Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SOFTECH, INC.,
SOFTECH ACQUISITION CORP.
AND
WORKGROUP TECHNOLOGY CORPORATION
DATED AS OF NOVEMBER 13, 2002
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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ARTICLE I THE OFFER................................................................................ 1
SECTION 1.01. The Offer......................................................................... 1
SECTION 1.02. Offer Documents................................................................... 3
SECTION 1.03. Company Actions................................................................... 4
ARTICLE II THE MERGER.............................................................................. 5
SECTION 2.01. The Merger........................................................................ 5
SECTION 2.02. Closing........................................................................... 5
SECTION 2.03. Effective Time.................................................................... 5
SECTION 2.04. Effect of the Merger.............................................................. 5
SECTION 2.05. Certificate of Incorporation; By-Laws............................................. 5
SECTION 2.06. Directors and Officers............................................................ 6
SECTION 2.07. Merger without Meeting of Stockholders............................................ 6
SECTION 2.08. Subsequent Actions................................................................ 6
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES..................................... 6
SECTION 3.01. Effect on Capital Stock........................................................... 6
SECTION 3.02. Conversion of Securities.......................................................... 7
SECTION 3.03. Payment for Shares................................................................ 7
SECTION 3.04. Treatment of Options.............................................................. 9
SECTION 3.05. Dissenting Shares................................................................. 9
SECTION 3.06. Lost, Stolen or Destroyed Certificates............................................ 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................... 10
SECTION 4.01. Organization and Qualification; No Subsidiaries................................... 10
SECTION 4.02. Certificate of Incorporation and By-Laws.......................................... 11
SECTION 4.03. Capitalization.................................................................... 11
SECTION 4.04. Authority Relative to This Agreement.............................................. 11
SECTION 4.05. No Conflict; Required Filings and Consents........................................ 12
SECTION 4.06. Material Contracts; Permits....................................................... 12
SECTION 4.07. SEC Filings; Financial Statements................................................. 13
SECTION 4.08. Absence of Certain Changes or Events.............................................. 14
SECTION 4.09. No Undisclosed Material Liabilities............................................... 16
SECTION 4.10. Absence of Litigation............................................................. 16
SECTION 4.11. Intellectual Property............................................................. 16
SECTION 4.12. Employee Benefit Plans; Employment Agreements..................................... 18
SECTION 4.13. Labor Matters..................................................................... 19
SECTION 4.14. Information Supplied.............................................................. 20
SECTION 4.15. Taxes............................................................................. 20
SECTION 4.16. Compliance with Laws.............................................................. 21
SECTION 4.17. Customers and Suppliers........................................................... 21
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SECTION 4.18. Product Releases.................................................................. 21
SECTION 4.19. Brokers........................................................................... 22
SECTION 4.20. Title to Property................................................................. 22
SECTION 4.21. Environmental Matters............................................................. 22
SECTION 4.22. Interested Party Transactions..................................................... 23
SECTION 4.23. Employment and Other Agreements................................................... 23
SECTION 4.24. Vote Required..................................................................... 24
SECTION 4.25. State Takeover Statutes........................................................... 24
SECTION 4.26. Opinion of Financial Advisor...................................................... 24
SECTION 4.27. Full Disclosure................................................................... 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.................................. 24
SECTION 5.01. Organization and Qualification.................................................... 24
SECTION 5.02. Authority Relative to this Agreement.............................................. 24
SECTION 5.03. No Conflict; Required Filings and Consents........................................ 25
SECTION 5.04. Information Supplied.............................................................. 25
SECTION 5.05. Absence of Litigation............................................................. 26
SECTION 5.06. Funds Available................................................................... 26
SECTION 5.07. Ownership of Company Common Stock................................................. 26
SECTION 5.08. SEC Filings; Parent Financial Statements.......................................... 26
ARTICLE VI CONDUCT OF BUSINESS OF THE COMPANY...................................................... 27
SECTION 6.01. Conduct of Business of the Company................................................ 27
ARTICLE VII ADDITIONAL AGREEMENTS.................................................................. 29
SECTION 7.01. Stockholder Approval.............................................................. 29
SECTION 7.02. Option to Acquire Additional Shares............................................... 30
SECTION 7.03. Access to Information; Confidentiality............................................ 31
SECTION 7.04. Consents; Approvals............................................................... 32
SECTION 7.05. Indemnification and Insurance..................................................... 32
SECTION 7.06. Employee Benefit Plans............................................................ 33
SECTION 7.07. Notification of Certain Matters................................................... 34
SECTION 7.08. Further Action.................................................................... 34
SECTION 7.09. Public Announcements.............................................................. 34
SECTION 7.10. Conveyance Taxes.................................................................. 34
SECTION 7.11. Conduct of Business of Merger Sub................................................. 35
SECTION 7.12. No Solicitation................................................................... 35
SECTION 7.13. Directors......................................................................... 36
SECTION 7.14. Books and Records................................................................. 37
SECTION 7.15. Access to Computer Equipment...................................................... 37
ARTICLE VIII CONDITIONS TO THE MERGER.............................................................. 37
SECTION 8.01. Conditions to the Merger.......................................................... 37
ARTICLE IX TERMINATION............................................................................. 38
SECTION 9.01. Termination....................................................................... 38
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SECTION 9.02. Effect of Termination............................................................. 39
SECTION 9.03. Fees and Expenses Payable by the Company.......................................... 39
SECTION 9.04. Fees and Expenses Payable by Parent............................................... 39
SECTION 9.05. Termination Fee................................................................... 40
ARTICLE X GENERAL PROVISIONS....................................................................... 40
SECTION 10.01. Effectiveness of Representations, Warranties and Agreements...................... 40
SECTION 10.02. Notices.......................................................................... 40
SECTION 10.03. Certain Definitions.............................................................. 41
SECTION 10.04. Amendment........................................................................ 41
SECTION 10.05. Waiver........................................................................... 41
SECTION 10.06. Headings......................................................................... 42
SECTION 10.07. Severability..................................................................... 42
SECTION 10.08. Entire Agreement................................................................. 42
SECTION 10.09. Assignment....................................................................... 42
SECTION 10.10. Parties in interest.............................................................. 42
SECTION 10.11. Failure or Indulgence Not Waiver; Remedies Cumulative............................ 42
SECTION 10.12. Governing Law.................................................................... 43
SECTION 10.13. Counterparts..................................................................... 43
Annex A Conditions to the Offer
Exhibit A Stockholders Agreement
Exhibit B Escrow Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 13, 2002 (this
"Agreement"), among SofTech, Inc., a Massachusetts corporation ("Parent"),
SofTech Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Merger Sub"), and Workgroup Technology Corporation, a Delaware
corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each unanimously determined that it is advisable and in the best interests
of their respective stockholders for Parent and Merger Sub to enter into a
business combination with the Company, by means of the merger (the "Merger") of
Merger Sub with and into the Company, upon the terms and subject to the
conditions set forth herein;
WHEREAS, to effectuate the Merger, Parent and the Company each desire that
Parent cause Merger Sub to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.01 per share (the "Company
Common Stock"), of the Company (the "Shares"), upon the terms and subject to the
conditions set forth in this Agreement and the "Offer Documents" (as defined in
Section 1.02), and the Board of Directors of the Company has unanimously
approved the "Offer" (as defined in Section 1.01(a)) and is recommending to its
stockholders that they accept the Offer and tender their shares of Company
Common Stock pursuant thereto;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, and as a condition and inducement to Parent's and Merger Sub's
willingness to enter into this Agreement, certain stockholders of the company
(each, a "Stockholder") are entering into a Stockholders Agreement in the form
attached hereto as Exhibit A (the "Stockholders Agreement"), pursuant to which
each such Stockholder has agreed, among other things, to tender its Shares in
the Offer, and to grant Parent a proxy with respect to the voting of such Shares
in favor of the Merger upon the terms and subject to the conditions set forth
therein; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the
consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Article IX and subject to the conditions set
forth on Annex A, as promptly as practicable, but in no event later than five
(5) business days after the public announcement (on the date hereof or the
following business day) of the execution and delivery of this Agreement, Parent
shall cause
Agreement and Plan of Merger - Page 2
Merger Sub to commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), a tender offer to
purchase (the "Offer") all of the outstanding shares of Company Common Stock at
a price of $2.00 per share, net to the seller in cash without interest (the
"Offer Consideration"). The obligations of Merger Sub to accept for payment and
to pay for shares of Company Common Stock validly tendered in the Offer and not
withdrawn shall be subject only to (i) the condition that there have been
validly tendered and not withdrawn prior to the time the Offer shall otherwise
expire (prior to any extensions thereof) a number of Shares which, together with
any Shares owned by Parent, represents at least two-thirds of the Shares
outstanding on a fully-diluted basis (excluding options the exercise price of
which is equal to or greater than the Offer Consideration and excluding any
"Purchase Option Shares" (as defined in Section 7.02(a)) (the "Minimum
Condition") on the date of purchase, and (ii) those conditions of the Offer set
forth in Annex A hereto. Subject to the prior satisfaction or waiver by Merger
Sub of the Minimum Condition and the other conditions of the Offer set forth in
Annex A hereto, Merger Sub shall, and Parent shall cause Merger Sub to, accept
for payment, and pay for, in accordance with the terms of the Offer, all shares
of Company Common Stock validly tendered and not withdrawn pursuant to the Offer
on the expiration date of the Offer, as determined in accordance with Section
1.01(b) below. The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") that contains the terms set forth in this Agreement.
(b) Parent and Merger Sub expressly reserve the right to modify
the terms of the Offer, except that, without the prior written consent of the
Company, neither Parent nor Merger Sub shall: (i) decrease the Offer
Consideration or change the form of consideration therefor, (ii) decrease the
number of Shares sought pursuant to the Offer, (iii) change the conditions to
the Offer (other than to increase the Offer Consideration), (iv) impose
additional conditions to the Offer, (v) extend the expiration date of the Offer
(except as set forth below), or (vi) amend any term of the Offer in any manner
adverse to holders of shares of Company Common Stock. Except as set forth in the
preceding sentence, Parent or Merger Sub may waive any other condition to the
Offer, in whole or in part, in their sole discretion, including, without
limitation, the Minimum Condition; provided, however, that neither Parent nor
Merger Sub may waive the Minimum Condition or any other condition to the Offer
unless, upon the payment of all shares of Company Common Stock validly tendered
in the Offer and not withdrawn, the Merger Sub shall own, together with any
Shares owned by Parent, at least a majority of the Shares outstanding on a
fully-diluted basis (excluding options the exercise price of which is equal to
or greater than the Offer Consideration and excluding any Purchase Option
Shares). Furthermore, notwithstanding the provisions of clause (v) above, if the
conditions set forth on Annex A shall have been satisfied or earlier waived, but
(A) the Minimum Condition has not been satisfied on any scheduled expiration
date of the Offer or (B) the number of shares of Company Common Stock that have
been validly tendered and not withdrawn represents more than the number of
shares of Company Common Stock necessary to satisfy the Minimum Condition but
less than ninety percent (90%) of the then issued and outstanding shares of
Company Common Stock on a fully-diluted basis (excluding options the exercise
price of which is equal to or greater than the Offer Consideration and excluding
any Purchase Option Shares), then Merger Sub may extend the Offer from time to
time for up to an aggregate of twenty (20) business days (each such individual
extension not to exceed five (5) business days after the previously scheduled
expiration date); provided, however, that as to any such extension, any
condition satisfied or waived at the commencement of such extension shall be
deemed satisfied at the end of such extension. Furthermore, notwithstanding the
provisions of clause (v) above, Merger Sub may extend the Offer in connection
with an increase in the Offer Consideration so as to comply with applicable
rules, regulations, interpretations or positions of the United States Securities
and Exchange Commission (the "SEC"). The initial expiration date of the Offer
shall be twenty (20) business days from the commencement of the Offer.
Agreement and Plan of Merger - Page 3
(c) Subject to Merger Sub's compliance with Rule 14d-11
promulgated under the Exchange Act, after the acceptance for payment, and
payment for, all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer on the expiration date of the Offer, as
determined in accordance with Section 1.01(b), Merger Sub may extend the Offer
for a further period of time, by means of a subsequent offering period under
Rule 14d-11 promulgated under the Exchange Act, of not more than twenty (20)
business days to meet the objective (which is not a condition to the Offer) that
on or prior to the expiration of such subsequent offering period, Merger Sub
shall have accepted for payment and paid for a number of Shares, which together
with Shares then owned by Merger Sub and Parent, represents at least 90% of the
Shares outstanding on a fully-diluted basis (excluding options the exercise
price of which is equal to or greater than the Offer Consideration and excluding
any Purchase Option Shares) on the date of purchase.
(d) Parent shall provide or cause to be provided to Merger Sub on
a timely basis the funds necessary for payment, and may pay for, any Shares that
Merger Sub becomes obligated to accept for payment and pay for, pursuant to the
Offer.
SECTION 1.02. OFFER DOCUMENTS. (a) As soon as practicable on the date of
commencement of the Offer, Parent and Merger Sub shall: (i) file or cause to be
filed with the SEC a Tender Offer Statement on Schedule TO promulgated under
Section 14(d)(1) of the Exchange Act (together with all amendments and
supplements thereto, and including all exhibits thereto, the "Schedule TO") with
respect to the Offer, which shall contain the Offer to Purchase and related
letter of transmittal and other ancillary documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents"), and shall (1) contain (or shall be amended in a
timely manner 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 (2) conform in all material respects
with the requirements of the Exchange Act and any other applicable law, and
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) deliver a copy of the Schedule TO to the Company at its
principal executive office; (iii) give telephonic notice and mail to the
National Association of Securities Dealers, Inc. (the "NASD") a copy of the
Schedule TO in accordance with Rule 14d-3 promulgated under the Exchange Act;
(iv) publish a summary advertisement of the Offer in the Wall Street Journal or
similar daily newspaper with national circulation; and (v) mail or cause to be
mailed the Offer Documents to the holders of the Company Common Stock.
(b) Parent, Merger Sub and the Company each agree promptly to
correct any information provided by them for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect and Merger Sub further agrees to take all lawful action necessary to
cause the Offer Documents as so corrected to be filed promptly with the SEC and
to be disseminated to the holders of Company Common Stock, in each case as and
to the extent required by applicable law. In conducting the Offer, Parent and
Merger Sub shall comply in all material respects with the provisions of the
Exchange Act and any other applicable law. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation and approval of the
Company Board of Directors referred to in clause (a)(i)(z) of the first sentence
of Section 1.03. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC or dissemination to Company's
stockholders. Parent and Merger Sub agree to provide the Company and its counsel
any comments Parent, Merger Sub or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments including a copy of such comments that are made in writing.
Agreement and Plan of Merger - Page 4
SECTION 1.03. COMPANY ACTIONS. (a) The Company hereby consents to the
Offer and represents that (i) its Board of Directors (at a meeting duly called
and held) has (x) determined that each of the Offer and the Merger is fair to
and in the best interests of the holders of Company Common Stock, (y) approved
and declared advisable this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, and such approval constitutes approval of
the Offer, this Agreement and the transactions contemplated hereby, including
the Merger, for purposes of Section 203 of the Delaware General Corporation Law
(as amended, the "DGCL"), and (z) resolved to recommend acceptance of the Offer
and approval and adoption of this Agreement and the Merger by the holders of
Company Common Stock (subject to the fiduciary duties of the Board of Directors
under the DGCL), and (ii) Xxxxxxxxx Associates, LLC ("Xxxxxxxxx Associates") has
delivered to the Board of Directors of the Company its opinion that the
consideration to be received by the holders of Company Common Stock in the Offer
and the Merger is fair, from a financial point of view, to such holders, subject
to the assumptions and qualifications set forth in such opinion. The Company
hereby agrees to file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendation of the Board of Directors of the
Company referred to in clause (i) (z) of the preceding sentence and shall mail
or cause to be mailed the Schedule 14D-9 to the holders of the Company Common
Stock. The Company hereby agrees to file the Schedule 14D-9 with the SEC on the
same date Parent and Merger Sub file the Schedule TO with the SEC, and shall
mail or cause to be mailed the Schedule 14D-9 to the holders of Company Common
Stock on the same date as the Offer Documents are mailed.
(b) The Schedule 14D-9 shall comply in all material respects with
the Exchange Act and any other applicable law and shall contain (or shall be
amended in a timely manner 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. The information contained
in the Schedule 14D-9 (other than information furnished in writing by Parent or
Merger Sub expressly for inclusion in the Schedule 14D-9, as to which the
Company makes no representations or warranties) will not, at the respective
times the Schedule 14D-9 is filed with the SEC (or such filings are amended or
supplemented) and first published, sent or given to holders of Company Common
Stock, 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 were made,
not misleading. The Company, Parent and Merger Sub each agree promptly to
correct any information provided by them 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 lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to the
extent required by applicable law. Parent, Merger Sub and their counsel shall be
given an opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC.
(c) In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Merger Sub with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its transfer
agent to furnish, Merger Sub with such information and assistance (including
updated lists of stockholders, mailing labels and lists of security positions)
as Merger Sub or its agents may reasonably request in writing in communicating
the Offer to the record and beneficial holders of Company Common Stock.
Agreement and Plan of Merger - Page 5
(d) Subject to the requirements of applicable law, and except for
such actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent and Merger
Sub and each of their affiliates, associates, partners, employees, agents and
advisors shall hold in confidence the information contained in such labels,
lists and files, shall use such information only in connection with the Offer
and the Merger, and, if this Agreement is terminated, in accordance with its
terms, shall deliver promptly to the Company all copies of such information then
in their possession or under their control.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. At the "Effective Time" (as defined in Section
2.03), and subject to and upon the terms and conditions of this Agreement and
the applicable provisions of the DGCL, Merger Sub shall be merged with and into
the Company, the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
SECTION 2.02. CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.01, the consummation of the Merger (the "Closing") will take place at
10:00 a.m., Boston time, as soon as practicable (but in no event later than the
second business day) after satisfaction or waiver of the conditions set forth in
Article VIII (the "Closing Date"), at the offices of Xxxxxxx Xxxxxx & Green,
P.C., 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, unless another date, time or
place is agreed to in writing by the parties hereto.
SECTION 2.03. EFFECTIVE TIME. On the Closing Date, the parties hereto
shall cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") as contemplated by Section 251 of the DGCL, together
with any required related certificates, 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 (the time of such filing being the "Effective
Time"). The Company and its counsel shall be given a reasonable opportunity to
review and comment on the Certificate of Merger prior to the filing thereof.
SECTION 2.04. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.05. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation; provided,
however, that Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read as follows: "FIRST: The name of the
corporation is Workgroup Technology
Agreement and Plan of Merger - Page 6
Corporation"; and provided further, however, that the Certificate of
Incorporation of the Surviving Corporation shall include the provisions
contemplated by Section 7.05(a). The Company and its counsel shall be given a
reasonable opportunity to review and comment on such Certificate of
Incorporation prior to the filing thereof.
(b) At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment on such
By-Laws prior to the adoption thereof.
SECTION 2.06. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
SECTION 2.07. MERGER WITHOUT MEETING OF STOCKHOLDERS. In the event that
Merger Sub shall have acquired at least ninety percent (90%) of the outstanding
shares of each class of capital stock of the Company entitled to vote on the
Merger upon completion of the Offer, the parties hereto agree, at the request of
Merger Sub and subject to Article VIII, to take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of the stockholders of the Company, in accordance
with Section 253 of the DGCL.
SECTION 2.08. SUBSEQUENT ACTIONS. If at any time after the Effective Time,
the Surviving Corporation shall determine, in its sole discretion, or shall be
advised, that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the Company
or Merger Sub acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, then the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Merger Sub, all such deeds, bills of sale, instruments of conveyance,
assignments and assurances and to take and do, in the name and on behalf of each
such corporation or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title or
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company, the
holders of any shares of Company Common Stock or the holders of any capital
stock of Merger Sub:
(a) Each share of the capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of Common Stock, par value $0.01
per share, of the Surviving Corporation.
Agreement and Plan of Merger - Page 7
(b) Each share of Company Common Stock and all other shares of
capital stock of the Company that are owned by the Company, and all shares of
Company Common Stock and other shares of capital stock of the Company owned by
Parent, Merger Sub or any other wholly-owned subsidiary of Parent, shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. As used in this Agreement, the
word "subsidiary," with respect to any party, means any corporation,
partnership, joint venture, limited liability company or partnership, or other
organization, whether incorporated or unincorporated, of which: (i) such party
or any other subsidiary of such party is a general partner; (ii) voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation, partnership, joint venture, limited
liability company or partnership, or other organization is held by such party or
by any one or more of its subsidiaries, or by such party and any one or more of
its subsidiaries; or (iii) at least 51% of the equity, other securities or other
interests is, directly or indirectly, owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and any one or more of its
subsidiaries.
(c) All outstanding "Options" (as defined in Section 3.04 hereof)
to purchase shares of Company Common Stock granted under the "Company Stock
Option Plans" (as defined in Section 3.04 hereof) shall be treated in accordance
with Section 3.04 hereof.
SECTION 3.02. CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company, the
holders of any shares of Company Common Stock or the holders of any capital
stock of Merger Sub:
(a) Subject to Section 3.01(b) and to the other provisions of this
Section 3.02, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (excluding "Dissenting Shares" (as
defined in Section 3.05 hereof)) shall be converted into the right to receive
the Offer Consideration (or the highest price paid for each share of Company
Common Stock pursuant to the Offer, if greater than the Offer Consideration),
without any interest thereon (the "Merger Consideration").
(b) From and after the Effective Time all such shares of Company
Common Stock, when converted as provided herein, no longer shall be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each "Certificate" (as defined in Section 3.03(b)) previously evidencing Shares
shall thereafter represent only the right to receive the Merger Consideration.
The holders of Certificates previously evidencing Shares outstanding immediately
prior the Effective Time shall cease to have any rights with respect to the
Company Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.03(b),
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon. 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 or the Surviving Corporation.
SECTION 3.03. PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Parent shall appoint a United
States bank or trust company mutually acceptable to the Company and Parent to
act as paying agent (the "Paying Agent") for the payment of the Merger
Consideration, and prior to the Effective Time, Parent shall deposit or shall
cause to be deposited with the Paying Agent in a separate fund established for
the benefit of the holders
Agreement and Plan of Merger - Page 8
of shares of Company Common Stock, for payment in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), cash in United States
dollars in immediately available funds in amounts necessary to make the payments
pursuant to Section 3.02(a) and Section 3.03(b). The Paying Agent shall,
pursuant to irrevocable instructions, pay the Merger Consideration out of the
Payment Fund as provided in Section 3.03(b).
The Paying Agent shall invest the Payment Fund as Parent directs in
obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest investment grade rating from both
Xxxxx'x Investors Services, Inc. and Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $1,000,000,000 (collectively, "Permitted
Investments"); provided, however, that the maturities of Permitted Investments
shall be such as to permit the Paying Agent to make prompt payment to former
holders of the Company Common Stock entitled thereto as contemplated by this
Section 3.03. Parent and the Surviving Corporation shall cause the Payment Fund
to be promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. All earnings on Permitted Investments shall be paid to
Parent at such times and in such amounts as Parent directs the Paying Agent. If
for any reason (including losses), the Payment Fund is inadequate to pay the
amounts to which holders of shares of Company Common Stock shall be entitled
under this Section 3.03, Parent and the Surviving Corporation shall in any event
be liable for payment thereof. The Payment Fund shall not be used for any
purpose except as expressly provided in this Agreement.
(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall instruct the Paying Agent to mail to each holder of record
(other than the Company, Parent, Merger Sub or any of their respective
subsidiaries or holders of "Dissenting Shares" (as defined in Section 3.05
hereof)) of a certificate or certificates which, immediately prior to the
Effective Time, evidenced outstanding shares of Company Common Stock (the
"Certificates"), (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent, and
shall be in such form and have such other provisions as the Surviving
Corporation reasonably may specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for payment therefor. Upon
surrender of a Certificate for cancellation to the Paying Agent together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be paid in cash in an amount equal to the product of (x) the number of
shares of Company Common Stock represented by such Certificate and (y) the
Merger Consideration, and the Certificate so surrendered shall forthwith be
canceled. Absolutely no interest shall be paid or accrued on the Merger
Consideration payable upon the surrender of any Certificate.
(c) If payment is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be promptly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment of the Merger Consideration shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the surrendered Certificate or shall have established to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered in accordance with the provisions of Sections 3.03(b) and (c),
each Certificate (other than Certificates representing Shares owned by Parent or
any subsidiary of Parent or held in the treasury of the Company) shall represent
for all purposes only the right to receive the Merger Consideration.
(d) Any portion of the Payment Fund which remains undistributed to
the holders of
Agreement and Plan of Merger - Page 9
Company Common Stock for 180 days after the Effective Time shall be delivered to
the Surviving Corporation, upon demand, and any holders of Company Common Stock
who have not theretofore complied with this Article III and the instructions set
forth in the letter of transmittal mailed to such holder after the Effective
Time shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration to which they are entitled. All interest accrued in respect
of the Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
(e) Neither Parent nor the Surviving Corporation shall be liable
to any holder of shares of Company Common Stock for any cash or interest thereon
from the Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation or Parent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Parent.
SECTION 3.04. TREATMENT OF OPTIONS. At the Effective Time, each holder of
a then outstanding option to purchase Shares under the Company's 1992 Stock
Plan, 1996 Stock Plan and the Amended and Restated 1996 Non-Employee Director
Stock Option Plan (collectively, the "Company Stock Option Plans"), to the
extent such option is then exercisable (individually, an "Option" and
collectively, the "Options"), shall, in settlement thereof, receive for each
Share subject to such Option (but only to the extent such Option is then
exercisable for each such Share) an amount (subject to any applicable
withholding tax) in cash equal to the difference between the Merger
Consideration and the per share exercise price of such Option to the extent such
difference is a positive number (such amount being hereinafter referred to as
the "Option Consideration"). Upon receipt of the Option Consideration, the
Option Consideration shall be deemed a release of any and all rights the holder
had or may have had in respect of such Option. Prior to the Effective Time, the
Company shall take all such lawful action as may be necessary to give effect to
the transactions contemplated by this Section 3.04 (except for such action that
may require the approval of the Company's stockholders). Except as otherwise
agreed to by the parties, the Company shall use its reasonable efforts to ensure
that (i) all Company Stock 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 of any other interest in respect of the capital stock of the
Company or any subsidiary thereof shall be canceled as of the Effective Time,
and (ii) following the Effective Time, no participant in any Company Stock
Option Plan or other plans, programs or arrangements shall have any right
thereunder to acquire equity securities of the Company, the Surviving
Corporation or any subsidiary or affiliate thereof and to terminate all such
plans.
SECTION 3.05. DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment in cash of the appraised value of such shares of Company Common Stock
held by them in accordance with the provisions of such Section 262, except that
all Dissenting Shares
Agreement and Plan of Merger - Page 10
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such shares of Company
Common Stock under such Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration
upon surrender, in the manner provided in Section 3.03(b), of their Certificate
or Certificates. The Company shall give Parent (i) prompt notice of any written
demand for appraisal received by the Company pursuant to the applicable
provisions of the DGCL and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any such demands or offer to settle or settle any such
demands.
SECTION 3.06. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that
any Certificates shall have been lost, stolen or destroyed, the Paying Agent
shall make payment in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, of the
Merger Consideration; provided, however, that Parent may, in its discretion and
as a condition precedent to the payment of the Merger Consideration, require the
owner of any such lost, stolen or destroyed Certificate or Certificates having
an aggregate value of $10,000 or more to deliver a bond in such sum as Parent
may reasonably direct as indemnity against any claim that may be made against
Parent or the Paying Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and Merger
Sub that, except as set forth in the written disclosure schedule previously
delivered by the Company to Parent (the "Company Disclosure Schedule"):
SECTION 4.01. ORGANIZATION AND QUALIFICATION; NO SUBSIDIARIES. The Company
is an entity duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the power and authority necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted. The Company is duly
qualified or licensed as a foreign entity to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect (as defined below) on the Company. The Company does not have any
subsidiaries. Except as set forth in Section 4.01 of the Company Disclosure
Schedule, the Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity. For purposes of this Agreement,
a "Material Adverse Change" or a "Material Adverse Effect" shall mean, with
respect to Parent on the one hand and the Company on the other hand, the result
of one or more events, changes or effects which, individually or in the
aggregate, would have a material adverse effect or impact on the business,
assets, liabilities, results of operations or financial condition of such party
and its subsidiaries, taken as a whole, but shall exclude the effects of (i) any
material adverse change in such party's results of operations for, or financial
condition in, any fiscal period prior to the date hereof that is directly
attributable to a disruption in the conduct of the Company's business arising
from the transactions contemplated by this Agreement or the public announcement
thereof, (ii) changes in general economic
Agreement and Plan of Merger - Page 11
conditions, or (iii) changes affecting the industry generally in which the such
party operates.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore made available or otherwise furnished to Parent a complete and
correct copy of its Certificate of Incorporation and By-Laws, as amended to
date. Such Certificate of Incorporation and By-Laws are in full force and
effect. The Company is not in violation of any of the provisions of its
Certificate of Incorporation or By-Laws in any material respect.
SECTION 4.03. CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 1,000,000 shares of Preferred Stock, par value $.01 per share,
of which no shares are issued and outstanding, and (ii) 30,000,000 shares of
Common Stock, par value $.01 per share, of which 1,841,121 shares were issued
and outstanding as of November 7, 2002. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are not subject to preemptive or other similar rights. Except
as set forth in the first sentence of this Section 4.03 or in Section 4.03 of
the Company Disclosure Schedule, as of November 7, 2002 there were no
outstanding (i) shares of capital stock or other voting securities of the
Company, (ii) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company or (iii) options,
warrants, exchange rights, subscription rights or other agreements, commitments
or rights to purchase or otherwise acquire from the Company, or agreements,
commitments or obligations of the Company to issue or sell, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company, in each case to which the Company is
a party or by which the Company is bound (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Company Securities"). Section 4.03
of the Company Disclosure Schedule sets forth a complete and correct list
(including the name of the holder, number of shares, exercise price and date of
grant) of all Company Securities described in clause (iii) of the definition of
Company Securities. There are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any Company Securities or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby (other than, with respect to the consummation
of the Merger, the approval of the Merger by the holders of a majority of the
outstanding shares of Company Common Stock at any meeting of such stockholders
called for such purpose, if necessary (the "Company Stockholders Meeting")). The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the consummation of the Merger, the
approval of the Merger by the holders of a majority of the outstanding shares of
Company Common Stock at the Company Stockholders Meeting, if required). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due execution and delivery by Parent and Merger Sub, constitutes
the legal, valid and binding obligation of the Company (other than, with respect
to the consummation of the Merger, the approval of the Merger by the holders of
a majority of the outstanding shares of Company Common Stock at the Company
Stockholders Meeting, if required), except that the enforcement hereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
Agreement and Plan of Merger - Page 12
(b) The Company Board of Directors, at a meeting duly called and
held at which all directors were present, has unanimously (i) duly and validly
approved and taken all corporate action required to be taken by the Company
Board of Directors to authorize this Agreement and the consummation of the
transactions contemplated hereby, (ii) resolved that the transactions are
advisable and in the best interests of the stockholders of the Company and that
the consideration to be paid for each Share in the Offer and the Merger is fair
to the holders of such Shares, and (iii) subject to the other terms and
conditions of this Agreement, resolved to recommend that the stockholders of the
Company accept the Offer, tender their shares to the Merger Sub pursuant to the
Offer, and approve and adopt this Agreement, and each of the transactions, and
none of the aforesaid actions by the Company Board of Directors has been
amended, rescinded or modified.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Section 4.05(a) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of the
Company, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or by which its properties are
bound or affected, (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair the Company's rights or alter the rights or obligations of any third
party under, any Material Contract (as hereinafter defined), (iv) give to others
any rights of termination, amendment, acceleration or cancellation of any
Material Contract, or (v) result in the creation of a lien or encumbrance on any
of the properties or assets of the Company pursuant to any Material Contract,
except in the case of clauses (ii), (iii), (iv) and (v) for any such conflicts,
violations, breaches, defaults or other occurrences that would not individually
or in the aggregate have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 4.05(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company and the
consummation of the transactions contemplated by this Agreement, including the
Merger, will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) (x) the filings and notices to be made
pursuant to Article I hereof, (y) the applicable requirements, if any, of state
securities or takeover laws ("Blue Sky Laws") and (z) the filing and recordation
of appropriate merger or other documents as required by DGCL and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement, or would not otherwise
have a Material Adverse Effect on the Company.
SECTION 4.06. MATERIAL CONTRACTS; PERMITS.
(a) Section 4.06(a) of the Company Disclosure Schedule sets forth
a list of all contracts, agreements, commitments, arrangements, leases and other
instruments to which the Company is a party or by which the Company is bound
which (i) (A) require payments to be made by the Company in excess of $25,000
per year for goods and/or services, or which require the Company to provide
goods and/or services in excess of $25,000 per year, except with respect to
software maintenance and consulting services contracts between the Company and
its customers for which the Company has made
Agreement and Plan of Merger - Page 13
available or otherwise provided to Parent the standard form of such contracts
and (B) do not by their terms expire or are not subject to termination by the
Company within three (3) months from the date of this Agreement, (ii) involve
the joint development, marketing or licensing of any "Company Intellectual
Property" (as defined in Section 4.08(a)) to, from or with third parties,
including, without limitation, OEM, VAR, product development, technology or
product sharing or similar strategic agreements, (iii) limit the freedom of the
Company to engage in any line of business or to compete with any other "person"
as that term is defined in the Exchange Act, or, other than those entered into
in the ordinary course of business, consistent with past practice, any
confidentiality, secrecy or non-disclosure contract, (iv) guarantee, support,
indemnify, assume or endorse the obligations, liabilities (whether accrued,
absolute, contingent or otherwise) or indebtedness of any other person, or (v)
have been, or as of the date of this Agreement will be, required to be filed by
the Company with the SEC pursuant to the requirements of the Exchange Act and
the rules and regulations thereunder (the items above being, collectively, the
"Material Contracts"). The Company has heretofore made available or otherwise
furnished to Parent a complete and correct copy of each Material Contract
(unless any such Material Contract has not been reduced to writing, in which
case the Company has provided a written description thereof).
(b) The Company has in all material respects performed the
obligations required to be performed by it (except for past breaches which have
been cured or waived or for which the Company has no continuing obligations) and
is entitled to all benefits under, and to its knowledge, is not alleged to be in
default in respect of, any Material Contract. Each of the Material Contracts is
in full force and effect, and there exists no default or event of default or
event, occurrence, condition or act, with respect to the Company or, to the
knowledge of the Company, with respect to the other contracting party, which,
with the giving of notice, the lapse of time or the happening of any other event
or conditions, would reasonably be expected to become a default or event of
default under the terms of any Material Contract.
(c) Section 4.06(c) of the Company Disclosure Schedule lists every
Material Contract which, if no required consent regarding the transactions is
obtained, would have a Material Adverse Effect on Parent's ability to operate
the business of the Company in the same manner as the business was operated by
the Company on the Offer Closing Date (as defined in Section 6.01).
(d) The Company holds all material permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are necessary to the operation of the business of
the Company taken as a whole (collectively, the "Company Permits"). The Company
is in compliance in all material respects with the terms of the Company Permits.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents
required to be filed by the Company with the SEC since March 31, 2000, (the
"Company SEC Reports") and has made available to Parent (i) its Annual Report on
Form 10-K for the each of the two fiscal years ended Xxxxx 00, 0000, (xx) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since Xxxxx 00, 0000, (xxx) all other reports or
registration statements filed by the Company with the SEC (other than Reports on
Forms 3, 4 and 5, Schedule 13G and Schedule 13D filed by or on behalf of
stockholders or affiliates of the Company) since March 31, 2000 and (iv) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC. As of their respective dates, the Company SEC
Reports (i) complied as of their respective filing dates in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the
Agreement and Plan of Merger - Page 14
"Securities Act"), and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) 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, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports, as of
their respective dates, complied in all material respects with applicable
accounting requirements and with the rules and regulations of the SEC and were
prepared in accordance with U.S. generally accepted accounting principles
("GAAP"), applied on a consistent basis throughout the periods involved (except
as may be indicated therein or in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X promulgated
by the SEC), and each fairly presented in accordance with the applicable
requirements of GAAP the consolidated financial position of the Company as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) The Company has heretofore made available or otherwise
furnished to Parent a complete and correct copy of any amendments or
modifications, which have not yet been filed with the SEC but which are required
to be filed, to agreements, documents or other instruments which previously had
been filed by the Company with the SEC pursuant to the Securities Act or the
Exchange Act.
(d) For purposes of this Agreement, the "Company Balance Sheet"
means the Company's audited balance sheet (including any related notes thereto)
for the year ended March 31, 2002 included in the Company SEC Reports. Except as
set forth in the Company SEC Reports or as incurred in the ordinary course of
business since the date of the most recent financial statements included in the
Company SEC Reports, the Company has no liabilities nor obligations of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required under GAAP to be set forth on a consolidated balance sheet of the
Company and which individually or in the aggregate would have a Material Adverse
Effect on the Company.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 4.08 of the Company Disclosure Schedule or in the Company SEC Reports or
as contemplated by this Agreement, since the date of the Company Balance Sheet,
the Company has conducted its business in the ordinary course and:
(a) there have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, operations, obligations
liabilities (fixed or contingent), or prospects of the Company which,
individually or in the aggregate, have resulted (whether before or after the
Effective Time) in a Material Adverse Effect on the Company;
(b) the Company has not issued, or authorized for issuance, any
equity security, bond, note, or other security, except for shares issued upon
exercise of outstanding Options granted under the Company Stock Option Plans,
which Options are listed in Section 4.03 of the Company Disclosure Schedule, or
accelerated the vesting of any employee stock benefits (including vesting under
stock purchase agreements or the exercisability of Options);
Agreement and Plan of Merger - Page 15
(c) the Company has not granted or entered into any commitment or
obligation to issue or sell any such equity security, bond, note or other
security of the Company, whether pursuant to offers, stock option agreements,
stock bonus agreements, stock purchase plans, incentive compensation plans,
warrants, calls, conversion rights or otherwise, except for shares issued upon
the exercise of Options;
(d) the Company has not incurred any additional debt for borrowed
money;
(e) the Company has not paid or incurred any obligation or
liability (fixed, contingent, or otherwise), or discharged or satisfied any lien
or encumbrance, or settled any liability, claim, dispute, proceeding, suit, or
appeal, pending or threatened against it or any of its assets or properties,
except for current liabilities included in the Company Balance Sheet and current
liabilities incurred since the date of the Company Balance Sheet in the ordinary
course of business;
(f) the Company has not declared, set aside for payment, or paid
any dividend, payment, or other distribution on or with respect to any share of
its capital stock;
(g) the Company has not purchased, redeemed, or otherwise acquired
or committed itself to acquire, directly or indirectly, any shares of its
capital stock;
(h) the Company has not mortgaged, pledged, otherwise encumbered,
or subjected to any "Liens" (as defined in Section 4.20) on any of its material
assets or properties, tangible or intangible, nor has it committed itself to do
any of the foregoing, except for Liens for current "Taxes" (as defined in
Section 4.15(a)) which are not yet due and payable and purchase money Liens
arising out of the purchase and sale of products or services made in the
ordinary course of business ("Permitted Liens");
(i) the Company has not disposed of, or agreed to dispose of, any
material asset or property, tangible or intangible nor has the Company leased or
licensed to others (including officers and directors of the Company), or agreed
so to lease or license, any asset or property, except for the licensing of the
Company's software to customers, distributors and resellers in the ordinary
course of business;
(j) the Company has not entered into any material contract, or
made any commitment to do the same except (i) for the licensing of the Company's
software to customers, distributors and resellers in the ordinary course of
business and (ii) for the provision of maintenance and/or consulting services to
customers in the ordinary course of business; the Company has not made any
expenditure or commitment for the purchase, acquisition, construction, or
improvement of a capital asset; and the Company has not waived any right of
substantial value or cancelled any material debts or claims or voluntarily
suffered any extraordinary losses;
(k) the Company has not sold, assigned, transferred, or conveyed,
or committed itself to sell, assign, transfer or convey, any Company
Intellectual Property, except for the licensing of software to customers,
distributors, and resellers in the ordinary course of business, and the Company
has not entered into any product development, technology or product sharing, or
similar strategic arrangement with any other party;
(l) the Company has not effected or agreed to effect any employee
profit sharing, stock option, stock purchase, pension, bonus, incentive,
retirement, medical reimbursement, life insurance, deferred compensation or any
other employee benefit plan or arrangement with any
Agreement and Plan of Merger - Page 16
amendment or supplement thereto; the Company has not paid or committed itself to
pay to or for the benefit of any of its directors, officers, employees,
consultants or stockholders any compensation of any kind other than wages,
salaries, and benefits at times and rates in effect prior to the date of the
Company Balance Sheet (other than regularly scheduled increases for non-officer
employees in the ordinary course of business); and the Company has not effected
or agreed to effect any change, including by way of hiring or involuntary
termination, in the employment or engagement terms of any of its directors,
executive officers, or key employees;
(m) the Company has not effected nor committed itself to effect
any amendment or modification to its Certificate of Incorporation or Bylaws;
(n) the Company has not changed in any way its accounting methods
or practices (including any change in depreciation or amortization policies or
rates, any changes in policies in making or reversing accruals, or any change in
capitalization of software development costs);
(o) the Company has not made any loan to any person or entity, and
the Company has not guaranteed the payment of any loan or debt of any person or
entity, except for (i) travel advances made to employees in connection with
their employment duties in the ordinary course of business, consistent with past
practice, and (ii) accounts receivable incurred in the ordinary course of
business, consistent with past practice;
(p) the Company has not changed in any material respect the prices
or royalties set or charged by the Company;
(q) the Company has not negotiated nor agreed to do any of the
things described in the preceding clauses (a) through (p) other than
negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement; and
(r) there has not occurred any Material Adverse Change with
respect to the Company.
SECTION 4.09. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in
Section 4.09 of the Company Disclosure Schedule or as disclosed in the Company
SEC Reports, there are no liabilities (absolute, accrued, contingent or
otherwise) of the Company that could reasonably be expected as of the date
hereof to have a Material Adverse Effect on the Company, except liabilities (a)
adequately provided for in the Company Balance Sheet or (b) incurred in
connection with this Agreement.
SECTION 4.10. ABSENCE OF LITIGATION. Except as set forth in Section 4.10
of the Company Disclosure Schedule or as disclosed in the Company SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company. Except
as disclosed in Section 4.10 of the Company Disclosure Schedule, the Company is
not subject to any judgment, order, injunction or decree entered in any lawsuit
or proceeding to which the Company is a party which is reasonably likely to have
a Material Adverse Effect on the Company. Except as disclosed on Section 4.10 of
the Company Disclosure Schedule, there is no litigation that the Company has
pending against other parties.
SECTION 4.11. INTELLECTUAL PROPERTY. (a) As used in this Agreement,
"Intellectual Property"
Agreement and Plan of Merger - Page 17
means all industrial and intellectual property, including all United States and
non-United States patents, patent applications, patent rights, trademarks,
trademark applications, common law trademarks, Internet domain name
registrations, trade names, service marks, service xxxx applications, common law
service marks, and the goodwill associated therewith, copyrights, in both
published and unpublished works, whether registered or unregistered, copyright
applications, franchises, licenses, know-how, trade secrets, technical data,
designs, customer lists, confidential and proprietary information, processes and
formulae, all computer software programs or applications, layouts, inventions,
development tools and all documentation and media constituting, describing or
relating to the above, including manuals, memoranda, and records. As used in
this Agreement, "Company Intellectual Property" means Intellectual Property
created, applied for, licensed by or owned by the Company in its business
throughout the world.
(b) To the knowledge of the Company, the Company Intellectual
Property does not infringe or violate the Intellectual Property of any other
person, except where such infringement or violation would not have a Material
Adverse Effect on the Company. There is no judicial proceeding pending, or to
the knowledge of the Company, threatened against the Company alleging that the
conduct of the Company's business materially infringes or violates the
Intellectual Property of any other person.
(c) The Company (i) owns all right, title and interest in and to
the Company Intellectual Property, free and clear of all Liens, except for
Permitted Liens or (ii) licenses or otherwise possesses legally enforceable
rights to use the Company Intellectual Property. Except as set forth on Section
4.11(c) of the Company Disclosure Schedule, the Company has made all necessary
filings and recordations to protect and maintain its interest in the Company
Intellectual Property, except where the failure to make such filings or
recordations would not have a Material Adverse Effect on the Company.
(d) Section 4.11(d) of the Company Disclosure Schedule sets forth
a true, complete and correct list of all contracts that grant licenses,
sublicenses or other rights of use of any Intellectual Property owned by a third
person and licensed to the Company, but excluding contracts that grant licenses,
sublicenses or other rights for off-the-shelf software which is commercially
available and has a retail value of less than $5,000 (the "Licensed Rights").
Each of the contracts that grant Licensed Rights was validly authorized and
executed by the Company and, to the knowledge of the Company, by each owner of
licensor of any Licensed Rights which is party to any such contract, and are in
full force and effect. The Company is not in default in the payment of any
royalties, license fees or other consideration to any owner or licensor of any
Licensed Rights used in the conduct of its business or to any representative of
any such owner or licensor nor otherwise in default in any material respect in
the performance of any of its obligations to any such owner or licensor. No such
owner or licensor, nor any agent or representative thereof, has notified the
Company in writing of any claim of any such default.
(e) Except as set forth on Section 4.06(a) or Section 4.11(e) of
the Company Disclosure Schedule, there are no contracts to which the Company
grants licenses, sublicenses or other rights of use of Company Intellectual
Property or Licensed Rights to other persons which require payments to be made
in excess of $25,000 per year.
(f) Section 4.11(f) of the Company Disclosure Schedule contains a
true, complete and correct list of all United States or non-United States
patents and patent applications owned or controlled by the Company (the
"Patents"). The Patents are in full force and effect, are valid and subsisting,
and all maintenance fees, annuities and the like have been paid, except where
failure to pay such fees or annuities would not have a Material Adverse Effect
on the Company. To the knowledge of the Company, none of the Patents has been
challenged, threatened or infringed in any material way by
Agreement and Plan of Merger - Page 18
any Person. There is no proceeding pending or, to the knowledge of the Company,
threatened alleging that any of the Patents materially infringes or violates the
Intellectual Property of any Person. Except as set forth on Section 4.11(f) of
the Company Disclosure Schedule, to the knowledge of the Company, all products
covered by the Patents have been marked with appropriate patent notices, except
where the failure to xxxx such products would not have a Material Adverse Effect
on the Company.
(g) Section 4.11(g) of the Company Disclosure Schedule contains a
true, complete and correct list of all United States or non-United States
business names, tradenames, trademarks, service marks, and applications and
registrations therefor, owned or controlled by the Company (the "Marks"). The
Marks are in full force and effect, are valid and subsisting, and all
maintenance fees, annuities and the like have been paid, except where failure to
pay such fees or annuities would not have a Material Adverse Effect on the
Company. To the knowledge of the Company, none of the Marks has been challenged,
threatened or infringed in any material way by any Person. There is no
proceeding pending or, to the knowledge of the Company, threatened alleging that
any of the Marks materially infringes or violates the Intellectual Property of
any Person. To the knowledge of the Company, all materials encompassed by the
Marks have been marked with appropriate trademark and registration notices,
except where the failure to xxxx such materials would not have a Material
Adverse Effect on the Company.
(h) Section 4.11(h) of the Company Disclosure Schedule contains a
true, complete and correct list of all United States or non-United States
registered copyrights owned or controlled by the Company (the "Copyrights"). The
Copyrights are valid and enforceable and all maintenance fees, annuities and the
like have been paid, except where failure to pay such fees or annuities would
not have a Material Adverse Effect on the Company. To the knowledge of the
Company, none of the Copyrights has been challenged, threatened or infringed in
any material way by any Person. There is no proceeding pending or, to the
knowledge of the Companies, threatened alleging that any of the Copyrights
infringes or violates the Intellectual Property of any Person. To the knowledge
of the Company, all works encompassed by the Copyrights have been marked with
appropriate copyright notices, except where the failure to xxxx such works would
not have a Material Adverse Effect on the Company.
(i) Section 4.11(i) of the Company Disclosure Schedule contains a
true, complete and correct list of all Internet domain name registrations of the
Company (the "Net Names"). No Net Name has been or is now involved in any
dispute, opposition, invalidation or cancellation proceeding, and, to the
knowledge of the Company, no such action has been threatened. There is no
proceeding pending or, to the knowledge of the Company, threatened alleging that
any of the Net Names infringes or violates the Intellectual Property of any
Person. To the knowledge of the Company, there is no domain name application
pending of any other Person that would or potentially would interfere with or
infringe any Net Name.
(j) To the knowledge of the Company, the trade secrets of the
Company (the "Trade Secrets") have not been used, divulged or appropriated
either for the benefit of any person (other than the Company) or to the
detriment of the Company, except where such use, divulgence or appropriation
would not have a Material Adverse Effect on the Company. To the knowledge of the
Company, none of the Trade Secrets is subject to any material adverse claim or
has been challenged or threatened in any material manner. There is no proceeding
pending, or to the knowledge of the Company, threatened alleging that any of the
Trade Secrets infringes or violates the Intellectual Property of any Person.
SECTION 4.12. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
(a) As used in this Agreement, "Employee Plans" means all employee
benefit plans
Agreement and Plan of Merger - Page 19
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), regardless of whether ERISA is applicable thereto,
all other bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance or termination pay, medical or life
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plans, agreements or arrangements of any Person, and any employment
or executive compensation or severance agreements, written or otherwise, for the
benefit of, or relating to, any employee of any Person to which such Person is a
party. Section 4.12(a) of the Company Disclosure Schedule lists the Employee
Plans of the Company (the "Company Employee Plans"). Copies of each such written
Company Employee Plan, a summary of each such Company Employee Plan, including
the summary plan description, and the three most recent Form 5500 Annual Reports
(including the report of an independent auditor), if applicable, with respect to
each such Company Employee Plan have previously been made available or delivered
to Parent.
(b) Except as set forth in Section 4.12(b) of the Company
Disclosure Schedule, (i) none of the Company Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person and none of the
Company Employee Plans is a "multi-employer plan" as such term is defined in
Section 3(37) of ERISA; (ii) there has been no transaction, including prohibited
transactions, or failure to act with respect to any Company Employee Plan which
could reasonably be expected as of the date hereof to have a Material Adverse
Effect on the Company; (iii) all Company Employee Plans are in compliance with
the requirements prescribed by any and all statutes, orders, or governmental
rules and regulations currently in effect with respect thereto, and the Company
has performed all obligations required to be performed by it under, is not in
default under or violation of any of the Company Employee Plans, except for such
failures to comply or perform and for such defaults and violations which,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company; (iv) each Company Employee Plan intended to qualify under Section
401(a) of the Code has received, or is entitled to rely upon, a favorable
determination letter from the Internal Revenue Service ("IRS"); (v) all
contributions required to be made to any Company Employee Plan pursuant to the
terms of the Company Employee Plan or any collective bargaining agreement have
been made on or before their due dates and a reasonable amount has been accrued
in accordance with prior funding and accrual practices for contributions to each
Company Employee Plan for the current plan years; and (vi) the Company does not
maintain any Company Employee Plan subject to Title IV of ERISA.
(c) There are no actions, suits or claims pending or, to the
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to Company Employee Plans or the
assets or fiduciaries thereof (other than routine claims for benefits). Except
as otherwise set forth on Section 4.12(c) of the Company Disclosure Schedule, no
Company Employee Plan provides benefits or payments contingent upon, triggered
by, or increased as a result of the transactions contemplated by this Agreement.
SECTION 4.13. LABOR MATTERS. (a) The Company is in compliance in all
material respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment practices and is
not engaged in any unfair labor practices, except where such engagement would
not have a Material Adverse Effect on the Company. The Company has withheld all
amounts required by law or by agreement to be withheld from the wages, salaries,
and other payments to employees and is not liable for any arrears of wages or
any taxes or penalty for failure to comply with any of the foregoing, except
where the failure to so withhold or comply would not have a Material Adverse
Effect on the Company. The Company is not liable for any payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other
Agreement and Plan of Merger - Page 20
benefits or obligations for employees (other than routine payments to be made in
the normal course of business and consistent with past practice). There are no
pending claims against the Company under any workers compensation plan or policy
or for long term disability.
(b) Except as set forth in Section 4.13 of the Company Disclosure
Schedule, there are no unfair labor practice charges, grievances, or complaints
pending or, to the knowledge of the Company, threatened, by or on behalf of any
employee or group of employees of the Company which, if resolved against the
Company, have had or could reasonably be expected as of the date hereof to have
a Material Adverse Effect on the Company; the Company is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company nor does the Company know of any activities or
proceedings of any labor union to organize any such employees; and the Company
has no knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, pending or threatened against or involving the Company.
SECTION 4.14. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company in writing for inclusion or incorporation by
reference in (i) any of the Offer Documents will, at the time the Offer
Documents are first published, sent or given to holders of Company Common Stock
and at any time they are amended or supplemented, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, (ii) the Schedule TO
and all amendments thereto will, at the times filed with the SEC, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, and (iii) the proxy
statement or information statement relating to the Company Stockholders Meeting
(such proxy statement or information statement as amended or supplemented from
time to time being hereinafter referred to as the "Proxy Statement") will, at
the respective times filed with the SEC or any other regulatory agency, on the
date mailed to the holders of Company Common Stock and at the time of the
Company Stockholders Meeting 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. If at any time prior to the Effective Time, any
event relating to the Company, affiliates, officers or directors should be
discovered by the Company which is required to be set forth in a supplement to
the Proxy Statement or an amendment or supplement to the Offer Documents or the
Schedule 14D-9, the Company shall promptly inform Parent and Merger Sub. The
Proxy Statement will comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent or Merger Sub
which is contained in any of the foregoing documents.
SECTION 4.15. TAXES.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes, fees, levies, duties, tariffs, imposts and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
Federal, state, provincial, local or foreign taxing authority, including
(without limitation) (i) income, franchise, profits, gross receipts, ad valorem,
net worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports and
information statements with respect to Taxes required to be
Agreement and Plan of Merger - Page 21
filed with the IRS or any other taxing authority, domestic or foreign (each, a
"Tax Authority"), including, without limitation, consolidated, combined and
unitary tax returns.
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, the Company has filed all Tax Returns required to be filed
by it, and have paid and discharged all Taxes shown therein to be due, except
such Taxes as are being contested in good faith by appropriate proceedings (to
the extent that any such proceedings are required) or with respect to which the
Company is maintaining reserves in accordance with GAAP in its financial
statements to the extent currently required in all material respects adequate
for their payment, except, in each instance, to the extent that the failure to
(i) file such Tax Returns, (ii) pay and discharge such Taxes, (iii) contest in
good faith such Taxes, or (iv) maintain reserves therefor would not have a
Material Adverse Effect on the Company. Except as set forth in Section 4.15(b)
of the Company Disclosure Schedule, the Company has received no notice of any
examination of any Tax Return of the Company that is currently in progress and
is not party to any proceeding in which Taxes are contested. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return of the Company.
(c) The Company has never been a member of any consolidated,
combined, unitary or aggregate group for Tax purposes (other than a group the
common parent of which was the Company). The Company has never been a "United
States real property holding corporation" within the meaning of Section 897 of
the Code. Except as set forth on Schedule 4.15(c) of the Company Disclosure
Schedule, none of the Tax Returns or the Company have ever been audited by a Tax
Authority.
SECTION 4.16. COMPLIANCE WITH LAWS. Except as set forth in Section 4.16 of
the Company Disclosure Schedule or as disclosed in the Company SEC Reports, the
Company is not in violation of any applicable laws, regulations and ordinances
relating to its business and operations, or any judgment, order or injunction
relating to its business and operations, and to the Company's knowledge there is
no pending inspection or investigation relating to any violation thereof nor has
any government agency indicated an intention to conduct the same, except for
violations which have not had, and (if determined adversely to the Company)
could not reasonably be expected as of the date hereof to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
SECTION 4.17. CUSTOMERS AND SUPPLIERS. Section 4.17-1 of the Company
Disclosure Schedule sets forth a true, complete and correct list of each of the
customers of the Company who purchased more than $100,000 of products and/or
services from the Company during the fiscal year ended March 31, 2002, which
customers in any event represent at least the ten (10) largest customers of the
Company during such period. Section 4.17-2 of the Company Disclosure Schedule
sets forth a true, complete and correct list of each of the suppliers of the
Company from whom the Company purchased more than $100,000 of products and
services during the fiscal year ended March 31, 2002, which suppliers represent
in any event at least the ten (10) largest suppliers of the Company during such
period. Except as set forth on Sections 4.17-1 and 4.17-2 of the Company
Disclosure Schedules, as of the date hereof, there exists no actual, and to the
knowledge of the Company, no threatened, termination, cancellation or material
limitation of, or any material change in, the business relationship of the
Company with any of the customers identified in Section 4.17-1 or any of the
suppliers identified in Section 4.17-2.
SECTION 4.18. PRODUCT RELEASES. The Company has made available or
otherwise provided Parent a schedule of product releases, which schedule is
attached as Section 4.18 of the Company Disclosure Schedule. The Company has a
good faith reasonable belief that it can achieve the release of products on the
schedule described in Section 4.18 of the Company Disclosure Schedule.
Agreement and Plan of Merger - Page 22
SECTION 4.19. BROKERS. No broker, finder or investment banker (other than
Xxxxxxxxx Associates) is entitled to any brokerage, finder's or other fee or
commission from the Company in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore made available or otherwise furnished to Parent a
complete and correct copy of all agreements between the Company and Xxxxxxxxx
Associates pursuant to which such firm would be entitled to any payment relating
to the transactions contemplated hereunder.
SECTION 4.20. TITLE TO PROPERTY. The Company does not own any real
property. Section 4.20 of the Company Disclosure Schedule sets forth a true and
complete list of all real property leased by the Company and the aggregate
monthly rental or other fee payable under such lease. All such current leases
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both would constitute an event of default) that would have a Material Adverse
Effect on the Company. The Company has good, marketable and defeasible title to
all its properties and assets (other than leased properties or assets), free and
clear of any and all mortgages, liens, encumbrances, pledges, charges, claims,
interest, security interest, condition, restriction, obligation, liability,
debt, Tax, option, right of first refusal, or restriction of any kind (whether
matured or unmatured) in respect of such property or asset ("Liens") except
Permitted Liens and Liens that individually or in the aggregate do not have a
Material Adverse Effect on the Company.
SECTION 4.21. ENVIRONMENTAL MATTERS.
(a) The Company is in material compliance with all Environmental
Laws (as hereinafter defined), which compliance includes, but is not limited to,
the possession by the Company of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance in
all material respects with the terms and conditions thereof. The Company has not
received any written communication, whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Company is not in
full compliance, and, to the knowledge of the Company, there are no material
circumstances that may prevent or interfere with such compliance in the future.
All of the material permits that are presently in effect and that the Company
and its subsidiaries have pursuant to Environmental Laws are listed on Section
4.21(a) of the Company Disclosure Schedule.
(b) To the knowledge of the Company, there are no Environmental
Claims pending, alleged or threatened against the Company, or, to the knowledge
of the Company, against any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of law.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern by or attributable to the Company, that could reasonably
be expected to form the basis of any Environmental Claim against the Company or,
to the knowledge of the Company, against any person or entity whose liability
for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing,
(i) all on-site and off-site locations where the Company has stored any material
quantity of Materials of Environmental Concern are identified Section 4.21(d) of
the Company Disclosure Schedule, (ii) any underground
Agreement and Plan of Merger - Page 23
storage tanks (and the capacity and contents of such tanks), if known to the
Company, located on the property leased by the Company as set forth on Section
4.21(d) of the Company Disclosure Schedule, (iii) to the knowledge of the
Company, there is no asbestos contained in or forming part of any building,
building component, structure or office space owned or leased by the Company in
violation of any Environmental Laws, and (iv) to the knowledge of the Company no
polychlorinated biphenyls (PCB's) or PCB-containing items are used or stored at
any property owned, leased or operated by the Company in violation of any
Environmental Laws.
(e) The Company has provided to Parent all assessments, reports,
data, results of investigations or audits, and other information that is in the
possession of or reasonably available to the Company regarding environmental
matters pertaining to or the environmental condition of the business of the
Company, or the compliance (or noncompliance) by the Company with any
Environmental Laws.
(f) For purposes of this Agreement:
(i) "Environmental Claim" means any material claim, action,
cause of action, investigation or notice (written or oral) by any person or
entity alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all applicable federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata with
respect to Matters of Environmental Concern), including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
(iii) "Materials of Environmental Concerns" means, to the
extent addressed by Environmental Laws, chemicals, pollutants, contaminants,
hazardous wastes, toxic substances, hazardous substances, petroleum and
petroleum products, but excluding materials commonly employed or wastes commonly
generated in office operations and/or janitorial operations.
SECTION 4.22. INTERESTED PARTY TRANSACTIONS. Except as contemplated by
this Agreement, disclosed in Section 4.22 of the Company Disclosure Schedule or
disclosed in the Company SEC Reports, since March 31, 2002, no event has
occurred that would be required to be reported pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
SECTION 4.23. EMPLOYMENT AND OTHER AGREEMENTS. Section 4.23 of the Company
Disclosure Schedule sets forth a true, complete and correct list of (i) all
employment, consulting and severance agreement between the Company and any
director, officer or employee of the Company and (ii) all contracts with respect
to the services of independent contractors or leased employees who provide
services to the Company. Except as set forth in Section 4.23 of the Company
Disclosure Schedule, the consummation of the transactions contemplated hereby,
with respect to each director, officer, employee and consultant of the Company,
will not result in (i) any payment (including, without limitation, severance,
unemployment compensation or bonus payments) becoming due from the Company or
under
Agreement and Plan of Merger - Page 24
any Company Employee Plan, (ii) any increase in the amount of compensation or
benefits payable to any such individual or (iii) any acceleration of the vesting
or timing of payment of benefits or compensation payable to any such individual.
No payment which will be made by the Company to any employee will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
SECTION 4.24. VOTE REQUIRED. Unless a meeting of the holders of the
Company Common Stock is not required pursuant to Section 253 of the DGCL, the
affirmative vote of the holders of at least a majority of the outstanding shares
of the Company Common Stock is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger.
SECTION 4.25. STATE TAKEOVER STATUTE. The action taken by the Company's
Board of Directors constitutes approval of each of the Offer and the Merger by
the Company's Board of Directors under Section 203 of the DGCL.
SECTION 4.26. OPINION OF FINANCIAL ADVISOR. The Company has received the
written opinion of Xxxxxxxxx Associates dated the date hereof, to the effect
that, as of the date of such opinion, the consideration to be 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, and a copy of such opinion has been
made available or otherwise provided to Parent and Merger Sub. The Company has
been authorized by Xxxxxxxxx Associates to permit the inclusion of such opinion
in its entirety in the Offer Documents, the Schedule 14D-9 and the Proxy
Statement, provided that Xxxxxxxxx Associates shall have the right to review and
approve in advance of filing the form of such opinion and any reference thereto
contained in the Offer Documents and the Schedule 14D-9.
SECTION 4.27. FULL DISCLOSURE. To the Company's knowledge, this Agreement,
the Company Disclosure Schedules and any certificate delivered by the Company to
Parent pursuant to this Agreement, when all such documents are read together in
their entirety, do not contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make such statements contained
herein or therein, in light of the circumstances under which made, not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby jointly and severally represents and
warrants to the Company that:
SECTION 5.01. ORGANIZATION AND QUALIFICATION. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the power and
authority necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power and authority would not have a Material Adverse Effect on
Parent.
SECTION 5.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation by
Parent and
Agreement and Plan of Merger - Page 25
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes the legal, valid and binding
obligation of Parent and Merger Sub, except that the enforcement hereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) the
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by Parent and Merger Sub will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Parent
or the Certificate of Incorporation or By-Laws of Merger Sub, (ii) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
Parent, Merger Sub or any of their subsidiaries or by which they or their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair Parent's, Merger Sub's or any of their
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material contract, agreement, commitment, arrangement,
lease or other instrument to which Parent, Merger Sub or any of their
subsidiaries is a party or by which Parent, Merger Sub or any of their
subsidiaries is bound, or result in the creation of a lien or encumbrance on any
of the properties or assets of Parent, Merger Sub or any of their subsidiaries
pursuant to any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent, Merger Sub or any of their subsidiaries is a party or by which Parent,
Merger Sub or any of their subsidiaries or any of their respective properties
are bound or affected, except in the case of clauses (ii) and (iii) for any such
breaches, defaults or other occurrences that would not have a Material Adverse
Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub, will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) (x) the filings and notices to be made
pursuant to Article I hereof, (y) the applicable requirements, if any, of Blue
Sky Laws and (z) the filing and recordation of appropriate merger or other
documents as required by DGCL and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the Merger,
or otherwise prevent or materially delay Parent and Merger Sub from performing
their obligations under this Agreement, or would not otherwise have a Material
Adverse Effect on Parent or Merger Sub.
SECTION 5.04. INFORMATION SUPPLIED. The Offer Documents and the Schedule
TO 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 conform in all material respects with the requirements of the
Exchange Act and any other applicable law. The information contained in the
Schedule TO and the Offer Documents (other than information furnished in writing
by the Company expressly for inclusion in the Schedule TO or the Offer
Documents, as to which Parent and Merger Sub make no representations or
warranties) will not, at the respective times the Schedule TO and such Offer
Documents are filed with the SEC (or such filings are amended or supplemented)
and first published, sent or given to holders of Company Common
Agreement and Plan of Merger - Page 26
Stock, 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. None of the information supplied or to be supplied by
Parent or Merger Sub or any affiliate of Parent for inclusion or incorporation
by reference in (i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is
filed with the SEC, and at any time it is amended or supplemented, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading or (ii) the Proxy
Statement will, at the respective times filed with the SEC or any other
regulatory agency, on the date it is mailed to the holders of Company Common
Stock or at the time of the Company Stockholders Meeting, 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. If at any time
prior to the Effective Time any event relating to Parent, Merger Sub or any of
their respective subsidiaries, affiliates, officers or directors should be
discovered by Parent or Merger Sub which is required to be set forth in a
supplement to the Proxy Statement or an amendment or supplement to the Offer
Documents, the Schedule TO or the Schedule 14D-9, Parent and Merger Sub shall
promptly inform the Company.
SECTION 5.05. ABSENCE OF LITIGATION. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of Parent or Merger
Sub, threatened against the Parent, Merger Sub or any of their subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to adversely affect Parent's or Merger Sub's
ability to perform its obligations under this agreement or to consummate the
transactions contemplated by this Agreement. Neither Parent, Merger Sub nor any
of their subsidiaries is subject to any judgment, order, injunction or decree
entered in any lawsuit or proceeding to which the Parent, Merger Sub or any of
their subsidiaries is a party which is reasonably likely to adversely affect
Parent's or Merger Sub's ability to perform its obligations under this agreement
or to consummate the transactions contemplated by this Agreement.
SECTION 5.06. FUNDS AVAILABLE. Parent has, and at all times from the date
of this Agreement through the expiration of the Offer and the Effective Time
will have, and will make available to Merger Sub, all funds necessary for the
acquisition of all Shares pursuant to the Offer and the Merger. Parent has all
funds necessary to pay the related fees and expenses of the transactions
contemplated by this Agreement. Parent has provided to Company written evidence
that Parent has the funds described in the two preceding sentences deposited in
Parent's bank account, and Parent agrees that such funds shall not be removed
from such account without the prior written consent of the Company.
SECTION 5.07. OWNERSHIP OF COMPANY COMMON STOCK. As of the date hereof,
Parent, Merger Sub and their affiliates beneficially own 229,501 shares of
Company Common Stock, but not including any shares of Common Stock subject to
the Stockholders Agreement or the "Purchase Option Shares" (as defined in
Section 7.02).
SECTION 5.08. SEC FILINGS; PARENT FINANCIAL STATEMENTS. Since May 31,
2002, there has not been with respect to Parent any condition, event or
occurrence which, individually or in the aggregate, would reasonably be expected
to prevent or materially delay the ability of Parent or Merger Sub to consummate
the transactions contemplated by this Agreement or to perform their obligations
hereunder.
Agreement and Plan of Merger - Page 27
ARTICLE VI
CONDUCT OF BUSINESS OF THE COMPANY
SECTION 6.01. CONDUCT OF BUSINESS OF THE COMPANY. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the date of acceptance for payment and payment of shares of
Company Common Stock by Merger Sub in the Offer (on the expiration date of the
Offer (as determined in accordance with Section 1.01(b)) (the "Offer Closing
Date"), the Company covenants and agrees that, except to the extent that Parent
shall otherwise consent in writing, the Company shall conduct its business only
in, and the Company shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company, to keep available the services of the present
officers, employees and consultants of the Company, to prevent the loss,
cancellation, abandonment, forfeiture or expiration of any intellectual property
rights of the Company, to preserve in full force and effect all material
licenses and approvals held by the Company and to preserve the present
relationships of the Company with customers, suppliers and other persons with
which the Company has significant business relations. By way of amplification
and not limitation, except as expressly contemplated or permitted by this
Agreement, the Company shall not, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Offer Closing Date, directly or indirectly do, or propose to do, any of
the following without the prior written consent of Parent, which consent shall
not be unreasonably withheld:
(a) amend or otherwise change the Company's Certificate of
Incorporation or By-Laws;
(b) issue or sell, or authorize the issuance or sale of, any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, without limitation, any phantom
interest) of the Company (except for the issuance of shares of Company Common
Stock issuable pursuant to Options under the Company Stock Option Plans which
Options are outstanding on the date of this Agreement);
(c) waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans; provided, however, the foregoing shall not apply to the terms and
conditions of any Options issued pursuant to the Company Stock Option Plans;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
(other than the Merger);
(e) sell, pledge, dispose of or encumber any material assets of
the Company;
(f) transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company
Intellectual Property, other than nonexclusive licenses in the ordinary course
of business consistent with past practice;
(g) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split,
Agreement and Plan of Merger - Page 28
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) amend the terms of,
repurchase, redeem or otherwise acquire any of its securities;
(h) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money, or issue any
debt securities, or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except in the ordinary course of business consistent with
past practice; (iii) authorize any capital expenditures or purchase of fixed
assets; or (iv) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section 6.01(h);
(i) amend any employment agreement, increase the compensation
payable or to become payable to its officers or employees, except for
commissions payable pursuant to the Company's Sales Incentive Plans for fiscal
year March 31, 2003 (copies of which have been made available or otherwise
provided to Parent and listed on Section 4.12(a) of the Company Disclosure
Schedule); or grant any severance or termination pay to (other than pursuant to
pre-existing arrangements under written documents listed on Section 4.12(a) of
the Company Disclosure Schedule), or enter into any employment or severance
agreement with any director, officer or other employee of the Company; or
establish, adopt, enter into or amend any Company Employee Plan except as may be
required by law;
(j) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company, enter into any "keep well" or other agreement to maintain any financial
statement condition, incur or modify any other material liability or enter into
any arrangement having the economic effect of any of the foregoing other than
(i) in connection with the financing of ordinary course trade payables
consistent with past practice or (ii) pursuant to existing credit facilities as
in effect on the date hereof in the ordinary course of business;
(k) pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit pursuant to any existing
plan, agreement or arrangement to any officer, director, employee or affiliate
or pay or agree to pay or make any accrual or arrangement for payment to any
officers, directors, employees or affiliates of the Company of any amount
relating to unused vacation days , except (i) for payments required by law, (ii)
for payments and accruals made in the ordinary course of business consistent
with past practice and (iii) as otherwise permitted by (m) below; adopt or pay,
grant, issue, accelerate or accrue salary or other payments or benefits pursuant
to any pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any Company director, officer, employee, agent or consultant, whether
past or present provided, however, the foregoing shall not apply to the terms
and conditions of any Options outstanding under the Company Stock Option Plans
and the terms and conditions of those certain agreements set forth on Section
4.12(a) of the Company Disclosure Schedule; or amend in any material respect any
such existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(l) modify, amend or terminate any Material Contract, or waive,
release or assign any material rights or claims thereunder or enter into any
agreement or arrangement that would be considered a Material Contract hereunder,
except, in each such case, any such action that is made in the ordinary course
of business, consistent with past practice, except for the Company's Key Man
life
Agreement and Plan of Merger - Page 29
insurance policy (which is identified in Section 4.06(a) of the Company
Disclosure Schedule), which such policy shall be cancelled by the Company
effective as of the Offer Closing Date;
(m) pay, discharge or satisfy any claims, liabilities or
obligations (whether absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business consistent with past practice
(including, without limitation, the payments under those severance agreements
referenced on Section 4.12(a) of the Company Disclosure Schedule), or of claims,
liabilities or obligations reflected or reserved against in the financial
statements of the Company or incurred in connection with the transactions
contemplated by this Agreement (including, without limitation: (i) payment to
Xxxxxxxxx Associates on the Offer Closing Date of the net amount due for the
"Minimum Transaction Success Fee" (as defined in the Financial Advisor Agreement
listed on Section 4.06(a) of the Company Disclosure Schedule); (ii) payment on
the Offer Closing Date of (1) Xxxxxxx X. Xxxxxxx'x accrued but unused vacation
time as of the Offer Closing Date, plus (2) Xx. Xxxxxxx'x accrued but unpaid
salary as of the Offer Closing Date, plus (3) Xx. Xxxxxxx'x out of pocket
expenses incurred but unpaid as of the Offer Closing Date provided such out-of
pocket expenses were incurred in the ordinary course of business and consistent
with past practice, plus (4) Xx. Xxxxxxx'x lump sum severance amount due under
Xx. Xxxxxxx'x Employment Agreement (as described in Section 4.05(a) of the
Company Disclosure Schedule); (iii) payment on the Offer Closing Date of the
premium for the "run off" period of the Company's Directors and Officers
liability insurance (as further described in Section 7.05(c) hereof); and (iv)
payment on the Offer Closing Date of all legal fees and expenses of the
Company's legal counsel);
(n) take any action, other than as required by GAAP or the SEC, to
change accounting policies or procedures (including, without limitation,
procedures with respect to revenue recognition, payments of accounts payable and
collection of accounts receivable);
(o) make any Tax election inconsistent with past practices or
settle or compromise any material Federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations for any assessment of any
Tax; or
(p) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.01(a) through (o) above, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect in any material respect or prevent the
Company from performing in any material respect or cause the Company not to
perform in any material respect its covenants hereunder or result in any of the
conditions to the Merger set forth herein not being satisfied.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. STOCKHOLDER APPROVAL. (a) To the extent stockholder approval
is required by law to consummate the Merger, the Company will take all action
necessary in accordance with the DGCL, the Company's Certificate of
Incorporation and its By-laws to convene the Company Stockholders Meeting as
promptly as practicable following the acceptance for payment of and payment for
shares of Company Common Stock by Parent and Merger Sub in the Offer to consider
and vote upon the Merger, this Agreement and the transactions contemplated
hereby.
Agreement and Plan of Merger - Page 30
(b) Subject to its fiduciary duties under the DGCL, the Company's
Board of Directors shall recommend that the holders of the Company Common Stock
vote in favor of the Merger, this Agreement and the transactions contemplated
hereby and shall cause the Company to take all lawful actions to solicit from
the holders of the Company Common Stock proxies in favor of such approval.
(c) Notwithstanding the foregoing, if Merger Sub shall have
acquired at least 90% of the outstanding shares of each class of capital stock
of the Company entitled to vote on the Merger, the parties shall 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 meeting of
stockholders in accordance with Section 253 of the DGCL.
(d) To the extent stockholder approval of this Agreement is
required by law, the Company shall prepare a Proxy Statement relating to the
Company Stockholders Meeting and a form of proxy for use at the Company
Stockholders Meeting relating to the vote of the holders of the Company Common
Stock with respect to the Merger, this Agreement and the transactions
contemplated hereby. The Company shall cause the Proxy Statement to be mailed to
holders of the Company Common Stock and filed with the SEC at the earliest
practicable date following the acceptance for payment of and payment for shares
of Company Common Stock by Parent and Merger Sub in the Offer. Parent shall
promptly furnish to the Company such information regarding each of Parent and
Merger Sub and their respective officers and directors as may be reasonably
requested by the Company for inclusion in the Proxy Statement as required by any
law or by the SEC.
(e) Parent and Merger Sub agree to cause all shares of Company
Common Stock purchased pursuant to the Offer and all other shares of Company
Common Stock owned by Parent, Merger Sub or any affiliate of Parent, or with
respect to which Parent, Merger Sub or any affiliate of Parent exercise voting
control, to be voted in favor of the approval and adoption of the Merger and
this Agreement.
SECTION 7.02. OPTION TO ACQUIRE ADDITIONAL SHARES.
(a) The Company hereby grants to Parent an irrevocable option (the
"Purchase Option") to purchase, subject to the terms hereof, up to a number of
newly issued shares (the "Purchase Option Shares") of Company Common Stock equal
to 19.9% of the number of shares of Company Common Stock issued and outstanding
immediately prior to the exercise of the Purchase Option (before giving effect
to the exercise of the Purchase Option) in accordance with terms of this Section
7.02 at a purchase price per share (the "Purchase Option Price") equal to the
Offer Consideration.
(b) Parent may exercise the Purchase Option for any reason, in
whole or in part and from time to time if, but only if, after giving effect to
the exercise of the Purchase Option and as a result of such exercise, the number
of shares of Company Common Stock then owned by Parent and Merger Sub will
represent at least 90% of the shares of Company Common Stock then outstanding.
(c) In the event that Parent desires to exercise the Purchase
Option on the terms and conditions set forth in Section 7.02(b) hereof, it shall
deliver to the Company a written notice (such notice being herein referred to as
an "Exercise Notice" and the date of issuance of an Exercise Notice being herein
referred to as the "Notice Date") specifying (i) the total number of Purchase
Option Shares it desires to purchase pursuant to such exercise and (ii) a place
and date, not earlier than three (3) business days nor later than ten (10)
business days after the Notice Date, for the closing of such purchase (the
"Purchase Option Closing Date").
Agreement and Plan of Merger - Page 31
(d) On the Purchase Option Closing Date, Parent shall pay to the
Company the aggregate Purchase Option Price for the number of shares of Company
Common Stock being purchased pursuant to the exercise of the Purchase Option by
means of (i) immediately available funds by wire transfer to a bank account
designated by the Company, (ii) a bank check, (iii) a promissory note issued by
Parent in favor of the Company or (iv) a combination of any of the
aforementioned forms of consideration acceptable to the Company.
(e) On the Purchase Option Closing Date, simultaneously with the
delivery of the consideration provided for in Section 7.02(d) hereof, the
Company shall deliver to Parent a certificate or certificates representing the
number of Purchase Option Shares purchased by Parent.
(f) Certificates for the Purchase Option Shares delivered at on
the Purchase Option Closing Date hereunder may be endorsed with a restrictive
legend that shall read substantially as follows:
"THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM."
It is understood and agreed that the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Parent shall have delivered
to the Company a copy of a letter from the staff of the SEC, or an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
of the future resale of the Purchase Option Shares is not required and that such
legend is not required for purposes of the Securities Act.
(g) Upon the delivery by Parent to the Company of the Exercise
Notice, and the delivery of the applicable Purchase Option Price as provided for
in Section 7.02(d) hereof, Parent shall be deemed to be the holder of record of
the Purchase Option Shares issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such Purchase Option Shares shall not then be actually delivered to
Parent. The Company shall pay all expenses that may be payable in connection
with the preparation, issuance and delivery of stock certificates under this
Section 7.02 in the name of Parent. Parent shall pay all expenses that may be
payable in connection with the issuance and delivery of stock certificates or a
substitute option agreement in the name of any assignee, transferee or designee
of Parent.
SECTION 7.03. ACCESS TO INFORMATION; CONFIDENTIALITY. From and after the
date of this Agreement until the Effective Time, subject to restrictions
contained in confidentiality agreements to which the Company is subject, the
Company shall afford to the officers, employees, accountants, counsel and other
representatives of Parent and Merger Sub, during the Company's normal business
hours, full and complete right and access to all its properties, books,
contracts, commitments and records. During such period, the Company shall
furnish promptly to Parent and Merger Sub all information concerning its
business, properties and personnel as Parent and Merger Sub may reasonably
request, and the Company shall make available the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of its
business, properties and personnel as Parent and Merger Sub may reasonably
request. Parent and Merger Sub shall keep such information confidential in
accordance with the terms of the currently effective confidentiality agreement
dated October 16, 2002 (the "Confidentiality Agreement") between Parent and the
Company. Any investigation pursuant to this
Agreement and Plan of Merger - Page 32
Section 7.03 shall not affect the representations and warranties contained in
this Agreement. For the duration of such period and during the Company's normal
business hours, the Company shall allow two employees of Parent (the "Parent
Representatives") the use of offices in close proximity to the executive offices
of the Company, including, without limitation, the office of the Chief Executive
Officer of the Company. The Company agrees that during such period and during
the Company's normal business hours, the Company shall consult with the Parent
Representatives with respect to day-to-day matters regarding the operation of
the Company and its business. Furthermore, the Company agrees that during such
period and during the Company's normal business hours, the Parent
Representatives shall be afforded reasonable access to, and the right to
communicate with, the employees, vendors and customers of the Company and other
third parties to discuss matters relating to the business and operation of the
Company and its present and future prospects.
SECTION 7.04. CONSENTS; APPROVALS. The Company, Parent and Merger Sub
shall each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and the Company,
Parent and Merger Sub shall promptly make all filings (including, without
limitation, all filings with United States and foreign governmental or
regulatory agencies) required in connection with the authorization, execution
and delivery of this Agreement by the Company, Parent and Merger Sub and the
consummation by them of the transactions contemplated hereby. The Company and
Parent shall furnish all information required to be included in the Proxy
Statement, if any, or for any application or other filing to be made pursuant to
the rules and regulations of any United States or foreign governmental body in
connection with the transactions contemplated by this Agreement. If either party
receives a request for additional information or documentary material from any
governmental authority with respect to the transactions contemplated hereby,
then such party shall use its best efforts to make, or cause to be made, as soon
as reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request.
SECTION 7.05. INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
Certificate of Incorporation of the Company as of the date of this Agreement,
which provisions shall not be amended, repealed or otherwise modified from and
after the Effective Time until at least six (6) years after the Effective Time
in any manner that would adversely affect the rights thereunder existing at the
Effective Time of individuals who at the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required by law.
(b) For six (6) years after the Effective Time, Parent and the
Surviving Corporation will indemnify and hold harmless (including advancement of
expenses) the current and former directors and officers of the Company in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent provided in the Company's Certificate of Incorporation and By-laws in
effect on the date hereof; provided that such indemnification shall be subject
to any limitation imposed from time to time under applicable law. It is
understood that, unless made by a court, any determination as to whether a
person seeking indemnification pursuant to this Section 7.05 has met any
applicable legal standard for indemnification shall be made by a committee
consisting of at least two of Parent's independent directors.
(c) The Company shall purchase, effective on the Offer Closing
Date, a "run-off" insurance policy of the Company's current directors' and
officers' insurance and indemnification policy
Agreement and Plan of Merger - Page 33
with the maximum aggregate limit of liability that can be obtained for a premium
of no more than $75,000, with a retention amount not to exceed $100,000,
covering claims that may be made during a period of three (3) years after the
Offer Closing Date against those who are directors and officers of the Company
prior to the Offer Closing Date for events occurring on or prior to the Offer
Closing Date. The Company shall pay such premium on or before the Offer Closing
Date. Such policies may be subject to such customary conditions and exclusions.
In connection with the purchase of such "run-off" policy, on or before the Offer
Closing Date, Parent, Merger Sub, Xxxxxxx Xxxxxx & Green, P.C., and the
directors and officers of the Company then in office shall execute and deliver
the Escrow Agreement in the form attached hereto as Exhibit B (the "Escrow
Agreement"). On or before the Offer Closing Date, the Parent shall fund the
"Escrow Amount" (as defined in the Escrow Agreement) in accordance with the
terms of the Escrow Agreement.
(d) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 7.05, proper
provision shall be made so that the successors and assigns of Parent and the
Surviving Corporation assume the obligations set forth in this Section 7.05;
provided that, in the case of any such assignment by Parent or the Surviving
Corporation, Parent and the Surviving Corporation shall remain liable for all of
their respective obligations under this Agreement.
(e) The provisions of this Section 7.05 are intended to be for the
benefit of, and shall be enforceable by, each indemnified party, his or her
heirs and his or her representatives and are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 7.06. EMPLOYEE BENEFIT PLANS. From and after the Effective Time,
Parent shall cause the Surviving Corporation to (a) honor and satisfy all
obligations and liabilities that are accrued and vested as of the Effective Time
under any Company Employee Plan and (b) continue all Company Employee Plans,
except for the Company Stock Option Plans. Notwithstanding the foregoing, the
Surviving Corporation hereby reserves the right to amend or terminate any
Company Employee Plan at any time after the Effective Time, in accordance with
its terms and applicable law. To the extent that any Company Employee Plan is
terminated or amended after the Effective Time so as to reduce the benefits that
are then being provided with respect to participants thereunder (provided
applicable law does not prohibit such reduction), Parent shall arrange for each
individual who is then a participant in such terminated or amended plan to
participate in a comparable type of benefit plan maintained by Parent in
accordance with the eligibility criteria thereof, provided that (i) such
participants shall receive full credit for years of service with the Company
prior to the Merger for all purposes for which such service was recognized under
the applicable Company Employee Plan, including, but not limited to, recognition
of service for eligibility and vesting (including acceleration thereof pursuant
to the terms of the applicable Company Employee Plan) and (ii) such participants
shall participate in the Parent benefit plans on terms no less favorable than
those offered by Parent to similarly situated employees of Parent.
Notwithstanding the foregoing, to the extent any of Employee Plans of the Parent
are superior (as to the type and breadth of coverage) to the Company Employee
Plans, Parent shall, or shall cause the Surviving Corporation to, arrange for
all current employees of the Company that continue as employees of the Surviving
Corporation or Parent to be transitioned into such Employee Plans of the Parent
(giving effect to the provisos contained in clauses (i) and (ii) above) prior to
consummation of the applicable "transition period" (as defined in Section
410(b)(6)(C) of the Code) with respect to any Employee Plan
Agreement and Plan of Merger - Page 34
qualified under Section 401(a) of the Code, and within one (1) year with respect
to all other Employee Plans.
SECTION 7.07. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental entity
in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting any of Parent, Merger Sub or the Company, as
the case may be, or any of their respective subsidiaries which relate to the
consummation of the transactions contemplated by this Agreement; and
(d) (i) any event known to the Company or Parent the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect,
and (ii) any failure of the Company, Parent or Merger Sub, as the case may be,
materially to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice; and provided
further, that failure to give such notice shall not be treated as a breach of
covenant for purposes of this Agreement unless the failure to give such notice
is willful by the party required to give notice and results in material
prejudice to the other party.
SECTION 7.08. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use their best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and to otherwise satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement.
SECTION 7.09. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld or delayed;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may upon the
advice of counsel be required by law, the NASD or the OTC Bulletin Board if it
has used all reasonable efforts to consult with the other party prior thereto.
SECTION 7.10. CONVEYANCE TAXES. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
Agreement and Plan of Merger - Page 35
SECTION 7.11. CONDUCT OF BUSINESS OF MERGER SUB. Prior to the Effective
Time, Merger Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Agreement.
SECTION 7.12. NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement in accordance with Article IX hereof,
whichever is earlier, neither the Company, nor its officers, directors,
employees, representatives or agents (including, without limitation, any
investment banker, attorney or accountant retained by the Company), will,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or take any other
action to facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to any "Acquisition Proposal"
(as defined below), or enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal, or authorize or permit any if its officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative to take any such action; provided, however, that nothing
contained in this Section 7.12 shall prohibit the Board of Directors of the
Company from (i) furnishing information to, or entering into discussions or
negotiations with, any person that makes an unsolicited (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 that person was "solicited")
written, bona fide proposal to acquire the Company pursuant to a merger,
consolidation, share exchange, business combination, tender or exchange offer or
other similar transaction and in respect of which such person has the necessary
funds or commitments therefor or (ii) failing to make or withdrawing or
modifying its recommendation referred to in Section 1.03(a) if there exists an
Acquisition Proposal; provided, however, that (x) the Company shall be permitted
to take the actions described in (ii) above if, and only to the extent that: (A)
the Board of Directors of the Company, after consultation with outside legal
counsel (who may be the Company's regularly engaged outside legal counsel)
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under applicable law, (B) the Board of Directors has determined that such
Acquisition Proposal constitutes a "Superior Proposal" (as defined below) and
(C) prior to taking such action, the Company provides reasonable notice to
Parent to the effect that it is taking such action specifying the material terms
and conditions (other than the identity of the person making the proposal) of
such Superior Proposal and (y) the Company shall be permitted to take, either
directly or indirectly, the actions described in (i) above if, and only to the
extent that, the conditions set forth in (x)(A) and (C) above are satisfied.
For purposes of this Agreement, "Acquisition Proposal" shall mean
any of the following (other than the transactions between the Company, Parent
and Merger Sub contemplated hereunder) involving the Company: (i) a written,
bona fide proposal for any transaction pursuant to which any person or its
affiliates (a "Third Party") proposes to acquire beneficial ownership of at
least a majority of the outstanding equity securities of the Company, whether
from the Company or pursuant to a tender offer, exchange offer,
recapitalization, reorganization or otherwise, (ii) a written, bona fide
proposal for any merger, consolidation or other business combination involving
the Company pursuant to which any Third Party proposes to acquire beneficial
ownership of at least a majority of the outstanding equity securities of the
Company or the entity surviving such merger, consolidation or other business
combination, (iii) a written, bona fide proposal for any other transaction or
series of related transactions pursuant to which any Third Party proposes to
acquire control of assets of the Company having a fair market value equal to or
greater than fifty percent (50%) of the fair market value of all of the assets
of
Agreement and Plan of Merger - Page 36
the Company immediately prior to such transaction, 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.
For purposes of this Agreement, a "Superior Proposal" means any
Acquisition Proposal on terms which the Board of Directors of the Company
determines in its good faith reasonable judgment (after consultation with
Xxxxxxxxx Associates or any other financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders than the
transactions contemplated by this Agreement.
(b) In addition to the obligations of the Company set forth in
paragraph (a) above, the Company shall promptly advise Parent orally and in
writing of the receipt of any Acquisition Proposal or any written request for
information which is apparent on its face that it is in connection with an
Acquisition Proposal, and the material terms and conditions of such request or
Acquisition Proposal (including the identity of the person making any such
request or Acquisition Proposal).
SECTION 7.13. DIRECTORS.
(a) Within two business days after the acceptance for payment of,
and payment by Merger Sub for, a number of shares of Company Common Stock such
that Parent and Merger Sub shall own at least two-thirds of the outstanding
Company Common Stock (the "Director Change Date"), and provided that the Escrow
Agreement has been fully executed by the parties thereto and the "Escrow Amount"
(as defined in the Escrow Agreement) has been delivered to the "Escrow Agent"
(as defined in the Escrow Agreement), Merger Sub shall be entitled to designate
three directors on the Board of Directors of the Company (the "Merger Sub
Directors"), and the Company shall be entitled to designate one director who is
a director on the date hereof and who is otherwise not (a) an employee, officer,
director or affiliate of Parent or Merger Sub or (b) an employee or officer of
the Company (the "Independent Director"). If for any reason and at any time
prior to the Effective Time, no Independent Director is serving on the Board of
Directors of the Company, then the Merger Sub Directors shall designate one
person to fill such vacancy who shall not be (1) an employee, officer, director
or affiliate of Parent or Merger Sub or (2) an employee or officer of the
Company, to serve as the Independent Director, and such person shall be deemed
to be an Independent Director for purposes of this Agreement. Subject to
applicable law, the Company shall take all action requested by Merger Sub
necessary to effect any such appointment or election, including mailing to its
shareholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agrees to make such mailing with the mailing of the Schedule 14D-9
(provided that Merger Sub shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to Merger Sub's designees). In connection with the foregoing, the
Company will obtain in advance and hold in escrow the written resignation of
each member of its Board of Directors other than the Independent Director and
shall accept such resignations as of the Director Change Date.
(b) Following the election or appointment of the Merger Sub
Directors pursuant to Section 7.13(a) and prior to the Effective Time, the
approval of the Independent Director shall be required to authorize any matter
relating to this Agreement or the Merger on behalf of the Company, including,
without limitation, (i) any termination of this Agreement by the Company, (ii)
any amendment of this Agreement, (iii) any extension of time for the performance
of any obligation or any other act of Parent or Merger Sub under this Agreement
(except with respect to any extension of the Offer as determined in Sections
1.01(b) or 1.01(c) hereof) and (iv) any waiver of compliance by Parent or Merger
Sub with any provision of this Agreement for the benefit of the Company or the
holders of the Company
Agreement and Plan of Merger - Page 37
Common Stock (including, without limitation, Section 7.05); provided, however,
that prior to the Effective Time of the Merger, no amendment or waiver may be
effected with respect to the provisions of Section 7.05 without the express
written consent of all persons who would be adversely affected by such amendment
or waiver.
(c) If the approval of the Independent Director is sought in
connection with the actions set forth in Section 7.13(b), the Independent
Director shall have the right to retain independent legal counsel reasonably
acceptable to the Independent Director and Parent, and Parent shall pay the
reasonable legal fees and expenses incurred by such legal counsel.
(d) At all times on and after the Offer Closing Date and through
and including the Effective Time, Parent shall include Independent Director on
Parent's "Directors and Officers" insurance policy, such that the Independent
Director shall be entitled to all the rights that Parent's directors and
officers are entitled to at any time under such policy.
SECTION 7.14. BOOKS AND RECORDS. For a period of six (6) years following
the Offer Closing Date, Parent shall, and Parent shall cause Merger Sub and/or
Surviving Corporation, as the case may be, to use reasonable best efforts to
maintain the Company's books and records in the same manner and state as such
books and records were kept on or before the Offer Closing Date.
SECTION 7.15. ACCESS TO COMPUTER EQUIPMENT. At least three (3) business
days before the Offer Closing Date, Xxxxxxx X. Xxxxxxx will provide the Parent
Representatives access to the computer equipment owned by the Company and used
by Xx. Xxxxxxx.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO THE MERGER. The respective 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 and as
required by the DGCL and the Company's Certificate of Incorporation and By-laws;
(b) Merger Sub shall have accepted for payment and paid for shares
of Company Common Stock tendered pursuant to the Offer; provided that this
condition will be deemed satisfied if (i) Merger Sub fails to accept for payment
and pay for Company Common Stock pursuant to the Offer in breach of its
obligations under this Agreement or (ii) Parent or any affiliate of Parent
acquires any shares of Company Common Stock other than pursuant to the Offer,
which shares, when added to the shares acquired by Parent pursuant to any stock
options and the Offer would result in Parent owning at least two-thirds of the
outstanding shares of Company Common Stock on a fully diluted basis (excluding
options the exercise price of which is equal to or greater than the Offer
Consideration and excluding any Purchase Option Shares) on the date of purchase;
and
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger.
Agreement and Plan of Merger - Page 38
ARTICLE IX
TERMINATION
SECTION 9.01. TERMINATION. This Agreement may be terminated and the Offer
and the Merger abandoned at any time prior to the Offer Closing Date or the
Effective Time, as set forth below, notwithstanding approval thereof by the
stockholders of the Company:
(a) prior to the Effective Time, by mutual written consent of
Parent and the Company for any reason, or by mutual action of their respective
Boards of Directors;
(b) prior to the Effective Time, by Parent or the Company if there
shall be any law or regulation of any competent authority that makes
consummation of the Merger illegal or otherwise prohibited or if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling or
taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
(c) prior to the Effective Time, by Parent or the Company, if, at
the Company Stockholders Meeting (including any adjournment or postponement
thereof), if required, the requisite vote of the stockholders of the Company
shall not have been obtained (provided that the right to terminate this
Agreement under this Section 9.01(c) shall not be available to Parent if it has
failed to vote as specified in Section 7.01(e));
(d) prior to the Offer Closing Date, by Parent or the Company, if
(i) the Board of Directors of the Company shall withdraw, modify or change its
recommendation of the Offer, this Agreement or the Merger in a manner adverse to
Parent or shall have resolved to do so; (ii) the Board of Directors of the
Company shall have taken a "neutral" position with respect to the Offer, this
Agreement and the Merger (or shall have failed to reject as inadequate or failed
to have reaffirmed its recommendation of the Offer, this Agreement and the
Merger within ten (10) business days after the public announcement or
commencement of an Acquisition Proposal); or (iii) the Board of Directors of the
Company shall have resolved to accept, or accepted, a Superior Proposal;
(e) prior to the Offer Closing Date, by Parent or the Company,
upon any material breach of any covenant or agreement made by the other set
forth in this Agreement (a "Terminating Breach"), provided that, if such
Terminating Breach is curable by the party committing such breach prior to the
expiration of thirty (30) days from its occurrence through the exercise of best
efforts and for so long as the party committing such breach continues to
exercise such best efforts, the non-breaching party may not terminate this
Agreement under this Section 9.01(e) unless such 30-day period expires without
such Terminating Breach having been cured;
(f) prior to the Offer Closing Date, by the Company, if Merger Sub
shall have failed to commence the Offer within five (5) business days following
the date of the initial public announcement of the Offer;
(g) prior to the Offer Closing Date, by the Company, (x) if the
Offer shall have expired or have been withdrawn or terminated without any shares
of Company Common Stock being
Agreement and Plan of Merger - Page 39
purchased thereunder or (y) if no shares of Company Common Stock have been
purchased thereunder on or prior to the fiftieth (50th) business day after the
date of this Agreement; or
(h) prior to the Offer Closing Date, by Parent, (x) if the Offer
shall have been withdrawn or terminated without any shares of Company Common
Stock being purchased thereunder or (y) if no shares of Company Common Stock
have been purchased thereunder, in each case, solely because of the failure of
any condition specified in Annex A to be satisfied on or prior to the fiftieth
(50th) business day after the date of this Agreement; provided, however, that
Parent's right to terminate this Agreement pursuant to this Section 9.01(h)
shall not be available to Parent if Parent's or Merger Sub's failure to fulfill
or perform any of its respective obligations under this Agreement has been the
cause of or resulted in the failure of any such condition to be satisfied.
SECTION 9.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 9.01, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement, except as provided in
Section 10.01, shall forthwith become void and there shall be no liability on
the part of any party hereto or any of its affiliates, directors, officers or
stockholders except (i) as set forth in Sections 9.03, 9.04 and 9.05 hereof, and
(ii) nothing herein shall relieve any party from liability for any willful
breach hereof.
SECTION 9.03. FEES AND EXPENSES PAYABLE BY THE COMPANY.
(a) Except as set forth in Section 9.04(b), all fees and expenses
incurred by the Company in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Company, whether or not the Merger is
consummated.
(b) Upon the termination of this Agreement by Parent pursuant to
Sections 9.01(e) and 9.01(h), the Company shall reimburse Parent and Merger Sub
for actual, documented and reasonable out-of-pocket expenses of Parent and
Merger Sub incurred in connection with this Agreement and the transactions
contemplated by this Agreement (including, but not limited to, fees and expenses
of the Parent's and Merger Sub's counsel, accountants and financial advisors) in
an aggregate amount not to exceed $100,000.
(c) The fees and expenses to be reimbursed pursuant to Sections
9.03(b) shall be paid within ten (10) days following written demand from Parent
to the Company. The Company's payment of such amount shall be made by wire
transfer of same-day funds to an account specified by Parent in writing.
SECTION 9.04. FEES AND EXPENSES PAYABLE BY PARENT.
(a) Except as set forth in Sections 9.03(b), all fees and expenses
incurred by Parent or Merger Sub in connection with this Agreement and the
transactions contemplated hereby shall be paid by Parent, whether or not the
Merger is consummated.
(b) Upon the termination of this Agreement by the Company pursuant
to Sections 9.01(e) and 9.01(g), Parent shall reimburse the Company for actual,
documented and reasonable out-of-pocket expenses of the Company incurred in
connection with this Agreement and the transactions contemplated by this
Agreement (including, but not limited to, fees and expenses of the Company's
counsel, accountants and financial advisors) in an aggregate amount not to
exceed $100,000.
Agreement and Plan of Merger - Page 40
(c) The fees and expenses to be reimbursed pursuant to Section
9.04(b) shall be paid within ten (10) days following written demand from the
Company to Parent. Parent's payment of such amount shall be made by wire
transfer of same-day funds to an account specified by the Company in writing.
SECTION 9.05. TERMINATION FEE. The Company shall pay Parent $450,000 if
this Agreement is terminated by (i) Parent pursuant to Section 9.01(e), if
within six (6) months of the date of such termination, the Company shall have
resolved to accept, or accepted, a Superior Proposal and the Company enters into
a definitive agreement in connection with such Superior Proposal on or before
the six (6) month anniversary of the date of such termination (in which case,
with respect to this clause (i), credit shall be given for any payments made
pursuant to Section 9.03(b) above), or (ii) either Parent or the Company
pursuant to Section 9.01(d) on or before March 31, 2003. Any payment due under
clause (i) hereof shall be made within five (5) days of the Company's execution
and delivery of such definitive agreement. Any payment due under clause (ii)
hereof shall be made within ten (10) days following written demand therefor from
Parent to Company. The Company's payment of such amount shall be made by wire
transfer of same-day funds to an account specified by Parent in writing.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 10.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. Any disclosure made with reference to one or more sections of
the Company Disclosure Schedule shall be deemed disclosed with respect to each
other section therein as to which such disclosure is relevant provided such
relevance is reasonably apparent. The representations, warranties and agreements
in this Agreement shall terminate at the Effective Time or upon the termination
of this Agreement pursuant to Section 9.01, as the case may be, except that the
agreements set forth in Article III, Sections 7.05, 7.06, 7.09, 9.03, 9.04 and
Article X shall survive the Effective Time indefinitely and those set forth in
Sections 7.09, 9.02, 9.03, 9.04, 9.05 and Article X shall survive termination
indefinitely. The Confidentiality Agreement shall survive termination of this
Agreement.
SECTION 10.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, three days after being
sent by registered or certified mail (postage prepaid, return receipt requested)
(five business days, if mailed outside the country of the recipient), one day
after dispatch by recognized overnight courier (provided delivery is confirmed
by the carrier) and upon transmission by telecopy, confirmed received, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address):
(a) If to Parent or Merger Sub:
SofTech, Inc.
0 Xxxxxxxx Xxxxx
Agreement and Plan of Merger - Page 41
Xxxxxxxxx, XX 00000
Attn.: Chief Operating Officer and President
With a copy to:
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn.: Xxxxx Xxxxx, Esq.
(b) If to the Company:
Workgroup Technology Corporation
Xxx Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Chief Executive Officer and President
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
Tel: (000) 000-0000
Fax: (000) 000-0000
SECTION 10.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "business day" means any day other than a day on which banks
in Boston, Massachusetts are required or authorized to be closed; and
(c) "person" means an individual, corporation, partnership,
association, trust, limited liability company or partnership, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of the
Exchange Act).
SECTION 10.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
(subject to the provisions of Section 7.13(b)) at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company, if necessary, no amendment may be made which by law
requires further approval by such stockholders without such further approval;
provided, further, however, that, after the Offer Closing Date, no amendment may
be made to any of Article III, Sections 7.05, 7.06, 7.09, 9.03, 9.04, 9.05 or
Article X without the approval of all persons who would be adversely affected by
the amendment of any provisions of such Articles or Sections. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto.
SECTION 10.05. WAIVER. At any time prior to the Effective Time, any party
hereto may, with
Agreement and Plan of Merger - Page 42
respect to any other party hereto, (a) extend the time for the performance of
any of the obligations or other acts, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, the parties agree that any
waiver of any provisions of Article III, Sections 7.02, 7.05, 7.06, 7.09, 9.03,
9.04, 9.05 or Article X shall require the consent of all persons who would be
adversely affected by the waiver of any provisions of such Articles or Sections.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 10.06. 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.
SECTION 10.07. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
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.
SECTION 10.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof, including, without limitation,
that certain letter agreement dated as of October 25, 2002 between Parent and
the Company (the "Letter Agreement"), and, except as otherwise expressly
provided herein, are not intended to confer upon any other person any rights or
remedies hereunder. The Company and Parent acknowledge and agree that (i) this
Agreement supercedes the terms and conditions of the Letter Agreement, (ii) the
Letter Agreement is hereby terminated, and (iii) the Letter Agreement is of no
further force or effect, and is null and void in all respects.
SECTION 10.09. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Merger Sub may assign all
or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
Parent guarantees the full and punctual performance by Merger Sub and the
Surviving Corporation of all of their respective obligations hereunder.
SECTION 10.10. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, expressed or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 7.05 (which is intended to be for the
benefit of the individuals described in Section 7.05 and may be enforced by such
individuals) and Section 7.06 (which is intended to be for the benefit of the
Company's employees and may be enforced by such Company employees).
SECTION 10.11. 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
Agreement and Plan of Merger - Page 43
or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
SECTION 10.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and shall in all
respects be interpreted, enforced and governed under the internal and domestic
laws of such state, without giving effect to the principles of conflicts of laws
of such state. Any claims or legal actions by one party against the other
arising out of the relationship between the parties contemplated herein (whether
or not arising under this Agreement) shall be governed by the laws of the State
of Delaware.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in one or more
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Signature Page to Agreement and Plan of Merger
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have each caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SOFTECH, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
SOFTECH ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
WORKGROUP TECHNOLOGY CORPORATION
By: /s/ P. H. Kareiva
---------------------------
Name: P. H. Kareiva
Title: President
ANNEX A
The capitalized terms used in this Annex A shall have the respective
meanings given to such terms in the Agreement and Plan of Merger, dated as of
November 13, 2002, among Parent, Merger Sub and the Company (the "Merger
Agreement") to which this Annex A is attached.
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Merger Sub 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 Merger Sub's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and (subject to Section 1.01(b) of the
Merger Agreement) may amend or terminate the Offer (whether or not any Shares
have theretofore been purchased or paid for) if, at any time on or after the
date of the Merger Agreement and before acceptance for payment of such Shares,
any of the following events shall occur:
(A) any U.S. governmental entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order which is in effect and which (1)
prevents or prohibits consummation of the Offer or the Merger, (2)
prohibits the ownership or operation by the Company, Parent or any
of Parent's subsidiaries of all or any material portion of the
business or assets of the Company, (3) imposes material limitations
on the ability of Parent, Merger Sub or any other subsidiary of
Parent to exercise effectively full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares,
acquired by Merger Sub pursuant to the Offer or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated thereby or (4) requires
divestitures by Parent, Merger Sub or any other affiliate of Parent
of the Shares; provided that Parent shall have used its best efforts
to cause any such decree, judgment, injunction or other order to be
vacated or lifted; or
(B) the representations and warranties of the Company
contained in the Merger Agreement were not true and correct in all
material respects as of the date of the Merger Agreement and the
failure of such representations and warranties to be true and
correct in the aggregate has a Material Adverse Effect on the
Company;
(C) the Company shall not have performed or complied in all
material respects with its material obligations under the Merger
Agreement to be performed or complied with by it;
(D) the Merger Agreement shall have been terminated in
accordance with its terms;
which, in the reasonable judgment of Merger Sub in any such case makes it
inadvisable to proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Merger Sub and its
affiliates and may be asserted by Merger Sub or may be waived by Merger Sub, in
whole or in part, from time to time in its
A-1
sole discretion, except as otherwise provided in the Merger Agreement. The
failure by Merger Sub at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right and may be asserted at any time and from time to time.
A-2
EXHIBIT A
STOCKHOLDERS AGREEMENT
(filed separately)
EXHIBIT B
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Escrow Agreement") is made as of December ,
2002 by and among SofTech, Inc., a Massachusetts corporation (the "Parent"),
SofTech Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of the Parent, the persons whose names are set forth on
Schedule I hereto (the "Indemnitees"), being the current executive officer and
directors of Workgroup Technology Corporation, a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxxx & Green, P.C., a New York professional
corporation ("EB&G"), as escrow agent (the "Escrow Agent"). All capitalized
words and terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement (as hereinafter defined). The
Escrow Agent shall not be considered a party to the Merger Agreement, nor have
any responsibility under the terms thereof.
W I T N E S S E T H:
WHEREAS, the Parent, the Purchaser and the Company have entered into a
Merger Agreement dated November 13, 2002 (the "Merger Agreement"), pursuant to
which the parties thereto have agreed to deliver into escrow an amount equal to
the maximum deductible allowable under the "run-off" insurance policy described
in Section 7.05(c) of the Merger Agreement (the "Run-Off Insurance Policy") in
order to secure the indemnification obligations of the Parent and the Surviving
Corporation to the Indemnities in Section 7.05 of the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual undertakings and covenants
contained in this Escrow Agreement, the parties hereto covenant and agree as
follows:
1. OBLIGATION OF ESCROW AGENT. The Escrow Agent agrees to hold and
dispose of the Escrow Amount (as defined below) pursuant to the terms and
conditions of this Escrow Agreement.
2. DEPOSIT. On the Offer Closing Date, the Parent shall deliver to
EB&G, as Escrow Agent, One Hundred Thousand Dollars ($100,000) (the "Escrow
Amount"), which amount shall be deposited in a separate, interest-bearing
sub-account designated "WTC Escrow Account" of the EB&G Client Master Account.
No other funds of the Parent, Purchaser or their respective affiliates shall be
deposited in such account. All interest and proceeds paid upon the Escrow Amount
shall be added to, and become part of, the Escrow Amount. EB&G shall serve as
the Escrow Agent for the release of the Escrow Amount and no portion of the
Escrow Amount shall be disbursed prior to the Escrow Release Date (as defined
below) except pursuant to Section 3 hereof. Parent, Purchaser and their
respective affiliates shall have no interest in the Escrow Amount except as
otherwise set forth in Section 3(b) hereof.
3. DISBURSEMENT OF ESCROW AMOUNT.
(a) Prior to the Escrow Release Date, the Escrow Agent shall only
disburse the Escrow Amount, or portions thereof, upon receipt of a Claim Notice
in the form attached hereto as Exhibit A, duly executed by the Indemnitee(s)
filing such Claim Notice.
(b) To the extent that any Escrow Amount is held on the Escrow
Release Date by the Escrow Agent against which no claim has been made or
pending, such remaining Escrow Amount shall be
B-1
transferred as soon as practicable thereafter by the Escrow Agent to the Parent
by wire transfer or the Escrow Agent's own check. For purposes of this
Agreement, the term "Escrow Release Date" shall mean the third year anniversary
of the Offer Closing Date.
(c) Upon receipt of a Claim Notice, the Escrow Agent shall, as
soon as practicable thereafter, but in no event later than five (5) business
days after the date of the Claim Notice, transfer to the Indemnitee(s) filing
such Claim Notice, all or such portion of the Escrow Amount as is required
pursuant to such Claim Notice by wire transfer or other means specified by such
Indemnitee(s).
(d) Disbursements of all or a portion of the Escrow Amount from
the Escrow Account by the Escrow Agent pursuant to clauses (a), (b) or (c) above
shall be together with any interest earned thereon.
4. PAYMENT OF ESCROW AMOUNT.
(a) The Escrow Agent shall not authorize or make any disbursements
of the Escrow Amount, except pursuant to Section 3 above.
(b) Any Claim Notice relating to the Escrow Amount must be
authorized by one individual acting on behalf of EB&G who is listed on Schedule
II attached hereto, such authorization not to be unreasonably withheld or
delayed. In the event that at any time while this Escrow Agreement is in effect,
any individual designated on Schedule II is no longer a member or partner of
EB&G, then the Parent shall have the right to designate one or more individuals
to fill the vacancy(s) on such list; provided, that such replacement signatory
must be a partner or member of EB&G who is not related by blood or marriage to
any party hereto.
5. EXCULPATION OF ESCROW AGENT. The Escrow Agent shall have no duties
or responsibilities except for those set forth herein which the parties agree
are ministerial in nature. Except for willful misconduct or gross negligence:
(a) the Escrow Agent shall not have any liability of any kind whatsoever for the
performance of any duties imposed upon such Escrow Agent under this Escrow
Agreement, or for any action or failure to act by the Escrow Agent hereunder;
(b) the Escrow Agent shall not be responsible for the acts or omissions of any
other parties hereto; (c) the Escrow Agent shall not be liable to anyone for
damages, losses or expenses arising out of this Escrow Agreement; (d) the Escrow
Agent may rely and/or act upon any instrument or document believed by the Escrow
Agent in good faith to be genuine and to be executed and delivered by the proper
person or party, and may assume in good faith the authenticity, validity and
effectiveness thereof and shall not be obligated to make any investigation or
determination as to the truth and accuracy of any information contained therein.
In the event of any dispute among the parties, the Parent shall pay the
attorneys' fees and other costs incurred by EB&G in respect thereof, and each
Indemnitee shall pay the attorneys fees and other costs incurred by his
attorneys in respect thereof. In the event that EB&G resigns at any time as
Escrow Agent, the Parent shall, within 15 days from the date of such
resignation, designate a successor Escrow Agent that is reasonably acceptable to
each of the Indemnitees. It is understood and agreed by the parties that EB&G
may continue to represent the Parent in any and all matters, which
representation may include matters pertaining to this Agreement or the Merger
Agreement (including any litigation stemming therefrom).
6. NO ADDITIONAL DUTIES. The Escrow Agent shall have no duties except
those which are expressly set forth herein, and the Escrow Agent shall not be
bound by any notice of a claim, or demand with respect thereto, or any waiver,
modification, amendment, termination or rescission of this Escrow Agreement,
unless received by them in writing.
B-2
7. MODIFICATION. No modification of this Escrow Agreement shall be
valid unless the same is in writing and is signed by each of the parties hereto.
8. RESIGNATION OF ESCROW AGENT. The Escrow Agent, and any successor
escrow agent, may resign at any time as escrow agent hereunder by giving at
least fifteen (15) business days written notice to each of the other parties
hereto. Upon such resignation and the appointment of a successor escrow agent in
accordance with Section 5 hereof, the resigning Escrow Agent shall be absolved
from any and all liability in connection with the exercise of its powers and
duties as escrow agent hereunder.
9. COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by
facsimile, overnight courier, registered or certified mail, postage prepaid,
addressed as follows or to such other address of which the parties may have
given notice:
(a) IF TO EB&G:
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Pravda, Esq.
Fax: (000) 000-0000
(b) IF TO THE PARENT AND/OR THE PURCHASER:
c/o SofTech, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: President and COO
Fax: (000) 000-0000
With a copy to EB&G (see paragraph (a) hereof)
(c) IF TO THE INDEMNITEES:
to their respective addresses set forth on Schedule I
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally or by
facsimile; (b) one business day after being sent, if sent by overnight courier;
or (c) three business days after being sent, if sent by registered or certified
mail.
11. BINDING EFFECT. This Escrow Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the parties hereto may not assign their respective
obligations hereunder without the prior written consent of the other parties.
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12. ENFORCEABILITY. In the event that a court of competent jurisdiction
shall hold any provision of this Escrow Agreement to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
13. HEADINGS. The headings in this Escrow Agreement are for the purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
14. APPLICABLE LAW. This Escrow Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware without regard
to the conflicts of law principles of said State.
B-4
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as a sealed instrument as of the date first above written.
XXXXXXX XXXXXX & GREEN, P.C.,
as escrow agent
By:_____________________________________
Xxxxx Xxxxx, Member
SOFTECH, INC.
By:_____________________________________
Xxxxxx X. Xxxxxxxx, President and COO
SOFTECH ACQUISITION CORP.
By:_____________________________________
Xxxxxx X. Xxxxxxxx, President and COO
INDEMNITEES:
_____________________________
Xxxxxxx X. Xxxxxxx
_____________________________
Xxxxxxx X. Xxxxxxxx
_____________________________
Xxxxx X. XxXxxxxxx
_____________________________
Xxxxxxxxx X. Xxxxxxxx
B-5
SCHEDULE I
INDEMNITEES
Xxxxxxx X. Xxxxxxx
Address:___________________
___________________
___________________
Xxxxxxx X. Xxxxxxxx
Address:___________________
___________________
___________________
Xxxxx X. XxXxxxxxx
Address:___________________
___________________
___________________
Xxxxxxxxx X. Xxxxxxxx
Address:___________________
___________________
___________________
SCHEDULE II
AUTHORIZED SIGNATORIES FOR EB&G
Xxxxx X. Pravda, Esq.
Xxxxx Xxxxx, Esq.
EXHIBIT A
NOTICE OF CLAIM
Reference is made to that certain Escrow Agreement dated as of December
__, 2002 (the "Escrow Agreement") by and among SofTech, Inc., a Massachusetts
corporation (the "Parent"), SofTech Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of the Parent, the persons whose
names are set forth on Schedule I thereto (the "Indemnitees"), being the current
executive officer and directors of Workgroup Technology Corporation, a Delaware
corporation (the "Company"), and Xxxxxxx Xxxxxx & Green, P.C., a New York
professional corporation ("EB&G"), as escrow agent (the "Escrow Agent"). All
capitalized words and terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Escrow Agreement.
The undersigned Indemnitee being duly sworn, hereby swears and attests
that the following statements are true, correct and complete in all respects:
1. A proceeding has been initiated against the undersigned in his
capacity as a former executive officer and/or director of the Company, and the
insurance company which issued the Run-Off Insurance Policy has acknowledged the
coverage (with or without reservation of rights) stated in the Run-Off Insurance
Policy, a copy of such acknowledgement is attached hereto as Exhibit I.
2. The undersigned is, pursuant to the indemnification obligations of
the Surviving Corporation in the Certificate of Incorporation of the Surviving
Corporation, entitled to have the retention amount paid for by the Surviving
Corporation and has made a claim to the Surviving Corporation for $_____ (the
"Retention Amount") which is [less than/equal to] the amount of the retention
under the Run-Off Insurance Policy, a copy of which is attached hereto as
Exhibit II (the "Retention Claim").
3. In the thirty (30) day period since the date of delivery of the
Retention Claim, the undersigned has not received payment for the Retention
Amount from the Surviving Corporation.
The undersigned hereby notifies the Escrow Agent that he is entitled to
receive the Retention Amount and requests that such amount be released from
escrow immediately in immediately available funds in accordance with the
instructions set forth on Exhibit III hereto.
Executed and entered into as of the ___ day of __, 200_ .
______________________
[name]
[Notary Public Legend:]
The following Schedules to the Agreement and Plan of Merger have been omitted in
accordance with Item 601(b)(2) of Regulation S-K:
Company Disclosure Schedule
4.01 Organization and Qualification; No Subsidiaries.
4.03 Capitalization.
4.03-I Option Schedule.
4.05(a) No Conflict; Required Consents.
4.05(b) Required Governmental Filings and Authorizations.
4.06(a) Material Contracts.
4.06(a)-I Maintenance and Consulting Schedule.
4.06(c) Material Contracts - Consent not Obtained.
4.08 Absence of Certain Changes or Events.
4.09 Undisclosed Material Liabilities.
4.10 Absence of Litigation.
4.11(c) Intellectual Property.
4.11(d) Intellectual Property.
4.11(e) Contracts that Grant Licenses.
4.11(f) Patents.
4.11(g) Business Names and Trademarks.
4.11(h) Copyrights.
4.11(i) Internet Domain Names.
4.11(j) Trade Secrets.
4.12(a) Employee Benefit Plans; Employment Agreements.
4.12(b) Employment Plans Compliance.
4.12(c) Claims with respect to Employment Plans.
4.13 Labor Matters.
4.15(b) Taxes.
4.16 Compliance with Laws.
4.17-1 Customers.
4.17-2 Suppliers.
4.18 Product Releases.
4.20 Title to Property.
4.21 Environmental Matters.
4.22 Interested Party Transactions.
4.23 Employment Agreements.
Workgroup Technology Corporation will furnish supplementally a copy of any
omitted schedule to the Securities and Exchange Commission upon request,
provided however that Workgroup Technology Corporation may request confidential
treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended, for any schedule so furnished.
