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EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
SER SYSTEME AG
SERSYS ACQUISITION CORPORATION
and
EIS INTERNATIONAL, INC.
Dated as of December 17, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER AND THE MERGER..................................................1
1.1 The Offer................................................................1
1.2 Company Action...........................................................3
1.3 Directors................................................................3
1.4 The Merger...............................................................4
1.5 Closing..................................................................5
1.6 Effective Time...........................................................5
1.7 Effects of the Merger....................................................5
1.8 Conversion of Company Common Stock.......................................5
1.9 Options..................................................................6
1.10 Certificate of Incorporation.............................................6
1.11 Bylaws...................................................................6
1.12 Directors and Officers of Surviving Corporation..........................7
1.13 Alternate Transaction Structures, Etc....................................7
ARTICLE II EXCHANGE OF SHARES.......................................................7
2.1 Establishment of Exchange Fund...........................................7
2.2 Exchange of Shares.......................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY...............................9
3.1 Corporate Organization...................................................9
3.2 Capitalization..........................................................10
3.3 Authority; No Violation.................................................11
3.4 Consents and Approvals..................................................12
3.5 Regulatory Reports......................................................12
3.6 Broker's Fees...........................................................12
3.7 Absence of Certain Changes or Events....................................13
3.8 Legal Proceedings.......................................................13
3.9 Taxes and Tax Returns...................................................13
3.10 ERISA and Employee Matters..............................................14
3.11 SEC Reports.............................................................17
3.12 Financial Statements....................................................17
3.13 Licenses; Compliance with Applicable Law................................17
3.14 Certain Contracts.......................................................17
3.15 [Reserved]..............................................................18
3.16 Investment Securities...................................................18
3.17 [Reserved]..............................................................18
3.18 Undisclosed Liabilities.................................................18
3.19 Environmental Liability.................................................18
3.20 Information Supplied....................................................19
3.21 State Takeover Laws; Rights Agreement...................................19
3.22 Insurance...............................................................19
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3.23 Year 2000 Compliance....................................................19
3.24 Intellectual Property...................................................20
3.25 Opinion of the Company's Financial Advisor..............................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................22
4.1 Corporate Organization..................................................22
4.2 Authority; No Violation.................................................23
4.3 Consents and Approvals..................................................23
4.4 Broker's Fees...........................................................24
4.5 Funds...................................................................24
4.6 Information Supplied....................................................24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS................................24
5.1 Conduct of Company Businesses Prior to the Effective Time...............24
5.2 Forbearances of Company.................................................24
ARTICLE VI ADDITIONAL AGREEMENTS...................................................27
6.1 Company Stockholders Meeting; Preparation of Proxy Statement............27
6.2 Reasonable Best Efforts.................................................27
6.3 Access to Information...................................................28
6.4 Indemnification; Directors' and Officers' Insurance.....................29
6.5 Employee Benefits.......................................................29
6.6 Advice of Changes.......................................................30
6.7 Exclusive Negotiations..................................................30
6.8 No Solicitation.........................................................30
6.8 Publicity...............................................................32
6.9 State Takeover Statutes.................................................32
6.10 Payment of Bonuses......................................................32
ARTICLE VII CONDITIONS PRECEDENT...................................................33
7.1 Conditions to Each Party's Obligation To Effect the Merger..............33
ARTICLE VIII TERMINATION AND AMENDMENT.............................................34
8.1 Termination.............................................................34
8.2 Effect of Termination...................................................35
8.3 Amendment...............................................................36
8.4 Extension; Waiver.......................................................36
ARTICLE IX GENERAL PROVISIONS......................................................36
9.1 Nonsurvival of Representations, Warranties and Agreements...............36
9.2 Expenses................................................................36
9.3 Notices.................................................................37
9.4 Interpretation..........................................................38
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9.5 Counterparts............................................................38
9.6 Entire Agreement........................................................38
9.7 Governing Law, Jurisdiction and Venue...................................38
9.8 Severability............................................................38
9.9 Assignment; Third Party Beneficiaries...................................38
9.10 Enforcement.............................................................39
Annex I - Conditions of the Offer
Annex II - Certificate if Incorporation of Surviving Corporation
Annex III - Bylaws of Surviving Corporation
Annex IV - Stock Option Plan
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 17, 1999 (this
"Agreement") is entered into by and among SER SYSTEME AG, a German corporation
("Parent"), SERSYS ACQUISITION CORPORATION ("Sub"), a Delaware corporation that
is a wholly owned subsidiary of SER (USA), INC. ("SER USA"), a Delaware
corporation that is a wholly owned subsidiary of Parent, and EIS INTERNATIONAL,
INC., a Delaware corporation ("Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and Company
have determined that the Offer (as defined in Section 1.1) and (ii) the merger
of Sub with and into Company (the "Merger") following the consummation of the
Offer, with Company as the surviving corporation (the "Surviving Corporation"),
each upon the terms and subject to the conditions set forth in this Agreement,
are advisable and fair to, and in the best interests of, their respective
stockholders;
WHEREAS, as an inducement and condition to Parent and Sub entering into
this Agreement, and concurrently with the execution of this Agreement, certain
entities, individuals, directors and executive officers of Company are executing
and delivering to Parent a Tender and Voting Agreement (the "Support Agreement")
dated as of the date hereof, which provides, among other things that such
parties agree to tender their shares of Company Common Stock in the Offer and,
to vote such shares in favor of the Merger and the approval and adoption of this
Agreement;
WHEREAS, as an inducement and condition to Parent and Sub entering into
this Agreement, and concurrently with the execution of this Agreement, Xxxxx X.
XxXxxxx and Xxxxxxxxx X. Xxxxx are each executing and delivering to Parent an
employment agreement dated as of the date hereof and to be effective from and
after the consummation of the Offer; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Offer and the Merger and also to prescribe
certain conditions therefor.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
1.1 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1, Parent shall cause Sub to, and Sub
shall, as soon as practicable after the date hereof, but in any event within
five (5) business days after the public announcement of the execution hereof,
commence (within the meaning of Rule 14d-2(a) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), a tender offer (the "Offer") for all
of the issued and outstanding shares of common stock, par value $0.01 per share,
of Company (the "Company Common Stock") at a price of $6.25 per share (the "Per
Share Price"), net to the sellers in cash, subject to the conditions set forth
in Annex I hereto and incorporated herein by reference (the "Offer Conditions")
including the Minimum Condition (as defined therein).
(b) The Offer shall be made by means of an offer to purchase
which shall contain as conditions only the Offer Conditions and, subject to the
next succeeding sentence, shall otherwise contain, and be consistent with, the
terms and conditions of the Offer as described in this Agreement. Each of Sub
and Parent expressly
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reserves the right, in its sole discretion, to waive any such condition and make
any other changes to the terms of the Offer; provided, that, without the consent
of Company, neither Parent nor Sub shall amend or waive the Minimum Condition,
change the form of consideration to be paid in the Offer, decrease the Per Share
Price or the number of shares of Company Common Stock sought, impose additional
conditions to the Offer, or amend any other condition of the Offer in any manner
adverse to the holders of the shares of Company Common Stock. The Per Share
Price shall be net to the sellers in cash, without interest, subject to
reduction only for any applicable withholding taxes. Notwithstanding the
foregoing, Sub may, without the consent of Company, (i) extend the Offer on one
or more occasions for up to ten (10) business days for each such extension
beyond the then-scheduled expiration date (the initial scheduled expiration date
being twenty (20) business days following commencement of the Offer), if at the
then-scheduled expiration date of the Offer any of the conditions to Sub's
obligation to accept for payment and pay for the shares of Company Common Stock
shall not be satisfied or waived, but not later than February 28, 2000, until
such time as such conditions are satisfied or waived, and, at the request of
Company, Sub shall, subject to Parent's right to terminate this Agreement
pursuant to Article VIII, extend the Offer for additional periods ending up to,
but not later than, February 28, 2000, if the only condition not satisfied or
earlier waived on the then-scheduled expiration date is the HSR Approval
Condition (as defined in Annex I hereto), (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
and (iii) provided that Parent and Sub irrevocably waive the conditions, other
than the Minimum Condition, to the Offer set forth in Annex I and agree not to
assert such conditions as a basis for not consummating the Offer, extend the
Offer for an aggregate period of not more than ten (10) business days beyond the
latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence if the Minimum Condition shall have been satisfied but
there shall not have been tendered sufficient shares of Company Common Stock so
that the Merger could be effected without a vote of Company's stockholders in
accordance with Section 253 of the Delaware General Corporation Law (the
"DGCL"). Subject to the terms of the Offer, including the Offer Conditions, Sub
shall accept for payment and pay for all shares of Company Common Stock duly
tendered, and not withdrawn, at the earliest time at which it is permitted to do
so under applicable law; provided, that, as set forth above, Sub shall have the
right, in its sole discretion, to extend the Offer for up to ten (10) business
days notwithstanding the prior satisfaction or waiver of the Offer Conditions,
in order to attempt to permit the tender of sufficient shares of Company Common
Stock to effect the Merger pursuant to Section 253 of the DGCL. It is agreed
that the Offer Conditions other than the Minimum Condition are solely for the
benefit of Parent and Sub and that all Offer Conditions may be asserted by
Parent or Sub, unless irrevocably waived, regardless of the circumstances
resulting in a condition not being satisfied (except for any action or inaction
by Sub or Parent constituting a breach of this Agreement) and, except with
respect to the Minimum Condition, may be waived by Parent or Sub, in whole or in
part at any time and from time to time, in their sole discretion.
(c) As soon as practicable on the date of commencement of
the Offer (within the meaning of Rule 14d-2(a) under the Exchange Act), Parent
and Sub, with the cooperation of, and subject to the prior review thereof by,
Company, shall file with the SEC a Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer that will contain or will incorporate by reference the
Offer (or portions thereof) and forms of the related letter of transmittal and
summary advertisement (which documents, together with any supplements or
amendments thereto, and together with the Schedule 14D-1, are referred to herein
collectively as the "Offer Documents"). Each of Parent, Sub and Company, with
respect to information supplied by it for use in the Offer Documents, agrees
promptly to correct the Offer Documents if and to the extent that any of them
shall have become false or misleading in any material respect or any event
occurs which should be set forth in an amendment or supplement to the Offer
Documents, and Sub shall take all steps necessary to cause the Offer Documents
as so corrected or supplemented to be filed with the SEC and such Offer
Documents as so corrected to be disseminated to holders of shares of Company
Common Stock, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the reasonable
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opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC. Parent and Sub shall provide
promptly the Company and its counsel with a copy of any written comments or
telephonic notification of any oral comments Parent or Sub may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
thereof. Parent and Sub shall use their reasonable best efforts to provide the
Company and counsel with a reasonable opportunity to participate in all
nonconfidential and substantive communications with the SEC and its staff,
including any nonconfidential and substantive meetings and telephone
conferences, relating to the Offer or this Agreement.
(d) Parent shall provide to Sub all funds reasonably
necessary to consummate the Offer, the Merger and any other transactions
contemplated by this Agreement.
1.2 Company Action. (a) Subject to Section 1.2(b) below, Company
hereby consents to the inclusion in the Offer Documents of the Company Board
Recommendation (as defined in Section 3.21).
(b) On the same day Parent and Sub first file the Schedule
14D-1 with the SEC, Company shall file with the SEC and mail to its stockholders
a Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") which shall comply in all material respects with the provisions of
applicable federal securities laws. Each of Company, Parent and Sub, with
respect to information supplied by it for use in the Schedule 14D-9, agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect, and Company shall take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and mailed to holders of shares of Company Common Stock to the extent
required by applicable federal securities laws. The Schedule 14D-9 shall contain
the Company Board Recommendation recommending that the holders of shares of
Company Common Stock accept the Offer, which recommendation shall not be
withdrawn, amended, modified or materially qualified in a manner adverse to
Parent (nor shall the Board of Directors of Company publicly announce its
intention to do so) except pursuant to Section 6.8(g) hereof. The Parent and its
counsel shall be given the reasonable opportunity to review and comment on the
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
SEC. Company shall provide promptly the Parent and its counsel with a copy of
any written comments or telephonic notification of any oral comments Parent or
Sub may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt thereof. Company shall use its reasonable best
efforts to provide Parent and its counsel with a reasonable opportunity to
participate in all nonconfidential and substantive communications with the SEC
and its staff, including any nonconfidential and substantive meetings and
telephone conferences, relating to the 14D-9.
(c) Company shall promptly furnish, or cause its transfer
agent to furnish, to Parent or Sub a list of the record holders of shares of
Company Common Stock and their addresses, as well as mailing labels containing
the names and addresses of the record holders of such shares, lists of any
non-objecting beneficial owners of such shares and lists of securities positions
of such shares held in stock depositories, each as of the most recent
practicable date, and shall furnish Parent or Sub with such additional
information, including updated lists of holders of such shares, mailing labels
and lists of securities positions, and other assistance as Parent, Sub or their
agents may reasonably request for the purpose of disseminating the Offer
Documents and communicating with the record and beneficial holders of shares of
Company Common Stock with respect thereto.
1.3 Directors. (a) Promptly upon the purchase of and payment for
shares of Company Common Stock by Sub which represent at least a majority of the
shares of Company Common Stock then outstanding, Parent shall be entitled to
designate a number of directors on the Board of Directors of Company equal to
the product (rounded up to the nearest whole number) of the total number of the
directors on such Board (after giving effect to the directors
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elected pursuant to this sentence) multiplied by the percentage that such number
of shares owned by Sub and its Affiliates (as defined in Rule 12b-2 of the
regulations promulgated under the Exchange Act, "Affiliates") bears to the
number of shares of Company Common Stock outstanding. Company shall, to the
extent permitted under its Certificate of Incorporation and Bylaws, designate
such directors for election to such class of the Company's Board of Directors
standing for election on the furthest date from the date of such nomination.
Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Parent or Sub
will supply Company with, and be solely responsible for, any information with
respect to either of them and their nominees, officers, directors and Affiliates
required by Section 14(f) and Rule 14f-1. Upon receipt of such information from
Parent or Sub, Company shall include in the Schedule 14D-9 (as an annex or
otherwise) or a separate Rule 14f-1 information statement mailed to stockholders
of Company promptly after the commencement of the Offer the information required
by Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to
be elected to the Board of Directors of Company.
(b) At the time specified in the first sentence of Section
1.3(a), Company shall, upon request of Parent, use its reasonable best efforts
promptly either to increase the size of the Board of Directors of Company or, at
Company's election, secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's designees pursuant to Section
1.3(a) to be so elected or appointed to Company's Board of Directors, and shall
cause Parent's designees to be so elected or appointed. Company will use its
reasonable best efforts to cause directors designated by Parent to constitute
the same percentage as their percentage on the full Board (i) of each committee
of its Board of Directors, (ii) of the board of directors of each of its
Subsidiaries (as defined in Section 3.1) and (iii) of each committee of each
such board, to the extent applicable, provided that in any event, at least one
(1) Parent designee shall be designated to serve on each such Board or
committee. Notwithstanding the foregoing, provided that the number of directors
which the Parent shall have the ability to designate shall constitute a majority
of the board of directors, until the Effective Time (as defined in Section 1.6),
Company and Parent shall use reasonable best efforts to retain as members of
Company's Board of Directors at least three (3) directors who are directors of
Company on the date hereof and who are not designated by Parent or employees of
Company or its Subsidiaries (the "Independent Directors"); provided that in the
event that the number of Independent Directors shall be reduced below three for
any reason whatsoever (other than to allow the Parent the ability to designate a
majority of the members of the board of directors), any remaining Independent
Directors (or Independent Director, if there shall be only one remaining) shall
be entitled to designate persons to fill such vacancies who shall be deemed to
be Directors for purposes of this Agreement.
(c) Notwithstanding anything in this Agreement to the
contrary, following the election or appointment of Parent's designees to
Company's Board of Directors and prior to the Effective Time, the affirmative
vote of a majority of the Independent Directors shall be required for Company to
take action to (i) amend or terminate this Agreement, (ii) exercise or waive any
of Company's rights or remedies hereunder, (iii) extend the time for performance
of Parent's and Sub's respective obligations hereunder, or (iv) approve any
other action by Company that would reasonably be expected to affect adversely
the interests of the stockholders of Company (other than Parent, Sub and their
Affiliates) with respect to the transactions contemplated hereby.
1.4 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the DGCL, at the Effective Time (as defined in
Section 1.6), Sub shall merge with and into Company. Company shall be the
Surviving Corporation in the Merger, and shall continue its corporate existence
under the laws of the State of Delaware. Upon consummation of the Merger, the
separate corporate existence of Sub shall terminate and the name of the
Surviving Corporation shall initially be SERSYS Acquisition Corporation.
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1.5 Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, the closing of the Merger (the "Closing") will take place at 10:00
a.m., Washington, D.C. time, on the second (2nd) business day after satisfaction
or waiver of the conditions (excluding conditions that, by their terms, cannot
be satisfied until the Closing Date (as defined below), but subject to
satisfaction or waiver of such conditions on the Closing Date) set forth in
Article VII (the "Closing Date"), at the offices of Venable, Baetjer, Xxxxxx &
Civiletti, LLP, 0000 Xxx Xxxx Xxx, X.X., Xxxxx 0000, Xxxxxxxxxx, X.X. 00000,
unless another date, time or place is agreed to in writing by the parties
hereto. Each of the parties undertakes to use its reasonable best efforts to
ensure that the Merger occurs as soon as practicable following the date on which
Sub consummates the Offer.
1.6 Effective Time. Upon the Closing, the parties shall file a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger shall have been duly filed with the Secretary of State of
the State of Delaware, or at such later time as is agreed by Parent and Company
and specified in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
1.7 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Sections 259, 260 and 261 of the
DGCL.
1.8 Conversion of Company Common Stock. At the Effective Time by
virtue of the Merger and without any action on the part of Parent, Sub, Company
or the holder of any of the following securities:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than (x) shares of
Company Common Stock canceled pursuant to Section 1.8(c), and (y) Dissenting
Shares, as defined in Section 1.8(d)) together with the associated right, if
any, to purchase Series A Shares or other securities of the Company pursuant to
the Rights Agreement, dated as of May 16, 1997 between Company and BankBoston
N.A. as rights agent thereunder (the "Rights Agreement") shall be converted into
the right to receive cash in an amount equal to the Per Share Price or any
higher per share price as may be paid in the Offer, payable to the holder
thereof, without interest thereon (the "Merger Consideration").
(b) All of the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and shall cease to exist as of
the Effective Time, and each certificate (each a "Common Certificate")
previously representing any such shares of Company Common Stock (other than
shares canceled pursuant to Section 1.8(c) and Dissenting Shares) shall
thereafter represent solely the right to receive the Merger Consideration into
which the shares of Company Common Stock represented by such Common Certificate
have been converted pursuant to this Section 1.8.
(c) All shares of Company Common Stock that are held by
Company as treasury stock or by any of Company's wholly owned Subsidiaries shall
automatically be canceled and shall cease to exist and no cash or other
consideration shall be delivered in exchange therefor.
(d) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time held by holders (if any) who have not voted in favor
of the Merger or consented thereto in writing and who have demanded appraisal
rights with respect thereto in accordance with Section 262 of the DGCL and, as
of the Effective Time, have not failed to perfect or have not effectively
withdrawn or lost their rights to appraisal and payment under Section 262 of the
DGCL ("Dissenting
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Shares") shall not be converted into the right to receive the Merger
Consideration as described in Section 1.8(a), but holders of such shares shall
be entitled to receive payment of the appraised value of such Dissenting Shares
in accordance with the provisions of such Section 262, except that any
Dissenting Shares held by a holder who shall have failed to perfect or shall
have effectively withdrawn or lost its right to appraisal and payment under
Section 262 of the DGCL shall thereupon be deemed to have been converted into
the right to receive the Merger Consideration and shall no longer be considered
Dissenting Shares. Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares, attempted withdrawals of such demands, and
any other instruments served pursuant to the DGCL received by Company relating
to stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
capital stock of Company, offer to settle or settle any such demands or approve
any withdrawal of any such demands.
(e) All of the shares of capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into a
total of 1,000,000 shares of the capital stock of the Surviving Corporation,
with such shares to be issued at the Effective Time, and shall constitute the
only issued and outstanding capital stock of the Surviving Corporation following
the Effective Time.
1.9 Options. At the Effective Time, each then outstanding option to
purchase Company Common Stock, whether or not then vested or exercisable, (each
a "Company Option") including without limitation such Company Options granted
under the Company's Amended and Restated Stock Option(s) Plan, the 1998 Stock
Incentive Plan and the 1993 Stock Option Plan for Non-Employee Directors ( each
a "Company Stock Plan" and collectively, the "Company Stock Plans") shall be
converted pursuant to the terms of the Company Stock Plan into a right to
receive a payment in cash (the "Option Consideration") equal to the product of
(i) the number of shares previously subject to the Company Option and (ii) the
excess, if any, of the Merger Consideration over the exercise price of each
share of Company Common Stock under the Company Option, subject to withholding
taxes and without interest. As soon as practicable after the Effective Time, and
in any event no more than fifteen (15) calendar days following the Effective
Time, the Surviving Corporation shall instruct the Exchange Agent (as defined in
Section 2.1) to pay, and the Exchange Agent shall so pay, all amounts due as
Option Consideration to the former holders of Company Options as required by
this Agreement. Notwithstanding the foregoing, the Parent, Merger Sub and
Company acknowledge that there are 7,666 Company Options outstanding under the
International Telesystems Corporation ("ITC") Stock Option Plan (the "ITC Plan")
which was assumed by the Company in connection with its acquisition of ITC on
November 30, 1993) which are not automatically convertible pursuant to the terms
of the ITC Plan into the right to receive Option Consideration. The treatment of
options under the ITC Plan and the 1993 Employee Stock Purchase Plan ("Stock
Purchase Plan") shall be pursuant to section 6.5 hereof.
1.10 Certificate of Incorporation. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Certificate of
Incorporation of Sub, substantially in the form attached hereto as Annex II
(provided that such plan shall be amended to increase the number of authorized
shares required to adopt the stock option plan pursuant to Section 6.5(b) of
this Agreement), shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein and by the DGCL.
1.11 Bylaws. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Bylaws of Sub, substantially in the form attached
hereto as Annex III, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided therein and by the DGCL.
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1.12 Directors and Officers of Surviving Corporation. At the
Effective Time, the directors and officers of Sub immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation following the Merger, to hold office in accordance with
the Surviving Corporation's Bylaws and applicable law.
1.13 Alternate Transaction Structures, Etc. The parties agree that
Parent may at any time change the method of effecting the Offer, including by
providing that any other Subsidiary of Parent shall make the Offer, or effect
the Merger by merging any direct or indirect wholly owned Subsidiary of Parent
with and into Company, or by merging Company with and into such direct or
indirect wholly owned Subsidiary, and Company shall cooperate in such efforts,
including by entering into any appropriate amendment(s) to this Agreement;
provided, however, that such other Subsidiary, if any, shall become a party to,
and shall agree to be bound by, the terms of this Agreement, and that any such
actions shall not (a) alter or change the amount or kind of consideration to be
issued to holders of Company Common Stock as provided for in this Agreement, or
(b) materially delay the receipt of any HSR Approval (as defined in Annex I
hereto) or the consummation of the transactions contemplated by this Agreement
or otherwise adversely affect the interests of the stockholders of the Company
(other than Parent, Sub and their affiliates) with respect to the transactions
contemplated by this Agreement. The parties also agree to take such actions as
Parent may reasonably request to provide for the merger or consolidation of
Subsidiaries of Company with other Subsidiaries of Company or of Parent, to be
effective at or following the Effective Time.
ARTICLE II
EXCHANGE OF SHARES
2.1 Establishment of Exchange Fund. Prior to the Effective Time,
Parent shall designate a bank or trust company, to act as exchange agent (the
"Exchange Agent") for the payment of the Merger Consideration (including any and
all Option Consideration). At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with the Exchange Agent, for the
benefit of the holders of certificates representing the Shares (the "Common
Certificates"), for exchange in accordance with this Article II, cash (such cash
being hereinafter referred to as the "Exchange Fund") to be paid pursuant to
Section 2.2(a) in exchange for outstanding shares of Company Common Stock and
cancellation of the Company Options pursuant to Section 1.9.
2.2 Exchange of Shares. (a) Within ten (10) days after the Effective
Time, the Exchange Agent shall mail to each holder of record as of the Effective
Time of one or more Common Certificates (other than with respect to shares of
Company Common Stock canceled pursuant to Section 1.8(c)) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Common Certificates shall pass, only upon delivery of the
Common Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Common Certificates in exchange for the Merger
Consideration. Upon proper surrender of a Common Certificate for exchange and
cancellation to the Exchange Agent, together with such properly completed letter
of transmittal, duly executed, covering such Common Certificate, the holder of
such Common Certificate shall be entitled to receive in exchange therefor a
check representing the amount of the Merger Consideration, and the Common
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on the Merger Consideration payable to holders of Common
Certificates. As soon as practicable after the Effective Time, and the
cancellation of such Company Options pursuant to Section 1.9, the Exchange Agent
shall provide for payment by check of the Option Consideration to such former
holders of Company Options cancelled pursuant to Section 1.9. No interest will
be paid or accrued on the Option Consideration payable to the former holders of
Company Options.
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(b) If the payment of the Merger Consideration is to be made
to a person other than the registered holder of the Common Certificate
surrendered in exchange therefor, it shall be a condition to the payment thereof
that the Common Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
issuance, delivery or payment of such Merger Consideration to any person other
than the registered holder of the Common Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Company of the shares of Company Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Common Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged for the
applicable Merger Consideration as provided in this Article II.
(d) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Company on or after the six (6) month anniversary of the
Effective Time shall be paid to Parent. Any stockholders of Company who have not
theretofore complied with this Article II shall thereafter look only to Parent
for payment of the Merger Consideration, without any interest thereon.
Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any Merger Consideration delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(e) In the event any Common Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Common Certificate to be lost, stolen or destroyed and, if
reasonably required by Parent, the posting by such person of a bond in such
amount as Parent may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Common Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Common
Certificate the Merger Consideration.
(f) All cash paid upon the surrender of the Common
Certificates and the Rights associated therewith under the Rights Agreement and
the cancellation of the Company Options in accordance with the terms of Articles
I and II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of the Company Common Stock theretofore represented by
such Common Certificates and the Company Options; subject, however, to the
Surviving Corporation's obligation, with respect to shares of Company Common
Stock outstanding immediately prior to the Effective Time, to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been declared or made by Company on such shares of Company Common
Stock prior to the date of this Agreement and which remain unpaid at the
Effective Time.
(g) The Exchange Agent shall invest the Exchange Fund as
directed by Parent. Any interest and other income resulting from such
investments shall be paid to Parent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Sub, except as set
forth in the Company disclosure schedule delivered to Parent concurrently
herewith (the "Company Disclosure Schedule"), as follows:
3.1 Corporate Organization. (a) Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Company has all requisite corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business and in good
standing in each jurisdiction (whether federal, state, local or foreign), in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary except where failure to be so qualified or in good
standing would not have a Company Material Adverse Effect (as defined below) on
the Company. As used in this Agreement, (i) the term "Subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, (x) of which such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interests in such partnership), or
(y) a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the board of directors or
other body performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries, and (ii) the term "Company Material Adverse Effect" means, a
material adverse effect on the business, assets, liabilities, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole as of the date of this Agreement (other than any change, event,
occurrence or effect (A) disclosed in the Company Disclosure Schedule or in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Company, Business or Financial Statements Sections of the Company
Reports filed prior to the date hereof (other than information contained under
any "Risk Factor," "Cautionary Statements" or "Factors Affecting Future Results"
heading contained therein) or (B) relating to (x) the United States or global
economy or securities markets in general, (y) the contact center industry and
not specifically relating to the Company or (z) this Agreement or the
transactions contemplated hereby or the announcement thereof) or on the ability
of the Company to perform its obligations under and to consummate the
transactions contemplated by this Agreement on a timely basis. Section 3.1(a) of
the Company Disclosure Schedule contains true and complete copies of the
Certificate of Incorporation and Bylaws of Company, as in effect as of the date
of this Agreement. Such organizational documents are in full force and effect
and other than the Rights Agreement no other organizational documents are
applicable to or binding upon Company. Company is not in violation of any of the
provisions of its Certificate of Incorporation or Bylaws.
(b) Part I of Section 3.1(b) of the Company Disclosure
Schedule sets forth a complete and correct list of all of Company's Subsidiaries
(each a "Company Subsidiary" and collectively the "Company Subsidiaries") and
indicates, as to each such Subsidiary the extent to which each Subsidiary is
owned by the Company and other Persons. There are no issued and outstanding
options, warrants, stock appreciation rights, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any capital stock or
other equity securities of each such Subsidiary, nor any contracts, commitments,
understandings or arrangements by which such Subsidiary may become bound to
issue additional shares of its capital stock or other equity securities, or
options, warrants, scrip on rights to purchase, acquire, subscribe to, calls on
or commitments for any shares of its capital stock or other equity securities
and the identity of the parties to any such agreements or arrangements. All of
the outstanding shares of capital stock or other securities evidencing
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ownership of the Company Subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable with no personal liability
attaching to the ownership thereof and such shares or other securities are owned
by Company or its wholly-owned Subsidiaries except as noted on the Company
Disclosure Schedule free and clear of any lien, claim, charge, option,
encumbrance, mortgage, pledge or security interest (a "Lien") with respect
thereto. Except where to be so, or have such, would not have a Company Material
Adverse Effect, each Company Subsidiary (i) is a duly organized and validly
existing corporation, partnership or limited liability company or other legal
entity under the laws of its jurisdiction of organization, (ii) is duly licensed
or qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified, and (iii) has all
requisite corporate power and authority to own or lease all of its properties
and assets and to carry on its business as now conducted. Except for the
ownership interests in its Subsidiaries disclosed in Part I of Section 3.1(b) of
the Company Disclosure Schedule, Company does not own, directly or indirectly,
any capital stock or other ownership interest, and does not have any option or
similar right to acquire any equity or other ownership interest, in any entity.
The Company and its Subsidiaries do not hold any partnership, joint venture and
similar investments, including, without limitation, all such investments in
which any Company employee or Affiliate serves as a director. Company has
provided to Parent a complete and accurate copy of all such partnership, joint
venture or similar agreements to which Company or any Company Subsidiary is a
party. Except as disclosed on Section 3.1(b) of the Company Disclosure Schedule,
neither Company nor any Company Subsidiary is subject to any obligation or
requirement to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any entity.
(c) Except as required by law, neither the Certificate of
Incorporation nor the Bylaws of the Company contains any provision that would
require a vote of the Company's stockholders in excess of a majority of the
outstanding shares of Company Common Stock in order to approve the Merger in
accordance with the terms of this Agreement.
3.2 Capitalization. The authorized capital stock of Company consists
of 2,000,000 shares of preferred stock, $.10 par value per share, 15,000,000
shares of Company Common Stock, of which, as of the date of this Agreement,
10,593,869 shares were issued and outstanding. All of the issued and outstanding
shares of Company Common Stock have been duly authorized and validly issued and
are fully paid, non-assessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. The shares of Company Common Stock
which are issuable upon exercise of Company Options have been duly authorized
and reserved for issuance and, if and when issued pursuant to the terms thereof,
will be validly issued, fully paid and non-assessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. Part I of
Section 3.2 of the Company Disclosure Schedule sets forth, in each case as of
the date of this Agreement, (i) the number of shares of Company Common Stock
that were reserved for issuance upon the exercise of authorized but unissued
stock options pursuant to the Company Stock Plans, and (ii) the number of shares
of Company Common Stock issuable upon the exercise of outstanding Company
Options pursuant to the Company Stock Plans. Except as set forth in Part I of
Section 3.2 of the Company Disclosure Schedule, no other shares of Company
Common Stock or other equity or voting securities of Company were outstanding or
reserved for issuance as of the date of this Agreement. Part II of Section 3.2
of the Company Disclosure Schedule sets forth a list, as of the date of this
Agreement, of the holders of Company Options, the date of grant of each Company
Option granted and outstanding, the number of shares subject to each such
option, the expiration date of each such option, the vesting schedule of each
such option and the price at which each such option may be exercised under the
applicable Company Stock Plan. Except as set forth in Part III of Section 3.2 of
the Company Disclosure Schedule, the Company has not (i) issued any shares of
its capital stock or other equity or voting securities or any securities
convertible into or exercisable or exchangeable for any shares of its capital
stock or other equity or voting securities, other than shares of Company Common
Stock issued upon the exercise or conversion of Company Options outstanding
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as of the date hereof, or (ii) taken any actions which would cause an
antidilution adjustment under any outstanding options of Company. There are no
outstanding bonds, debentures, notes or other indebtedness or other securities
of Company having the right to vote (or convertible into, or exchangeable or
exercisable for, securities having the right to vote) on any matters on which
stockholders of Company may vote. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Company or any of
its Subsidiaries is a party or by which any of them is bound obligating Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares or shares of capital stock or other equity
or voting securities of Company or of any of its Subsidiaries or obligating
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. There are no outstanding contractual obligations, commitments,
understandings or arrangements of Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Company
or any of its Subsidiaries, other than in connection with the surrender of
Company Common Stock as full or partial payment of the exercise price or
withholding tax in connection with the exercise of Company Options under the
Company Stock Plans. Except as set forth above, there are no agreements or
arrangements pursuant to which Company is or could be required to register
shares of Company Common Stock or other securities under the Securities Act of
1933, as amended (the "Securities Act"), or other agreements or arrangements
with or among any security holders of Company with respect to securities of
Company. Except as set forth above, there are no voting, sale, transfer or other
similar agreements to which Company or any of its Subsidiaries is a party with
respect to the capital stock of Company or its Subsidiaries or any other
securities of Company or its Subsidiaries which are convertible or exchangeable
into or exercisable for shares of the capital stock of Company or its
Subsidiaries. None of the shares of Company Common Stock are held, directly or
indirectly, by any of the Company Subsidiaries. Each purchase by the Company or
any Subsidiary of any shares of the Company's capital stock has been made in
compliance with applicable securities laws and any rules and regulations
promulgated thereunder, and no such purchase by the Company has occurred since
September 20, 1999.
3.3 Authority; No Violation. (a) Company has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Company. Except for the adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon in
connection with the Merger (the "Company Stockholder Approval") as may be
required under DGCL and as contemplated by this Agreement, no other corporate
proceedings on the part of Company and no other votes or consents of any holders
of Company securities are necessary to approve this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Company and (assuming due authorization, execution and
delivery by Parent and Sub) constitutes the valid and binding obligation of
Company, enforceable against Company in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether considered in a proceeding
in equity or at law).
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, none of the execution and delivery of this Agreement by
Company, the consummation by Company of the transactions contemplated hereby, or
compliance by Company with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of Company
or any Company Subsidiary or (ii) assuming that the consents and approvals
referred to in Section 3.4 are duly obtained (A) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Company or any of its Subsidiaries or any of their
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respective properties or assets, or (B) violate, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien upon any of the respective properties or assets of
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, permit,
concession, franchise, license, lease, agreement, contract, or other instrument
or obligation to which Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties, assets or business activities
may be bound or affected except, with respect to either (A) or (B), as would not
have a Company Material Adverse Effect.
3.4 Consents and Approvals. Except for (i) the filing of any
required applications or notices with other applicable federal, state or foreign
governmental agencies or authorities as set forth in Section 3.4 of the Company
Disclosure Schedule and approval of such applications and notices (the
"Additional Regulatory Approvals"), (ii) the filing with the SEC of a proxy
statement, if any, in definitive form relating to the meeting of Company's
stockholders to be held in connection with the Merger and as contemplated by
this Agreement (the "Proxy Statement"), (iii) the filing with the SEC of the
Offer Documents and the Schedule 14D-9, (iv) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware pursuant to the
DGCL, (v) the expiration of any applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (vi) the Company Stockholder Approval, and (vii) the filing with the SEC
of such reports under the Exchange Act, as may be required in connection with
the execution and delivery of this Agreement and the transactions contemplated
by this Agreement, no consents or approvals of or filings or registrations with
any court, administrative agency or commission or other governmental or
regulatory authority or instrumentality (each a "Governmental Entity"), are
necessary in connection with the execution and delivery by Company of this
Agreement and the consummation by Company of the transactions contemplated by
this Agreement. Company has no reason to believe that the HSR Approval (as
defined in Annex I hereto) will not be obtained on a timely basis.
3.5 Regulatory Reports. Except as disclosed in Section 3.5 of the
Company Disclosure Schedule, or where failure to do so would not have a Company
Material Adverse Effect, Company and each of its Subsidiaries have timely filed
all regulatory reports, schedules, forms, registrations and other documents,
together with any amendments required to be made with respect thereto, that they
were required to file since January 1, 1997 with any federal, state or foreign
Governmental Entity (collectively, with the SEC and the Nasdaq Stock Market
("Nasdaq"), "Regulatory Agencies"), and have paid all fees and assessments due
and payable in connection therewith. Except as disclosed in Section 3.5 of the
Company Disclosure Schedule, and for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Company and its
Subsidiaries, to the knowledge of Company, no Regulatory Agency has initiated
any proceeding or investigation into the business or operations of Company or
any of its Subsidiaries since January 1, 1997. Except as set forth in Section
3.5 of the Company Disclosure Schedule, there is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Company or any of its Subsidiaries
except for violations, criticisms or exceptions that would not have a Company
Material Adverse Effect.
3.6 Broker's Fees. Except for the employment of and payments to
Updata Capital, Inc. and Innovative Software Engineering Practices, Inc.
described in Section 3.6 of the Company Disclosure Schedule, none of Company,
any Company Subsidiary or any of their respective officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
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3.7 Absence of Certain Changes or Events. (a) Except as set forth in
Section 3.7(a) of the Company Disclosure Schedule or as disclosed in the Company
Reports (as defined herein) filed prior to the date hereof, since September 30,
1999, no event, change or circumstance has occurred which has had, or would
reasonably be expected to result in, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Since September 30, 1999, other than actions that are
not reasonably expected to have a Company Material Adverse Effect, Company and
its Subsidiaries have carried on their respective businesses only in the
ordinary and usual course consistent with their past practices.
(c) Except as disclosed in Section 3.7(c) of the Company
Disclosure Schedule, or as disclosed in the Company Reports (as defined herein)
filed prior to the date hereof, since September 30, 1999, there has not occurred
any event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 5.2 without the prior
consent of Parent.
3.8 Legal Proceedings. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there are no suits, actions, counterclaims,
proceedings (whether judicial, arbitral, administrative or other) or
governmental, or regulatory investigations pending or, to the knowledge of
Company, threatened against or affecting Company or any of its Subsidiaries
except as would not have a Company Material Adverse Effect. There is not any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Company or any of its Subsidiaries.
3.9 Taxes and Tax Returns. Except as set forth in Section 3.9 of the
Company Disclosure Schedule:
(a) Company and each of its Subsidiaries, and any
consolidated, combined or unitary group for tax purposes of which Company or any
of its Subsidiaries is or has been a member, has timely and accurately filed all
Tax Returns (as defined below) required to be filed by it in the manner provided
by law and all such Tax Returns are true, correct and complete in all material
respects. Company and each of its Subsidiaries has paid all Taxes (as defined
below) due and payable whether or not shown on a Tax Return to be due, other
than Taxes which are being contested in good faith and for which an adequate
reserve has been provided in accordance with generally accepted accounting
principles ("GAAP"). None of the Company and its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return and no
claim has been made by any Taxing authority in a jurisdiction where any of
Company or its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(b) Except as set forth in Section 3.9 of the Company
Disclosure Schedule, there are no audits or disputes pending, or claims
asserted, for Taxes (as defined below) upon Company (or any of its predecessors)
or any of its Subsidiaries (or any of their respective predecessors). No closing
agreements, private letter rulings, technical advice memoranda or similar
agreements or rulings have been entered into or issued by any Taxing authority
with respect to Company or any of its Subsidiaries that have a continuing
material impact on any Taxes. The Company has delivered to Parent correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any of the Company
and its Subsidiaries since December 31, 1994. Except as set forth in Section 3.9
of the Company Disclosure Schedule, none of the Company and its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency. None of the Company and
its Subsidiaries has made any payments, is obligated to make any payments, or is
a party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"). Section 3.9 of the Company
Disclosure Schedule sets forth the amount of any net operating loss, net capital
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loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to the Company or Subsidiary.
(c) All Taxes required to have been withheld have properly
and accurately been withheld by Company and its Subsidiaries from their
employees' compensation in compliance with the tax withholding provisions of
applicable federal, state and local laws and have been paid over to the
appropriate taxing authorities when due, except where the failure to do so would
not have a Company Material Adverse Effect.
(d) There are no Tax liens upon any property or assets of
Company or any of its Subsidiaries except liens for Taxes not yet due and
payable.
(e) None of Company and its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. None of Company
and its Subsidiaries has been required to include any amount in income from any
adjustment pursuant to section 481 of the Code (or any similar provision of
state, local or foreign tax law) by reason of a voluntary change in accounting
method initiated by Company or any of its Subsidiaries, and to the knowledge of
the Company, the Internal Revenue Service has not initiated or proposed any such
adjustment or change in accounting method.
(f) Neither Company nor any of its Subsidiaries (i) has been
a member of an affiliated group filing consolidated federal income tax return
(other than a group the common parent of which was or is the Company), (ii) is a
party to a Tax allocation or Tax sharing agreement (other than an agreement
solely among members of a group the common parent of which is Company), or (iii)
has any liability for the Taxes of any person (other than any of Company or its
Subsidiaries) including, but not limited to, (x) under Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or foreign law), (y)
as a transferee or successor or (z) by contract.
For purposes of this Agreement, "Taxes" shall mean any taxes of
any kind, including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. For purposes of this Agreement,
"Tax Return" shall mean any return, report or statement required to be filed
with any governmental authority with respect to Taxes, including any schedule or
attachment thereto or amendment thereof.
3.10 ERISA and Employee Matters. An "Employee Plan" is: (i)(A) each
"employee benefit plan" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder ("ERISA")), whether or not such plan is, or is intended
to be, qualified under Section 401(a) of the Code and whether or not such plan
is subject to Title I of ERISA, (B) each employment, collective bargaining,
severance, compensation upon reduction in hours, change in control, change in
employment category, or similar event, or similar contract or arrangement
(whether or not written), and (C) each plan, policy, fund, program, contract or
arrangement (whether or not written) providing for compensation, bonus,
profit-sharing, stock or equity options, other stock or equity related rights,
other forms of incentive or deferred compensation, paid time off (including, but
not limited to, holiday pay, sick leave, vacation, leave of absence, or
disability), other fringe benefits (including, but not limited to, company cars,
relocation assistance, free or reduced cost products or services, service
awards, tuition payments, or reimbursement for scholarships), insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, life or accidental death or dismemberment benefits,
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workers' compensation, supplemental unemployment benefits, severance benefits,
or post-employment or retirement benefits that (ii)(A) is, or has been at any
time within the last five (5) years, maintained, administered or contributed to
by Company, any of its Subsidiaries, or any entity which, together with Company
or any of its Subsidiaries, would be treated as a single employer under Section
414 of the Code (each such entity, an "ERISA Affiliate") and (B) covers or
covered any current or former employee, consultant, independent contractor or
director of or with respect to Company or any of its Subsidiaries (each, an
"Employee Plan").
(b) Company has supplied to Parent a true and correct copy
of: all of the Employee Plans, and any amendments thereto (or if no written plan
document exists, a written description thereof); (2) the summary plan
description and any material employee communication which describes the terms or
operation of the Employee Plans; (3) all trust agreements, insurance contracts
or other funding arrangements related to the Employee Plans; (4) the most recent
annual report (Form 5500)(including the accountant's report) for the Employee
Plans; (5) the most recent actuarial valuation; and (6) any collective
bargaining agreement or other contract requiring or providing for contributions
to an Employee Plan.
(c) Except as set forth in Section 3.10(c) of the Company
Disclosure Schedule, none of Company, any of its Subsidiaries or any ERISA
Affiliate has at any time during the last six years (i) maintained or
contributed to any plan subject to Title IV of ERISA or Section 412 of the Code,
(ii) been required to contribute to any multiemployer plan (as defined in
Section 3(37) of ERISA), or (iii) incurred any current or projected liability in
respect of post-employment or post-retirement health, medical or life insurance
benefits for current, former or retired employees of Company or any of its
Subsidiaries, except as required to avoid an excise tax under Section 4980B of
the Code.
(d) Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified in
form and operation during the period since its adoption; each trust created
under any such Plan is exempt from tax under Section 501(a) of the Code and has
been so exempt since its creation. Company has made available to Parent a true
and correct copy of the most recent determination letter issued by the Internal
Revenue Service relating to each such Employee Plan and any subsequent
determination letters issued with respect to Employee Plan amendments. Each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Code and has been
maintained in good standing with applicable regulatory authorities, and is not
"top-heavy."
(e) There has been no amendment to, written interpretation
of or announcement (whether or not written) by Company or any of its
Subsidiaries or ERISA Affiliates relating to, or any change in employee
participation or coverage under, any Employee Plan that would increase the
expense of maintaining such Employee Plan above the level of the expense
incurred in respect thereof for the most recent fiscal year ended prior to the
date hereof. There have been no material changes in the financial condition of
the Employee Plans from that stated in the annual report (as described in
Section 103 of ERISA) most recently filed, as applicable, for each Employee
Plan.
(f) With respect to any Employee Plan that is unfunded,
Company has adequately provided for, and its financial statements accurately
reflect (in accordance with GAAP), the amount of all accrued benefits and
obligations under such Employee Plan.
(g) Except as set forth in Section 3.10(g) of the Company
Disclosure Schedule, there is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of Company or any of
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its Subsidiaries that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 162 or 280G of the Code.
(h) Except as provided in this Agreement or as set forth in
Section 3.10(h) of the Company Disclosure Schedule, (i) no employee or former
employee of Company or any of its Subsidiaries will become entitled to any
bonus, retirement, severance, job security or similar benefit or enhancement
thereof (including acceleration of vesting or exercise of an incentive award) as
a result of the transactions contemplated by this Agreement, and (ii) any
Company Stock Plan may be terminated by the Company in accordance with this
Agreement without the consent of such Plan's participants except for such
consents required by Regulatory Agencies.
(i) Except as set forth in Section 3.10(i) of the Company
Disclosure Schedule, no Employee Plan is maintained outside the jurisdiction of
the United States, or covers any employee residing or working outside the United
States.
(j) Except as would not have a Company Material Adverse
Effect, there are no actions, lawsuits, arbitrations, audits, inquires,
investigations, proceedings or claims (other than routine claims for benefits
made in the ordinary course and qualified domestic relations or medical child
support orders) pending or, to the knowledge of the Company, threatened with
respect to any Employee Plan or the operation thereof (whether brought or
threatened to be brought by or against a participant or beneficiary, a trustee,
a plan administrator, Company or any director, officer or employee thereof and
including matters pending before or threatened by the Internal Revenue Service,
United States Department of Labor, or other governmental agency), and Company
does not have knowledge of any facts which could give rise to any such action,
lawsuit, arbitration, audit, inquiry, investigation, proceeding or claim.
(k) Labor and Employment Matters. (i) None of Company or any
of its Subsidiaries is the subject of any suit, action or proceeding which is
pending or, to the knowledge of the Company, threatened, asserting that the
Company or any of its Subsidiaries has committed an unfair labor practice or
seeking to compel the Company or any of its Subsidiaries to bargain with any
labor organization as to wages and conditions of employment, in any such case;
(ii) no strike or other labor dispute involving the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened, and, to
the knowledge of the Company, there is no activity involving any employees of
the Company or any of its Subsidiaries seeking to certify a collective
bargaining unit or engaging in any other organizational activity; (iii) except
where such noncompliance would not have a Company Material Adverse Effect, the
Company and each of its Subsidiaries is and has been, to the knowledge of the
Company, in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting minimum wage and
overtime payments, employment discrimination, civil rights, workers'
compensation, family and medical leave, administration of leave, rights under
the Consolidated Omnibus Budget Reconciliation Act of 1985, the Immigration
Reform and Control Act, occupational safety and health requirements, collective
bargaining, the Worker Adjustment and Retraining Notification Act and the
payment of social security and similar taxes; and (iv) no person has, to the
knowledge of the Company, asserted or threatened to assert that the Company or
any of its Subsidiaries is liable for any arrears in wages or taxes or damages,
penalties, or other relief, equitable or otherwise, for failure to comply with
any of the foregoing, except where such claims would not have a Company Material
Adverse Effect.
3.11 SEC Reports. Company has made available to Parent an accurate
and complete copy of each (a) final registration statement, prospectus, report,
schedule, form and definitive proxy statement filed since November 1, 1996 by
Company with the SEC pursuant to the Securities Act or the Exchange Act
(collectively, and in each case
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including all exhibits and schedules thereto and documents incorporated by
reference therein, the "Company Reports"), and (b) communication mailed by
Company to its stockholders since November 1, 1996. As of their respective dates
of filing or mailing, as the case may be, each Company Report and each such
communication complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company Report
or communication, and as of such dates no such Company Report or communication
(including any and all financial statements included therein) contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Since November 1, 1996, Company and each of its Subsidiaries has filed all
reports and other documents required to be filed by them under the Securities
Act and the Exchange Act on a timely basis.
3.12 Financial Statements. Each of the consolidated financial
statements (including the notes thereto) included in the Company Reports
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. The books and records of
Company and its Subsidiaries have been, and are being, maintained in all
respects in accordance with GAAP and any other applicable legal and accounting
requirements.
3.13 Licenses; Compliance with Applicable Law. (a) Except as set
forth in Section 3.13(a) of the Company Disclosure Schedule, Company and its
Subsidiaries (i) hold, and have been and are in compliance with, all permits,
licenses, exemptions, orders and approvals ("Permits") of all Governmental
Entities necessary for the operation of their respective businesses, and (ii)
the transfer of such permits upon the Effective Time shall not limit, restrict
or cause the termination such Permits at the Effective Time, except with respect
to both (i) and (ii) above as would not have a Company Material Adverse Effect,
and there are no proceedings pending or, to the knowledge of Company, threatened
or contemplated by any Governmental Entity seeking to terminate, revoke or limit
any such permit, license, exemption, order or approval, nor, to the knowledge of
Company, do adequate grounds exist for any such action by any Governmental
Entity.
(b) To the knowledge of the Company, none of Company, any of
its Subsidiaries or the conduct of any of their respective businesses is in
default or violation of, any statutes, laws, regulations, ordinances, permits,
rules, judgments, orders, decrees or arbitration awards of any Governmental
Entity applicable to Company or any of its Subsidiaries or by which its or any
of their respective properties are bound or affected.
3.14 Certain Contracts. Except as set forth in Section 3.14 of the
Company Disclosure Schedule or as expressly permitted by Section 5.2, neither
Company nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (i) with respect to the employment of
any directors, executive officers or key employees, or with any consultants
involving the payment of $150,000 or more per annum, (ii) which is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) that has not been filed as an exhibit to or incorporated by reference in
the Company Reports, (iii) which limits in any way the ability of Company or any
of its Subsidiaries to compete in any line of business, in any geographic area
or with any person, or which requires referrals of any business or requires
Company or any of its affiliates to make available investment opportunities to
any person on a priority, equal or exclusive basis, (iv) with or to a labor
union or guild (including any collective bargaining agreement), (v) any of the
benefits of which will be materially increased, or the vesting of the benefits
of which will be
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materially accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
(other than those agreements and arrangements disclosed in Section 3.11 of the
Company Disclosure Schedule), or (vi) which would prohibit or materially delay
the consummation of any of the transactions contemplated by this Agreement.
Company has previously made available to Parent complete and accurate copies of
all Company Contracts (as defined below). Each contract, arrangement, commitment
or understanding of the type described in this Section 3.14, whether or not set
forth in Section 3.14 of the Company Disclosure Schedule, is referred to herein
as a "Company Contract," and neither Company nor any of its Subsidiaries knows
of, or has received notice of, any violation or default of the above by any of
the other parties thereto. All contracts, agreements, arrangements or
understandings of any kind between any Affiliate of Company (other than any
wholly owned Subsidiary of Company), on the one hand, and Company or any
Subsidiary of Company, on the other hand, are on terms no less favorable to
Company or to such Subsidiary of Company than would be obtained with an
unaffiliated third party on an arm's length basis.
3.15 [RESERVED].
3.16 Investment Securities. Each of Company and its Subsidiaries has
good and marketable title to all securities held by it, free and clear of any
Lien, except to the extent such securities are pledged in the ordinary course of
business consistent with prudent business practices to secure obligations of
Company or any of its Subsidiaries. Such securities are valued on the books of
Company in accordance with GAAP.
3.17 [RESERVED]
3.18 Undisclosed Liabilities. Except for (i) those liabilities that
are fully reflected or reserved for in the consolidated balance sheet of Company
included in its Quarterly Report on Form 10-Q for the three-month period ended
September 30, 1999, as filed with the SEC, (ii) liabilities disclosed in Section
3.18 of the Company Disclosure Schedule, (iii) liabilities incurred since
September 30, 1999 in the ordinary course of business consistent with past
practice, and (iv) liabilities or obligations that would not have, individually
or in the aggregate, a Company Material Adverse Effect, at September 30, 1999,
neither Company nor any of its Subsidiaries had, and since such date none of
them has incurred, any liabilities or obligations of any nature whatsoever
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected in Company's financial statements in accordance with GAAP.
3.19 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on Company or any of its Subsidiaries of any liability or
obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), pending or, to the Company's knowledge, threatened
against Company or any of its Subsidiaries which could result in a Company
Material Adverse Effect. To the knowledge of Company, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation that
would impose any liability or obligation.
3.20 Information Supplied. None of the information supplied or to be
supplied by Company for inclusion or incorporation by reference in the Offer
Documents or the Schedule 14D-9 will, at the time such documents are filed with
the SEC or distributed to Company's stockholders, or at the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Schedule
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14D-9 will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC thereunder. No
representation is made by Company with respect to statements made or
incorporated by reference in the Offer Documents or the Schedule 14D-9, based on
information supplied by Parent or Sub in writing for inclusion or incorporation
by reference in such documents. Company shall promptly inform Parent of the
discovery of any information which should be set forth in a corrected Schedule
14D-9 or a supplement to the Offer Documents.
3.21 State Takeover Laws; Rights Agreement. (a) The Board of
Directors of Company, at a meeting duly called and held, at which a quorum was
present, has unanimously (the "Company Board Recommendation") (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are advisable and fair to and in the best interests of the
holders of shares of Company Common Stock, (ii) duly approved and adopted this
Agreement and approved the transactions contemplated hereby, including the
Merger and the Offer, in each case prior to the execution of such agreement
(such approvals being sufficient to render the restrictions of Section 203 of
the DGCL inapplicable to this Agreement, the Offer and the Merger and the
transactions contemplated hereby and thereby) and (iii) resolved to recommend
that the holders of shares of Company Common Stock accept the Offer, tender
their shares of Company Common Stock pursuant thereto and vote to approve and
adopt this Agreement (to the extent required by applicable law) provided that,
subject to Section 6.8 hereof, the Board of Directors of the Company may
withdraw, modify or amend such recommendation consistent with Section 6.8(g)
hereof.
(b) The Board of Directors of Company, at a meeting duly
called and held in connection with its authorization and approval noted above
has taken all action necessary to render the rights issued pursuant to the
Rights Agreement inapplicable to this Agreement, the Offer, the Merger and the
transactions contemplated thereby.
3.22 Insurance. Company and its Subsidiaries maintain insurance
policies and performance bonds on their respective properties and assets, and
with respect to their employees and operations, with reputable insurance
carriers, and such insurance policies provide coverage for risks incident to the
business of Company and its Subsidiaries and their respective properties and
assets and are in character and amount which the Company reasonably considers to
be reasonable and customary for persons engaged in similar businesses as the
Company. Company and its Subsidiaries are not in default under any of their
insurance policies and have paid all premiums owed thereunder since January 1,
1999, and no claims for coverage thereunder have been denied, except where being
in default or failing to pay such premiums would not have a material adverse
effect on the coverage provided by such policies and the Company.
3.23 Year 2000 Compliance. The occurrence of the year 2000 will not
affect the Company's computer hardware, software, databases, systems and other
computer equipment (collectively, "Computer Equipment") in a manner that would
have a Company Material Adverse Effect and no material expenditures in excess of
currently budgeted items will be required in order to cause such Computer
Equipment to operate properly following the change of the year 1999 to 2000. The
Company's Year 2000 Readiness Disclosure Statement provided to Parent and the
Company's customers contains an accurate assessment of the Company's Year 2000
compliance program.
3.24 Intellectual Property. The Company has provided to Parent true
and complete copies of all United States and foreign (a) patents and patent
applications; (b) trademark registrations (including Internet domain
registrations) and applications and material unregistered trademarks; (c)
copyright registrations and applications.
(b) The Company has provided Parent access to its records and files
containing all written license agreements which involve aggregate payments or
receipts in excess of $100,000 granting any right to use or practice any rights
under any Intellectual Property (as defined below), whether the Company or any
of its Subsidiaries is the licensee or
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licensor thereunder, and any assignments, consents, forbearances to xxx,
judgments, orders, settlements or similar obligations relating to any
Intellectual Property to which the Company or any of its Subsidiaries is a party
or otherwise bound (other than off-the-shelf or other mass-market software
applications programs) (collectively, the "License Agreements"). Except as would
not have a Company Material Adverse Effect, the License Agreements are valid and
binding obligations of Company or its Subsidiaries, enforceable in accordance
with their terms, and, to the Company's knowledge, there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default by the Company or its
Subsidiaries under any such License Agreement. "Intellectual Property" shall
mean " trademarks, service marks, trade names, URLs and Internet domain names
and applications therefor (and all interest therein), designs, slogans and
general intangibles of like nature, patents (including any registrations,
continuations, continuations in part, renewals and applications for any of the
foregoing); copyrights (including any registrations and applications for any of
the foregoing); computer programs and other computer software; databases;
technology, trade secrets and other confidential information, know-how,
proprietary technology, processes, formulae, algorithms, models, user
interfaces, customer lists, inventions, source codes and object codes and
methodologies, architecture, structure, display screens, layouts, development
tools, instructions, templates, marketing materials, inventions, trade dress,
logos and designs and all documentation and media constituting, describing or
relating to the foregoing (collectively, "Trade Secrets"), used in or necessary
for the conduct of Company's and each of its Subsidiaries' business as currently
conducted or contemplated to be conducted.
(c) No material royalties, honoraria or other fees are payable to any third
parties for the use of or right to use any Intellectual Property except pursuant
to the License Agreements.
(d) Except as has not had, nor is reasonably likely to have, a Company
Material Adverse Effect, and except as set forth in Section 3.24(d) of the
Company Disclosure Schedule:
(i) the Company or its Subsidiaries exclusively own, free and clear
of all Liens, all owned Intellectual Property, and have a valid,
enforceable right to use all of the Intellectual Property
licensed by the Company from third parties;
(ii) the Company has taken reasonable steps to protect the owned
Intellectual Property;
(iii) to the knowledge of the Company, the conduct of the Company's
and its Subsidiaries' businesses as currently conducted does not
infringe upon any Intellectual Property rights of or controlled
by any third party;
(iv) there is no litigation pending, or to the Company's knowledge,
threatened (A) alleging that the Company's activities or the
conduct of its businesses or that of any of its Subsidiaries
infringes upon, violates, or constitutes the unauthorized use of
the Intellectual Property rights of any third party or (B)
challenging the ownership, use, validity or enforceability of
any Intellectual Property;
(v) to the knowledge of the Company, no third party is
misappropriating, infringing, diluting, or violating any
Intellectual Property owned by the Company or any of its
Subsidiaries and no such claims have been brought against any
third party by the Company or any of its Subsidiaries; and
(vi) the consummation of the transactions contemplated hereby will
not result in the loss or impairment of the Company's or any of
its Subsidiaries' right to own or use any of the
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Intellectual Property listed on Sections 3.24(a) and (b) of the
Company Disclosure Schedule, nor will they require the consent
of any Governmental Entity or third party in respect of any such
Intellectual Property.
(e) Section 3.24(e)(i) of the Company Disclosure Schedule lists all material
Software contained in products, sold, licensed, leased or otherwise distributed
to third parties by the Company or any of its Subsidiaries (other than
off-the-shelf or mass-market software applications programs). Section
3.24(e)(ii) of the Company Disclosure Schedule lists all Software material to
the business of Company (other than off-the-shelf or other mass-market software
applications programs) that is owned, licensed to or by the Company or any of
its Subsidiaries, leased to or by the Company or any of its Subsidiaries, or
otherwise used by the Company or any of its Subsidiaries, and not included under
Section 3.24(d)(i) of the Company Disclosure Schedule. The Software set forth in
Sections 3.24(e)(i) and (ii) of the Company Disclosure Schedule which the
Company or any of its Subsidiaries purports to own and that is or could
reasonably be expected to be material to the conduct of the business of the
Company, was either developed (i) by employees of Company or any of its
Subsidiaries within the scope of their employment; (ii) by independent
contractors who have assigned their rights to Company or any of its Subsidiaries
pursuant to enforceable written agreements or by operation of law; or (iii) has
otherwise been rightfully assigned to the Company or one of its Subsidiaries.
For purposes of Section 3.24(e) and (h), "Software" means any and all (i)
computer programs, including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, (iv)
all documentation, including user manuals and training materials, relating to
any of the foregoing.
(f) All of the Company's registered trademarks and material unregistered
trademarks have been in continuous use by the Company or its Subsidiaries except
where failure to be in such continuous use would not have a Company Material
Adverse Effect. To the knowledge of the Company, there has been no prior use of
such trademarks by any third party which would confer upon said third party
superior rights in such trademarks; and the registered trademarks have been
continuously used in the form appearing in, and in connection with the goods and
services listed in, their respective registration certificates or identified in
their respective pending applications.
(g) The Company has taken reasonable steps in accordance with normal industry
practice to protect the Company's rights in Trade Secrets of the Company.
Without limiting the foregoing, the Company (A) has a policy of requiring
employees, consultants and contractors with access to such Trade Secrets to
execute proprietary information, confidentiality and assignment agreements
substantially consistent with the Company's standard forms thereof (complete and
current copies of which have been delivered to the Parent), (B) has requested
that all existing employees sign such agreements and (C) has required all
employees hired since November 30, 1998 to sign such an agreement. To the
knowledge of the Company, except as subject to confidentiality agreements or
confidentiality provisions in other agreements, there has been no material
disclosure of any Company or Subsidiary confidential information or Trade
Secrets. Section 3.24(g) of the Company Disclosure Schedule, sets forth a list
of all current employees and employees who have been employed by the Company
subsequent to January 1, 1998, consultants and contractors with access to Trade
Secrets who have not executed proprietary information, confidentiality and
assignment agreements.
(h) Except as would not have a Company Material Adverse Effect, all Software
owned by the Company or any of its Subsidiaries operates and runs in a manner
adequate to operate the business of the Company as presently conducted, and, to
the knowledge of the Company conforms to the specifications thereof. The Company
has or at the Effective Time will have all material documentation relating to
use, maintenance and operation of the material Software used in the conduct of
business of the Company to the extent such documentation exists.
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3.25 Opinion of the Company's Financial Advisor. The Board of
Directors of the Company has received a written opinion from Updata Capital,
Inc. (addressed to such Board) to the effect that, as of the date of such
opinion, the consideration to be received in the Offer and the Merger by the
holders of Company Common Stock is fair to such holders (other than Parent and
Sub) from a financial point of view.
3.26 Disclosure. Disclosure in any of the documents set forth on
Section 3.26 of the Company Disclosure Schedule that would reasonably put Parent
or Sub on notice of an item required to be listed under any heading in the
Company Disclosure Schedule or an exception to any of the Company's
representations and warranties will be deemed to have been disclosed under the
appropriate heading of the Company Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and, with respect to Sections 4.1 and 4.2, Sub, hereby represent
and warrant to Company that:
4.1 Corporate Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Germany. Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Sub has all requisite corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and in good standing in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary except where failure to be so qualified or in good
standing would not have a Parent Material Adverse Effect (as defined below). The
term "Parent Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities, financial condition or results of operations of
the Parent and its Subsidiaries taken as a whole as of the date of this
Agreement (other than any change, event, occurrence or effect relating to (x)
the United States or global economy or securities markets in general, (y) the
document and data storage management industry and not specifically relating to
the Parent or (z) this Agreement or the transactions contemplated hereby or the
announcement thereof) or on the ability of the Parent to perform its obligations
under and to consummate the transactions contemplated by this Agreement on a
timely basis. Parent owns all of the issued and outstanding capital stock of Sub
and all such capital stock has been validly issued, is fully paid and
nonassessable and is owned by Parent free and clear of all Liens.
4.2 Authority; No Violation. (a) Each of Parent and Sub has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Sub and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of each of Parent and Sub and by Parent in its capacity as sole
stockholder of Sub. No other corporate proceedings on the part of Parent or Sub
and no other votes or consents of any holders of Parent securities are necessary
on the part of Parent or Sub to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and (assuming due
authorization, execution and delivery by Company) constitutes a valid and
binding obligation of Parent and Sub, enforceable against each of them in
accordance with its respective terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
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(b) None of the execution and delivery of this Agreement by
Parent or Sub, or the consummation by Parent or Sub of the transactions
contemplated hereby, or compliance by Parent or Sub with any of the terms or
provisions hereof will (i) violate any provision of the Certificate of
Incorporation or Bylaws of Parent or Sub, as applicable, or (ii) assuming that
the consents and approvals referred to in Section 4.3 are duly obtained, (A)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Parent or any of its Subsidiaries or any of
their respective properties or assets, or (B) violate, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien upon any of the respective properties or assets of
Parent or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, permit,
concession, franchise, license, lease, agreement, contract, or other instrument
or obligation to which Parent or any of its Subsidiaries is a party, or by which
they or any of their respective properties, assets or business activities may be
bound or affected, except with respect to either (A) or (B), as would not have a
Parent Material Adverse Effect.
4.3 Consents and Approvals. Except for (i) the filing with the SEC
of the Proxy Statement, as may be required under applicable law, (ii) the filing
with the SEC of the Offer Documents and the Schedule 14D-9, (iii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL, (iv) the expiration of any applicable waiting period under
the HSR Act, (v) the Company Stockholder Approval, and (vi) the filing with the
SEC of such reports under the Exchange Act as may be required in connection with
the execution and delivery of this Agreement and the transactions contemplated
hereby, no consents or approvals of or filings or registrations with any
Governmental Entity, or of or with any third party, are necessary in connection
with the execution and delivery by Parent of this Agreement and the consummation
by Parent of the transactions contemplated hereby. Parent has no reason to
believe that the HSR Approval will not be obtained on a timely basis.
4.4 Broker's Fees. Except for Broadview International, LLC, neither
Parent nor any Parent Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. Parent is solely liable for the fees of
Broadview International, LLC.
4.5 Funds. Either Parent or Sub has, or will have prior to the
consummation of the Offer, and will have at the Effective Time, sufficient funds
available to satisfy the obligation to pay for shares of Company Common Stock in
the Offer, to pay the Option Consideration and to pay Merger Consideration in
the Merger.
4.6 Information Supplied. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Offer
Documents or the Schedule 14D-9 will, at the time such documents are filed with
the SEC or distributed to Company's stockholders, or at the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC thereunder, except that no representation is made by Parent with respect to
statements made or incorporated by reference therein based on information
supplied by Company for inclusion or incorporation by reference in such
documents. Parent shall promptly inform Company of the discovery by it or Sub of
any information which should be set forth in a corrected Schedule 14D-9 or a
supplement to the Offer Documents or any Proxy Statement.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Company Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective Time, except
as expressly required or permitted by this Agreement, Company shall, and shall
cause each of its Subsidiaries to, (a) conduct its business in the usual,
regular and ordinary course consistent with past practice and in compliance with
applicable laws, (b) use reasonable best efforts to maintain and preserve intact
its business organization, employees and business relationships and retain the
services of its key officers and key employees and (c) take no action which
would adversely affect or delay in any material respect the ability of either
Parent or Company to obtain any necessary approvals of any Regulatory Agency or
other Governmental Entity required for the transactions contemplated hereby or
to perform its covenants and agreements under this Agreement.
5.2 Forbearances of Company. During the period from the date of this
Agreement to the Effective Time, except as set forth in Section 5.2 of the
Company Disclosure Schedule and except as expressly required or permitted by
this Agreement, Company shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Parent:
(a) (i) incur any indebtedness for borrowed money (other
than (A) short-term indebtedness incurred (y) to refinance existing
short-term indebtedness or (z) pursuant to lines of credit and credit
facilities existing on the date of this Agreement, (B) indebtedness
incurred in an aggregate amount not exceeding $100,000, and (C)
indebtedness of Company or any of its Subsidiaries owed to Company or
any of its other wholly owned Subsidiaries), assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity, or make any loan,
advance or capital contribution (other than to Company or any of its
wholly-owned Subsidiaries and other than in the ordinary course of
Company's business consistent with past practice) or (ii) make or commit
to make any capital expenditures in excess of $100,000 for any single
capital expenditure;
(b) (i) adjust, split, combine or reclassify any of its
capital stock; (ii) make, declare, set aside or pay any dividend (except
for dividends paid in the ordinary course of business by any
wholly-owned Subsidiaries of Company to Company or to any other of its
wholly-owned Subsidiaries) or make any other distribution on, or
directly or indirectly (other than in connection with the surrender of
Company Common Stock as full or partial payment of the exercise price or
withholding tax in connection with the exercise of Company Options under
the Company Stock Plans) redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock; (iii) grant
any individual, corporation or other entity any right to acquire any
shares of its capital stock or any stock appreciation or similar rights
except as permitted by Section 5.2(i); (iv) issue or authorize the
issuance of, deliver, sell, transfer, pledge or otherwise encumber any
additional shares of capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock,
other than the issuance of Company Common Stock pursuant to the exercise
of stock options disclosed in Section 3.2 of the Company Disclosure
Schedule as being outstanding on the date of this Agreement and granted
pursuant to the Company Stock Plans; or (v) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its
capital stock;
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(c) sell, transfer, mortgage, encumber or otherwise dispose
of any significant portion of its properties or assets, including,
without limitation, capital stock in any Subsidiaries of Company, to any
individual, corporation or other entity other than a direct or indirect
wholly owned Subsidiary, or cancel, release or assign any indebtedness
to any such person or any claims held by any such person, except in the
ordinary course of business consistent with past practice;
(d) make any material investment, either by purchase of
stock or other equity or debt securities, contributions to capital,
property transfers, or purchase of any property or assets, of any other
individual, corporation, limited partnership or other entity, other than
an investment in a wholly owned Subsidiary of Company existing prior to
the date hereof;
(e) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of,
or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof;
(f) acquire or agree to acquire voting or non-voting equity
securities or similar ownership interests in any person (other than a
Subsidiary);
(g) commence, undertake or engage in any new line of
business;
(h) enter into or terminate any significant lease, contract
or agreement, or make any change in any of its existing significant
leases, contracts or agreements, except in the ordinary course of
business and consistent with the past practices of the Company;
(i) (i) grant to any employees any restricted stock or
options to purchase the Company's common stock, (ii) pay any bonus which
is not consistent with past practices or consistent with the plans,
arrangements or agreements in place prior to the date hereof or which,
when aggregated with all of the bonuses for 1999, exceed $900,000,
(other than the Company's 25% matching program for 401K contributions,
payments pursuant to which shall not exceed $175,000), (iii) hire new
executive officers or materially modify any compensation or severance
package other than in the ordinary course of business and consistent
with past practice, or (iv) enter into, establish, adopt or amend
(except (A) as may be required by applicable law, (B) to satisfy
contractual obligations existing as of the date of this Agreement or (C)
as otherwise provided by this Agreement) any Employee Plan, as that term
is defined in Section 3.10(a) of this Agreement, or any trust agreement
(or similar arrangement) related thereto in respect of any director,
officer, consultant, independent contractor, or employee of or with
respect to Company or any of its Subsidiaries;
(j) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or
satisfaction of current liabilities or obligations, in accordance with
their terms, in the ordinary course of business consistent with past
practice, or waive, release, grant, or transfer any rights of material
value or modify or change any existing license, lease, contract or other
document in any manner that would be material to Company and its
Subsidiaries;
(k) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement), other than settlements
or compromises of litigation where the amount paid by the Company
(excluding amounts paid by insurance providers on behalf of the Company)
does not exceed $50,000 for any
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single litigation matter or related group of litigation matters (such
limit including the monetary value of any non-monetary obligations on
the part of Company or any of its Subsidiaries other than, in the case
of litigation not involving any Governmental Entity or other Regulatory
Agency, immaterial non-monetary obligations);
(l) change any accounting principle used by it, except for
such changes as may be required to be implemented pursuant to generally
accepted accounting principles or rules and regulations of the SEC as
concurred in by Company's independent auditors;
(m) change any material Tax election, change any annual Tax
accounting period, change any method of Tax accounting in any material
respect, file any material amended Tax return, enter into any closing
agreement relating to any material Tax, settle any material Tax claim or
assessment, surrender any right to claim a material Tax refund or
consent to any extension or waiver of the limitations period applicable
to any material Tax claim or assessment except as advised by the
Company's independent auditors;
(n) adopt or implement any amendment to its charter or
bylaws or enter into any plan of consolidation, merger or reorganization
with any person other than a wholly-owned Subsidiary of Company;
(o) [RESERVED].
(p) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, restructuring, recapitalization or reorganization;
(q) take any action that is intended or would reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger set forth in Article
VII or to the Offer set forth in Annex I not being satisfied or in a
violation of any provision of this Agreement, except, in each case, as
may be expressly permitted by this Agreement or as may be required by
applicable law; or
(r) agree to, or make any commitment to, take, or authorize,
any of the actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Company Stockholders Meeting; Preparation of Proxy Statement.
(a) If Company Stockholder Approval is required under the
DGCL to consummate the Merger, (i) Company shall cause a meeting of its
stockholders (the "Company Stockholders Meeting") to be duly called and held as
soon as reasonably practicable after the date on which shares of Company Common
Stock are purchased by Sub pursuant to the Offer for the purpose of voting on
the adoption of this Agreement, and (ii) Parent and Company shall prepare and
file with the SEC the Proxy Statement. Each of Parent and Company shall use all
reasonable efforts to resolve any comments of the SEC as promptly as practicable
after such filing, and Company shall thereafter mail or deliver the Proxy
Statement to its stockholders as promptly as practicable. The Board of Directors
of Company shall (i) include in the Proxy Statement the Company Board
Recommendation and (ii) use its reasonable best efforts to obtain
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the necessary vote in favor of the adoption of this Agreement by its
stockholders. Subject to the fiduciary duties of the Board of Directors as
advised by outside counsel, following the consummation of the Offer, the Board
of Directors of Company shall not withdraw, amend, modify or materially qualify
in a manner adverse to Parent the Company Board Recommendation (or announce
publicly its intention to do so).
(b) Parent agrees that it will vote, or cause to be voted,
at the Company Stockholders Meeting, all shares of Company Common Stock then
owned by it or Sub in favor of the adoption of this Agreement.
(c) Notwithstanding this Section 6.1, in the event that
Parent, Sub or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of each class of capital stock of Company, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of Company, in accordance with Section 253 of the DGCL, in each
case subject to applicable laws relating to exchange of information.
6.2 Reasonable Best Efforts. (a) Each of Parent and Company shall,
and shall cause their respective Subsidiaries and Affiliates to, use their
reasonable best efforts to take, or cause to be taken, all actions necessary,
proper or advisable to comply promptly with all legal requirements which may be
imposed on such party or any of its Subsidiaries or Affiliates with respect to
the Offer and the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts to as promptly as practicable prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all Governmental Entities and any other third parties
which are necessary or advisable to consummate the transactions contemplated by
this Agreement (including, without limitation, the Offer and the Merger) or to
prevent the termination of Company's and its Subsidiaries' contracts as a result
thereof, to comply fully with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities, to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby, and to defend any litigation seeking to enjoin, prevent or delay the
consummation of the transactions contemplated hereby or seek material damages.
Parent and Company shall have the right to review in advance and, to the extent
practicable, each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to Company or Parent, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any Governmental Entity or any other third party in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all Governmental Entities and other third parties necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated hereby.
(c) Parent and Company shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Offer Documents, the Schedule 14D-9 or the
Proxy Statement or any other statement, filing, notice or application made by or
on behalf of Parent, Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement.
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6.3 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, Company shall, and
shall cause its Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent, reasonable access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
Company shall, and shall cause its Subsidiaries to, provide to Parent and such
representatives (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal securities laws or other federal or state laws (other
than reports or documents which Company is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request, in all cases so that
Parent or its representatives, as the case may be, may have reasonable
opportunity to make such investigations as it desires of the affairs and assets
of Company. Neither Company nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would (i) violate or prejudice the rights of its customers, (ii) interfere
unreasonably with the conduct of the business of the Company and its
Subsidiaries, (iii) jeopardize the attorney-client privilege to the extent
applicable to the Company's or any of its Subsidiary's materials, or (iv)
contravene any law, rule, regulation, order, judgment, decree or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Parent shall hold all information furnished by or on
behalf of Company or any of Company's Subsidiaries or representatives in
confidence, to the extent required by, and in accordance with, the provisions of
the confidentiality agreement, dated October 15, 1999 between Parent and Company
(the "Confidentiality Agreement").
(c) No investigation by Parent or its representatives shall
affect the representations and warranties of Company set forth herein.
6.4 Indemnification; Directors' and Officers' Insurance. (a) For a
period of six (6) years after the Effective Time, the Certificate of
Incorporation and Bylaws of the Surviving Corporation shall contain, to the
extent permitted by law, provisions with respect to indemnification that are no
less favorable to the Indemnified Party (as defined below) then set forth in the
Certificate of Incorporation and Bylaws of Company on the date hereof.
(b) Parent shall, and shall cause the Surviving Corporation
to, indemnify, defend and hold harmless the present and former officers and
directors of Company or any of Company's Subsidiaries in their capacities as
such (each an "Indemnified Party") after the Effective Time against all losses,
expenses, claims, damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time to the fullest extent now provided
in their respective Certificates of Incorporation or Bylaws, and as permitted by
applicable law.
(c) Parent shall cause the persons serving as officers and
directors of Company immediately prior to the Effective Time to be covered for a
period of six years from the Effective Time by the directors' and officers'
liability insurance policy maintained by Company (provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Parent be required to expend more than
150% of the current amount expended by Company (the "Insurance Amount") to
maintain or procure insurance coverage pursuant hereto and further provided,
that if Parent is unable to maintain or obtain the insurance called for by this
Section 6.4(c),
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Parent shall use its reasonable best efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(d) In the event Parent, the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, assume the obligations set forth in this section.
(e) The provisions of this Section 6.4 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
6.5 Employee Benefits. (a)The Company Stock Plans and the 1993
Employee Stock Purchase Plan of the Company (the "Stock Purchase Plan"), and any
other stock or option based compensation plans of the Company, shall be
terminated prior to the Closing Date and any shares of Company Common Stock
purchased thereunder prior to the Closing Date which continue to be held by
participants under such plans at the Effective Time shall be cancelled in
accordance with the procedures set forth in Section 1.8(b) of this Agreement. As
provided in the Stock Purchase Plan, each option outstanding thereunder at the
Effective Time shall be exercisable at the Exercise Date (as defined in the
Stock Purchase Plan) for $6.25 in cash. After the Effective Time, Parent will
take, or will cause the Company to take, all action necessary to carry out the
provisions of Section 16 and 19 of the Stock Purchase Plan. The Company shall
use its reasonable best efforts prior to the Effective Time to obtain the
consent of the holders of all Company Options outstanding under the ITC Plan to
the conversion of such options into the right to receive the Option
Consideration in exchange therefor at the Effective Time. Section 3.2 of the
Company Disclosure Schedule includes a complete and accurate list of such
holders.
(b) At the Effective Time, the Parent will cause the
Surviving Corporation to adopt the stock option plan in substantially the form
attached hereto as Annex IV and reserve for issuance shares equal to 17% of the
issued and outstanding shares of Common Stock of the Surviving Corporation at
the Effective Time, and such plan shall have been approved by Parent as the sole
stockholder of the Surviving Corporation.
6.6 Advice of Changes. Parent and Company shall promptly advise the
other party of any change or event having or reasonably likely to have a Company
Material Adverse Effect or Parent Material Adverse Effect, as the case may be,
on it or which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations or warranties or
covenants contained herein; provided, however, that the delivery of any notice
pursuant to this Section 6.6 shall not limit or otherwise affect the remedies
available hereunder to any party receiving such notice.
6.7 Exclusive Negotiations. Parent and Sub undertake and agree that
they will not, and will not permit any of their officers, directors, employees,
financial or legal advisors, agents or other representatives or those of any of
its Affiliates to, after the date of this Agreement, and until the Effective
Time or such earlier time as this Agreement is terminated pursuant to Article
VIII, directly or indirectly, offer to purchase, solicit proposals to sell,
furnish information or engage in any discussions or negotiations relating to the
acquisition of all or any part of, or any interest in, or any of the assets of
Davox Corporation, E-share Technologies, Inc., X-xxxxx.xxx, Inc., Melita
International Corporation (or affiliates thereof) regardless of the form of the
proposed transaction.
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6.8 No Solicitation. (a) From the date of this Agreement until the
earlier of (x) the Effective Time, or (y) the termination of this Agreement
pursuant to Article VIII hereof, the Company shall not, shall not permit any of
its Subsidiaries to, and shall not authorize or permit any of its or their
respective officers, directors, employees, representatives, agents or
Affiliates, directly or indirectly, to:
(i) solicit, initiate or knowingly encourage or take any action to
facilitate or encourage any inquiries or the making of any proposal that
constitutes, an Acquisition Proposal (as defined below); or
(ii) participate or engage in discussions or negotiations with, or provide
any information to any individual, corporation, partnership, association, trust,
unincorporated organization, limited liability company or other entity or group,
as defined in Section 13(d)(3) of the Exchange Act (each a, "Person") concerning
an Acquisition Proposal or which might reasonably be expected to result in an
Acquisition Proposal.
(b) Acquisition Proposal. For purposes of this Agreement,
the term "Acquisition Proposal" shall mean any inquiry, proposal or offer from
any Person (other than Parent, Sub or any of their Affiliates, including, but
not limited to any subsidiary created in order to consummate the Merger) made or
submitted prior to the termination of this Agreement, relating to any merger,
consolidation, recapitalization, liquidation or other direct or indirect
business combination, involving the Company or any Subsidiary or the issuance or
acquisition of shares of capital stock or other equity securities of the Company
or any Subsidiary representing 40% or more (by voting power) of the outstanding
capital stock of the Company or such Subsidiary (except for the issuance of
shares of Common Stock pursuant to employee stock options granted under any
Company Stock Plan and outstanding on the date of this Agreement) or any tender
or exchange offer that if consummated would result in any Person, together with
all Affiliates thereof, beneficially owning shares of capital stock or other
equity securities of the Company or any Subsidiary representing 40% or more (by
voting power) of the outstanding capital stock of the Company or such
Subsidiary, or the acquisition, license, assignment, purchase or other
disposition of a substantial portion of the technology, business or assets of
the Company or any Subsidiary outside the ordinary course of business or
inconsistent with past practice, or any other transaction of similar
significance, the consummation of which would reasonably be expected to impede
materially, to interfere with, to prevent or to delay materially the
consummation of the Offer, the Merger and such other transactions contemplated
between the parties or which would reasonably be expected to dilute materially
the benefits to Parent or Sub of the transactions contemplated hereby.
(c) Termination of Negotiation with Persons. The Company
shall immediately cease and cause to be terminated and shall cause its
Affiliates and Subsidiaries and its or their respective officers, directors,
employees, representatives or agents, to terminate all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
would reasonably be expected to lead to, an Acquisition Proposal.
(d) Unsolicited Acquisition Proposals. Notwithstanding the
foregoing, the Company may participate in discussions or negotiations with, or
furnish information with respect to the Company pursuant to a confidentiality
agreement substantially similar to the Confidentiality Agreement in effect
between the Company and Parent, to any Person if and only if such Person has
submitted an unsolicited written Acquisition Proposal to the Board of Directors
of the Company and such Board of Directors:
(i) believes in good faith based on such matters as it deems relevant,
including the advice of Company's financial advisor, that such Acquisition
Proposal is a Superior Proposal (as defined below);
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(ii) receives the advice of Hunton & Xxxxxxxx or other outside counsel to the
Company that is reasonably competent to render such advice, to the effect that
taking such action is required to satisfy the fiduciary duties of such Board of
Directors under DGCL; and
(iii) determines in good faith that taking such action is required to satisfy
the fiduciary duties of the Company's Board of Directors under applicable
Delaware Law.
(e) Superior Proposal. For purposes of this Agreement, the
term "Superior Proposal" means any bona fide Acquisition Proposal to effect a
tender offer, merger, consolidation or sale of all or substantially all of the
assets or capital stock of the Company, which is on terms which the Board of
Directors of the Company determines by a majority vote of its directors in its
good faith judgment (based upon the advice of Updata Capital, Inc. or other a
financial advisor reasonably competent to render such advice that the value of
the consideration provided in such Acquisition Proposal exceeds the value of the
consideration provided hereunder, after taking into account all relevant
factors, including, the form of consideration, any conditions to such
Acquisition Proposal, the timing of the closing thereof, the risk of
nonconsummation, the ability of the person making the Acquisition Proposal to
finance the transaction contemplated thereby and any required governmental or
other consents, filings and approvals) to be more favorable to the Company's
stockholders than the transactions contemplated by this Agreement, or any
revised offer submitted by Parent that is itself a Superior Proposal, and for
which financing, to the extent required, is then fully committed to the Person
making such Acquisition Proposal.
(f) Notice to Parent in connection with Acquisition
Proposal. Company shall immediately advise Parent orally and in writing of any
request for information with respect to any Acquisition Proposal, or any inquiry
with respect to or which could result in an Acquisition Proposal, the material
terms and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the person making the same. The Company shall inform Parent on a
prompt and current basis of the status and content of any discussions regarding
any Acquisition Proposal with a third party and as promptly as practicable of
any change in the price, structure or form of the consideration or material
terms of and conditions regarding the Acquisition Proposal.
(g) Board Recommendation. The Board of Directors of the
Company shall be permitted to withdraw, or modify in any manner, whether or not
adverse to Parent, the Company Board Recommendation, but only if (i) the Company
has complied with the terms of this Section 6.8, including, without limitation,
the requirement that it notify Parent promptly after its receipt of any
Acquisition Proposal, (ii) a Superior Proposal has been offered and not
withdrawn at the time the Company's Board of Directors determines to take any
such action, (iii) the Company's Board of Directors determines in good faith by
a majority vote, on the basis of the advice of its outside legal counsel, that
its fiduciary duties under applicable law so require that it must take such
action and (iv) the Company shall have delivered to Parent four business days'
prior written notice advising Parent that it intends to take such action.
6.9 Publicity. Company, on the one hand, and Parent and Sub, on the
other hand, will consult with each other before holding any press conferences,
analyst calls or other meetings or discussions and before issuing any press
releases or other public announcements or statements regarding the transactions
contemplated hereby and by the Support Agreement. The parties will provide each
other the reasonable opportunity to review and comment upon any press release or
other public announcement or statement with respect to the transactions
contemplated by this Agreement and the Support Agreement, including the Offer
and the Merger, and shall not issue any such press release or other public
announcement or statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with Nasdaq, any U.S. national securities exchange or the German Neuer
Market Exchange. The parties agree that the initial press release or releases to
be issued with respect
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to the transactions contemplated by this Agreement shall be mutually agreed upon
prior to the issuance thereof. In addition, Company shall, and shall cause its
Subsidiaries to consult with Parent regarding written communications with
customers, stockholders and employees relating to the transactions contemplated
hereby.
6.10 State Takeover Statutes. Each party will take all steps
necessary to exempt (or continue the exemption of) the Offer, the Merger and the
other transactions contemplated hereby and by the Support Agreement from any
applicable state takeover law (including Section 203 of the DGCL), as now or
hereafter in effect.
6.11 Payment of Bonuses. Company has delivered to Parent a copy of
all Company's bonus plans or programs in effect prior to the date of this
Agreement. Subject to Section 5.2(i) hereof, Parent and Sub agree to cause the
Company to comply with all terms and conditions of the Company's bonus plans or
programs in effect prior to the date of this Agreement and to make all payments
pursuant to such plans or programs for periods prior to the Effective Time.
6.12 HSR Act Filings. (a) Each of Parent and the Company shall, if
applicable, (i) promptly make or cause to be made the filings required of such
party or any of its subsidiaries under the HSR Act with respect to the
transactions contemplated by this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents, or other material received by such party or any of its subsidiaries
from the Federal Trade Commission or the Department of Justice or any other
Governmental Entity in respect of such filings or such transactions, and (iii)
cooperate with the other party in connection with any such filing and in
connection with resolving any investigation or other inquiry of any such agency
or other Governmental Entity under any Antitrust Laws (defined below) with
respect to any such filing or any such transaction. Each party shall promptly
inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings or any such transaction.
(b) Each of Parent and the Company shall use all commercially reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other Federal,
state or foreign statutes, rules, regulations, orders or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, and, if by
mutual agreement, Parent and the Company decide that litigation is in their best
interests, each of Parent and the Company shall cooperate and use all reasonable
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents, or restricts consummation of any such transaction.
Each of Parent and the Company shall use all commercially reasonable efforts to
take such action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Consummation of the Offer. Sub shall have purchased all
shares of Company Common Stock duly tendered pursuant to the Offer.
(b) Company Stockholder Approval. If required under the
DGCL, the Company Stockholder Approval shall have been obtained.
(c) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent jurisdiction
or other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts or
makes illegal consummation of the Merger.
(d) HSR Act. Any applicable waiting period under the HSR Act
shall have expired or been terminated.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
Company of the matters presented in connection with the Merger:
(a) by mutual consent of Parent and Company;
(b) by either Parent or the Board of Directors of Company if
any Governmental Entity which must grant the HSR Approval has denied
approval of the Offer or the Merger and such denial has become final and
nonappealable, or any Governmental Entity of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; provided, however, that
the right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to comply with Section 6.2 or any other
provision of this Agreement has been a primary cause of such action;
(c) (i) by the Board of Directors of Company, if, prior to
the purchase of any shares of Company Common Stock by Sub pursuant to the
Offer, Parent breaches any of its representations, covenants or agreements
contained in this Agreement (A) such that any of the conditions set forth in
Annex I would not be
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satisfied, and (B) such breach either cannot be cured or is not cured prior
to the earlier of (x) ten (10) days after Company has furnished Parent with
written notice of such breach and (y) two (2) business days prior to the
date on which the Offer is then scheduled to expire; or (ii) by Parent, if,
prior to the purchase of any shares of Company Common Stock by Sub pursuant
to the Offer, Company breaches any of its representations, covenants or
agreements contained in this Agreement (A) such that any of the conditions
set forth in Annex I would not be satisfied, and (B) such breach either
cannot be cured or is not cured prior to the earlier of (x) ten (10) days
after Parent has furnished Company with written notice of such breach and
(y) two (2) business days prior to the date on which the Offer is then
scheduled to expire;
(d) by Parent, if, prior to the purchase of any shares of
Company Common Stock by Sub pursuant to the Offer, Company or its Board of
Directors shall have (i) withdrawn, modified, amended or materially
qualified in any respect adverse to Parent the Company Board Recommendation,
(ii) failed to mail the Schedule 14D-9 as required by Section 1.2(b) to its
stockholders, or failed to include in the Schedule 14D-9 the Company Board
Recommendation, (iii) entered into a definitive or binding agreement with
respect to a Superior Proposal, (iv) in response to the commencement of any
tender offer or exchange offer for 40% or more of the outstanding shares of
Company Common Stock, or the public announcement or disclosure of any other
Acquisition Proposal (as defined in Section 6.8 hereof), or the commencement
of negotiations or discussions with any third party regarding an Acquisition
Proposal in accordance with the terms of Section 6.8, failed, fully and
unconditionally, to recommend publicly rejection of such tender or exchange
offer or reject such other Acquisition Proposal (and publicly announce such
rejection, in the case of Acquisition Proposals which have been publicly
disclosed or become publicly known) within five business days of such
commencement, announcement or disclosure, or (v) resolved to do any of the
foregoing; or
(e) by either Parent or the Board of Directors of Company if
(i) the Offer expires or terminates in accordance with the terms hereof
without the purchase of any shares of Company Common Stock thereunder or
(ii) Sub shall not have purchased Shares under the Offer prior to February
28, 2000; provided, however, that the right to terminate this Agreement
under this Section 8.1(e) shall not be available to any party to the extent
that such party's failure to comply with Section 6.2 or any other provision
of this Agreement has resulted in the failure of any of the conditions set
forth on Annex I hereto.
(f) by the Company, if (i) prior to the acceptance for
payment of any shares of Company Common Stock pursuant to the Offer, (ii)
the Company is in compliance with Section 6.8, (iii) the Board of Directors
of the Company shall have withdrawn or modified in a manner adverse to
Parent the Company Board Recommendation, (iv) the Board of Directors of the
Company authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a definitive agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Parent in
writing that it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice, (v) Parent does not make,
within four business days of receipt of the Company's written notification
of its intention to enter into a definitive agreement for a Superior
Proposal, an offer that the Board of Directors of the Company determines, in
good faith after consultation with its financial advisors, is at least as
favorable, from a financial point of view, to the stockholders of the
Company as the Superior Proposal and (vi) the Company agrees to pay the fees
required to be paid pursuant to Section 8.2(b) hereof. The Company agrees
(x) that it will not enter into a binding agreement referred to in clause
(iv) above until at least the fifth business day after it has provided the
notice to Parent required hereby and (y) to notify Parent promptly if its
intention to enter into the written agreement referred to in its
notification shall change at any time after giving such notification.
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8.2 Effect of Termination. (a) In the event of termination of this
Agreement by either Parent or Company as provided in Section 8.1, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become void and have no effect, and none of Parent, Company, any
of their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i) Section
6.3(b), this Section 8.2 and Article IX shall survive any termination of this
Agreement, (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Company shall be relieved or released from any
liabilities or damages arising out of its intentional breach of any provision of
this Agreement, and (iii) Company shall pay to Parent the Termination Fee (as
defined below), if applicable, in accordance with this Section 8.2.
(b) In the event that this Agreement is terminated (other than
pursuant to Section 8.1(a), 8.1(b), or 8.1(c)(i), subsequent to the receipt of a
Superior Proposal, and Company within nine (9) months of the date hereof enters
a definitive agreement with respect to, or consummates, such Superior Proposal,
Company shall pay to Parent by wire transfer of immediately available funds to
an account designated by Parent within five days subsequent to the execution of
a definitive agreement with respect to such Superior Proposal an amount equal to
$3 million (the "Termination Fee").
(c) If Company wrongfully fails to pay Parent any amounts due to
Parent under this Section 8.2 within the time periods specified herein, Company
shall pay all reasonable costs and expenses (including reasonable legal fees and
expenses) incurred by Parent in connection with any action or proceeding
(including the filing of any lawsuit) taken by Parent to collect such unpaid
amounts, together with interest on such unpaid amounts at the publicly announced
prime lending rate as published in the Wall Street Journal from the date such
amounts were required to be paid until the date actually received by Parent.
8.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the stockholders of Company, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which changes the amount or the form of the consideration to be delivered to the
holders of Company Common Stock hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (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; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the stockholders of Company, there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which reduces the amount or changes the form of the consideration to be
delivered to the holders of Company Common Stock hereunder other than as
contemplated by this Agreement. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement (other than pursuant
to the Support Agreement, which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
9.2 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense; provided, however, that the costs and expenses of
printing and mailing the Offer Documents, the Schedule 14D-9 and the Proxy
Statement, and all filing and other fees paid to the SEC in connection with the
Offer and the Merger, shall be borne equally by Parent and Company.
9.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, to:
Xxxx X. Xxxxxxxxx
SER Systeme AG
Innovationspark Rahms
D-53577 Neustadt/Xxxx
Germany
Fax number: 000 00 0000 000000
Xxxxxx Xxxxxx
SER Systeme AG
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax number: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxx, III
Xxxxxxx, Xxxxxxx and Xxxxxx, LLP
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, XX 00000
Fax number: 000 000 0000
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(b) if to Company, to:
Xxxxx XxXxxxx
EIS International, Inc.,
000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Fax number: 000 000 0000
with a copy to:
Xxxxxxx X. Xxxxx
Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax number: 000 000 0000
9.4 Interpretation. When a reference is made in this Agreement to
Sections or Schedules, such reference shall be to a Section of or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." No provision of this
Agreement shall be construed to require Company, Parent or any of their
respective Subsidiaries or affiliates to take any action which would violate any
applicable law, rule or regulation. The recitals set forth in this Agreement are
incorporated into this Agreement by reference and made a part hereof.
9.5 Counterparts. This Agreement may be executed in counterparts,
each of which, when so executed and delivered, shall constitute an original, and
all of which counterparts, taken together, shall constitute one and the same
instrument, with the same effect as if all signatures were on the same
instrument.
9.6 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof other than the Support
Agreement, the Confidentiality Agreement dated October 15, 1999, and Article 2
of the Non-Solicitation and Standstill Agreement dated November 17, 1999 between
Parent and Company.
9.7 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed and construed in accordance with the laws of the Commonwealth of
Virginia. Each party to this Agreement: (a) agrees that any legal action or
proceeding under this Agreement shall be brought in the United States District
Court for the Eastern District of Virginia sitting in Alexandria, Virginia; or
if such court does not have jurisdiction over a particular matter, in the
appropriate state court of the Commonwealth of Virginia; (b) irrevocably submits
to the jurisdiction of such courts; (c) agrees not to assert any claim or
defense that it is not personally subject to the jurisdiction of such courts,
that any such forums are not convenient or the venues thereof are improper, or
that this Agreement or the subject matter hereof may not be enforced in such
courts; and (d) agrees to accept service of process on it by certified or
registered mail or by any other method authorized by law.
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9.8 Severability. If any term or provision of this Agreement, or the
application thereof to any person(s) or in any circumstance(s) is found by a
court of competent jurisdiction to be invalid, illegal or unenforceable, for any
reason, in any jurisdiction, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby and thereby is not
affected in any manner materially adverse to any party to this Agreement. Upon
such a determination that any term(s) or other provision(s) is or are invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify such Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. In the event that such modification is not
possible or is not achieved for any reason, then the term(s) or provision(s)
found invalid, illegal or incapable of being enforced such term(s) or
provision(s) shall be deemed to be deleted or excluded from the affected
Agreement as if never included therein to the extent that such deemed deletion
or exclusion does not affect the economic or legal substance of the transactions
contemplated in a manner materially adverse to any party to this Agreement.
9.9 Assignment; Third Party Beneficiaries. Subject to Section 1.13,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Except as otherwise specifically provided in Section 6.5, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
9.10 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, this being in addition to any other
remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, Sub and Company have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
SER SYSTEME AG
By: /s/ XXXX X. XXXXXXXXX
--------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer
SERSYS ACQUISITION CORPORATION
By: /s/ XX. XXXXXX X. XXXXXX
--------------------------
Name: Xx. Xxxxxx X. Xxxxxx
Title: President
EIS INTERNATIONAL, INC.
By: /s/ XXXXX X. XxXXXXX
--------------------------
Name: Xxxxx X. XxXxxxx
Title: President and Chief Executive
Officer
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ANNEX I
CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, and in addition to
the conditions that at the expiration of the Offer (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Company Common Stock which, together with any other shares
beneficially owned by Parent or its wholly-owned Subsidiaries, constitute more
than 50% of the voting power (determined on a fully-diluted basis) on the date
of purchase of all the securities of Company entitled to vote generally in the
election of directors or in a merger (the "Minimum Condition"), (ii) the
applicable waiting period under the HSR Act (the "HSR Approval") shall have
expired or been terminated (the expiration of such waiting period being referred
to as the "HSR Approval Condition"), and (iii) any other approvals or consents
of third parties required to consummate the transactions contemplated by the
Merger Agreement (including the Offer and the Merger), shall have been obtained
and shall remain in full force and effect, Sub shall not be required to accept
for payment, or subject to applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Sub's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), purchase or pay for any shares tendered pursuant to the Offer, may
postpone the acceptance for payment of shares tendered, and subject to the terms
and conditions of the Merger Agreement may terminate the Offer, if at any time
on or after the date of the Merger Agreement and at or before the time of
payment for any such shares any of the following conditions shall have occurred
and shall have not been cured:
(a) (x) the representations and warranties of Company set forth in
the Merger Agreement, shall not have been true and correct in all respects
as of the date of the Merger Agreement, or shall not be true and correct in
all respects as of the expiration of the Offer as though made at and as of
the expiration of the Offer (except to the extent that such representations
and warranties speak as of another date which shall be required to be true
and correct as of such date) except where the failure to be true and correct
would not, individually or in the aggregate, have a Company Material Adverse
Effect (ignoring for purposes of this section all materiality or Material
Adverse Effect qualifiers contained in such representations and warranties)
or prevent the consummation of the Offer, or (y) Company shall have breached
in any material respect any of its material covenants or obligations
contained in the Merger Agreement;
(b) there shall have been any action or proceeding taken or
instituted and pending, or any statute, rule, regulation, judgment, order,
injunction or decree promulgated, entered, enforced, enacted, issued or
deemed applicable to the Offer or the Merger, or any other action taken,
proposed or threatened, by any domestic or foreign federal or state
governmental, regulatory or administrative agency or authority or court or
legislative body or commission which has or would reasonably be expected to
have the effect of (i) making the purchase of, or payment for, some or all
of the shares of Company Common Stock by Parent or Sub or their Affiliates
pursuant to the Offer or the Merger illegal, (ii) otherwise directly or
indirectly preventing the making or consummation of the Offer, or the
consummation of the Merger, (iii) prohibiting the ownership or operation by
Parent or any of its Subsidiaries of all or any material portion of the
business or assets of Company and its Subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, (iv) imposing material
limitations on the ability of Parent, Sub or any of Parent's Affiliates
effectively to acquire or hold or to exercise full rights of ownership of
the shares of Company Common Stock, including, without limitation, the right
to vote any such shares acquired or owned by Parent or Sub or any of their
Affiliates on all matters properly presented to the stockholders of Company,
including, without limitation, the adoption of the Merger Agreement or the
right to vote any shares of capital stock of any Company Subsidiary, (v)
requiring divestiture by Parent or
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Sub or any of their Affiliates of any shares of Company Common Stock or (vi)
materially adversely affecting the business, financial condition, prospects
or results of operations of the Company and its Subsidiaries taken as a
whole; or
(c) there shall have occurred after the execution of this Agreement
(i) any general suspension in, or limitation on, or material adverse decline
in prices for securities on the New York Stock Exchange or Nasdaq, (ii) any
material adverse change or any condition, event or development involving a
prospective material adverse change in United States or German currency
exchange rates or a suspension of, or limitation on the markets therefor,
resulting in an increase of 20% or more in the cost to Parent of the Merger
Consideration (iii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (iv) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States that would prevent (or
delay) the consummation of the Offer, or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, material
acceleration or worsening thereof;
(d) there shall have occurred any change in the business, properties
assets, liabilities, capitalization, stockholders equity, financial
condition, operations, results of operations or prospects of Company or any
of its Subsidiaries, that (i) was not disclosed in the Company Disclosure
Schedule or in the Management's Discussion and Analysis of Financial
Condition and Results of Operations, Company, Business or Financial
Statements Sections of the Company Reports filed prior to the date hereof
(other than information contained under any "Risk Factor," "Cautionary
Statements" or "Factors Affecting Future Results" heading contained therein)
and (ii) that would reasonably be expected to have a Company Material
Adverse Effect or materially adversely affect (or delay) the consummation of
the Offer;
(e) (A) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Sub the Company Board Recommendation, or approved or recommended any
Acquisition Proposal or other acquisition of Company Common Stock other than
the Offer and the Merger, (B) any such corporation, partnership, other
entity or person shall have entered into a definitive agreement or any
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Company Common Stock or a merger, consolidation or
other business combination with or involving the Company or any of its
Subsidiaries or (C) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing; or
(f) the Company's Board of Directors shall have failed to take all
action necessary to render the rights issued pursuant to the Rights
Agreement inapplicable to this Agreement, the Offer, the Merger and the
transactions contemplated thereby; or
(g) this Agreement shall have been terminated by Company, Parent or
Sub in accordance with its terms.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and its Affiliates and may be asserted by Parent or its
Affiliates regardless of the circumstances giving rise to such condition. The
foregoing conditions (other than the Minimum Condition) may be waived by Parent
in whole or in part at any time and from time to time in its sole discretion.
The failure by Parent at any time to exercise any of its rights in connection
with the foregoing conditions shall not be deemed a waiver of any such right,
the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
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circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
3
