par value $0.01 per share, none of which preferred stock is
outstanding. As of the date of this Agreement, (i) 4,632,329 shares of Company
Common Stock are outstanding, (ii) 482,529 shares of Company Common Stock are
issuable in the aggregate pursuant to presently outstanding options, awards or
other obligations under the Eagle Point Software Corporation Stock Option Plan
(the "Initial Stock Option Plan"), including any shares that will become
exercisable or vest upon completion of the Merger or related transactions,
(iii) 247,903 shares of Company Common Stock are issuable in the aggregate
pursuant to presently outstanding options, awards or other obligations under
the Eagle Point Software Corporation 1999 Stock Option Plan (the "1999 Stock
Option Plan" and together with the Initial Stock Option Plan, the "Company
Stock Option Plans"), including any shares that will become exercisable or vest
upon completion of the Merger or related transactions, (iv) no funds are being
held pursuant to presently effective participation elections under the Amended
and Restated Eagle Point Software Corporation 1995 Stock Purchase Plan (the
"Company Stock Purchase Plan") to be applied to the purchase of Company Common
Stock in accordance with the terms of thereof, (v) $1,246.39 is held that is
required to be invested in shares of Company Common Stock under the Eagle Point
Software Corporation 401(k) Plan and Trust (the "Company 401(k) Plan" and
together with the Company Stock Option Plans and the Company Stock Purchase
Plan, the "Company Stock Plans"), (vi) 309,401 shares of Company Common Stock
are held by the Company in its treasury or by its wholly owned Subsidiaries,
and (vii) except as set forth in Section 4.3 of the Company Disclosure
Schedule, no bonds, debentures, notes or other indebtedness having the right to
vote (or convertible into securities having the right to vote) on any matters
on which stockholders may vote ("Voting Debt") are issued or outstanding. All
of the issued and outstanding shares of Company Common Stock are validly
issued, fully paid, nonassessable and free of preemptive rights. As of the date
of this Agreement, except as set forth in Section 4.3 of the Company Disclosure
Schedule or as may be provided by the Company Stock Plans, there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other pledges, security interests, encumbrances, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or
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other agreement, obligating the Company to issue, deliver or sell, pledge,
grant a security interest or encumber, or cause to be issued, delivered or
sold, pledged or encumbered or a security interest to be granted on, shares of
capital stock or any Voting Debt of the Company or obligating the Company to
grant, extend or enter into any such agreement or commitment.
Section 4.4. Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. The Company has all requisite power and authority to enter
into this Agreement and, subject to the receipt of the Company Stockholders'
Approval (as defined in Section 4.11), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject to obtaining the Company Stockholders' Approval. This Agreement has
been duly and validly executed and delivered by the Company, and, assuming the
due authorization, execution and delivery hereof by the other signatories
hereto, this Agreement constitutes the valid and binding obligation of the
Company enforceable against it in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity.
(b) Non-Contravention. The execution and delivery of this Agreement by the
Company do not, and the consummation of the transactions contemplated hereby
will not, in any respect, violate, conflict with or result in a breach of any
provision of, or constitute a default (with or without notice or lapse of time
or both) under, or result in the termination or modification of, or accelerate
the performance required by, or result in a right of termination, cancellation
or acceleration of any obligation or the loss of a benefit under, or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the agreements, properties or assets of the Company or any of the Company
Subsidiaries (any such violation, conflict, breach, default, right of
termination, modification, cancellation or acceleration, loss or creation, is
referred to herein as a "Violation" with respect to the Company, and such term
when used in Article V shall have a correlative meaning with respect to Parent
and Merger Sub) pursuant to any provisions of (i) the certificate of
incorporation, by-laws or similar governing documents of the Company or any of
the Company Subsidiaries, (ii) subject to the receipt of the Company
Stockholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court,
federal, state, local or foreign governmental or regulatory body (including a
stock exchange or other self-regulatory body) or authority (each, a
"Governmental Authority") applicable to the Company or any of the Company
Subsidiaries or any of their respective properties or assets or (iii) subject
to obtaining the third-party consents set forth in Section 4.4(b) of the
Company Disclosure Schedule (the "Company Required Consents"), any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which the Company or any of the Company Subsidiaries is a party or by which it
or any of its properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such Violations which would not, in the
aggregate, have, or reasonably be expected to have, a Company Material Adverse
Effect.
(c) Compliance. Except as set forth in Section 4.4(c) of the Company
Disclosure Schedule or as disclosed in the Company SEC Reports (as defined in
Section 4.5) filed as of the date of this Agreement, neither the Company nor
any of the Company Subsidiaries is in violation of, is, to the knowledge of the
Company, under investigation with respect to any violation of, or has been
given notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any Governmental
Authority, except for violations which individually or in the aggregate do not,
and would not reasonably be expected to, have a Company Material Adverse
Effect. Except as set forth in Section 4.4(c) of the Company Disclosure
Schedule, the Company and the Company Subsidiaries have all permits, licenses,
franchises and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted which are material
to the operation of the businesses of the Company and the Company Subsidiaries.
Except as set forth in Section 4.4(c) of the Company Disclosure Schedule, the
Company and each of the Company Subsidiaries is not in breach or violation of
or in default in the performance or observance of any term or provision of, and
no
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event has occurred which, with lapse of time or action by a third party, could
result in a default by the Company or any Company Subsidiary under (i) its
certificate of incorporation, (ii) its by-laws or other organizational document
or (iii) any contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument to which it
is a party or by which the Company or any Company Subsidiary is bound or to
which any of its property is subject, except in the case of clause (ii) above,
for violations, breaches or defaults which individually or in the aggregate do
not affect the validity or enforceability of any material corporate action by
the Company or any Company Subsidiary, and in the case of clause (iii) above,
for violations, breaches or defaults which individually or in the aggregate do
not, and would not reasonably be expected to, have a Company Material Adverse
Effect.
Section 4.5. Reports and Financial Statements. Except as set forth in
Section 4.5 of the Company Disclosure Schedule, the filings required to be made
by the Company and the Company Subsidiaries under the Securities Act of 1933,
as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), have been made with the Securities and Exchange
Commission (the "SEC") and complied, as of their respective dates, in all
material respects with the applicable requirements of such laws and the rules
and regulations thereunder. Except as set forth in Section 4.5 of the Company
Disclosure Schedule, the filings required to be made by applicable federal laws
(other than the Securities Act and the Exchange Act) and applicable state,
municipal, local and other laws, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, have been filed with the appropriate
Governmental Authorities, as the case may be, and complied, as of their
respective dates, in all material respects with all applicable requirements of
the appropriate statutes and the rules and regulations thereunder except (i)
where the failure to make such a filing or to so comply would not, individually
or in the aggregate, have or reasonably be expected to have a Company Material
Adverse Effect and (ii) with respect to Taxes (as defined in Section 4.9) to
the extent described in Section 4.9 of the Company Disclosure Schedule. The
Company has made available to Parent a true and complete copy of each report,
schedule, registration statement and definitive proxy statement and all
amendments thereto filed with the SEC by the Company or any Company Subsidiary
(or their predecessors) pursuant to the requirements of the Securities Act or
Exchange Act since May 5, 1995 (as such documents have since the time of their
filing been amended, the "Company SEC Reports"). As of their respective dates,
the Company SEC Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements of the Company included in
the Company SEC Reports (collectively, the "Company Financial Statements") have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis ("GAAP") (except as may be indicated therein or
in the notes thereto) and fairly present the financial position of the Company
as of the dates thereof and the results of their operations and cash flows for
the periods then ended, subject, in the case of the unaudited interim financial
statements, to normal, recurring audit adjustments. True, accurate and complete
copies of the certificate of incorporation and by-laws of the Company, as in
effect on the date of this Agreement, are included (or incorporated by
reference) in the Company SEC Reports.
Section 4.6. Absence of Certain Changes or Events; Absence of Undisclosed
Liabilities.
(a) Absence of Certain Changes or Events. Except as set forth in Section
4.6(a) of the Company Disclosure Schedule or as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, since June 30, 2000, the
Company and each of the Company Subsidiaries have conducted their business only
in the ordinary course of business consistent with past practice and there has
not been, and no fact or condition exists which would have, or would reasonably
be expected to have, a Company Material Adverse Effect.
(b) Absence of Undisclosed Liabilities. Neither the Company nor any Company
Subsidiary, has any liabilities or obligations (whether absolute, accrued,
contingent or otherwise and including, without limitation, margin loans) of a
nature required by GAAP to be reflected in a consolidated corporate balance
sheet, except liabilities, obligations or contingencies which are accrued or
reserved against in the consolidated financial
9
statements of the Company and or reflected in the notes thereto for the year
ended June 30, 2000, or which were incurred after June 30, 2000 in the ordinary
course of business and would not, in the aggregate, have, or reasonably be
expected to have, a Company Material Adverse Effect.
Section 4.7. Litigation. Except as set forth in Section 4.7 of the Company
Disclosure Schedule or as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, (a) as of the date of this Agreement, there are no
claims, suits, actions or proceedings by any Governmental Authority or any
arbitrator pending or, to the knowledge of the Company, threatened, nor are
there, to the knowledge of the Company, any investigations or reviews by any
Governmental Authority or any arbitrator pending or threatened against,
relating to or affecting the Company or any of the Company Subsidiaries, (b)
there have not been any significant developments between June 30, 2000 and the
date of this Agreement with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews and (c) as of the date of this
Agreement, there are no judgments, decrees, injunctions, rules or orders of any
Governmental Authority or any arbitrator applicable to the Company or any of
the Company Subsidiaries.
Section 4.8. Proxy Statement. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the proxy statement in definitive form ("Proxy Statement")
relating to the Company Meeting (as defined in Section 7.4(a)) will, at the
date mailed to stockholders of the Company or at the time of the Company
meeting (giving effect to any documents incorporated by reference therein),
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier authorized communication with respect to the
solicitation of proxies on behalf of the Company for the Company Meeting which
has become false or misleading. Notwithstanding the foregoing, the Company does
not make any representation or warranty with respect to any information that
has been supplied by Parent, Merger Sub or their affiliates (other than the
Company and the Company Subsidiaries), accountants, counsel or other authorized
representatives for use in any of the foregoing documents. The Proxy Statement
will comply as to form in all material respects with the provisions of
applicable federal securities law.
Section 4.9. Tax Matters. "Taxes," as used in this Agreement, means any
federal, state, county, local or foreign taxes, charges, fees, levies or other
assessments, including all net income, gross income, sales and use, ad valorem,
transfer, gains, profits, excise, franchise, real and personal property, gross
receipt, capital stock, production, business and occupation, disability,
employment, payroll, license, estimated, stamp, custom duties, severance or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties (civil or criminal) on or additions to any such
taxes and any expenses incurred in connection with the determination,
settlement or litigation of any Tax liability. "Tax Return," as used in this
Agreement, means a report, return or other information required to be supplied
to a governmental entity with respect to Taxes including, without limitation,
where permitted or required, combined or consolidated returns for any group of
entities that includes the Company or any Company Subsidiary.
(a) Filing of Timely Tax Returns. Except as set forth in Section 4.9(a) of
the Company Disclosure Schedule, the Company and each of the Company
Subsidiaries have filed (or there has been filed on their behalf) all material
Tax Returns required to be filed by each of them under applicable law. All such
Tax Returns were and are in all material respects true, complete and correct
and filed on a timely basis.
(b) Payment of Taxes. Except as set forth in Section 4.9(b) of the Company
Disclosure Schedule, the Company and each of the Company Subsidiaries have,
within the time and in the manner prescribed by law, paid (and until the
Closing Date will pay within the time and in the manner prescribed by law) all
Taxes that are currently due and payable, except for those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made in the Company Financial Statements.
(c) Tax Reserves. The Company and the Company Subsidiaries have established
(and until the Closing Date will maintain) on their books and records reserves
which adequately reflect its estimate of the amounts required to pay all Taxes
in accordance with GAAP.
10
(d) Tax Liens. There are no Tax liens upon any material assets of the
Company or any of the Company Subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. Except as set forth in Section 4.9(e) of the Company
Disclosure Schedule, the Company and each of the Company Subsidiaries have
complied (and until the Closing Date will comply) in all material respects with
the provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
relating to the payment and withholding of Taxes, including, without
limitation, the withholding and reporting requirements under Code Sections 1441
through 1464, 3401 through 3406 and 6041 through 6049, as well as similar
provisions under any other laws, and have, within the time and in the manner
prescribed by law, withheld from employee wages and paid over to the proper
governmental authorities all amounts required.
(f) Extensions of Time For Filing Tax Returns. Except as set forth in
Section 4.9(f) of the Company Disclosure Schedule, neither the Company nor any
of the Company Subsidiaries has requested any extension of time within which to
file any Tax Return, which Tax Return has not since been timely filed.
(g) Waivers of Statute of Limitations. Except as set forth in Section 4.9(g)
of the Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
(h) Audit, Administrative and Court Proceedings. Except as disclosed in
Section 4.9(h) of the Company Disclosure Schedule, no audits or other
administrative proceedings or court proceedings are presently pending, or, to
the knowledge of the Company, threatened, with regard to any Taxes or Tax
Returns of the Company or any of the Company Subsidiaries.
(i) Tax Rulings. Neither the Company nor any of the Company Subsidiaries has
received or requested a Tax Ruling (as defined below) or entered into a Closing
Agreement (as defined below) with any taxing authority that would have a
continuing adverse effect after the Closing Date. "Tax Ruling," as used in this
Agreement, shall mean a written ruling of a taxing authority relating to Taxes.
"Closing Agreement," as used in this agreement, shall mean a written and
legally binding agreement with a taxing authority relating to Taxes.
(j) Availability of Tax Returns. The Company has made available to Parent,
where requested by Parent, complete and accurate copies of (i) all federal and
state income Tax Returns for open years, and any amendments thereto, filed by
the Company or any of the Company Subsidiaries, (ii) all audit reports or
written proposed adjustments (whether formal or informal) received from any
taxing authority relating to any Tax Return filed by the Company or any of the
Company Subsidiaries and (iii) any Tax Ruling or request for a Tax Ruling
applicable to the Company or any of the Company Subsidiaries and Closing
Agreements entered into by the Company or any of the Company Subsidiaries.
(k) Tax Sharing Agreements. Except as disclosed in Section 4.9(k) of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary is
a party to any agreement relating to allocating or sharing of Taxes.
(l) Code Section 341(f). Neither the Company nor any of the Company
Subsidiaries has filed (or will file prior to the Closing) a consent pursuant
to Code Section 341(f) or has agreed to have Code Section 341(f)(2) apply to
any disposition of a subsection (f) asset (as that term is defined in Code
Section 341(f)(4)), owned by the Company or any of the Company Subsidiaries.
(m) Code Section 168. Except as set forth in Section 4.9(m) of the Company
Disclosure Schedule, no property of the Company or any of the Company
Subsidiaries is property that the Company or any Company Subsidiary or any
party to this transaction is or will be required to treat as being owned by
another person pursuant to the provisions of Code Section 168(f)(8) (as in
effect prior to its amendment by the Tax Reform Act of 1986) or is "tax-exempt
use property" within the meaning of Code Section 168(h).
11
(n) Code Section 481 Adjustments. Except as set forth in Section 4.9(n) of
the Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries is required to include in income for any tax period ending after
the date hereof any adjustment pursuant to Code Section 481(a) by reason of a
voluntary change in accounting method initiated by the Company or any of the
Company Subsidiaries, and, to the knowledge of the Company, the Internal
Revenue Service ("IRS") has not proposed any such adjustment or change in
accounting method.
(o) Consolidated Tax Returns. Except as disclosed in Section 4.9(o) of the
Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries has ever been a member of an affiliated group of corporations
(within the meaning of Code Section 1504(a)) filing consolidated returns, other
than the affiliated group of which the Company is the common parent.
Section 4.10. Employee Matters; ERISA.
(a) Benefit Plans. Section 4.10(a) of the Company Disclosure Schedule
contains a true and complete list of each employee benefit plan, practice,
program or arrangement currently sponsored, maintained or contributed to by the
Company or any of the Company Subsidiaries for the benefit of employees, former
employees or directors and their beneficiaries in respect of services provided
to any such entity, including, but not limited to, any employee benefit plans
within the meaning of Section 3(3) of Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), employee pension benefit plan, program,
arrangement or agreement, any health, medical, welfare, disability, life
insurance, bonus, option, stock appreciation plan, performance stock plan,
restricted stock plan, deferred compensation plan, retiree benefits plan,
severance pay and other employee benefit or fringe benefit plan and any
employment, consulting, non-compete, severance or change in control agreement
(collectively, the "Company Benefit Plans"), together with, for any option,
stock appreciation plan, performance stock plan, restricted stock plan,
deferred compensation plan and supplemental retirement plan, the amounts or
benefits granted or payable under each, as of the date of this Agreement and as
of the Effective Time (assuming no termination of employment as of such times),
and exercise prices regarding Company Options or other securities which
represent the right (contingent or other) to purchase or receive shares of
Company Common Stock or, following the Merger, of Surviving Corporation Common
Stock. For the purposes of this Section 4.10, the term "Company" shall be
deemed to include predecessors thereof.
(b) Contributions. Except as set forth in Section 4.10(b) of the Company
Disclosure Schedule, all material contributions and other payments required to
be made by the Company or any of the Company Subsidiaries to any Company
Benefit Plan (or to any person pursuant to the terms thereof) have been timely
made or the amount of such payment or contribution obligation has been
reflected in the Company Financial Statements. Except as set forth in Section
4.10(b) of the Company Disclosure Schedule, (i) the current value of all
accrued benefits under any Company Benefit Plan which is a defined benefit plan
did not, as of the date of the most recent actuarial valuation for such plan,
exceed the then current value of the assets of such plan, based on the
actuarial assumptions set forth in such valuation for calculating the minimum
funding requirements of Code Section 412, which actuarial assumptions and
calculations have been provided to Parent prior to the date of this Agreement,
and (ii) neither the Company nor any Company Subsidiary contributes or has
contributed, during the six-year period immediately prior to the date of this
Agreement, to a multiemployer plan (as defined in Section 3(37) of ERISA), or
has any liability under ERISA Section 4203 or Section 4205 in respect of any
such plan.
(c) Qualification; Compliance. Except as set forth in Section 4.10(c) of the
Company Disclosure Schedule, the Company Benefit Plan that is intended to be
"qualified" within the meaning of Section 401(a) of the Code is a standardized
prototype plan that has received an opinion letter from the IRS stating that
the most recent amendment to the plan does not affect the plan's acceptability
under Section 401(a) of the Code, and, to the knowledge of the Company, no
circumstances exist that are reasonably expected by the Company to result in
the revocation of such opinion. The Company and each of the Company
Subsidiaries are in compliance in all material respects with, and each Company
Benefit Plan is and has been operated in all material respects in compliance
with the terms thereof and all applicable laws, rules and regulations governing
such plan, including,
12
without limitation, ERISA and the Code. Each Company Benefit Plan intended to
provide for the deferral of income, the reduction of salary or other
compensation or to afford other income tax benefits is reasonably designed to
comply with the requirements of the applicable provisions of the Code or other
laws, rules and regulations required to provide such income tax benefits.
(d) Liabilities. With respect to the Company Benefit Plans individually and
in the aggregate, there are no actions, suits or claims pending or, to the
knowledge of the Company, threatened, and, to the knowledge of the Company, no
event has occurred that could reasonably be expected to subject the Company or
any of the Company Subsidiaries to any liability arising under the Code, ERISA
or any other applicable law (including, without limitation, any liability of
any kind whatsoever, whether direct or indirect, contingent, inchoate or
otherwise, to any such plan or the Pension Benefit Guaranty Corporation (the
"PBGC")), or under any indemnity agreement to which the Company or any of the
Company Subsidiaries is a party, in each such case, which liability,
individually or in the aggregate, could reasonably be expected to have a
Company Material Adverse Effect.
(e) Welfare Plans. Except as set forth in Section 4.10(e) of the Company
Disclosure Schedule, none of the Company Benefit Plans that are "welfare
plans", within the meaning of Section 3(1) of ERISA, provides for any benefits
payable to or on behalf of any employee or director after termination of
employment or service, as the case may be, other than elective continuation
required pursuant to Code Section 4980B or coverage which expires at the end of
the calendar month following such event. Each such plan that is a "group health
plan" (as defined in Code Section 4980B(g)) has been operated in compliance
with Code Section 4980B at all times, except for any non-compliance that could
not reasonably be expected to give rise to a Company Material Adverse Effect.
(f) Documents Made Available. The Company has made available to Parent a
true and correct copy of, with respect to each Company Benefit Plan, to the
extent applicable, (i) such plan and summary plan description (including all
amendments to each such document), (ii) the most recent annual report filed
with the IRS, (iii) each related trust agreement, insurance contract, service
provider or investment management agreement (including all amendments to each
such document), (iv) the most recent opinion of the IRS with respect to the
qualified status of such plan and (v) the most recent actuarial report or
valuation.
(g) Payments Resulting from Merger and Other Severance Payments. Except as
set forth in Section 4.10(g) of the Company Disclosure Schedule or as
specifically provided for in this Agreement, the announcement or consummation
of any transaction contemplated by this Agreement will not (either alone or
upon the occurrence of any additional or further acts or events, including,
without limitation, termination of employment) result, as of the date of this
Agreement or as of the Effective Time, in any (A) payment (whether of severance
pay or otherwise) becoming due from the Company or any of the Company
Subsidiaries to any officer, employee, former employee or director thereof or
to the trustee under any "rabbi trust" or similar arrangement or (B) benefit
being established or becoming accelerated, vested or payable under any Company
Benefit Plan.
(h) Labor Agreements. As of the date hereof, except as set forth in Section
4.10(h) of the Company Disclosure Schedule, neither the Company nor any of the
Company Subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization. Except as set forth in
Section 4.10(h) of the Company Disclosure Schedule, to the knowledge of the
Company, as of the date hereof, there is no current union representation
question involving employees of the Company or any of the Company Subsidiaries,
nor does the Company know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any such
employees. Except as set forth in Section 4.10(h) of the Company Disclosure
Schedule, (i) there is no unfair labor practice, employment discrimination or
other complaint against the Company or any of the Company Subsidiaries pending
or, to the knowledge of the Company, threatened, which has or could reasonably
be expected to have a Company Material Adverse Effect, (ii) there is no strike,
dispute, slowdown, work stoppage or lockout pending, or, to the knowledge of
the Company, threatened, against or involving the Company or any of the Company
Subsidiaries which has or
13
could reasonably be expected to have, a Company Material Adverse Effect and
(iii) there is no proceeding, claim, suit, action or governmental investigation
pending or, to the knowledge of the Company, threatened, in respect of which
any director, officer, employee or agent of the Company or any of the Company
Subsidiaries is or may be entitled to claim indemnification from the Company
pursuant to their respective certificate of incorporation or by-laws or as
provided in the Indemnification Agreements listed in Section 4.10(h) of the
Company Disclosure Schedule. Except as set forth in Section 4.10(h) of the
Company Disclosure Schedule, the Company and the Company Subsidiaries have
complied in all material respects with all laws relating to the employment of
labor, including without limitation any provisions thereof relating to wages,
hours, collective bargaining and the payment of social security and similar
taxes, and no person has, to the knowledge of the Company, asserted that the
Company or any of the Company Subsidiaries is liable in any material amount for
any arrears of wages or any taxes or penalties for failure to comply with any
of the foregoing.
(i) Parachute Payments. Section 4.10(i) of the Company Disclosure Schedule
sets forth the name of each officer of the Company who, in connection with the
transactions contemplated with this Agreement, will receive, or will or may
become entitled to receive in the future or upon termination of such person's
employment, any payments (including without limitation accelerated vesting of
Company Options or other equity-based awards) which could reasonably be
expected to constitute "excess parachute payments" with respect to such person
within the meaning of Section 280G of the Code ("Excess Parachute Payments").
(j) Section 162(m). Except as set forth in Section 4.10(j) of the Company
Disclosure Schedule, no payments to any executive officer of the Company or any
Company Subsidiaries will fail to be deductible for Federal income tax purposes
by reason of the deduction limit imposed under Section 162(m) of the Code.
Section 4.10(j) of the Company Disclosure Schedule sets forth the name of each
executive officer who will receive compensation which may not be fully
deductible by reason of the application of Section 162(m), and a reasonable
estimate of the amount of such potentially nondeductible compensation.
(k) Changes in Compensation, Benefits Since June 30, 2000. Except as
specifically described in Section 4.10(k) of the Company Disclosure Schedule,
since June 30, 2000, the Company has not, nor has any of the Company
Subsidiaries, (i) entered into, adopted or amended or increased the amount or
accelerated the payment or vesting of any benefit or amount payable under, any
employee benefit plan or other contract, agreement, commitment, arrangement,
plan, trust, fund or policy maintained by, contributed to or entered into by
the Company or any of the Company Subsidiaries (including, without limitation,
the Company Benefit Plans set forth in Section 4.10(a) of the Company
Disclosure Schedule, as in effect on June 30, 2000) or increased, or entered
into any contract, agreement, commitment or arrangement to increase in any
manner, the compensation or fringe benefits, or otherwise to extend, expand or
enhance the engagement, employment or any related rights, of any director,
officer or other employee of the Company or any of the Company Subsidiaries,
except (in all cases described in this clause (i)) pursuant to binding legal
commitments existing on June 30, 2000 and specifically identified in Section
4.10(a) of the Company Disclosure Schedule and except (in all cases described
in this clause (i)) for action taken in the ordinary course of business
consistent with past practice that, in the aggregate, did not result in a
material increase in benefits or compensation expense to the Company or any of
the Company Subsidiaries; (ii) entered into or amended any employment,
severance, pension, deferred compensation or special pay arrangement with
respect to the termination of employment or other similar contract, agreement
or arrangement with (A) any director or officer or (B) any other employee other
than in the ordinary course of business consistent with past practice; or (iii)
deposited into any trust (including any "rabbi trust") amounts in respect of
any employee benefit obligations or obligations to directors other than
transfers into trusts (other than a rabbi or other trust with respect to any
non-qualified deferred compensation) in accordance with past practice or
pursuant to binding legal agreements existing on June 30, 2000.
(l) Employment Agreements. Section 4.10(l) of the Company Disclosure
Schedule is a true and correct list of each employment agreement to which the
Company is currently a party.
Section 4.11. Vote Required. The approval of the Merger by the affirmative
vote of a majority of the votes entitled to be cast by holders of Company
Common Stock (the "Company Stockholders' Approval") is
14
the only vote of the holders of any class or series of the securities of the
Company or any of the Company Subsidiaries required to approve this Agreement,
the Merger and the other transactions contemplated hereby.
Section 4.12. Insurance. The Company maintains insurance coverage against
all risks of a character and in such amounts as it believes are adequate for
its business. Neither the Company nor any of the Company Subsidiaries has
received any notice of cancellation or termination with respect to any material
insurance policy of the Company or any of the Company Subsidiaries. To the
Company's knowledge, the insurance policies of the Company and each of the
Company Subsidiaries are valid and enforceable policies in all material
respects. Section 4.12 of the Company Disclosure Schedule lists all insurance
coverage currently maintained by the Company and the insurers with which such
coverage is maintained.
Section 4.13. Title to Properties.
(a) The real property (the "Real Property") owned by the Company and the
Company Subsidiaries or demised by the leases (the "Leases") described in
Section 4.13(a) of the Company Disclosure Schedule constitutes all of the real
property owned, used or occupied by the Company and any Company Subsidiary
other than home offices maintained by those individuals listed on Section
4.13(a) of the Company Disclosure Schedule. The Real Property has access,
sufficient for the conduct of the business of the Company and each of the
Company Subsidiaries as now conducted or as presently proposed to be conducted,
to public roads and to all utilities, including electricity, sanitary and storm
sewer, potable water, natural gas and other utilities, used in the operation of
the business of the Company and each of the Company Subsidiaries at that
location.
(b) The Leases are in full force and effect, and the Company or a Company
Subsidiary holds a valid and existing leasehold interest under each of the
Leases for the term set forth under such caption in the Company Disclosure
Schedule. The Company has made available to Parent and Merger Sub complete and
accurate copies of each of the Leases, and none of the Leases has been modified
in any respect, except to the extent that such modifications are disclosed by
the copies made available to Parent and Merger Sub. Neither the Company nor any
of the Company Subsidiaries is in default, and no circumstances exist which, if
unremedied, would, either with or without notice or the passage of time or
both, result in such default under any of the Leases; nor, to the best
knowledge of the Company, is any other party to any of the Leases in default.
(c) The Company and the Company Subsidiaries own good and marketable title
to each parcel of Real Property identified in Section 4.13(a) of the Company
Disclosure Schedule as being owned by the Company and to each of the tangible
properties and tangible assets reflected in the consolidated financial
statements of the Company for the year ended June 30, 2000 or acquired since
the date thereof, free and clear of all liens and encumbrances, except for (i)
liens for current taxes not yet due and payable, (ii) liens set forth in
Section 4.13(c) of the Company Disclosure Schedule, (iii) the properties
subject to the Leases, (iv) liens imposed by law and incurred in the ordinary
course of business for obligations not yet due to carriers, warehousemen,
laborers and materialmen and (v) liens in respect of pledges or deposits under
workers' compensation laws, all of which liens, individually or in the
aggregate, do not or will not, and are not and will not reasonably be expected
to, give rise to a Company Material Adverse Effect.
(d) All of the buildings, machinery, equipment and other tangible assets
necessary for the conduct of the Company's and the Company's Subsidiaries
business are in good condition and repair, ordinary wear and tear excepted, and
are usable in the ordinary course of business. There are no defects in such
assets or other conditions relating thereto which, individually or in the
aggregate, give rise, or would reasonably be expected to give rise, to a
Company Material Adverse Effect. The Company and the Company Subsidiaries own,
or lease under valid leases, all buildings, machinery, equipment and other
tangible assets necessary for the conduct of their businesses.
(e) The Company and the Company Subsidiaries are not in violation of any
applicable zoning ordinance or other law, regulation or requirement relating to
the operation of any properties used in the operation of its business, and the
Company and the Company Subsidiaries have not received any notice of any such
violation,
15
or the existence of any condemnation proceeding with respect to any of the Real
Property, except with respect to violations the potential consequences of
which, individually or in the aggregate, do not or will not, and are not and
will not reasonably be expected to, give rise to a Company Material Adverse
Effect.
(f) Neither the Company nor any Company Subsidiary has any knowledge of
improvements made or contemplated to be made by any public or private
authority, the costs of which are to be assessed as special taxes or charges
against any of the Real Property, and there are no present assessments.
Section 4.14 Environmental Matters.
(a) As used in this Section 4.14, the following terms shall have the
following meanings:
(i) "Hazardous Materials" means any pollutant, contaminant, waste,
hazardous substance or toxic substance as defined in or governed by any
Environmental Law.
(ii) "Environmental Laws" means all applicable federal, state, local and
foreign laws, rules, regulations, codes, ordinances, orders, decrees,
permits and licenses relating to pollution, contamination or protection of
the environment or human health or safety (including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act
and all other applicable federal, state, local and foreign laws, rules,
regulations, codes, ordinances, orders, decrees, permits and licenses
relating to Hazardous Materials).
(iii) "Release" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, ejecting, leaching, escaping or
threatened release, whether intentional or unintentional, of any Hazardous
Material into the environment.
(b) The Company and each of the Company Subsidiaries and the Real Property
are in material compliance with all applicable Environmental Laws.
(c) The Company and each of the Company Subsidiaries have obtained, and
maintained in full force and effect, all environmental permits, licenses,
certificates of compliance, approvals and other authorizations necessary to
conduct their businesses and own or operate the Real Property (collectively,
the "Environmental Permits"). A true and correct copy of each such
Environmental Permit has been made available by the Company to Parent and
Merger Sub. The Company and each of the Company Subsidiaries have conducted
their businesses in compliance with all terms and conditions of the
Environmental Permits. The Company and each of the Company Subsidiaries have
filed all reports and notifications required to be filed under and pursuant to
all applicable Environmental Laws.
(d) Except as set forth in Section 4.14 of the Company Disclosure Schedule:
(i) no Hazardous Materials (other than those incidental or necessary to the
conduct of its business, which Hazardous Materials are listed in Section
4.14(d) of the Company Disclosure Schedule) have been generated, treated,
contained, handled, located, used, manufactured, processed, buried,
incinerated, deposited, stored, or released by the Company or any Company
Subsidiary on, under or about any part of the Real Property, (ii) the Company,
the Company Subsidiaries and the Real Property and any improvements thereon,
contain no asbestos, urea, formaldehyde, radon at levels above natural
background, polychlorinated biphenyls (PCBs), and (iii) no aboveground or
underground storage tanks are located on, under or about the Real Property, or
have been located on, under or about the Real Property and then subsequently
been removed or filled.
(e) Except as set forth in Section 4.14 of the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries, have received notice
alleging in any manner that the Company or any Company Subsidiary is, or might
be potentially responsible for any Release of Hazardous Materials, or any costs
arising under or violation of Environmental Laws.
(f) No expenditure or expenditures of more than $50,000, individually or in
the aggregate, will be required, or is reasonably expected to be required, in
order for Parent, Merger Sub or the Surviving Corporation
16
to comply with any Environmental Laws in effect at the time of the Closing in
connection with the operation or continued operation of the businesses of the
Company and any Company Subsidiary or the Real Property in a manner consistent
with the current operation thereof by the Company.
(g) To the Company's knowledge, the Company, the Company Subsidiaries and
the Real Property are not and have not been listed on the United States
Environmental Protection Agency National Priorities List of Hazardous Waste
Sites, or any other list, schedule, law, inventory or record of hazardous or
solid waste sites maintained by any federal, state or local agency.
(h) The Company does not have in its possession or control any written
environmental reports or investigations which the Company has obtained or
ordered with respect to the businesses of the Company, the Company Subsidiaries
or the Real Property.
(i) No lien has been attached or filed against the Company or any Company
Subsidiary or the Real Property in favor of any governmental or private entity
for (i) any liability or imposition of costs under or violation of any
applicable Environmental Law; or (ii) any Release of Hazardous Materials.
Section 4.15. Technology and Intellectual Property Rights.
(a) As used in this Section 4.15, "Company Intellectual Property" consists
of the following:
(i) all inventions, patents, trademarks, trade names, service marks,
domain names, original works of authorship, copyrights and any renewal
rights, applications and registrations for any of the foregoing, and all
trade dress, schematics, technology, manufacturing processes, supplier
lists, trade secrets, know-how, moral rights, computer software programs or
applications (as applicable, in both source and object code form) owned in
whole or in part by the Company or any Company Subsidiary;
(ii) all goodwill associated with trademarks, trade names service marks
and trade dress owned in whole or in part by the Company or any Company
Subsidiary;
(iii) all software, including without limitation source code, object
code and system build software and instructions related to all software
described herein owned in whole or in part by the Company or any Company
Subsidiary;
(iv) all documents, records and files relating to design, end user
documentation, manufacturing, quality control, sales, marketing or customer
support for all intellectual property described herein owned in whole or in
part by the Company or any Company Subsidiary;
(v) all other tangible or intangible proprietary information and
materials owned in whole or in part by the Company or any Company
Subsidiary; and
(vi) all license and other rights held by the Company or any Company
Subsidiary in any third party product, intellectual property, proprietary
or personal rights, documentation, or tangible or intangible property,
including without limitation the types of intellectual property and
tangible and intangible proprietary information described in (i) through
(v) above;
that are being, and/or have been, used, or are currently under development for
use, in the business of the Company or any Company Subsidiary as it has been,
is currently or is currently anticipated to be (up to the Closing), conducted.
Company Intellectual Property described in clauses (i) to (v) above is referred
to herein as "Company Owned Intellectual Property" and the Company Intellectual
Property described in clause (vi) above is referred to herein as "Company
Licensed Intellectual Property." Unless otherwise noted, all references to
"Company Intellectual Property" shall refer to both Company Owned Intellectual
Property and Company Licensed Intellectual Property.
(b) Section 4.15 of the Company Disclosure Schedule lists: (i) all patents,
registered copyrights, mask works, registered and material unregistered
trademarks and service marks and any applications and registrations
17
for any of the foregoing, that are included in the Company Owned Intellectual
Property; (ii) all material licenses, sublicenses and other agreements to which
the Company or any Company Subsidiary is a party and pursuant to which any
other person is authorized to have access to or use the Company Owned
Intellectual Property or exercise any other right with regard thereto (except
standard form, unmodified end user license agreements in the forms that have
existed from time to time and dealer/distributor agreements for the Company's
and the Company Subsidiaries' commercially distributed products, entered into
between the Company or any Company Subsidiary and the end users of the Company
products in the ordinary course of business); (iii) all material Company
Licensed Intellectual Property (other than license agreements for "shrink
wrapped, off the shelf," commercially available, third party products used by
the Company or any Company Subsidiary but including any software tools or "open
source" licenses); and (iv) any obligations of exclusivity, noncompetition,
nonsolicitation, right of first refusal or first negotiation to which the
Company or any Company Subsidiary is subject.
(c) The Company Intellectual Property consists solely of items and rights
that are either: (i) owned by the Company or any Company Subsidiary, (ii) in
the public domain, or (iii) rightfully used and authorized for use by the
Company or any Company Subsidiary and their successors pursuant to a valid
license or other agreement. The Company and each of the Company Subsidiaries
have all rights in the Company Intellectual Property reasonably necessary to
carry out the Company's and each Company Subsidiaries' current activities and
has or had all rights in the Company Intellectual Property reasonably necessary
to carry out the Company's and each Company Subsidiaries' former activities.
(d) The Company and the Company Subsidiaries are not, nor as a result of the
execution or delivery of this Agreement, or performance of the Company's
obligations hereunder, will the Company or any Company Subsidiary be, in
violation of any license, sublicense or other agreement relating to the Company
Intellectual Property to which the Company or any Company Subsidiary is a party
or otherwise bound. Except pursuant to the terms of the agreements listed in
the Company Disclosure Schedule, the Company and the Company Subsidiaries are
not obligated to provide any consideration (whether financial or otherwise) to
any third party, nor is any third party otherwise entitled to any consideration
from the Company or any Company Subsidiary, with respect to any exercise of
rights by the Company or any Company Subsidiary or their successors in the
Company Intellectual Property.
(e) The use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any Company Owned
Intellectual Property or any other authorized exercise of rights in or to the
Company Owned Intellectual Property by the Company or any Company Subsidiary or
their licensees does not and will not infringe any copyright, patent, trade
secret, trademark, service xxxx, trade name, firm name, logo, trade dress, mask
work, moral right, other intellectual property right, right of privacy, right
of publicity or right in personal or other data of any person. No claims (i)
challenging the validity, effectiveness, or ownership by the Company or any
Company Subsidiary of any of the Company Owned Intellectual Property, or (ii)
to the effect that the use, reproduction, modification, manufacturing,
distribution, licensing, sublicensing, sale or any other exercise of rights in
any Company Owned Intellectual Property by the Company or any Company
Subsidiary or their licensees infringes, or will infringe on, any intellectual
property or other proprietary or personal right of any person, have been
asserted or, to the knowledge of Company, are threatened by any person nor, to
the knowledge of Company, are there any valid grounds for any bona fide claim
of any such kind. All granted or issued patents and all registered trademarks
listed on the Company Disclosure Schedule and all copyright registrations held
by the Company or any Company Subsidiary are valid, enforceable and subsisting.
To the knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Owned Intellectual Property by any third
party, employee or former employee.
(f) Except as set forth in Section 4.15(f) of the Company Disclosure
Schedule, no parties other than the Company or any Company Subsidiary possess
any current or contingent rights to any source code that is part of the Company
Owned Intellectual Property (including, without limitation, through any escrow
account).
(g) Section 4.15(g) of the Company Disclosure Schedule lists all parties who
have created any material portion of, or otherwise have any rights in or to,
the Company Owned Intellectual Property other than
18
employees of the Company and any Company Subsidiary whose work product was
created by them entirely within the scope of their employment by the Company or
any Company Subsidiary. The Company and the Company Subsidiaries have secured
from all parties who have created any material portion of, or otherwise have
any rights in or to, the Company Owned Intellectual Property valid and
enforceable written assignments or licenses of any such work or other rights to
the Company and the Company Subsidiaries and have provided Parent access to
true and complete copies of such assignments or licenses.
(h) Section 4.15(h) of the Company Disclosure Schedule includes a true and
complete list of all support or maintenance agreements relating to Company
Owned Intellectual Property or to which the Company or any Company Subsidiary
is a party as to Company Licensed Intellectual Property, as of the date set
forth on such schedule (which shall not be more than five business days prior
to the date of this Agreement).
(i) Except as set forth in Section 4.15(i) of the Company Disclosure
Schedule, the Company and the Company Subsidiaries have entered into written
agreements with employees and third parties with whom the Company or any
Company Subsidiary has (i) shared material confidential or proprietary
information of the Company or any Company Subsidiary, or (ii) received from
others confidential or proprietary information which the Company or any Company
Subsidiary is obligated to treat as confidential, which agreements require such
employees and third parties to keep such information confidential in accordance
with their terms. The Company has provided Parent with access to true and
correct copies of all such written agreements.
Section 4.16. Warranties. Except as disclosed in Section 4.16 of the Company
Disclosure Schedule there are no claims outstanding, pending or, to the best
knowledge of the Company, threatened for breach of any warranty relating to any
products sold by the Company or any Company Subsidiary prior to the date hereof
that could reasonably be expected to give rise to a Company Material Adverse
Effect.
Section 4.17. Opinion of Financial Adviser. A Special Committee of the Board
of Directors of the Company formed to, among other things, evaluate the Merger
(the "Special Committee"), has obtained the opinion of Duff & Xxxxxx, LLC, to
the effect that, as of the date hereof, the Per Share Amount to be paid to
holders of Company Common Stock (other than Biver, Parent and its subsidiaries,
Xxxx and Xxxxxx) pursuant to this Agreement is fair from a financial point of
view to such holders. A true and correct copy of such opinion has been provided
by the Company to Parent.
Section 4.19. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Merger based upon arrangements made by or on behalf of the Company.
Section 4.20. Non-Applicability of Certain Provisions of the Delaware
Act. None of the business combination provisions of Section 203 of the Delaware
Act or any similar provisions of the Delaware Act, the certificate of
incorporation or by-laws of the Company are applicable to the transactions
contemplated by this Agreement because such provisions do not apply by their
terms or because any required approvals of the Board of Directors of the
Company have been obtained.
Section 4.21. Board Recommendation. The Company's Board of Directors, at a
meeting duly called and held, has by unanimous vote of those directors present
(who constituted all of the directors then in office other than Xxxx X. Xxxxx
and Xxxxxx X. Xxxx, who did not participate in such deliberations or vote)
(i) approved this Agreement and determined that it is advisable and fair to and
in the best interests of the stockholders of the Company, and (ii) resolved to
recommend that the holders of Company Common Stock approve this Agreement and
the Merger.
Section 4.22. Sale Agreement Representations and Warranties. The Company has
reviewed that certain Asset Purchase Agreement, dated as of the date hereof, by
and among Parent, Merger Sub and Digital Canal Corporation, an Iowa corporation
("Digital Canal"), a copy of which is attached hereto as Exhibit F (the "Sale
Agreement"), pursuant to which Parent and Merger Sub have agreed, immediately
following the Effective Time, to cause the Company to sell to Digital Canal the
assets (the "Transferred Assets") that relate
19
to the Company's (i) Building Design and Construction division and product line
and (ii) Structural Engineering division and product line (collectively, the
"Transferred Divisions"). The transactions contemplated by the Sale Agreement
shall hereinafter be referred to as the "Asset Sale." The representations and
warranties contained in Section 4 of the Sale Agreement are true and accurate
in all material respects, except as set forth in the Transferred Divisions
Disclosure Schedule delivered by the Company to Parent and Merger Sub on the
date hereof (which such Transferred Divisions Disclosure Schedule the Company
hereby consents to Parent delivering to Digital Canal on the date hereof and
sets forth the exceptions to the representations and warranties contained in
Section 4 of the Sale Agreement under captions referencing the sections to
which such exceptions apply).
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company that,
except as set forth in the Disclosure Schedule delivered by Parent and Merger
Sub to the Company on the date hereof (the "Parent Disclosure Schedule") (which
Parent Disclosure Schedule sets forth the exceptions to the representations and
warranties contained in this Article V under captions referencing the Sections
to which such exceptions apply):
Section 5.1. Organization. Parent is a limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Parent and Merger Sub were organized solely for the purposes of
consummating the Merger and the other transactions contemplated by this
Agreement and taking action with respect thereto. Except for obligations or
liabilities incurred in connection with the transactions contemplated by this
Agreement or in connection with their organization, at the Effective Time
neither Parent nor Merger Sub will have incurred any obligations or liabilities
or engaged in any business activities of any kind.
Section 5.2. Authority; Non-Contravention; Statutory Approvals.
(a) Authority. Parent and Merger Sub have all requisite power and authority
to enter into this Agreement and, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary limited liability company action on the part of
Parent and all necessary corporate action on the part of Merger Sub. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub, and, assuming the due authorization, execution and delivery hereof by the
Company, this Agreement constitutes the valid and binding obligation of each of
Parent and Merger Sub enforceable against them in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general principles of equity.
(b) Non-Contravention. The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any provisions
of (i) the articles of organization or operating agreement of Parent or the
certificate of incorporation or by-laws of Merger Sub, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority applicable to Parent or Merger Sub or
any of their properties or assets or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or Merger Sub
is a party or by which it or any of its properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such Violations
which would not, in the aggregate, have a material adverse effect on the
ability of Parent or Merger Sub to consummate the transactions contemplated by
this Agreement (any such material adverse effect, a "Parent Material Adverse
Effect").
20
Section 5.3. Proxy Statement. None of the information supplied by Parent or
Merger Sub, or their officers, directors, managers, representatives, agents or
employees, for inclusion in the Proxy Statement, or in any amendments thereof
or supplements thereto, will, on the date the Proxy Statement is first mailed
to stockholders or at the time of the Company Meeting (giving effect to any
documents incorporated by reference therein), contain any statement which, at
such time and in light of the circumstances under which it will be made, will
be false or misleading with respect to any material fact, or will omit to state
any material fact necessary in order to make the statements therein not false
or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Meeting which has become false or misleading.
Section 5.4. Brokers. No broker, finder or investment banker (other than
Strategic Capital Partners, LLC ("SCP")) is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of Parent or Merger Sub. Parent has
heretofore furnished to the Company a complete and correct copy of all
agreements between Parent or Merger Sub and SCP, pursuant to which such firm
would be entitled to any payment relating to the Merger.
Section 5.5. Financing. Parent has (i) entered into a commitment letter (the
"Commitment Letter") with a reliable financing source contemplating senior debt
financing in the amount of $6,300,000 for the Merger and a revolving credit
facility of $1,500,000 and (ii) made arrangements with other reliable financing
sources for subordinated debt financing in an amount of $2,000,000 for the
Merger. The financings contemplated by the Commitment Letter and such other
financing arrangements, respectively, are, together with the Company's cash
balances described in Section 8.3(h), adequate to consummate the transactions
contemplated hereby in accordance with the terms hereof. Parent has delivered
to the Company a true, correct and complete copy of the Commitment Letter. The
Commitment Letter is in full force and effect and has not been amended or
terminated in any manner adverse to Parent or Company. The financings
contemplated by the Commitment Letter and such other financing arrangements,
respectively, are subject to, among other things, the accuracy of the Company's
representations and warranties in this Agreement, the performance of the
covenants set forth in Articles VI and VII of this Agreement and the
satisfaction of the conditions set forth in Article VIII of this Agreement.
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1. Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees, as to itself and each of the Company
Subsidiaries, that after the date of this Agreement and prior to the Effective
Time or earlier termination of this Agreement, except as expressly contemplated
or permitted in this Agreement, or to the extent Parent and Digital Canal, but
Digital Canal only with respect to Sections 6.1(a), (d) and (e) and then only
to the extent related to the Transferred Assets or the Transferred Divisions,
shall have otherwise consented in writing, which decision regarding consent
shall be made as soon as reasonably practicable (it being understood that if a
particular activity is permissible as a result of its being disclosed and,
where applicable, approved in writing by Parent under any one of the Section
6.1 subsections of the Company Disclosure Schedule and by Digital Canal, but
Digital Canal only with respect to Sections 6.1(a), (d) and (e) and then only
to the extent related to the Transferred Assets or the Transferred Divisions,
that activity will not be prohibited under any of the subsections of Section
6.1):
(a) Ordinary Course of Business. The Company shall, and shall cause the
Company Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and use their commercially reasonable efforts to preserve intact
their present business organizations and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having business dealings
with them (including without limitation making payments to its vendors and
suppliers in the ordinary course of business consistent with the Company's
existing practices) and, subject to prudent management of workforce needs, keep
available the services of their present officers and employees to the
21
end that their goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time. Except as described in Section 7.10 or
as set forth in Section 6.1(a) of the Company Disclosure Schedule, the Company
shall not, nor shall the Company permit any of the Company Subsidiaries to, (i)
enter into a new line of business involving any material investment of assets
or resources or any material exposure to liability or loss to the Company and
the Company Subsidiaries taken as a whole, (ii) acquire, or agree to acquire,
by merger or consolidation with, or by purchase or otherwise, a substantial
equity interest in or a substantial portion of the assets of, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets (other
than equipment, supplies and similar items or for capital expenditures, in each
case, in the ordinary course of business consistent with past practice), (iii)
sell, pledge, dispose or encumber any of its assets, except in the ordinary
course of business, (iv) amend or propose to amend its certificate of
incorporation or bylaws or equivalent organizational documents, (v) hire or
terminate the employment of any person except that nothing contained herein
shall prohibit the Company from (a) terminating the employment of any employee
for cause or (b) suspending the employment of any employee or (vi) enter into
or propose to enter into, or modify or propose to modify, any agreement,
arrangement or understanding with respect to any of the matters set forth in
this Section 6.1(a).
(b) Dividends. The Company shall not, nor shall the Company permit any of
the Company Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than to the
Company or its wholly owned Subsidiaries and; or (ii) split, combine,
reclassify, redeem or repurchase any of their capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of, or in substitution for, shares of their capital stock.
(c) Issuance or Repurchase of Securities. The Company shall not, nor shall
the Company permit any of the Company Subsidiaries to, issue, agree to issue,
deliver, sell, award, pledge, dispose of or otherwise encumber or authorize or
propose the issuance, delivery, sale, award, pledge, grant of a security
interest, disposal or other encumbrance of, any shares of their capital stock
of any class or any securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares or convertible or
exchangeable securities, other than (i) issuances by a wholly owned Subsidiary
of its capital stock to its direct or indirect parent; (ii) issuances of shares
of Company Common Stock after the date of this Agreement pursuant to the
Company Stock Option Plans, in each case pursuant to awards or grants existing
as of the date hereof and identified in Section 4.10(a) of the Company
Disclosure Schedule and (iii) issuances of shares of Company Common Stock after
the date of this Agreement pursuant to the Company Stock Purchase Plan but only
with respect to employee contributions to the plan made on or before June 30,
2001 under employee elections made prior to the date of this Agreement as
described in Section 4.3(iv). While this Agreement is in effect, the Company
shall not issue (including the sale of any treasury shares) any shares of
Company Common Stock to the Company 401(k) Plan, it being understood that
nothing in this Agreement shall prohibit the acquisition by the Company 401(k)
Plan of shares of Company Common Stock from a source other than the Company.
Effective July 1, 2001, the Company will not allow employee contributions under
the Company Stock Purchase Plan. The Company shall not, nor shall the Company
permit any of the Company Subsidiaries to, repurchase, redeem or otherwise
acquire any Company Common Stock, any security convertible into or exchangeable
for Company Common Stock, or any Voting Debt.
(d) Indebtedness. Except as set forth in Section 6.1(d) of the Company
Disclosure Schedule, the Company shall not, nor shall the Company permit any of
the Company Subsidiaries to, incur or guarantee any indebtedness (including any
debt borrowed or guaranteed or otherwise assumed including, without limitation,
the issuance of debt securities or warrants or rights to acquire debt) or enter
into any "keep well" or indemnity 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 other than (i) indebtedness or
guarantees or "keep well" or other agreements incurred in the ordinary course
of business consistent with past practice, (ii) arrangements between the
Company and wholly owned Company Subsidiaries or among wholly owned Company
Subsidiaries, (iii) in connection with the refunding or defeasance of existing
indebtedness that becomes due in accordance with its terms before the Effective
Time, or (iv) as may be necessary in connection with investments permitted by
Section 6.1(a).
22
(e) Compensation, Benefits. Except as may be required by applicable law or
by Section 6.4, as specifically set forth in Section 6.1(e) of the Company
Disclosure Schedule or as contemplated by this Agreement, the Company shall
not, nor shall the Company permit any of the Company Subsidiaries to, (i) enter
into, adopt or amend or increase the amount or accelerate the payment or
vesting of any benefit or amount payable under, any employee benefit plan or
other contract, agreement, commitment, arrangement, plan, trust, fund or policy
maintained by, contributed to or entered into by the Company or any of the
Company Subsidiaries (including, without limitation, the Company Benefit Plans
set forth in Section 4.10(a) of the Company Disclosure Schedule, as in effect
on the date of this Agreement) or increase or amend, or enter into any
contract, agreement, commitment or arrangement to increase or amend in any
manner, the compensation or fringe benefits, or otherwise to extend, expand or
enhance the engagement, employment or any related rights, of any director,
officer or other employee of the Company or any of the Company Subsidiaries,
except pursuant to binding legal commitments existing on the date of this
Agreement and specifically identified in Section 4.10(a) of the Company
Disclosure Schedule and except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to the Company or any
of the Company Subsidiaries; (ii) enter into or amend any employment,
severance, pension, deferred compensation or special pay arrangement with
respect to the termination of employment or other similar contract, agreement
or arrangement with (A) any director or officer or (B) other employee other
than in the ordinary course of business consistent with past practice; or (iii)
deposit into any trust (including any "rabbi trust") amounts in respect of any
employee benefit obligations or obligations to directors; provided that
transfers into any trust, other than a rabbi or other trust with respect to any
non-qualified deferred compensation, may be made in accordance with past
practice or pursuant to legally binding agreements in effect on the date of
this Agreement.
Section 6.2. Conduct of Business by Parent and Merger Sub Pending the
Merger. Each of Parent and Merger Sub covenant and agree that after the date of
this Agreement and prior to the Effective Time or earlier termination of this
Agreement, except as expressly contemplated or permitted in this Agreement, or
to the extent the Company shall have otherwise consented in writing, which
decision regarding consent shall be made as soon as reasonably practicable (it
being understood that if a particular activity is permissible as a result of
its being disclosed and, where applicable, approved in writing by the Company
under any one of the Section 6.2 subsections of the Parent Disclosure Schedule,
that activity will not be prohibited under any of the subsections of Section
6.2):
(a) Limited Business Activities. Except for obligations or liabilities
incurred in connection with the transactions contemplated by this Agreement
or in connection with their organization, neither Parent nor Merger Sub
shall incur any obligations or liabilities or engage in any business
activities of any kind.
(b) Financing Arrangements. Parent and Merger Sub shall use commercially
reasonable efforts to consummate the financings contemplated by Section 5.5
on the terms set forth in the Commitment Letter (with such modifications as
Parent and the senior lender may agree) and on such terms and conditions
acceptable to Parent with respect such other financing arrangements,
respectively.
Section 6.3. Additional Covenants by the Company and Parent Pending the
Merger. Each of Parent and the Company covenants and agrees, each as to itself
and each of its Subsidiaries, that after the date of this Agreement and prior
to the Effective Time or earlier termination of this Agreement, except as
expressly contemplated or permitted in this Agreement, or to the extent the
other parties hereto shall otherwise consent in writing, which decision
regarding consent shall be made as soon as reasonably practicable:
(a) Cooperation, Notification. Each party shall (i) confer on a regular
and frequent basis with one or more representatives of the other party to
discuss, subject to applicable law, material operational matters and the
general status of the Company's ongoing operations, (ii) use all reasonable
efforts to cooperate in all respects with Merger Sub and the parties
providing debt financing for the Merger (the "Lenders") in order for Merger
Sub to establish and obtain its contemplated debt financing arrangements,
(iii) promptly advise the other party of any change or event which has had,
or would reasonably be
23
expected to result in, a Company Material Adverse Effect or a Parent
Material Adverse Effect, as the case may be, and (iv) pursuant to
Section 7.3, promptly provide the other party with copies of all filings
made by such party or any of its Subsidiaries with any state or federal
court, administrative agency, commission or other Governmental Authority.
In addition, the Company shall promptly notify Parent of any significant
changes in the Company's business, properties, assets, financial condition
or results of operations.
(b) No Breach, Etc. Each of the parties shall not, nor shall it permit
any of its Subsidiaries to, take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or
in any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
Section 6.4. Compensation of Regional Representatives. Effective upon
execution of this Agreement, without the consent of Parent the Company will
not, nor will the Company permit any of the Company Subsidiaries, to amend or
propose to amend, change, or terminate the structure of the compensation system
for regional sales representatives in effect on the date hereof.
ARTICLE VII.
ADDITIONAL AGREEMENTS
Section 7.1. Access to Information. Upon reasonable notice, the Company
shall, and shall cause the Company Subsidiaries to, afford to the officers,
directors, employees, accountants, counsel, investment bankers, financial
advisors and other representatives (collectively, "Representatives") of Parent,
the Lenders and, if requested by Parent, Digital Canal, so long as Digital
Canal agrees to be bound by the terms and conditions of the Xxxx
Confidentiality Agreement (as defined below) as if it were a party thereto,
reasonable access, during normal business hours throughout the period prior to
the Effective Time, to all of its properties, books, contracts, commitments,
records and other information (including, but not limited to, Tax Returns) and,
during such period, each of the parties hereto shall, and shall cause its
Subsidiaries to, furnish promptly to the other party access to each significant
report, schedule and other document filed or received by it or any of its
Subsidiaries pursuant to the requirements of federal or state securities laws
or filed with or sent to the SEC, the Department of Labor, the Immigration and
Naturalization Service, the Environmental Protection Agency (state, local and
federal), the IRS, the Department of Justice, the Federal Trade Commission, or
any other federal, state or foreign regulatory agency or commission or other
Governmental Authority. In addition, during such period, the Company shall, and
shall cause the Company Subsidiaries to, furnish promptly to Parent, Merger Sub
and, if requested by Parent, Digital Canal, but to Digital Canal only the
extent related to the Transferred Assets or the Transferred Divisions, access
to all information concerning the Company, the Company Subsidiaries, directors,
officers and stockholders, properties, facilities or operations owned, operated
or otherwise controlled by the Company, or if not so owned, operated or
controlled, which properties, facilities or operations that the Company may
nonetheless obtain access to through the exercise of reasonable diligence, and
such other matters as may be reasonably requested by Parent in connection with
any filings, applications or approvals required or contemplated by this
Agreement, the Sale Agreement or for any other reason related to the
transactions contemplated by this Agreement or the Sale Agreement. No later
than seven days prior to the Closing Date, the Company shall furnish to Parent
and Digital Canal the lists and reports provided for in Section 6.7 of the Sale
Agreement. Parent shall, and shall cause its Subsidiaries, Representatives
(other than Xxxx and Digital Canal) and the Lenders to, hold in confidence all
documents and information concerning the Company furnished to it in connection
with the transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement, dated as of March 19, 2001, between Parent and the
Company (the "Confidentiality Agreement"). The Company shall not, without prior
consent of Parent, terminate or otherwise amend or waive any obligations of
Xxxx or Digital Canal under that certain Confidentiality Agreement, dated March
7, 2001, between Xxxx and the Company (the "Xxxx Confidentiality Agreement").
Notwithstanding anything else contained herein, Parent and Merger Sub shall be
permitted to satisfy their respective obligations to Digital Canal under
Sections 6.1, 6.2, 6.3, 6.6, 6.7, 6.8 and 6.9 of the Sale Agreement without
breaching this Agreement.
24
Section 7.2. Proxy Statement and Schedule 13E-3.
(a) The Company shall prepare, in consultation with Parent, the Proxy
Statement and shall file the Proxy Statement with the SEC as soon as is
reasonably practicable after the date of this Agreement and shall use all
reasonable efforts to respond to comments from the SEC and to cause the Proxy
Statement to be mailed to the Company's stockholders at the earliest
practicable time. The Company will not amend or supplement the Proxy Statement
unless (i) the Proxy Statement or any amendment or supplement thereof is
satisfactory in content to Parent in its reasonable judgment or (ii) required
by applicable securities laws. Parent will not unreasonably withhold or delay
its consent under clause (i) of this subsection.
(b) As soon as practicable after the date of this Agreement, Parent and the
Company shall file with the SEC, and shall use all reasonable efforts to cause
any of their respective affiliates engaging in this transaction to file with
the SEC, a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule
13E-3 Transaction Statement") with respect to the Merger. Each of the parties
hereto agrees to use all reasonable efforts to cooperate and to provide each
other with such information as any of such parties may reasonably request in
connection with the preparation of the Proxy Statement and the Schedule 13E-3
Transaction Statement.
(c) Each party hereto agrees promptly to supplement, update and correct any
information provided by it for use in the Proxy Statement and the Schedule 13E-
3 Transaction Statement if and to the extent that such information is or shall
have become incomplete, false or misleading.
Section 7.3. Regulatory Approvals and Other Matters.
(a) HSR Filings. The parties agree that the Merger and transactions
contemplated by this Agreement are exempt from the notification requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the rules and regulations thereunder. However, if the parties
determine that some notification is required by the HSR Act, each party hereto
shall file or cause to be filed with the Federal Trade Commission and the
Department of Justice any such notification. Such parties will use all
reasonable efforts to coordinate such filings and any responses thereto, to
make such filings promptly and to respond promptly to any requests for
additional information made by either of such agencies.
(b) Other Approvals. Each party hereto shall cooperate and use all
reasonable efforts to promptly prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to use all reasonable efforts to obtain all necessary permits,
consents, approvals and authorizations of all Governmental Authorities and all
other persons necessary or advisable to consummate the transactions
contemplated hereby, including, without limitation, the Company Required
Consents. The Company agrees it will use commercially reasonable efforts to
obtain all consents and lien releases required under Section 6.6 of the Sale
Agreement. Parent and the Company agree that they will consult with each other
and Digital Canal, but Digital Canal only to the extent related to the
Transferred Assets or the Transferred Divisions, with respect to the obtaining
of all such necessary or advisable permits, consents, approvals and
authorizations of Governmental Authorities. The Company shall promptly notify
Parent and Digital Canal, but Digital Canal only to the extent related to the
Transferred Assets or the Transferred Divisions, of any failure or prospective
failure to obtain any such consents and lien releases and shall provide copies
of all (i) Company Required Consents obtained by the Company to Parent; and
(ii) all consents and lien releases required pursuant to Section 6.6 of the
Sale Agreement to Parent and Digital Canal.
Section 7.4. Stockholder Approval.
(a) Approval of Company Stockholders. The Company shall, as soon as
reasonably practicable after the date of this Agreement, (i) take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Meeting"), as promptly as practicable after the date
of this Agreement, for the purpose of securing the Company Stockholders'
Approval, (ii) distribute to its stockholders the Proxy Statement in accordance
with applicable federal and state law and with its certificate of incorporation
and
25
by-laws, (iii) subject to Section 7.7, recommend to its stockholders the
approval of the Merger, this Agreement and the transactions contemplated hereby
and (iv) cooperate and consult with Parent with respect to each of the
foregoing matters.
(b) Meeting Date. The Company shall duly call and give notice of the Company
Meeting, and shall commence distribution of the Proxy Statement to its
stockholders, as soon as reasonably practicable after the clearance of the
Proxy Statement by the staff of the SEC (or after the expiration of the ten
calendar day period after filing the preliminary proxy statement with the SEC
if the staff of the SEC has not commented on or otherwise notified the Company
within such ten day period of the staff's intent to review and comment on the
preliminary proxy statement).
Section 7.5. Disclosure Schedules. On or before the date hereof, (i) Parent
has delivered to the Company the Parent Disclosure Schedule, accompanied by a
certificate signed by an officer of Parent stating the Parent Disclosure
Schedule has been delivered pursuant to this Section 7.5, (ii) the Company has
delivered to Parent the Company Disclosure Schedule, accompanied by a
certificate signed by the chief financial officer of the Company stating the
Company Disclosure Schedule has been delivered pursuant to this Section 7.5,
and (iii) the Company has delivered to Parent and Digital Canal the Transferred
Divisions Disclosure Schedule, accompanied by a certificate signed by the chief
financial officer of the Company stating the Transferred Divisions Disclosure
Schedule has been delivered pursuant to this Section 7.5. The Parent Disclosure
Schedule, the Company Disclosure Schedule and the Transferred Divisions
Disclosure Schedule are collectively referred to herein as the "Disclosure
Schedules." The Disclosure Schedules shall be deemed to constitute an integral
part of this Agreement and to modify the respective representations,
warranties, covenants or agreements of the parties hereto contained herein and
the Sale Agreement to the extent that such representations, warranties,
covenants or agreements expressly refer to the Disclosure Schedules. Anything
to the contrary contained herein or in the Disclosure Schedules
notwithstanding, any and all statements, representations, warranties or
disclosures set forth in the Disclosure Schedules delivered on or before the
date hereof shall be deemed to have been made on and as of the date hereof.
From time to time prior to the Closing, the parties shall promptly supplement
or amend the Disclosure Schedules with respect to any matter, condition or
occurrence hereafter arising affecting the representations and warranties
contained herein and in the Sale Agreement, respectively, which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Disclosure Schedules pertaining to the parties'
representations and warranties contained herein and the Sale Agreement. No
supplement or amendment shall be deemed to cure any breach of any
representation or warranty made in this Agreement and in the Sale Agreement,
respectively, or have any effect for the purpose of determining satisfaction of
the conditions set forth in Section 8.2(b) or 8.3(b).
Section 7.6. Public Announcements. Subject to each party's disclosure
obligations imposed by law or regulation, Parent and the Company will cooperate
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement, the Sale
Agreement or any of the transactions contemplated hereby and thereby,
respectively, and shall not issue any public announcement or statement with
respect hereto or thereto without consulting with the other party.
Section 7.7. No Solicitations. The Company shall, and shall direct and cause
its executive officers, directors and authorized Representatives to,
immediately cease any discussions or negotiations with any parties that may be
ongoing with respect to an Acquisition Proposal (as defined below). From and
after the date hereof, the Company will not, and will not authorize or permit
any of its Representatives to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing non-public information) any inquiries
or the making of any proposal which constitutes or may reasonably be expected
to lead to an Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal; provided, however, that if, at
any time prior to the Effective Time the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that it
would be consistent with its fiduciary responsibilities to the Company's
stockholders under applicable law, the Company may, in response to an
Acquisition Proposal, which was not solicited subsequent to the date hereof,
(x) furnish information with respect to the Company to any person pursuant to a
customary confidentiality agreement (as determined by the
26
Company) (y) participate in discussions or negotiations regarding such
Acquisition Proposal and (z) withdraw or modify its approval or recommendation
of the Merger, this Agreement and the transactions contemplated hereby. The
Company shall notify Parent orally and in writing of any such Acquisition
Proposal (including, without limitation, the material terms and conditions of
any such Acquisition Proposal and the identity of the person making it), within
24 hours of the receipt thereof, shall apprise Parent of any change in the
material terms and conditions of any such Acquisition Proposal, and shall give
Parent three business days' advance notice of any agreement (specifying the
material terms and conditions thereof) to be entered into with or any
information to be supplied to any person making such Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by a director or executive
officer of the Company, whether or not such person is purporting to act on
behalf of the Company or otherwise, shall be deemed to be a breach of this
Section 7.7 by the Company. Nothing contained in this Section 7.7 or any other
provision hereof shall prohibit the Company or its Board of Directors from (i)
taking and disclosing to its stockholders a position with respect to a tender
or an exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act or (ii) making such disclosure to its
stockholders (including withdrawing or modifying its approval or recommendation
of the Merger, this Agreement and the transactions contemplated hereby) as, in
good faith judgment of its Board of Directors, after consultation with outside
counsel, is consistent with its fiduciary responsibilities to the Company's
stockholders under applicable law.
The term "Acquisition Proposal" shall mean a written proposal or offer
(other than by Parent or Merger Sub) for a tender or exchange offer, merger,
consolidation or other business combination involving the Company or any
material Company Subsidiary or any proposal to acquire in any manner a
substantial equity interest in or a substantial portion of the assets of the
Company or any material Company Subsidiary, other than the transactions
contemplated by this Agreement. As used in this Section, "Board of Directors"
includes any committee thereof.
Section 7.8. Expenses. Subject to Section 9.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
Section 7.9. Takeover Statutes. If any "business combination," "fair price,"
"moratorium," "control stock acquisition" or other form of antitakeover statute
or regulation shall become applicable to the Merger or the transactions
contemplated hereby, the Company and the members of the Board of Directors of
the Company shall grant such approvals and take such actions as are reasonably
necessary so that the Merger or the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or
regulation on the Merger or the transactions contemplated hereby.
Section 7.10. Sale of Building Design and Construction and Structural
Engineering Divisions. The Company shall, immediately following the Effective
Time, sell to Digital Canal the Transferred Assets, pursuant to the terms and
conditions of the Sale Agreement. The Company shall allow Parent the
opportunity to direct all negotiations and proceedings with respect to the
Company's sale of such Transferred Assets to Digital Canal.
Section 7.11. Indemnification; Directors and Officers Insurance.
(a) All rights to indemnification or exculpation, existing in favor of a
director, officer, employee or agent (an "Indemnified Person") of the Company
or any of its Subsidiaries (including, without limitation, rights relating to
advancement of expenses and indemnification rights to which such persons are
entitled because they are serving as a director, officer, agent or employee of
another entity at the request of the Company or any of its Subsidiaries), as
provided in the certificate of incorporation or by-laws of the Company or any
Company Subsidiary or any indemnification agreement, in each case, as in effect
on the date of this Agreement, and relating to actions or events through the
Effective Time, shall survive the Merger and shall continue in full
27
force and effect, without any amendment thereto; provided, however, that the
Surviving Corporation shall not be required to indemnify any Indemnified Person
in connection with any proceeding (or portion thereof) to the extent involving
any claim initiated by such Indemnified Person unless the initiation of such
proceeding (or portion thereof) was authorized by the Board of Directors of the
Company or unless such proceeding is brought by an Indemnified Person to
enforce rights under this Section 7.11; provided further that any determination
required to be made with respect to whether an Indemnified Person's conduct
complies with the standards set forth under the applicable law or the
certificate of incorporation or by-laws of the Company or any Company
Subsidiary or any such agreement, as the case may be, shall be made by
independent legal counsel selected by such Indemnified Person and reasonably
acceptable to Parent; and provided further that nothing in this Section 7.11
shall impair any rights of any Indemnified Person. Without limiting the
generality of the preceding sentence, in the event that any Indemnified Person
becomes involved in any actual or threatened action, suit, claim, proceeding or
investigation after the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, promptly advance to such Indemnified Person his or
her legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the providing by such
Indemnified Person of an undertaking to reimburse all amounts so advanced in
the event of a non-appealable determination of a court of competent
jurisdiction that such Indemnified Person is not entitled thereto.
(b) Parent shall cause the Surviving Corporation to maintain the Company's
directors' and officers' liability insurance policy ("D&O Insurance") for a
period of not less than six years after the Effective Time; provided, that the
Surviving Corporation may substitute therefor policies of substantially similar
coverage and amounts containing terms no less advantageous to such former
directors or officers; provided further that if the existing D&O Insurance
expires or is canceled during such period, Parent or the Surviving Corporation
shall use its best efforts to obtain substantially similar D&O Insurance; and
provided further that neither Parent nor the Surviving Corporation shall be
required to expend, in order to maintain or procure an annual D&O Insurance
policy an amount, with respect to any single year of coverage, in excess of
125% of the last annual premium paid prior to the date hereof, but in such case
shall purchase as much coverage with respect to that year as possible for such
amount. In lieu of the D&O Insurance required by the preceding sentence, the
Company may, at its option, purchase on or prior to the Effective Time, "tail"
coverage D&O Insurance for the six-year period described in the preceding
sentence, which "tail" coverage shall provide coverage in amounts and on terms
consistent with the D&O Insurance coverage immediately prior to the purchase of
such "tail" coverage.
(c) The provisions of this Section 7.11 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Person, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of Parent, the Company and the Surviving Corporation.
Section 7.12. ECOM Associates, Inc. Prior to Closing, the Company shall
cause ECOM Associates, Inc., a Wisconsin corporation and wholly-owned
subsidiary of the Company ("ECOM"), to do any of the following (i) transfer,
assign and convey all of its assets, including the Transferred Assets, to the
Company, (ii) be merged into the Company or (iii) be dissolved.
ARTICLE VIII.
CONDITIONS
Section 8.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5 by the joint action of the parties
hereto:
(a) Stockholder Approval. The Company Stockholders' Approval shall have
been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court
preventing consummation of the Merger, the Asset Sale or the other
28
transactions contemplated hereby shall have been issued and be continuing
in effect, and the Merger, the Asset Sale and the other transactions
contemplated hereby shall not have been prohibited under any applicable
federal or state law or regulation; provided, however, that the parties
hereto shall use all reasonable efforts to have any such order, injunction,
or prohibition vacated.
(c) Governmental Approvals. All approvals of Governmental Authorities
specified in Section 7.3 shall have been obtained.
Section 8.2. Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.5:
(a) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub will have performed in all material respects their agreements
and covenants contained in or contemplated by this Agreement, which are
required to be performed by them at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties
of Parent and Merger Sub set forth in Article V of this Agreement shall be
true and correct, unless the failure of such representations and warranties
to be so true and correct, in the aggregate, have not had and would not
reasonably be expected to have a Parent Material Adverse Effect (ignoring,
for purposes of this Section 8.2(b) any materiality standard expressly
included in such representations or warranties) as of the date hereof (or,
to the extent such representations and warranties speak as of an earlier or
later date, as of such earlier or later date) and as of the Closing Date
(except to the extent such representations and warranties speak as of an
earlier or later date) as if made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
(c) Closing Certificates. The Company shall have received a certificate
of Parent signed by the managing member of Parent, dated the Closing Date,
to the effect that, to the best of such person's knowledge, the conditions
set forth in Section 8.2(a) and Section 8.2(b) have been satisfied.
Section 8.3. Conditions to Obligation of Parent and Merger Sub to Effect the
Merger. The obligation of Parent and Merger Sub to effect the Merger shall be
further subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by Parent in writing pursuant to
Section 9.5:
(a) Performance of Obligations of the Company. The Company (and/or
appropriate Company Subsidiaries) will have performed in all material
respects its agreements and covenants contained in or contemplated by this
Agreement which are required to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct,
unless the failure of such representations and warranties to be so true and
correct, in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect (ignoring, for purposes
of this Section 8.3(b), any materiality standard expressly included in such
representations or warranties) as of the date hereof (or, to the extent
such representations and warranties speak as of an earlier or later date,
as of such earlier or later date) and as of the Closing Date (except to the
extent such representations and warranties speak as of an earlier or later
date) as if made on and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(c) Company Material Adverse Effect. No Company Material Adverse Effect
shall have occurred and there shall exist no fact or circumstance that
would or, insofar as reasonably can be foreseen, could have a Company
Material Adverse Effect.
(d) Company Required Consents. The Company Required Consents shall have
been obtained.
(e) Sale of Divisions. The Sale Agreement shall have been entered into
and shall either have been consummated in accordance with its terms or
shall then remain in full force and effect, it being understood
29
that this condition shall not apply if such agreement shall have been
entered into and subsequently terminated by reason of a breach by Biver,
Parent or Merger Sub or any of their respective affiliates of any
obligations that any of them may have had thereunder.
(f) Closing Certificates. The Company shall have delivered (i) to Parent
a certificate of the Company signed by the chief financial officer and
another vice president of the Company, dated the Closing Date, to the
effect that, to the best of such officers' knowledge, the conditions set
forth in Sections 8.3(a), (b), (c), (d), (h) and (j) hereunder have been
satisfied, (ii) to Digital Canal the certificate of the Company provided
for by Section 7.1(g)(i) of the Sale Agreement.
(g) Dissenting Shares. Holders of not more than ten percent (10%) of the
outstanding shares of Company Common Stock shall have perfected such
holder's right to dissent in accordance with the applicable provisions of
the DGCL and shall not have withdrawn or lost such rights.
(h) Cash Balances; Merger Expenses. The Company shall have aggregate
cash, cash equivalents, investments, including accrued interest, gains or
losses thereon (calculated according to GAAP), of at least $12,800,000,
after payment by the Company of all of the Company's expenses (not
including any expenses incurred by Parent or Merger Sub) incurred in
connection with this Agreement, the Merger and the transactions
contemplated hereby (including the Sale Agreement), including without
limitation, any insurance (including without limitation insurance purchased
by the Company pursuant to Section 7.11(b)), legal, accounting, printing,
mailing, proxy solicitation, investment banking or financial advisory
services.
(i) Financing. The debt financings contemplated by Section 5.5 shall
have closed (x) substantially on the terms set forth in the Commitment
Letter (as modified by agreement of Parent and the senior lender) and (y)
on such terms and conditions acceptable to Parent with respect to the other
financing arrangements contemplated thereby.
(j) ECOM. The Company shall have caused ECOM to do one of the following
(i) transfer, assign and convey all of its assets, including the
Transferred Assets, to the Company, (ii) be merged into the Company or
(iii) be dissolved.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
Section 9.1. Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after the Company Stockholders' Approval
has been obtained:
(a) by mutual written consent of Parent and the Board of Directors of
the Company;
(b) by any party hereto, by written notice to the others, if the
Effective Time shall not have occurred on or before that date which is six
months after the date hereof; provided, that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date;
(c) by any party hereto, by written notice to the other party, if the
Company Stockholders' Approval shall not have been obtained at a duly held
Company Meeting, including any adjournments thereof;
(d) by any party hereto, after consultation with outside counsel, if any
state or federal law, order, rule or regulation is adopted or issued, which
has the effect of prohibiting the Merger, or by any party hereto, if any
court of competent jurisdiction in the United States or any State shall
have issued an order, judgment or decree permanently restraining, enjoining
or otherwise prohibiting the Merger, and such order, judgment or decree
shall have become final and nonappealable; provided, that such terminating
party shall have complied with its obligations pursuant to Section 10.8;
30
(e) by the Company, upon three business days' prior notice to Parent if,
as a result of an Acquisition Proposal, (i) the Board of Directors of the
Company shall have concluded in good faith, after considering applicable
provisions of state law and after consultation with outside counsel, that
their fiduciary duties reasonably require that such Acquisition Proposal be
accepted; and (ii) the Company shall have complied with all its obligations
under Sections 7.4, 7.7 and 9.3;
(f) by Parent, by written notice to the Company, if (i) there shall have
been any breach of any representation or warranty, or any breach of any
covenant or agreement, of the Company hereunder, other than such breaches,
which, together with any other such breaches, has not had and would not
reasonably be expected to have a Company Material Adverse Effect, and such
breach shall not have been remedied within twenty days after receipt by the
Company of notice in writing from Parent, specifying the nature of such
breach and requesting that it be remedied, and provided, that, any
materiality standard expressly included in such representations,
warranties, covenants or agreements shall be ignored for purposes of this
Section 9.1(f)(i); or (ii) the Special Committee or Board of Directors of
the Company (whether or not acting through the Special Committee) (A) shall
withdraw or modify in any manner adverse to Parent its approval of this
Agreement and the transactions contemplated hereby or its recommendation to
its stockholders regarding the approval of this Agreement, (B) shall fail
to reaffirm such approval or recommendation within three business days
after a written request therefor of Parent (unless such request is made
during the last seven business days immediately prior to the Company
Meeting, in which case, such reaffirmation shall fail to be made within two
business days after the request), (C) shall approve or recommend any
Acquisition Proposal or (D) shall resolve to take any of the actions
specified in clause (A), (B) or (C); or
(g) by the Company, by written notice to Parent, if there shall have
been any breach of any representation or warranty, or any breach of any
covenant or agreement, of Parent or Merger Sub hereunder, (including
without limitation, the failure of Parent and Merger Sub to (i) deposit, or
cause to be deposited (including from available cash balances at the
Company), the cash to the Exchange Agent required pursuant to Section
2.3(a) or (ii) make available at the Closing the consideration required to
be paid pursuant to Section 2.1(b) or 2.1(c), in each case, assuming all
other conditions to Closing have been satisfied or otherwise waived in
writing by Parent), other than such breaches, which, together with any
other such breaches, has not had and would not reasonably be expected to
have a Parent Material Adverse Effect, and such breach shall not have been
remedied within twenty days after receipt by Parent of notice in writing
from the Company, specifying the nature of such breach and requesting that
it be remedied and provided, that, any materiality standard expressly
included in such representations, warranties, covenants or agreements shall
be ignored for purposes of this Section 9.1(g).
Section 9.2. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent pursuant to Section 9.1, there shall
be no liability on the part of either Parent or the Company or their respective
officers, members or directors hereunder, except as provided in Section 7.8 and
9.3 provided, however, that nothing herein shall relieve any party for
liability for any breach hereof except that as contemplated by Section 9.3,
payment of the Expense Amount (as defined in Section 9.3) shall constitute the
sole remedy for any breach that gives rise to the payment of such Expense
Amount.
Section 9.3. Termination Fee; Expenses.
(a) Termination and Expense Fees. In this Agreement (i) is terminated by
Parent pursuant to Section 9.1(f), or (ii) is terminated by the Company
pursuant to Section 9.1(e), then the Company shall pay to Parent promptly (but
not later than five business days after such notice is given or received by the
Company pursuant to Section 9.1(f) or 9.1(e)) a non-accountable expense
reimbursement equal to $600,000 in cash (the "Expense Amount") constituting
reimbursement of expenses and fees incurred or to be incurred by Parent or
Merger Sub in connection with or related to the Merger and the transactions
contemplated by this Agreement, without any requirement that Parent or Merger
Sub account for actual expenses. If (i) this Agreement is terminated pursuant
to Section 9.1(c) and (ii) at the time of such termination, there shall have
been an Acquisition Proposal made by a third party which, at the time of such
termination, shall not have been (x)
31
rejected by the Company and its Board of Directors and (y) withdrawn by the
third party and (iii) within twelve months of any such termination, the Company
becomes a subsidiary or part of such third party or a subsidiary or part of an
affiliate of such third party, or merges with or into the third party or a
subsidiary or affiliate of the third party or enters into a definitive
agreement to consummate an Acquisition Proposal with such third party or
affiliate thereof, then the Company shall pay to Parent in cash, at the
consummation of the transactions contemplated by such agreement (and as a
condition to the closing), a fee equal to the Expense Amount.
(b) Expenses. The parties agree that the agreements contained in this
Section 9.3 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages (and not a penalty) for any breach
by the Company of its obligations hereunder that gives rise to the right of
Parent to receive such payments. Notwithstanding anything to the contrary
contained in this Section 9.3, if the Company fails to promptly pay to Parent
any fee or expense due under this Section 9.3, in addition to any amounts paid
or payable pursuant to such Section, the Company shall pay Parent's costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. from the date such fee was required to
be paid.
Section 9.4. Amendment. This Agreement may be amended by Parent and the
Boards of Directors of the Company and Merger Sub, at any time before or after
the Company Stockholders' Approval has been obtained and prior to the Effective
Time, but after such Approval has been obtained, no such amendment shall (a)
alter or change the Per Share Amount or (b) alter or change any of the terms
and conditions of this Agreement if any of the alterations or changes, alone or
in the aggregate, would materially adversely affect the rights of holders of
Company Common Stock. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 9.5. Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X.
GENERAL PROVISIONS
Section 10.1. Non-Survival; Effect of Representations and Warranties. No
representations or warranties in this Agreement shall survive the Effective
Time, except as otherwise provided in this Agreement.
Section 10.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given (a) when delivered personally, (b) when
sent by reputable overnight courier service or (c) when telecopied (which is
confirmed by copy sent within one business day by a reputable overnight courier
service) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) If to Parent or Merger Sub, to:
JB Acquisitions, LLC
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
32
with a copy to:
Xxxxxx & Whitney LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Company, to:
Eagle Point Software Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxx 00000-0000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Sidley Xxxxxx Xxxxx & Xxxx
Bank One Plaza
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq. and Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Section 10.3. Miscellaneous. This Agreement (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof (other than the Confidentiality Agreement), (b) shall not
be assigned by operation of law or otherwise and (c) shall be governed by and
construed in accordance with the laws of the State of Iowa applicable to
contracts executed in and to be fully performed in such State, without giving
effect to its conflicts of law rules or principles and except to the extent the
provisions of this Agreement (including the documents or instruments referred
to herein) are expressly governed by or derive their authority from the
Delaware Act.
Section 10.4. Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, 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."
Section 10.5. Counterparts; Effect. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.6. 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
located in the State of Iowa or in Iowa state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Iowa or any Iowa
state court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny such personal jurisdiction by motion or other request for
33
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal or state court sitting in the State
of Iowa.
Section 10.7. Parties in Interest. Except as expressly provided in Section
7.11 and the rights of Xxxx and Xxxxxx as provided in Sections 2.1(b) and (c),
as the case may be, and Section 2.3(c), this Agreement shall be binding upon
and inure solely to the benefit of each party hereto, nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.8. Further Assurances. Each party will execute such further
documents and instruments and take such further actions as may reasonably be
requested by any other party in order to consummate the Merger in accordance
with the terms hereof.
Section 10.9. Certain Definitions. The term "affiliate," except where
otherwise defined herein, shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. The term "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
34
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused this
Agreement as of the date first written above to be signed by their respective
officers thereunto duly authorized.
Eagle Point Software Corporation
/s/ Xxxxxx X. Xxxxxx
By: _________________________________
Xxxxxx X. Xxxxxx
Chairman of the Board of Directors
Jb Acquisitions LLC
/s/ Xxxx X. Xxxxx
By: _________________________________
Xxxx X. Xxxxx
Manager
Talon Acquisition Corp.
/s/ Xxxx X. Xxxxx
By: _________________________________
Xxxx X. Xxxxx
President and Chief Executive
Officer
Xxxxxx X. Xxxx and Xxxxxx X. Xxxxxx sign this Agreement to indicate that,
subject to the consummation of the transactions contemplated by this Agreement
in accordance with its terms, each consents to the purchase of his Shares as
set forth in Section 2.1(b) and (c), as the case may be, and Section 2.3(c);
provided, however, that in the case of Xxxxxx X. Xxxx, such consent is further
conditioned on (i) the Sale Agreement remaining in full force and effect as of
the Closing under this Agreement, and (ii) all conditions to closing under the
Sale Agreement having been satisfied as of the Closing (except where the
failure to satisfy any such condition is as a result of a breach by Xxxx or
Digital Canal).
/s/ Xxxxxx X. Xxxx
_____________________________________
Xxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxx
_____________________________________
Xxxxxx X. Xxxxxx
35