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AGREEMENT AND PLAN OF MERGER
among
RETEK INC.,
HT ACQUISITION, INC.,
HIGHTOUCH TECHNOLOGIES, INC.,
and
KIPLING INVESTMENTS LABUAN LIMITED
Dated as of April 17, 2000
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AGREEMENT AND PLAN OF MERGER dated as of April 17, 2000 (this
"Agreement"), among RETEK INC., a Delaware corporation ("Parent"), HT
ACQUISITION, INC., a Florida corporation and a wholly owned subsidiary of Parent
("Merger Sub"), HIGHTOUCH TECHNOLOGIES, INC., a Florida corporation, (the
"Company"), and KIPLING INVESTMENTS LABUAN LIMITED, a Malaysian corporation and
the sole shareholder of the Company (the "Sole Shareholder").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Florida Business Corporation Act (the
"FBCA"), Parent and the Company will enter into a business combination
transaction pursuant to which Merger Sub will merge with and into the Company
(the "Merger");
WHEREAS, the Board of Directors of the Company (i) has determined that
the Merger is fair to, advisable to and in the best interests of, the Company
and the Sole Shareholder and has approved and adopted this Agreement, the Merger
and the other transactions contemplated by this Agreement and (ii) has
recommended the approval and adoption of this Agreement by the Sole Shareholder;
WHEREAS, the Sole Shareholder owns all of the issued and outstanding
capital stock of the Company, consisting of shares of common stock, par value
$.01 per share (such capital stock being the "Company Stock");
WHEREAS, the Sole Shareholder has approved this Agreement and the
transactions contemplated hereby; and
WHEREAS, certain capitalized terms used in this Agreement are defined
in Section 11.02 of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub, the Company and the Sole Shareholder hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VIII, and in accordance with the FBCA, at the
Effective Time (as defined in Section 1.02), Merger Sub shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
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SECTION 1.02. Effective Time; Closing. As promptly as practicable and
in no event later than the fifth business day following the satisfaction or, if
permissible, waiver of the conditions set forth in Article VIII (or such other
date as may be agreed by each of the parties hereto), the parties hereto shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Secretary of State of the State of Florida in such form as
is required by, and executed in accordance with, the relevant provisions of the
FBCA. The term "Effective Time" means the date and time of the filing of the
Articles of Merger with the Secretary of State of the State of Florida (or such
later time as may be agreed by each of the parties hereto and specified in the
Articles of Merger). Immediately prior to the filing of the Articles of Merger,
a closing (the "Closing") will be held at the offices of Shearman & Sterling,
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000 (or such other place
as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the FBCA.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
each of the Company and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities, obligations, restrictions, disabilities and duties of
each of the Company and Merger Sub shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; By-Laws. (a) At the
Effective Time, the Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Articles of Incorporation.
At the Effective Time, the By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation after the Effective Time, each to hold office in accordance with the
Articles of Incorporation and By-Laws of the Surviving Corporation (the
directors of the Company immediately prior to the Effective Time shall cease to
be directors as of the Effective Time), and the officers of Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation after the Effective Time, in each case until their respective
successors are duly elected or appointed and qualified (the officers of the
Company immediately prior to the Effective Time shall cease to be officers as of
the Effective Time).
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. (a) At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the following securities:
(i) each share of Company Stock issued and outstanding immediately
prior to the Effective Time (other than any shares of Company Stock to be
canceled pursuant to Section 2.01(a)(ii)) shall be converted into the right
to receive, subject to and in accordance with Section 2.02, the following
consideration (the "Merger Consideration"), without interest or
withholding:
(A) the amount of cash equal to the quotient determined by
dividing $18.0 million by the number of shares of Company Stock issued
and outstanding immediately prior to the Effective Time (the "Cash
Consideration"); and
(B) the number of shares of common stock of Parent, par value
$.01 per share ("Parent Stock"), equal to the quotient determined by
dividing the Aggregate Retek Shares (as defined below) by the number
of shares of Company Stock issued and outstanding immediately prior to
the Effective Time (the "Stock Consideration"); and
(ii) each share of common stock, par value $.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) The "Aggregate Retek Shares" shall be the quotient determined by
dividing $9 million by the Average Parent Stock Price (as defined in Section
2.03(d)); provided, however, that if such quotient is greater than 400,000, the
Aggregate Retek Shares shall be 400,000.
SECTION 2.02. Exchange of Certificates. (a) After the Effective Time,
a holder of record of a certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of Company Stock ("Company
Share Certificates") that were converted into the right to receive the Merger
Consideration pursuant to Section 2.01 may surrender Company Share Certificates
to Parent.
(b) Upon surrender of a Company Share Certificate for cancellation to
Parent:
(i) the holder of such Company Share Certificate shall be entitled to
receive in exchange therefor the Merger Consideration (free and clear of
any fees or deductions, including withholding taxes, if any) that such
holder has the right to receive in respect of such Company Share
Certificate pursuant to the provisions of this Article II (after taking
into account all shares of Company Stock then held by such holder); and
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(ii) the Company Share Certificate so surrendered shall forthwith be
cancelled.
The Sole Shareholder agrees to surrender to Parent at the Closing
Company Share Certificates representing all of the Company Stock held by the
Sole Shareholder immediately prior to the Closing.
(c) No Further Rights in Company Stock. The Merger Consideration
issued upon surrender of shares of Company Stock in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Stock.
From and after the Effective Time, the holders of Company Share
Certificates representing shares of Company Stock outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such shares
of Company Stock, except as otherwise provided in this Agreement or by Law.
SECTION 2.03. Company Stock Options. (a) All options (the "Company
Stock Options") outstanding, whether or not exercisable and whether or not
vested, at the Effective Time under the Company's 1999 Stock Option Plan and any
other equity-based incentive program adopted by the Company prior to the
Effective Time (the "Company Stock Option Plans"), shall remain outstanding
following the Effective Time. At the Effective Time, the Company Stock Options
shall, by virtue of the Merger and without any further action on the part of the
Company or the holder thereof, be assumed by Parent in such manner that Parent
(i) is a corporation "assuming a stock option in a transaction to which Section
424(a) applies" within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the "Code") and the regulations thereunder or
(ii) to the extent that Section 424 of the Code does not apply to any such
Company Stock Options, would be such a corporation were Section 424 of the Code
applicable to such Company Stock Options. From and after the Effective Time, all
references to the Company in the Company Stock Option Plans and the applicable
stock option agreements issued thereunder shall be deemed to refer to Parent,
which shall have assumed the Company Stock Option Plans as of the Effective Time
by virtue of this Agreement and without any further action. Each Company Stock
Option assumed by Parent (each, a "Substitute Option") shall be exercisable upon
the same terms and conditions as under the applicable Company Stock Option Plan
and the applicable option agreement issued thereunder, except that (A) each such
Substitute Option shall be exercisable for, and represent the right to acquire,
that whole number of shares of Parent Stock, (rounded down to the nearest whole
share) equal to the number of shares of Company Stock subject to such Company
Stock Option multiplied by the Option Exchange Ratio (as defined below) and (B)
the option price per share of Parent Stock shall be an amount equal to the
option price per share of Company Stock subject to such Company Stock Option in
effect immediately prior to the Effective Time divided by the Option Exchange
Ratio (the option price per share, as so determined, being rounded upward to the
nearest full cent). The adjustments provided for herein with respect to any
options that are intended to be "incentive stock options" within the meaning of
Section 422 of the Code shall be effected in a manner consistent with Section
424(a) of the Code.
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(a) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an outstanding Company Stock Option an appropriate
notice setting forth such holder's rights pursuant thereto and such Company
Stock Option shall continue in effect on the same terms and conditions
(including any antidilution provisions, and subject to the adjustments required
by this Section 2.03 after giving effect to the Merger). Parent shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of Parent Stock for delivery upon exercise of Substitute Options pursuant to the
terms set forth in this Section 2.03. As soon as reasonably practicable after
the Effective Time, the shares of Parent Stock subject to Company Stock Options
will be covered by an effective registration statement on Form S-8 (or any
successor form) or another appropriate form, and Parent shall use its reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements for so long as Substitute Options remain outstanding.
(b) "Option Exchange Ratio" means the quotient determined by dividing
$8.4752 by the Average Parent Stock Price (as defined below),
(d) "Average Parent Stock Price" means the average closing trading
price of Parent Stock as reported by the Nasdaq National Market for the 20
consecutive trading days ending on the trading day that is two trading days
prior to the date of the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
SOLE SHAREHOLDER RELATED TO THE COMPANY
The Sole Shareholder hereby represents and warrants to Parent and
Merger Sub that:
SECTION 3.01. Organization and Qualification. To the actual knowledge
of the Sole Shareholder, since December 21, 1999, the Company has not ceased to
be a corporation duly incorporated under the laws of Florida and its status has
not ceased to be active and it has not ceased to have all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so duly
incorporated and active or to have such corporate power and authority have not
had, and could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect (as defined below). The term
"Company Material Adverse Effect" means any change in or effect on the business
of the Company that is materially adverse to the business, condition (financial
or otherwise), assets, liabilities or results of operations of the Company taken
as a whole, except for any such changes or effects resulting from or arising in
connection with any changes in general economic, regulatory or political
conditions. To the actual knowledge of the Sole Shareholder, since December 21,
1999, the Company has not acquired, of record or beneficially, any direct or
indirect equity or other interest, or any right (contingent or otherwise) to
acquire the same, in any corporation, partnership, joint venture, association or
other entity. To the actual knowledge of the Sole Shareholder, since December
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21, 1999, the Company has not become a member of (nor has any part of the
Company's business been conducted through) any partnership, nor has the Company
been a participant in any joint venture or similar arrangement.
SECTION 3.02. Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent a complete and correct copy of the Articles
of Incorporation and the By-Laws of the Company. Such Articles of Incorporation
and By-Laws are in full force and effect. To the actual knowledge of the Sole
Shareholder, since December 21, 1999, the Company has not been in material
violation of any of the provisions of its Articles of Incorporation or By-Laws.
SECTION 3.03. Capitalization. As of the Effective Time, the
authorized capital stock of the Company will consist of 30,000,000 shares of
Company Stock. As of the Effective Time, (i) 3,185,765 shares of Company Stock
will be issued and outstanding, all of which will be validly issued, fully paid
and nonassessable, (ii) no shares of Company Stock will be held in the treasury
of the Company, and (iii) except as contemplated in Section 7.07, 256,845 shares
of Company Stock will be reserved for future issuance pursuant to the Company
Stock Option Plans. All of the outstanding shares of Company Stock are owned by
the Sole Shareholder. To the actual knowledge of the Sole Shareholder, no
Company Stock Options have been issued since December 21, 1999. Except for the
Company Stock Options granted pursuant to the Company Stock Option Plans, to the
actual knowledge of the Sole Shareholder, since December 21, 1999, the Company
has not granted any options, warrants or other rights, agreements, arrangements
or commitments of any character obligating the Company to issue or sell any
shares of capital stock of, or other equity interests in, the Company. To the
actual knowledge of the Sole Shareholder, since December 21, 1999, the Company
has not incurred any obligations to repurchase, redeem or otherwise acquire any
shares of Company Stock. To the actual knowledge of the Sole Shareholder, since
December 21, 1999, the Company has not incurred any material contractual
obligations to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) to any other person. To the actual knowledge
of the Sole Shareholder, other than in the ordinary course of business, the
Company has not since December 21, 1999 agreed to sell any of its assets or
capital stock to any Person or to enter into any merger, business combination or
other extraordinary transaction with any Person and the Sole Shareholder has not
agreed to any of the foregoing.
SECTION 3.04. Authority Relative to This Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Merger and the other transactions contemplated by this Agreement have been
duly and validly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement (other than the filing and
recordation of appropriate merger documents as required by the FBCA). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the other parties
hereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity.
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SECTION 3.05. No Conflict; Required Filings and Consents. (a) To the
actual knowledge of the Sole Shareholder, the execution and delivery of this
Agreement by the Company do not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate the Articles of Incorporation or
By-Laws of the Company, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 3.05(b) have been obtained
and all filings and obligations described in Section 3.05(b) have been made,
conflict with or violate in any material respect any foreign or domestic law,
statute, ordinance, rule, regulation, order, judgment or decree ("Law")
applicable to the Company or by which any property or asset of the Company is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clause (iii), for any such
conflicts, violations, breaches, defaults or other occurrences that could not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(b) To the actual knowledge of the Sole Shareholder, the execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any domestic or
foreign governmental or regulatory authority ("Governmental Entity"), except (i)
for the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), (ii) for the filing and recordation of appropriate merger
documents as required by the FBCA, and (iii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications could not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
SECTION 3.06 Absence of Litigation. To the actual knowledge of the
Sole Shareholder, there is no litigation, suit, claim, action, proceeding or
investigation pending or threatened against the Company, or any property or
asset of the Company, before any court, arbitrator or Governmental Entity. To
the actual knowledge of the Sole Shareholder, neither the Company nor any
material property or assets of the Company is subject to any continuing order
of, consent decree, settlement agreement or other similar written agreement
with, or continuing investigation by, any Governmental Entity, or any order,
writ, judgment, injunction, decree, determination or award of any court,
arbitrator or Governmental Entity that could materially and adversely affect the
properties or assets of the Company taken as a whole.
SECTION 3.07. Absence of Certain Changes or Events. To the actual
knowledge of the Sole Shareholder, since December 21, 1999:
(i) the Company has not taken any of the actions specified in Section
6.01(a) through 6.01(n);
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(ii) the Company has not defaulted in any material respect under any
material contract or agreement, nor has any other party to a material
contract or agreement with the Company defaulted thereunder in any material
respect;
(iii) the Company has not received any notices that it is infringing
upon the intellectual property rights of any other party; and
(iv) there has not been any Company Material Adverse Effect.
SECTION 3.08. Vote Required. The only votes of the holders of any
classes or series of capital stock of the Company necessary to approve this
Agreement, the Merger and the other transactions contemplated by this Agreement
is the affirmative vote of the holders of at least a majority of the outstanding
shares of Company Stock (which vote has been duly and validly obtained pursuant
to Section 7.01 hereof).
SECTION 3.09. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SOLE SHAREHOLDER
The Sole Shareholder hereby represents and warrants to Parent and
Merger Sub that:
SECTION 4.01. Organization. The Sole Shareholder is a company duly
organized and validly existing under the laws of jurisdiction of its
organization.
SECTION 4.02. Authority Relative to This Agreement. The Sole
Shareholder has all necessary company power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by the Sole Shareholder and the performance by the
Sole Shareholder of its obligations hereunder have been duly and validly
authorized by all necessary company action on the part of the Sole Shareholder
and no other company proceedings on the part of the Sole Shareholder are
necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement (other than the filing and
recordation of appropriate merger documents as required by the FBCA). This
Agreement has been duly and validly executed and delivered by the Sole
Shareholder and, assuming the due authorization, execution and delivery by the
other parties hereto, constitutes a legal, valid and binding obligation of the
Sole Shareholder, enforceable against the Sole Shareholder in accordance with
its terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to the effect of general principles of equity.
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SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Sole Shareholder do not, and the
performance of this Agreement by the Sole Shareholder will not, (i) conflict
with or violate the Articles of Incorporation or By-Laws or other constitutive
documents of the Sole Shareholder, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.03(b) have been obtained
and all filings and obligations described in Section 4.03(b) have been made,
conflict with or violate in any material respect any Law applicable to the Sole
Shareholder or by which any property or asset of the Sole Shareholder is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Sole Shareholder pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, except, with respect to clause (iii), for any
such conflicts, violations, breaches, defaults or other occurrences (x) pursuant
to the Term Loan Facility Agreement dated December 14, 1999 (the "Facility
Agreement"), between the Sole Shareholder and Forbisher Investments Limited
("Forbisher") and the related Deed of Debenture dated January 6, 2000 (the "Deed
of Debenture") (Forbisher has consented in writing to the transactions
contemplated by this Agreement and the Sole Shareholder represents that
Forbisher will not have any claim of any kind upon Parent or the Company or any
of their assets or capital stock after the Effective Time), and (y) that could
not reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(b) To the actual knowledge of the Sole Shareholder, the execution
and delivery of this Agreement by the Sole Shareholder do not, and the
performance of this Agreement by the Sole Shareholder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for the pre-merger notification
requirements of the HSR Act, (ii) for the filing and recordation of appropriate
merger documents as required by the FBCA, and (iii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications could not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
SECTION 4.04. Ownership of Shares. The Sole Shareholder owns of
record and beneficially, free and clear of all liens, charges, security
interests or other encumbrances or adverse claims, all outstanding shares of
Company Stock, except for security interests pursuant to the Facility Agreement
and the Deed of Debenture, which will be released as of the Effective Time.
There are no voting trusts, stockholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any such
shares of Company Stock.
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SECTION 4.05. No Litigation Involving Sole Shareholder. The Sole
Shareholder is not a party to, and has not been threatened with, any litigation
or judicial, administrative or arbitration proceeding which could reasonably be
expected to delay or prevent the consummation of the transactions contemplated
hereby or have a material adverse effect upon the ability of the Sole
Shareholder to perform its obligations hereunder.
SECTION 4.06. Certain Interests. Other than obligations to indemnify
directors and officers of the Company for liabilities that they may incur in
connection with acting as directors or officers of the Company, the Company does
not have any liability or any other obligation of any nature whatsoever to the
Sole Shareholder or any affiliate thereof or any director, officer, employee,
agent or representative of the Sole Shareholder or any affiliate thereof.
SECTION 4.07. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Sole Shareholder.
SECTION 4.08. Investment Representations. The Sole Shareholder
understands and acknowledges that the shares of Parent Stock to be issued to it
pursuant to this Agreement have not been, and will not be, registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and that such
shares will be issued to it in a transaction that is exempt from the
registration requirements of the Securities Act. The Sole Shareholder
understands and acknowledges that such shares cannot be offered or resold except
pursuant to registration under the Securities Act or an available exemption from
registration and the Sole Shareholder agrees that it shall not resale such
shares except in compliance with applicable securities laws. The Sole
Shareholder will be acquiring shares of Parent Stock pursuant to this Agreement
for its own account for investment and not with a view to, or for resale in
connection with, the distribution hereof, and it has no present intention of
distributing any thereof, except in accordance with the terms of this Agreement.
The Sole Shareholder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in the shares of Parent Stock pursuant to this Agreement and protecting its own
interests in connection with this transaction. The Sole Shareholder is not a
U.S. person. The Sole Shareholder has had access to such information regarding
Parent as it deems necessary in connection with the transactions contemplated by
this Agreement. The Sole Shareholder understands and acknowledges that all
certificates representing shares of Parent Stock issued pursuant to this
Agreement shall bear, in addition to any other legends required under applicable
securities laws, a legend to the following effect:
"The securities represented by this certificate have not been registered
under the U.S. Securities Act of 1933, as amended (the Securities Act), and
may not be transferred except pursuant to registration under the Securities
Act or pursuant to an available exemption from registration."
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company and the Sole Shareholder that:
SECTION 5.01. Organization and Qualification. Each of Parent and
Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
SECTION 5.02. Authority Relative to this Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Merger and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by each of Parent and Merger Sub and
the consummation by each of Parent and Merger Sub of the Merger and the other
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement (other than, with respect to the
Merger, the filing and recordation of appropriate merger documents as required
by the FBCA). This Agreement has been duly and validly executed and delivered by
each of Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity.
SECTION 5.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by each of Parent and Merger Sub do
not, and the performance of this Agreement by each of Parent and Merger Sub will
not, (i) conflict with or violate the certificate of incorporation or by-laws of
Parent or any comparable organizational documents of Parent or Merger Sub, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 5.03(b) have been obtained and all filings and obligations
described in Section 5.03(b) have been made, conflict with or violate in any
material respect any Law applicable to Parent or by which any property or asset
of Parent is bound or affected, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clause
(iii), for any such conflicts, violations, breaches, defaults, or other
occurrences that could not reasonably be expected, individually or in the
aggregate, to prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
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(b) The execution and delivery of this Agreement by each of Parent
and Merger Sub do not, and the performance of this Agreement by each of Parent
and Merger Sub will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i) for
the pre-merger notification requirements of the HSR Act, (ii) for the filing and
recordation of appropriate merger documents as required by the FBCA and (iii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications could not reasonably be expected to have,
individually or in the aggregate to prevent or materially delay the consummation
of the transactions contemplated by this Agreement.
SECTION 5.04. Operations of Merger Sub. Merger Sub is a wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
SECTION 5.05. Absence of Litigation. There is no litigation, suit,
claim, action, proceeding or investigation pending or, to the actual knowledge
of Parent, threatened against Parent or Merger Sub related to the transactions
contemplated by this Agreement or that could reasonably be expected to
materially adversely affect the ability of Parent or Merger Sub to perform its
obligations under this Agreement.
SECTION 5.06. No Vote Required. The only votes of the holders of any
classes or series of capital stock of Parent or Merger Sub necessary to approve
this Agreement, the Merger and the other transactions contemplated by this
Agreement is the affirmative vote of the holders of at least a majority of the
outstanding shares of capital stock of Merger Sub (which vote has been duly and
validly obtained from Parent).
SECTION 5.07. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Merger Sub.
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ARTICLE VI
CONDUCT OF THE COMPANY'S BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger.
The Company and the Sole Shareholder agree that, between the date of this
Agreement and the Effective Time, except as contemplated by any other provision
of this Agreement or unless Parent shall otherwise consent in writing, the
Company shall not, and upon request by Parent the Sole Shareholder shall cause
the Company not to, do, or propose to do, any of the following:
(a) amend or otherwise change its Articles of Incorporation or
By-Laws;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares
of its capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest (including, without limitation, any
phantom interest), of the Company, except pursuant to the terms of options,
warrants or preferred stock outstanding on the date of this Agreement, or (ii)
any material assets of the Company;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets) any interest in any corporation, partnership,
other business organization or any division thereof or any assets;
(f) incur any indebtedness for borrowed money (other than trade
payables) or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
person, or make any loans or advances;
(g) authorize any capital expenditure in excess of $25,000; or
(h) increase the compensation payable or to become payable to its
officers or employees, or grant any severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer or other
employee of the Company, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
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(i) other than in the ordinary course of business consistent with
past practice, enter into any contract or agreement material to the business,
results of operations or financial condition of the Company;
(j) enter into or amend any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under this Section
6.01;
(k) other than in the ordinary course of business consistent with
past practice, enter into any licensing, distribution, sponsorship, advertising,
merchant program or other similar contracts, agreements, or obligations which
may not be cancelled without penalties by the Company upon notice of 30 days or
less;
(l) take any action to cause, or fail to take any action to prevent,
the accelerated vesting and exercisability of the Company Stock Options;
(m) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures; or
(n) make, change or revoke any material tax election or make any
material agreement or settlement regarding taxes with any taxing authority.
SECTION 6.02. Notification of Certain Matters. Parent and Merger Sub
shall give prompt notice to the Sole Shareholder, and the Sole Shareholder and
the Company shall give prompt notice to Parent, of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause (x) any representation or warranty of such party contained in
this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied by
such party and (ii) any failure of Parent or Merger Sub, on the one hand, or the
Company or the Sole Shareholder, on the other hand, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.02 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Shareholder Approval by Written Consent. As provided by
the FBCA and the Company's Articles of Incorporation and By-laws, the Sole
Shareholder hereby approves and adopts this Agreement by written consent and
hereby approves by written consent the transactions contemplated hereby. During
the term of this Agreement, at every meeting of the shareholders of the Company
called with respect to any of the following, and at every adjournment thereof,
and on every action or approval by written consent of shareholders of the
Company with respect to any of the following, the Sole Shareholder shall vote
its shares of
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Company Stock: (i) in favor of the adoption of this Agreement and approval of
the Merger and the other transactions contemplated by this Agreement; (ii)
against any proposal made in opposition to or in competition with consummation
of the Merger and this Agreement, against any proposal for any recapitalization,
merger, sale of assets or other business combination between the Company and any
person or entity (other than the Merger) and against any liquidation or winding
up of the Company; and (iii) in favor of any other matter necessary to effect
the consummation of the transactions contemplated by this Agreement.
(b) The Sole Shareholder hereby covenants and agrees that it shall
not, and shall not offer or agree to, sell, transfer, tender, assign,
hypothecate or otherwise dispose of, or create or permit to exist any security
interest, lien, claim, pledge, option, right of first refusal, agreement,
limitation on his voting rights, charge or other encumbrance of any nature
whatsoever with respect to the shares of Company Stock now owned or that may
hereafter be acquired by the Sole Shareholder, unless and until this Agreement
is terminated, except pursuant to the Facility Agreement or the Deed of
Debenture.
SECTION 7.02. Access to Information. Except as required pursuant to
any confidentiality agreement or similar agreement or arrangement to which the
Company is a party or pursuant to applicable Law, from the date of this
Agreement to the Effective Time, the Company shall: (i) provide to Parent (and
its officers, directors, employees, accountants, consultants, legal counsel,
agents and other representatives, collectively, "Representatives") access at
reasonable times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of the Company and to the books and
records thereof; and (ii) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of the Company as Parent or its Representatives may reasonably request.
SECTION 7.03. No Solicitation of Transactions. (a) Neither the
Company nor the Sole Shareholder will, directly or indirectly, and each will
instruct its officers, directors, employees, agents or advisors or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), not to, directly or indirectly, solicit, initiate
or knowingly encourage (including by way of furnishing nonpublic information),
or take any other action knowingly to facilitate, any inquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
its shareholders) that constitutes, or may reasonably be expected to lead to,
any Competing Transaction (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of the officers, directors or
employees of the Company, or any investment banker, financial advisor, attorney,
accountant or other representative retained by the Company or the Sole
Shareholder, to take any such action. Each of the Company and the Sole
Shareholder shall notify Parent promptly if any proposal or offer, or any
inquiry or contact with any person with respect thereto, regarding a Competing
Transaction is made. Each of the Company and the Sole Shareholder shall
immediately cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Competing
Transaction. Each of the Company and the Sole Shareholder agrees not to release
any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party.
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(b) A "Competing Transaction" means any of the following involving
the Company (other than the Merger and the other transactions contemplated by
this Agreement): (i) a merger, consolidation, share exchange, business
combination or other similar transaction; (ii) any sale, lease, exchange,
transfer or other disposition of a material portion of the assets of the
Company; (iii) a tender offer or exchange offer for outstanding voting
securities of the Company; or (iv) any solicitation in opposition to approval by
the Company's shareholders of this Agreement and the Merger.
SECTION 7.04. Performance of Obligations. Parent shall perform, and
shall cause Merger Sub to perform, in a timely manner all of their respective
obligations hereunder. The Sole Shareholder shall perform, and upon request by
Parent shall cause the Company to perform, in a timely manner all of their
respective obligations hereunder.
SECTION 7.05. Further Action; Consents; Filings. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to (i) take, or cause to be taken, all appropriate
action and do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the Merger
and the other transactions contemplated by this Agreement, (ii) obtain from
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by any of the parties
hereto in connection with the authorization, execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement,
the Merger and the other transactions contemplated by this Agreement required
under applicable Law. The parties hereto shall cooperate with each other in
connection with the making of all such filings, including by providing copies of
all such documents to the nonfiling party and its advisors prior to filing and,
if requested, by accepting all reasonable additions, deletions or changes
suggested in connection therewith.
SECTION 7.06. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which
shall be agreed to by each of Parent and the Sole Shareholder. Thereafter,
unless otherwise required by applicable Law, neither the Sole Shareholder nor
any of its affiliates nor any of their respective directors, officers, employees
or agents shall issue any press release or otherwise make any public statements
with respect to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement without the prior written consent of Parent.
SECTION 7.07. Stock Options. On or after the date hereof, but in any
event prior to the Effective Time, the Company shall adopt and the Sole
Shareholder shall approve an amendment to the Company's 1999 Stock Option Plan
increasing the number of shares of Company Stock that may be subject to awards
under such plan by an additional 13,000,000 shares (or such other number as
Parent shall specify).
SECTION 7.08. Indemnification and Insurance. (a) The Articles of
Incorporation and By-laws of the Surviving Corporation shall contain provisions
related to the indemnification of directors and officers substantially similar
to those provisions contained in the Articles of Incorporation and By-laws of
the Company as of the date hereof, which provisions
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shall not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who at or at any time prior to the Effective Time were
directors, officers or employees of the Company.
(b) The Company shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, and, after the Effective Time,
Parent and the Surviving Corporation shall, to the fullest extent permitted
under applicable law, indemnify and hold harmless, each director or officer of
the Company as of immediately prior to the Effective Time (collectively, the
"Directors and Officers") and the Sole Shareholder against all costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, administrative or investigative,
arising out of or pertaining to any action or omission in their capacities as
officers or directors or shareholders, in each case occurring after December 21,
1999 and before the Effective Time and including, without limitation, any action
or omission in connection with this Agreement and the transactions contemplated
hereby (but excluding claims by Parent against the Sole Shareholder under this
Agreement). Without limiting the foregoing, in the event of any such claim,
action, suit, proceeding or investigation, (i) the Company or Parent and the
Surviving Corporation, as the case may be, shall pay the fees and expenses of
counsel selected by any Director and Officer or the Sole Shareholder, which
counsel shall be reasonably satisfactory to the Company or to Parent and the
Surviving Corporation, as the case may be, promptly after statements therefor
are received (unless the Surviving Corporation shall elect to defend such
action) and (ii) the Company and Parent and the Surviving Corporation shall
cooperate in the defense of any such matter, provided, however, that none of the
Company, Parent or the Surviving Corporation shall be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed).
(c) This Section 7.08 is intended to be for the benefit of, and shall
be enforceable by, the indemnified parties, their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
respective successors and assigns. In the event the Company or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (ii)
transfers all or substantially all its properties and assets to any person,
then, and in each case, proper provision shall be made so that the successors
and assigns of the Company or the Surviving Corporation, as the case may be,
honor the indemnification obligations set forth in this Section 7.08.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent, Merger Sub and the Sole Shareholder to
consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following conditions:
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(a) no Governmental Entity or court of competent jurisdiction located
or having jurisdiction in the United States shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, judgment, decree,
executive order or award (an "Order") which is then in effect and has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger; and
(b) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
SECTION 8.02. Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following additional
conditions:
(a) each of the representations and warranties of the Company and the
Sole Shareholder contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and Parent shall have
received a certificate of an officer of the Sole Shareholder to such effect;
(b) the Company and the Sole Shareholder shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time and Parent shall have received a certificate of an officer of the
Sole Shareholder to that effect;
(c) Parent shall have received, each in form and substance reasonably
satisfactory to Parent, (i) all required authorizations, consents, orders and
approvals of all Governmental Entities and officials, if any, and (ii) all third
party consents set forth in Section 3.05;
(d) no event or events shall have occurred, or be reasonably likely
to occur, which, individually or in the aggregate, have had or could reasonably
be expected to have, a Company Material Adverse Effect;
(e) there shall not be pending or threatened any suit, action,
investigation or proceeding to which a Governmental Entity is a party (i)
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or seeking to obtain from
Parent or the Company any damages that are material or (ii) seeking to prohibit
or limit the ownership or operation by Parent or the Company of any material
portion of their respective businesses or assets;
(f) the Company shall have filed Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Florida in the form
agreed between the Company and Parent prior to the date of this Agreement and
approved by the Board of Directors of the Company on or prior to the date of
this Agreement, and the Company shall have issued shares of Company Stock to the
Sole Shareholder as agreed between the Company and Parent prior to the date of
this Agreement and approved by the Board of Directors of the Company on or prior
to the date of this Agreement; and
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(g) the Sole Shareholder shall have executed and delivered to Parent
a Form W-8 certifying that it is a foreign entity.
SECTION 8.03. Conditions to the Obligations of the Company and the
Sole Shareholder. The obligations of the Company and the Sole Shareholder to
consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following additional conditions:
(a) each of the representations and warranties of Parent and Merger
Sub contained in this Agreement shall be true and correct as of the Effective
Time, as though made on and as of the Effective Time, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and the Sole Shareholder
shall have received a certificate of a duly authorized officer of Parent to such
effect;
(b) Parent and Merger Sub shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time, and
the Sole Shareholder shall have received a certificate of a duly authorized
officer of Parent to that effect; and
(c) there shall not be pending or threatened any suit, action,
investigation or proceeding to which a Governmental Entity is a party seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated and the
Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by
this Agreement, as follows:
(a) by mutual written consent of Parent and the Sole Shareholder;
(b) by either Parent or the Sole Shareholder if the Effective Time
shall not have occurred on or before July 31, 2000; provided, however, that the
right to terminate this Agreement under this Section 9.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before July 31, 2000;
(c) there shall be any Order which is final and nonappealable
preventing the consummation of the Merger;
(d) by Parent upon a breach of any material representation, warranty,
covenant or agreement on the part of the Company or the Sole Shareholder set
forth in this Agreement, or if any representation or warranty of the Company or
the Sole Shareholder shall
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have become untrue, in either case such that the conditions set forth in Section
8.02(a), Section 8.02(b) or Section 8.02(c) would not be satisfied ("Terminating
Company Breach"); provided, however, that, if such Terminating Company Breach is
curable by the Company and the Sole Shareholder through the exercise of their
respective reasonable efforts and for so long as the Company and the Sole
Shareholder continue to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 9.01(d) unless such breach is not
cured within thirty (30) days after notice thereof is provided by Parent to the
Sole Shareholder; or
(e) by the Sole Shareholder upon a breach of any material
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub set forth in this Agreement, or if any representation or warranty of Parent
or Merger Sub shall have become untrue, in either case such that the conditions
set forth in Section 8.03(a), Section 8.03(b) or Section 8.03(c) would not be
satisfied ("Terminating Parent Breach"); provided, however, that, if such
Terminating Parent Breach is curable by Parent or Merger Sub through the
exercise of their respective reasonable efforts and for so long as Parent and
Merger Sub continue to exercise such reasonable efforts, the Sole Shareholder
may not terminate this Agreement under this Section 9.01(e) unless such breach
is not cured within thirty (30) days after notice thereof is provided by the
Sole Shareholder to Parent.
SECTION 9.02. Effect of Termination. In the event of termination of
this Agreement pursuant to Section 9.01, this Agreement shall forthwith become
void, there shall be no liability under this Agreement on the part of Parent,
Merger Sub, the Company or the Sole Shareholder or any of their respective
officers or directors, and all rights and obligations of each party hereto shall
cease; provided, however, that nothing herein shall relieve any party from
liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.04. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
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ARTICLE X
INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall survive the
Effective Time for a period of 12 months. Neither the period of survival nor the
liability of a party hereto with respect to such party's representations and
warranties shall be reduced by any investigation made at any time by or on
behalf of another party hereto. If written notice of a claim has been given
prior to the expiration of the applicable representations and warranties by a
party hereto to another party hereto, then the relevant representations and
warranties shall survive as to such claim until such claim has been finally
resolved.
SECTION 10.02. Indemnification by the Sole Shareholder. (a) Subject to
Section 10.02(b), after the Effective Time, Parent and its affiliates
(including, after the Effective Time, the Surviving Corporation), officers,
directors, employees, agents, successors and assigns (collectively, the "Parent
Indemnified Parties") shall be indemnified and held harmless by the Sole
Shareholder for any and all liabilities, losses, damages, diminution in value,
claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, reasonable attorneys' and consultants' fees and
expenses) actually suffered or incurred by them (including, without limitation,
in connection with any action brought or otherwise initiated by any of them)
(hereinafter, a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty (without giving
effect to any qualification as to materiality contained therein in
determining the amount of any Loss) made by the Sole Shareholder in this
Agreement;
(ii) the breach of any covenant or agreement made by the Company or
the Sole Shareholder in this Agreement; or
(iii) Losses from breach of contract or other claims made by any party
alleging to have had a contractual or other right to acquire the Company's
capital stock or assets.
(b) Notwithstanding anything to the contrary contained in this
Agreement, except with respect to claims based on fraud:
(i) the maximum aggregate amount of indemnifiable Losses arising out
of or resulting from the causes enumerated in Section 10.02(a)(i) which may
be recovered from the Sole Shareholder shall be the amount equal to 15% of
the aggregate Cash Consideration to which the Sole Shareholder is entitled
pursuant to Section 2.01 of this Agreement; and
(ii) no indemnification payment by the Sole Shareholder with respect
to any indemnifiable Loss otherwise payable under Section 10.01(a) and
arising out of or resulting from the causes enumerated in Section
10.02(a)(i) shall be payable until such
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time as all such indemnifiable Losses shall aggregate to more than
$150,000, after which time the Sole Shareholder shall be liable for all
indemnifiable Losses, exceeding the first $150,000 of Losses.
SECTION 10.03. Indemnification by Parent. (a) Subject to Section
10.03(b), after the Effective Time, the Sole Shareholder and its affiliates,
officers, directors, employees, agents, successors and assigns (collectively,
the "Shareholder Indemnified Parties") shall be indemnified and held harmless by
Parent for any and all Losses, arising out of or resulting from:
(i) the breach of any representation or warranty (without giving
effect to any qualification as to materiality contained therein in
determining the amount of any Loss) made by Parent or Merger Sub in this
Agreement; or
(ii) the breach of any covenant or agreement made by Parent or Merger
Sub in this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, except with respect to claims based on fraud:
(i) the maximum aggregate amount of indemnifiable Losses arising out
of or resulting from the causes enumerated in Section 10.03(a)(i) which may
be recovered from Parent shall be the amount equal to 15% of the aggregate
Cash Consideration to which the Sole Shareholder is entitled pursuant to
Section 2.01 of this Agreement; and
(ii) no indemnification payment by Parent with respect to any
indemnifiable Loss otherwise payable under Section 10.03(a) and arising out
of or resulting from the causes enumerated in Section 10.03(a)(i) shall be
payable until such time as all such indemnifiable Losses shall aggregate to
more than $150,000, after which time Parent shall be liable for all
indemnifiable Losses exceeding the first $150,000 of Losses.
SECTION 10.04. Indemnification Procedures. (a) For the purposes of
this Section 10.04, a party against which indemnification may be sought is
referred to as the "Indemnifying Party" and the party which may be entitled to
indemnification is referred to as the "Indemnified Party".
(i) The obligations and liabilities of Indemnifying Parties under
this Article X with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Article
X ("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions: if an Indemnified Party shall
receive notice of any Third Party Claim, the Indemnified Party shall give
all Indemnifying Parties notice of such Third Party Claim within 90 days of
the receipt by the Indemnified Party of such notice; provided, however,
that the failure to provide such notice shall not release an Indemnifying
Party from any of its obligations under this Article X except to the extent
that such Indemnifying Party is materially prejudiced by such failure. The
notice of claim shall describe in reasonable detail the facts known to the
Indemnified Party giving rise to such indemnification claim, and the amount
or good faith estimate of the amount arising therefrom.
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(ii) If the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnified Party hereunder against any Losses that may
result from such Third Party Claim, then the Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within ten days of the receipt
of such notice from the Indemnified Party; provided, however, that if there
exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the judgment of the Indemnified Party, in its
reasonable discretion, for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party
shall be entitled to retain its own counsel, in each jurisdiction for which
the Indemnified Party determines counsel is required, at the expense of the
Indemnifying Party. In the event that the Indemnifying Party exercises the
right to undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses, pertinent records, materials
and information in the Indemnified Party's possession or under the
Indemnified Party's control relating thereto as is reasonably required by
the Indemnifying Party. Similarly, in the event the Indemnified Party is,
directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified Party, at the
Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the
Indemnifying Party's control relating thereto as is reasonably required by
the Indemnified Party. No such Third Party Claim may be settled by any
party conducting the defense against such claim without the prior written
consent of the other party unless the other party and its affiliates is
released in full in connection with such settlement.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, facsimile, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11.01):
if to Parent or Merger Sub (or the Company after the Effective Time):
Midwest Plaza
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
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if to the Company prior to the Effective Time:
000 Xxxxxx Xxxxxx XX, Xxxxx 000
Xx Xxxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxxx
if to the Sole Shareholder:
Kipling Investments Labuan Limited
Xxxxx 0
(X0) Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxxxx
PO Box 80107
87011 Labuan F.T.
Malaysia
Facsimile No.: (6087) 439 193 or (6087) 451-311
Attention: Foo Chee Thong
SECTION 11.02. Certain Definitions. (a) As used in this Agreement, the
following terms shall have the following meanings:
(i) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with such specified person;
(ii) "business day" means any day on which banks are not required or
authorized to close in Tampa, Florida;
(iii) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(iv) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(v) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary)
owns, directly or indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
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(b) The following additional terms shall have the meanings defined
for such terms in the Sections of this Agreement set forth below:
Term Section
Aggregate Retek Shares.................................................................... 2.01(b)
Agreement................................................................................. Preamble
Articles of Merger........................................................................ 1.02
Average Parent Stock Price................................................................ 2.03(d)
Cash Consideration........................................................................ 2.01(a)(i)
Closing................................................................................... 1.02
Code...................................................................................... 2.03(a)
Company................................................................................... Preamble
Company Material Adverse Effect........................................................... 3.01
Company Share Certificates................................................................ 2.02(a)
Company Stock............................................................................. Recitals
Company Stock Option Plans................................................................ 2.03(a)
Company Stock Options..................................................................... 2.03(a)
Competing Transaction..................................................................... 7.03(b)
Deed of Debenture......................................................................... 4.03(a)
Director and Officer...................................................................... 7.08(b)
FBCA...................................................................................... Recitals
Effective Time............................................................................ 1.02
Facility Agreement........................................................................ 4.03(a)
Forbisher................................................................................. 4.03(a)
Governmental Entity....................................................................... 3.05(b)
HSR Act................................................................................... 3.05(b)
Indemnified Party ........................................................................ 10.04(a)
Indemnifying Party ....................................................................... 10.04(a)
Law....................................................................................... 3.05(a)
Loss...................................................................................... 10.02(a)
Merger.................................................................................... Recitals
Merger Consideration...................................................................... 2.01(a)(i)
Merger Sub................................................................................ Preamble
Option Exchange Ratio..................................................................... 2.03(c)
Order..................................................................................... 8.01(a)
Parent.................................................................................... Preamble
Parent Indemnified Parties................................................................ 10.02(a)
Parent Stock.............................................................................. 2.01(a)(i)
Representatives........................................................................... 7.02
Securities Act............................................................................ 4.08
Shareholder Indemnified Parties........................................................... 10.03(a)
Sole Shareholder.......................................................................... Preamble
Stock Consideration....................................................................... 2.01(a)(i)
Substitute Option......................................................................... 2.03(a)
Surviving Corporation..................................................................... 1.01
Terminating Company Breach................................................................ 9.01(d)
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Terminating Parent Breach................................................................. 9.01(e)
Third Party Claims........................................................................ 10.04(a)(i)
SECTION 11.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated by this Agreement is not affected in
any manner which is materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.04. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties; provided, however, that
Parent may assign all or any of its rights under this Agreement to any of its
affiliates or to any subsequent purchaser of assets or stock of the Company (by
merger or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
SECTION 11.05. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 11.06. Governing Law; Forum. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Florida
applicable to contracts executed in and to be performed in that state and
without regard to any applicable conflicts of law. Unless otherwise agreed by
Parent and the Sole Shareholder, all actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in the federal court in
the State of Florida. Each of the parties to this Agreement (a) consents to
submit itself to the personal jurisdiction of the federal court in the State of
Florida in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action in
relation to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement in any court other than the federal court of the
State of Florida.
SECTION 11.07. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
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SECTION 11.08. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 11.09. Entire Agreement. This Agreement and the other written
agreements and documents signed by the parties as of the date hereof constitute
the entire agreement among the parties with respect to the subject matter hereof
and thereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Sole
Shareholder have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.
RETEK INC.
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
HT ACQUISITION, INC.
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
HIGHTOUCH TECHNOLOGIES, INC.
By: /s/ X.X. Xxxxxxx
---------------------------------
Name: X.X. Xxxxxxx
Title: Director
By: /s/ M.D. Xxxxx
---------------------------------
Name: M.D. Xxxxx
Title: Director and Secretary
KIPLING INVESTMENTS LABUAN LIMITED
By: /s/ X.X. Xxxx
---------------------------------
Name: X.X. Xxxx
Title: Director
By: /s/ X.X. Xxxxxxx
---------------------------------
Name: X.X. Xxxxxxx
Title: Director
