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AGREEMENT AND PLAN OF MERGER
by and among
THE SAGE GROUP PLC
BOBCAT ACQUISITION CORP.
and
BEST SOFTWARE, INC.
dated
January 12, 2000
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TABLE OF CONTENTS
ARTICLE I
THE OFFER AND MERGER.................................................................................
SECTION 1.1 THE OFFER..............................................................................3
SECTION 1.2 COMPANY ACTIONS........................................................................6
SECTION 1.3 DIRECTORS..............................................................................8
SECTION 1.4 THE MERGER............................................................................10
SECTION 1.5 EFFECTIVE TIME........................................................................10
SECTION 1.6 CLOSING...............................................................................11
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION...................................11
SECTION 1.8 EFFECTS OF THE MERGER.................................................................11
SECTION 1.9 SUBSEQUENT ACTIONS....................................................................11
SECTION 1.10 SHAREHOLDERS' MEETING................................................................12
SECTION 1.11 MERGER WITHOUT MEETING OF SHAREHOLDERS...............................................13
SECTION 1.12 EARLIEST CONSUMMATION................................................................13
ARTICLE II
CONVERSION OF SECURITIES.............................................................................
SECTION 2.1 CONVERSION OF CAPITAL STOCK...........................................................13
SECTION 2.1A DISSENTING SHARES.....................................................................14
SECTION 2.2 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.............................................15
SECTION 2.3 COMPANY STOCK PLANS....................................................................17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................
SECTION 3.1 ORGANIZATION..........................................................................20
SECTION 3.2 CAPITALIZATION........................................................................21
SECTION 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION..................................23
SECTION 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS.................................................24
SECTION 3.5 SEC REPORTS AND FINANCIAL STATEMENTS..................................................25
SECTION 3.6 ABSENCE OF CERTAIN CHANGES............................................................26
SECTION 3.7 NO UNDISCLOSED LIABILITIES............................................................26
SECTION 3.8 LITIGATION............................................................................26
SECTION 3.9 EMPLOYEE BENEFIT PLANS; ERISA.........................................................27
SECTION 3.10 TAXES................................................................................30
SECTION 3.11 CONTRACTS............................................................................31
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SECTION 3.12 REAL PROPERTY........................................................................32
SECTION 3.13 INTELLECTUAL PROPERTY................................................................32
SECTION 3.14 LABOR MATTERS........................................................................33
SECTION 3.15 COMPLIANCE WITH LAWS.................................................................33
SECTION 3.16 ENVIRONMENTAL MATTERS................................................................34
SECTION 3.17 PRODUCT WARRANTIES...................................................................34
SECTION 3.18 INFORMATION IN PROXY STATEMENT.......................................................35
SECTION 3.19 POTENTIAL CONFLICT OF INTEREST.......................................................35
SECTION 3.20 OPINION OF FINANCIAL ADVISOR.........................................................36
SECTION 3.21 INSURANCE............................................................................36
SECTION 3.22 STATE TAKEOVER STATUTES; REQUIRED VOTE...............................................36
SECTION 3.23 BROKERS..............................................................................37
SECTION 3.24 FULL DISCLOSURE......................................................................37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
SECTION 4.1 ORGANIZATION..........................................................................37
SECTION 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION................................38
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.................................................38
SECTION 4.4 INFORMATION IN PROXY STATEMENT........................................................39
SECTION 4.5 INTERIM OPERATIONS OF THE PURCHASER...................................................39
SECTION 4.6 BROKERS...............................................................................39
SECTION 4.7 FINANCING. ...........................................................................40
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER...............................................................
SECTION 5.1 ACQUISITION PROPOSALS.................................................................40
SECTION 5.2 INTERIM OPERATIONS OF THE COMPANY.....................................................41
SECTION 5.3 NO SOLICITATION.......................................................................44
ARTICLE VI
ADDITIONAL AGREEMENTS................................................................................
SECTION 6.1 ADDITIONAL AGREEMENTS.................................................................46
SECTION 6.2 NOTIFICATION OF CERTAIN MATTERS.......................................................47
SECTION 6.3 ACCESS; CONFIDENTIALITY...............................................................47
SECTION 6.4 CONSENTS AND APPROVALS................................................................48
SECTION 6.5 PUBLICITY.............................................................................48
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SECTION 6.6 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION................................49
SECTION 6.7 PURCHASER COMPLIANCE..................................................................50
SECTION 6.8 BEST REASONABLE EFFORTS...............................................................50
SECTION 6.9 STATE TAKEOVER LAWS...................................................................51
SECTION 6.10 FINANCING RELATED EFFORTS.............................................................51
ARTICLE VII
CONDITIONS...........................................................................................
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER...........................51
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND THE PURCHASER TO EFFECT THE MERGER............52
ARTICLE VIII.........................................................................................
TERMINATION..........................................................................................
SECTION 8.1 TERMINATION...........................................................................52
SECTION 8.2 EFFECT OF TERMINATION.................................................................54
SECTION 8.3 INDEMNITY.............................................................................55
ARTICLE IX
MISCELLANEOUS........................................................................................
SECTION 9.1 AMENDMENT AND MODIFICATION............................................................57
SECTION 9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................................57
SECTION 9.3 EXPENSES..............................................................................57
SECTION 9.4 NOTICES...............................................................................58
SECTION 9.5 INTERPRETATION........................................................................59
SECTION 9.6 COUNTERPARTS..........................................................................60
SECTION 9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES........................................60
SECTION 9.8 SEVERABILITY..........................................................................60
SECTION 9.9 GOVERNING LAW.........................................................................61
SECTION 9.10 ASSIGNMENT............................................................................61
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Index of Defined Terms
Defined Term Section No.
------------ -----------
Acquisition Proposal.............................................................................5.1
Acquisition Proposal Interest....................................................................5.1
Agreement...................................................................................Recitals
Appointment Date.................................................................................5.2
Articles of Incorporation........................................................................1.4
Assignee........................................................................................9.10
Assumed Options...........................................................................2.3(a)(ii)
Audit........................................................................................3.10(b)
Average Premium...............................................................................6.6(b)
Benefit Plans.................................................................................3.9(a)
By-laws..........................................................................................1.4
Cash-Out Options...........................................................................2.3(a)(i)
Certificates..................................................................................2.2(b)
Closing..........................................................................................1.6
Closing Date.....................................................................................1.6
Code..........................................................................................3.9(b)
Common Stock..................................................................................3.2(a)
Commonly Controlled Entity....................................................................3.9(b)
Company.....................................................................................Recitals
Company Agreements...............................................................................3.4
Company Board of Directors..................................................................Recitals
Company Disclosure Schedule..............................................................Article III
Company Material Adverse Change ..............................................................3.1(a)
Company Material Adverse Effect...............................................................3.1(a)
Company SEC Documents............................................................................3.5
Confidentiality Agreement.....................................................................5.3(b)
Contest.......................................................................................8.3(b)
December 1999 Financial Statements...............................................................3.5
Dissenting Shares...............................................................................2.1A
D&O Insurance.................................................................................6.6(b)
Effective Time...................................................................................1.5
Encumbrances..................................................................................3.2(b)
Environmental Claims............................................................................3.16
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Environmental Laws..............................................................................3.16
ERISA.........................................................................................3.9(b)
Exchange Act..................................................................................1.1(a)
Exchange Ratio...........................................................................2.3(a)(iii)
Financing .......................................................................................4.7
Financing Document ..............................................................................4.7
Financial Statements.............................................................................3.5
GAAP.............................................................................................3.5
Governmental Entity..............................................................................3.4
HSR Act..........................................................................................3.4
Indemnified Party.............................................................................6.6(a)
Independent Directors.........................................................................1.3(c)
Initial Expiration Date.......................................................................1.1(a)
Intellectual Property Rights....................................................................3.13
London Stock Exchange ...........................................................................6.7
Materials of Environmental Concern..............................................................3.16
Merger...........................................................................................1.4
Merger Consideration..........................................................................2.1(c)
Minimum Condition............................................................................Annex I
Offer.......................................................................................Recitals
Offer Documents...............................................................................1.1(b)
Offer Price.................................................................................Recitals
Offer to Purchase.............................................................................1.1(a)
Option Agreement............................................................................Recitals
Option.....................................................................................2.3(a)(i)
Owned Intellectual Property..................................................................3.13(a)
Parachute Gross-Up Payment....................................................................3.9(g)
Parent......................................................................................Recitals
Parent Common Share......................................................................2.3(a)(iii)
Paying Agent..................................................................................2.2(a)
Pension Plans.................................................................................3.9(b)
Permitted Investments.........................................................................2.2(a)
Person...........................................................................................9.5
Plan of Merger...................................................................................1.4
Possible Withholding Taxes....................................................................8.3(a)
Preferred Stock...............................................................................3.2(a)
Proxy Statement..........................................................................1.10(a)(ii)
Purchaser...................................................................................Recitals
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Purchaser Common Stock...........................................................................2.1
Real Property...................................................................................3.12
Reg M-A Amendments............................................................................9.5(b)
Schedule 14D-l................................................................................1.1(b)
Schedule 14D-9................................................................................1.2(b)
SEC...........................................................................................1.1(b)
Securities Act...................................................................................3.5
Shares......................................................................................Recitals
Special Meeting...........................................................................1.10(a)(i)
Stock Plans................................................................................2.3(a)(i)
Shareholder.................................................................................Recitals
Shareholders Agreement......................................................................Recitals
Stock Purchase Plan...........................................................................2.3(f)
Subsidiary....................................................................................3.1(a)
Subsequent Offering Period....................................................................1.1(a)
Substitute Financing..........................................................................1.1(a)
Superior Proposal.............................................................................5.3(b)
Surviving Corporation............................................................................1.4
Tax Authority................................................................................3.10(b)
Tax Returns..................................................................................3.10(b)
Taxes........................................................................................3.10(b)
Termination Fee...............................................................................8.2(b)
Transactions..................................................................................1.2(a)
Transmittal Documents.........................................................................2.2(b)
Voting Debt...................................................................................3.2(a)
VSCA........................................................................................Recitals
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated January 12, 2000, by and among The Sage Group plc, a company
organized under the laws of England ("Parent"), Bobcat Acquisition Corp., a
Virginia corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
and Best Software, Inc., a Virginia corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective shareholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser
make a cash tender offer (the "Offer") to acquire all shares (the "Shares") of
the issued and outstanding common stock, no par value, of the Company, for
$35.00 per share, net to the seller in cash (such price, or any such higher
price per Share as may be paid to any holder of Shares in the Offer, being
referred to herein as the "Offer Price");
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company has approved the Merger
(as defined below) following the Offer in accordance with the Virginia Stock
Corporation Act (the "VSCA") and upon the terms and subject to the conditions
set forth herein, whereby each issued and outstanding Share not owned directly
or indirectly by Parent, the Purchaser or the Company will be converted into the
right to receive an amount equal to the Offer Price in cash;
WHEREAS, the Board of Directors of the Company (the "Company
Board of Directors") has determined that the consideration to be paid for each
Share in the Offer and the Merger is fair to the holders of such Shares and has
resolved to recommend that the holders of such Shares accept the Offer and
approve this Agreement and each of the transactions contemplated hereby upon the
terms and subject to the conditions set forth herein;
WHEREAS, as a condition and further inducement to Parent and
the Purchaser to enter into this Agreement and incurring the obligations set
forth herein, certain shareholders of the Company (each a "Shareholder")
concurrently herewith
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are entering into a Shareholders Agreement (the "Shareholders Agreement"), dated
as of the date hereof, with Parent and the Purchaser, in the form attached
hereto as Exhibit A, pursuant to which each Shareholder has agreed, among other
things, to tender the Shares held by each in the Offer and to grant Parent a
proxy with respect to the voting of such Shares in favor of the Merger upon the
terms and subject to the conditions set forth therein;
WHEREAS, as a condition and further inducement to Parent and
the Purchaser to enter into this Agreement and incurring the obligations set
forth herein, concurrently with the execution and delivery of this Agreement,
the Purchaser and the Company are entering into a Stock Option Agreement in the
form of Exhibit B hereto (the "Option Agreement"), pursuant to which, among
other things, the Company has granted Parent an option to purchase certain
newly-issued shares of Common Stock (as hereinafter defined), subject to certain
conditions;
WHEREAS, the Board of Directors of the Company has approved
the acquisition of Shares pursuant to the Offer, the Option Agreement, the
Shareholders Agreement and the Merger for the purposes of Article 14 and Article
14.1 of the VSCA such that the provisions of Article 14 and Article 14.1 of the
VSCA will not apply to any such agreement or Transaction (as hereinafter
defined), such approval occurring prior to the time Parent or the Purchaser
became an "interested shareholder", as that term is defined in Section 13.1-725
of the VSCA; and
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and Merger and also to prescribe to certain various conditions to the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
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ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex I shall have occurred and be existing, as promptly as practicable
(but in no event later than five business days after the public announcement of
the execution of this Agreement), the Purchaser shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) the Offer at the Offer Price. The obligations of the Purchaser
to accept for payment and to pay for any Shares validly tendered on or prior to
the expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex I hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") subject to the conditions set forth
in Annex I hereto. The Purchaser shall not, without the prior written consent of
the Company, (i) decrease the Offer Price or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought to be purchased
in the Offer, (iii) impose conditions to the Offer in addition to those set
forth in Annex I, (iv) amend any condition of the Offer set forth in Annex I,
(v) extend the initial expiration date (the "Initial Expiration Date") of the
Offer, except as required by law and except (A) that the Purchaser may extend
the expiration date of the Offer for up to ten (10) business days after the
Initial Expiration Date if as of the Initial Expiration Date there shall not
have been tendered at least ninety percent (90%) of the outstanding Shares so
that the Merger can be effected without a meeting of the Company's shareholders
in accordance with VSCA, (B) that in the event that any condition to the Offer
is not satisfied on a date on which the Offer is scheduled to expire, the
Purchaser may, from time to time, in its sole discretion, extend the expiration
date of the Offer up to a maximum of one hundred twenty (120) calendar days
following the Initial Expiration Date, (C) in the event that any condition to
the Offer is not satisfied on a date on which the Offer is scheduled to expire,
at the written request of the Company delivered no later than two business days
prior to the Initial Expiration Date, the Purchaser shall, and shall continue
to, extend the Offer from time to time for the period commencing on the date of
the notice referred to above until a date not later than ninety (90) calendar
days following the Initial Expiration Date (it being understood that the
Purchaser may determine the interim expiration dates of any extension of the
Offer during such
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extension period) provided, however, that in the event that the Purchaser
extends the expiration date of the Offer in accordance with such request and the
Financing (as defined below) shall no longer be reasonably available to Parent:
(I) Annex I shall be deemed to be amended to provide an additional condition
that the Purchaser shall not be required to accept for payment or pay for any
tendered Shares unless and until Parent and the Purchaser shall have obtained
sufficient financing (the "Substitute Financing") in replacement, if necessary,
of the Financing in order to permit Parent and the Purchaser to acquire all of
the Shares in the Offer and the Merger and to pay the anticipated expenses in
connection therewith, (II) the condition set forth in paragraph (i) of Annex I
shall be amended and replaced with the condition set forth in clause (I) above,
(III) from and after such time Parent shall not be subject to Section 6.10 and
(IV) Parent shall use all commercially reasonable efforts to secure the
Substitute Financing prior to June 12, 2000 and to provide funds to the
Purchaser to permit it to perform its obligations hereunder and in the Offer
(provided that Parent shall not be required to obtain Substitute Financing on
economic terms materially less favorable to it than the Financing), (D) that the
Purchaser may extend the expiration date of the Offer for up to ten (10)
business days in order to amend the Schedule 14D-1 to permit the announcement of
a Subsequent Offering Period (as hereinafter defined) to the Offer, and (E) that
the Purchaser may include a subsequent offering period (as such term is defined
in new Rule 14D-1 promulgated under the Exchange Act, effective on January 24,
2000, the "Subsequent Offering Period") to the Offer for a period up to twenty
(20) business days or (vi) amend any other term of the Offer in any manner
adverse to any holders of the Shares. The Purchaser shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment and pay for Shares tendered as soon as it is legally
permitted to do so under applicable law. Parent shall provide or cause to be
provided to the Purchaser on a timely basis the funds necessary to accept for
payment, and pay for, any Shares that the Purchaser becomes obligated to accept
for payment, and pay for, pursuant to the Offer. The Initial Expiration Date
shall be no later than midnight on the twenty-fifth business day after the Offer
is commenced.
(b) Concurrently with the commencement of the Offer, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-l"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "Offer
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Documents"). Parent and the Purchaser agree that the Offer Documents will comply
in all material respects with the provisions of the Exchange Act, the rules and
regulations thereunder and other applicable federal securities laws and, on the
date filed with the SEC and on the date first published or sent to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information furnished by the Company expressly
for inclusion in the Offer Documents. The information supplied by the Company
expressly in writing for inclusion in the Offer Documents and by Parent or the
Purchaser expressly in writing for inclusion in the Schedule 14D-9 (as
hereinafter defined) will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. No representation, warranty or covenant is
made or shall be made herein by the Company with respect to information
contained in the Offer Documents other than information supplied by the Company
in writing expressly for inclusion in the Offer Documents.
(c) Each of Parent and the Purchaser will take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Schedule 14D-1 or the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect, and the Purchaser further will take all
steps necessary to cause the Schedule 14D-1 or the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the reasonable
opportunity to review and comment on the Schedule 14D-1 (as well as all
amendments or supplements thereto) before any such document is filed with the
SEC. In addition, Parent and the Purchaser will provide the Company and its
counsel with any comments or other communications, whether written or oral,
Parent, the Purchaser or their counsel may receive from time to time from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments or other communications.
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Section 1.2 Company Actions.
(a) The Company represents that the Company Board of
Directors, at a meeting duly called and held has (i) determined that each of the
Agreement, the Offer, the Merger, the Option Agreement and the Shareholders
Agreement are fair to and in the best interests of the shareholders of the
Company, (ii) duly approved this Agreement, the Option Agreement, the
Shareholders Agreement and the transactions contemplated hereby and thereby,
including the Offer and the Merger (collectively, the "Transactions"), and such
approval constitutes approval of this Agreement, the Option Agreement, the
Shareholders Agreement and the Transactions, for purposes of Sections 13.1-727
and Sections 13.1-728.1 et. seq. of the VSCA, (iii) amended the Company's
By-laws to provide that Article 14.1 of the VSCA does not apply to the Company,
and (iv) resolved to recommend that the shareholders of the Company accept the
Offer and tender their shares thereunder to the Purchaser and approve and adopt
this Agreement and the Merger (provided, however, that subject to and in
accordance with the provisions of Section 5.3, such recommendation may be
withdrawn, modified or amended in connection with a Superior Proposal (as
defined in Section 5.3)).
(b) As soon as practicable on or after the date the Offer is
commenced, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments or supplements thereto
and including the exhibits thereto, the "Schedule 14D-9") which shall, subject
to the provisions of Section 5.3(c) contain the recommendation referred to in
clause (iv) of Section 1.2(a) hereof. The Schedule 14D-9 will comply in all
material respects with the provisions of the Exchange Act, the rules and
regulations thereunder, and other applicable federal securities laws and, on the
date filed with the SEC and on the date first published or sent to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information furnished by Parent or the Purchaser
expressly in writing for inclusion in the Schedule 14D-9. No representation,
warranty or covenant is made or shall be made herein by Parent or the Purchaser
with respect to information contained in the Schedule 14D-9 other than the
information supplied by Parent or the Purchaser in writing expressly for
inclusion in the Schedule 14D-9. The Company further agrees to take all steps
necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders
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of the Shares, in each case, as and to the extent required by the Exchange Act,
the rules and regulations thereunder and other applicable federal securities
laws. The Company shall mail, or cause to be mailed, such Schedule 14D-9 to the
shareholders of the Company at the same time the Offer Documents are first
mailed to the shareholders of the Company together with such Offer Documents.
Each of the Company, on the one hand, and Parent and the Purchaser, on the other
hand, agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case, as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given the reasonable opportunity to review and comment on the Schedule
14D-9 (as well as all amendments or supplements thereto) before it is filed with
the SEC. In addition, the Company agrees to provide Parent, the Purchaser and
their counsel with any comments, whether written or oral, that the Company or
its counsel may receive from time to time from the SEC or its staff with respect
to the Schedule 14D-9 promptly after the receipt of such comments or other
communications.
(c) In connection with the Offer, the Company will, or will
cause its transfer agent following a request by the Purchaser to, promptly
furnish to the Purchaser mailing labels, security position listings and any
available listing or computer file containing the names and addresses of all
record holders of Shares, each as of a recent date, and shall promptly furnish
the Purchaser with such additional information (including, but not limited to,
updated mailing labels, security position listings and available listings or
computer files containing the names and addresses of all recordholders of
Shares, or any of such other information and assistance) as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other document necessary to consummate the Merger, Parent, the Purchaser
and their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will
deliver, and will use their reasonable efforts to cause their agents to deliver,
to the Company all copies and any extracts or summaries from such information
then in their possession or control.
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Section 1.3 Directors.
(a) Subject to compliance with applicable law, promptly upon
the purchase of and payment for any Shares by the Purchaser pursuant to the
Offer, and from time to time thereafter as Shares are acquired by the Purchaser,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Company Board of Directors as is equal to the
product of the total number of directors on such Board (determined after giving
effect to the directors designated by Parent pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares which the
Purchaser or any affiliate of the Purchaser owns beneficially (excluding any
unexercised portion of the options granted under the Option Agreement or the
Shareholders Agreement) bears to the total number of Shares then outstanding,
provided, however, that in the event the Purchaser accepts Shares for payment
and the Minimum Condition is not satisfied, Parent shall not be entitled to
designate more than two (2) directors. In furtherance thereof, subject to Parent
having theretofore provided the Company with the information with respect to
Parent's designees required pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder, the Company shall, upon the request of Parent, promptly
secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be elected to the Company Board of
Directors and shall take all actions available to the Company to cause Parent's
designees to be so elected. In furtherance of the foregoing, in the event the
Company is unable to secure a sufficient number of resignations of its incumbent
directors in accordance with the immediately preceding sentence, the Company
shall use its best efforts promptly to increase the size of the Company Board of
Directors as is necessary to enable the number of Parent's designees computed in
accordance with the first sentence of this Section 1.3(a) (after taking into
account the increase in the size of the Company Board of Directors) to be so
elected to the Company Board of Directors and shall take all actions available
to the Company to cause Parent's designees to be so elected. At such time, the
Company shall, if requested by Parent, also cause persons designated by Parent
to constitute at least the same percentage (rounded up to the next whole number)
as is on the Company Board of Directors of (i) each committee of the Company
Board of Directors, (ii) each board of directors (or similar body) of each
Subsidiary (as hereinafter defined) of the Company and (iii) each committee (or
similar body) of each such board.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-l promulgated
thereun-
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der in order to fulfill its obligations under Section 1.3(a) hereof, and
shall include in the Schedule 14D-9 mailed to shareholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under Section 1.3(a). Parent or the Purchaser shall supply to
the Company in writing and solely be responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1. The provisions of this Section
1.3 are in addition to and shall not limit any rights which the Parent, the
Purchaser or any of their affiliates may have as a holder or beneficial owner of
Shares as a matter of law with respect to the election of directors or
otherwise.
(c) In the event that Parent's designees are elected to the
Company Board of Directors, subject to the other terms of this Agreement and
until the Effective Time, the Company Board of Directors shall have at least two
(2) directors who are directors on the date hereof and neither of whom is an
officer of the Company nor a designee, shareholder, affiliate or associate
(within the meaning of the federal securities laws) of Parent (one or more of
such directors, the "Independent Directors"), provided that, in such event, if
the number of Independent Directors shall be reduced below two (2) for any
reason whatsoever, to the extent permitted by the VSCA, any remaining
Independent Director shall be entitled to designate persons to fill such
vacancies who shall be deemed Independent Directors for purposes of this
Agreement or, if no Independent Director then remains, the other directors shall
designate one person to fill one of the vacancies who shall not be a
shareholder, affiliate or associate of Parent or the Purchaser and such person
shall be deemed to be an Independent Director for purposes of this Agreement,
and the Purchaser shall use its reasonable best efforts to cause its designees
to designate such person. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company Board
of Directors, after the acceptance for payment of Shares pursuant to the Offer
and prior to the Effective Time (as hereinafter defined), the affirmative vote
of a majority of the Independent Directors shall be required to (a) amend or
terminate this Agreement on behalf of the Company, (b) exercise or waive any of
the Company's rights, benefits or remedies hereunder, (c) extend the time for
performance of the Purchaser's obligations hereunder or (d) take any other
action by the Company Board of Directors under or in connection with this
Agreement; provided, however, that if there shall be no such
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directors, such actions may be effected by unanimous vote of the entire Company
Board of Directors.
Section 1.4 The Merger. Upon the terms and subject to
satisfaction or waiver of the conditions of this Agreement, and in accordance
with the applicable provisions of this Agreement and the VSCA and the Plan of
Merger attached hereto as Exhibit I (the "Plan of Merger"), at the Effective
Time, the Company and the Purchaser shall consummate a merger (the "Merger")
pursuant to which (a) the Purchaser shall be merged with and into the Company
and the separate corporate existence of the Purchaser shall thereupon cease, (b)
the Company shall be the successor or the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the Commonwealth of Virginia and (c) the
separate corporate existence of the Company with all of its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Section 1.4. Pursuant to the Merger, (x) the
Articles of Incorporation of the Company (the "Articles of Incorporation"),
shall be amended in its entirety to read as the Articles of Incorporation of the
Purchaser in effect immediately prior to the Effective Time, except that Article
I thereof shall read as follows: "The name of the Corporation is BEST SOFTWARE,
INC." and, as so amended, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation and (y) the By-laws of the Purchaser (the "By-laws"),
as in effect immediately prior to the Effective Time (as hereinafter defined),
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, by such Articles of Incorporation or by such By-laws.
Section 1.5 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII hereof,
Parent, the Purchaser and the Company shall cause to be executed and filed on
the Closing Date (as hereinafter defined) (or on such other date as Parent and
the Company may agree) with the State Corporation Commission of the Commonwealth
of Virginia in the manner required by the VSCA Articles of Merger with respect
to the Merger and the Purchaser, and the parties shall take such other and
further actions as may be required by law to make the Merger effective. The
Merger shall become effective upon the issuance of a certificate of merger by
the State Corporation Commission of the Commonwealth of Virginia or as provided
in the Articles of Merger (the "Effective Time").
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Section 1.6 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VII hereof (the "Closing Date"), at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 0000 Xxx Xxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving
Corporation. Subject to applicable law, the directors of the Purchaser and the
officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers of the Surviving Corporation until
their successors shall have been duly elected or appointed or qualified or until
their earlier death, resignation or removal in accordance with the Articles of
Incorporation and the By-laws. If, at the Effective Time, a vacancy shall exist
on the Company Board of Directors or in any office of the Surviving Corporation,
such vacancy may thereafter be filled in the manner provided by law.
Section 1.8 Effects of the Merger. At the Effective Time, the
Merger shall have the effects set forth in Section 13.1-721 of the VSCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of the Company
and the Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and the Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.9 Subsequent Actions. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or the Purchaser acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or the Purchaser, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
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any and all rights, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.10 Shareholders' Meeting.
(a) If required by the Articles of Incorporation and/or
applicable law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable law and its
Articles of Incorporation and By-laws, and following (i) acceptance for payment
of Shares by the Purchaser pursuant to the Offer or (ii) the expiration of the
Offer without the Purchaser purchasing any Shares thereunder, in the case of
either clause (i) or (ii), without the termination of this Agreement by Parent
or the Company in accordance with Section 8.1:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders (the "Special Meeting") as promptly
as practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the
adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and use its commercially reasonable efforts (x) to obtain and
furnish the information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation with Parent,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto
(the "Proxy Statement") to be mailed to its shareholders, provided that
no amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel and (y) to
obtain the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) subject to Section 5.3(c) hereof, include in
the Proxy Statement the recommendation of the Company Board of
Directors that shareholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement.
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(b) Parent promptly will provide the Company with the
information concerning Parent and the Purchaser required to be included in the
Proxy Statement. Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.11 Merger Without Meeting of Shareholders.
Notwithstanding Section 1.10 hereof, in the event that Parent, the Purchaser and
any other Subsidiaries of Parent shall have acquired in the aggregate at least
ninety percent (90%) of the outstanding Shares pursuant to the Offer or
otherwise (including as a result of the exercise of the Option Agreement), the
parties hereto shall take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the acceptance for
payment of and payment for Shares by the Purchaser pursuant to the Offer,
without a meeting of shareholders of the Company, in accordance with Section
13.1-719 of the VSCA.
Section 1.12 Earliest Consummation. Each party hereto shall
use its commercially reasonable efforts to consummate the Merger as soon as
practicable. If the conditions set forth in Annex I hereto are satisfied, or
waived, the Purchaser shall consummate the Offer and accept for payment Shares
validly tendered and not withdrawn therein and thereafter effectuate the Merger
as soon as practicable after the Purchaser accepts the Shares for payment
pursuant to the Offer.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or holders of common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) Each issued and outstanding share of Purchaser Common
Stock shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
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(b) All Shares owned by Parent, the Purchaser or any other
wholly owned Subsidiary of Parent shall be cancelled and retired, and shall
cease to exist and no consideration shall be delivered in exchange therefor and
Dissenting Shares (as defined below), if any, shall be treated in accordance
with Article 15 of the VSCA.
(c) Each issued and outstanding Share immediately before the
Effective Time (other than any Shares to be cancelled pursuant to Section 2.1(b)
and any Dissenting Shares (as defined below)) shall be cancelled and
extinguished and be converted into the right to receive the Offer Price in cash,
payable to the holder thereof, without interest (the "Merger Consideration"),
upon surrender of the certificate formerly representing such Share in the manner
provided in Section 2.2 hereof. All such Shares, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 2.2, without interest.
Section 2.1A Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time of the Merger and that are held by a
shareholder (other than Parent or Purchaser and their subsidiaries, which waive
the right to dissent) who has the right (to the extent such right is available
by law) to demand and receive payment of the fair value of his Shares of Company
Common Stock pursuant to Section 13.1-730 of the VSCA (the "Dissenting Shares")
shall not be converted into or be exchangeable for the right to receive the
consideration provided in Section 2.1 of this Agreement, unless and until such
holder shall fail to perfect his or her right to dissent or shall have
effectively withdrawn or lost such right under the VSCA, as the case may be. If
such holder shall have so failed to perfect his right to dissent or shall have
effectively withdrawn or lost such right, each of his Shares of Company Common
Stock shall thereupon be deemed to have been converted into, at the Effective
Time of the Merger, the right to receive the Offer Price as provided in Section
2.1 of the Agreement.
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Section 2.2 Surrender of Shares; Stock Transfer Books.
(a) Before the Effective Time, the Purchaser shall designate a
bank or trust company reasonably acceptable to the Company to act as agent for
the holders of Shares in connection with the Merger (the "Paying Agent") to
receive the funds necessary to make the payments contemplated by Section 2.1(c).
At the Effective Time, the Purchaser shall deposit, or cause to be deposited,
immediately available funds in trust with the Paying Agent for the benefit of
holders of Shares the aggregate consideration to which such holders shall be
entitled at the Effective Time. Such funds shall be invested as directed by
Parent or the Surviving Corporation pending payment thereof by the Paying Agent
to holders of the Shares in obligations of or guaranteed by the United States of
America, in commercial paper obligations receiving the highest investment grade
rating from both Xxxxx'x Investors Services, Inc. and Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
banker's acceptances of commercial banks with capital exceeding $100,000,000
(collectively, "Permitted Investments"); provided, however, that the maturities
of Permitted Investments shall be such as to permit the Paying Agent to make
prompt payment to former holders of Shares who have validly tendered their
Shares pursuant to the Offer. Earnings from Permitted Investments shall be the
sole and exclusive property of the Purchaser and the Surviving Corporation and
no part thereof shall accrue to the benefit of the holders of the Shares. Such
funds held by the Paying Agent shall not be used for any purpose except as
expressly provided in this Agreement.
(b) As soon as reasonably practicable after the Effective Time
(and in any event within five (5) business days), the Paying Agent shall mail to
each holder of record of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding Shares (the "Certificates"), whose
Shares were converted pursuant to Section 2.1 into the right to receive the
Merger Consideration, (i) a letter of transmittal (which shall specify that
delivery shall be effected and that the risk of loss of and title to the
Certificates shall pass only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions not inconsistent
with this Agreement as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of Certificates in exchange for
payment of the Merger Consideration (together, the "Transmittal Documents").
Upon surrender of a Certificate for cancellation to the Paying Agent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
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for each Share formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall otherwise be in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
Upon the surrender of Certificates in accordance with the terms and instructions
contained in the Transmittal Documents, the Purchaser shall cause the Paying
Agent to pay the holder of such Certificates in exchange therefor cash in an
amount equal to the Merger Consideration multiplied by the number of Shares
represented by such Certificate (other than Certificates representing Shares
held by the Purchaser or in the treasury of the Company). In the event that any
Certificate shall have been lost, stolen or destroyed, the Paying Agent shall
issue in exchange therefor upon the making of an affidavit of that fact by the
holder thereof the Merger Consideration for the Shares represented by such
Certificate; provided, however, that Parent or the Paying Agent may, in their
discretion, require delivery of a reasonable and customary bond or indemnity by
the holder of such Shares.
(c) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration of
transfers of shares of any shares of capital stock thereafter on the records of
the Company. From and after the Effective Time, the holders of certificates
evidencing ownership of the Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for cash as provided in this Article II. No
interest shall accrue or be paid on any cash payable upon the surrender of a
Certificate or Certificates which immediately before the Effective Time
represented outstanding Shares.
(d) Promptly following the date which is one year after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying
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Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) The Merger Consideration paid in the Merger shall be net
to the holder of Shares in cash, subject to reduction only for any applicable
federal withholding taxes or, as set forth in Section 2.2(b), stock transfer
taxes payable by such holder.
Section 2.3 Company Stock Plans.
(a) For purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "Cash-Out Options" shall mean each option
outstanding at the Effective Time to purchase Shares (an "Option") granted under
the Company's 1988 Nonqualified Stock Option Plan, 1992 Nonqualified Stock
Option Plan, the 1997 Stock Incentive Plan or the 1997 Director Stock Option
Plan or any other stock-based incentive plan or arrangement of the Company
(excluding any options granted under the Company's Employee Stock Purchase Plan)
(the "Stock Plans") that is not an Assumed Option (as defined below).
(ii) "Assumed Options" shall mean those Options or
portions thereof as identified on Section 2.3 of the Company Disclosure Schedule
granted under the 1992 Nonqualified Stock Option Plan and the 1997 Stock
Incentive Plan that will not have vested and become exercisable as of the
Effective Time as identified on Section 2.3(a) of the Company Disclosure
Schedule. To the extent any Options or portions thereof, as identified on
Section 2.3 of the Company Disclosure Schedule, cannot be assumed by Parent,
such Options or portions thereof shall be
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treated as Cash-Out Options and shall be cancelled as of the Effective Time in
consideration for a cash payment in accordance with Section 2.3(b).
(iii) "Exchange Ratio" shall mean the quotient of (x)
the Offer Price multiplied by the average of the mid-point of the bid and ask
price of the rate of currency exchange of pounds sterling for U.S. dollars
quoted in The Financial Times for each of the business days in a consecutive
twenty (20) business day period ending two (2) business days prior to the
Effective Date and (y) the average per Share closing price of the ordinary
shares of 1 xxxxx each in the capital of Parent (a "Parent Common Share") as
reported on the London Stock Exchange on each of the ten (10) trading days
immediately preceding the Effective Time.
(b) The Company shall take all actions necessary to provide
that at the Effective Time, (i) each Cash-Out Option shall be cancelled and (ii)
in consideration of such cancellation, each holder of a Cash-Out Option shall
receive in consideration thereof an amount (subject to any applicable
withholding tax) in cash equal to the product of (x) the excess, if any, of the
Offer Price over the per Share exercise price of such Cash-Out Option and (y)
the number of Shares subject to such Cash-Out Option. The Company shall use all
commercially reasonable efforts to effectuate the foregoing, including, without
limitation, providing that any unexercised Cash-Out Options will become
exercisable in full as of a specified time prior to the Effective Time and will
terminate immediately prior to the Effective Time, amending the Stock Plans and
obtaining any necessary consents from holders of Cash-Out Options.
(c) At the Effective Time, each Assumed Option shall be
assumed by Parent (and Parent shall take all action necessary under applicable
law, to cause such result or equivalent result without disadvantage to the
Option holders) and shall thereupon constitute an option to acquire that number
of Parent Common Shares equal to (i) the number of Shares subject to the Assumed
Option immediately prior to the Effective Time, multiplied by (ii) the Exchange
Ratio, rounded down to the nearest whole share, at a price per Parent Common
Share equal to (x) the exercise price of the Assumed Option immediately prior to
the Effective Time divided by (y) the Exchange Ratio, rounded up to the nearest
whole cent. Other than as described in the immediately preceding sentence, the
Assumed Options shall be subject to the same terms and conditions as applicable
immediately prior to the Effective Time; provided, however, that Parent shall
take all actions necessary for the terms of the Stock Plans to be amended as
necessary to comply with all applicable securities laws
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and laws of the jurisdiction of the Parent (but without disadvantage to the
option holder). As soon as reasonably practicable following the Effective Time,
Parent shall deliver to each holder of an Assumed Option an appropriate notice
setting forth the terms of such assumption. With respect to any Assumed Option
that is an incentive stock option (within the meaning of Section 422 of the
Code) immediately prior to the Effective Time, such assumption shall, to the
extent reasonably practicable, conform to the requirements of Section 424(a) of
the Code. Parent shall take all action necessary for the Parent Common Shares to
rank pari passu in all respects with all other Parent Common Shares then in
issue and to be listed and issuable upon exercise of the Assumed Options so that
the Parent Common Shares underlying such Assumed Options shall be freely
tradeable on the London Stock Exchange. Notwithstanding the foregoing provisions
of this Section 2.3(c), to the extent any Option or portion thereof is not
assumed pursuant to this Section 2.3(c), such Options or portion thereof shall
be treated as a Cash-Out Option.
(d) Except as may be otherwise agreed to by Parent or the
Purchaser and the Company or as otherwise contemplated or required to effectuate
this Section 2.3, the Stock Plans shall terminate as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time.
(e) The Company shall take all necessary actions to provide
that as of the Effective Time no holder of Options under the Stock Plans will
have any right to receive shares of common stock of the Surviving Corporation
upon exercise of any such Option.
(f) The Company shall take all actions necessary to provide
that at or immediately prior to the Effective Time, (i) each then outstanding
Option under the Company's Employee Stock Purchase Plan (the "Stock Purchase
Plan") shall automatically be exercised and (ii) in lieu of the issuance of
Certificates, each option holder shall receive an amount in cash (subject to any
applicable withholding tax) equal to the product of (x) the number of Shares
otherwise issuable upon such exercise and (y) the Merger Consideration. The
Company shall use all reasonable efforts to effectuate the foregoing, including
without limitation amending the Stock Purchase Plan and obtaining any necessary
consents from holders of Options. The Company (i) shall not permit the
commencement of any new offering period under the Stock Purchase Plan following
the date hereof, (ii) shall not permit any optionee
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to increase his or her rate of contributions under the Stock Purchase Plan
following the date hereof, (iii) shall terminate the Stock Purchase Plan as of
the Effective Time, and (iv) shall take any other actions necessary to provide
that as of the Effective Time no holder of options under the Stock Purchase Plan
will have any right to receive shares of common stock of the Surviving
Corporation upon exercise of any such option.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the schedule of exceptions to the
Company's representations and warranties set forth herein, delivered to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
the Company represents and warrants to Parent and the Purchaser as set forth
below. Each exception set forth in the Company Disclosure Schedule is identified
by reference to, or has been grouped under a heading referring to, a specific
individual section of this Agreement.
Section 3.1 Organization.
(a) Each of the Company and its Subsidiaries (as defined
below) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as is now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority and governmental
approvals would not, individually or in the aggregate, have a Company Material
Adverse Effect (as hereinafter defined). As used in this Agreement, the term
"Subsidiary" shall mean, with respect to any party, any corporation, limited
liability company or other organization, whether incorporated or unincorporated
or domestic or foreign to the United States of which (i) such party or any other
Subsidiary of such party is a general partner (excluding such partnerships where
such party or any Subsidiary of such party does not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a
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majority of the board of directors or others performing similar functions with
respect to such corporation, limited liability company 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. As
used in this Agreement, "Company Material Adverse Change" or "Company Material
Adverse Effect" means any change or effect that is materially adverse to the
business, operations, properties (including intangible properties), financial
condition, results of operations, assets or liabilities of the Company or its
Subsidiaries, taken as a whole, other than (i) changes or effects which are or
result from occurrences relating to the economy in general or such entity's
industry in general and not specifically relating to such entity, (ii) set forth
or described in the Company SEC Reports filed prior to the date hereof, (iii)
changes or effects which result from the loss of customers or delay or
cancellation or cessation of orders for the Company's products directly
attributable to the announcement of this Agreement or stockholder litigation
brought or threatened against the Company or any member of its Board of
Directors in respect to this Agreement, the Offer or the Merger, (iv) the
financial condition and results of operations of the Company set forth on
Section 3.1(a) of the Company Disclosure Schedule or (v) solely as a result of
the decline in the market price of the Shares. The Company Disclosure Schedule
sets forth in Section 3.1(a) a complete list of the Company's Subsidiaries.
(b) Except as set forth in Section 3.1(b) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate reasonably be expected to have a Company
Material Adverse Effect. Except as set forth in Section 3.1(b) of the Company
Disclosure Schedule, other than its Subsidiaries, the Company does not own any
significant equity interest in any corporation or other entity.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 40,000,000 shares of common stock, no par value per share (the "Common
Stock") and (ii) 1,000,000 shares of preferred stock (the "Preferred Stock"). As
of the date hereof, (i) 11,826,614 Shares are issued and outstanding, (ii) no
shares of Preferred
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Stock are issued and outstanding, (iii) no Shares are issued and held in the
treasury of the Company and (iv) a total of 1,633,578 Shares are reserved for
issuance pursuant to the Stock Plans. All the outstanding shares of the
Company's capital stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Options will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and non-assessable.
There are no bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such rights) ("Voting
Debt") of the Company or any of its Subsidiaries issued and outstanding. Except
as disclosed in this Section 3.2 or as set forth in Section 3.2(a) of the
Company Disclosure Schedule or other than pursuant to the Option Agreement, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (ii) there are no existing options, warrants, calls, pre-emptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) there are no outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company or any Subsidiary or affiliate of the Company or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity.
(b) Except as set forth in Section 3.2(b) of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each of
the Subsidiaries are beneficially owned by the Company, directly or indirectly,
and all such shares have been validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its Subsidiaries
free and clear of all liens, charges, security interests, options, claims,
mortgages, pledges or other encumbrances and restrictions of any nature
whatsoever ("Encumbrances").
(c) Except as set forth in Section 3.2(c) of the Company
Disclosure Schedule and as provided in the Shareholders Agreement, there are no
voting trusts or other agreements or understandings to which the Company or any
of its
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Subsidiaries is a party with respect to the voting of the capital stock of the
Company or any of its Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company
Action.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement (including the Plan of Merger), the Option
Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement (including the Plan of Merger) and
the Option Agreement, and the consummation by it of the Transactions, have been
duly and validly authorized by the Company Board of Directors and no other
corporate action on the part of the Company is necessary (other than, with
respect to the Merger, the approval and adoption of the Merger, this Agreement
and the Plan of Merger by holders of a majority of the Shares) to authorize the
execution and delivery by the Company of this Agreement and the Option
Agreement, and the consummation by it of the Transactions. Each of this
Agreement and the Option Agreement has been duly executed and delivered by the
Company and, assuming due and valid authorization, execution and delivery hereof
by Parent and the Purchaser, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
(b) The Company Board of Directors has duly and validly
approved this Agreement, the Plan of Merger, the Option Agreement, the
Shareholders Agreement and the Transactions, including the Offer, the Merger,
and the acquisition of Shares pursuant to the Offer, the Option Agreement, the
Shareholders Agreement and the Merger for the purposes of Article 14 and Article
14.1 of the VSCA such that the provisions of Article 14 and Article 14.1 of the
VSCA will not apply to any of the Transactions, including the Offer and the
Merger, such approval occurring prior to the time Parent or the Purchaser became
an "interested shareholder," as that term is defined in Section 13.1-725 of the
VSCA. This Agreement, the Plan of Merger, the Option Agreement, the Shareholders
Agreement and the Transactions have been duly and validly approved by at least a
majority of the
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"disinterested directors" of the Company, as that term is defined in Section
13.1-725 of the VSCA.
Section 3.4 Consents and Approvals; No Violations. Except as
set forth in Section 3.4 of the Company Disclosure Schedule, none of the
execution, delivery or performance of this Agreement (including the Plan of
Merger) by the Company, the consummation by the Company of the Transactions or
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the Articles of Incorporation,
the By-laws or similar organizational documents of the Company or any of its
Subsidiaries, state securities laws or blue sky laws and the VSCA, (ii) require
any filing by the Company with, or permit, authorization, consent or approval
of, any court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, foreign or domestic (a
"Governmental Entity") (except for (A) compliance with any applicable
requirements of the Exchange Act, (B) the filing of articles of merger in
connection with the Merger pursuant to the VSCA and appropriate documents with
the relevant authorities of other states in which the Company is qualified to
do business, (C) filings, permits, authorizations, consents and approvals as
may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and comparable merger and notifications, laws or
regulations of foreign jurisdictions, (D) the filing with the SEC and the
Nasdaq Stock Market, Inc. of (1) the Schedule 14D-9, (2) a proxy statement
relating to shareholder approval, if such approval is required by law and (3)
such reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement or (E) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound which provides for the payment to or from the Company in excess of
$250,000 annually or $1,000,000 in the aggregate (the "Company Agreements") or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their properties
or assets, except in the case of clause (ii), (iii) or (iv) where failure to
obtain such permits, authorizations, consents or approvals or to make such
filings, or where such violations, breaches or
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defaults which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.5 SEC Reports and Financial Statements. The
Company has filed with the SEC all forms, reports, schedules, statements and
other documents required to be filed by it since December 31, 1997 under the
Exchange Act or the Securities Act of 1933, as amended (the "Securities Act")
(as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"). As of their respective dates, or if
amended, as of the date of the last such amendment, the Company SEC Documents
(a) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements included in the Company SEC
Documents and the unaudited consolidated statement of operations for the 3
months ended and for the year ended and condensed consolidated balance sheet at
December 31, 1999 (the "December 1999 Financial Statements") (other than for the
absence of footnotes, in the case of the December 1999 Financial Statements and
interim financial statements) set forth in Section 3.5 of the Company Disclosure
Schedule (collectively, the "Financial Statements") (i) have been prepared from
and are in accordance with, the books and records of the Company and its
consolidated Subsidiaries, (ii) comply in all material respects with applicable
accounting requirements and, as to the Company SEC Documents, with the published
rules and regulations of the SEC with respect thereto, (iii) have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto and except, in the case of the unaudited
interim statements, as may be permitted under Form 10-Q of the Exchange Act) and
(iv) fairly present in all material respects the consolidated financial position
and the consolidated results of operations and cash flows (subject, in the case
of unaudited interim financial statements, to normal year-end adjustments) of
the Company and its consolidated Subsidiaries as of the times and for the
periods referred to therein. The audited consolidated financial statements of
the Company for the year ended December 31, 1999 will not be inconsistent with
the December 1999 Financial Statements in any respect which is materially
adverse.
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Section 3.6 Absence of Certain Changes. Except as
contemplated by this Agreement and except as set forth in Section 3.6 of the
Company Disclosure Schedule or in the Company SEC Documents filed prior to the
date hereof, since September 30, 1999, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary and usual course.
From September 30, 1999 through the date of this Agreement, there has not
occurred (i) any event, change or effect (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Company Material Adverse Effect,
(ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the equity
interests of the Company or any of its Subsidiaries or (iii) any change in
accounting principles or methods, except insofar as may be required by a change
in GAAP. Since September 30, 1999, neither the Company nor any of its
Subsidiaries has taken any of the actions prohibited by Section 5.2 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as
recognized or disclosed in the Financial Statements or the Company SEC Documents
and (b) for liabilities and obligations (i) incurred in the ordinary course of
business since September 30, 1999, (ii) pursuant to the terms of this Agreement,
(iii) as disclosed in Section 3.7 of the Company Disclosure Schedule, (iv) as
disclosed in Section 3.8 of the Company Disclosure Schedule or (v) as would not
reasonably be expected to have a Company Material Adverse Effect, neither the
Company nor any of its Subsidiaries has incurred any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise required by GAAP
to be recognized or disclosed on a consolidated balance sheet of the Company and
its Subsidiaries or in the notes thereto. Section 3.7 of the Company Disclosure
Schedule sets forth the amount of principal and unpaid interest outstanding
under each instrument evidencing any material amount of indebtedness for
borrowed money of the Company and its Subsidiaries which will accelerate or
become due or result in a right of redemption or repurchase on the part of the
holder of such indebtedness (with or without due notice or lapse of time) as a
result of this Agreement, the Merger or the other transactions contemplated
hereby or thereby.
Section 3.8 Litigation. Except as set forth in Section 3.8
of the Company Disclosure Schedule or in the Company SEC Documents, as of the
date hereof, there is no suit, claim, action, proceeding, including, without
limitation, arbitration proceeding or alternative dispute resolution proceeding,
or investigation pending or, to the knowledge of the Company, threatened against
or affecting, the
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Company or any of its Subsidiaries before any Governmental Entity as to which
there is a reasonable possibility of an adverse determination and that, either
individually or in the aggregate, if adversely determined, would reasonably be
expected to have a Company Material Adverse Effect.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Company SEC Documents, since
the audited financial statements for the year ended December 31, 1998 until the
date hereof, there has not been any adoption or amendment (or an agreement to
adopt or amend) in any material respect by the Company or any of its
subsidiaries of any employment or consulting agreement, collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, stock appreciation right or other stock-based incentive, retirement,
vacation, severance, change in control or termination pay, disability, death
benefit, hospitalization, medical or other insurance or any other plan, program,
agreement, arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee, officer or director of the
Company or any Subsidiary (collectively, the "Benefit Plans"). Except as
disclosed in the Company SEC Documents, or in Section 3.9(a) of the Company
Disclosure Schedule, there exist, as of the date hereof, no employment,
consulting, severance, termination or indemnification agreements, arrangements
or understandings between the Company or any of its Subsidiaries, and any
current or former employee, consultant, officer or director of the Company.
(b) Section 3.9(b) of the Company Disclosure Schedule contains
a list and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other
Benefit Plans sponsored, maintained, contributed to or required to be
contributed to, by the Company or any of its Subsidiaries or any person or
entity that, together with the Company and its Subsidiaries, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended (the "Code") (the Company and each such other person or
entity, a "Commonly Controlled Entity") for the benefit of any current or former
employees, officers or directors of the Company or any of its Subsidiaries. The
Company has made available to Parent true, complete and correct copies of (1)
each Benefit Plan (or, in the case of any unwritten Benefit
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Plans, descriptions thereof), (2) the most recent annual report on Form 5500
filed with the Internal Revenue Service with respect to each Benefit Plan (if
any such report was required), (3) the most recent summary plan description for
each Benefit Plan for which such summary plan description is required (together
with all Summaries of Material Modification issued with respect thereto), (4)
each trust agreement and group annuity contract relating to any Benefit Plan and
(5) all material contracts and employee communications relating to each Benefit
Plan. Each Benefit Plan has been administered materially in accordance with its
terms. The Company, each of its Subsidiaries and all the Benefit Plans are all
in material compliance with applicable provisions of ERISA, the Code and other
applicable laws.
(c) All Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such Pension Plans
are qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, a true, complete and correct copy of each
such determination letter has been made available to Parent, and no such
determination letter has been revoked nor has any event occurred since the date
of the most recent determination letter or application therefor for each Pension
Plan that would adversely affect its qualification or materially increase its
costs.
(d) Neither the Company, nor any of its Subsidiaries, nor any
Commonly Controlled Entity has at any time maintained, contributed or been
obligated to contribute to any Benefit Plan that is subject to Title IV of
ERISA, including, without limitation, any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA).
(e) Except as set forth in Section 3.9(e) of the Company
Disclosure Schedule, no employee of the Company or any of its Subsidiaries will
be entitled to any additional compensation or benefits or any acceleration of
the time of payment or vesting or any other enhancement of any compensation or
benefits under any Benefit Plan as a result of the transactions contemplated by
this Agreement or the Option Agreement.
(f) Except as set forth in Section 3.9(f) of the Company
Disclosure Schedule, the deduction of any amount payable pursuant to the terms
of the Benefit Plans will not be subject to disallowance under Section 162(m) of
the Code.
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(g) Except as set forth in Section 3.9(g) of the Company
Disclosure Schedule, no amount that could be received (whether in cash or
property or the vesting of property) by any employee, consultant, officer or
director of the Company or any of its Subsidiaries under any employment,
consulting, severance or termination agreement, other compensation arrangement
or other Benefit Plan currently in effect would be an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code). No such person is
entitled to receive any additional payment from the Company or any of its
Subsidiaries, the Surviving Corporation or any other person (a "Parachute
Gross-Up Payment") in the event that the excise tax of Section 4999(a) of the
Code is imposed on such person. The Company Board of Directors has not granted
to any officer, director, consultant or employee of the Company any right to
receive any Parachute Gross-Up Payment.
(h) No Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of the Company, its subsidiaries or any Commonly
Controlled Entity after retirement or other termination of service, other than
(i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any Pension Plan, (iii) deferred compensation benefits accrued as
liabilities on the books of the Company, the Subsidiary or any Commonly
Controlled Entity, (iv) benefits, the full cost of which is borne by the current
or former employee, officer or director (or his beneficiary), (v) life insurance
benefits for which the employee dies while in service with the Company or (vi)
any employee stock options that may be exercised after termination of
employment.
(i) There are no pending or, to the Company's knowledge,
threatened or anticipated claims by or on behalf of any Benefit Plan, by any
employee or beneficiary under any Benefit Plan or otherwise involving any
Benefit Plan (other than routine claims for benefits).
(j) Neither the Company, any Subsidiary, any Commonly
Controlled Entity, any of the Benefit Plans, any trust created thereunder nor
any trustee or administrator thereof has engaged in a transaction or has taken
or failed to take any action in connection with which any such person or entity
or any party dealing with the Benefit Plans or any such trust could be subject
to either a civil penalty assessed pursuant to section 409 or 502(i) or ERISA or
a tax imposed pursuant to section 4975, 4976, or 4980B of the Code.
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Section 3.10 Taxes.
(a) Except as set forth in Section 3.10 of the Company
Disclosure Schedule:
(i) the Company and its Subsidiaries (x) have duly
filed (or there have been filed on their behalf) with the appropriate
Tax Authorities (as hereinafter defined) all material Tax Returns (as
hereinafter defined) required to be filed by them, and to the knowledge
and belief of the Company, such Tax Returns are true, correct and
complete in all material respects and (y) have duly paid in full (or
there has been paid on their behalf), or have established reserves (in
accordance with GAAP) as reflected on the Financial Statements, all
material Taxes (as hereinafter defined) that are due and payable;
(ii) there are no material liens for Taxes upon any
property or assets of the Company or any Subsidiary thereof, except for
liens for Taxes not yet due or for which adequate reserves have been
established in accordance with GAAP;
(iii) as of the date hereof, no material Federal,
state, local or foreign Audits are pending (A) with regard to any
material Taxes or material Tax Returns of the Company or its
Subsidiaries and (B) for which the Company or any of its Subsidiaries
has received written notice. To the best knowledge of the Company and
its Subsidiaries no such Audit is threatened;
(iv) the United States Federal income Tax Returns of
the Company and its Subsidiaries have been examined by the applicable
Tax Authorities for all periods through and including December 31,
1998, and as of the date hereof no material adjustments have been
asserted as a result of such examinations which have not been (x)
resolved and fully paid or (y) reserved on the Financial Statements in
accordance with GAAP;
(v) neither the Company nor any of its Subsidiaries
has given or been requested to give any waiver of statutes of
limitations relating to the payment of Taxes or has executed powers of
attorney with respect to Tax matters, which waivers or powers of
attorney are outstanding;
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(vi) neither the Company nor any of its Subsidiaries
is a party to any agreement providing for the allocation,
indemnification or sharing of Taxes with any Person other than the
Company and its Subsidiaries, and the Company has provided Parent with
copies of any such agreement that the Company or any Subsidiary has
entered into with any other Subsidiary; and
(vii) neither the Company nor any of its Subsidiaries
has been a member of any "affiliated group" (as defined in section
1504(a) of the Code) other than the affiliated group of which Company
is the "parent" and, except with respect to any group of which only the
Company and/or its Subsidiaries are members, is not subject to Treas.
Reg. 1.1502-6 (or any similar provision under foreign, state or local
law) for any period.
(b) "Audit" means any audit, assessment or other examination
relating to Taxes by any Tax Authority or any judicial or administrative
proceedings relating to Taxes. "Tax" or "Taxes" means all Federal, state, local
and foreign taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax, or
penalties applicable thereto, imposed by any Tax Authority. "Tax Authority"
means the Internal Revenue Service and any other domestic or foreign
governmental authority responsible for the administration of any Taxes. "Tax
Returns" mean all Federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms, and information returns and any
amendments thereto.
Section 3.11 Contracts. Each Company Agreement is valid,
binding and enforceable and in full force and effect, except where failure to be
valid, binding and enforceable and in full force and effect would not REASONABLY
BE EXPECTED TO have a Company Material Adverse Effect, and there are no defaults
thereunder, except those defaults that would not reasonably be expected to have
a Company Material Adverse Effect. Section 3.11 of the Company Disclosure
Schedule sets forth a true and complete list of (i) all material Company
Agreements (defined as any agreement required to be filed as an Exhibit to an
Annual Report on form 10-K of the Company pursuant to Item 601(b)(10) of
Regulation S-K of the Securities Act) entered into by the Company or any of its
Subsidiaries since December 31, 1998 and all amendments to any Company
Agreements included as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 and (ii) all non-competition
agreements imposing restrictions on the ability of the
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Company or any of its Subsidiaries to conduct business in any jurisdiction or
territory.
Section 3.12 Real Property. Neither the Company nor any of
its Subsidiaries owns any real property. Section 3.12 of the Company Disclosure
Schedule sets forth a complete list of all real property leased by the Company
or its Subsidiaries (the "Real Property"). Except as disclosed in Section 3.12
of the Company Disclosure Schedule, the Company is not a party to any lease,
assignment or similar arrangement under which the Company is a lessor, assignor
or otherwise makes available for use by any third party any portion of the Real
Property.
Section 3.13 Intellectual Property. Other than as would not
have a Company Material Adverse Effect, the Company and its Subsidiaries own
free and clear of all liens and encumbrances, or are validly licensed or
otherwise have the right to use, all trademarks, trade secrets, trademark
rights, trade names, trade name rights, service marks, service marks rights, and
copyrights, and to the Company's knowledge, all patents and patent applications,
and other proprietary intellectual property rights which are used in the conduct
of the business of the Company and its Subsidiaries either individually or taken
as a whole (collectively, "Intellectual Property Rights"). Except as would not
have a Company Material Adverse Effect, to the knowledge of the Company, all
patents, copyrights, and trademarks, and all registrations and applications
relating thereto (i) have been duly maintained (including the proper, sufficient
and timely submission of all necessary filings and fees), (ii) have not lapsed,
expired or been abandoned, and (iii) are not the subject of any opposition,
interference, cancellation or other proceeding before any governmental
registration or other authority in any jurisdiction. Except as would not have
Company Material Adverse Effect, (x) the Company will continue to own or be
licensed to the Intellectual Property Rights after consummation of the Offer and
the Merger (consistent with their ownership and license rights prior to said
consummation) and (y) the consummation of the Offer and Merger will not result
in the material breach of any license, sublicense or other agreement relating to
the Intellectual Property Rights. Except as would not have a Company Material
Adverse Effect, to the knowledge of the Company, no claim, suit, action or
proceeding involving any infringement of, or conflict with, any intellectual
property rights of any third party has been made or asserted against the Company
or any of its Subsidiaries in respect of the operation of the Company's or any
Subsidiary's business, nor is there any basis for such. Except as would not have
a Company Material Adverse Effect, to the knowledge of the Company, no person is
infringing, or taking any action in conflict with, the rights of the Company or
any Subsidiary with respect to any Intellectual
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Property Right. Except as would not have a Company Material Adverse Effect, to
the knowledge of the Company, neither the Company nor any Subsidiary has
licensed, or otherwise granted, to any third party, any rights in or to any
material Intellectual Property Rights other than in the ordinary course of the
Company's business of licensing applications software to resellers and
end-users. Except where such disclosure would not have a Company Material
Adverse Effect, no trade secret, know-how or other confidential information
relating to the Company or its Subsidiaries has been disclosed or authorized to
be disclosed to any third party, other than pursuant to a standard
non-disclosure agreement.
Section 3.14 Labor Matters. The Company and each of its
Subsidiaries has good labor relations and there are no controversies pending, or
to the knowledge of the Company, threatened between the Company and any of its
Subsidiaries and any of their respective employees, which failure to have good
labor relations or controversies would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. There are
no collective bargaining or other labor union agreements to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound. Since December 31, 1997, neither the Company nor any of
its Subsidiaries has encountered any labor union organizing activity, nor had
any actual or, to the knowledge of the Company, threatened employee strikes,
work stoppages, slowdowns or lockouts.
Section 3.15 Compliance with Laws. The Company and its
Subsidiaries have complied in a timely manner and in all material respects with
all laws, rules and regulations, ordinances, judgments, decrees, orders, writs
and injunctions of all United States federal, state, local, foreign governments
and agencies thereof which affect the business, properties or assets of the
Company and its Subsidiaries, except where the failure to comply would not
reasonably be expected to have, individually or in the aggregate a Company
Material Adverse Effect, and no notice, charge, claim, action or assertion has
been received by the Company or any of its Subsidiaries or has been filed,
commenced or, to the Company's knowledge, threatened against the Company or any
of its Subsidiaries alleging any violation of any of the foregoing, except
alleged violations that individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect. All licenses, permits and
approvals required under such laws, rules and regulations are in full force and
effect except where the failure to be in full force and effect would not
reasonably be expected to have a Company Material Adverse Effect.
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Section 3.16 Environmental Matters. Except as set forth in
Section 3.16 of the Company Disclosure Schedule, (a) the Company and its
Subsidiaries are in compliance in all material respects with federal, state,
local and foreign laws and regulations relating to pollution or protection or
preservation of human health or the environment, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of toxic or hazardous substances or hazardous waste, petroleum and
petroleum products, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon, or lead or lead-based paints or materials ("Materials of
Environmental Concern"), or otherwise relating to the generation, storage,
containment (whether above ground or underground), disposal, transport or
handling of Materials of Environmental Concern, or the preservation of the
environment or mitigation of adverse effects thereon (collectively,
"Environmental Laws"), and including, but not limited to, compliance with any
permits or other governmental authorizations or the terms and conditions
thereof, except where noncompliance is not reasonably likely to have a Company
Material Adverse Effect; (b) neither the Company nor any of its Subsidiaries has
received any communication or notice, whether from a Governmental Entity or
otherwise, alleging any violation of or noncompliance with any Environmental
Laws by any of the Company or its Subsidiaries or for which any of them is
responsible, and there is no pending or, to the Company's knowledge, no
threatened claim, action, investigation or notice by any person or entity
alleging potential liability for investigatory, cleanup or governmental response
costs, or natural resources or property damages, or personal injuries,
attorney's fees or penalties relating to (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location owned or
operated by the Company or its Subsidiaries, now or in the past or (ii) any
violation, or alleged violation, of any Environmental Law (collectively,
"Environmental Claims"), except where such notices, communications, claims,
actions, investigations or Environmental Claims would not have a Company
Material Adverse Effect; and (c) to the Company's knowledge, there are no past
or present facts or circumstances that are reasonably likely to form the basis
of any Environmental Claim against the Company or its Subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
its Subsidiaries have retained or assumed either contractually or by operation
of law, except where such Environmental Claim, if made, would not have a Company
Material Adverse Effect.
Section 3.17 Product Warranties. Except as described in
Section 3.17 of the Company Disclosure Schedule, all products are sold or
licensed by the Company pursuant to (i) the Company's disclaimer of all
warranties, express or
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implied, including those of merchantability and fitness for a particular
purpose; (ii) the Company's disclaimer of all consequential damages arising from
the use or possession of the product, regardless of whether such liability is
based in tort, contract or otherwise; and (iii) language stating that if the
foregoing disclaimers are held to be unenforceable, the Company's maximum
liability shall not exceed the amount of money(ies) paid for such product(s),
except, in each case, where the failure so to provide would not have a Company
Material Adverse Effect.
Section 3.18 Information in Proxy Statement. The Proxy
Statement, if any (or any amendment thereof or supplement thereto), at the date
mailed to the Company's shareholders and at the time of the meeting of Company
shareholders to be held in connection with the Merger, will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information supplied in writing by Parent or the Purchaser
expressly for inclusion in the Proxy Statement. The Proxy Statement will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
Section 3.19 Potential Conflict of Interest. Except as set
forth in Section 3.19 of the Company Disclosure Schedule or in the SEC Reports
filed prior to the date hereof, since December 31, 1998 there have been no
transactions, agreements, arrangements or understandings between the Company or
its Subsidiaries, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act (except for amounts due as normal salaries and bonuses
and in reimbursements of ordinary expenses). Except as set forth in Section 3.19
of the Company Disclosure Schedule or in the SEC Reports filed prior to the date
hereof, no officer of the Company or any of its Subsidiaries owns, directly or
indirectly, any interest in (excepting not more than one percent (1%) stock
holdings for investment purposes in securities of publicly held and traded
companies) or is an officer, director, employee or consultant of any person
which is a competitor, lessor, lessee, customer or supplier of the Company; and
no officer or director of the Company or any of its Subsidiaries (i) owns,
directly or indirectly, in whole or in part, any Intellectual Property which the
Company or any of its Subsidiaries is using or the use of which is necessary for
the business of the Company or its Subsidiaries, (ii) has any claim, charge,
action or cause of action against the Company or any of its Subsidiaries,
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except for claims for accrued vacation pay, accrued benefits under the Plans and
similar matters and agreements existing on the date hereof, (iii) has made, on
behalf of the Company or any of its Subsidiaries, any payment or commitment to
pay any commission, fee or other amount to, or to purchase or obtain or
otherwise contract to purchase or obtain any goods or services from, any other
Person of which any officer or director of the Company or any of its
Subsidiaries, or, to the Company's knowledge, a relative of any of the
foregoing, is a partner or shareholder (except stock holdings solely for
investment purposes in securities of publicly held and traded companies) or (iv)
owes any money to the Company or any of its Subsidiaries (except for
reimbursement of advances in the ordinary course).
Section 3.20 Opinion of Financial Advisor. The Company has
received the written opinion of Xxxxxxxxx & Xxxxx LLC, dated the date hereof, to
the effect that, based upon and subject to the matters set forth therein and as
of such date, the consideration to be received in the Offer and the Merger by
the Company's shareholders is fair to the Company's shareholders from a
financial point of view, a copy of which opinion has been delivered to Parent
and the Purchaser.
Section 3.21 Insurance. The Company and each of its
Subsidiaries has policies of insurance and bonds of the type and in amounts
customarily carried by persons conducting businesses or owning assets similar to
those of the Company and its Subsidiaries. There is no material claim pending
under any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All premiums
due and payable under all such policies and bonds have been paid and the Company
and its Subsidiaries are otherwise in compliance in all material respects with
the terms of such policies and bonds. The Company has no knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.
Section 3.22 State Takeover Statutes; Required Vote;
Dissenter's Rights.
(a) Except for Articles 14 and 14.1 of the VSCA, no Virginia
takeover statute or similar statute applies or purports to apply to the Offer or
the Merger, or to this Agreement, the Option Agreement or the Shareholders
Agreement or the transactions contemplated hereby. In the event the Special
Meeting is required to approve the Merger and the adoption of this Agreement the
approval by the
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holders of a majority of the outstanding Shares is the only vote required to
approve the Merger and the adoption of this Agreement.
(b) No shareholder is entitled to dissenter's rights, rights
of appraisal or other similar rights pursuant to the VSCA or applicable law
unless the shares cease to be listed on the Nasdaq Stock Market and (i) are not
then listed on a national securities exchange or (ii) held by at least 2,000
record shareholders.
Section 3.23 Brokers. No broker, investment banker,
financial advisor or other person, other than Xxxxxxxxx & Xxxxx LLC, the fees
and expenses of which will be paid by Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Company.
Section 3.24 Full Disclosure. To the knowledge of the
Company, the representations and warranties by the Company in this Agreement and
the documents referred to herein (including the Schedules and Exhibits hereto),
taken together with all the other information provided to the Parent or its
counsel in connection with the transactions contemplated hereby, do not contain
any untrue statements of a material fact or omit to state any material fact
necessary, in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is
a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized and existing or to have
such power, authority, and governmental
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approvals would not, individually or in the aggregate, impair in any material
respect the ability of each of Parent and the Purchaser to perform its
obligations under this Agreement, as the case may be, or prevent or materially
delay the consummation of any of the Transactions.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and the Shareholders Agreement and to
consummate the Transactions. The execution, delivery and performance by Parent
and the Purchaser of this Agreement and the Shareholders Agreement and the
consummation of the Offer, Merger and of the Transactions have been duly
authorized by the boards of directors of the Purchaser and Parent and by the
shareholders of the Purchaser, and no other corporate authority or approval on
the part of Parent or the Purchaser is necessary to authorize the execution and
delivery by Parent and the Purchaser of this Agreement and the Shareholders
Agreement and the consummation of the Transactions. Each of this Agreement and
the Shareholders Agreement has been duly executed and delivered by Parent and
the Purchaser and, assuming due and valid authorization, execution and delivery
hereof by the Company and the other parties to the Shareholders Agreement, is
the valid and binding obligation of each of Parent and the Purchaser enforceable
against each of them in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
Section 4.3 Consents and Approvals; No Violations. None of
the execution, delivery or performance of this Agreement by Parent or the
Purchaser, the consummation by Parent or the Purchaser of the Transactions or
compliance by Parent or the Purchaser with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the organizational
documents of Parent or the Articles of Incorporation or By-laws of the
Purchaser, (ii) require any filing by Parent or the Purchaser with, or permit,
authorization, consent or approval of, any Governmental Entity (except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) the filing
of articles of merger in connection with the Merger pursuant to the VSCA, (iii)
filings, permits, authorizations, consents and approvals as may be required
under, the HSR Act and comparable merger and notifications,
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laws or regulations of foreign jurisdictions, (iv) the filing with the SEC and
the Nasdaq Stock Market, Inc. of (A) the Schedule 14D-1, (B) a proxy statement
relating to shareholder approval, if such approval is required by law and (C)
such reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement or (v) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover laws), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent, or any of its Subsidiaries or the Purchaser is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, except in the case of clause (ii), (iii) or (iv) such violations,
breaches or defaults which would not, individually or in the aggregate, impair
in any material respect the ability of each Parent and the Purchaser to perform
its obligations under this Agreement, as the case may be, or prevent or
materially delay the consummation of any the Transactions.
Section 4.4 Information in Proxy Statement. None of the
information supplied by Parent or the Purchaser in writing expressly for
inclusion or incorporation by reference in the Proxy Statement (or any amendment
thereof or supplement thereto) will, at the date mailed to shareholders and at
the time of the meeting of shareholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading.
Section 4.5 Interim Operations of the Purchaser. The
Purchaser was formed solely for the purpose of engaging in the Transactions, and
has engaged in no other business activities other than in connection with the
Transactions as contemplated hereby.
Section 4.6 Brokers. No broker, investment banker, financial
advisor or other person, other than Deutsche Banc Alex.Xxxxx, the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated
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by this Agreement based upon arrangements made by or on behalf of Parent or
Purchaser.
Section 4.7 Financing. Purchaser has, or will have available
to it upon the consummation of the Offer, sufficient funds to consummate the
Transactions, including payment in full for all Shares validly tendered into the
Offer or outstanding at the Effective Time, subject to the terms and conditions
of the Offer and this Agreement. Parent and the Purchaser have received, and
have furnished to the Company, true and complete copies of the Vendor Placing
Agreement, dated January 12, 2000 between Parent and Deutsche Bank AG London
(the "Financing Document") with respect to the financing of the acquisition of
the Shares in the Offer and the Merger (the "Financing"). The aggregate proceeds
of the Financing, together with internal corporate funds of Parent or the
Purchaser, are sufficient to acquire all of the Shares in the Offer and the
Merger and to pay anticipated expenses in connection therewith.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Acquisition Proposals. The Company will notify
Parent and the Purchaser promptly if on or after the date of this Agreement any
proposals are received by, any information is requested from, or any
negotiations or discussions are sought to be initiated or continued with the
Company or its officers, directors, employees, investment bankers, attorneys,
accountants or other agents, in each case in connection with any Acquisition
Proposal (as hereinafter defined) or the possibility or consideration of making
an Acquisition Proposal ("Acquisition Proposal Interest") indicating, in
connection with such notice, the name of the Person indicating such Acquisition
Proposal Interest and the material terms and conditions of any proposals or
offers. Subject to Section 5.3, the Company agrees that it will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal Interest. The Company agrees that it shall keep Parent and
the Purchaser informed, on a current basis, of the status and terms of any
Acquisition Proposal Interest. As used in this Agreement, "Acquisition Proposal"
shall mean any tender or exchange offer involving the Company, any proposal for
a merger, consolidation or other business combination involving the Company, any
proposal or offer to
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acquire in any manner a substantial equity interest in, or a substantial portion
of the business or assets of, the Company (other than immaterial or
insubstantial assets or inventory in the ordinary course of business or assets
held for sale), any proposal or offer with respect to any recapitalization or
restructuring with respect to the Company or any proposal or offer with respect
to any other transaction similar to any of the foregoing with respect to the
Company other than pursuant to the transactions to be effected pursuant to this
Agreement.
Section 5.2 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement or the Option Agreement, (ii) as set forth in Section 5.2 of the
Company Disclosure Schedule, (iii) in the ordinary course of business consistent
with past practice or (iv) as agreed in writing by Parent, after the date
hereof, and prior to the earlier of (x) the termination of this Agreement in
accordance with Article VIII hereof and (y) the time the designees of Parent
have been elected to, and shall constitute a majority of, the Board of Directors
of the Company pursuant to Section 1.3 hereof (the "Appointment Date"):
(a) the business of the Company and its Subsidiaries shall
be conducted only in the ordinary course consistent with past practice and each
of the Company and its Subsidiaries shall use its commercially reasonable
efforts to preserve its present business organization intact and maintain its
satisfactory relations with customers, suppliers, employees, contractors,
distributors and others having business dealings with it;
(b) the Company will not, directly or indirectly, (i) amend
its Articles of Incorporation or By-laws; or (ii) split, combine or reclassify
the outstanding Shares or any outstanding capital stock of the Company;
(c) neither the Company nor any of its Subsidiaries shall:
(i) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to its capital stock; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares reserved for issuance on the
date hereof pursuant to the exercise of the Options or other rights to purchase
shares of Common Stock pursuant to the Employee Stock Purchase Plan outstanding
on the date hereof; (iii) transfer, lease, license, sell,
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mortgage, pledge, dispose of, or encumber any of its material assets, or incur
or modify any material indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or (iv)
redeem, purchase or otherwise acquire any shares of any class or series of its
capital stock, or any instrument or security which consists of or includes a
right to acquire such shares except as permitted by Section 5.2(b) and other
than in connection with the exercise of options or rights under the Stock Plans
or the Employee Stock Purchase Plan;
(d) neither the Company nor any of its Subsidiaries shall
increase the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants (other than general increases in
wages to employees who are not directors or affiliates in the ordinary course
consistent with past practice), or to persons providing management services,
enter into or amend any employment, severance, consulting, termination or other
agreement or employee benefit plan or make any loans to any of its officers,
directors, employees, affiliates, agents or consultants or make any change in
its existing borrowing or lending arrangements for or on behalf of any of such
persons pursuant to an employee benefit plan or otherwise;
(e) except to the extent permitted and contemplated by
Section 2.3 hereof or as disclosed on Schedule 5.2(e) hereof, neither the
Company nor any of its Subsidiaries shall pay or make any accrual or arrangement
for payment of any pension, retirement allowance or other employee benefit
pursuant to any existing plan, agreement or arrangement to any officer,
director, employee or affiliate or pay or agree to pay or make any accrual or
arrangement for payment to any officers, directors, employees or affiliates of
the Company of any amount relating to unused vacation days, except payments and
accruals made in the ordinary course consistent with past practice; adopt or
pay, grant, issue, accelerate or accrue salary or other payments or benefits
pursuant to any pension, profit-sharing, bonus, extra compensation, incentive,
deferred compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or any employment or consulting agreement with or for
the benefit of any director, officer, employee, agent or consultant, whether
past or present; or amend in any material respect any such existing plan,
agreement or arrangement in a manner inconsistent with the foregoing;
(f) the Company shall not, in any material respect, modify,
amend or terminate any of the Company Agreements, and neither the Company nor
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any of its Subsidiaries shall waive, release or assign any material rights on
claims under any of the Company Agreements;
(g) neither the Company nor any of its Subsidiaries will
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent;
(h) neither the Company nor any of its Subsidiaries will (i)
incur or assume any long-term debt or any short-term indebtedness; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; (iii) make
any loans, advances or capital contributions to, or investments in, any other
person; or (iv) enter into any material commitment or transaction (including,
but not limited to, any borrowing, capital expenditure or purchase, sale or
lease of assets or real estate);
(i) neither the Company nor any of its Subsidiaries will (i)
change any of the accounting methods used by it materially affecting its assets,
liabilities or business, except for such changes required by GAAP or (ii) make
any Tax election or change any Tax election already made, adopt any Tax
accounting method, change any Tax accounting method, enter into any closing
agreement or settle any Tax Audit;
(j) neither the Company nor any of its Subsidiaries will
pay, discharge or satisfy any claims, liabilities or obligations (whether
absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction of any such claims, liabilities or obligations, in the ordinary
course of business and consistent with past practice, or of claims, liabilities
or obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company;
(k) except as otherwise permitted pursuant to Section 5.3,
neither the Company nor any of its Subsidiaries will adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger);
(l) except for the actions permitted to be taken pursuant to
Section 5.3 hereof, neither the Company nor any of its Subsidiaries will take,
or agree in writing or otherwise to take, any action that would or is reasonably
likely to
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result in any of the conditions to the Merger set forth in Article VII or any of
the conditions to the Offer set forth in Annex I not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any material respect at, or as of any time prior to, the Effective Time,
other than those representations and warranties which by their terms address
matters as of a particular date, or that would materially impair the ability of
the Company to consummate the Merger in accordance with the terms hereof or
materially delay such consummation; and
(m) except for the actions permitted to be taken pursuant to
Section 5.3 hereof, neither the Company nor any of its Subsidiaries will enter
into any written agreement, contract, commitment or arrangement to do any of the
foregoing, or authorize, recommend, propose, in writing or announce an intention
to do any of the foregoing.
Section 5.3 No Solicitation.
(a) Except as provided in Section 5.3(b) below, the Company,
from the date of this Agreement until the earlier of termination of this
Agreement or the Effective Time, will not nor shall it authorize or permit its
officers, directors, employees, to (and will use reasonable best efforts to
ensure that such persons and the Company's investment bankers, attorneys,
accountants and other agents do not) directly or indirectly (i) initiate,
solicit or knowingly encourage, or knowingly take any action to facilitate the
making of, any offer or proposal which constitutes or is reasonably likely to
lead to any Acquisition Proposal, (ii) enter into any agreement with respect to
any Acquisition Proposal, or (iii) in the event of an unsolicited Acquisition
Proposal for the Company engage in negotiations or discussions with, or provide
any information or data to, any Person (other than Parent, any of its affiliates
or representatives) relating to any Acquisition Proposal; provided, however,
that nothing contained in this Section 5.3 or any other provision hereof shall
prohibit the Company or the Company Board of Directors from (A) taking and
disclosing to the Company's shareholders its position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, (B) making such disclosure to the Company's shareholders
as, in the good faith judgment of the Company Board of Directors after receipt
of advice from outside legal counsel to the Company that such disclosure is
required under applicable law and that the failure to make such disclosure is
reasonably likely to cause the Company Board of Directors to violate its
fiduciary duties to the Company's shareholders
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under applicable law or (C) otherwise complying with their fiduciary duties to
shareholders.
(b) Notwithstanding the foregoing, prior to the acceptance
of Shares pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any Person pursuant to a confidentiality
agreement with terms no less favorable to the Company than those contained in
the Mutual Non-Disclosure Agreement, dated October 14, 1999 entered into between
a Subsidiary of Parent and the Company (the "Confidentiality Agreement") and may
negotiate and participate in discussions and negotiations with such Person
concerning an Acquisition Proposal if (x) such entity or group has on an
unsolicited basis submitted a bona fide written proposal to the Company relating
to any such transaction which the Board of Directors determines in good faith,
after receiving advice from a nationally recognized investment banking firm,
represents a superior transaction to the Offer and the Merger and which is not
conditioned upon obtaining additional financing the certainty of closing of
which is less certain than the satisfaction of the condition set forth in
paragraph (i) of Annex I (as it may be deemed to be amended pursuant to Section
1.1(a)) on conditions less favorable to the Company than the Financing and (y)
in the good faith opinion of the Company Board of Directors, only after
consultation with outside legal counsel to the Company, providing such
information or access or engaging in such discussions or negotiations is in the
best interests of the Company and its shareholders and the failure to provide
such information or access or to engage in such discussions or negotiations
would cause the Company Board of Directors to violate its fiduciary duties to
the Company's shareholders under applicable law (an Acquisition Proposal which
satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). The Company shall promptly, and in any event within one business day
following receipt of a Superior Proposal, notify Parent of the receipt of the
same and prior to providing any such party with any material non-public
information. The Company shall promptly provide to Parent any material
non-public information regarding the Company provided to any other party which
was not previously provided to Parent.
(c) Except as set forth herein, neither the Company Board of
Directors nor any committee thereof permitted by law to do so shall (i) withdraw
or modify, or propose (publicly or to a third party) to withdraw or modify, in a
manner adverse to Parent or the Purchaser, the approval or recommendation by
such Company Board of Directors or any such committee of the Offer, this
Agreement or the Merger, (ii) approve or recommend or propose (publicly or to a
third party) to
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approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal (other than a confidentiality agreement
as contemplated by Section 5.3(b)). Notwithstanding the foregoing, prior to the
time of acceptance for payment of Shares in the Offer, the Company Board of
Directors may (subject to the terms of this and the following sentence) withdraw
or modify its approval or recommendation of the Offer, this Agreement or the
Merger, approve or recommend a Superior Proposal, or enter into an agreement
with respect to a Superior Proposal, in each case at any time after the fifth
business day following the Company's delivery to Parent of written notice
advising Parent that the Board of Directors has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided that the Company
shall not enter into an agreement with respect to a Superior Proposal unless the
Company also shall have furnished Parent with written notice that it intends to
enter into such agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Additional Agreements. Subject to the terms and
conditions as herein provided, the Company, Parent and Purchaser will each
comply in all material respects with all applicable laws and with all applicable
rules and regulations of any Governmental Entity to achieve the satisfaction of
the Minimum Condition and all conditions set forth in Annex I attached hereto
and Article VII hereof, and to consummate and make effective the Merger and the
other transactions contemplated hereby. Each of the parties hereto agrees to use
all commercially reasonable efforts to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, and to use all commercially reasonable efforts to take, or cause to be
taken, all other actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of the
Company, Parent and the Purchaser shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions.
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Section 6.2 Notification of Certain Matters. The Company
shall give prompt notice to the Purchaser and the Purchaser shall give prompt
notice to the Company, of (i) the occurrence, or non-occurrence of any event
whose occurrence, or non-occurrence would be likely to cause either (x) any
representation or warranty contained in this Agreement of such party to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time or (y) any condition set forth in Annex I to be unsatisfied
in any material respect at any time from the date hereof to the date the
Purchaser purchases Shares pursuant to the Offer (except to the extent it refers
to a specific date) and (ii) any material failure of the Company, the Purchaser
or Parent, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.2 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice or the
representations or warranties of the parties or the conditions to the
obligations of the parties hereto.
Section 6.3 Access; Confidentiality.
(a) From the date hereof to the Appointment Date, upon
reasonable notice and subject to the terms of the Confidentiality Agreement, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, reasonable access, during normal business hours
during the period prior to the Appointment Date, to all its properties, books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to), subject to any limitations
imposed by law with respect to records of employees, furnish promptly to Parent
(a) 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 and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. After the Appointment
Date, the Company shall provide Parent and such persons as Parent shall
designate with all such information as is in Company's possession or control and
as Parent shall reasonably request, at such time as Parent shall reasonably
request.
(b) Unless otherwise required by law or regulation (including
stock exchange rules) and until the Appointment Date, Parent and the Purchaser
will hold any such information which is non-public in confidence in accordance
with the terms of the Confidentiality Agreement (except as may be required by
law or by any listing
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agreement with or by the listing rules of the London Stock Exchange) and, in the
event this Agreement is terminated for any reason, Parent shall promptly return
or destroy such information in accordance with paragraph 10 of the
Confidentiality Agreement. No investigation pursuant to this Section 6.5(a)
shall affect any representation or warranty made by the parties hereunder.
Section 6.4 Consents and Approvals.
(a) Each of Parent, the Purchaser and the Company will use
all commercially reasonable efforts to take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed on it with
respect to this Agreement and the Transactions (which actions shall include,
without limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and, subject to such confidentiality agreements as
may be reasonably necessary or requested, furnish information to each other or
their counsel in connection with any such requirements imposed upon any of them
or any of their Subsidiaries in connection with this Agreement and the
Transactions.
(b) Each of the Company, the Purchaser and Parent shall use
all commercially reasonable efforts to take all actions necessary to file as
soon as practicable notifications under the HSR Act, or under comparable merger
notification laws under non-U.S. jurisdictions and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice or the authorities of such other
jurisdictions for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters.
Section 6.5 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent, the Purchaser nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
Transactions without the prior consultation of the other party, except as such
party believes, after receiving the advice of outside counsel, may be required
by law or by any listing agreement with or listing rules of a national
securities exchange or trading market or inter-dealer quotation system or by the
listing
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rules of The London Stock Exchange (the "London Stock Exchange") in which case,
the party proposing to issue such press release or make such public announcement
shall use its best efforts to consult in good faith with the other party before
issuing such press release or making such public announcements.
Section 6.6 Directors' and Officers' Insurance and
Indemnification.
(a) From and after the Effective Time, the Surviving
Corporation (or any successor to or assign of the Surviving Corporation) shall
indemnify, defend and hold harmless the present and former officers and
directors of the Company and its Subsidiaries, and persons who become any of the
foregoing prior to the Effective Time (each an "Indemnified Party") against all
losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the written consent of the Parent or the Surviving
Corporation which consent shall not unreasonably be withheld)) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent permissible under applicable provisions of the VSCA, the terms of the
Company's Articles of Incorporation or the By-laws, and under any agreements as
in effect at the date hereof (true and correct copies of which have been
previously provided to Parent) (including rights to reimbursement or advancement
of expenses and exculpation from liability).
(b) Parent or the Surviving Corporation (or any successor to
or assign of the Surviving Corporation) shall maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") for a period of
not less than six years after the Effective Time; provided, that, Parent may
substitute therefor policies of substantially equivalent coverage and amounts
containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
cancelled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance of at least the
same coverage containing terms and conditions that are not materially less
advantageous; provided, further, however, that in no event shall Parent be
required to pay aggregate premiums for insurance under this Section 6.6(b) in
excess of 150% of the premiums paid by the Company in 1999 on an annualized
basis for such purpose (the "Average Premium"), which true and correct amounts
are set forth in Section 6.6(b) of the Company Disclosure Schedule; and
provided, further, that if Parent or the Surviving Corporation is unable to
obtain the amount of insurance
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required by this Section 6.6(b) for such aggregate premium, Parent or the
Surviving Corporation shall obtain as much insurance as can be obtained for an
annual premium not in excess of 150% of the Average Premium.
Section 6.7 Purchaser Compliance. Parent shall cause the
Purchaser, or any assignee of the Purchaser pursuant to Section 9.10 hereof, to
comply with all of its obligations under this Agreement.
Section 6.8 Best Reasonable Efforts.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Parent, the Purchaser and the Company, agree to
use their respective best reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary and
appropriate, under any applicable laws to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or waivers by
any third party or Governmental Entity, and (ii) the satisfaction of the other
parties' conditions to Closing. In addition, no party hereto shall take any
action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult
with the other parties hereto with respect to and subject to such
confidentiality agreements as may be reasonably necessary or requested, provide
any necessary information with respect to and provide the other (or its counsel)
copies of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement and the transactions contemplated by this Agreement. Each
party hereto shall promptly inform the other of any communication from any
Governmental Entity regarding any of the transactions contemplated by this
Agreement unless otherwise prohibited by law. If any party hereto or affiliate
thereof receives a request for additional information or documentary material
from any such Government Entity with respect to the transactions contemplated by
this Agreement, then such party will endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation
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with the other party, an appropriate response in compliance with such request.
To the extent that transfers of permits or Environmental Permits are required as
a result of execution of this Agreement or consummation of the transactions
contemplated hereby, the Company shall use its commercially reasonable efforts
to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to require Parent, the Purchaser or the Company to defend
against any litigation brought by any Governmental Entity seeking to prevent the
consummation of the transactions contemplated hereby.
Section 6.9 State Takeover Laws. The Company shall, upon the
request of the Purchaser, take all commercially reasonable steps to assist in
any challenge by the Purchaser to the validity or applicability to the
transactions contemplated by this Agreement, the Option Agreement, and the
Shareholders Agreement including the Offer and the Merger, of any state takeover
law.
Section 6.10 Financing Related Efforts.
(a) Parent shall use all commercially reasonable efforts to
cause the Financing to be consummated and Parent shall provide funds to the
Purchaser to permit it to perform its obligations hereunder and in the Offer.
(b) Parent will provide the Company with true, correct and
complete copies of all amendments and supplements to the Financing Document as
well as true, correct and complete copies of all other commitments and
agreements with respect to the transaction contemplated by this Agreement and
any amendments or supplements thereto from third parties to provide financing to
the Parent or to the Purchaser.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions,
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any and all of which may be waived in whole or in part by Parent, the Purchaser
and the Company, as the case may be, to the extent permitted by applicable law:
(a) Shareholder Approval. The Merger and this Agreement
shall have been approved and adopted by the requisite vote of the holders of the
Shares, to the extent required pursuant to the requirements of the Articles of
Incorporation and the VSCA;
(b) Statutes; Court Orders. No statute, rule or regulation
shall have been enacted or promulgated by any United States or United Kingdom
Governmental Entity which prohibits the consummation of the Merger; and there
shall be no order or injunction of a court of competent jurisdiction in effect
preventing consummation of the Merger; provided, that any party asserting this
condition shall first have used its commercially reasonable efforts to obtain
the dismissal of such order; and
(c) Purchase of Shares in Offer. The Purchaser shall have
purchased, or caused to be purchased, the Shares pursuant to the Offer;
provided, that this condition shall be deemed to have been satisfied with
respect to the obligation of Parent and the Purchaser to effect the Merger if
the Purchaser fails to accept for payment or pay for Shares validly tendered
pursuant to the Offer in violation of the terms of the Offer or of this
Agreement; and
(d) HSR Approval. The applicable waiting period under the
HSR Act shall have expired or been terminated.
Section 7.2 Conditions to Obligations of Parent and the
Purchaser to Effect the Merger. The obligations of Parent and Purchaser to
consummate the Merger are further subject to fulfillment of the condition that
all actions contemplated by Section 2.3 hereof shall have been taken, which may
be waived in whole or in part by Parent and the Purchaser.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated
and the transactions contemplated herein may be abandoned at any time before the
Effective
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Time, whether before or after shareholder approval thereof (provided, however,
that if Shares are purchased pursuant to the Offer, Parent may not in any event
terminate this Agreement):
(a) By mutual written consent of Parent and the Company; or
(b) (i) By Parent if the Offer shall have expired without
any Shares being accepted for purchase thereunder by the Purchaser and without
the Purchaser having had an obligation under Section 1.1(a) of this Agreement to
extend the Offer; provided, however, that Parent shall not be entitled to
terminate this Agreement pursuant to this Section 8.1(b) if it or the Purchaser
is in material breach of its representations and warranties, covenants or other
obligations under this Agreement; or (ii) by the Company (A) if the Offer has
not commenced within five business days of the execution of this Agreement or
(B) the Offer shall have expired without any Shares being accepted for purchase
thereunder by the purchaser or (C) if prior to the acceptance for Purchase of
Shares pursuant to the Offer, there has been a material breach by either Parent
or the Purchaser of any representation, warranty, covenant or agreement set
forth herein (and such breach is not reasonably capable of being cured within 30
days of notice thereof); provided, however, that the Company shall not be
entitled to terminate this Agreement pursuant to this Section 8.1(b) if it is in
material breach of its representations and warranties, covenants or other
obligations under this Agreement; or
(c) By either Parent or the Company (i) if a court of
competent jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, the Option Agreement or the Shareholders Agreement, (ii) prior
to the acceptance for purchase of Shares pursuant to the Offer, if there has
been a willful breach by the other party of any representation, warranty,
covenant or agreement set forth in this Agreement, which breach shall result in
any condition set forth in Annex I (other than the Minimum Condition) not being
satisfied (and such breach is not reasonably capable of being cured and such
condition satisfied within thirty (30) days after the receipt of notice
thereof), or (iii) if by June 12, 2000 the Purchaser has not purchased any
Shares pursuant to the Offer; provided, however, that the right to terminate
this Agreement pursuant to this clause (iii) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the Purchaser's failure to make such purchases;
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(d) By the Company to allow the Company to enter into an
agreement in accordance with Section 5.3(c) with respect to a Superior Proposal
which the Company Board of Directors has determined is more favorable to the
shareholders of the Company than the transactions contemplated hereby; provided,
however, that it has complied with all provisions thereof, including the notice
provision therein, and that it makes simultaneous payment of the Termination
Fee, plus any amounts then due as a reimbursement of expenses; or
(e) By Parent, at any time prior to the acceptance for
purchase of the Shares pursuant to the Offer, if (i) the Company Board of
Directors, or any committee thereof, shall have withdrawn, modified, or changed
its recommendation in respect of this Agreement or the Offer in a manner adverse
to the Purchaser, (ii) the Company Board of Directors, or any committee thereof,
shall have recommended any proposal other than by Parent or the Purchaser in
respect of an Acquisition Proposal, (iii) the Company shall have exercised a
right with respect to an Acquisition Proposal referenced in Section 5.3(b) and
shall, directly or through its representatives, continue discussions with any
third party concerning an Acquisition Proposal for more than ten business days
after the date of receipt of such Acquisition Proposal, or (iv) an Acquisition
Proposal that is publicly disclosed shall have been commenced, publicly proposed
or communicated to the Company which contains a proposal as to price (without
regard to whether such proposal specifies a specific price or a range of
potential prices) and the Company shall not have rejected such proposal within
ten business days of its receipt or, if sooner, the date its existence first
becomes publicly disclosed.
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as
provided in Section 8.1 hereof, 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 null and
void and there shall be no liability on the part of Parent, the Purchaser or the
Company, except (i) as set forth in Sections 6.5(b), 8.2 and 9.3 hereof and (ii)
nothing herein shall relieve any party from liability for any breach of this
Agreement.
(b) If (i) Parent shall have terminated this Agreement
pursuant to Section 8.1(e), (ii) (x) Parent shall have terminated this Agreement
pursuant to Section 8.1(c) (ii) and (y) following the date hereof but prior to
such termination there
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shall have been an Acquisition Proposal Interest, or (iii) the Company shall
have terminated this Agreement pursuant to Section 8.1(d), then the Company
shall pay (A) simultaneously with such termination if pursuant to Section
8.1(d), or (B) promptly, but in no event later than two business days after the
date of such termination if pursuant to Section 8.1(c)(ii) or Section 8.1(e), to
Parent a termination fee (the "Termination Fee") of $12,000,000 plus an amount,
not in excess of $1,500,000, equal to the Purchaser's reasonable actual and
documented out-of-pocket expenses incurred by Parent and the Purchaser in
connection with the Offer, the Merger, this Agreement and the consummation of
the transactions contemplated hereby, which amount shall be payable by wire
transfer to such account as Parent may designate in writing to the Company.
(c) If this Agreement is terminated, and at any time on or
prior to June 12, 2000 all of the conditions set forth on Annex I have been
fulfilled except (i) the condition set forth in paragraph (i) of Annex I and
(ii) any other conditions that are not fulfilled as a result, directly or
indirectly, of a breach by Parent or the Purchaser of any representation,
warranty, covenant or agreement set forth in this Agreement, then promptly, but
in no event later than two business days after the date of such termination,
Parent shall pay to the Company a termination fee of $12,000,000 plus an amount,
not in excess of $1,500,000, equal to the Company's reasonable actual and
documented out-of-pocket expenses incurred by the Company in connection with the
Offer, the Merger, this Agreement and the consummation of the transactions
contemplated hereby, which amount shall be payable by wire transfer to such
account as the Company may designate in writing to Parent. The Company shall not
withhold any United States withholding taxes on any payment under this Section
8.2.
Section 8.3 Indemnity.
(a) Subject to the provisions of this Section 8.3, Parent
hereby agrees to indemnify the Company with respect to any liability for United
States federal withholding taxes (including any interest, additions to tax, or
penalties related thereto) with respect to the payment by the Company to Parent
of the Termination Fee described in Section 8.2 of this Agreement and with
respect to any payment under Section 1.5 of the Option Agreement ("Possible
Withholding Taxes").
(b) If the Company is notified, in writing, as part of an
audit or other administrative proceeding related to taxes (a "Contest"), that
the Internal
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Revenue Service is asserting a claim for Possible Withholding Taxes, then (i)
the Company shall promptly notify Parent of such claim in writing, (ii) the
Company shall permit Parent, at Parent's own cost and expense, to control that
portion of the Contest related to Possible Withholding Taxes, including the
execution of any powers-of-attorney or similar documents necessary for Parent to
control such portion of the Contest; provided that in executing such
powers-of-attorney or similar documents, the Company and Parent agree that such
powers shall be limited to such portion of the Contest, and (iii) the Company
shall not settle or otherwise compromise such portion of the Contest related to
Possible Withholding Taxes without the prior written consent of Parent which
consent shall not be unreasonably withheld. If Parent does not assume control
under Section 8.3(b)(ii) above, then Parent shall reimburse the Company promptly
upon demand for reasonable out-of-pocket expenses incurred in connection with
that portion of a Contest related to Possible Withholding Taxes. Parent must
inform the Company of all terms of any proposed settlement prior to settling
that portion of the Contest related to Possible Withholding Taxes and, if the
Company objects to Parent entering into such settlement, Parent shall pay to the
Company the amount that would be payable by Parent under Section 8.3(a) if such
settlement were entered into and upon payment of such amount, any liability of
Parent under this Section 8.3 shall terminate. Parent shall keep the Company
informed of material developments in that portion of the Contest that is
controlled by Parent. Further, without the prior written consent of Parent, the
Company shall not take any position on any tax return or similar filing that
Possible Withholding Taxes may be due and owing, unless such position is
required by law pursuant to a final determination. Neither the Company nor its
officers, employees, representatives, or affiliates shall take any action that
prejudices the defense by Parent of any claim subject to indemnification
hereunder. Parent and the Company shall (i) provide, or cause to be provided, to
each other, the assistance of officers, employees, representatives and
affiliates, or such assistance as may reasonably be requested by any of them in
connection with the portion of the Contest related to Possible Withholding Taxes
and (ii) retain, or cause to be retained, for so long as the taxable year in
which a payment was made by the Company to Parent shall remain open for
adjustments, any records or information which may be relevant to any Tax Returns
or Audits for such taxable year related to Possible Withholding Taxes. If the
Company fails to comply with any of the provisions set forth in this Section
8.3(b), Parent shall be relieved of any obligation under Section 8.3(a) to the
extent of any actual prejudice suffered by Parent as a result of such failure.
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(c) In connection with the payment of a Termination Fee under
Section 8.2(b) or a payment under Section 1.5 of the Option Agreement, Parent
shall provide a Form 1001 or similar form on a protective basis certifying that
if the payment of a Termination Fee under Section 8.2(b) or a payment under
Section 1.5 of the Option Agreement were deemed to be United States source
income, such payments would be exempt from withholding tax under the United
Kingdom-U.S. Income Tax Treaty as in effect as of the date any such payment is
made.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable
law and as otherwise provided in the Agreement, this Agreement may be amended,
modified and supplemented in any and all respects, whether before or after any
vote of the shareholders of the Company contemplated hereby, by written
agreement of the parties hereto, by action taken by their respective Boards of
Directors or equivalent governing bodies, but, after the purchase of Shares
pursuant to the Offer, no amendment shall be made which decreases the Merger
Consideration and, after the approval of this Agreement by the shareholders, no
amendment shall be made which by law requires further approval by such
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.2 Non-survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time or termination of this Agreement. This Section 9.2 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
Section 9.3 Expenses. Except as expressly set forth in
Section 8.2(b), all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses, whether or not the Merger is
consummated, except any transfer, stamp or similar taxes shall be borne by
Parent.
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Section 9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service, such as Federal Express or United Parcel Service (providing
proof of delivery), to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
The Sage Group plc
Xxxx Xxxxx
Xxxxxx Xxxx Xxxx
Xxxxxxxxx xxxx Xxxx, XX0 0XX
Attention: Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (191) 255-0306
with a copy to:
Bobcat Acquisition Corp.
Xxxx Xxxxx
Xxxxxx Xxxx Xxxx
Xxxxxxxxx xxxx Xxxx, XX0 0XX
Attention: Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (191) 255-0306
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
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(b) if to the Company, to:
Best Software, Inc.
00000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.:
with a copy to:
Xxxx and Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and a copy to:
Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: T. Xxxxxx Xxxxx, III
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Section 9.5 Interpretation.
(a) When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the term "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement,
the term "Person" shall mean a natural person, partnership, corporation, limited
liability company, business trust, joint stock
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company, trust, unincorporated association, joint venture, Governmental Entity
or other entity or organization.
(b) In the event the Offer is commenced on or after January
24, 2000, all references in this Agreement to "Schedule 14D-1 or "Schedule
14D-9" shall be deemed to refer to the successor forms of such schedules as
provided in new rules, and amendments to existing rules, promulgated under the
Exchange Act which become effective on January 24, 2000 (the "Reg M-A
Amendments"). In addition, all references to the "Exchange Act" shall include
all the Reg M-A Amendments from and after such date. The parties agree that
their obligations under this Agreement and the Option Agreement shall in no way
be effected by the effectiveness of the Reg M-A Amendments and shall use
commercially reasonable efforts to cause their obligations to be fulfilled in
accordance with the Reg M-A Amendments.
Section 9.6 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 9.7 Entire Agreement; No Third Party Beneficiaries.
This Agreement and the Confidentiality Agreement:
(a) constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof and thereof (provided that the
provisions of this Agreement shall supersede any conflicting provisions of the
Confidentiality Agreement), and
(b) except as provided in Sections 2.3 and 6.8 is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 9.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or
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incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
Section 9.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of Virginia
without giving effect to the principles of conflicts of law thereof, provided,
however, that the laws of the respective jurisdictions of incorporation of each
of the parties shall govern the relative rights, obligations, powers, duties and
other internal affairs of such party and its board of directors.
Section 9.10 Assignment. This Agreement shall not be assigned
by any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion and without the consent of any other party, any
or all of its rights, interests and obligations hereunder to (i) Parent, (ii) to
Parent and one or more direct or indirect wholly owned Subsidiaries of Parent,
or (iii) to one or more direct or indirect wholly owned Subsidiaries of Parent
(each, an "Assignee"). Any such Assignee may thereafter assign, in its sole
discretion and without the consent of any other party, any or all of its rights,
interests and obligations hereunder to one or more additional Assignees. Subject
to the preceding sentence, but without relieving any party hereto of any
obligation hereunder, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
THE SAGE GROUP PLC
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
BOBCAT ACQUISITION CORP.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: President
BEST SOFTWARE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
70
ANNEX I
Notwithstanding any other provisions of the Offer, and in
addition to (and not in limitation of) the Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Merger Agreement), the Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any validly tendered Shares
unless there are validly tendered and not withdrawn prior to the expiration date
for the Offer that number of Shares which, when added to the Shares owned by the
Purchaser or Parent, if any, will represent at least a majority of the
outstanding Shares on a fully diluted basis (without giving pro forma effect to
the potential issuance of any Shares issuable under the Option Agreement) on the
date of purchase (the "Minimum Condition"). Furthermore, notwithstanding any
other provisions of the Offer, the Purchaser shall not be required to accept for
payment or pay for any validly tendered Shares if, at the scheduled expiration
date, (i) any applicable waiting period under the HSR Act has not expired or
terminated prior to termination of the Offer, or (ii) any of the following
events shall occur, or shall be deemed to have occurred, and be continuing:
(a) there shall be threatened in writing or pending any suit,
action or proceeding by any United States or United Kingdom Governmental Entity
against the Purchaser, Parent, the Company or any Subsidiary of the Company (i)
seeking to prohibit or impose any material limitations on Parent's or the
Purchaser's ownership or operation (or that of any of their respective
Subsidiaries or affiliates) of all or a material portion of their or the
Company's and its Subsidiaries' businesses or assets, taken as a whole, or to
compel Parent or the Purchaser or their respective Subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Parent or the Purchaser of any Shares
under the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Merger Agreement, or seeking to obtain from the Company,
Parent or the Purchaser any damages that are material in relation to the Company
and its Subsidiaries taken as a whole, (iii) seeking to impose material
limitations on the ability of
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the Purchaser, or render the Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer and the Merger, or (iv)
seeking to impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's shareholders;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated, or deemed
applicable, pursuant to an authoritative interpretation by or on behalf of a
Government Entity, to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity, other than the application to the Offer or the
Merger of applicable waiting periods under HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the London Stock
Exchange, the New York Stock Exchange, the American Stock Exchange or the NASDAQ
Stock Market for a period in excess of 24 hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or the United Kingdom (whether or not mandatory), (iii) a commencement of
a war, armed hostilities or other international or national calamity directly or
indirectly involving the United States or the United Kingdom that constitutes a
Company Material Adverse Effect or materially adversely affects or delays the
consummation of the Offer, (iv) any limitation (whether or not mandatory) by any
United States or United Kingdom Governmental Entity on the extension of credit
generally by banks or other financial institutions, or (v) a change in general
financial, bank or capital market conditions which materially and adversely
affects the ability of financial institutions in the United States to extend
credit or syndicate loans;
(d) the representations and warranties of the Company set
forth in the Merger Agreement that are qualified by reference to a Company
Material Adverse Effect were not true and correct in any respect, or any other
such representations or warranties were not true and correct in any respect that
(when taken together with all such other representations and warranties not true
and correct) would reasonably be expected to have a Company Material Adverse
Effect (i) in the case of
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any representation or warranty which addresses matters as of a particular date,
as of such date, or (ii) in the case of all other representations and
warranties, as of the date of this Agreement and as of the scheduled expiration
of the Offer;
(e) since the date of this Agreement, there shall have
occurred any change (or any development that is reasonably likely to result in
any change) that constitutes a Company Material Adverse Change;
(f) (i) the Company Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Parent
or the Purchaser or its approval or recommendation of the Offer, the Merger or
this Agreement, or approved or recommended any Acquisition Proposal or (ii) the
Company shall have entered into any agreement with respect to any Superior
Proposal in accordance with Section 5.3(b) of this Agreement;
(g) the Company shall have failed, in any material respect, to
perform or to comply with any agreement or covenant to be performed or complied
with by it under this Agreement;
(h) all consents, permits and approvals of Governmental
Entities shall not have been obtained;
(i) The London Stock Exchange shall have failed to admit to
the Official List of the London Stock Exchange the shares of capital stock of
Parent to be issued in connection with the equity financing contemplated in
connection with Transactions or such admission shall have not become effective
in accordance with paragraph 7.1 of the listing rules of the London Stock
Exchange, provided that Purchaser shall not be entitled to rely on this
condition if the Financing is not consummated for any reason other than the
failure to have Parent's shares of capital stock admitted for listing as
provided in this clause (i);
(j) the Merger Agreement shall have been terminated in
accordance with its terms; and
(k) the Company shall have provided Parent with the audited
consolidated financial statements of the Company for the year ended December 31,
1999 which will not be inconsistent with the December 1999 Financial Statements
in any respect which is materially adverse.
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The foregoing conditions are for the sole benefit of Parent
and the Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition and may be waived by Parent or the
Purchaser in whole or in part at any time and from time to time in the sole
discretion of Parent or the Purchaser, subject in each case to the terms of this
Agreement. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
The capitalized terms used in this Annex I shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
74
EXHIBIT I
PLAN OF MERGER
OF
BOBCAT ACQUISITION CORP.
INTO
BEST SOFTWARE, INC.
Section 1. Merger. Pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"), dated January 12, 2000, by and among The Sage Group plc, a
company organized under the laws of England ("Parent"), Bobcat Acquisition
Corp., a Virginia corporation and a wholly owned subsidiary of Parent (the
"Purchaser"), and Best Software, Inc., a Virginia corporation (the "Company"),
Purchaser shall, upon the time that Articles of Merger are made effective by the
State Corporation Commission of Virginia (the "Effective Time"), be merged (the
"Merger") into the Company, which shall be the "Surviving Corporation".
Section 2. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any issued and
outstanding shares ("Shares") of common stock, no par value per share (the
"Common Stock"), of the Company or holders of common stock, par value $.01 per
share, of the Purchaser (the "Purchaser Common Stock"):
(a) Each issued and outstanding share of Purchaser Common
Stock shall be converted into and become one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
(b) All Shares owned by Parent, the Purchaser or any other
wholly owned Subsidiary (as defined below) of Parent shall be cancelled
and retired, and shall cease to exist and no consideration shall be
delivered in exchange therefor and Dissenting Shares (as defined in
Section 5 hereof), if any, shall be treated in accordance with Article
15 of the Virginia Stock Corporation Act (the "VSCA"). As used in this
Plan of Merger, the term "Subsidiary" shall mean, with respect to any
party, any corporation, limited liability
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company or other organization, whether incorporated or unincorporated
or domestic or foreign to the United States of which (i) such party or
any other Subsidiary of such party is a general partner (excluding
such partnerships where such party or any Subsidiary of such party
does not have a majority of the voting interest in such partnership)
or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect
to such corporation, limited liability company 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.
(c) Each issued and outstanding Share immediately before the
Effective Time (other than any Shares to be cancelled pursuant to
Section 2(b) hereof) and any Dissenting Shares (as defined in Section 5
hereof) shall be cancelled and extinguished and be converted into the
right to receive $35.00 per share, net to the seller in cash (such
price, or any such higher price per Share as may be paid to any holder
of Shares in connection with the cash tender offer (the "Offer") by the
Purchaser to acquire all Shares of the Company, being referred to
herein as the "Offer Price"), payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the
certificate formerly representing such Share in the manner provided in
Section 3 hereof. All such Shares, when so converted, shall no longer
be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any
such Shares shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 3 hereof,
without interest.
Section 3. Conversion of Rights. At the Effective Time, each option to
purchase Shares issued under the Company's employee and director stock option
plans outstanding immediately prior to the Effective Time shall be assumed by
Parent and shall thereupon constitute an option to acquire that number of Parent
Common Shares (as defined below) equal to (i) the number of Shares subject to
the such option immediately prior to the Effective Time, multiplied by (ii) the
Exchange Ratio, rounded down to the nearest whole share, at a price per Parent
Common Share equal to (x) the exercise price of such option immediately prior to
the Effective Time divided by (y) the Exchange Ratio, rounded up to the nearest
whole cent.
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For purposes of this Plan of Merger "Exchange Ratio" shall mean the quotient of
(x) the Offer Price multiplied by the average of the mid-point of the bid and
ask price of the rate of currency exchange of pounds sterling for U.S. dollars
quoted in The Financial Times for each of the business days in a consecutive
twenty (20) business day period ending two (2) business days prior to the
Effective Date and (y) the average per Share closing price of the ordinary
shares of 1 xxxxx each in the capital of Parent (a "Parent Common Share") as
reported on the London Stock Exchange on each of the ten (10) trading days
immediately preceding the Effective Time.
Section 4. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time of the Merger and that are held by a shareholder
(other than Parent or Purchaser and their subsidiaries, which waive the right to
dissent) who has the right (to the extent such right is available by law) to
demand and receive payment of the fair value of his Shares of Company Common
Stock pursuant to Section 13.1-730 of the VSCA (the "Dissenting Shares") shall
not be converted into or be exchangeable for the right to receive the
consideration provided in Section 2 hereof, unless and until such holder shall
fail to perfect his or her right to dissent or shall have effectively withdrawn
or lost such right under the VSCA, as the case may be. If such holder shall have
so failed to perfect his right to dissent or shall have effectively withdrawn or
lost such right, each of his Shares of Company Common Stock shall thereupon be
deemed to have been converted into, at the Effective Time of the Merger, the
right to receive the Offer Price as provided in Section 2 hereof.
Section 5. Articles of Incorporation. The Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall be
amended and restated at the Effective Time in their entirety as the Articles of
Incorporation of the Surviving Corporation to read as set forth on Annex A
hereto.
SECTION 6. Amendment. Pursuant to Section 13.1-718(I) of the VSCA, the
Board of Directors of each of Parent, Purchaser and Company (with the consent of
each of the other parties) reserves the right to amend this Plan of Merger at
any time prior to issuance of the certificate of merger by the State Corporation
Commission of Virginia; provided, however, that any such amendment made
subsequent to
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the submission of this Plan of Merger to the shareholders of Purchaser
or to the shareholders of the Company, to the extent that this Plan of
Merger is required to be submitted to the shareholders of the Company,
may only be made to the extent permitted by Section 13.1-718(I) of the
VSCA.
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ANNEX A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BEST SOFTWARE, INC.
Best Software, Inc., a Virginia corporation, does hereby set forth the
following:
1. Name.
The name of the corporation is Best Software, Inc.
(hereinafter, the "Corporation").
2. Duration.
The Corporation shall have perpetual duration.
3. Purpose.
The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the Virginia Stock
Corporation Act, as amended from time to time.
4. Authorized Capital.
The Corporation shall have two classes of common stock
consisting of Class A Common Stock and Class B Common Stock. The aggregate
number of shares of each class of Common Stock that the Corporation shall have
authority to issue and the par value per share of each class of Common Stock are
as follows:
Class Number of Shares Par Value Per Share
----- ---------------- -------------------
Class A Common Stock 1000 $0.01
Class B Common Stock 1000 $0.01
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5. Registered Office and Registered Agent.
The address of the initial registered office of the
Corporation is 0000 Xxxxxxx Xxxx Xxxx, Xxxxxxxx, XX 00000, which is in the
County of Henrico. The Corporation's initial registered agent is Xxxxxx X.
Xxxxxx, who is a resident of the Commonwealth of Virginia and a member of the
Virginia State Bar, and whose business office is identical with the registered
office.
6. Preemptive Rights.
No holder of shares of any class of the Corporation's capital
stock shall have any preemptive or preferential right to purchase or subscribe
to any shares of any class of the Corporation's capital stock, whether now or
hereafter authorized.
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