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EXHIBIT 99(c)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SOLUTION 6 HOLDINGS LIMITED,
EIG ACQUISITION CORP.
AND
ELITE INFORMATION GROUP, INC.
DATED AS OF DECEMBER 14, 1999
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TABLE OF CONTENTS
ARTICLE I Definitions................................................ 1
1.1. Definitions................................................. 1
1.2. Rules of Construction....................................... 1
ARTICLE II The Offer................................................. 1
2.1. The Offer................................................... 1
2.2. Company Actions............................................. 2
2.3. Stockholder Lists........................................... 3
2.4. Composition of the Board of Directors; Section 14(f)........ 3
ARTICLE III The Merger............................................... 4
3.1. The Merger.................................................. 4
3.2. Effective Time.............................................. 4
3.3. Effect of the Merger........................................ 4
3.4. Certificate of Incorporation; Bylaws........................ 4
3.5. Directors and Officers...................................... 5
3.6. Stock Options............................................... 5
3.7. Stockholders' Meeting....................................... 5
ARTICLE IV Conversion of Securities; Exchange of Certificates........ 6
4.1. Merger Consideration; Conversion and Cancellation of
Securities.................................................. 6
4.2. Exchange of Certificates.................................... 6
4.3. Dissenting Shares........................................... 7
4.4. Closing..................................................... 8
4.5. Stock Transfer Books........................................ 8
ARTICLE V Representations and Warranties of the Company.............. 8
5.1. Organization and Qualification; Subsidiaries................ 8
5.2. Certificate of Incorporation and Bylaws..................... 8
5.3. Capitalization.............................................. 8
5.4. Authorization of Agreement.................................. 9
5.5. Approvals................................................... 10
5.6. No Violation................................................ 10
5.7. Reports and Financial Statements............................ 10
5.8. No Undisclosed Liabilities.................................. 11
5.9. No Material Adverse Effect; Conduct......................... 11
5.10. Schedule 14D-9; Offer Documents; Proxy Statement............ 12
5.11. Properties and Assets....................................... 12
5.12. Contracts................................................... 12
5.13. Litigation; Compliance with Laws............................ 12
5.14. Employee Benefit Plans...................................... 13
5.15. Labor Matters............................................... 14
5.16. Taxes....................................................... 14
5.17. Environmental Matters....................................... 15
5.18. Intellectual Property....................................... 16
5.19. Brokers..................................................... 17
5.20. Opinion of Financial Advisor................................ 17
5.21. Year 2000................................................... 18
5.22. Insurance................................................... 18
ARTICLE VI Representations and Warranties of the Parent Companies.... 18
6.1. Organization and Qualification; Subsidiaries................ 18
6.2. Authorization of Agreement.................................. 18
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6.3. Approvals................................................... 18
6.4. No Violation................................................ 19
6.5. Proxy Statement; Schedule 14D-9............................. 19
6.6. Sufficient Funds............................................ 19
6.7. Brokers..................................................... 19
6.8. DGCL 203.................................................... 19
ARTICLE VII Covenants................................................ 20
7.1. Conduct of Business of the Company.......................... 20
7.2. Prohibited Actions by the Company........................... 20
7.3. No Solicitation............................................. 22
7.4. Access to Information....................................... 24
7.5. Confidentiality Agreement................................... 24
7.6. Reasonable Efforts.......................................... 24
7.7. Public Announcements........................................ 24
7.8. Employee Agreements......................................... 24
7.9. State Takeover Statutes..................................... 24
7.10. Rights Plan................................................. 25
7.11. Employee Benefit Plans...................................... 25
7.12. Indemnification of Directors and Officers................... 25
7.13. Event Notices and Other Actions............................. 26
7.14. Third Party Standstill Agreements; Tortious Interference.... 26
7.15. Payment of Certain Fees..................................... 26
ARTICLE VIII Closing Conditions...................................... 27
8.1. Closing Conditions.......................................... 27
ARTICLE IX Termination, Amendment and Waiver......................... 27
9.1. Termination................................................. 27
9.2. Effect of Termination....................................... 28
9.3. Amendment................................................... 28
9.4. Extension; Waiver........................................... 28
9.5. Fees, Expenses and Other Payments........................... 28
ARTICLE X General Provisions......................................... 29
10.1. Nonsurvival of Representations, Warranties and Agreements... 29
10.2. Notices..................................................... 29
10.3. Headings.................................................... 30
10.4. Severability................................................ 30
10.5. Entire Agreement............................................ 30
10.6. Assignment.................................................. 30
10.7. Parties in Interest......................................... 30
10.8. Failure or Indulgence Not Waiver; Remedies Cumulative....... 30
10.9. Governing Law............................................... 30
10.10. Enforcement................................................. 30
10.11. Counterparts................................................ 31
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of December 14, 1999 (this
"Agreement"), is by and among Solution 0 Xxxxxxxx Xxxxxxx, x Xxx Xxxxx Xxxxx,
Xxxxxxxxx corporation ("Parent"), EIG Acquisition Corp., a Delaware corporation
and an indirect wholly-owned subsidiary of Parent ("Purchaser"), and Elite
Information Group, Inc., a Delaware corporation (the "Company"). Parent and
Purchaser are sometimes referred to herein as the "Parent Companies."
W I T N E S S E T H
WHEREAS the respective Boards of Directors of the Company, Parent, and
Purchaser have unanimously approved the acquisition of the Company by Parent on
the terms and subject to the conditions set forth in this Agreement.
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock") at a price per share of Company Common Stock of $11.00,
net to the seller in cash, upon the terms and subject to the conditions set
forth in this Agreement.
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Delaware,
Purchaser will merge with and into the Company and the Company will be the
Surviving Corporation (as defined below).
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent and Purchaser, on the one hand, and certain stockholders of the Company
are entering into an agreement dated the date hereof (the "Stockholders
Agreement") pursuant to which such stockholders have agreed to take specified
actions in furtherance of the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. Certain capitalized and other terms used in this
Agreement are defined in Annex A hereto and are used herein with the meanings
ascribed to them therein.
1.2. Rules of Construction. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. Unless the context otherwise requires, as used in this Agreement: (a)
a term has the meaning ascribed to it; (b) "or" is not exclusive; (c) whenever
the words "include," "includes" or "including" are used, they shall be deemed to
be followed by the words "without limitation"; and (d) words in the singular
include the plural and words in the plural include the singular.
ARTICLE II
THE OFFER
2.1. The Offer.
(a) Subject to the conditions of this Agreement including those set forth
in Annex B hereto, as promptly as practicable but in no event later than five
Business Days after the date of this Agreement, Purchaser shall, and Parent
shall cause Purchaser to, commence the Offer within the meaning of the
applicable Regulations of the SEC. The obligation of Purchaser to, and of Parent
to cause Purchaser to, commence the Offer or accept for payment, or pay for, any
shares of Company Common Stock tendered pursuant to the Offer shall be
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subject to the conditions set forth in Annex B (any of which may be waived by
Purchaser in its sole and reasonable judgment provided that, without the consent
of the Company, Purchaser may not waive the Minimum Tender Condition) and to the
other provisions of this Agreement. The initial expiration date of the Offer
shall be the 20th Business Day following the commencement of the Offer
(determined using Rule 14d-1(e)(6) under the Exchange Act).
Purchaser expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company, Purchaser shall not (i) reduce
the number of shares of Company Common Stock subject to the Offer, (ii) reduce
the price per share of Company Common Stock to be paid pursuant to the Offer,
(iii) modify or add to the conditions set forth in Annex B in any manner adverse
to the holders of shares of Company Common Stock, (iv) except as provided in the
next sentence, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) otherwise amend the Offer in any manner adverse to the holders
of shares of Company Common Stock. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, (i) extend the Offer, if at the scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
purchase shares of Company Common Stock are not satisfied, until such time as
such conditions are satisfied or waived; provided, however, that the expiration
date shall not be later than the Termination Date as a result of such extension,
(ii) extend the Offer for a period of not more than 10 Business Days beyond the
expiration date that would otherwise be permitted under clause (i) of this
sentence, if on the date of such extension (x) less than 90% of the Company
Common Stock have been validly tendered and not properly withdrawn pursuant to
the Offer and (y) Purchaser has permanently waived all of the conditions to the
Offer set forth in Annex B (other than conditions that are not legally capable
of being satisfied and conditions that have not been satisfied because of the
willful or intentional action or inaction of the Company), and (iii) extend the
Offer for any period required by any Regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer. If, on any scheduled
expiration date of the Offer, any of the conditions set forth in Annex B have
not been satisfied or waived and such unsatisfied conditions are still capable
of being satisfied, the Company may require Purchaser to extend the expiration
date of the Offer for a period of not more than 10 Business Days; provided,
however, that Purchaser shall not be required to extend the expiration date
later than the Termination Date. On the terms and subject to the conditions of
the Offer and this Agreement, Purchaser shall, and Parent shall cause Purchaser
to, pay for all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer that Purchaser becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
(b) Notwithstanding anything to the contrary contained in this Agreement,
Parent and Purchaser shall not be required to commence the Offer in any
jurisdiction other than the United States of America.
(c) On the date of the commencement of the Offer, Purchaser shall file with
the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
("Schedule 14D-1") which will contain an offer to purchase and form of the
related letter of transmittal (the Schedule 14D-1 and the documents included
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, collectively, the "Offer Documents"). Parent, Purchaser,
and the Company each agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect and Parent and Purchaser further
agree to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and be disseminated to holders of shares of Company
Common Stock, in each case, as and to the extent required by applicable federal
securities Laws.
(d) Subject to the terms and conditions of this Agreement, Parent shall
provide or cause to be provided to Purchaser on a timely basis the funds
necessary to purchase any shares of Company Common Stock that Purchaser becomes
obligated to purchase pursuant to the Offer.
2.2. Company Actions. The Company hereby consents to the Offer and
represents that its Board of Directors (at a meeting duly called and held) has
(a) determined that the Offer and the Merger are fair to the stockholders of the
Company and are in the best interests of the stockholders of the Company, (b)
approved this Agreement, the Offer, the Merger and the other Transaction
Agreements, which approval (assuming the accuracy of the representations and
warranties in Section 6.8) constitutes approval of each of the Transactions
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for purposes of the applicable provisions of the DGCL, including Section 203 of
the DGCL, and (c) resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by the stockholders of the Company.
The Financial Advisor has delivered to the Board of Directors of the Company its
opinion that the consideration to be received by the holders of shares of
Company Common Stock in the Offer and the Merger is fair to the holders of
shares of Company Common Stock from a financial point of view. The Company
hereby agrees to file a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9")
containing such recommendation with the SEC (and the information required by
Section 14(f) of the Exchange Act) and to mail such Schedule 14D-9 to the
stockholders of the Company; provided that such recommendation may be withdrawn,
modified or amended by the Company's Board of Directors only to the extent
permitted by Section 7.3(b). The Company shall use its reasonable best efforts
to cause such Schedule 14D-9 to be filed on the same date as Purchaser's
Schedule 14D-1 is filed and mailed together with the Offer Documents. Purchaser
agrees to give the Company and its counsel a reasonable opportunity to review
and comment on the Schedule 14D-1 prior to Purchaser's filing of the Schedule
14D-1 with the SEC. Purchaser agrees to provide the Company and its counsel in
writing with any comments Purchaser or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-1 promptly after the receipt thereof.
Each of the Company, Parent, and Purchaser 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 disseminated to the holders of
shares of Company Common Stock, in each case, as and to the extent required by
applicable federal securities Laws. The Company agrees to give Purchaser and its
counsel a reasonable opportunity to review and comment on the Schedule 14D-9
prior to the Company's filing of the Schedule 14D-9 with the SEC. The Company
agrees to provide Purchaser and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt thereof.
2.3. Stockholder Lists. In connection with the Offer, the Company will
promptly furnish Purchaser with mailing labels, security position listings and
any available listing or computer file containing the names and addresses of the
record holders of shares of Company Common Stock as of a recent date and of
those Persons becoming record holders subsequent to such date (to the extent
available), together with all other information in the Company's possession or
control regarding the beneficial owners of shares of Company Common Stock and
shall furnish Purchaser with such information and assistance (including, to the
extent available, updated lists of stockholders, security position listings and
computer files) as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of shares of
Company Common Stock. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate this Agreement, Parent and Purchaser shall
hold in confidence the information contained in any such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement is terminated, shall, upon request, deliver to the
Company or destroy all copies of such information then in their possession,
followed promptly by written certification of copies destroyed, if any.
2.4. Composition of the Board of Directors; Section 14(f). Promptly upon
the acceptance for payment of, and payment by Purchaser for, any shares of
Company Common Stock pursuant to the Offer, Purchaser shall be entitled to
designate such number of directors on the Board of Directors of the Company as
will give Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Board of Directors of the Company equal to at least
that number of directors, rounded up to the next whole number, which is the
product of (a) the total number of directors on the Company's Board of Directors
(giving effect to the directors elected pursuant to this sentence) multiplied by
(b) the percentage that (i) such number of shares of Company Common Stock so
accepted for payment and paid for by Purchaser plus the number of shares of
Company Common Stock otherwise owned by Purchaser or any other Subsidiary of
Parent bears to (ii) the number of such shares outstanding, and the Company
shall, at such time, cause Purchaser's designees to be so elected; provided,
however, that in the event that Purchaser's designees are appointed or elected
to the Board of Directors of the Company, until the Effective Time the Board of
the Directors of the Company shall have at least two directors who are directors
on the date of this Agreement (the "Independent Directors");
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and provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall be entitled to designate a person to fill such vacancy who shall
be deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Director then remains, the other directors promptly shall designate
two persons to fill such vacancies who shall not be officers, employees,
stockholders or Affiliates of Parent or Purchaser, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable Law, the Company shall take all action reasonably requested by Parent
necessary to effect any such election, including mailing to its stockholders the
information statement required under Rule 14f-1 containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company shall make such mailing with the mailing of the
Schedule 14D-9. Purchaser shall supply to the Company in a timely manner, and
shall be solely responsible for, any information with respect to Purchaser's
nominees, officers, directors and affiliates required by such Section 14(f) and
14f-1. Purchaser's designees shall be divided between the classes of directors
as necessary to comply with the requirements of the Company's bylaws. In
connection with the foregoing, the Company shall promptly, at the option of
Purchaser, either increase the size of the Board of Directors of the Company or
obtain the resignation of such number of its current directors as is necessary
to enable Purchaser's designees to be elected or appointed to the Board of
Directors of the Company as provided above. The date on which Purchaser's
designees constitute a majority of the Company's Board of Directors is herein
referred to as the "Control Date." Following the Control Date but prior to the
Effective Time: (i) no amendment or waiver of this Agreement on the Company's
behalf pursuant to Sections 9.03 and 9.04, respectively, and no termination of
this Agreement pursuant to Section 9.01(a) shall be valid; (ii) there shall be
no amendment to the certificate of incorporation or bylaws of the Company; (iii)
there shall be no extension of the time for the performance of any of the
obligations or other acts of Parent or Purchaser (including any extension of the
Closing pursuant to Section 4.4 or the Effective Time of the Merger beyond
filing of the Certificate of Merger); and (iv) no waiver of any provision in
favor of the Company in the Confidentiality Agreement, unless, in each such
case, there are Independent Directors in office and a majority of such
Independent Directors approve such amendment, waiver, termination or action, as
the case may be.
ARTICLE III
THE MERGER
3.1. The Merger. Subject to the terms and conditions set forth herein,
Purchaser shall merge with and into the Company at the Effective Time (the
"Merger"). The terms and conditions of the Merger and the mode of carrying the
same into effect shall be as set forth in this Agreement. As a result of the
Merger, the separate corporate existence of Purchaser shall cease and the
Company shall continue as the Surviving Corporation. At the election of Parent,
subject to Section 10.6, Parent or any Affiliate of Parent may be substituted
for Purchaser as a constituent corporation in the Merger.
3.2. Effective Time. As soon as practicable after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VIII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL.
3.3. Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time,
except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Purchaser and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Purchaser and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
3.4. Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended to read in its entirety the same as the
certificate of incorporation of Purchaser in effect immediately
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prior to the Effective Time, until further amended in accordance with applicable
law; provided that the name of the Surviving Corporation shall continue to be
Elite Information Group, Inc.
(b) The Bylaws of Purchaser as in effect immediately prior to the Effective
Time shall be the bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable Law; provided, however, that the
Bylaws of Purchaser shall be amended prior to the Effective Time to the extent
necessary to comply with Purchaser's obligations under the first sentence of
Section 7.12(a).
3.5. Directors and Officers. The directors of Purchaser immediately prior
to the Effective Time and/or any individuals designated by Parent shall be the
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time and/or any
individuals designated by Parent shall be the officers of the Surviving
Corporation, in each case until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and qualify.
3.6. Stock Options.
(a) Except as provided herein, upon consummation of the Merger, all then
outstanding vested and unvested Company Stock Options and all Company Common
Stock subject to a vesting requirement ("Restricted Stock") shall be cancelled
in exchange for a cash payment from the Company to the holder of a Company Stock
Option or Restricted Stock equal to (i) in the case of Company Common Stock
Options, the product of (x) the difference between the Per Share Merger
Consideration and the per share exercise price of the holder's Company Stock
Option multiplied by (y) the number of shares of Company Common Stock subject to
the holder's Company Stock Option and (ii) in the case of Restricted Stock, the
number of shares of the holder's Restricted Stock multiplied by the per share
Merger Consideration. All applicable Taxes shall be withheld from any proceeds
payable under this Section 3.6(a).
(b) Except as provided herein or as otherwise agreed to by the parties, (i)
the Company Option Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant by the Company or any of its Subsidiaries of any interest in respect of
the capital stock of the Company or any of its Subsidiaries shall be terminated
as of the Effective Time, and (ii) following the Effective Time no holder of
Company Stock Options or any participant in the Company Option Plans or any
other such plans, programs or arrangements shall have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof.
(c) Notwithstanding subparagraph (a) above or Section 7.2, upon the
acceptance of, and payment by Purchaser for, any shares of Company Common Stock
pursuant to the Offer, the Company shall redeem any Company Stock Options for
the cash payment provided in subparagraph (a) above (assuming an agreement of
redemption is made with the applicable optionholder).
3.7. Stockholders' Meeting.
(a) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer, prepare and file with the SEC the Proxy
Statement in preliminary form, and each of the Company and Parent shall use its
reasonable best efforts to respond as promptly as practicable to any comments of
the SEC or its staff with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of the Company Stockholder Approval
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects, unless such mailing is required by Law. The Company shall
use its reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing and clearance
with the SEC.
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(b) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer and the purchase of Shares pursuant
thereto, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of seeking
the Company Stockholder Approval. The Company shall, through the Board of
Directors of the Company, give the recommendation referred to in Section 2.2.
Notwithstanding the foregoing, (i) if Purchaser or any other Subsidiary of
Parent shall acquire at least 90% of the outstanding shares of Company Common
Stock, the parties shall, at the request of Parent, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a stockholders meeting in
accordance with Section 253 of the DGCL and (ii) the parties shall, at the
request of Parent, take all necessary and appropriate action to effect the
Merger through a written consent in lieu of the Company Stockholders' Meeting to
the extent permitted by, and in accordance with, applicable Law.
(c) Parent will provide the Company with the information concerning Parent
and Purchaser required to be included in the Proxy Statement and will vote, or
cause to be voted, all shares of Company Common Stock owned by it or its
Subsidiaries in favor of the adoption of this Agreement.
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
4.1. Merger Consideration; Conversion and Cancellation of Securities. At
the Effective Time, by virtue of the Merger and without any action on the part
of the Parent Companies, the Company or the holders of any of the following
securities:
(a) Subject to Section 4.3, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any
shares of Company Common Stock described in Section 4.1(c)) shall be
converted into the right to receive $11.00 in cash, without interest
thereon (the "Per Share Merger Consideration").
(b) All shares of Company Common Stock converted pursuant to Section
4.1(a) shall cease to be outstanding and shall automatically be canceled
and retired, and each holder of a Certificate previously evidencing such
shares of Company Common Stock shall cease to have any rights as a
stockholder of the Company, except the right to receive the Per Share
Merger Consideration for each such share.
(c) Each share of Company Common Stock that is owned by the Company,
Parent or Purchaser immediately prior to the Effective Time shall be
cancelled and retired and shall cease to exist and no consideration shall
be delivered in exchange therefor. Each share of Company Common Stock owned
by any Subsidiary of the Company or Parent (other than Purchaser)
immediately prior to the Effective Time shall remain outstanding without
change.
(d) Each share of common stock, par value $.01 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time shall
continue to be issued and outstanding as one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation.
4.2. Exchange of Certificates.
(a) Exchange Fund. Parent shall deposit, or cause to be deposited, on a
timely basis immediately after the Effective Time with the Paying Agent in the
Exchange Fund, for the payment of the Merger Consideration through the Paying
Agent upon surrender of Certificates in accordance with Section 4.2(c), cash in
an amount sufficient to make the cash payments due under Section 4.1(a). The
Exchange Fund shall not be used for any other purpose except as specified in
this Section 4.2.
(b) Letter of Transmittal. As soon as reasonably practicable after the
Effective Time, Parent will cause the Paying Agent to send a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) to each record holder of shares
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of Company Common Stock immediately prior to the Effective Time, along with
other appropriate materials for use in surrendering Certificates to the Paying
Agent.
(c) Exchange Procedures. Promptly after the Effective Time, the Paying
Agent shall distribute to each former holder of shares of Company Common Stock,
upon surrender to the Paying Agent for cancellation of one or more Certificates,
the Merger Consideration. If the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate or Certificates
are registered, it shall be a condition of payment of the Merger Consideration
that the surrendered Certificate or Certificates shall be properly endorsed,
with signatures guaranteed, or otherwise in proper form for transfer and that
the Person requesting such payment shall pay any transfer or other Taxes
required by reason of the payment of the Merger Consideration to a Person other
than the registered holder of the surrendered Certificate or Certificates or
such Person shall establish to the reasonable satisfaction of Parent that such
Tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 4.2(c), each Certificate shall be deemed from and after the
Effective Time to represent only the right to receive upon such surrender the
Per Share Merger Consideration for each share of Company Common Stock evidenced
by such Certificate. In no event shall the holder of any such surrendered
Certificate be entitled to receive interest on any cash to be received in the
Merger. Neither the Paying Agent nor any party hereto shall be liable to a
holder of shares of Company Common Stock for any amount paid to a public
official or Governmental Authority pursuant to any applicable abandoned
property, escheat, or similar Law. If any Certificate has not been surrendered
prior to the date which is five years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Authority), any such cash in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains unclaimed by the former holders of shares of Company Common Stock for
six months after the Effective Time shall be delivered to Parent, upon demand,
and any former holders of shares of Company Common Stock who have not
theretofore complied with this Article IV shall thereafter look only to Parent
for any cash payment to which they are entitled.
(e) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(f) Withholding of Tax. Parent or any of its Affiliates shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of shares of Company Common Stock such amounts as
Parent (or any Affiliate thereof) is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld by Parent
and paid by Parent to the applicable taxing authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of shares of Company Common Stock in respect of which such
deduction and withholding was made by Parent.
4.3. Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock ("Dissenting Shares") which are issued
and outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to demand and properly demands appraisal of such
Dissenting Shares pursuant to, and who complies in all respects with, Section
262 of the DGCL ("Section 262") shall not be converted as provided in Section
4.1(a), but rather the holders of Dissenting Shares shall be entitled only to
payment of the fair value of such Dissenting Shares in accordance with Section
262; provided, however, that if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal under Section
262, then the right of such holder to be paid the fair value of such holder's
Dissenting Shares shall cease and such Dissenting Shares shall be treated as if
they had been converted as of the Effective Time into the Merger Consideration
as provided in Section 4.1(a). The Company shall serve prompt notice to Parent
of any demands received by the Company for appraisal of any shares of Company
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Common Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do any
of the foregoing.
4.4. Closing. The closing (the "Closing") of the Merger shall take place at
the offices of Xxxxxxx Xxxxxx L.L.P., 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000 at 10 a.m. (Dallas time) on a date as soon as practicable following the
date on which the conditions to the Closing (other than those that, by their
terms, are to be satisfied at the Closing) have been satisfied or waived, or at
such other place, time and date as the parties hereto may agree. At the
conclusion of the Closing on the Closing Date, the parties hereto shall cause
the Certificate of Merger to be filed with the Secretary of State of the State
of Delaware.
4.5. Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company's Disclosure Letter that specifically
relates to such Section, the Company hereby represents and warrants to the
Parent Companies that:
5.1. Organization and Qualification; Subsidiaries. The Company and each
Subsidiary of the Company are legal entities duly organized, validly existing
and in good standing under the Laws of their respective jurisdictions of
incorporation or organization, have all requisite power and authority and
possess all governmental franchises and Permits necessary to enable them to own,
lease and operate their respective properties and assets and to carry on their
business as it is now being conducted and are duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by them or the ownership or leasing of their respective properties and
assets makes such qualification necessary, other than such franchises and
Permits and qualifications the lack of which, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company. Section 5.01 of the Company's Disclosure Letter sets
forth, as of the date of this Agreement, a true and complete list of all the
Company's directly or indirectly owned Subsidiaries, together with the
jurisdiction of incorporation of each Subsidiary and the percentage of each
Subsidiary's outstanding capital stock or other equity interests owned of record
or beneficially by the Company or another Subsidiary of the Company. Except for
such Subsidiaries and as disclosed in Section 5.01 of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries owns an equity interest
in any partnership or joint venture arrangement or other business entity.
5.2. Certificate of Incorporation and Bylaws. The Company has heretofore
furnished or made available to Parent complete and correct copies of the
certificate of incorporation and the bylaws or the equivalent organizational
documents, in each case as amended or restated to the date hereof, of the
Company. Neither the Company nor any of its Subsidiaries is in violation of any
of the provisions of its certificate of incorporation or bylaws (or equivalent
organizational documents).
5.3. Capitalization.
(a) The authorized capital stock of the Company consists of (i) 20,000,000
shares of Company Common Stock of which, as of December 13, 1999, 8,409,380
shares were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights, and
(ii) 2,000,000 shares of preferred stock, 400,000 of which are designated Series
A Junior Participating Preferred Stock, but none of which are issued and
outstanding. As of the date hereof, there were 705,165 shares of Company Common
Stock reserved for future issuance pursuant to outstanding Company Stock Options
granted pursuant to the Company Option Plans, and the exercise price for each of
such Company Stock Options is set forth in the Company's Disclosure Letter.
(b) Except as set forth in Section 5.3(a), no shares of Company Common
Stock are reserved for issuance, and, except for the Company Stock Options, as
listed in Section 5.3(b) of the Company's Disclosure
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Letter, there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, contracts, agreements, commitments or arrangements obligating
the Company (i) to offer, sell, issue or grant any shares of, or any options,
warrants or rights of any kind to acquire any shares of, or any securities that
are convertible into or exchangeable for any shares of, capital stock of the
Company, (ii) to redeem, purchase or acquire, or offer to purchase or acquire,
any outstanding shares of, or any outstanding options, warrants or rights of any
kind to acquire any shares of, or any outstanding securities that are
convertible into or exchangeable for any shares of, capital stock of the Company
or (iii) to grant any Lien on any shares of capital stock of the Company.
(c) Except as set forth in Section 5.3(c) of the Company's Disclosure
Letter, (i) the issued and outstanding shares of capital stock of, or other
equity interests in, each of the Subsidiaries of the Company that are owned by
the Company or any of its Subsidiaries have been duly authorized and are validly
issued, and, with respect to capital stock, are fully paid and nonassessable,
and were not issued in violation of any preemptive or similar rights of any past
or present equity holder of such Subsidiary; (ii) all such issued and
outstanding shares, or other equity interests, that are indicated as owned by
the Company or one of its Subsidiaries in Section 5.3(c) of the Company's
Disclosure Letter are owned (A) beneficially as set forth therein and (B) free
and clear of all Liens except as described therein; (iii) no shares of capital
stock of, or other equity interests in, any Subsidiary of the Company are
reserved for issuance, and there are no options, warrants, rights, convertible
or exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, contracts, agreements, commitments or
arrangements obligating the Company or any of its Subsidiaries (A) to offer,
sell, issue, grant, pledge, dispose of or encumber any shares of capital stock
of, or other equity interests in, or any options, warrants or rights of any kind
to acquire any shares of capital stock of, or other equity interests in, or any
securities that are convertible into or exchangeable for any shares of capital
stock of, or other equity interests in, any of the Subsidiaries of the Company
or (B) to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding shares of capital stock of, or other equity interests in, or any
outstanding options, warrants or rights of any kind to acquire any shares of
capital stock of, other equity interests in, or any outstanding securities that
are convertible into or exchangeable for, any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of the Company or (C) to
grant any Lien on any outstanding shares of capital stock of, or other equity
interests in, any of the Subsidiaries of the Company.
(d) Except for the Company Option Plans listed in Section 5.3(b) of the
Company's Disclosure Letter, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound with respect to the voting of any shares of capital stock
of the Company or any of its Subsidiaries or with respect to the future
registration of the offering, sale or delivery of any shares of capital stock of
the Company or any of its Subsidiaries under the Securities Act.
(e) There are not any bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote ("Voting Company Debt").
5.4. Authorization of Agreement.
(a) The Company has all requisite corporate power and authority to execute
and deliver each Transaction Agreement to which it is a party and each
instrument required hereby to be executed and delivered by it prior to or at the
Closing, to perform its obligations hereunder and thereunder and to consummate
the Transactions. The execution and delivery by the Company of each Transaction
Agreement to which it is a party and each instrument required hereby to be
executed and delivered by it prior to or at the Closing and the performance of
its obligations hereunder and thereunder have been duly and validly authorized
by all requisite corporate action on the part of the Company (other than,
assuming the accuracy of the representations and warranties in Section 6.8, with
respect to the Merger, the adoption of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock in accordance with
the DGCL). Each Transaction Agreement to which it is a party has been duly
executed and delivered by the Company and (assuming due authorization, execution
and delivery hereof by the other parties hereto)
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constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as the same may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws relating to creditors' rights generally, and
(ii) legal principles of general applicability governing the application and
availability of equitable remedies.
(b) Assuming the accuracy of the representations and warranties contained
in Section 6.8: (i) the only vote of holders of any class or series of capital
stock of the Company necessary to adopt or approve this Agreement and the Merger
is the adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock (the "Company Stockholder Approval");
and (ii) the affirmative vote of the holders of any capital stock of the
Company, or any of them, is not necessary to consummate the Offer or any other
Transaction, other than the Merger.
5.5. Approvals. Except for the applicable requirements, if any, of (a) the
Exchange Act, (b) state securities Laws or blue sky Laws, (c) the HSR Act, (d)
the filing and recordation of appropriate merger documents as required by the
DGCL and (e) those Laws and Orders noncompliance with which would not reasonably
be expected to have a material adverse effect on the ability of the Company to
perform its obligations under each Transaction Agreement to which it is a party
or to have a Material Adverse Effect on the Company, no filing or registration
with, no waiting period imposed by and no Permit or Order of, any Governmental
Authority is required under any Law or Order applicable to the Company or any of
its Subsidiaries to permit the Company to execute, deliver or perform each
Transaction Agreement to which it is a party or any instrument required hereby
or thereby to be executed and delivered by it prior to or at the Closing.
5.6. No Violation. Except as set forth in Section 5.6 of the Company's
Disclosure Letter, assuming effectuation of all filings and registrations with,
termination or expiration of any applicable waiting periods imposed by and
receipt of all Permits and Orders of, Governmental Authorities indicated as
required in Section 5.5 and adoption of this Agreement by the stockholders of
the Company as required by the DGCL, neither the execution and delivery by the
Company of any Transaction Agreement to which it is a party or any instrument
required hereby or thereby to be executed and delivered by it prior to or at the
Closing nor the performance by the Company of its obligations hereunder or
thereunder will (a) conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a Material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary of the Company under, any provision of (i) any Law or Order
applicable to the Company, (ii) the certificate of incorporation or bylaws of
the Company or (iii) any contract or agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties or assets is bound, or (b) with the
passage of time, the giving of notice or the taking of any action by a third
Person, have any of the effects set forth in clause (a) of this Section, except
in any such case for any matters described in this Section that would not
reasonably be expected to have a Material Adverse Effect on the Company. Prior
to the execution of this Agreement, assuming the accuracy of the representations
and warranties contained in Section 6.8, the Board of Directors of the Company
has taken all necessary action to cause this Agreement and the other Transaction
Agreements and the Transactions to be exempt from the provisions of Section 203
of the DGCL No other state takeover statute or similar Law or Regulation applies
to the Company with respect to this Agreement, the other Transaction Agreements,
the Offer, the Merger or any other Transaction. The Company has been advised by
each of its directors and executive officers that each such Person currently
intends to tender all shares of Company Common Stock owned by such Person
pursuant to the Offer.
5.7. Reports and Financial Statements.
(a) The Company has filed all SEC Reports required to be filed by the
Company with the SEC (the "Company SEC Documents"). As of its respective date,
each Company SEC Document complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as the case may be,
applicable to such Company SEC Document, and 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 therein,
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in light of the circumstances under which they were made, not misleading. Except
to the extent that information contained in any Company SEC Document has been
revised or superseded by a later filed Company SEC Document, none of the Company
SEC Documents contains any untrue statement of a material fact or omits 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 were
made, not misleading. No Subsidiaries of the Company are SEC reporting
companies.
(b) The Company and its Subsidiaries have filed all Reports required to be
filed with any Governmental Authorities other than the SEC, including state
securities administrators, except where the failure to file any such Reports of
the Company would not reasonably be expected to have a Material Adverse Effect
on the Company. Such Reports of the Company, including all those filed after the
date of this Agreement and prior to the Effective Time, were or will be prepared
in all material respects in accordance with the requirements of applicable Law.
(c) The Company Consolidated Financial Statements and any consolidated
financial statements of the Company (including any related notes thereto)
contained in any SEC Reports of the Company filed with the SEC (i) have been or
will have been prepared in accordance with applicable accounting requirements
and the published Regulations of the SEC and/or in accordance with GAAP
consistently applied (except (A) to the extent required by changes in GAAP and
(B) with respect to SEC Reports of the Company filed prior to the date of this
Agreement, as may be indicated in the notes thereto) and (ii) fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (and include, in the case of
any unaudited interim financial statements, reasonable accruals for normal
year-end adjustments).
5.8. No Undisclosed Liabilities. Except as set forth in Section 5.8 of the
Company's Disclosure Letter, there exist no liabilities or obligations of the
Company and its Subsidiaries, whether accrued, absolute, contingent or
otherwise, which would be required to be reflected, reserved for or disclosed
under GAAP in consolidated financial statements of the Company (including the
notes thereto) as of and for the most recent period ended prior to the date this
representation and warranty is given or required to be true to satisfy any
condition to the Offer or the Merger, other than (a) liabilities or obligations
that are adequately reflected, reserved for or disclosed in the Company's
Consolidated Financial Statements and (b) liabilities or obligations incurred in
the ordinary course of business of the Company since the Balance Sheet Date of
similar nature and amount as the liabilities and obligations of the Company as
of the Balance Sheet Date.
5.9. No Material Adverse Effect; Conduct. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents") or in Section 5.9 of the Company's
Disclosure Letter, from the date of the most recent audited financial statements
included in the Filed Company SEC Documents, the Company has conducted its
business only in the ordinary course, and during such period there has not been:
(a) any event, change, effect or development that, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend on, or
other distribution in respect of (whether in cash, stock or property), any
capital stock of the Company or any repurchase for value by the Company of
any capital stock of the Company;
(c) any split, combination or reclassification of any capital stock of
the Company or of any other equity interests in the Company, or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of
the Company or of any other equity interests in the Company;
(d) (i) any granting by the Company or any Subsidiary of the Company
to any director or executive officer of the Company or any Subsidiary of
the Company of any increase in compensation, except in the ordinary course
of business consistent with past practice or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (ii) any
granting by the Company or any Subsidiary of the Company to any
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such director or executive officer of any increase in severance or
termination pay, except as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, or (iii)
any entry by the Company or any Subsidiary of the Company into any
employment, severance or termination agreement with any such director or
executive officer; or
(e) any change in accounting methods, principles or practices by the
Company or any Subsidiary of the Company materially affecting the
consolidated assets, liabilities or results of operations of the Company.
5.10. Schedule 14D-9; Offer Documents; Proxy Statement. None of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy Statement, including any amendments or supplements thereto,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published or sent or given to holders of
shares of Company Common Stock, and, in the case of the Proxy Statement, at the
time that it or any amendment or supplement thereto is mailed to the Company's
stockholders, at the time of the Company Stockholders' Meeting or at the
Effective Time, will 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; provided, that the foregoing shall not apply to
information supplied by or on behalf of Parent or the Purchaser specifically for
inclusion or incorporation by reference in any such document. Schedule 14D-9
will comply as to form in all material respects with the provisions of the
Exchange Act, except that no representation is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied by Parent or Purchaser for inclusion or incorporation by reference
therein.
5.11. Properties and Assets. Except as set forth in Section 5.11 of the
Company's Disclosure Letter, the Company and its Subsidiaries own or have rights
to use all properties and assets necessary to permit the Company and its
Subsidiaries to continue to conduct their businesses as currently being
conducted except where the failure to own or have the right to use such
properties and assets would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Except as set forth
in Section 5.11 of the Company's Disclosure Letter, each of the Company and its
Subsidiaries has good and indefeasible fee title to, or valid leasehold
interests in, all its material real property, free and clear of all Liens,
except for Permitted Liens. As of the date of this Agreement, the Company had
cash of over $30 million. There are no Liens on the Company's cash, nor are
there any contractual restrictions on the use or distribution of the Company's
cash.
5.12. Contracts. Section 5.12(a) of the Company's Disclosure Letter
contains a true and complete list of all "Company Contracts". All Company
Contracts are in full force and effect, the Company or the Subsidiary of the
Company that is a party to or bound by such Company Contract has performed its
obligations thereunder to date and, to the Knowledge of the Company, each other
party thereto has performed its obligations thereunder to date. Except as set
forth in Section 5.12(b) of the Company's Disclosure Letter, neither the Company
nor any of its Subsidiaries has received any written notice of the intention of
any party to terminate any Company Contract, whether as a termination for
convenience or for default of the Company or any Subsidiary thereunder.
5.13. Litigation; Compliance with Laws. There are no actions, suits,
investigations or proceedings (including any proceedings in arbitration) pending
or, to the Knowledge of the Company, threatened against the Company or any of
its Subsidiaries, at law or in equity, except actions, suits or proceedings that
are set forth in Section 5.13 of the Company's Disclosure Letter. Except as set
forth in Section 5.13 of the Company's Disclosure Letter, the Company and its
Subsidiaries are in compliance with all applicable Laws and Regulations and are
not in default with respect to any Order applicable to the Company or any of its
Subsidiaries, except such events of noncompliance or defaults that, individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company. Since January 1, 1994, to the date hereof, neither the
Company nor any Subsidiary of the Company has received any written notice of any
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administrative or civil or criminal investigation or audit (other than Tax
audits) by any Governmental Authority.
5.14. Employee Benefit Plans.
(a) Each Benefit Plan of the Company and its Subsidiaries is listed in
Section 5.14(a) of the Company's Disclosure Letter, including, with respect to
Terminated Benefit Plans, the date of termination.
(b) Except as set forth in Section 5.14(b) of the Company's Disclosure
Letter, no event has occurred and, to the Knowledge of the Company, there exists
no condition or set of circumstances in connection with which the Company or any
of its Subsidiaries could be subject to any liability under the terms of any
Benefit Plan, or under ERISA, or, with respect to any Benefit Plan, under the
Code or any other applicable Law. Each of the Benefit Plans has been
administered in material compliance with its terms and with the applicable
provisions of ERISA, the Code and any other applicable Law.
(c) Except as set forth in Section 5.14(c) of the Company's Disclosure
Letter, as to any Benefit Plan of the Company intended to be qualified under
Section 401 of the Code, such Benefit Plan has been determined by the IRS to
satisfy in form the requirements of such Section, no event has occurred that,
individually or in the aggregate, could be reasonably expected to result in the
disqualification of such Benefit Plan (disregarding correction methods under the
Employee Plans Compliance Resolution System) and there has been no termination
or partial termination of such Benefit Plan within the meaning of Section
411(d)(3) of the Code.
(d) As to any Terminated Benefit Plan intended to have been qualified under
Section 401 of the Code, such Terminated Benefit Plan received a favorable
determination letter from the IRS with respect to its termination, all
liabilities with respect to each such plan have been satisfied by the purchase
of annuities or otherwise, and each Terminated Benefit Plan has been terminated
in accordance with the requirements of law and the terms of the plan.
(e) There are no investigations, audits, actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the Company,
threatened against, or with respect to, any Benefit Plan or its assets.
(f) To the Knowledge of the Company, there is no matter pending (other than
routine qualification determination filings) with respect to any Benefit Plan
before the IRS, the Department of Labor or the PBGC.
(g) All contributions required to be made by the Company or the Company's
Subsidiaries to any Benefit Plan pursuant to its terms and provisions have been
timely made.
(h) Neither the Company or any of its subsidiaries maintain any Current
Benefit Plan subject to Title IV of ERISA.
(i) Except as set forth in Section 5.14(i) of the Company's Disclosure
Letter, no employee of the Company or any Subsidiary of the Company or any
fiduciary of a Benefit Plan has a material liability with respect to a Benefit
Plan.
(j) In connection with the consummation of the Transactions, no payments
have been or will be made under any Current Benefit Plan or any other program,
agreement, policy or arrangement which would be nondeductible under Section 280G
of the Code.
(k) Except as set forth in Section 5.14(k) of the Company's Disclosure
Letter, the execution and delivery of this Agreement and the consummation of the
Transactions will not (i) require the Company or any of its Subsidiaries to pay
greater compensation or make a larger contribution to, or pay greater benefits
or accelerate payment or vesting of a benefit under, any Current Benefit Plan or
any other program, agreement, policy or arrangement or (ii) create or give rise
to any additional vested rights or service credits under any Current Benefit
Plan or any other program, agreement, policy or arrangement.
(l) Except as set forth in Section 5.14(l) of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreement, program or policy. True and
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correct copies of all employment agreements with officers of the Company and its
Subsidiaries, and all vacation, overtime and other compensation policies of the
Company and its Subsidiaries relating to their employees have been made
available to Parent.
(m) No Benefit Plan provides retiree medical or retiree life insurance
benefits to any Person and neither the Company nor any of its Subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide any
Person with life insurance or medical benefits upon retirement or termination of
employment, other than as required by the provisions of Sections 601 through 608
of ERISA and Section 4980B of the Code.
(n) Neither the Company nor any of its Subsidiaries contributes or has an
obligation to contribute, and neither has within six years prior to the date of
this Agreement contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(o) No compensation payable by the Company or any of its Subsidiaries to
any of their employees under any Current Benefit Plan or other program,
agreement, policy or arrangement is subject to disallowance under Section 162(m)
of the Code.
(p) All liabilities of Benefit Plans required to be included in the
Company's financial statements under financial accounting standards has been so
included in the Financial statements.
(q) The Company or a Subsidiary of the Company has retained the right to
terminate, suspend or amend any Benefit Plan.
5.15. Labor Matters. No collective bargaining agreement to which the
Company or any of its Subsidiaries is a party is currently in effect or is being
negotiated by the Company or any of its Subsidiaries. There is no pending or, to
the Knowledge of the Company, threatened labor dispute, strike or work stoppage
against the Company or any of its Subsidiaries. Neither the Company or any of
its Subsidiaries nor any representative or employee of the Company or any of its
Subsidiaries has committed any unfair labor practices in connection with the
operation of the business of the Company and its Subsidiaries, and there is no
pending or, to the Knowledge of the Company, threatened charge or complaint
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable agency of any state of the United States. The Company
and its Subsidiaries are in compliance with all applicable federal, state, local
or foreign labor Laws.
5.16. Taxes.
(a) Except as disclosed in Section 5.16(a) of the Company's Disclosure
Letter, (i) the Company and each Subsidiary of the Company, and any affiliated
group, within the meaning of Section 1504 of the Code, of which the Company or
any Subsidiary of the Company is or has been a member, has filed or will file in
a timely manner (within any applicable extension periods) all material Tax
Returns required to be filed by the Code or by applicable state, local or
foreign tax Laws, and all such Tax Returns are or will be true, complete and
accurate in all material respects, (ii) all Taxes with respect to taxable
periods covered by such Tax Returns, and all other Taxes for which the Company
or any Subsidiary of the Company is or might otherwise be liable, have been
timely paid in full or will be timely paid in full by the due date thereof and
the most recent audited financial statements contained in the Filed Company SEC
Documents for the Company reflect an adequate reserve for all Taxes accruing or
payable by the Company and its Subsidiaries for all taxable periods and portions
thereof through the date of such financial statements, and (iii) there are no
material liens for Taxes with respect to any of the assets or properties of the
Company or any Subsidiary of the Company.
(b) Except as disclosed in Section 5.16(b) of the Company's Disclosure
Letter, no Tax Return of the Company or of any Subsidiary of the Company is
under examination by the Internal Revenue Service, and no written notice of such
an audit or examination has been received by the Company or any Subsidiary of
the Company.
(c) Each deficiency resulting from any audit or examination relating to
Taxes by any Taxing Authority has been timely paid. No material issues relating
to Taxes were raised by the relevant Taxing Authority in any completed audit or
examination that can reasonably be expected to recur in a later taxable period.
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(d) Neither the Company nor any Subsidiary of the Company is party to or
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including any advance
pricing agreement, closing agreement or other agreement relating to Taxes with
any Taxing Authority).
(e) Except as disclosed in Section 5.16(e) of the Company's Disclosure
Letter or as disclosed in the most recent audited financial statements included
in the Filed Company SEC Documents, neither the Company nor any Subsidiary of
the Company shall be required to include in a taxable period ending after the
Effective Time taxable income attributable to income that accrued in a
Pre-Effective Time Tax period but that was not recognized in any Pre-Effective
Time Tax period as a result of the installment method of accounting, the
completed contract or percentage contract methods of accounting (including the
look-back method under Section 460(b)(2) of the Code), the cash method of
accounting or Section 481 of the Code or any comparable provision of state,
local, or foreign Tax law, or for any other reason.
(f) Except as disclosed in Section 5.16(f) of the Company's Disclosure
Letter, (i) there are no outstanding agreements or waivers extending, or having
the effect of extending, the statutory period of limitation applicable to any
Tax Returns required to be filed with respect to the Company or any Subsidiary
of the Company, (ii) neither the Company nor any Subsidiary of the Company, nor
any affiliated group, within the meaning of Section 1504 of the Code, of which
the Company or any Subsidiary of the Company is or has ever been a member, has
requested any extension of time within which to file any Tax Return, which
return has not yet been filed , and (iii) no power of attorney with respect to
any Taxes has been executed or filed with any Taxing Authority by or on behalf
of the Company or any Subsidiary of the Company.
(g) The Company and its Subsidiaries have complied in all material respects
with all applicable Laws relating to the payment and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402
of the Code or any comparable provision of any state, local or foreign Laws) and
have, within the time and in the manner prescribed by applicable Law, withheld
from and paid over to the proper Taxing Authorities all amounts required to be
so withheld and paid over under applicable Laws.
(h) To the Company's knowledge, no person who holds five percent or more of
the stock of the Company is a "foreign person" as defined in Section 1445 of the
Code.
(i) None of the Company and its Subsidiaries, has been a member of an
affiliated group filing a consolidated Federal income Tax Return other than the
affiliated group of which the Company is the common parent corporation.
5.17. Environmental Matters. The properties, operations and activities of
the Company and its Subsidiaries are in compliance with all material
Environmental Laws. The Company and its Subsidiaries and the properties,
operations and activities of the Company and its Subsidiaries are not subject
to, and have not received written notice of, any existing, pending or, to the
Knowledge of the Company, threatened action, suit, investigation, inquiry or
proceeding by or before any Court or Governmental Authority under any
Environmental Law. All material Permits or applications therefor required to be
obtained or filed by the Company or any of its Subsidiaries under any
Environmental Law in connection with the properties, operations and activities
of the Company and its Subsidiaries have been obtained or filed and are valid
and currently in full force and effect, and, to the Company's Knowledge, there
are no facts or circumstances that would cause such Permits to be revoked,
modified or not renewed under current conditions or in connection with the
transactions contemplated by this Agreement. There has been no material release
of any hazardous substance, pollutant or contaminant into the environment by the
Company or its Subsidiaries or in connection with their properties, operations
or activities. There has been no exposure (attributable to the action of the
Company or its Subsidiaries) of any Person or property to any hazardous
substance, pollutant or contaminant in connection with the properties,
operations and activities of the Company and its Subsidiaries in such quantities
or of such type as would reasonably be expected to give rise to a claim, demand
or suit. Neither the Company nor its Subsidiaries have assumed, whether by
contract, operation of Law or otherwise, any liabilities or obligations arising
under Environmental Laws in connection with their respective formerly owned
properties, businesses, divisions, Subsidiaries, companies or other entities.
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5.18. Intellectual Property. Section 5.18 of the Company's Disclosure
Letter contains a complete list of all Patents and Trademarks which are owned by
the Company or its Subsidiaries. Except as set forth in Sections 5.6 and 5.18 of
the Company's Disclosure Letter:
(a) The rights of the Company in and to each item of Intellectual
Property are owned or licensed by the Company, free and clear of any Liens
(except, in the case of licensed Intellectual Property, as set forth in the
license therefor). All of the Company's rights in and to such Intellectual
Property owned by the Company are freely assignable by it or its
Subsidiaries. As of the date of this Agreement, the Company is under no
obligation to pay any royalty, license fee or other similar consideration
to any third party or to obtain any approval or consent for use of any of
the Intellectual Property (except, in the case of licensed Intellectual
Property, as set forth in the license therefor). None of the Intellectual
Property owned by the Company or its Subsidiaries is subject to any
outstanding judgment, order, decree, or injunction issued by a court of
competent jurisdiction; no complaint, action, suit, proceeding, or hearing,
is pending or, to the Knowledge of the Company, no charge, investigation,
claim or demand, is threatened, which challenges the legality, validity,
enforceability, or ownership of any of the Intellectual Property owned and
currently used by the Company or its Subsidiaries.
(b) No breach or default (or event which with notice or lapse of time
or both would result in an event of default) by the Company exists or has
occurred, but not been cured, under any License-In or other agreement
pursuant to which the Company uses any Intellectual Property, and the
consummation of the transactions contemplated by this Agreement will not
violate or conflict with or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) or result in a
forfeiture under, or constitute a basis for termination of, any such
License-In or other agreement, except for such breaches, defaults,
violations or conflicts which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) The Company owns or has the right to use all the Intellectual
Property necessary to provide, produce, sell or license the services and
products currently provided, produced, sold or licensed by the Company and
conduct the Company's business as presently conducted, and the consummation
of the transactions contemplated hereby will not impair any such rights,
including any right of the Company to use or sublicense any Intellectual
Property owned by others. The Intellectual Property covers all rights that
are necessary to operate the business of the Company as it is presently
conducted and to satisfy and perform the contracts, commitments,
arrangements and understandings with customers of the Company. The Company
has no Knowledge of any reason the Company will not be able to continue to
own, use, license or sub-license all Intellectual Property without
infringing any enforceable intellectual property rights of any third party.
(d) Except for Licensed-In Intellectual Property, no Intellectual
Property owned or used by the Company, and no product or service licensed
or sold by the Company, infringes any trademark, trade name, copyright or
patent, or misappropriates any trade secret, right of publicity, right of
privacy or other proprietary right of any Person or would give rise to an
obligation to render an accounting to any Person as a result of
co-authorship or co-invention; provided, however, that as to Licensed-In
Intellectual Property of a third party, such representation is qualified by
"to the Knowledge of the Company." The Company has received no written
notice of any adversely held patent, trademark, copyright, service xxxx,
trade name or trade secret of any other Person alleging or threatening to
assert that the Company's use of any of the Intellectual Property infringes
upon or is in conflict with any intellectual property or proprietary rights
of any third party. The Company has no Knowledge of any basis for any
charge, claim, suit or action asserting any such infringement or asserting
that the Company does not have the legal right to use any such Intellectual
Property.
(e) All the Company's Patents and registered Trademarks listed in
Section 5.18 of the Company's Disclosure Schedule as having been filed in,
issued by or registered with the United States Patent and Trademark Office
or the corresponding offices of other countries have been so duly filed,
registered or issued, as the case may be, and have been properly maintained
and renewed in accordance with all applicable provisions of law and
administrative regulations in the United States and each such other
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country. The Company has used reasonable efforts to diligently protect its
rights in such Intellectual Property, and, to the Knowledge of the Company,
there have been no acts or omissions by the Company, the result of which
would be to compromise the rights of the Company to apply for or enforce
appropriate legal protection of such Intellectual Property in the United
States or in such countries as the Company has done business within the
past year.
(f) Each of the Company's employees and those independent contractors
retained by the Company who, either alone or in concert with others,
created or creates, developed or develops, invented or invents, discovered
or discovers, derived or derives, programmed or programs or designed or
designs any of the Intellectual Property, has entered into a written
agreement with the Company providing, in substance, that all such
Intellectual Property shall be owned by, or otherwise assigned to, the
Company and that the Company's Proprietary Information shall not be used,
or disclosed to any third party except as authorized by the Company. No
former employees or independent contractors of the Company have any claim
or right to any of the Intellectual Property necessary for the lawful
conduct of the Company's business as now conducted. To the Knowledge of the
Company, no employee of the Company is a party to or otherwise bound by any
agreement with or obligated to any other Person (including, any former
employer) which prevents such employee from performing any material
obligation or commitment of such employee to the Company under any
agreement to which he or she is currently a party.
(g) The Company and each of its Subsidiaries has used its reasonable
best efforts to protect the proprietary and, as appropriate, confidential
nature of all Proprietary Information that it presently owns or uses.
For purposes of this Agreement, "Intellectual Property" means all of the
following which is owned by, licensed by, licensed to, or used by the Company
and its Subsidiaries (including all authorized copies and embodiments thereof
that are fixed in a tangible media or form): (i) all registered and unregistered
trademarks, service marks, logos, trade names, and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction, and applications in any jurisdiction to register (the
"Trademarks"); (ii) all issued U.S. and foreign patents and pending patent
applications (including, without limitation, divisionals, continuation,
continuation in part, continuing and renewal applications) (the "Patents");
(iii) all registered and unregistered copyrights and all applications to
register the same (the "Copyrights"), (iv) all protectable items of trade dress
used by the Company and its Subsidiaries, (v) all computer software and
protectable databases owned by the Company or under development by, or
specifically on behalf of, the Company (the "Software"); (vi) all licenses and
agreements pursuant to which the Company has acquired rights in or to the
Trademarks, Patents, Copyrights or Software (excluding software and databases
licensed to the Company under standard (except for immaterial deviations),
nonexclusive software licenses granted to end-user customers by third parties in
the ordinary course of such third parties' business) ("Licenses-In"), (vii) all
licenses and agreements pursuant to which the Company has licensed or
transferred the rights in and to Company Intellectual Property (excluding
software licensed by the Company under standard (except for immaterial
deviations) non-exclusive software licenses granted to end-user customers by the
Company as part of the sale of the Company's products) ("Licenses Out"); and
(viii) all confidential and proprietary trade secrets, know-how, processes,
procedures, drawings, specifications, designs, plans, proposals, or technical
data. ("Proprietary Information").
5.19. Brokers. Except as set forth in Section 5.19 of the Company's
Disclosure Letter, no broker, finder or investment banker (other than the
Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The estimated fees and expenses incurred and to be
incurred by the Company in connection with the Offer, the Merger and the other
Transactions (including the fees of the Financial Adviser and the fees of the
Company's legal counsel) are set forth in Section 5.19 of the Company's
Disclosure Letter. The Company has furnished to Parent a true and complete copy
of all agreements between the Company and the Financial Advisor relating to the
Merger and the other Transactions.
5.20. Opinion of Financial Advisor. The Company has received the opinion of
the Financial Advisor in customary form, dated the date of this Agreement, to
the effect that, as of such date, the consideration to be
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received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of view.
5.21. Year 2000. The disclosures in the Company's Form 10-Q for the period
ending September 30, 1999 regarding the status of "Year 2000 Issues" are true,
correct and complete in all material respects as if made on the date of this
Agreement.
5.22. Insurance. The Company and its Subsidiaries maintain policies of fire
and casualty, liability and other forms of insurance in such amounts, with such
deductibles and against such risks and losses as are reasonable for the assets
and properties of the Company and its Subsidiaries and as are customary in the
Company's industry. As of the date of this Agreement all such policies are in
full force and effect, all premiums due and payable thereon have been paid, and
no notice of cancellation or termination has been received with respect to any
such policy.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
The Parent Companies hereby represent and warrant to the Company that:
6.1. Organization and Qualification; Subsidiaries. Parent and Purchaser are
legal entities duly organized, validly existing and in good standing under the
Laws of their respective jurisdictions of incorporation or organization, have
all requisite power and authority to own, lease and operate their respective
properties and assets and to carry on their business as it is now being
conducted and are duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by them or the
ownership or leasing of their respective properties and assets makes such
qualification necessary, other than such qualifications the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on Parent.
6.2. Authorization of Agreement. Each of Parent and Purchaser has all
requisite corporate power and authority to execute and deliver, each Transaction
Agreement to which it is a party and each instrument required hereby to be
executed and delivered by it prior to or at the Closing, to perform its
obligations hereunder and thereunder and to consummate the Transactions. The
execution and delivery by Parent and Purchaser of each Transaction Agreement to
which it is a party and each instrument required hereby to be executed and
delivered by Parent or Purchaser prior to or at the Closing and the performance
of their respective obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of Parent and
Purchaser, respectively. Each Transaction Agreement to which it is a party has
been duly executed and delivered by Parent and Purchaser and (assuming due
authorization, execution and delivery hereof by the other party hereto)
constitutes a legal, valid and binding obligation of Parent and Purchaser,
enforceable against Parent and Purchaser in accordance with its terms, except as
the same may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar Laws relating to creditors'
rights generally and (b) legal principles of general applicability governing the
application and availability of equitable remedies.
6.3. Approvals. Except for the applicable requirements, if any, of (a) the
Exchange Act, (b) state securities Laws or blue sky Laws, (c) the HSR Act, (d)
the filing and recordation of appropriate merger documents as required by the
DGCL (and other state Laws where Purchaser or the Company are qualified to do
business) and (e) those Laws and Orders noncompliance with which would not
reasonably be expected to have a material adverse effect on the ability of
Parent or Purchaser to perform its obligations under each Transaction Agreement
to which it is a party, no filing or registration with, no waiting period
imposed by and no Permit or Order of, any Governmental Authority is required
under any Law or Order applicable to Parent or Purchaser to permit Parent or
Purchaser to execute, deliver or perform each Transaction Agreement to which it
is a party or any instrument required hereby or thereby to be executed and
delivered by it prior to or at the Closing.
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6.4. No Violation. Assuming effectuation of all filings and registrations
with, termination or expiration of any applicable waiting periods imposed by and
receipt of all Permits and Orders of, Governmental Authorities indicated as
required in Section 6.3, neither the execution and delivery by Parent or
Purchaser of any Transaction Agreement to which it is a party or any instrument
required hereby or thereby to be executed and delivered by Parent or Purchaser
prior to or at the Closing nor the performance by Parent or Purchaser of their
respective obligations hereunder or thereunder will (a) conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a Material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any Subsidiary of Parent under, any provision of (i) any
Law or Order applicable to Parent or Purchaser, (ii) the certificate of
incorporation or bylaws of Parent or Purchaser or (iii) any contract or
agreement to which Parent or any of its Subsidiaries is a party or by which it
or any of its properties or assets is bound, or (b) with the passage of time,
the giving of notice or the taking of any action by a third Person, have any of
the effects set forth in clause (a) of this Section, except in any such case for
any matters described in this Section that would not reasonably be expected to
have a material adverse effect upon the ability of Parent or Purchaser to
perform its obligations under this Agreement or any other Transaction Agreement.
6.5. Proxy Statement; Schedule 14D-9. None of the information supplied or
to be supplied by or on behalf of Parent or Purchaser for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
Proxy Statement, including any amendments or supplements thereto, incorporation
by reference in the Offer Documents, the Schedule 14D-9 or the Proxy Statement,
including any amendments or supplements thereto, at the time such document is
filed with the SEC, at any time it is amended or supplemented or at the time it
is first published or given to holders of shares of Company Common Stock, and,
in the case of the Proxy Statement, at the time that it or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Company Stockholders' Meeting or at the Effective Time, will 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; provided
that the foregoing shall not apply to information supplied by or on behalf of
the Company specifically for inclusion or incorporation by reference in any such
document. The Offer Documents will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law, and will comply as to form in all
material respects with the provisions of the Exchange Act and any other
applicable law, except that no representations is made by Parent or Purchaser
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
6.6. Sufficient Funds. Parent and Purchaser have access to sufficient funds
to consummate the Offer and the Merger on the terms contemplated by this
Agreement and to pay related fees and expenses, the evidence of which
sufficiency has been provided in Section 6.6 of the Purchaser's Disclosure
Letter.
6.7. Brokers. Except for Warburg Dillon Read, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
and on behalf of Parent or Purchaser.
6.8. DGCL 203. At no time during the three (3) years prior to the date of
this Agreement has Parent, Purchaser, or any of their respective Affiliates,
been an "interested stockholder" within the meaning of, and as defined in,
Section 203 of the DGCL.
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ARTICLE VII
COVENANTS
7.1. Conduct of Business of the Company. The Company hereby covenants and
agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by Parent and, after
the Control Date, also by a majority of the Independent Directors, it will and
will cause each of its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use reasonable efforts to preserve intact its business
organization, maintain its material rights and franchises, retain the
services of its respective key employees and maintain its relationships
with its respective customers and suppliers and others having business
dealings with it;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain
supplies and inventories in quantities consistent with its customary
business practice; and
(d) use reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that currently
maintained.
7.2. Prohibited Actions by the Company. Without limiting the generality of
Section 7.1, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent
and after the Control Date, also by a majority of the Independent Directors,
which consents shall not be unreasonably withheld or delayed, from the date of
this Agreement until the Effective Time, it will not do, and will not permit any
of its Subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become payable to
any director or employee, except for increases in salary or wages of
employees in the ordinary course of business and consistent with past
practice or as required under any existing employment agreements, and
except that the Company may pay annual bonuses for fiscal year 1999 as
provided in Item 7 of Section 5.14(a) of the Company's Disclosure Letter;
(ii) grant any severance or termination pay (other than pursuant to any
existing employment agreements or the normal severance policy or practice
of the Company or its Subsidiaries as in effect on the date of this
Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish,
adopt, enter into or amend in any material respect any collective
bargaining agreement or Benefit Plan of the Company or its Subsidiaries
except as required by applicable Law or (iv) take any action to accelerate
any rights or benefits, or make any material determinations not in the
ordinary course of business consistent with past practice, under any
collective bargaining agreement or Benefit Plan of the Company or its
Subsidiaries;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property),
outstanding shares of capital stock, except for dividends by a wholly owned
Subsidiary of the Company to the Company or another wholly owned Subsidiary
of the Company;
(c) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any outstanding shares of capital stock of,
or other equity interests in, or any securities that are convertible into
or exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, the
Company or any of its Subsidiaries (other than (i) any such acquisition by
the Company or any of its wholly owned Subsidiaries directly from any
wholly owned Subsidiary of the Company in exchange for capital
contributions or loans to such Subsidiary or (ii) any purchase, forfeiture
or retirement of shares of Company Common Stock or the Company Stock
Options occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Company or any of its
Subsidiaries);
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in,
the Company or any of its Subsidiaries or issue or authorize or
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propose the issuance of any other securities in respect of, in lieu of or
in substitution for, shares of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of,
or other equity interests in, or any Voting Company Debt or other voting
securities of, the Company or any of its Subsidiaries, or any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than issuances of shares of Company Common Stock
upon the exercise of the Company Stock Options outstanding at the date of
this Agreement in accordance with the terms thereof (as in effect on the
date of this Agreement);
(f) change the terms of any Company Stock Option;
(g) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any
assets of any other Person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
past practice);
(h) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets (including technological
assets) of the Company or any of its Subsidiaries, except for (i)
dispositions of excess or obsolete assets, (ii) sales of inventories in the
ordinary course of business and consistent with past practice and (iii) the
licensing of software to customers consistent with past practice;
(i) adopt any amendments to its certificate of incorporation or bylaws
or other organizational documents;
(j) effect any change in any accounting methods, principles or
practices of the Company, except as may be required by a change in GAAP, or
any change in Tax accounting;
(k) (i) incur any indebtedness, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another Person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings pursuant to existing lines of credit incurred in the ordinary
course of business consistent with past practice or (ii) make any loans,
advances or capital contributions to, or investments in, any other Person,
other than to or in the Company or any direct or indirect wholly owned
Subsidiary of the Company;
(l) enter into any contract which, if such contract is entered into,
would be a Material Contract;
(m) make or agree to make any new capital expenditure or expenditures
other than the capital expenditures contemplated by the Company's annual
operating plan for 1999, copy of which has been furnished to Parent prior
to the execution of this Agreement and except for capital expenditures from
January 1, 2000 through May 1, 2000 not to exceed $732,335 in the
aggregate, and capital expenditures described in Section 7.2(m) of the
Company's Disclosure Letter;
(n) make any nonroutine Tax election or settle or compromise any Tax
liability or refund, except as provided in Section 7.2(n) of the Company's
Disclosure Letter;
(o) (i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents or
incurred in the ordinary course of business consistent with past practice
or (ii) cancel any Material indebtedness (individually or in the aggregate)
or waive any claims or rights of substantial value;
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(p) enter into any new agreements with, or commitments to, insurance
brokers or advisers extending beyond one year or extend any insurance
policy beyond one year (including, for the avoidance of doubt, the
directors' and officers' liability insurance policies referred to in
Section 7.11); or
(q) agree in writing or otherwise to do any of the foregoing.
7.3. No Solicitation.
(a) From the date of this Agreement until the Effective Time or the
termination of this Agreement pursuant to Section 9.1, the Company agrees that
it will not, and will not permit any of its Subsidiaries, or any of its or their
officers, directors, employees, representatives, agents, or Affiliates,
including any investment banker, attorney, or accountant retained by the Company
or any of its Subsidiaries (collectively, "Representatives"), to, directly or
indirectly (i) initiate, solicit or encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiries with respect
to or the making of any proposal or offer that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal, (ii) enter into or maintain or
continue discussions or negotiate with any Person regarding an Acquisition
Proposal or in furtherance of such inquiries with respect to or to obtain an
Acquisition Proposal, or (iii) agree to, approve, recommend or endorse any
Acquisition Proposal, or authorize or permit any of the Representatives of the
Company or any of its Subsidiaries to take any such action, and the Company
shall promptly notify Parent of any such inquiries and proposals hereafter
received by the Company or any of its Subsidiaries or by any such
Representative, relating to any of such matters. Any violation of the
restrictions set forth in this Section 7.3 by any Representative of the Company
or any of its Subsidiaries, whether or not such Person is purporting to act on
behalf of the Company or otherwise, shall be deemed to be a breach of this
Section 7.3 by the Company. Notwithstanding the foregoing, the Board of
Directors of the Company may, at any time prior to the payment of shares of
Company Common Stock pursuant to the Offer, furnish information (pursuant to a
customary confidentiality agreement not materially more favorable to the party
receiving information than the Confidentiality Agreement and consistent with the
Company's disclosure and other obligations under this Agreement, including
Section 7.3(c)) to, or engage in discussions or negotiations with, any Person in
response to an unsolicited (and the existence of discussions or negotiations
with a Person prior to the date of this Agreement shall not create a presumption
that a proposal from a Person was solicited) bona fide Acquisition Proposal of
such Person that the Board of Directors of the Company determines is reasonably
likely to result in a Qualifying Proposal, if, and only to the extent that, (A)
the Board of Directors of the Company, after consultation with outside legal
counsel to the Company, determines in good faith that failure to do so would
result in a breach of the fiduciary duty of the Board of Directors of the
Company to the stockholders of the Company under applicable Law, and (B) prior
to furnishing such information to, or entering into discussions or negotiations
with, such Person the Company provides written notice to Parent to the effect
that it is furnishing information to, or entering into discussions or
negotiations with, such Person and the Company complies with Section 7.3(c). The
Company shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any Persons
conducted heretofore by it or its Representatives with respect to any
Acquisition Proposal.
(b) Except as expressly permitted by this Section 7.3, (i) neither the
Board of Directors of the Company nor any committee thereof shall (A) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent or Purchaser, the approval or recommendation by such Board of the Offer
or the Merger as set forth in Section 2.02, (B) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (C) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal and (ii) the Company shall not enter into any Acquisition
Agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the payment of shares of Company Common Stock pursuant to
the Offer, the Board of Directors of the Company may terminate this Agreement
but only (A) if the Board of Directors of the Company, after consultation with
outside legal counsel to the Company, determines in good faith that failure to
do so would result in a breach of the fiduciary duty of the Board of Directors
to the stockholders of the Company under applicable Law, (B) if the Company and
the Board of Directors of the Company have complied with all the provisions of
this Section 7.3, (C) after the second Business Day
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following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company is prepared to accept a Qualifying Proposal, and after
having received from the Company sufficient and accurate guidance in order to
enable Parent to make a bona fide counter proposal, it being understood and
agreed that nothing contained in this paragraph shall require the Company to
provide to Parent any of the details of such Qualifying Proposal, including the
identity of the Person making such Qualifying Proposal and the specific terms of
such Qualifying Proposal (during which two day period the Company will negotiate
in good faith with Parent or Purchaser concerning any amendments proposed by
Parent or Purchaser) and (D) if concurrently with such termination, the Company
enters into an Acquisition Agreement with respect to such Qualifying Proposal
and pays to Parent the Termination Fee.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 7.3, the Company shall promptly advise Parent,
orally and in writing, of any request for information or of any Acquisition
Proposal.
(d) "Acquisition Proposal" means an inquiry, offer or proposal that is made
after the date of this Agreement regarding any of the following (other than the
Transactions) involving the Company: (i) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business combination or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of a substantial portion of the assets of the
Company and its Subsidiaries, taken as a whole, or of any Material Business or
of any Subsidiary or Subsidiaries responsible for a Material Business in a
single transaction or series of related transactions; (iii) any acquisition of
20% or more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in connection
therewith or any other acquisition or disposition the consummation of which
would prevent or materially diminish the benefits to Parent of the Merger; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
"Qualifying Proposal" means any written proposal made by a third party
after the date of this Agreement to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction all the shares of Company Common Stock then
outstanding or all or substantially all of the assets of the Company and its
Subsidiaries which the Board of Directors of the Company determines in good
faith (x) (based on the advice of the Financial Advisor or another financial
advisor of nationally recognized reputation) that such proposal has a reasonable
likelihood of being consummated and (y) (based on the advice of the Financial
Advisor or another financial advisor of nationally recognized reputation) that
such proposal would, if consummated, be superior to the Company's stockholders
from a financial point of view (taking into account any changes to the financial
terms of this Agreement proposed by Parent or Purchaser in response to such
proposal) when compared to the Offer, the Merger and the other Transactions,
taken as a whole.
"Material Business" means any business (or the assets needed to carry out
such business) that contributed or represented 15% or more of the net sales, the
net income or the assets (including equity securities) of the Company and its
Subsidiaries taken as a whole.
(e) Nothing contained in this Section 7.3 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14d-9
or Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders which the Board of Directors of the
Company, after consultation with outside legal counsel to the Company,
determines in good faith is required by applicable Law; provided that neither
the Board of Directors of the Company nor any committee thereof approves or
recommends, or publicly proposes to approve or recommend, an Acquisition
Proposal unless the Company and the Board of Directors of the Company have
complied with all the provisions of this Section 7.3. Notwithstanding anything
to the contrary, if the Purchaser has accepted for payment of, and paid for, any
shares of Company Common Stock pursuant to the Offer, the Company will duly
call, give notice and hold the Stockholders Meeting, if required by the DGCL,
for the purpose of considering and taking action upon this Agreement and the
Merger whether or not the Board of Directors of the Company has determined at
any time after the date hereof it is no longer advisable for the stockholders of
the Company to adopt this Agreement.
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7.4. Access to Information. Between the date of this Agreement and the
Effective Time, the Company shall, and shall cause its Subsidiaries to: (a)
afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full reasonable
access during normal business hours and at all other reasonable times to the
officers, employees, agents, properties, offices and other facilities of the
Company and its Subsidiaries and to their books and records and (b) furnish
promptly to Parent and its representatives a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities Laws and such other
information concerning the business, properties, contracts, records and
personnel of the Company and its Subsidiaries (including financial, operating
and other data and information) as may be reasonably requested, from time to
time, by or on behalf of Parent.
7.5. Confidentiality Agreement. Subject to Section 7.7, the parties agree
that the provisions of the Confidentiality Agreement shall remain binding and in
full force and effect and that the terms of the Confidentiality Agreement are
incorporated herein by reference; provided, however, that any consents from the
Company necessary under the Confidentiality Agreement for Parent and Purchaser
to consummate the Transactions shall be deemed to have been made. The parties
shall comply with, and shall cause their respective representatives to comply
with, all of their respective obligations under the Confidentiality Agreement
until the Effective Time.
7.6. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable Laws to
consummate and make effective as soon as reasonably practicable the Transactions
including: (a) cooperating in the preparation and filing of all applications,
requests, consents and other filings required by applicable Governmental
Authorities or Courts, including filings required by the HSR Act, the Offer
Documents, the Schedule 14D-9, the Proxy Statement and any amendments and
supplements to any thereof; (b) taking all action reasonably necessary, proper
or advisable to secure any necessary consents, approvals or waivers from third
parties; (c) contesting any pending legal proceeding, whether judicial or
administrative, relating to the Offer or the Merger, including seeking to have
any stay or temporary restraining order entered by any Court or other
Governmental Authority vacated or reversed; and (d) executing any additional
instruments necessary to consummate the Transactions. In case at any time after
the Effective Time any further action is necessary to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall use
all reasonable efforts to take all such necessary action.
7.7. Public Announcements. Parent, Purchaser and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Offer or the Merger or this Agreement and shall
not issue any such press release or make any such public statement prior to such
consultation (and affording the other party or parties an opportunity to comment
thereon), except as may be required by applicable Law or Court process or by
obligations pursuant to any listing agreement with the NASD or any securities
exchange.
7.8. Employee Agreements. Parent acknowledges and agrees that all
employment agreements, severance agreements, deferred compensation agreements,
and supplemental retirement agreements with the employees of the Company and its
Subsidiaries that are listed in Section 7.8 of the Company's Disclosure Letter
will be binding and enforceable obligations of the Surviving Corporation to the
same extent as they were binding and enforceable obligations of the Company and
its Subsidiaries as of the date of this Agreement, except as the parties thereto
may otherwise agree or as required by applicable law.
7.9. State Takeover Statutes. Assuming the accuracy of the representations
and warranties in Section 6.8, the Company has taken all steps necessary (a) to
exempt the Transactions from Section 203 of the DGCL, (b) to ensure that no
other state takeover statute or similar Law or Regulation is or becomes
applicable to any Transaction Agreement and (c) if any state takeover statute or
similar Law or Regulation becomes applicable to any Transaction Agreement, to
ensure that the Offer, the Merger and the other Transactions may be consummated
as promptly as practicable on the terms contemplated by the Transaction
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Agreements and otherwise to minimize the effect of such Law or Regulation on the
Offer, the Merger and the other Transactions.
7.10. Rights Plan. The Board has amended the Rights Agreement so that (i)
none of the execution or delivery of this Agreement or the Stockholders
Agreement or the making of the Offer or the exercise of Purchaser's rights under
the Stockholders Agreement will cause (A) the "Rights" (as defined in the Rights
Agreement) to become exercisable under the Rights Agreement, (B) Parent or
Purchaser or any of their affiliates to be deemed an "Acquiring Person" (as
defined in the Rights Agreement) or (C) the "Stock Acquisition Date" (as defined
in the Rights Agreement) to occur upon any such event, (ii) none of the
acceptance for payment or payment for Shares by Purchaser pursuant to the Offer,
the consummation of the Merger or the exercise of Purchaser's rights under the
Stockholders Agreement will cause (A) the Rights to become exercisable under the
Rights Agreement or (B) Parent or Purchaser or any of their affiliates to be
deemed an Acquiring Person or (C) the Stock Acquisition Date to occur upon any
such event, and (iii) the "Expiration Date" (as defined in the Rights Agreement)
shall occur no later than immediately prior to the purchase of shares pursuant
to the Offer, a copy of which amendment is attached to Section 7.10 of the
Company's Disclosure Letter.
7.11. Employee Benefit Plans. Following the Effective Time, Parent intends
to continue the Benefit Plans until it has evaluated the Benefit Plans, market
conditions and other factors. However, Parent reserves the right to cancel any
and all Benefit Plans at any time, in which event, as to any such cancelled
Benefit Plan, Parent shall grant all employees of the Surviving Corporation and
its Subsidiaries on the date of such cancellation credit for vesting and
eligibility purposes for all service with the Surviving Corporation and any
Subsidiary of the Surviving Corporation prior to the date of such cancellation
under all Benefit Plans of Parent or its Subsidiaries (other than the Surviving
Corporation and its Subsidiaries) in which such employees shall become eligible
to participate as if such service with the Surviving Corporation or any
Subsidiary of the Surviving Corporation and their respective predecessors was
service with Parent or any Subsidiary of Parent (other than the Surviving
Corporation and its Subsidiaries). In the event any severance agreement, program
or policy requires the payment of benefits solely as a result of the
transactions contemplated under agreement, the Company will prior to the Closing
amend such agreement, program or policy to prevent the payment of benefits
solely as a result of the transactions contemplated under this agreement.
7.12. Indemnification of Directors and Officers.
(a) Purchaser agrees that all rights to indemnification or exculpation (to
the extent provided in the certificate of incorporation of the Company) for acts
or omissions occurring prior to the Effective Time in favor of the current or
former directors, officers or employees of the Company and its Subsidiaries as
provided in their respective certificates of incorporation or bylaws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of six years from the Effective Time. In addition,
until the sixth (6th) anniversary of the Effective Time, Parent shall cause the
Surviving Corporation to maintain in effect with respect to matters occurring
prior to the Effective Time, to the extent available at less than 300% of
current premiums, the policies of directors' and officers' liability insurance
currently maintained by the Company (or policies substantially similar in amount
and coverage) or, in the alternative, may cause similar coverage to be included
in Parent's directors' and officers' liability coverage (if available). The
Company shall not increase, amend or change any rights to indemnification or
exculpation after the date hereof.
(b) If any claims for indemnification as provided in subparagraph (a) above
cannot be satisfied by the Surviving Corporation (through its own means and/or
directors' and officers' liability insurance) and the Surviving Corporation has
distributed assets to Parent or any of Parent's Affiliates or has otherwise
transferred any assets to or for the benefit of Parent or any of Parent's
affiliates (whether by loan, asset sale or otherwise), then Parent shall be
liable for such unsatisfied indemnification claims to the extent of up to the
fair market value of any such distributions or transfers (less, in the case of
any transfer, the fair market value of any consideration received by the Company
in such transfer).
(c) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made in writing against any present or former
director, officer or employee of the Company based on or arising
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out of the services of such Person prior to the Effective Time in the capacity
of such Person as a director, officer or employee of the Company (and such
director, officer or employee shall have given Parent written notice of such
claim or claims within such six year period), the provisions of subsection (a)
of this Section respecting the rights to indemnity for current or former
directors, officers or employees under the certificate of incorporation and
bylaws of the Company and its Subsidiaries shall continue in effect until the
final disposition of all such claims.
(d) Notwithstanding anything to the contrary in this Section 7.12, neither
Parent nor the Surviving Corporation shall be liable for any settlement effected
without its written consent, which shall not be unreasonably withheld.
7.13. Event Notices and Other Actions.
(a) From and after the date of this Agreement until the Effective Time,
each party hereto shall promptly notify the other parties hereto of (i) the
occurrence or nonoccurrence of any event, the occurrence or nonoccurrence of
which has resulted in, or could reasonably be expected to result in, any
condition to the Offer set forth in Annex B, or any condition to the Merger set
forth in Article VIII, not being satisfied, (ii) the failure of such party to
comply with any covenant or agreement to be complied with by it pursuant to this
Agreement which has resulted in, or could reasonably be expected to result in,
any condition to the Offer set forth in Annex B, or any condition to the Merger
set forth in Article VIII, not being satisfied and (iii) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect. No delivery of any notice pursuant to this
Section 7.13(a) shall cure any breach of any representation or warranty of such
party contained in this Agreement or otherwise limit or affect the remedies
available hereunder to the party or parties receiving such notice.
(b) The Company and Parent shall not, and shall not permit any of their
respective Subsidiaries to, take any action or nonaction that would, or that
could reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) except
as otherwise permitted by Section 7.3, any condition to the Offer set forth in
Annex B, or any condition to the Merger set forth in Article VIII, not being
satisfied.
7.14. Third Party Standstill Agreements; Tortious Interference. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill or similar agreement to which the Company or any of its
Subsidiaries is a party (other than any involving Parent or customary
confidentiality agreements with customers, suppliers and other third parties in
the ordinary course of business provided that no such terminations, amendments,
modifications or waivers shall, individually or in the aggregate have a Material
Adverse Effect on the Company). Subject to the foregoing, during such period,
the Company agrees to enforce, to the fullest extent permitted under applicable
Law, the provisions of any such agreements, including obtaining injunctions to
prevent any breaches of such agreements and to use all reasonable efforts to
enforce specifically the terms and provisions thereof in any Court of the United
States or any state thereof having jurisdiction. Notwithstanding the foregoing,
nothing in this Section 7.14 is intended to prevent the Company from exercising
its rights under Section 7.3 in accordance with the provisions of Section 7.3.
7.15. Payment of Certain Fees. Upon consummation of the Merger, Parent
shall cause the Surviving Corporation to promptly (but no later than two (2)
Business days following such consummation) pay any fees and expenses owed to the
Financial Advisor.
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ARTICLE VIII
CLOSING CONDITIONS
8.1. Closing Conditions. The obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the stockholders of the Company, if required by
applicable Law.
(b) No Court of competent jurisdiction or Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Order
(whether temporary, preliminary or permanent) which is in effect and which
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) The applicable waiting period under the HSR Act shall have expired
or been terminated.
(d) The Purchaser, Parent or their Affiliates shall have accepted for
payment and purchased shares of Company Common Stock pursuant to and
subject to the conditions of the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated and the Offer and the
Merger may be abandoned at any time (notwithstanding approval of the Merger by
the stockholders of the Company) prior to the Effective Time:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Parent, Purchaser or the Company if any Court of competent
jurisdiction or other Governmental Authority shall have issued a final
Order or taken any other final action restraining, enjoining or otherwise
prohibiting the consummation of the Offer or the Merger and such Order or
other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth
in Annex B hereto, Purchaser shall have (i) failed to commence the Offer
within the time required by Regulation 14D under the Exchange Act, (ii)
terminated the Offer without purchasing any shares of Company Common Stock
pursuant to the Offer or (iii) failed to accept for payment shares of
Company Common Stock pursuant to the Offer prior to May 1, 2000 (the
"Termination Date");
(d) by the Company if (i) there shall not have been (x) any breach or
breaches of any representation or warranty or (y) any breach or breaches of
a covenant or agreement on the part of the Company under this Agreement
that, individually or in the aggregate, materially adversely affect (or
materially delay) the consummation of the Offer and Purchaser shall have
(A) failed to commence the Offer within the time required by Regulation 14D
under the Exchange Act, (B) terminated the Offer without purchasing any
shares of Company Common Stock pursuant to the Offer or (C) failed to
accept for payment shares of Company Common Stock pursuant to the Offer
prior to the Termination Date, or (ii) prior to the payment for shares of
Company Common Stock pursuant to the Offer, concurrently with the execution
of an Acquisition Agreement under the circumstances permitted by Section
7.3; provided that such termination under this clause (ii) shall not be
effective unless the Company and the Board of Directors of the Company
shall have complied with all their obligations under Section 7.3 and until
payment of the Termination Fee pursuant to Section 9.5(b);
(e) by Parent or Purchaser prior to the purchase of shares of Company
Common Stock pursuant to the Offer, if (i) Purchaser shall be entitled to
terminate the Offer pursuant to paragraph (b)(i) of Annex B, (ii) there
shall have been any breach of any covenant or agreement on the part of the
Company under this Agreement which materially adversely affects (or
materially delays) the consummation of the
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Offer, which shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two Business Days prior to the date
on which the Offer expires, provided, however, that the Company shall have
no right to cure a breach of Section 7.3, (iii) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified
(including by amendment of Schedule 14D-9) in a manner adverse to Purchaser
its approval or recommendation of the Offer, the Merger or this Agreement
or shall have recommended to the Company's stockholders a Third Party
Acquisition, or (iv) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer at least a majority of the
Fully Diluted Shares; or
(f) by the Company prior to the purchase of any shares of Company
Common Stock pursuant to the Offer if (i) there shall have been a breach of
any representation or warranty in this Agreement on the part of Parent or
Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger or (ii) there shall have been a
breach of any covenant or agreement in this Agreement on the part of Parent
or Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger which shall not have been cured
prior to the earliest of (A) 10 days following notice of such breach and
(B) two Business Days prior to the date on which the Offer expires.
9.2. Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its Affiliates, directors, officers or stockholders, other than the
provisions of this Section 9.2 and Sections 5.19, 6.7, 7.5 and 9.5 and Article X
and the Confidentiality Agreement. Nothing contained in this Section 9.2 shall
relieve any party from liability for any antecedent breach of this Agreement.
9.3. Amendment. This Agreement may be amended by action taken by the
Company, Parent and Purchaser at any time before or after any adoption of this
Agreement by the stockholders of the Company (whether or not such adoption is
required); provided that after the date of adoption of this Agreement by the
stockholders of the Company, no amendment shall be made that by Law requires
further approval of such stockholders without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
9.4. Extension; Waiver. At any time prior to the Effective Time, a party
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other parties hereto
contained herein; provided that after the date of adoption of the Merger by the
stockholders of the Company, no extensions or waivers shall be made that by Law
requires further approval by such stockholders without the approval of such
stockholders. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
9.5. Fees, Expenses and Other Payments.
(a) Except as provided in Section 9.5(b) of this Agreement, all fees and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to Section
9.1(e)(i) (other than a termination resulting from an event or circumstance
that causes a Material Adverse Effect with respect to the Company after the
date of this Agreement, which event or circumstance was not caused by the
willful or intentional action or inaction by the Company) or pursuant to
Section 9.1(e) (ii) (other than as a result of a breach of Section 7.3),
and in any such case, any proposal for a Third Party Acquisition shall have
been made on or prior to the date of such termination and in any such case,
within 12 months thereafter the Company enters into an agreement with
respect to the consummation of a Third Party Acquisition or a Third Party
Acquisition is otherwise consummated;
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(ii) Parent or Purchaser terminates this Agreement pursuant to Section
9.1(e)(ii) as a result of a breach of Section 7.3 or pursuant to Section
9.1(e)(iii); or
(iii) the Company terminates this Agreement pursuant to Section
9.1(d)(ii); or
(iv) if Parent or Purchaser terminates, or does not purchase any
shares of Company Common Stock under, the Offer, and prior to such
termination an Acquisition Proposal is publicly announced, and within
twelve (12) months after such termination, the transactions contemplated by
such Acquisition Proposal (as may be modified or amended) are consummated;
then, in each case, the Company shall pay to Parent, within two Business
Days following the execution and delivery of such agreement or such
occurrence, as the case may be, or simultaneously with such termination
pursuant to Section 9.1(d)(ii), a fee, in cash, of $3 million (the
"Termination Fee).
(c) Any payment required to be made pursuant to Section 9.5(b) of this
Agreement shall be made to Parent by wire transfer of immediately available
funds to an account designated by Parent.
ARTICLE X
GENERAL PROVISIONS
10.1. Nonsurvival of Representations, Warranties and Agreements. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
10.2. Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to either of the Parent Companies:
Solution 6 Holdings Limited
Town Hall House
Level 21, 456 Kent Street
Sydney, New South Wales,
Australia 2000
Attention: Xxxxxx X. Xxxxxxxxxx
Telecopier No.: 011-612-9278-0702
with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
(b) If to the Company:
Elite Information Group, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx
Telecopier No.: (000) 000-0000
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with a copy to:
Xxxxxxxx Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed received on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed received three
days after the date the same is postmarked.
10.3. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
10.4. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the Transactions is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
10.5. Entire Agreement. This Agreement (together with the Annexes, the
Company's Disclosure Letter, the Confidentiality Agreement and the other
Transaction Agreements) constitutes the entire agreement of the parties, and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, with respect to the subject matter hereof.
10.6. Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of Law or otherwise by any of the parties without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any of or all its rights (including the right to purchase Shares in
the Offer), interests and obligations under this Agreement to Parent or to an
Affiliate of Parent, but no such assignment shall relieve Purchaser of any of
its obligations under this Agreement. Any attempted assignment in violation of
this Section 10.06 shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
10.7. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and its successors and permitted
assigns, and, except as provided in Article III, Article IV and Section 7.12
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies or any nature whatsoever
under or by reason of this Agreement.
10.8. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.
10.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
10.10. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent
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breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Delaware state court or any Federal court located in
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Delaware state
court or any Federal court located in the State of Delaware in the event any
dispute arises out of this Agreement or any transaction contemplated by this
Agreement (and Parent agrees that promptly after the date hereof, Parent will
appoint CT Corporation as agent for service of process in Delaware for such
purpose), (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated by this Agreement in any court other than any Delaware
state court or any Federal court sitting in the State of Delaware and (d) waives
any right to trial by jury with respect to any action related to or arising out
of this Agreement or any transaction contemplated by this Agreement. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or of the United
States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
10.11. Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers or
directors thereunto duly authorized.
SOLUTION 6 HOLDINGS LIMITED.
By: /s/ XXXXXX X. XXXXXXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
------------------------------------
Title: CEO
------------------------------------
ELITE INFORMATION GROUP, INC.
By: /s/ XXXXXXXXXXX X. XXXXX
----------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
------------------------------------
Title: CEO
------------------------------------
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings set
forth below unless the context shall otherwise require:
"Acquisition Agreement" shall have the meaning ascribed to such term in
Section 7.3(b).
"Acquisition Proposal" shall have the meaning ascribed to such term in
Section 7.3(d).
"Affiliate" shall mean, with respect to any Person, any other Person that
controls, is controlled by or is under common control with the former Person.
"Agreement" shall mean the Agreement and Plan of Merger dated as of
December 14, 1999 among Parent, Purchaser and the Company, including any
amendments thereto and each Annex (including this Annex A) and Schedule thereto
(including the Company's Disclosure Letter).
"Balance Sheet Date" shall mean November 30, 1999.
"Benefit Plans" shall mean any employee pension benefit plan (whether or
not insured), as defined in Section 3(2) of ERISA, any employee welfare benefit
plan (whether or not insured) as defined in Section 3(1) of ERISA, any plans
that would be employee pension benefit plans or employee welfare benefit plans
if they were subject to ERISA, such as foreign plans and plans for directors,
any employment contracts, severance or termination pay arrangements, any stock
bonus, stock ownership, stock option, stock purchase, stock appreciation rights,
phantom stock or other stock plan (whether qualified or nonqualified), and any
bonus or incentive compensation plan sponsored, maintained or contributed to by
the Company or any of its Subsidiaries for the benefit of any of the present or
former directors, officers, employees, agents, consultants or other similar
representatives providing services to or for the Company or any of its
Subsidiaries in connection with such services or any such plans which have been
so sponsored, maintained, or contributed to within six years prior to the date
of this Agreement (however, as to employment contracts, and severance or
termination pay arrangements, only as to those that are currently in effect);
provided, however, that such term shall not include (a) routine employment
policies and procedures developed and applied in the ordinary course of business
and consistent with past practice, including wage, vacation, holiday and sick or
other leave policies, and (b) workers compensation insurance.
"Business Day" means any day other than a day on which banks in New York
are authorized or obligated to be closed.
"Certificate" shall mean an outstanding stock certificate which immediately
prior to the Effective Time represented shares of Company Common Stock.
"Certain Stockholders" shall have the meaning ascribed to such term in the
recitals to the Agreement.
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 3.2.
"Closing" shall have the meaning ascribed to such term in Section 4.4.
"Closing Date" shall mean the date of the Closing as determined pursuant to
Section 4.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
"Company" shall mean Elite Information Group, Inc., a Delaware corporation.
"Company Common Stock" shall have the meaning ascribed to such term in the
recitals to the Agreement.
"Company Contract" shall mean all contracts, agreements, arrangements and
understandings to which the Company or any of its Subsidiaries is a party which
fall into any of the following categories: (i) leases; (ii) contracts with
customers (including maintenance agreements) as provided in Section 5.12 of the
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Company's Disclosure Letter or which, as of the date hereof, have a receivable
balance of over $50,000 any portion of which is over 120 days past due, which
contracts are listed on Section A-1 of the Company's Disclosure Letter; (iii)
agreements of resale with third party software providers; (iv) dealer
agreements; (v) the Agreement with Data Fusion Technologies, Inc.; (vi) the
License Support and Maintenance Agreement with Pivotal Corporation and the
Services Agreement with Basys Inc.; (vii) agreements with any employees that
cannot be terminated at will without less than a three-month
severance/termination payment; (viii) agreements entered into since January 1,
1998 involving the sale of any stock and/or all or substantially all of the
assets of the or by the Company or any of its current or former subsidiaries;
(ix) loan agreements; (x) noncompetition agreements; (xi) consulting agreements
(excluding temporary employee agreements and consulting agreements with
installation contractors entered into in the ordinary course of business); or
(xii) agreements with financial advisors.
"Company Option Plans" shall mean the option plans listed in Section 5.3(a)
of the Company's Disclosure Letter.
"Company SEC Documents" shall have the meaning ascribed to such term in
Section 5.7(a).
"Company Stock Options" shall mean stock options granted pursuant to the
Company Option Plans.
"Company Stockholder Approval" shall have the meaning ascribed to such term
in Section 5.4(b).
"Company Stockholders' Meeting" shall have the meaning ascribed to such
term in Section 3.7(b).
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1998 and December 31, 1997 and the related consolidated statements of income
and cash flows for the fiscal years ended December 31, 1998, 1997 and 1996,
together with the notes thereto, all as audited by Pricewaterhouse Coopers LLP,
under their report with respect thereto dated February 6, 1999 and included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 filed with the SEC.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter dated the date of the
Agreement delivered by the Company to the Parent Companies concurrently with the
execution of the Agreement, which, among other things, shall identify exceptions
to the Company's representations and warranties contained in Article V and
covenants contained in Article VII by specific section and subsection
references.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 1999, and the related consolidated statements of income and cash
flows for the nine-month periods ended September 30, 1999 and September 30,
1998.
"Copyrights" shall have the meanings ascribed to such term in Section 5.18.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between Parent and the Company entered into in 1999.
"Control Date" shall have the meaning ascribed to such term in Section 2.4.
"Court" shall mean any court of the United States, any foreign country or
any domestic or foreign state, and any political subdivision thereof, or any
arbitration tribunal and shall include the European Court of Justice.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by the Company or any of its Subsidiaries as of
the date of this Agreement.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenting Shares" shall have the meaning ascribed to such term in Section
4.3.
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"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 3.2 or such later time as Parent and the
Company may agree and specify in such certificate.
"Environmental Law or Laws" shall mean any and all Laws, enforceable
requirements or Orders of any Governmental Authority pertaining to health or the
environment currently in effect and applicable to a specified Person and its
Subsidiaries, including the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Hazardous & Solid Waste
Amendments Act of 1984, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
the Oil Pollution Act of 1990, as amended ("OPA"), any state or local Laws
implementing the foregoing federal Laws, and all other environmental
conservation or protection Laws. For purposes of the Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA;
provided, however, that, to the extent the Laws of the state or locality in
which the property is located establish a meaning for "hazardous substance" or
"release" that is broader than that specified in CERCLA, such broader meaning
shall apply within the jurisdiction of such state or locality, and the term
"hazardous substance" shall include all dehydration and treating wastes, waste
(or spilled) oil, and waste (or spilled) petroleum products, by-products and
derivatives thereof, polychlorinated biphenyls, asbestos, and radioactive
material, even if such are specifically exempt from classification as hazardous
substances or hazardous wastes pursuant to CERCLA or RCRA or the analogous
statutes of any jurisdiction applicable to the specified Person or its
Subsidiaries or any of their respective properties or assets.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the Regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
Regulations promulgated thereunder.
"Exchange Fund" shall mean the fund of cash deposited with the Paying Agent
pursuant to Section 4.2.
"Expenses" shall have the meaning ascribed to such term in the Option
Agreement.
"Filed Company SEC Documents" shall have the meaning ascribed to such term
by Section 5.9.
"Financial Advisor" shall mean Xxxxx Xxxxx Xxxxxx & Company, LLC, the
financial advisor to the Company with respect to the Transactions.
"Fully Diluted Shares" shall have the meaning ascribed to such term in
Annex B.
"GAAP" shall mean accounting principles generally accepted in the United
States consistently applied by a specified Person.
"Governmental Authority" shall mean any governmental agency or authority
(other than a Court) of the United States, any foreign country, or any domestic
or foreign state, and any political subdivision or agency thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the Regulations promulgated thereunder.
"Independent Directors" shall have the meaning ascribed to such term in
Section 2.4.
"Intellectual Property" shall have the meaning ascribed to such term in
Section 5.18.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or Parent, the
actual knowledge (after reasonable inquiry) of: (i) in the case of the Company,
Xxxxxxxxxxx X. Xxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxx and Xxxx Xxxxxx; and, (ii) in
the case of Parent, any executive officer of Parent.
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"Laws" shall mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of Law in each such jurisdiction.
"Leaseholds" shall mean, with respect to any Person, all the right, title
and interest of such Person as lessee or licensee, in, to and under leases,
licenses, improvements and/or fixtures.
"Licenses-In" shall have the meaning ascribed to such term in Section 5.18.
"Licenses-Out" shall have the meaning ascribed to such term in Section
5.18.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Material" shall mean is or will be material to the business, properties,
assets, condition (financial and other) or results of operations of a specified
Person and its Subsidiaries, if any, taken as a whole.
"Material Adverse Effect" shall mean any change or effect that is material
and adverse to the business, properties, assets, condition (financial and other)
or results of operations of a specified Person and its Subsidiaries, if any,
taken as a whole, including a material adverse effect on the ability of a
specified Person to perform its obligations under each Transaction Agreement to
which it is a party, other than any such effect arising out of or resulting
from, in the case of a determination with respect to the Company and its
Subsidiaries (i) changes in general economic conditions, (ii) general changes or
developments in the industries in which the Company and its Subsidiaries operate
and (iii) facts or events that are primarily and directly attributable to the
announcement of this Agreement and the Transactions.
"Material Business" shall have the meaning ascribed to such term in Section
7.3(d).
"Material Contract" shall mean any Company Contract, except with respect to
contracts with customers, only if such contract is not commercially reasonable
or not consistent with past practices.
"Merger" shall have the meaning ascribed to such term in Section 3.1.
"Merger Consideration" shall mean, as to any Certificate, the amount to be
paid to the holder thereof pursuant to the Merger, which amount shall be equal
to the product of the number of shares of Company Common Stock evidenced by such
Certificate, multiplied by the Per Share Merger Consideration.
"Minimum Tender Condition" shall have the meaning ascribed to such term in
Annex B.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Offer" shall have the meaning ascribed to such term in the recitals to the
Agreement.
"Offer Closing Date" shall mean the date on which the acceptance for
payment and payment by Purchaser for shares of Company Common Stock tendered
pursuant to the Offer occurs.
"Offer Documents" shall have the meaning ascribed to such term in Section
2.1(c).
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"Parent" shall mean Solution 6 Holdings Limited, a New South Wales,
Australia corporation.
"Parent Companies" shall have the meaning ascribed to such term in the
first paragraph of the Agreement.
"Patents" shall have the meaning ascribed to such term in Section 5.18.
"Paying Agent" shall mean a bank or trust company designated and appointed
by Parent to act in the capacities required thereof under Section 4.2.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Per Share Merger Consideration" shall have the meaning ascribed to such
term in Section 4.01(a).
"Permits" shall mean any and all permits, licenses, authorizations, orders,
certificates, registrations or other approvals granted by any Governmental
Authority.
"Permitted Lien" shall mean (i) Liens for taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings, (ii)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business which are less than $10,000 in
amount and which are being contested in good faith by appropriate proceedings,
or (iii) easements, rights-of-way, encroachments, restrictions, conditions and
other similar encumbrances incurred or suffered in the ordinary course of
business and which, individually or in the aggregate (A) are not substantial in
character, amount or extent in relation to the applicable real property and (B)
do not materially detract from the use, utility or value of the applicable real
property or otherwise materially impair the Company's present business
operations at such location.
"Person" shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but shall not include a Governmental Authority.
"Proprietary Information" shall have the meaning ascribed to such term in
Section 5.18.
"Proxy Statement" shall mean a proxy statement conforming to the
requirements of the Exchange Act and relating to the adoption of this Agreement
by the Company's stockholders, if such adoption is required by Law.
"Purchaser" shall mean EIG Acquisition Corp., a Delaware corporation and a
wholly owned Subsidiary of Parent.
"Qualifying Proposal" shall have the meaning ascribed to such term in
Section 7.3(d).
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the SEC).
"Representatives" shall have the meaning ascribed to such term in Section
7.3(a).
"Restricted Stock" shall have the meaning ascribed to such term in Section
3.6(a).
"Schedule 14D-1" shall have the meaning ascribed to such term in Section
2.1(c).
"Schedule 14D-9" shall have the meaning ascribed to such term in Section
2.2.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean all of the following filings since December 1,
1996: (a) all Annual Reports on Form 10-K, (b) all Quarterly Reports on Form
10-Q, (c) all proxy statements relating to meetings of stockholders (whether
annual or special), (d) all Current Reports on Form 8-K and (e) all other
reports, schedules, registration statements or other documents required to be
filed during a specified period by a Person with the SEC pursuant to the
Securities Act or the Exchange Act.
"Section 262" shall have the meaning ascribed to such term in Section 4.3.
"Securities Act" shall mean the Securities Act of 1933 and the Regulations
promulgated thereunder.
"Software" shall have the meaning ascribed to such term in Section 5.18.
"Stockholders Agreement" shall have the meaning ascribed to such term in
the recitals to this Agreement.
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A "Subsidiary" of a specified Person shall mean any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50% or more of the stock or other
equity or partnership interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
"Surviving Corporation" shall mean the Company as the corporation surviving
the Merger.
"Tax" or "Taxes" shall mean all Federal, state, county, local, municipal,
foreign and other taxes, assessments, duties or similar charges of any kind
whatsoever, including all corporate franchise, income, sales, use, ad valorem,
receipts, value added, profits, license, withholding, payroll, employment,
excise, premium, property, customs, net worth, capital gains, transfer, stamp,
documentary, social security, environmental, alternative minimum, occupation,
recapture and other taxes, and including all interest, penalties and additions
imposed with respect to such amounts, and all amounts payable pursuant to any
agreement or arrangement with respect to Taxes.
"Taxing Authority" shall mean any domestic, foreign, federal, national,
state, county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising tax
regulatory authority.
"Tax Return" or "Tax Returns" shall mean all returns, declarations of
estimated tax payments, reports, estimates, information returns and statements,
including any related or supporting information with respect to any of the
foregoing, filed or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any Taxes.
"Terminated Benefit Plans" shall mean Benefit Plans that were sponsored,
maintained, or contributed to by the Company or any of its Subsidiaries within
six years prior to the date of the Agreement but which have been terminated
prior to the date of the Agreement.
"Termination Date" shall have the meaning ascribed to such term in Section
9.1(c).
"Termination Fee" shall have the meaning ascribed to such term in Section
9.5(b).
"Third Party Acquisition" shall mean (a) the acquisition of the Company by
merger, consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction by any Person
(which includes for these purposes a "person" as defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser or any Affiliate thereof (a
"Third Party"); (b) the acquisition by a Third Party of more than 50% of the
assets of the Company and its Subsidiaries, taken as a whole; (c) the
acquisition by a Third Party of 50% or more of the outstanding Company Common
Stock or 50% or more of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Company; (d) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (e) the purchase by the Company or any of its
Subsidiaries of more than 30% of the outstanding shares of Company Common Stock.
"Trademarks" shall have the meaning ascribed to such term in Section 5.18.
"Transaction Agreements" shall mean, collectively, the Agreement and the
Stockholders Agreement.
"Transactions" shall mean, collectively, the transactions contemplated by
the Transaction Agreements.
"Voting Company Debt" shall have the meaning ascribed to such term in
Section 5.3(e).
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XXXXX X
CONDITIONS OF THE OFFER
(a) Notwithstanding any other term of the Offer or the Agreement, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered shares of
Company Common Stock promptly after the termination or withdrawal of the Offer),
to pay for any shares of Company Common Stock tendered pursuant to the Offer
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Company Common Stock which
would represent at least a majority of the Fully Diluted Shares (the "Minimum
Tender Condition"), (ii) any waiting period under the HSR Act applicable to the
purchase of shares of Company Common Stock pursuant to the Offer shall have
expired or been terminated; and (iii) [the Company has amended its Rights Plan
so that the stockholders' rights under the Rights Plan are not triggered by the
Offer or the Agreement. The term "Fully Diluted Shares" means all outstanding
securities entitled generally to vote in the election of directors of the
Company on a fully diluted basis, after giving effect to the exercise or
conversion of all options, warrants, rights and securities exercisable or
convertible into such voting securities.
(b) Furthermore, notwithstanding any other term of the Offer or the
Agreement, Purchaser shall not be required to commence the Offer, accept for
payment or, subject as aforesaid, pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, (i) with the consent of the Company or (ii) if, at any time on or after
the date of the Agreement and before the acceptance of such shares for payment
or the payment therefor, any of the following conditions exists:
(i) any representation and warranty of the Company in this Agreement
that is qualified as to materiality shall not be true and correct or any
such representation and warranty that is not so qualified shall not be true
and correct in any material respect, as of the date of the Agreement and as
of such time, except to the extent such representation and warranty
expressly relates to an earlier date (in which case on and as of such
earlier date);
(ii) the Company shall have breached any of its covenants or
agreements contained in the Agreement which breaches, individually or in
the aggregate, materially adversely affects (or materially delays) the
consummation of the Offer (it being understood that a breach of Section
7.13 of the Agreement shall not result in a failure of this condition to be
satisfied unless such breach results in the failure of the condition
specified in paragraph (i) above);
(iii) there shall be threatened or pending any suit, action or
proceeding by any Governmental Authority, or any suit, action or proceeding
brought by any other Person that has a reasonable likelihood of success,
(A) challenging the acquisition by Parent or Purchaser of any Company
Common Stock, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger, or seeking to obtain from the Company, Parent or
any of their respective Subsidiaries or Affiliates any damages in an amount
that would result in a Material Adverse Effect in respect of the Company,
taken as a whole, and in the case of Parent or any of its Subsidiaries or
Affiliates relating to the Transaction, (B) seeking to prohibit or limit
the ownership or operation by the Company, Parent or any of their
respective Subsidiaries or Affiliates of any Material portion of the
business or assets of the Company, Parent or any of their respective
Subsidiaries or Affiliates, or to compel the Company, Parent or any of
their respective Subsidiaries or Affiliates to dispose of or hold separate
any Material portion of the business or assets of the Company, Parent or
any of their respective Subsidiaries or Affiliates, as a result of the
Offer, the Merger or any of the other Transactions or (C) which otherwise
is reasonably likely to have a Material Adverse Effect on the Company;
(iv) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, or any consent or approval withheld with respect
to, (A) Parent, the Company or any of their respective Subsidiaries or
Affiliates or (B) the Offer or the Merger by any
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42
Governmental Authority that has or is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in paragraph (iii)
above;
(v) since the date of the Agreement there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a Material Adverse
Effect on the Company;
(vi) there shall have occurred and be continuing (A) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or in Australia (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index),
(B) a declaration of a banking moratorium by any Governmental Authority or
any suspension of payments by any Governmental Authority in respect of
banks in the United States or in Australia, (C) any general limitation
(whether or not mandatory) by any Governmental Authority in the United
States or in Australia on the extension of credit by banks or other lending
institutions or (D) in the case of any of the foregoing existing on the
date of the Agreement, a material acceleration or worsening thereof;
(vii) any Person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Purchaser, any of its
Affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 20% of the outstanding shares of
Company Common Stock or shall have entered into a definitive agreement or
an agreement in principle with the Company with respect to a tender offer
or exchange offer for any shares of Company Common Stock or a merger,
consolidation or other business combination with or involving the Company
or any of its Subsidiaries;
(viii) the Agreement shall have been terminated in accordance with its
terms; which, in the sole judgment of Purchaser or Parent, in any such
case, and regardless of the circumstances giving rise to any such condition
(including any action or inaction by Parent or any of its Affiliates),
makes it inadvisable to proceed with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to such condition or may be waived by Purchaser and Parent in whole
or in part at any time and from time to time in their sole and reasonable
judgment; provided that the Minimum Tender Condition may be waived or modified
only by the mutual written consent of Purchaser and the Company. The failure by
Parent, Purchaser or any other Affiliate of Parent at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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