EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
STERLING COMMERCE, INC.
STERLING COMMERCE (SOUTHERN), INC.
and
XCELLENET, INC.
Dated as of April 16, 1998
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TABLE OF CONTENTS
Page
ARTICLE I - THE MERGER............................................................................................1
SECTION 1.1 The Merger..................................................................................1
SECTION 1.2 Closing.....................................................................................1
SECTION 1.3 Effective Time..............................................................................2
SECTION 1.4 Effects of the Merger.......................................................................2
SECTION 1.5 Certificate of Incorporation; Bylaws........................................................2
SECTION 1.6 Directors; Officers.........................................................................2
ARTICLE II - EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS................................................................2
SECTION 2.1 Effect on Capital Stock.....................................................................2
SECTION 2.2 Stock Options...............................................................................4
SECTION 2.3 Share Purchase Rights.......................................................................5
ARTICLE III - PAYMENT FOR SHARES..................................................................................5
SECTION 3.1 Payment For Shares..........................................................................5
ARTICLE IV - REPRESENTATIONS AND WARRANTIES.......................................................................8
SECTION 4.1 Representations and Warranties of Company...................................................8
SECTION 4.2 Representations and Warranties of Parent and Merger Sub....................................22
ARTICLE V - COVENANTS............................................................................................26
SECTION 5.1 Conduct of Business of Company.............................................................26
ARTICLE VI - ADDITIONAL AGREEMENTS...............................................................................27
SECTION 6.1 Preparation of the Proxy Statement and the Form S-4;
Accountant's Letters.......................................................................27
SECTION 6.2 Shareholders Meeting.......................................................................28
SECTION 6.3 Access to Information; Confidentiality.....................................................29
SECTION 6.4 Reasonable Best Efforts....................................................................29
SECTION 6.5 Indemnification............................................................................29
SECTION 6.6 Public Announcements.......................................................................31
SECTION 6.7 No Solicitation; Acquisition Proposals.....................................................31
SECTION 6.8 Consents, Approvals and Filings............................................................33
SECTION 6.9 Board Action Relating to Stock Option Plans and Stock Purchase
Plan.......................................................................................33
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SECTION 6.10 Employment and Employee Benefit Matters...................................................34
SECTION 6.11 Affiliates and Certain Shareholders.......................................................34
SECTION 6.12 NYSE Listing..............................................................................34
SECTION 6.13 Advice of Changes.........................................................................34
SECTION 6.14 Tax Treatment.............................................................................35
SECTION 6.15 Company Rights Agreement..................................................................35
SECTION 6.16 Parent Rights Agreement...................................................................35
ARTICLE VII - CONDITIONS PRECEDENT...............................................................................35
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger.................................35
SECTION 7.2 Conditions to Obligations of Parent and Merger Sub.........................................36
SECTION 7.3 Conditions to Obligation of Company........................................................37
SECTION 7.4 Frustration of Closing Conditions..........................................................38
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER.................................................................38
SECTION 8.1 Termination................................................................................38
SECTION 8.2 Effect of Termination......................................................................39
SECTION 8.3 Amendment..................................................................................40
SECTION 8.4 Extension; Waiver..........................................................................40
SECTION 8.5 Termination Fees...........................................................................40
SECTION 8.6 Procedure for Termination, Amendment, Extension or Waiver..................................41
ARTICLE IX - GENERAL PROVISIONS..................................................................................41
SECTION 9.1 Nonsurvival of Representations and Warranties..............................................41
SECTION 9.2 Fees and Expenses..........................................................................41
SECTION 9.3 Definitions................................................................................41
SECTION 9.4 Notices....................................................................................43
SECTION 9.5 Interpretation.............................................................................43
SECTION 9.6 Entire Agreement; Third-Party Beneficiaries................................................44
SECTION 9.7 Governing Law..............................................................................44
SECTION 9.8 Assignment.................................................................................44
SECTION 9.9 Enforcement................................................................................44
SECTION 9.10 Severability..............................................................................44
SECTION 9.11 Counterparts..............................................................................44
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AGREEMENT AND PLAN OF MERGER, dated as of April 16, 1998, among STERLING
COMMERCE, INC., a Delaware corporation ("Parent"), STERLING COMMERCE (SOUTHERN),
INC., a Delaware corporation and wholly owned subsidiary of Parent ("Merger
Sub"), and XCELLENET, INC., a Georgia corporation ("Company").
RECITALS:
A. The respective Boards of Directors of Parent, Merger Sub and Company
have determined that it would be advisable and in the best interests of their
respective shareholders for Parent to acquire Company, by means of a merger of
Company with and into Merger Sub (the "Merger"), on the terms and subject to the
conditions set forth in this Agreement.
B. Concurrently with the execution and delivery of this Agreement and as
a condition to Parent's and Merger Sub's willingness to enter into this
Agreement, Parent and certain shareholders of Company have entered into a
Shareholder Agreement, dated as of the date hereof (the "Shareholder
Agreement").
C. Parent, Merger Sub and Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. On the terms and subject to the conditions set
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forth in this Agreement, and in accordance with Section 252 of the General
Corporation Law of the State of Delaware (the "DGCL") and Section 14-2-1107 of
the Georgia Business Corporation Code (the "GBCC"), the Merger shall be effected
and Company shall be merged with and into Merger Sub at the Effective Time (as
hereinafter defined). At the Effective Time, the separate existence of Company
shall cease and Merger Sub shall continue as the surviving corporation
(sometimes hereinafter referred to as the "Surviving Corporation").
SECTION 1.2 Closing. Unless this Agreement shall have been terminated
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and the transactions herein contemplated shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the conditions
set forth in Article VII, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on the second business day following satisfaction or waiver
of all of the conditions set forth in Article VII, other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions (the "Closing Date"), at the offices
of Xxxxx, Day, Xxxxxx & Xxxxx,
2300 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, unless another
date, time or place is agreed to in writing by the parties hereto.
SECTION 1.3 Effective Time. As soon as practicable after satisfaction
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or, to the extent permitted hereunder, waiver of all conditions set forth in
Article VII, Merger Sub will execute a certificate of merger complying with the
DGCL (the "Delaware Certificate of Merger") and a certificate of merger
complying with the GBCC (the "Georgia Certificate of Merger"). On the Closing
Date, Merger Sub will promptly file the Georgia Certificate of Merger with the
Secretary of State of the State of Georgia (the "Georgia Secretary of State")
and file the Delaware Certificate of Merger with the Secretary of State of the
State of Delaware (the "Delaware Secretary of State") and, together with
Company, make all other filings or recordings required by the GBCC or the DGCL
in connection with the Merger. The Merger shall become effective immediately
upon the later of the filing of the Georgia Certificate of Merger and the filing
of the Delaware Certificate of Merger or at such later time as is specified in
the Georgia Certificate of Merger or the Delaware Certificate of Merger (the
"Effective Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
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forth in the applicable provisions of the GBCC and the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
property of Company and Merger Sub shall vest in the Surviving Corporation, and
all liabilities of Company and Merger Sub shall become the liabilities of the
Surviving Corporation.
SECTION 1.5 Certificate of Incorporation; Bylaws. At the Effective Time,
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(a) the certificate of incorporation of Merger Sub as in effect at the Effective
Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the provisions thereof and applicable Law (as hereinafter
defined) and (b) the bylaws of Merger Sub as in effect at the Effective Time
shall, from and after the Effective Time, be the bylaws of the Surviving
Corporation until thereafter changed or amended in accordance with the
provisions thereof and applicable law.
SECTION 1.6 Directors; Officers. From and after the Effective Time, the
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directors and officers of the Surviving Corporation shall be as set forth in
Section 1.6 of the Disclosure Memorandum (as hereinafter defined) until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
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the Merger and without any action on the part of any holder of shares of
Company's common stock, par value $0.01 per share (individually a "Share" and
collectively the "Shares"), or any other capital stock of Company or any shares
of capital stock of Merger Sub:
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(a) Common Stock of Merger Sub. Each share of common stock, par value
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$0.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding.
(b) Cancellation of Treasury Shares and Parent-Owned Shares. Each
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Share issued and outstanding immediately prior to the Effective Time that is
owned by Company or any Subsidiary (as hereinafter defined) of Company or by
Parent, Merger Sub or any other Subsidiary of Parent (other than shares in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or deliverable
in exchange therefor.
(c) Conversion of Shares. Each Share issued and outstanding
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immediately prior to the Effective Time (other than Shares to be canceled in
accordance with Section 2.1(b) and any Dissenting Shares (as hereinafter
defined)) shall be converted into the right to receive the Merger Consideration
(as hereinafter defined) upon surrender of the certificate formerly representing
such Share in accordance with this Agreement.
(d) Merger Consideration. "Merger Consideration" shall mean, (i) a
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cash payment in an amount equal to $8.80 (the "Cash Payment") and (ii) 0.2885
(the "Stock Factor") of a fully paid and nonassessable share of Parent's common
stock, $0.01 par value per share ("Parent Common Stock"), adjusted, if
necessary, pursuant to the following paragraph.
Notwithstanding the foregoing, in the event that the aggregate amount
of the Cash Payments, plus the dollar value of all Dissenting Shares (determined
as provided in this Section 2.1(d)), exceeds the value of all shares of Parent
Common Stock to be issued pursuant to Section 2.1(c) (based upon the closing
sales price of the Parent Common Stock on the last trading day prior to the
Closing Date), the Merger Consideration shall be adjusted by reducing the Cash
Payment and increasing the aggregate number of Shares of Parent Common Stock to
be issued pursuant to Section 2.1(c) in each case, to the minimum extent
necessary, such that the dollar amount of the aggregate Cash Payments plus the
dollar value of all Dissenting Shares (determined as provided in this Section
2.1(d)) is equal to the value of all shares of Parent Common Stock to be issued
(based upon the closing sales price of the Parent Common Stock on the last
trading day prior to the Closing Date). In determining the adjustment pursuant
to the previous sentence, to the extent the Cash Payment is reduced, the number
of shares of Parent Common Stock shall be increased, dollar for dollar, valuing
the Parent Common Stock as the lesser of (i) the closing sales price of the
Parent Common Stock on the last trading day prior to the Closing Date, and (ii)
the average of the closing sales prices of Parent Common Stock for the three
trading days prior to the Closing Date. For the purposes of this Section 2.1(d)
only, the value of each Dissenting Share shall be deemed to be an amount equal
to $22.
The Stock Factor shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Common Stock (as hereinafter
defined) or Parent Common Stock), reorganization, recapitalization or other like
change with respect to the Common Stock or the Parent Common Stock occurring
after the date hereof and on or prior to the Effective Time.
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(e) Dissenting Shares. Notwithstanding anything in this Agreement to
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the contrary, any Shares issued and outstanding immediately prior to the
Effective Time held by a holder who has the right to demand, and who properly
demands, payment for such Shares ("Dissenting Shares") in accordance with
Article 13 of the GBCC (together with any successor provision, "Article 13")
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or otherwise loses such holder's right to payment
in accordance with Article 13. If, after the Effective Time, such holder fails
to perfect or loses any such right, each such Share of such holder shall be
treated as a Share that had been converted as of the Effective Time into the
right to receive the Merger Consideration in accordance with this Section 2.1.
At the Effective Time, any holder of Dissenting Shares shall cease to have any
rights with respect thereto, except the rights provided in Article 13 and as
provided in the immediately preceding sentence. Company shall give prompt
notice to Parent of any demands received by Company for payment in accordance
with Article 13, and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such demands. Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
SECTION 2.2 Stock Options.
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(a) At the Effective Time, each then-outstanding option to purchase
Shares (collectively, "Options") under Company's 1987 Stock Option Plan, as
amended, Company's 1994 Stock Option Plan for Outside Directors, as amended,
Company's 1996 Long-Term Incentive Plan and issued on an individual basis and
not under a plan (collectively, the "Stock Option Plans") shall be assumed by
Parent and shall constitute an option (a "Substitute Option") to acquire, on
substantially the same terms and subject to substantially the same conditions as
were applicable under such Option, including without limitation term, vesting,
exercisability, status as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and termination
provisions, the number of shares of Parent Common Stock, rounded down to the
nearest whole share, determined by multiplying the number of Shares subject to
such Option immediately prior to the Effective Time by 0.4809 (the "Option
Conversion Factor") at an exercise price per share of Parent Common Stock
(increased to the nearest whole cent) equal to the exercise price per share of
Common Stock subject to such Option divided by the Option Conversion Factor;
provided, however, that in the case of any Option to which Section 421 of the
Code applies by reason of its qualification as an incentive stock option under
Section 422 of the Code, the conversion formula shall be adjusted if necessary
to comply with Section 424(a) of the Code.
(b) Company shall use its best efforts to obtain all necessary
waivers, consents or releases from holders of Options under the Stock Option
Plans and take any such other action as may be reasonably necessary to give
effect to the transactions contemplated by this Section 2.2.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Substitute Options pursuant to the terms set forth in Section
2.2(a). As soon as practicable after the Effective Time, Parent shall use
reasonable efforts to file and cause to be declared effective a registration
statement on Form S-8 (or any successor form) or another appropriate form to
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register the shares of Parent Common Stock subject to Substitute Options and
Parent shall use reasonable efforts to maintain the effectiveness of such
registration statements for so long as the Substitute Options remain
outstanding. In addition, Parent shall use reasonable efforts to cause the
shares of Parent Common Stock subject to Substitute Options to be listed on the
NYSE (as hereinafter defined) and such other exchanges as Parent shall
determine.
SECTION 2.3 Share Purchase Rights. Each reference in this Article II and
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in Article III to a "Share" is a reference to such Share together with the
Rights (as hereinafter defined in Section 4.1(c)), if any, associated with such
Share.
ARTICLE III
PAYMENT FOR SHARES
SECTION 3.1 Payment For Shares.
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(a) Payment Fund. Concurrently with the Effective Time, Parent shall
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deposit, or shall cause to be deposited, with or for the account of BankBoston,
N.A. or such other bank or trust company designated by Parent reasonably
satisfactory to Company (the "Paying Agent") for the benefit of the holders of
Shares (i) shares of Parent Common Stock representing the aggregate stock
portion of the Merger Consideration and (ii) cash in an aggregate amount
sufficient to pay the aggregate cash portion of the Merger Consideration
(hereinafter collectively referred to as the "Payment Fund").
(b) Letters of Transmittal; Surrender of Certificates. As soon as
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reasonably practicable after the Effective Time, Parent shall instruct the
Paying Agent to mail to each holder of record (other than Company or any of its
Subsidiaries or Parent, Merger Sub or any of their respective Subsidiaries) of a
certificate or certificates that, immediately prior to the Effective Time,
evidenced outstanding Shares (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 Parent may reasonably 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 entitled to receive in respect thereof (A) a certificate
representing the number of whole shares of Parent Common Stock (and cash in lieu
of fractional shares of Parent Common Stock as contemplated by this Section 3.1)
that the aggregate number of Shares previously represented by such certificate
or certificates so surrendered shall have been converted into the right to
receive pursuant to Section 2.1(c) and (B) cash in an amount equal to the
product of (1) the number of Shares theretofore represented by such Certificate
and (2) the Cash Payment, and the Certificate so surrendered shall forthwith be
canceled. No interest shall be paid or accrued on the Merger Consideration
payable upon the surrender of any Certificate. 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
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be promptly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
surrendered Certificate or established to the satisfaction of Parent and the
Surviving Corporation that such tax has been paid or is not applicable.
(c) Cancellation and Retirement of Shares; No Further Rights. As of
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the Effective Time, all Shares (other than Shares to be canceled in accordance
with Section 2.1(b) and any Dissenting Shares) issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a Certificate theretofore representing any such Shares shall cease to have
any rights with respect thereto (including, without limitation, the right to
vote), except the right to receive the Merger Consideration, without interest,
upon surrender of such Certificate in accordance with this Article III, and
until so surrendered, each such Certificate shall represent for all purposes
only the right, subject to Section 2.1(e), to receive the Merger Consideration,
without interest. The Merger Consideration paid upon the surrender for exchange
of Certificates in accordance with the terms of this Article III shall be deemed
to have been paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Certificates.
(d) Distributions with Respect to Unsurrendered Shares. No dividends
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or other distributions with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the Shares represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 3.1(e), and all such dividends, other distributions and cash in lieu of
fractional shares shall be paid by Parent to the Paying Agent and shall be
included in the Payment Fund, in each case until the surrender of such
Certificate in accordance with this Article III. Subject to the effect of
applicable escheat or similar Laws, following surrender of any such Certificate
there shall be paid to the holder of the certificate representing shares of
Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
shares of Parent Common Stock, and the amount of any cash payable in lieu of
fractional shares to which such holder is entitled pursuant to Section 3.1(e)
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with
respect to such shares of Parent Common Stock.
(e) No Fractional Shares.
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(i) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
certificates that immediately prior to the Effective Time represented Shares
which have been converted pursuant to Section 2.1(c), and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) In lieu of any such fractional shares, each holder of Shares
who would otherwise have been entitled to a fraction of a share of Parent Common
Stock upon surrender of Certificates for exchange pursuant to this Section 3.1
will be paid an amount in cash
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(without interest), rounded to the nearest cent, determined by multiplying (A)
the per share closing price on the NYSE of Parent Common Stock (as reported on
the NYSE Composite Transactions List) on the date on which the Effective Time
occurs (or, if Parent Common Stock does not trade on the NYSE on such date, the
first date of trading of Parent Common Stock on the NYSE after the Effective
Time) by (B) the fractional interest to which such holder otherwise would be
entitled. Promptly upon request from the Paying Agent, Parent will make
available to the Paying Agent the cash necessary for this purpose.
(f) Investment of Payment Fund. The Paying Agent shall invest the
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cash portion of the Payment Fund as directed by Parent, in (i) direct
obligations of the United States of America, (ii) obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, (iii) commercial paper rated the highest
quality by either Xxxxx'x Investors Services, Inc. or Standard & Poor's
Corporation, or (iv) certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $500 million.
Any net earnings with respect to the Payment Fund shall be the property of and
paid over to Parent as and when requested by Parent; provided, however, that any
such investment or any such payment of earnings shall not delay the receipt by
holders of Certificates of the Merger Consideration.
(g) Termination of Payment Fund. Any portion of the Payment Fund
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which remains undistributed to the holders of Certificates for 180 days after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Certificates that have not theretofore complied with this Article III shall
thereafter look only to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration.
(h) No Liability. None of Parent, Merger Sub, the Surviving
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Corporation or the Paying Agent shall be liable to any person in respect of any
payments or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificates shall not have been surrendered prior to five years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as hereinafter defined)), any
amounts payable in respect of such Certificate shall, to the extent permitted by
applicable Law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(i) Withholding Rights. Parent shall be entitled to deduct and
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withhold, or cause to be deducted or withheld, from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares, Options or
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of
applicable state, local or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to such holders in respect of which such deduction
and withholding was made.
(j) Lost Certificates. If any Certificate shall have been lost,
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stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such
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person of a bond in such reasonable amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration and, if applicable, any
cash in lieu of fractional shares, and unpaid dividends and distributions on
Shares deliverable in respect thereof, pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of Company. Company
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represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. Each of Company and
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each Subsidiary of Company is a corporation duly organized, validly existing and
in good standing under the Laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Company and each Subsidiary of Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (as hereinafter defined) on Company. Company has delivered to
Parent true, complete and correct copies of the articles of incorporation and
bylaws or comparable governing documents of Company and each Subsidiary of
Company, in each case as amended to the date of this Agreement. A true, correct
and complete list of all Subsidiaries of Company, together with the jurisdiction
of incorporation of each such Subsidiary, is set forth in Section 4.1(a) of the
Disclosure Memorandum. Company owns directly or indirectly each of the
outstanding shares of capital stock of each of the Subsidiaries set forth in
Section 4.1(a) of the Disclosure Memorandum. Each of the outstanding shares of
capital stock of each of Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable (or, in the case of foreign Subsidiaries,
is appropriately authorized, validly issued and, if applicable under local Law,
nonassessable), and except as set forth in Section 4.1(a) of the Disclosure
Memorandum is owned, directly or indirectly, by Company free and clear of all
Liens (as hereinafter defined). Except as set forth in Section 4.1(a) of the
Disclosure Memorandum, neither Company nor any of its Subsidiaries owns directly
or indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity (other than
investments in short-term investment securities acquired in the ordinary course
of business).
(b) Authority; Noncontravention. Company has all necessary corporate
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power and authority to enter into this Agreement. The execution and delivery of
this Agreement by Company and the consummation by Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Company, subject, in the case of the Merger, to the approval of
this Agreement by its shareholders as contemplated by Section 6.2. This
Agreement has been duly executed and delivered by Company and, assuming this
Agreement constitutes the valid and
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binding agreement of Parent and Merger Sub, constitutes a valid and binding
obligation of Company, enforceable against Company in accordance with its terms.
Except as specified in Section 4.1(b) of the Disclosure Memorandum, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof will not, (i) conflict with any of the provisions of the articles of
incorporation or bylaws of Company or the comparable documents of any Subsidiary
of Company, (ii) subject to the governmental filings and other matters referred
to in the next following sentence, conflict with, result in a breach of or
default (with or without notice or lapse of time, or both) under, or give rise
to a material obligation, a right of termination, cancellation or acceleration
of any obligation or a loss of a material benefit under, or require the consent
of any person under, any indenture or other agreement, permit, concession,
franchise, license or similar instrument or undertaking to which Company or any
of its Subsidiaries is a party or by which Company or any of its Subsidiaries or
any of their respective assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in the next following
sentence, contravene any applicable Law currently in effect, which, in the case
of clauses (ii) and (iii) above could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company. No
consent, approval or authorization of, or declaration or filing with, or notice
to, any Governmental Entity (as hereinafter defined) which has not been received
or made is required by or with respect to Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Company or the
consummation by Company of the transactions contemplated hereby, except for (i)
the filing of premerger notification and report forms under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), with respect to the Merger, (ii) the filing with the SEC of (A) the Proxy
Statement (as hereinafter defined) relating to the approval and adoption by the
shareholders of Company of this Agreement, and (B) such reports under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (iii) the filing of the Delaware Certificate of Merger with the
Delaware Secretary of State and the Georgia Certificate of Merger with the
Georgia Secretary of State, and appropriate documents with the relevant
authorities of other states in which Company is qualified to do business, (iv)
such other consents, approvals, authorizations, filings or notices as are
specified in Section 4.1(b) of the Disclosure Memorandum, and (v) any other
filings, authorizations, consents or approvals the failure to make or obtain
which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company.
(c) Capital Structure. The authorized capital stock of Company
-----------------
consists of (i) 30,000,000 shares of common stock, par value $0.01 per share
(the "Common Stock") and (ii) 10,000,000 shares of Preferred Stock, par value
$0.01 per share ("Preferred Stock"), of which 250,000 shares are designated
Series G Junior Participating Preferred Stock ("Series G Preferred Stock"). At
the close of business on April 15, 1998: (i) 8,381,193 shares of Common Stock
were issued and outstanding, (ii) 2,877,977 shares of Common Stock were reserved
for issuance pursuant to outstanding Options granted under the Stock Option
Plans, (iii) 218,152 shares of Common Stock were reserved for issuance pursuant
to Company's 1995 Employee Stock Purchase Plan (the "Stock Purchase Plan"), and
(iv) 250,000 shares of Company's Series G Preferred Stock were authorized for
issuance solely pursuant to the exercise of the preferred stock purchase rights
(the "Rights") issued pursuant to the Shareholder Protection Rights Agreement,
dated as of November 21, 1997, between Company and SunTrust Bank, Atlanta, as
9
rights agent (the "Company Rights Agreement"). Except as set forth in the
immediately preceding sentence, at the close of business on April 15, 1998, no
shares of capital stock (including without limitation shares of Series G
Preferred Stock) or other equity securities of Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Company are
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as specified above or in Section 4.1(c) of the
Disclosure Memorandum, neither Company nor any Subsidiary of Company has or, at
or after the Effective Time will have, any outstanding option, warrant, call,
subscription or other right, agreement or commitment which (i) obligates Company
or any Subsidiary of Company to issue, sell or transfer, or repurchase, redeem
or otherwise acquire, any shares of the capital stock of Company or any
Subsidiary of Company, (ii) restricts the transfer of any shares of capital
stock of Company or any of its Subsidiaries, or (iii) relates to the voting of
any shares of Company or any of its Subsidiaries. No bonds, debentures, notes
or other indebtedness of Company or any Subsidiary of Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which the shareholders of Company or any Subsidiary
of Company may vote are issued or outstanding.
(d) SEC Documents. Company has filed all required reports, schedules,
-------------
forms, statements and other documents with the Securities and Exchange
Commission (the "SEC") since January 1, 1996 (such reports, schedules, forms,
statements and other documents are hereinafter referred to as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents as of such dates contained any untrue
statements of a material fact or omitted to state a 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 consolidated
financial statements of Company included in the SEC Documents comply in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as in effect at the time
of filing the respective SEC Documents, have been prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q) applied on a
consistent basis during the periods involved (except as may otherwise be
indicated in the notes thereto) and fairly present the consolidated financial
position of Company and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments).
(e) Absence of Certain Changes or Events; No Undisclosed Material
-------------------------------------------------------------
Liabilities.
-----------
(i) Except as contemplated by this Agreement and except as
disclosed in the SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed SEC Documents") or in Section 4.1(e)(i) of the
Disclosure Memorandum, since the date of the most recent audited financial
statements included in the Filed SEC Documents, Company and its Subsidiaries
have conducted their business only in the ordinary course, and there has not
been
10
(A) any change, event or occurrence which has had or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company; (B) any declaration, setting aside or payment of any dividend or other
distribution in respect of shares of Company's capital stock, or any redemption
or other acquisition by Company of any shares of its capital stock; (C) any
increase in the rate or terms of compensation payable or to become payable by
Company or its Subsidiaries to their directors, officers or employees, except
increases occurring in the ordinary course of business consistent with past
practices; (D) any entry into, or increase in the rate or terms of, any bonus,
insurance, severance, pension or other employee or retiree benefit plan, payment
or arrangement made to, for or with any such directors, officers or employees,
except increases occurring in the ordinary course of business consistent with
past practices or as required by applicable Law; (E) any entry into any
agreement, commitment or transaction by Company or any of its Subsidiaries which
is material to Company and its Subsidiaries taken as a whole, except for
agreements, commitments or transactions entered into in the ordinary course of
business; (F) any change by Company in accounting methods, principles or
practices, except as required or permitted by generally accepted accounting
principles; (G) any write-off or write-down of, or any determination to write-
off or write-down, any asset of Company or any of its Subsidiaries or any
portion thereof; or (H) any agreements by Company or any of its Subsidiaries to
do any of the things described in the preceding clauses (A) through (G) other
than as expressly contemplated or provided for herein.
(ii) Except as disclosed in the Filed SEC Documents or in Section
4.1(e)(ii) of the Disclosure Memorandum and except for liabilities incurred in
the ordinary course of business since the date of the most recent financial
statements included in the Filed SEC Documents, as of the date hereof, there are
no liabilities of Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, due, to become due, determined, determinable or
otherwise, having or which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company.
(f) Certain Information. None of the information supplied or to be
-------------------
supplied by Company specifically for inclusion or incorporation by reference in
(i) the registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance by Parent of shares of Parent Common Stock in the
Merger (the "Form S-4") will, at the time the Form S-4 is filed with the SEC, at
any time that it is amended or supplemented and at the time it becomes effective
under the Securities Act, 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 not misleading, or (ii) the Proxy Statement will, at
the time the Proxy Statement is filed with the SEC, at any time that the Proxy
Statement is amended or supplemented, at the time the Proxy Statement is mailed
to the shareholders of Company or at the time of the Shareholders Meeting (as
hereinafter defined), 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. The Proxy Statement will comply in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Company with
respect to statements made or incorporated by reference therein based on
information supplied by or on behalf of Parent or Merger Sub specifically for
inclusion or incorporation by reference in such documents.
11
(g) Real Property; Other Assets. Except as set forth in Section
---------------------------
4.1(g) of the Disclosure Memorandum, Company has heretofore made available to
Parent true, correct and complete copies of all leases, subleases and other
agreements (the "Real Property Leases") under which Company or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now or in the
future, any real property or facility (the "Leased Real Property"), including
all modifications, amendments and supplements thereto. Except as set forth in
Section 4.1(g) of the Disclosure Memorandum and except in each case where the
failure could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company: (A) to the knowledge of
Company, Company or one of its Subsidiaries has a valid and subsisting leasehold
interest or other right or license to occupy in each parcel of Leased Real
Property and such leasehold interest or other right or license to occupy is free
and clear of all Liens and each Real Property Lease is in full force and effect,
(B) all rent and other sums and charges payable by Company or its Subsidiaries
as tenants thereunder are current in all material respects, (C) no termination
event or condition or uncured default of a material nature on the part of
Company or any such Subsidiary or, to Company's knowledge, the landlord, exists
under any Real Property Lease, and (D) Company or one of its Subsidiaries is the
sole undisputed lessee of each Leased Real Property, is in actual possession
thereof and is entitled to quiet enjoyment thereof in accordance with the terms
of the applicable Real Property Lease. Neither Company nor any of its
Subsidiaries owns, leases or occupies any real property other than the Leased
Real Property.
(h) Software.
--------
(i) Section 4.1(h)(i) of the Disclosure Memorandum sets forth
under the caption "Owned Software" a true, correct and complete list of all
computer programs (source code or object code) owned by Company or any
Subsidiary of Company, including without limitation any computer programs in the
development or testing phase (collectively, the "Owned Software"), Section
4.1(h)(i) of the Disclosure Memorandum sets forth under the caption "Licensed
Software" a true, correct and complete list of all computer programs (source
code or object code) licensed to Company or any Subsidiary of Company by another
person and licensed by Company to third parties (collectively, the "Licensed
Software"), and Section 4.1(h)(i) of the Disclosure Memorandum sets forth under
the caption "Other Software" a true, correct and complete list of all computer
programs (source code or object code) licensed to Company or any Subsidiary of
Company by another person and not licensed by Company to third parties, the loss
of the current license to which could reasonably be expected to have a Material
Adverse Effect on Company (collectively, the "Other Software" and, together with
the Owned Software and the Licensed Software, the "Software").
(ii) Except as specified in Section 4.1(h)(ii) of the Disclosure
Memorandum, Company, directly or through its Subsidiaries, has good, marketable
and exclusive title to, and the valid and enforceable power and unqualified
right to sell, license, lease, transfer, use or otherwise exploit, all versions
and releases of the Owned Software and all copyrights thereof, free and clear of
all Liens. Company, directly or through its Subsidiaries, is in actual
possession of the source code and object code for each computer program included
in the Owned Software, and Company, directly or through its Subsidiaries, is in
possession of all other documentation, including without limitation all related
engineering specifications, program flow charts, installation and user manuals
and know-how necessary for the effective use of the
12
Software as currently used in Company's business or as offered or represented to
Company's customers or potential customers. The license agreements for the
Licensed Software and Other Software are in full force and effect, and Company
has complied with all of its obligations under such license agreements. Company,
directly or through its Subsidiaries, has the valid and enforceable power and
right to license, lease, transfer, use or otherwise exploit, all versions and
releases of the Licensed Software as provided in the licenses thereto, true,
correct and complete copies of which have been made available to Parent and its
representatives (and which licenses are listed in Section 4.1(h)(i) of the
Disclosure Memorandum). Company, directly or through its Subsidiaries is in
actual possession of the object code and user manuals for each computer program
included in the Licensed Software. The Software, together with such other
computer software licensed by Company or any of its Subsidiaries from time to
time, the loss of the license to which could not reasonably be expected to have
a Material Adverse Effect on Company, constitutes all of the computer programs
necessary to conduct the business of Company and its Subsidiaries as now
conducted. The Software includes all of the computer programs used in the
development, marketing, licensing, sale or support of the products and the
services presently offered by Company. Except for those customers who have
licensed Owned Software and the resellers listed in Section 4.1(h)(ii) of the
Disclosure Memorandum, no person other than Company and its Subsidiaries has any
right or interest of any kind or nature in or with respect to the Owned Software
or any portion thereof. Except for Company and its Subsidiaries and the
resellers listed in Section 4.1(h)(ii) of the Disclosure Memorandum, no person
has any rights to sell, license, lease or transfer the Owned Software or any
portion thereof.
(iii) Section 4.1(h)(iii) of the Disclosure Memorandum sets forth
a true, correct and complete list, (A) by computer program, of all persons other
than Company and its Subsidiaries that have been provided with the source code
for any of the Owned Software, (B) of all agreements with persons holding such
source code as escrow agent (and the escrow agent's list of third party
beneficiaries), and (C) of the form of agreement pursuant to which any third
party has a right to be provided such source code. All agreements pursuant to
which any third parties have a right to be provided the source code are, in all
material respects, in the form set forth in Section 4.1(h)(iii) of the
Disclosure Memorandum. Except as specified in Section 4.1(h)(iii) of the
Disclosure Memorandum, no person (other than Company and its Subsidiaries and
any person that is a party to a contract referred to in clause (vii) of the
first sentence of Section 4.1(k) that restricts such person from disclosing any
information concerning such source code) is in possession of, or has or has had
access to, any source code for any computer program included in the Owned
Software.
(iv) Except as disclosed in Section 4.1(h)(iv) of the Disclosure
Memorandum, there are no defects in (i) any computer program included in the
Owned Software or (ii) to the knowledge of Company, any Licensed Software or
Other Software that, in either case, would materially adversely affect the
functioning thereof in accordance with any published specifications therefor.
Without limiting the generality of the foregoing, all of the Owned Software and,
to the knowledge of Company, all Licensed Software and Other Software has the
following properties and capabilities: (A) the capability to correctly recognize
and accurately process dates expressed as a four-digit number (or the binary
equivalent or other machine readable iteration thereof) (collectively, the
"Four-Digit Dates"); (B) the capability to accurately execute calculations using
Four-Digit Dates; (C) the functionality (both on-line and batch),
13
including entry, inquiry, maintenance and update, to support processing
involving Four-Digit Dates; (D) except as disclosed in Section 4.1(h)(iv) of the
Disclosure Memorandum the capability to generate interfaces and reports that
support processing involving Four-Digit Dates; (E) the capability to generate
and successfully transition, without human intervention, into the year 2000
using the correct system date and to thereafter continue processing with Four-
Digit Dates; and (F) the capability to provide correct results in forward and
backward data calculations spanning century boundaries, including the conversion
of pre-2000 dates currently stored as two-digit dates. Section 4.1(h)(iv) of the
Disclosure Memorandum sets forth a true, correct and complete list of any
current developments or maintenance efforts with respect to the Owned Software,
including without limitation the development of new computer programs,
enhancements or revisions to existing computer programs included in the Owned
Software and software fixes in progress for any person to whom or to which
Company or a Subsidiary of Company has sold, licensed, leased, transferred or
otherwise furnished Owned Software or related products or services.
(v) Except as specified in Section 4.1(h)(v) of the Disclosure
Memorandum, none of the sale, license, lease, transfer, use, reproduction,
distribution, modification or other exploitation by Company, any Subsidiary of
Company or any of their respective successors or assigns of any version or
release of any computer program included in the Owned Software or the Licensed
Software obligates or will obligate Company, any Subsidiary of Company or any of
their respective successors or assigns to pay any royalty, fee or other
compensation to any other person.
(vi) Except as specified in Section 4.1(h)(i) of the Disclosure
Memorandum, neither Company nor any of its Subsidiaries markets and none of them
is obligated to support any Licensed Software.
(i) Intellectual Property.
---------------------
(i) Section 4.1(i)(i) of the Disclosure Memorandum sets forth a
true, correct and complete list (including, to the extent applicable,
registration, application or file numbers) of all patents, registered
copyrights, registered trademarks and service marks and registered trade names
owned by Company or any Subsidiary of Company, and all registrations of or
applications for registration of any of the foregoing, including any additions
thereto or extensions, continuations, renewals or divisions thereof (setting
forth the registration, issue or serial number and a description of the same)
(collectively, the "Scheduled Intellectual Property"). Parent has heretofore
been furnished with a true, correct and complete list of each registration or
application for registration covering any of the Scheduled Intellectual Property
which is registered with, or in respect of which any application for
registration has been filed with, any Governmental Entity. Except as described
in Section 4.1(i)(i) of the Disclosure Memorandum, none of the Scheduled
Intellectual Property has been declared invalid or challenged as invalid by any
Governmental Entity or any other person, and to the knowledge of Company, the
Scheduled Intellectual Property was properly obtained in accordance with all
applicable Laws.
(ii) The Scheduled Intellectual Property together with all
unregistered copyrights and trademarks, domain names, and other intellectual
property rights, including
14
without limitation, trade secrets, processes, formulae, designs and know-how,
owned or licensed by Company or any of its Subsidiaries and the rights licensed
pursuant to licenses listed in Section 4.1(i)(ii) of the Disclosure Memorandum
(together with the Scheduled Intellectual Property, the "Intellectual Property")
constitute all of the intellectual property rights necessary to conduct their
business as it is now conducted, and includes all of the intellectual property
rights owned or licensed by Company and its Subsidiaries that are used in the
development, marketing, licensing or support of the Software except for
intellectual property rights, the absence of which could not reasonably be
expected to have a Material Adverse Effect on Company. Except as specified in
Section 4.1(i)(ii) of the Disclosure Memorandum, (A) Company, directly or
through its Subsidiaries, has good, marketable and exclusive title to, and the
valid and enforceable power and unqualified right to use, the Intellectual
Property free and clear of all Liens and (B) no person or entity other than
Company and its Subsidiaries has any right or interest of any kind or nature in
or with respect to the Intellectual Property or any portion thereof or any
rights to use, market or exploit the Intellectual Property or any portion
thereof. Section 4.1(i)(i) of the Disclosure Memorandum also sets forth a true,
correct and complete list of all unregistered trademarks, service marks and
domain names owned and used by Company or any of its subsidiaries.
(j) No Infringement. Except as specified in Section 4.1(j) of the
---------------
Disclosure Memorandum, neither the existence nor the sale, license, lease,
transfer, use, reproduction, distribution, modification or other exploitation by
Company, any Subsidiary of Company or any of their respective successors or
assigns of any Software or Intellectual Property, as such Software or
Intellectual Property, as the case may be, is or was, or is currently planned to
be, sold, licensed, leased, transferred, used or otherwise exploited by such
persons, does, did or will (i) infringe on any patent, trademark, copyright or
other right of any other person, (ii) constitute a misuse or misappropriation of
any trade secret, know-how, process, proprietary information or other right of
any other person, or (iii) entitle any other person to any interest therein, or
right to compensation from Company, any Subsidiary of Company or any of their
respective successors or assigns by reason thereof. Except as specified in
Section 4.1(j) of the Disclosure Memorandum, neither Company nor any of its
Subsidiaries has received any notice of any lawsuit, claim, demand, proceeding
or investigation (a "Claim") involving matters of the type contemplated by the
immediately preceding sentence, or to the knowledge of Company, has any person
asserted or threatened to make any Claim involving matters of the type
contemplated by the immediately preceding sentence or is aware of any facts or
circumstances that could reasonably be expected to give rise to any such Claim.
Except as specified in Section 4.1(j) of the Disclosure Memorandum, there are no
restrictions on the ability of Company, any Subsidiary of Company or any of
their respective successors or assigns to sell, license, lease, transfer, use,
reproduce, distribute, modify or otherwise exploit any Owned Software or
Intellectual Property.
(k) Material Contracts. The following constitute Material Contracts:
------------------
(i) contracts with any current officer or director of Company or any of its
Subsidiaries; (ii) contracts pursuant to which Company or any of its
Subsidiaries has licensed other persons to use, sublicense, market or distribute
the Owned Software; (iii) contracts pursuant to which Company or any of its
Subsidiaries license other persons to use Owned Software which deviate in any
material respect from the form contracts used since December 31, 1993, copies of
which have been provided to Parent; (iv) contracts pursuant to which other
persons license Company or any of its Subsidiaries the right to use and
sublicense to others the Licensed Software; (v) contracts
15
for the sale of, or the grant to any person of any preferential rights to
purchase, the assets of Company or any of its Subsidiaries, other than contracts
entered into in the ordinary course of business; (vi) contracts which restrict
Company or any of its Subsidiaries from competing in any line of business or
with any person in any geographical area or which restrict any other person from
competing with Company or any of its Subsidiaries in any line of business or in
any geographical area; (vii) contracts which restrict Company or any of its
Subsidiaries from disclosing any information concerning or obtained from any
other person; (viii) contracts which restrict any other person from disclosing
any information concerning or obtained from Company or any of its Subsidiaries;
(ix) indentures, credit agreements, security agreements, mortgages, guaranties,
promissory notes and other contracts relating to the borrowing of money; and (x)
all other agreements, contracts or instruments entered into outside of the
ordinary course of business or which are material to Company. There have been
made available to Parent and its representatives true, correct and complete
copies of all of the Material Contracts other than the Material Contracts
specified in clauses (iii), (vii) and (viii) of the immediately preceding
sentence. Except as specified in Section 4.1(k) of the Disclosure Memorandum,
all of the Material Contracts are in full force and effect and are the legal,
valid and binding obligation of Company and/or its Subsidiaries and each of the
other parties thereto, enforceable against them in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except as
specified in Section 4.1(k) of the Disclosure Memorandum, neither Company nor
any of its Subsidiaries is in breach or default in any material respect under
any Material Contract nor, to the knowledge of Company, is any other party to
any Material Contract in breach or default thereunder in any material respect.
The deviations to the form contracts that are reflected in the Material
Contracts referred to in clause (iii) above could not reasonably be expected to
have a Material Adverse Effect on Company.
(l) Litigation, Etc. As of the date hereof, except as specified in
---------------
Section 4.1(l) of the Disclosure Memorandum, (i) there is no suit, claim,
action, proceeding (at law or in equity) or investigation pending or, to the
knowledge of Company, threatened against Company or any of its Subsidiaries
before any court or other Governmental Entity, and (ii) neither Company nor any
of its Subsidiaries is subject to any outstanding order, writ, judgement,
injunction, decree or arbitration order or award that, in any such case
described in clauses (i) and (ii), has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
As of the date hereof, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Company, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by this
Agreement.
(m) Compliance with Applicable Laws. All federal, state, local and
-------------------------------
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for each
of Company and its Subsidiaries to own, lease or operate its properties and
assets and to carry on its business as now conducted have been obtained or made,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or default could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. Except as disclosed in
16
the Filed SEC Documents or in Section 4.1(m) of the Disclosure Memorandum,
Company and its Subsidiaries are in compliance with all applicable Laws, except
for non-compliance which could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Company.
(n) Environmental Laws. Except as could not reasonably be expected to
------------------
have, individually or in the aggregate, a Material Adverse Effect on Company:
(i) to the knowledge of Company, neither Company nor any of its Subsidiaries has
violated or is in violation of any Environmental Law (as hereinafter defined);
(ii) to the knowledge of Company, none of the properties leased by Company or
any of its Subsidiaries (including without limitation soils and surface and
ground waters) are contaminated with any Hazardous Substance in quantities which
require investigation or remediation under Environmental Laws; (iii) neither
Company nor any of its Subsidiaries has received any claim of liability under
Environmental Laws arising from any off-site contamination; (iv) neither Company
nor any of its Subsidiaries has received notice of any claim for liability or
remediation obligation under any Environmental Law; (v) no assets of Company or
any of its Subsidiaries are subject to pending or, to the knowledge of Company,
threatened Liens under any Environmental Law; (vi) Company and its Subsidiaries
have all Permits required under any Environmental Law ("Environmental Permits");
and (vii) Company and its Subsidiaries are in compliance with their respective
Environmental Permits, if any.
(o) Taxes. Except as specified in Section 4.1(o) of the Disclosure
-----
Memorandum:
(i) Except where the failure to do so could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company, each of Company and each Subsidiary of Company (and any affiliated or
unitary group of which any such person was a member) has (A) timely filed all
federal, state, local and foreign returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be filed by or for it
in respect of any Taxes (as hereinafter defined) and has caused such Returns as
so filed to be true, correct and complete, (B) established reserves that are
reflected in Company's most recent financial statements included in the Filed
SEC Documents and that as so reflected are adequate for the payment of all Taxes
not yet due and payable with respect to the results of operations of Company and
its Subsidiaries through the date hereof, and (C) timely withheld and paid over
to the proper taxing authorities all Taxes and other amounts required to be so
withheld and paid over. Each of Company and each Subsidiary of Company (and any
affiliated or unitary group of which any such person was a member) has timely
paid all Taxes that are shown as being due on the Returns referred to in the
immediately preceding sentence.
(ii) (A) There has been no taxable period for which a Return of
Company or any of its Subsidiaries has been examined by the IRS, (B) all
examinations, if any, by the IRS of any taxable period have been completed
without the assertion of material deficiencies, and (C) except for alleged
deficiencies which have been finally and irrevocably resolved, Company has not
received formal or informal notification that any deficiency for any Taxes, the
amount of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company, has been or will be proposed,
asserted or assessed against Company or any of
17
its Subsidiaries by any federal, state, local or foreign taxing authority or
court with respect to any period.
(iii) Neither Company nor any of its Subsidiaries has requested,
executed or entered into with the IRS or any other taxing authority (A) any
agreement or other document that continues in force and effect beyond the
Effective Time and that extends or has the effect of extending the period for
assessments or collection of any federal, state, local or foreign Taxes, (B) any
closing agreement or other similar agreement (nor has Company or any of its
Subsidiaries received any ruling, technical advice memorandum or similar
determination) affecting the determination of Taxes required to be shown on any
Return not yet filed, or (C) requested any extension of time to be granted to
file after the Effective Date any return required by applicable Law to be filed
by it.
(iv) Neither Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Company or any of its
Subsidiaries. None of the assets of Company or any of its Subsidiaries is
required to be treated as being owned by any other person pursuant to the "safe
harbor" leasing provisions of Section 168(f)(8) of the Internal Revenue Code of
1954 as formerly in effect.
(v) Neither Company nor any of its Subsidiaries is a party to,
is bound by or has any obligation under any tax sharing agreement or similar
agreement or arrangement.
(vi) Company has not agreed to make, nor is it required to make,
any material adjustment under Section 481(a) of the Code by reason of a change
in accounting method or otherwise.
(vii) Neither Company nor any of its Subsidiaries is, or has been,
a United States Real Property Holding Corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
For purposes of this Agreement, "Taxes" shall mean all federal, state,
local, foreign income, property, sales, excise, employment, payroll, franchise,
withholding and other taxes, tariffs, charges, fees, levies, imposts, duties,
licenses or other assessments of every kind and description, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority.
(p) Benefit Plans. Section 4.1(p) of the Disclosure Memorandum sets
-------------
forth a true, correct and complete list of all the "employee benefit plans" (as
that term is defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) maintained or contributed to for the benefit
of any current or former employee, officer or director of Company or any of its
Subsidiaries ("Company ERISA Plans") and any other benefit or compensation plan,
program or arrangement maintained or contributed to for the benefit of any
current or former employee, officer or director of Company or any of its
Subsidiaries (Company ERISA Plans and such plans being referred to as "Company
Plans"). Company has furnished or
18
made available to Parent and its representatives a true, correct and complete
copy of every document pursuant to which each Company Plan is established or
operated (including any summary plan descriptions), a written description of any
Company Plan for which there is no written document, and the three most recent
annual reports, financial statements and actuarial valuations with respect to
each Company Plan. Except as specified in Section 4.1(p) of the Disclosure
Memorandum:
(i) none of the Company ERISA Plans is a "multiemployer plan"
within the meaning of ERISA;
(ii) none of the Company Plans promises or provides retiree
health or life insurance benefits to any person;
(iii) none of the Company ERISA Plans is a plan subject to Title
IV of ERISA;
(iv) except as disclosed in Section 4.1(p)(iv) of the Disclosure
Memorandum, none of the Company Plans provides for payment of a benefit, the
increase of a benefit amount, the payment of a contingent benefit or the
acceleration of the payment or vesting of a benefit by reason of the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement;
(v) neither Company nor any of its Subsidiaries has an
obligation to adopt, or is considering the adoption of, any new Company Plan or,
except as required by Law, the amendment of an existing Company Plan;
(vi) each Company ERISA Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service ("IRS") that it is so qualified except as disclosed
in Section 4.1(p)(vi) of the Disclosure Memorandum and nothing has occurred
since the date of such letter that could reasonably be expected to affect the
qualified status of such Company ERISA Plan;
(vii) except as described in Section 4.1(p)(vii) of the
Disclosure Memorandum, each Company Plan has been operated in accordance with
its terms and the requirements of all applicable Law; and
(viii) Company is not aware of any claims relating to the Company
Plans, other than routine claims for benefits;
provided, however, that the failure of the representations set forth in clauses
(vi), (vii) and (viii) to be true and correct shall not be deemed to be a breach
of any such representation unless such failures could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
(q) Absence of Changes in Benefit Plans. Except as disclosed in the
-----------------------------------
Filed SEC Documents or in Section 4.1(q) of the Disclosure Memorandum, since the
date of the most recent
19
audited financial statements included in the Filed SEC Documents, neither
Company nor any of its Subsidiaries has adopted or agreed to adopt any
collective bargaining agreement or any Company Plan or any amendment thereto.
(r) Labor Matters.
-------------
(i) Except as specified in Section 4.1(r)(i) of the Disclosure
Memorandum, neither Company nor any of its Subsidiaries is a party to any
employment, severance, labor or collective bargaining agreement, and there are
no employment, severance, labor or collective bargaining agreements which
pertain to employees of Company or any of its Subsidiaries. Company has
heretofore made available to Parent true, complete and correct copies of the
agreements specified in Section 4.1(r)(i) of the Disclosure Memorandum, together
with all amendments, modifications, supplements or side letters affecting the
duties, rights and obligations of any party thereunder.
(ii) No employees of Company or any of its Subsidiaries are
represented by any labor organization and, to the knowledge of Company, no labor
organization or group of employees of Company or any of its Subsidiaries has
made a pending demand for recognition or certification. There are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority and, to the knowledge of Company, there are no
organizing activities involving Company or any of its Subsidiaries pending with
any labor organization or group of employees of Company or any of its
Subsidiaries.
(iii) Except as specified in Section 4.1(r)(iii) of the
Disclosure Memorandum, there are no (A) unfair labor practice charges,
grievances or complaints pending or threatened in writing by or on behalf of any
employee or group of employees of Company or any of its Subsidiaries which, if
resolved against Company or any of its Subsidiaries, as the case may be, could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company, or (B) complaints, charges or claims against Company
or any of its Subsidiaries pending, or threatened in writing to be brought or
filed, with any Governmental Entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by Company or any of its Subsidiaries which, if
resolved against Company or any of its Subsidiaries, as the case may be, could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company.
(s) Brokers. No broker, investment banker, financial advisor or
-------
other person, other than BancAmerica Xxxxxxxxx Xxxxxxxx, the fees and expenses
of which will be paid by Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Company.
(t) Written Opinion of Financial Advisor. Company has received the
------------------------------------
written opinion of BancAmerica Xxxxxxxxx Xxxxxxxx, dated April 16, 1998 (a true
and complete copy of
20
which has been delivered to Parent by Company), to the effect that, based upon
and subject to the matters set forth therein and as of the date thereof, the
Merger Consideration was fair to such shareholders from a financial point of
view.
(u) Voting Requirements. The affirmative vote of a majority of the
-------------------
votes entitled to be cast by the holders of Shares entitled to vote thereon at
the Shareholders Meeting with respect to the approval and adoption of this
Agreement is the only vote of the holders of any class or series of Company's
capital stock or other securities required in connection with the consummation
by Company of the Merger and the other transactions contemplated hereby to be
consummated by Company.
(v) Rights Plan Matters. A true, correct and complete copy of the
-------------------
Company Rights Agreement (including all amendments thereto) is included in the
Filed SEC Documents. Concurrently with the execution and delivery of this
Agreement, Company's Board of Directors has taken all necessary action to
approve, and each of Company and the Rights Agent has duly executed, an
amendment to the Company Rights Agreement which provides that (i)
notwithstanding anything in the Company Rights Agreement to the contrary, the
execution and delivery of this Agreement or the Shareholder Agreement, the
public announcement or consummation of the transactions contemplated hereby or
thereby and the other matters provided for herein (including the Merger) or
therein will not result in (A) Parent or Merger Sub or any of their respective
Affiliates or Associates being an Acquiring Person, (B) the occurrence of a
Flip-In Date, a Stock Acquisition Date, a Separation Time, a Flip-Over
Transaction or Event, or (C) the Rights becoming exercisable, and (ii) the
Expiration Time of the Rights shall occur immediately prior to the Effective
Time, and Company shall cause such amendment, together with a certificate from
Company that such amendment satisfies the terms of Section 5.4 of the Company
Rights Agreement, to be delivered to the Rights Agent in accordance with Section
5.4 of the Company Rights Agreement. Except as set forth in the preceding
sentence in connection with the transactions contemplated by this Agreement or
the Shareholder Agreement, the Company Rights Agreement shall not be amended by
Company without the prior written consent of Parent, which consent Parent may
withhold in its sole discretion. For purposes hereof, the terms "Acquiring
Person," "Affiliate," "Associate," "Expiration Time," "Flip-In Date," "Stock
Acquisition Date," "Flip-Over Transaction or Event," "Right" and "Rights Agent"
shall have the respective meanings ascribed thereto in the Company Rights
Agreement.
(w) Takeover Statutes. The Board of Directors of Company has
-----------------
approved the execution and delivery of this Agreement and the Shareholder
Agreement and the transactions contemplated hereby and thereby in accordance
with the applicable provisions of the GBCC, and as a result thereof, Article 11,
Part 3, of the GBCC and Article 12 of Company's bylaws do not and will not apply
to this Agreement and the Shareholder Agreement, or the transactions
contemplated hereby and thereby.
(x) Related Parties. Except as disclosed in Filed SEC Documents or
---------------
Section 4.1(x) of the Disclosure Memorandum, to the knowledge of Company, none
of the executive officers or directors of Company, or any beneficial owner of
two percent (2%) or more of the outstanding Shares, or any entity controlled by
any of the foregoing or any member of the immediate family of any of the
foregoing:
21
(i) owns, directly or indirectly, any interest in (except for
stock holdings not in excess of two percent (2%) held solely for investment
purposes in securities which are listed on a national securities exchange or
which are regularly traded in the over-the-counter market), or is an owner, sole
proprietor, stockholder, partner, director, officer, employee, consultant or
agent of any person which is a competitor, lessor, lessee or customer of, or
supplier of goods or services to, Company or any of its Subsidiaries, except
where the value to such person of any such arrangement with Company and its
Subsidiaries has not exceeded $60,000 during the period since December 31, 1997;
(ii) owns, directly or indirectly, in whole or in part, any
real property, leasehold interests, tangible property or intangible property
which Company or any of its Subsidiaries currently use in their business;
(iii) has any cause of action or other suit, action or claim
whatsoever against, or owes any amount to Company or any of its Subsidiaries,
except for claims in the ordinary course of business, such as for accrued
vacation pay, accrued benefits under any compensation plans and similar matters;
or
(iv) has sold to, or purchased from, Company or any of its
Subsidiaries any assets or property for consideration in excess of $60,000 in
the aggregate since December 31, 1997.
As used in this Section 4.1(x), a person's immediate family shall mean
such person's spouse, parents, grandparents, uncles, aunts, first cousins,
children, siblings, mothers and fathers-in-law, sons and daughters-in-law, and
brothers and sisters-in-law.
SECTION 4.2 Representations and Warranties of Parent and Merger Sub.
-------------------------------------------------------
Parent and Merger Sub represent and warrant to Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
------------------------------------------
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Merger Sub and each other Subsidiary of
Parent is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent. Parent has delivered to Company true and complete copies of the
certificate of incorporation and by-laws of Parent and certificate of
incorporation and by-laws of Merger Sub, as amended to the date of this
Agreement.
(b) Authority; Noncontravention. Parent and Merger Sub have all
---------------------------
necessary corporate power and authority to enter into this Agreement. The
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly authorized by the respective Boards of Directors of Parent and
Merger Sub and have been duly approved by Parent as sole shareholder of Merger
22
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
contemplated hereby. This Agree ment has been duly executed and delivered by
each of Parent and Merger Sub and, assuming this Agreement constitutes the valid
and binding agreement of Company, constitutes a valid and binding obligation of
each of Parent and Merger Sub, enforceable against each such party in accordance
with its terms. Except as specified in Section 4.2(b) of the Disclosure
Memorandum, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) conflict with any of the
provisions of the certificate of incorporation or bylaws of Parent or the
certificate of incorporation or bylaws of Merger Sub, (ii) subject to the
governmental filings and other matters referred to in the next following
sentence, conflict with, result in a breach of or default (with or without
notice or lapse of time, or both) under, or give rise to a material obligation,
a right of termination, cancellation or acceleration of any obligation or loss
of a material benefit under, or require the consent of any person under, any
indenture, or other agreement, permit, concession, franchise, license or similar
instrument or undertaking to which Parent or Merger Sub is a party or by which
Parent or Merger Sub or any of their respective assets is bound or affected, or
(iii) subject to the governmental filings and other matters referred to in the
next following sentence, contravene any applicable Law currently in effect,
which, in the case of clauses (ii) and (iii) above, could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Parent.
No consent, approval or authorization of, or declaration or filing with, or
notice to, any Governmental Entity which has not been received or made is
required by or with respect to Parent or Merger Sub in connection with the
execution and delivery of this Agreement by Parent or Merger Sub or the
consummation by Parent or Merger Sub, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the filing of
premerger notification and report forms under the HSR Act with respect to the
Merger, (ii) the filing with the SEC of (A) the Form S-4 and (B) such reports
under the Exchange Act as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (iii) the filing of the
Delaware Certificate of Merger with the Delaware Secretary of State, the Georgia
Certificate of Merger with the Georgia Secretary of State and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business, (iv) state "blue-sky" filings, (v) NYSE approvals,
(vi) such other consents, approvals, authorizations, filings or notices as are
specified in Section 4.2(b) of the Disclosure Memorandum, and (vii) any other
applicable filings, authorizations, consents or approvals the failure to make or
obtain which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
(c) Capital Structure. As of the date hereof, the authorized capital
-----------------
stock of Parent consists of (i) 150,000,000 shares of Parent Common Stock, and
(ii) 50,000,000 shares of preferred stock, par value $0.01 per share, of which
1,500,000 shares are designated Series A Junior Participating Preferred Stock
("Parent Series A Preferred Stock"). At the close of business on April 15,
1998, (i) 91,024,996 shares of Parent Common Stock were issued and outstanding,
(ii) 20,018,187 shares of Parent Common Stock were reserved for issuance
pursuant to Parent's stock option plan (subject to adjustment in accordance with
the terms of such stock option plan in the form filed as an exhibit to the Filed
Parent SEC Documents (as hereinafter defined)), (iii) 4,000,000 shares of Parent
Common Stock were reserved for issuance pursuant to Parent's employee stock
purchase plan, and (iv) 1,500,000 shares of Parent Series A Preferred Stock were
23
authorized for issuance solely pursuant to the exercise of the preferred stock
purchase rights issued pursuant to the Rights Agreement, dated December 18,
1997, between Parent and The First National Bank of Boston, as rights agent.
Except as set forth in the immediately preceding sentence, at the close of
business on April 15, 1998, no shares of capital stock or other equity
securities of Parent were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of Parent are, and all shares of Parent
Common Stock which may be issued pursuant to this Agreement will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock, $0.01 par value per share, all of
which shares have been validly issued, are fully paid and nonassessable and are
owned by Parent. As of the date hereof, no bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
the stockholders of Parent may vote are issued or outstanding.
(d) SEC Documents. Parent has filed all required reports, schedules,
-------------
forms, statements and other documents with the SEC since October 1, 1996 (the
"Parent SEC Docu ments"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents as of such dates contained any
untrue statement of a material fact or omitted to state a 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
consolidated financial statements of Parent included in the Parent SEC Documents
comply in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Parent
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
(e) Absence of Certain Changes of Events; No Undisclosed Material
-------------------------------------------------------------
Liabilities.
-----------
(i) Except as disclosed in the Parent SEC Documents filed and
publicly available prior to the date of this Agreement (the "Filed Parent SEC
Documents") or in Section 4.2(e) of the Disclosure Memorandum, since the date of
the most recent audited financial statements included in the Filed Parent SEC
Documents, Parent and its Subsidiaries have conducted their business only in the
ordinary course, and there has not been any change, event or occurrence which
has had or would have, individually or in the aggregate, a Material Adverse
Effect on Parent.
(ii) Except as set forth in or disclosed in the Filed Parent
SEC Documents or in the Disclosure Memorandum and except for liabilities
incurred in the ordinary course of business since the date of the most recent
financial statements included in the Filed
24
Parent SEC Documents, as of the date hereof, there are no liabilities of Parent
or any Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
due, to become due, determined, determinable or otherwise, having or which
would, individually or in the aggregate, have a Material Adverse Effect on
Parent.
(f) Certain Information. None of the information supplied or to be
-------------------
supplied by Parent or Merger Sub in writing specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, 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 not misleading, or (ii) the Proxy
Statement will, at the time it is filed with the SEC, at any time that the Proxy
Statement is amended or supplemented, at the time the Proxy Statement is mailed
to the shareholders of Company, or at the time of the Shareholders 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. The Form S-4 will comply in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation or warranty is
made by Parent or Merger Sub with respect to statements made or incorporated by
reference in such document based on information supplied by or on behalf of
Company specifically for inclusion or incorporation by reference therein.
(g) Financial Capacity. Parent has available sufficient funds to
------------------
enable it to satisfy its obligations under Section 3.1.
(h) Brokers. No broker, investment banker, financial advisor or
-------
other person, other than Broadview Associates LLC and B.T. Alex. Xxxxx
Incorporated, the fees and expenses of which will be paid by Parent, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Merger Sub.
(i) Litigation, Etc. As of the date hereof, except as disclosed in
---------------
Section 4.2(i) of the Disclosure Memorandum, (i) there is no suit, claim,
action, proceeding (at law or in equity) or investigation pending or, to the
knowledge of Parent, threatened against Parent or any of its Subsidiaries
(including, without limitation, any product liability claims) before any court
or other Governmental Entity, and (ii) neither Parent nor any of its
Subsidiaries is subject to any outstanding order, writ, judgement, injunction,
order, decree or arbitration award or order that, in any such case described in
clauses (i) and (ii), has had or would have, individually or in the aggregate, a
Material Adverse Effect on Parent. As of the date hereof, there are no suits,
actions, claims, proceedings or investigations pending or, to the knowledge of
Parent, threatened, seeking to prevent, hinder, modify or challenge the
transactions contemplated by this Agreement.
(j) Compliance with Applicable Laws. All Permits necessary for each
-------------------------------
of Parent and its Subsidiaries to own, lease or operate its properties and
assets and to carry on its business as now conducted have been obtained or made,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or
25
default could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent. Except as disclosed in the Filed
Parent SEC Documents or in Section 4.2(j) of the Disclosure Memorandum, Parent
and its Subsidiaries are in compliance with all applicable Laws, except for
noncompliance which could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business of Company. Except as contemplated by
------------------------------
this Agreement, during the period from the date of this Agreement to the
Effective Time, Company shall, and shall cause each of its Subsidiaries to, act
and carry on its businesses only in the ordinary course of business and, to the
extent consistent therewith, use reasonable best efforts to preserve intact its
current business organizations, keep available the services of its current
officers and key employees and preserve the goodwill of those engaged in
material business relationships with them, and to that end, without limiting the
generality of the foregoing, except as set forth in Section 5.1 of the
Disclosure Memorandum, Company shall not, and shall not permit any of its
Subsidiaries to, without the prior consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect of, any
of its outstanding capital stock (other than with respect to a Subsidiary of
Company, to its corporate parent), (B) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (C) purchase, redeem or otherwise acquire any
shares of outstanding capital stock or any rights, warrants or options to
acquire any such shares;
(ii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible or exchangeable
securities, other than upon the exercise of Options outstanding on the date of
this Agreement;
(iii) amend its articles of incorporation, bylaws or other
comparable charter or organizational documents;
(iv) directly or indirectly acquire, make any investment in, or
make any capital contributions to, any person (other than any direct or indirect
wholly owned Subsidiary);
(v) directly or indirectly sell or otherwise dispose of any of
its properties or assets that are material to its business, except for sales or
licenses of software in the ordinary course of business;
26
(vi) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, or (B) make any loans or advances to
any other person, other than to Company or to any direct or indirect wholly
owned Subsidiary of Company and other than routine advances to employees,
except, in the case of clause (A), for borrowings under existing credit
facilities described in the Filed SEC Documents in the ordinary course of
business;
(vii) grant or agree to grant to any employee any increase in
wages or bonus, severance, profit sharing, retirement, deferred compensation,
insurance or other compensa tion or benefits, or establish any new compensation
or benefit plans or arrangements, or amend or agree to amend any existing
Company Plans, except as may be required under existing agreements or by Law and
normal, regularly scheduled increases in respect of non-officer employees
consistent with past practices;
(vii) enter into or amend any employment, consulting, severance
or similar agreement with any individual;
(ix) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization or any agreement relating to an Acquisition Proposal (as
hereinafter defined) (other than as expressly permitted pursuant to this
Agreement);
(x) make any tax election or settle or compromise any income
tax liability of Company or of any of its Subsidiaries involving on an
individual basis more than $25,000;
(xi) make any change in any method of accounting or accounting
practice or policy, except as required by any changes in generally accepted
accounting principles;
(xii) enter into any agreement, understanding or commitment that
restrains, limits or impedes Company's ability to compete with or conduct any
business or line of business; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions in respect of which it is restricted by the provisions of this
Section 5.1.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of the Proxy Statement and the Form S-4;
----------------------------------------------------
Accountant's Letters.
--------------------
(a) As soon as practicable following the date hereof:
27
(i) Company and Parent shall jointly prepare for inclusion in
the Form S-4, and Company shall file with the SEC, as soon as practicable after
the date hereof, a proxy statement (the "Proxy Statement") relating to the
Merger in accordance with the Exchange Act and the rules and regulations under
the Exchange Act, with respect to the transactions contemplated by this
Agreement. Company, Parent and Merger Sub shall cooperate with each other in the
preparation of the Proxy Statement. Company and Parent shall use all reasonable
efforts to respond promptly to any comments made by the SEC with respect to the
Proxy Statement, and to cause the Proxy Statement to be mailed to the
shareholders of Company at the earliest practicable date after the Form S-4 is
declared effective by the SEC.
(ii) Parent shall prepare and file with the SEC, as soon as
practicable after the date hereof, the Form S-4. Each of Company and Parent
shall use all reasonable efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after such filing. Parent also
shall take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or filing a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger, and Company
shall furnish all information concerning Company and the holders of the Shares
as may be reasonably requested in connection with any such action.
(b) Company shall use its reasonable efforts to cause to be delivered
to Parent a letter of Xxxxxx Xxxxxxxx LLP, Company's independent public
accountants, dated as of a date within two business days before the date on
which the Form S-4 shall become effective, and a letter of Xxxxxx Xxxxxxxx LLP,
dated as of a date within two business days before the Closing Date, each
addressed to Parent, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for letters delivered by independent
accountants in connection with registration statements similar to the Form S-4.
(c) Parent shall use its reasonable efforts to cause to be delivered
to Company a letter of Ernst & Young LLP, Parent's independent public
accountants, dated as of a date within two business days before the date on
which the Form S-4 shall become effective and a letter of Ernst & Young LLP,
dated as of a date within two business days before the Closing Date, each
addressed to Company, in form and substance reasonably satisfactory to Company
and customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
SECTION 6.2 Shareholders Meeting. Subject to Company's right to
--------------------
terminate this Agreement pursuant to Section 8.1, Company shall take all action
necessary, in accordance with the GBCC, the Exchange Act and other applicable
Law, the rules of NASDAQ and its articles of incorporation and bylaws, to
convene a meeting of the shareholders of Company (the "Share holders Meeting")
as promptly as practicable after the Form S-4 is declared effective by the SEC
for the purpose of considering and voting upon this Agreement. Subject to
Company's right to terminate this Agreement pursuant to Section 8.1 and subject
to the Board of Directors of Company determining in good faith that the making
of such recommendation or the failure to withdraw such recommendation would
constitute a breach of fiduciary duties of the members of the Board of Directors
of Company under applicable Law, the Board of Directors of Company
28
shall recommend that the holders of the Shares vote in favor of the approval of
this Agreement at the Shareholders Meeting and such recommendation shall be
included in the Proxy Statement. At the Shareholders Meeting, Parent and Merger
Sub shall vote any Shares beneficially owned by them in favor of the approval of
this Agreement.
SECTION 6.3 Access to Information; Confidentiality. Company shall, and
--------------------------------------
shall cause each of its Subsidiaries to, afford to Parent and to Parent's
officers, employees, counsel, financial advisors and other representatives
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, tax
returns, personnel and records and, during such period, Company shall, and shall
cause each of its Subsidiaries to, furnish as promptly as practicable to Parent
such information concerning its business, properties, financial condition,
operations and personnel as Parent may from time to time reasonably request,
provided that the foregoing action shall be reasonably related to the
transactions contemplated hereby (including, without limitation, the integration
of Company's business with Parent and its existing businesses) and shall not
interfere unnecessarily with normal operations. Parent shall, and shall cause
each of its Subsidiaries to, afford to Company and to Company's officers,
employees, counsel, financial advisors and other representatives reasonable
access during normal business hours during the period prior to the Effective
Time to all its properties, books, contracts, commitments, tax returns,
personnel and records and during such period, Parent shall, and shall cause each
of its Subsidiaries to, furnish as promptly as practicable to Company such
information concerning its business, properties, financial condition, operations
and personnel as Company may from time to time reasonably request, provided that
the foregoing action shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with normal
operations. Any such investigation by Parent or Company shall not affect the
representations or warranties contained in this Agreement. Parent and Company
will hold, and will cause their respective directors, officers, partners,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any non-public information obtained from the other party
in confidence to the extent required by, and in accordance with the provisions
of the letter agreements between Parent and Company with respect to
confidentiality and other matters.
SECTION 6.4 Reasonable Best Efforts. Subject to the terms and conditions
-----------------------
set forth in this Agreement, each of the parties shall use its reasonable best
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
and assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including the satisfaction of the respective conditions set forth in
Article VII, provided that nothing herein shall preclude any party from
exercising its rights under this Agreement.
SECTION 6.5 Indemnification.
---------------
(a) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who, with the consent of Parent, becomes prior
to the Effective Time, an officer or director of Company (each, an "Indemnified
Party") against all losses, claims, damages, costs,
29
expenses (including reasonable costs of investigation and defense and reasonable
attorneys' fees and expenses), liabilities or judgments or amounts that are paid
in settlement with the approval of the indemnifying party (which approval shall
not be unreasonably withheld) of or in connection with any threatened or actual
Claim based in whole or in part on or arising in whole or in part out of the
fact that such person is or was a director or officer of Company whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities"), including all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case, to the
fullest extent permitted under the GBCC and by Company's Articles of
Incorporation and Bylaws as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any matter and
whether or not Parent or the Surviving Corporation is insured against any such
matter. Without limiting the foregoing, in any case in which approval by the
Surviving Corporation is required to effectuate any indemnification, the
Surviving Corporation shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon by Parent and the Indemnified Party.
(b) Without limiting the foregoing, in the event any such Claim is
brought against any Indemnified Party, whether arising before or after the
Effective Time, the Surviving Corporation shall assume and direct all aspects of
the defense thereof, including settlement; the Surviving Corporation shall
retain and direct, and pay all fees and expenses of, counsel reasonably
satisfactory to such Indemnified Party, provided that if the Surviving
Corporation elects not to assume such defense or if counsel for the Indemnified
Party advises that there are substantive issues that raise conflicts of interest
between Parent or the Surviving Corporation and the Indemnified Party, the
Indemnified Party may retain counsel reasonably satisfactory to Parent, and the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Party promptly as statements therefor are received to the
extent not prohibited by applicable Law and upon receipt of any affirmation and
undertaking required by applicable Law. The Surviving Corporation shall be
obligated pursuant to this paragraph (b) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction, except to the extent that, in the
opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, there exist conflicts of interest among such Indemnified
Parties that preclude one firm of counsel from representing the interests of all
such Indemnified Parties. The Indemnified Party shall cooperate in the vigorous
defense of any such matter. The Indemnified Party shall have a right to
participate in (but not control) the defense of any such matter with its own
counsel and at its own expense. Neither Parent nor the Surviving Corporation
shall be liable for any settlement effected without its prior written consent,
which shall not be unreasonably withheld. After the Effective Time neither
Parent nor the Surviving Corporation shall settle any such matter unless (i) the
Indemnified Party gives prior written consent, which shall not be unreasonably
withheld, or (ii) the terms of the settlement provide that the Indemnified Party
shall have no responsibility for the discharge of any settlement amount and
impose no other obligations or duties on the Indemnified Party and the
settlement discharges all rights against Indemnified Party with respect to such
matter. Any Indemnified Party wishing to claim indemnification under this
Section 6.5, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Company (or, after the Effective Time, Parent and
the Surviving Corporation) (but the failure so to notify shall
30
not relieve a party from any liability which it may have under this Section 6.5
except to the extent such failure prejudices such party).
(c) If Parent or the Surviving Corporation or any successors or
assigns shall consolidate with or merge into any other person and shall not be
the continuing or surviving person in such consolidation or merger, or shall
transfer all or substantially all of its assets to any person, then and in each
case, provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 6.5.
(d) Parent shall, or shall cause the Surviving Corporation to,
purchase policies of directors' and officers' "run-off" liability insurance (or
policies that contain terms and conditions that are no less advantageous, in any
material respect, to the directors and officers and former directors and
officers of Company as the directors' and officers' liability insurance policies
that are in effect at Company on the date hereof), which insurance shall remain
in effect for a period of not less than three years from and after the Effective
Time; provided that the Surviving Corporation shall not be required to pay an
annual premium thereon in excess of the last annual premium paid prior to the
date hereof by Company on its current directors' and officers' insurance policy.
(e) The provisions of this Section 6.5 shall survive the Effective
Time, are intended expressly to be for the benefit of, and shall be enforceable
by, each Indemnified Party and their respective heirs and representatives.
Parent hereby guarantees, for a period of seven years, the performance by the
Surviving Corporation of the indemnification obligations of the Surviving
Corporation pursuant to this Section 6.5; provided that, in the event that any
claim is asserted or made within such seven-year period, Parent's guarantee
shall continue in respect of any such claim until final disposition of such
claim.
SECTION 6.6 Public Announcements. Parent and Merger Sub, on the one
--------------------
hand, and Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release, SEC filing (including without limitation the Form S-4 and the
Proxy Statement) or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except (i) to the extent any party reasonably determines, after consultation
with its counsel, that disclosure is necessary or advisable in order to satisfy
such party's disclosure obligations under applicable Law, or (ii) as may be
required by court process or by obligations pursuant to any listing agreement
with any national securities exchange.
SECTION 6.7 No Solicitation; Acquisition Proposals.
--------------------------------------
(a) Until the termination of this Agreement in accordance with Section
8.1, Company shall not, and shall not authorize or permit any of its
Subsidiaries, or any of its or their affiliates, officers, directors, employees,
agents or representatives (including without limitation any investment banker,
financial advisor, attorney or accountant retained by Company or any of its
Subsidiaries), to, directly or indirectly, initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries, any
31
expression of interest or the making of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal (as hereinafter
defined), 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 agree to or endorse any Acquisition Proposal; provided, however, that nothing
in this Agreement shall prohibit the Board of Directors of Company from (A)
furnishing information to, or entering into, maintaining or continuing
discussions or negotiations with, any person that makes an unsolicited
Acquisition Proposal after the date hereof or (B) recommending an Acquisition
Proposal to the shareholders of Company, if, and to the extent that, the Board
of Directors of Company, (i) determines in good faith that such Acquisition
Proposal would constitute a Superior Proposal (as hereinafter defined) and (ii)
determines in good faith (after consultation with outside legal counsel) that
such action is necessary for the Board of Directors of Company to comply with
its fiduciary duties under applicable Law, and, prior to furnishing any non-
public information to such person, Company receives from such person an executed
confidentiality agreement with provisions no less favorable to Company than the
letter agreement relating to the furnishing of confidential information of
Company to Parent referred to in the last sentence of Section 6.3. Company shall
promptly (and, in any event within 24 hours) notify Parent after receipt of any
Acquisition Proposal or any request for information relating to Company or any
of its Subsidiaries or for access to the properties, books or records of Company
or any of its Subsidiaries by any person who has informed Company that such
person is considering making, or has made, an Acquisition Proposal, and Company
shall keep Parent informed in reasonable detail of the status and details of any
such Acquisition Proposal.
(b) For purposes of this Agreement, "Acquisition Proposal" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement with Parent or Merger Sub) involving
Company: (A) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (B) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of Company and its Subsidiaries, taken as a whole,
in a single transaction or series of related transactions; (C) any tender offer
or exchange offer for 20 percent or more of the outstanding shares of capital
stock of Company or the filing of a registration statement under the Securities
Act in connection therewith; or (D) 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, "Superior Proposal" means any
Acquisition Proposal that Company's Board of Directors determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to Company's shareholders than the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment of Company's Board of Directors, is reasonably
capable of being obtained by such third party.
(c) Nothing contained in this Section 6.7 shall prohibit Company from
taking and disclosing to its shareholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act or from making any disclosure to Company's
shareholders which, in the good faith judgment of the Board of Directors of
Company based on the advice of outside counsel, is required under applicable
Law; provided that Company does not withdraw or modify, or propose to withdraw
or modify, its position with respect to the Merger or approve or recommend, or
32
propose to approve or recommend, an Acquisition Proposal unless Company and its
Board of Directors have complied with all the provisions of this Section 6.7.
SECTION 6.8 Consents, Approvals and Filings. Upon the terms and subject
-------------------------------
to the conditions hereof, each of the parties hereto shall (a) make promptly its
respective filings, and thereafter make any other required submissions, under
the HSR Act and the Exchange Act, with respect to the Merger and the other
transactions contemplated hereby and (b) use its reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the Merger and the other transactions contemplated
hereby, including without limitation using its reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities and parties to contracts with Company and its
Subsidiaries as are necessary for the consummation of the Merger and the other
transactions contemplated hereby and to fulfill the conditions to the Merger;
provided, however, (i) that in no event shall Parent or any of its Subsidiaries
be required to agree or commit to divest, hold separate, offer for sale,
abandon, limit its operation of or take similar action with respect to any
assets (tangible or intangible) or any business interest of it or any of its
Subsidiaries (including without limitation the Surviving Corporation after
consummation of the Merger) in connection with or as a condition to receiving
the consent or approval of any Governmental Entity (including without limitation
under the HSR Act) and (ii) that nothing herein shall preclude any party from
exercising its rights under this Agreement.
SECTION 6.9 Board Action Relating to Stock Option Plans and Stock
-----------------------------------------------------
Purchase Plan.
-------------
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of Company (or, if appropriate, any committee administering a
Stock Option Plan) shall adopt such resolutions or take such actions, if any, as
may be required to adjust the terms of all outstanding Options in accordance
with Section 2.2 and shall make such other changes to the Stock Option Plans as
it deems appropriate to give effect to the Merger (subject to the approval of
Parent, which shall not be unreasonably withheld). Notwithstanding the
foregoing or anything else in this Agreement to the contrary, except as
disclosed in Section 6.9(a) of the Disclosure Memorandum, Company shall not take
any action to accelerate the vesting, exercisability or other rights under any
Options granted under any Stock Option Plan.
(b) Without limiting the generality or effect of Section 5.1, at the
written request of Parent, the Board of Directors of Company shall adopt such
resolutions or take such actions as may be required pursuant to the Stock
Purchase Plan such that no Option Period (as such term is defined in the Stock
Purchase Plan) will commence after the date hereof. Alternatively, at the
request of Parent, the Board of Directors of Company shall amend the Stock
Purchase Plan as reasonably requested by Parent, including to provide that the
next Option Period will expire at or immediately prior to the Effective Time.
33
SECTION 6.10 Employment and Employee Benefit Matters.
---------------------------------------
(a) Each of Parent, Merger Sub and Company will take the actions
indicated to be taken by it in Section 6.10(a) of the Disclosure Memorandum at
or prior to the time specified therein. Following the Effective Time, Parent
shall cause the Surviving Corporation and its Subsidiaries to honor in
accordance with their terms all employment, severance, consulting and other
compensation contracts disclosed in Section 6.10(a) of the Disclosure Memorandum
between Company or any of its Subsidiaries and any current or former director,
officer or employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under the Company
Plans, to the extent it does not constitute a violation of this Agreement.
(b) As promptly as practicable, following the Effective Time, Parent
shall cause to be provided generally to officers and employees of Company and
its Subsidiaries employee benefits under employee benefit and welfare plans
(other than stock option or other plans involving the potential issuance of
Parent Common Stock), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by Parent to their similarly
situated officers and employees; provided, that, for a period of 12 months after
the Effective Time, Parent shall provide generally to officers and employees of
Company and its Subsidiaries (other than those persons who currently have
written severance agreements with Company) severance benefits in accordance with
the policies of either (i) Company as disclosed in Section 6.10(b) of the
Disclosure Memorandum, or (ii) Parent, whichever of (i) or (ii) will provide the
greater benefit to the officer or employee. For purposes of participation,
vesting and (except in the case of Parent retirement and sabbatical plans)
benefit accrual under Parent's employee benefit plans, the service of the
employees of Company and its Subsidiaries prior to the Effective Time shall be
treated as service with Parent participating in such employee benefit plans.
SECTION 6.11 Affiliates and Certain Shareholders. At least three business
-----------------------------------
days prior to the Closing Date, Company shall deliver to Parent a letter
identifying all persons whom it reasonably believes are "affiliates" of Company
for purposes of Rule 145 under the Securities Act. Company shall use its
reasonable efforts to cause each such person to deliver to Parent on or prior to
the Closing Date a written agreement substantially in the form attached as
Exhibit A hereto. Parent shall not be required to maintain the effectiveness of
the Form S-4 or any other registration statement under the Securities Act for
the purposes of resale of Parent Common Stock by such affiliates, and the
certificates representing Parent Common Stock received by such affiliates in the
Merger shall bear a customary legend regarding applicable Securities Act
restrictions.
SECTION 6.12 NYSE Listing. Parent shall use its reasonable efforts to
------------
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date, and Parent shall give all notices and make all filings with
the NYSE required in connection with the transactions contemplated herein.
SECTION 6.13 Advice of Changes. Parent and Company shall promptly advise
-----------------
the other party orally and in writing of (i) any representation or warranty made
by it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any
34
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply in any
material respect with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement, or
(iii) any change or event having, or which, insofar as can reasonably be
foreseen, could reasonably be expected to have, a Material Adverse Effect on
such party or on the truth of their respective representations and warranties or
the ability of the conditions set forth in Article VII to be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 6.14 Tax Treatment. Each of Parent and Company shall use
-------------
reasonable efforts to cause the Merger, and shall take no action that would
cause the Merger not, to qualify as a reorganization under the provisions of
Section 368 of the Code and to obtain the opinions of counsel referred to in
Sections 7.2 and 7.3.
SECTION 6.15 Company Rights Agreement. Company's Board of Directors
------------------------
shall take all further action (in addition to that referred to in Section 4.1
(v)) reasonably requested in writing by Parent in order to render the Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement and the Shareholder Agreement. Except as provided above with respect
to the Merger and the other transactions contemplated by this Agreement and the
Shareholder Agreement and in Section 4.1(v), Company's Board of Directors shall
not (a) amend the Company Rights Agreement or (b) take any action with respect
to, or make any determination under, the Company Rights Agreement, including a
redemption of the Rights.
SECTION 6.16 Parent Rights Agreement. Immediately after the Effective
-----------------------
Time, each share of Parent Common Stock issued as part of the Merger
Consideration shall have the same rights as all other shares of Parent Common
Stock outstanding immediately after the Effective Time under the terms of the
Rights Agreement filed as an exhibit to the Filed Parent SEC Documents.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to perform this Agreement and effect
the Merger are subject to the satisfaction or written waiver on or prior to the
Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
--------------------
adopted by the affirmative vote of the requisite number of shareholders of
Company in the manner required pursuant to Company's articles of incorporation
and bylaws, the GBCC and other applicable Law.
(b) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal
35
restraint or prohibition preventing the consummation of the Merger shall be in
effect, and no applicable Law that makes consummation of the Merger illegal
shall have been enacted or adopted since the date of this Agreement and shall
remain in effect; provided, however, that the party invoking this condition
shall have complied with its obligations under Section 6.8.
(c) HSR Act. All necessary waiting periods under the HSR Act
-------
applicable to the Merger shall have expired or been earlier terminated.
(d) Form S-4. The Form S-4 shall have been declared effective under
--------
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(e) NYSE Listing. The shares of Parent Common Stock issuable to
------------
Company's shareholders pursuant to the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance.
SECTION 7.2 Conditions to Obligations of Parent and Merger Sub. The
--------------------------------------------------
obligations of Parent and Merger Sub to perform this Agreement and effect the
Merger are further subject to satisfaction or written waiver on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Company contained in this Agreement, which representations and
warranties shall be deemed for purposes of this Section 7.2 not to include any
qualification or limitation with respect to materiality (whether by reference to
"Material Adverse Effect" or otherwise), shall be true and correct as of the
Closing Date, except where the matters in respect of which such representations
and warranties are not true and correct, in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect on Company,
with the same effect as though such representations and warranties were made as
of the Closing Date, and Parent and Merger Sub shall have received a certificate
signed on behalf of Company by an authorized executive officer of Company to
such effect.
(b) Performance of Obligations of Company. Company shall have
-------------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent and Merger
Sub shall have received a certificate signed on behalf of Company by an
authorized officer of Company to such effect.
(c) No Material Adverse Change. Since the date of this Agreement,
--------------------------
Company and its Subsidiaries, taken as a whole, shall not have experienced any
change, event or occurrence that has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company,
provided that for the purposes of this Section 7.2(c), a "Material Adverse
Effect" shall not be deemed to include the impact of delays of revenues of
Company that are caused by delays in the signing of customer contracts that, but
for the pendency of the transactions contemplated by this Agreement, would have
been signed; provided that the burden of proving such cause shall be borne by
Company.
(d) Certain Litigation. There shall not be pending any Claim seeking
------------------
to restrain or prohibit the Merger or seeking to obtain from Parent or Company
or any of their
36
respective affiliates in connection with the Merger any damages, or seeking any
other relief that, following the Merger, would limit or restrict the ability of
Parent and its Subsidiaries to own and conduct both the assets and businesses
owned and conducted by Parent and its Subsidiaries prior to the Merger and the
assets and businesses owned and conducted by Company and its Subsidiaries prior
to the Merger, except where such limitations and restrictions, in the aggregate,
have not had or could not reasonably be expected to have a Material Adverse
Effect on the Parent on a consolidated basis or Company on a consolidated basis.
(e) Consents. All consents, authorizations, orders, approvals,
--------
filings or registrations identified in Section 7.2(e) of the Disclosure
Memorandum shall have been obtained or made, except for the filing of the
certificates of merger pursuant to Section 1.3 and except where the failure to
have obtained or made such consents, authorizations, orders, approvals, filings
or registrations could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or the Surviving Corporation.
(f) Tax Opinions. Company shall have received from Xxxxxx & Bird,
------------
counsel to Company, on the date of the Proxy Statement and on the Closing Date,
opinions, in each case dated as of such respective dates and stating that the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that Company and Parent
will each be a party to that reorganization within the meaning of Section 368(b)
of the Code and that no gain or loss will be recognized by the shareholders of
Company upon their exchange of Shares for the Merger Consideration under Section
354 of the Code (except to the extent such shareholders receive cash for their
Shares). In rendering such opinions, counsel for Company shall be entitled to
rely upon representations of officers of Company, Parent and stockholders of
Parent.
SECTION 7.3 Conditions to Obligation of Company. The obligations of
-----------------------------------
Company to perform this Agreement and effect the Merger are further subject to
satisfaction or written waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of each of Parent and Merger Sub contained in this Agreement, which
representations and warranties shall be deemed for purposes of this Section 7.3
not to include any qualification or limitation with respect to materiality
(whether by reference to "Material Adverse Effect" or otherwise), shall be true
and correct as of the Closing Date, except where the matters in respect of which
such representations and warranties are not true and correct, in the aggregate,
have not had and could not reasonably be expected to have a Material Adverse
Effect on Parent, with the same effect as though such representations and
warranties were made as of the Closing Date, and Company shall have received a
certificate signed on behalf of Parent and Merger Sub by an authorized officer
of Parent to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of
---------------------------------------------------
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Company shall have received a certificate signed on behalf
of Parent by an authorized executive officer of Parent to such effect.
37
(c) No Material Adverse Change. Since the date of this Agreement,
--------------------------
Parent and its Subsidiaries, taken as a whole, shall not have experienced any
change or occurrence particular to them, that has had or would have a Material
Adverse Effect on Parent.
(d) Tax Opinions. Parent shall have received from Xxxxx, Day, Xxxxxx
------------
& Xxxxx, counsel to Parent, on the date of the Proxy Statement and on the
Closing Date, opinions, in each case dated as of such respective dates and
stating that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that Parent
and Company will each be a party to that reorganization within the meaning of
Section 368(b) of the Code and that no gain or loss will be recognized by the
shareholders of Company upon their exchange of the Shares for the Merger
Consideration under Section 354 of the Code (except to the extent such
shareholders receive cash for their Shares). In rendering such opinions,
counsel for Parent shall be entitled to rely upon representations of officers of
Parent, Company and stockholders of Parent.
SECTION 7.4 Frustration of Closing Conditions. Neither Parent nor
---------------------------------
Company may rely on the failure of any condition set forth in Section 7.1, 7.2
or 7.3, as the case may be, to be satisfied if such failure was caused by such
party's failure to comply with or perform any of its obligations or covenants
set forth in this Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. Notwithstanding any other provisions of this
-----------
Agreement, and notwithstanding approval and adoption of this Agreement by the
shareholders of Company, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Effective Time in
any one of the following circumstances:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and Company.
(b) By Parent or Company, if the Effective Time shall not have
occurred on or before October 31, 1998; provided, however, that neither Parent
nor Company may terminate this Agreement pursuant to this Section 8.1(b) if such
party's failure to fulfill any of its obligations under the Agreement shall be a
reason that the Effective Time shall not have occurred on or before such date.
(c) By Parent or Company, if any federal or state court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling, or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and non-appealable, provided that neither party may
terminate this Agreement pursuant to this Section 8.1(c) if it has not complied
with its obligations under Section 6.8.
38
(d) (i) By Parent or Company, if the Shareholders Meeting shall have
been held and this Agreement shall not have been approved and adopted by the
affirmative vote of the requisite number of shareholders of Company or (ii) by
Parent, if the Shareholders Meeting shall not have been held by October 26,
1998, as a result of a breach by Company of its obligations under Section 6.2.
(e) By Parent or Company, if the Board of Directors of Company shall
have determined to approve, endorse or recommend an Acquisition Proposal to its
shareholders.
(f) By Parent, if the Board of Directors of Company shall have (i)
withdrawn, modified or amended in any adverse respect its approval or
recommendation of this Agreement, the Merger or the other transactions
contemplated hereby, (ii) failed to call, or once called, adjourned, canceled or
postponed the Shareholders Meeting without the prior written consent of Parent
(which consent in the case of an adjournment or postponement shall not be
unreasonably withheld), or (iii) resolved to do any of the foregoing.
(g) By Parent or Company (provided that the terminating party is not
then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement), if (i) the other party shall have failed
to comply in any material respect with any of the material covenants and
agreements contained in this Agreement to be complied with or performed by such
party at or prior to such date of termination, and such failure continues for 20
calendar days after the actual receipt by such party of a written notice from
the other party setting forth in detail the nature of such failure, or (ii) a
representation or warranty of the other party contained in this Agreement shall
have been breached in any respect on the date when made (or in the case of any
representations and warranties that are made as of a different date, as of such
different date) and the breach cannot be or has not been cured within 20
calendar days after the giving of written notice to the breaching party of such
breach and the matters in respect of which such representation or warranty shall
have been breached has had or could reasonably be expected to have a Material
Adverse Effect on such other party.
(h) By Company, in the event that (i) Parent enters into a definitive
agreement providing for a merger, consolidation or other business combination
transaction pursuant to which (a) a majority of the members of the board of
directors of the surviving entity in any such transaction is not comprised of
members of the Board of Directors of Parent immediately prior to the
consummation of such transaction, or (b) the holders of Parent Common Stock
immediately prior to such transaction own less than a majority of the
outstanding voting securities of the surviving entity in such transaction; (ii)
the Board of Directors of Parent adopts a plan of liquidation or dissolution of
Parent; (iii) Parent enters into a definitive agreement providing for the
acquisition by a third party of more than 50% of the consolidated assets of
Parent; or (iv) a tender offer or exchange offer for 50% or more of the
outstanding shares of Parent Common Stock is commenced and the Board of
Directors of Parent recommends that the stockholders of Parent tender their
shares in such tender offer or exchange offer.
SECTION 8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1 hereof, this Agreement
(except for the provisions of the last sentence of Section 4.1(s), Section
4.2(h), Section 6.3, Section 6.6, this Section 8.2, Section
39
8.5 and Article IX) shall forthwith become void and cease to have any force or
effect, without any liability on the part of any party hereto or any of its
affiliates; provided, however, that nothing in this Section 8.2 shall relieve
any party to this Agreement of liability for any willful or intentional breach
of this Agreement.
SECTION 8.3 Amendment. Subject to the applicable provisions of the GBCC
---------
and the DGCL, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after approval and adoption of this Agreement at the Shareholders Meeting, no
amendment shall be made which would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
SECTION 8.4 Extension; Waiver. At any time prior to the Effective Time,
-----------------
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c)
subject to Section 8.3, waive compliance with any of the agreements or
conditions of the other parties contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 8.5 Termination Fees.
----------------
(a) In the event that this Agreement is terminated pursuant to Section
8.1(d), 8.1(e) or 8.1(f), then Company shall pay Parent a fee in the amount of
$2.2 million (the "Initial Fee").
(b) In the event that this Agreement is terminated pursuant to Section
8.1(d), Section 8.1(e), or Section 8.1(f) and there shall have been commenced,
publicly disclosed or publicly proposed any Acquisition Proposal prior to such
termination, then Company shall pay Parent the Initial Fee promptly and in any
event within two business days of such termination. If within one year of a
termination under the circumstances described in the immediately preceding
sentence, Company enters into a definitive agreement with respect to an
Acquisition Proposal, then Company shall pay Parent an additional fee of $4.4
million promptly, and in any event within two business days of the execution of
such definitive agreement by Company.
(c) In the event that this Agreement is terminated pursuant to Section
8.1(h), then Parent shall pay Company a fee in the amount of $2.2 million
promptly and in any event within two business days of such termination.
(d) If Company or Parent fails to pay the appropriate fee or fees in
accordance with this Section 8.5, the non-paying party shall pay the costs and
expenses (including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other
40
legal action, together with interest on the amount of any unpaid fee at the
so-called composite "prime rate" as quoted from time to time during the relevant
period in the Southwest Edition of The Wall Street Journal, plus 4% per annum
from the date such fee or fees were required to be paid pursuant to this Section
8.5.
(e) Any payment required to be made pursuant to this Section 8.5 shall
be made by delivery of a certified check or by wire transfer of immediately
available funds to an account designated by the recipient thereof.
SECTION 8.6 Procedure for Termination, Amendment, Extension or Waiver. A
---------------------------------------------------------
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 shall, in order to be effective, require in the case of Parent, Merger Sub
or Company, action by its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.2 Fees and Expenses. Except as set forth in this Section 9.2,
-----------------
all fees and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that each of Parent and Company shall bear and pay one-half of the costs
and expenses incurred in connection with (i) the filing, printing and mailing of
the Form S-4 and the Proxy Statement (including SEC filing fees) and (ii) the
filings of the premerger notification and report forms under the HSR Act
(including filing fees).
SECTION 9.3 Definitions. For purposes of this Agreement:
-----------
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "business day" means any day other than Saturday, Sunday or any
other day on which banks in the City of New York are required or permitted to
close;
(c) "Disclosure Memorandum" means the disclosure memorandum delivered
by each party to the other simultaneously with the execution of the Agreement;
41
(d) "Environmental Laws" means any Law relating to (i) releases or
threatened releases of Hazardous Substances or materials containing Hazardous
Substances; (ii) the manufacture, handling, transport, use, treatment, storage
or disposal of Hazardous Substances or materials containing Hazardous
Substances; or (iii) otherwise relating to pollution of the environment or the
protection of human health;
(e) "Governmental Entity" means any domestic or foreign government,
court, governmental agency, authority, entity or instrumentality;
(f) "Hazardous Substances" means (i) those substances defined in or
regulated under the following federal statutes and their state counterparts, as
each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas and any mixtures thereof; (iv) radon; (v) any
other contaminant; and (vi) any substance with respect to which any Governmental
Entity requires environmental investigation, monitoring, reporting or
remediation;
(g) "knowledge" means the actual knowledge of any executive officer of
Company or Parent, as the case may be;
(h) "Law" means the provisions of any law, statute, ordinance, rule,
orders and regulations of any Governmental Entity;
(i) "Liens" means, collectively, all pledges, claims, liens, charges,
mortgages, conditional sale or title retention agreements, hypothecations,
collateral assignments, security interests, easements and other encumbrances of
any kind or nature whatsoever;
(j) a "Material Adverse Effect" with respect to any person means a
material adverse effect on (i) the ability of such person to perform its
obligations hereunder or consummate the transactions contemplated hereby or (ii)
the condition (financial or otherwise), assets, business, liabilities (actual or
contingent) or operations of such person and its Subsidiaries taken as a whole;
(k) the "NASDAQ" means The NASDAQ Stock Market, Inc.;
(l) the "NYSE" means The New York Stock Exchange, Inc.;
(m) a "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity; and
(n) a "Subsidiary" of any person means any other person of which (i)
the first mentioned person or any Subsidiary thereof 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
42
other person is held by the first mentioned person and/or by any one or more of
its Subsidiaries, or (iii) at least 50% of the equity interests of such other
person is, directly or indirectly, owned or controlled by such first mentioned
person and/or by any one or more of its Subsidiaries.
SECTION 9.4 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to Parent, to
Sterling Commerce, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx, Day, Xxxxxx & Xxxxx
2300 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. X'Xxxxxx
Telecopy: (000) 000-0000
(ii) if to Company, to
XcelleNet, Inc.
0 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
43
SECTION 9.5 Interpretation. When a reference is made in this Agreement
--------------
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
SECTION 9.6 Entire Agreement; Third-Party Beneficiaries. This Agreement
-------------------------------------------
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (except for the letter agreement referenced in
the last sentence of Section 6.3). This Agreement is not intended to confer
upon any person (including without limitation any employees or former employees
of Company), other than the parties hereto.
SECTION 9.7 Governing Law. Except to the extent necessarily governed by
-------------
the GBCC, this Agreement shall be governed by, and construed in accordance with,
the Laws of the State of Delaware, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of Laws thereof.
SECTION 9.8 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of Law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void, except that Parent and/or Merger Sub may
assign this Agreement to any direct wholly owned Subsidiary of Parent without
the prior consent of Company; provided that each of Parent and Merger Sub shall
remain liable for all of its respective obligations under this Agreement.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 9.9 Enforcement. The parties agree that irreparable damage would
-----------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware, this being in addition to any other remedy to
which they are entitled at Law or in equity.
SECTION 9.10 Severability. Whenever possible, each provision or portion
------------
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable Law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 9.11 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become
44
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
IN WITNESS WHEREOF, Parent, Merger Sub and Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
STERLING COMMERCE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx,
Executive Vice President
STERLING COMMERCE (SOUTHERN), INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx, President
XCELLENET, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx, Chairman
and Chief Executive Officer
45
EXHIBIT A
---------
FORM OF AFFILIATE AGREEMENT
Gentlemen:
The undersigned is a holder of shares of common stock, par value $.01 per
share ("Company Common Stock"), of XcelleNet, Inc., a Georgia corporation
("Company"), or may become a holder of shares of Company Common Stock prior to
the effective time of the Merger (as hereinafter defined) upon exercise of
certain options held by the undersigned to purchase shares of Company Common
Stock. As such, the undersigned will be entitled to receive in connection with
the merger (the "Merger") of Company with and into Sterling Commerce (Southern),
Inc., a Delaware corporation and a subsidiary of Sterling Commerce, Inc., a
Delaware corporation ("Parent"), shares of common stock, par value $.01 per
share, of Parent (the "Securities") in exchange for any such shares of Company
Common Stock held by the undersigned at the effective time of the Merger.
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of Company within the meaning of Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Act") of the Securities and
Exchange Commission (the "Commission"), although nothing contained herein shall
be construed as an admission of such status.
If in fact the undersigned were an affiliate of Company under the Act, the
undersigned's ability to sell, assign or transfer any Securities received by the
undersigned in exchange for any shares of Company Common Stock pursuant to the
Merger may be restricted unless such transaction is registered under the Act or
an exemption from such registration is available. The undersigned understands
that such exemptions are limited and the undersigned has obtained advice of
counsel as to the nature and conditions of such exemptions, including
instructions with respect to the applicability to the sale of such Securities of
Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants to Parent that the
undersigned will not sell, assign or transfer any Securities received by the
undersigned in exchange for shares of Company Common Stock pursuant to the
Merger except (i) pursuant to an effective registration statement under the Act,
(ii) by a transaction in conformity with the volume and other limitations of
Rule 145 or Rule 144 under the Act ("Rule 144"), to the extent applicable, and
any other applicable rules promulgated by the Commission, or (iii) in a
transaction which, in the opinion of independent counsel reasonably satisfactory
to Parent, is not required to be registered under the Act.
In the event of a sale of Securities pursuant to Rule 145, or, if
applicable, Rule 144, the undersigned will provide Parent with evidence of
compliance with such Rule, in the form of customary seller's or broker's Rule
145 or, if applicable, Rule 144, representation letters or as Parent may
otherwise reasonably request. The undersigned understands that Parent may
instruct
its transfer agent to withhold the transfer of any Securities disposed of by the
undersigned in a manner inconsistent with this letter.
The undersigned acknowledges and agrees that appropriate legends will be
placed on certificates representing Securities received by the undersigned in
the Merger or held by a transferee thereof, which legends will be removed (i) by
delivery of substitute certificates upon receipt of an opinion in form and
substance reasonably satisfactory to Parent to the effect that such legends are
no longer required for the purposes of the Act and the rules and regulations of
the Commission promulgated thereunder or (ii) in the event of a sale of the
Securities which has been registered under the Act.
The undersigned acknowledges that it has carefully reviewed this letter and
understands the requirements hereof and the limitations imposed upon the
distribution, sale, transfer or other disposition of Securities.
Very truly yours,
---------------------------------
Dated:______________, 1998
As an inducement to the above individual to deliver this letter, Parent
agrees that for so long and to the extent necessary to permit such individual to
sell the Securities pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Act, Parent shall use all reasonable efforts to file, on a timely
basis, all reports and data required to be filed by it with the Commission
pursuant to Section 13 of the Securities and Exchange Act of 1934.
Very truly yours,
STERLING COMMERCE, INC.
By:
------------------------------
Name:
Title:
2
