EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXX SYSTEMS CORPORATION
PSC HEALTH CARE, INC.
AND
HEALTH SYSTEMS DESIGN CORPORATION
DATED AS OF OCTOBER 18, 2000
TABLE OF CONTENTS
ARTICLE I THE MERGER
SECTION 1.1 The Merger..........................................................................
SECTION 1.2 Closing.............................................................................
SECTION 1.3 Effective Time......................................................................
SECTION 1.4 Effects of the Merger...............................................................
SECTION 1.5 Certificate of Incorporation and Bylaws.............................................
SECTION 1.6 Directors...........................................................................
SECTION 1.7 Officers............................................................................
SECTION 1.8 Additional Actions..................................................................
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; MERGER CONSIDERATION
SECTION 2.1 Effect on Capital Stock.............................................................
SECTION 2.2 Appraisal Rights....................................................................
SECTION 2.3 Payment for Shares..................................................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification......................................................
SECTION 3.2 Subsidiaries........................................................................
SECTION 3.3 Authorized Capital..................................................................
SECTION 3.4 Corporate Authorization.............................................................
SECTION 3.5 Approvals; No Violations............................................................
SECTION 3.6 SEC Filings; Financial Statements...................................................
SECTION 3.7 Absence of Certain Liabilities and Changes..........................................
SECTION 3.8 Compliance with Applicable Law......................................................
SECTION 3.9 Termination, Severance, and Employment Agreements...................................
SECTION 3.10 Employee Benefits; Labor Matters....................................................
SECTION 3.11 Taxes...............................................................................
SECTION 3.12 Litigation..........................................................................
SECTION 3.13 Environmental Matters...............................................................
SECTION 3.14 Voting Requirements.................................................................
SECTION 3.15 Finders and Investment Bankers; Transaction Expenses................................
SECTION 3.16 Insurance...........................................................................
SECTION 3.17 Title to Properties; Entire Business................................................
SECTION 3.18 Intellectual Property Rights........................................................
SECTION 3.19 Major Customers.....................................................................
SECTION 3.20 Contracts...........................................................................
SECTION 3.21 Insider Interests...................................................................
SECTION 3.22 Noncompetition......................................................................
SECTION 3.23 Proxy Statement.....................................................................
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.1 Organization and Qualification......................................................
SECTION 4.2 Corporate Authorization.............................................................
SECTION 4.3 Approvals; No Violations............................................................
ARTICLE V COVENANTS
SECTION 5.1 Conduct of Business of the Company..................................................
SECTION 5.2 Proxy Statement.....................................................................
SECTION 5.3 Action of Stockholders of the Company; Voting.......................................
SECTION 5.4 Additional Agreements...............................................................
SECTION 5.5 Notification of Certain Matters.....................................................
SECTION 5.6 Access to Information...............................................................
SECTION 5.7 Public Announcements................................................................
SECTION 5.8 Officers' and Directors' Indemnification............................................
SECTION 5.9 Employee Options....................................................................
SECTION 5.10 Other Actions by the Company........................................................
SECTION 5.11 Letters of Accountants..............................................................
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 Mutual Conditions...................................................................
SECTION 6.2 Additional Conditions to Obligations of Parent and Merger Sub.......................
SECTION 6.3 Additional Conditions to Obligations of the Company.................................
ARTICLE VII TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 Termination.........................................................................
SECTION 7.2 Effect of Termination...............................................................
SECTION 7.3 Fees and Expenses...................................................................
SECTION 7.4 Amendment...........................................................................
SECTION 7.5 Waiver..............................................................................
ARTICLE VIII MISCELLANEOUS
SECTION 8.1 Survival of Representations, Warranties, and Agreements.............................
SECTION 8.2 Entire Agreement; Assignment........................................................
SECTION 8.3 Severability........................................................................
SECTION 8.4 Notices.............................................................................
SECTION 8.5 Governing Law.......................................................................
SECTION 8.6 Specific Performance................................................................
SECTION 8.7 Other Potential Bidders.............................................................
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SECTION 8.8 Descriptive Headings; References....................................................
SECTION 8.9 Parties in Interest.................................................................
SECTION 8.11 Beneficiaries.......................................................................
SECTION 8.12 Counterparts........................................................................
SECTION 8.13 Obligations.........................................................................
SECTION 8.14 Certain Definitions.................................................................
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 18, 2000, among Xxxxx
Systems Corporation, a Delaware corporation ("Parent"), PSC Health Care, Inc., a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("Merger
Sub"), and Health Systems Design Corporation, a Delaware corporation (the
"Company").
PRELIMINARY STATEMENTS
A. The respective Boards of Directors of Parent, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), whereby the issued and outstanding shares of common stock of the
Company, $.001 par value per share (the "Company Common Stock"), will be
converted into the right to receive cash consideration of $2.00 per share (the
"Per Share Amount").
B. The Merger requires the approval of the holders of a majority of the
outstanding shares of the Company Common Stock (the "Stockholder Approval").
C. Concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of Parent's and Merger Sub's willingness
to enter into this Agreement, certain stockholders of the Company named on
EXHIBIT A-1 have entered into Voting Agreements (the "Voting Agreements") with
Parent, substantially in the form of EXHIBIT A-2, pursuant to which such
stockholders have agreed, among other things, to vote all shares of Company
Common Stock beneficially owned by such stockholders, or for which such
stockholders exercise voting power pursuant to an irrevocable proxy, in favor of
approval and adoption of this Agreement and the Merger.
D. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
In consideration of the foregoing and the representations, warranties,
covenants and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which all parties hereby
acknowledge, the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Merger Sub will be
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merged with and into the Company at the Effective Time (as defined in SECTION
1.3). Following the Merger, the separate corporate existence of Merger Sub will
cease and the Company will continue as the surviving corporation (the "Surviving
Corporation") and will succeed to and assume all rights and obligations of the
Company and of Merger Sub in accordance with the DGCL. At the election of Parent
or Merger Sub, any one or more direct or indirect wholly-owned subsidiaries of
Parent organized under the laws of the State of Delaware may be substituted for
Merger Sub as a constituent entity in the Merger. As used in this Agreement, the
term "Merger Sub" refers to any such substituted entity.
SECTION 1.2 CLOSING. The closing of the Merger will take place at 10:00
a.m. on a date to be specified by the parties, which will be no later than the
second business day after satisfaction or waiver of the conditions set forth in
ARTICLE VI (the "Closing Date"), at the offices of Xxxxxx & Xxxx, L.L.P., 0000
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, unless another time, date or place
is agreed to in writing by the parties to this Agreement.
SECTION 1.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties will
prepare, execute and acknowledge and thereafter file a certificate of merger in
such form as is required by the DGCL and will make all other filings or
recordings required under the DGCL. The Merger will become effective at such
time as such filings are made with the Delaware Secretary of State, or at such
later time as Merger Sub and the Company agree and is specified in such filings
(the date and time of such filing, or such later date or time as may be set
forth therein, being the "Effective Time").
SECTION 1.4 EFFECTS OF THE MERGER. The Merger will have the effects set
forth in ss.259 of the DGCL and all other effects specified in the applicable
provisions of the DGCL. Without limiting the foregoing, at the Effective Time,
all properties, rights, privileges, powers, and franchises of the Company and
Merger Sub will vest in the Surviving Corporation and all debts, liabilities,
obligations, and duties of the Company and Merger Sub will become the debts,
liabilities, obligations, and duties of the Surviving Corporation.
SECTION 1.5 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective
Time, the certificate of incorporation and bylaws of the Surviving Corporation
will be amended to be identical to the certificate of incorporation and bylaws,
respectively, of Merger Sub as in effect immediately prior to the Effective Time
(except that the name of the Surviving Corporation will be changed to
____________).
SECTION 1.6 DIRECTORS. The directors of Merger Sub at the Effective
Time will continue as the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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SECTION 1.7 OFFICERS. The officers of the Company immediately after the
Effective Time will be as set forth on Section 1.7 of the Disclosure Letter and
will hold office until the earlier of their death, resignation or removal.
SECTION 1.8 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation considers or is advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of Merger Sub or the Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; MERGER CONSIDERATION
SECTION 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, subject to
SECTION 2.2, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holders of any shares of capital stock of
the Company or any shares of capital stock of Merger Sub:
(a) Each share of the capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted
into and become one fully paid and nonassessable share of common stock
of the Surviving Corporation.
(b) Each share of Company Common Stock that is owned by the
Company or by any wholly-owned subsidiary of the Company and each share
of Company Common Stock that is owned by Parent, Merger Sub or any
other subsidiary of Parent immediately prior to the Effective Time will
automatically be canceled and retired without any conversion thereof
and no consideration will be delivered with respect thereto.
(c) (i) Except for shares to be canceled in accordance with
SECTION 2.1(B), each share of the Company Common Stock issued
and outstanding as of the Effective Time (the "Common Shares")
will be automatically canceled and extinguished and converted
into the right to receive in cash the Per Share Amount (the
"Merger Consideration")
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without interest, less any required withholding taxes, upon
surrender of the certificate formerly representing such Common
Shares in accordance with SECTION 2.3.
(ii) As of the Effective Time, all Common Shares will
no longer be outstanding and will automatically be canceled
and retired and will cease to exist, and each certificate
previously representing any such Common Shares will thereafter
represent the right to receive the Merger Consideration. The
holders of such certificates previously evidencing the Common
Shares outstanding immediately prior to the Effective Time
will cease to have any rights with respect to such Common
Shares as of the Effective Time, except as otherwise provided
in this Agreement or by law. Such certificates previously
representing Common Shares will be exchanged for the Merger
Consideration upon the surrender of such certificates in
accordance with the provisions of SECTION 2.3, without
interest.
SECTION 2.2 APPRAISAL RIGHTS.
(a) Notwithstanding anything in this Agreement to the
contrary, Common Shares that are issued and outstanding immediately
prior to the Effective Time and that are held by stockholders that are
entitled to demand and have properly demanded appraisal of their Common
Shares under the DGCL and have complied in all respects with the
requirements of the DGCL concerning the right of a stockholder of the
Company to demand appraisal of such Common Shares and that, as of the
Effective Time, have not effectively withdrawn or lost such right to
appraisal (the "Dissenting Shares") will not be converted into or
represent a right to receive the Merger Consideration, but the holders
of such Dissenting Shares will be entitled only to such rights as are
granted under ss.262 of the DGCL. Each holder of Dissenting Shares that
becomes entitled to payment for such Dissenting Shares pursuant to
ss.262 of the DGCL will receive payment for such Dissenting Shares from
the Surviving Corporation in accordance with the DGCL; PROVIDED,
HOWEVER, that to the extent that any holder or holders of Common Shares
have failed to establish the entitlement to appraisal rights as
provided in ss.262 of the DGCL, such holder or holders (as the case may
be) will forfeit the right to appraisal of such Common Shares and each
such Common Share will thereupon be deemed to have been converted, as
of the Effective Time, into and represent the right to receive payment
from the Surviving Corporation of the Merger Consideration, without
interest.
(b) The Company will give the Parent and Merger Sub (i) prompt
notice of any written demands for appraisal, withdrawals of demands for
appraisal, and any other instrument served pursuant to ss.262 of the
DGCL received by the Company, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
under ss.262 of the DGCL. The Company will
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not, except with the express written consent of the Parent, voluntarily
make any payment with respect to any demands for appraisal or settle or
offer to settle any such demands.
SECTION 2.3 PAYMENT FOR COMMON SHARES.
(a) Prior to the Effective Time, Merger Sub will appoint a
bank or trust company reasonably acceptable to the Company as agent for
the holders of Common Shares (the "Paying Agent") to receive and
disburse the Merger Consideration to which holders of Common Shares
become entitled pursuant to SECTION 2.1(C). At the Effective Time,
Merger Sub or Parent will provide the Paying Agent with sufficient cash
to allow the Merger Consideration to be paid by the Paying Agent for
each Common Share then entitled to receive the Merger Consideration
(the "Payment Fund").
(b) Promptly after the Effective Time, Merger Sub or Parent
will cause the Paying Agent to mail to each record holder of a
certificate or certificates that immediately prior to the Effective
Time represented Common Shares (the "Certificates"), a form of letter
of transmittal (which will specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for
use in effecting the surrender of the Certificates for payment.
(i) Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal duly
executed and completed in accordance with its instructions and
such other documents as may be reasonably requested, the
holder of such Certificate will be entitled to receive in
exchange for such Certificate, less any required withholding
of taxes, the Merger Consideration and such Certificate will
forthwith be canceled. No interest will be paid or accrued on
the Merger Consideration upon the surrender of the
Certificates.
(ii) If payment or delivery is to be made to a person
other than the person in whose name the Certificate
surrendered is registered, it will be a condition of payment
or delivery that the Certificate so surrendered be properly
endorsed, with signature properly guaranteed, or otherwise be
in proper form for transfer and that the person requesting
such payment or delivery pay any transfer or other taxes
required by reason of the payment or delivery to a person
other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
(iii) Subject to SECTION 2.2, until surrendered in
accordance with the provisions of this SECTION 2.3(B), each
Certificate (other than Certificates held by persons referred
to in SECTION 2.1(B)) will represent for
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all purposes only the right to receive the Merger
Consideration, without interest and less any required
withholding of taxes.
(c) Promptly following the date that is six months after the
Effective Time, the Paying Agent will return to the Surviving
Corporation all cash, certificates, and other property in its
possession that constitute any portion of the Payment Fund (including
any interest received with respect thereto), and the duties of the
Paying Agent will terminate. Thereafter, each holder of a Certificate
formerly representing a Common Share or Common Shares shall be entitled
to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with
respect to the Merger Consideration payable upon due surrender of their
Certificates without any interest thereon. Notwithstanding the
foregoing, neither the Parent, Merger Sub, the Surviving Corporation
nor the Paying Agent shall be liable to any holder of a Certificate for
Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. Notwithstanding
the foregoing, the Surviving Corporation will be entitled to receive
from time to time all interest or other amounts earned with respect to
the Payment Fund as such amounts accrue or become available.
(d) After the Effective Time there will be no registration of
transfers on the stock transfer books of the Surviving Corporation of
the Common Shares that were outstanding immediately prior to the
Effective Time. If after the Effective Time, any Certificate is
presented to the Surviving Corporation, it shall be canceled and
exchanged for the Merger Consideration, without interest and less any
required withholding taxes, as provided for, and in accordance with the
procedures set forth in, this ARTICLE II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority and any necessary governmental authority to own, operate, and lease
its properties and assets and to carry on its business as it is now being
conducted, except for failures to have such power and authority as could not
reasonably be expected to result in a Company Material Adverse Effect (as
defined below in this SECTION 3.1). The Company is duly qualified or licensed to
do business and is in good standing in each jurisdiction where the character of
its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except for failures to be so qualified or
licensed and in good standing as could not reasonably be expected to result in a
Company Material
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Adverse Effect. The certificate of incorporation and bylaws of
the Company, including all amendments, filed with the SEC as part of the Company
Reports (as defined below in SECTION 3.6) are accurate and complete. The
certificate of incorporation and bylaws of the Company are in full force and
effect and the Company is not in default of the performance, observation, or
fulfillment of any provision of its certificate of incorporation or bylaws. For
purposes of this Agreement, "Company Material Adverse Effect" or "Company
Material Adverse Change" means in each case any change or effect that,
individually or when taken together with all such other changes or effects,
could reasonably be expected to be materially adverse to the condition
(financial or other), business, operations, properties, assets, liabilities,
prospects, results of operations of the Company and its subsidiaries, taken as a
whole or to adversely affect the ability of the Company to perform its
obligations under this Agreement and consummate the Merger, provided that none
of the following shall be deemed, either alone or in combination, to constitute
a Company Material Adverse Effect or Company Material Adverse Change: (i)
general industry or economic conditions affecting the U.S. or world economy as a
whole, (ii) conditions affecting the health care or health care software
industry, so long as such conditions do not affect the Company and the Company's
subsidiaries taken as a whole in a disproportionate manner as compared to
companies of a similar size, or (iii) any disruption of customer, supplier or
employee relationships that the Company can establish results primarily from the
announcement of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 3.2 SUBSIDIARIES. Section 3.2 of the Disclosure Letter is a
list of each subsidiary of the Company and its jurisdiction of incorporation or
organization.
(a) The Company is, directly or indirectly, the record and
beneficial owner of all outstanding shares of capital stock or other
equity interests of each of its subsidiaries, there are no proxies or
voting agreements with respect to any such shares, and no equity
security of any of its subsidiaries is or may become required to be
issued by reason of any options, warrants, scrip, rights to subscribe
to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of
any capital stock or other equity interests of any such subsidiary, and
there are no contracts, commitments, understandings, or arrangements by
which any subsidiary is bound to issue additional shares of its capital
stock or other equity interests or securities convertible into or
exchangeable for such shares or other equity interests. All such shares
or other equity interests directly or indirectly owned by the Company
are owned by the Company or a wholly-owned subsidiary of the Company,
free and clear of any claim, lien, encumbrance, or agreement.
(b) Each subsidiary of the Company is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation or organization and has the requisite corporate or entity
power and authority and any necessary governmental authority to own,
operate, or lease its properties and assets and to carry on its
business as it is now being conducted, except for
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failures as could not reasonably be expected to result in a Company
Material Adverse Effect.
(c) Each subsidiary of the Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of
its activities makes such qualification or licensing necessary, except
for failures to be so qualified or licensed and in good standing as
could not reasonably be expected to result in a Company Material
Adverse Effect. Copies of the charter documents, bylaws, or equivalent
organizational documents of each subsidiary of the Company have been
delivered to Parent and are accurate and complete.
(d) Neither the Company nor any subsidiary of the
Company:
(i) beneficially owns any equity interests
in any entities that are not subsidiaries of the Company;
or
(ii) is party to any joint venture, partnership, or
similar arrangement.
SECTION 3.3 AUTHORIZED CAPITAL.
(a) The authorized capital stock of the Company consists
solely of (i) 20,000,000 shares of common stock, $.001 par value per
share, of which 6,772,528 shares are outstanding as of the date hereof,
and (ii) 1,000,000 shares of preferred stock, $.001 par value per
share, of which there are no shares outstanding as of the date hereof.
(b) All of the outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid,
nonassessable, and free of preemptive or similar rights.
(c) Section 3.3 of the Disclosure Letter lists each stock
option of the Company outstanding on the date hereof (the "Employee
Options"), the number of shares covered by such Employee Options, the
exercise prices, the exercise dates, and the plan or agreement pursuant
to which such Employee Options were issued. Except as set forth above
or on Section 3.3 of the Disclosure Letter, there are no preemptive or
similar rights nor any outstanding subscriptions, options, warrants,
rights, convertible securities, or other agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of the Company or any of its subsidiaries to which the
Company or any of its subsidiaries is a party. There are no voting
trusts or other understandings to which the Company or any of its
subsidiaries is a party with respect to the voting capital stock or
other interests of the Company or any of its subsidiaries.
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SECTION 3.4 CORPORATE AUTHORIZATION.
(a) The Company has the full corporate power and authority to
execute and deliver this Agreement, and, subject to any necessary
stockholder approval of the Merger, to consummate the transactions
contemplated by this Agreement.
(b) The execution, delivery, and performance by the Company of
this Agreement, and the consummation by the Company of the Merger and
of the other transactions contemplated by this Agreement, have been
duly and validly authorized by all necessary corporate action and,
except for any required approval of the Merger and any adoption of this
Agreement by the stockholders of the Company in connection with the
consummation of the Merger, no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement.
(c) This Agreement has been duly and validly executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor's rights and to
general equity principles.
SECTION 3.5 APPROVALS; NO VIOLATIONS.
(a) No filing with, and no permit, authorization, consent, or
approval of, any foreign or domestic public body or authority is
necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except:
(i) the filing of a premerger notification and report
form under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx");
(ii) the filing with the Securities and Exchange
Commission (the "SEC") of:
(A) the Proxy Statement (as defined in
SECTION 5.2); and
(B) such reports under the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange
Act"), as may be required in connection with this
Agreement and the transactions contemplated by this
Agreement; and
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(iii) the filing of the certificate of merger with
the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company
is qualified to do business.
(b) Except as set forth on Section 3.5(b) of the Disclosure
Letter, the execution and delivery of this Agreement by the Company,
the consummation by the Company of the transactions contemplated by
this Agreement and the compliance by the Company with any of the
provisions of this Agreement do not and will not:
(i) conflict with or result in any breach of any
provision of the charters or bylaws or equivalent
organizational documents of the Company or any of its
subsidiaries;
(ii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination,
cancellation or acceleration) or require any authorization,
consent or approval under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or
by which any of them or any of their properties or assets may
be bound; or
(iii) provided all filings, permits, authorizations,
consents, and approvals as described in SECTION 3.5(A) are
made or obtained, violate or require any authorization,
consent or approval under any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of
its subsidiaries or any of their properties or assets;
except, with respect to the foregoing SECTIONS 3.5(A) and (B), such violations,
conflicts, breaches, defaults, terminations, cancellations, accelerations,
authorizations, consents or approvals referred to in this SECTION 3.5 as could
not reasonably be expected to result in a Company Material Adverse Effect or to
otherwise materially adversely affect the Company's ability to timely (in
accordance with this Agreement) perform its obligations under this Agreement and
consummate the Merger.
SECTION 3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has timely filed with the SEC all forms,
reports, statements, and documents required to be filed by it pursuant
to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), and the
Exchange Act, and the rules and regulations promulgated thereunder,
together with all amendments thereto and will file all
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such forms, reports, statements and documents required to be filed by
it prior to the Effective Time (collectively, the "Company Reports"),
and has otherwise complied in all material respects with the
requirements of the Securities Act and the Exchange Act.
(b) The Company has made available to Merger Sub accurate and
complete copies of all Company Reports and will promptly deliver to
Merger Sub any Company Reports filed by the Company after the date of
this Agreement.
(c) As of their respective dates, the Company Reports did not
and (in the case of Company Reports filed after the date of this
Agreement) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were or (in the case of Company Reports
filed after the date of this Agreement) will be made, not misleading.
(d) Each of the historical consolidated balance sheets and
each of the historical consolidated statements of income and earnings,
stockholders' equity, and cash flows included in or incorporated by
reference into the Company Reports (including any related notes and
schedules) fairly presents or will (in the case of Company Reports
filed after the date of this Agreement) fairly present the consolidated
financial condition, results of operations, stockholders' equity, and
cash flows, as the case may be, of the Company and its subsidiaries for
the periods set forth (subject, in the case of unaudited statements, to
normal year-end audit adjustments of a character and amount consistent
with those of previous periods), in each case, in accordance with
generally accepted accounting principles consistently applied during
the periods involved.
(e) The Company maintains a system of internal accounting
controls sufficient to provide that transactions are executed in
accordance with management's general or specific authorization,
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, access to assets
is permitted only in accordance with management's general or specific
authorization, and the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
SECTION 3.7 ABSENCE OF CERTAIN LIABILITIES AND CHANGES.
(a) Except as set forth on Section 3.7(a) of the Disclosure
Letter, in the audited financial statements of the Company for the
period ended as of September 30, 1999 (a copy of which has been
delivered to Parent), in the condensed consolidated balance sheets of
the Company as of December, 31, 1999, March 31, 2000, and June 30, 2000
or in the Company Reports, neither
11
the Company nor any of its subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent, or
otherwise that could reasonably be expected to result in a Company
Material Adverse Effect.
(b) Since September 30, 1999, the Company and its subsidiaries
have conducted their respective businesses in a manner consistent with
past practices, and neither the Company nor any of its subsidiaries has
become subject to any material liabilities or obligations other than
liabilities or obligations (i) incurred in the ordinary course of
business consistent with past practices, or (ii) incurred in connection
with this Agreement or the Merger and set forth on Section 3.7(b) of
the Disclosure Letter.
(c) Except as disclosed in the Company Reports filed prior to
the date of this Agreement, since September 30, 1999, the Company has
conducted its business only in the ordinary course consistent with
prior practice, and there has not been:
(i) any Company Material Adverse Change;
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock;
(iii) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization
of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock;
(iv) except as set forth on Section 3.7 of the
Disclosure Letter, any granting by the Company or any of its
subsidiaries to any director, officer, employee, agent or
contractor of the Company or any of its subsidiaries of:
(A) any increase in compensation, except in
the ordinary course of business consistent with prior
practice or as was required under employment
agreements in effect as of the date of the most
recent audited financial statements included in the
Company Reports filed prior to the date hereof and
set forth on Section 3.9 of the Disclosure Letter; or
(B) any right to participate in (by way of
bonus or otherwise) the profits of the Company or any
of its subsidiaries;
(v) except as set forth on Section 3.7 of the
Disclosure Letter, any granting by the Company or any of its
subsidiaries to any such
12
director, officer, employee, agent or contractor of any
increase in severance or termination pay, except as was
required under employment, severance or termination agreements
in effect as of the date of the most recent audited financial
statements included in the Company Reports filed prior to the
date hereof and set forth on Section 3.9 of the Disclosure
Letter,
(vi) except as set forth on Section 3.7 of the
Disclosure Letter, any entry into, or renewal or modification,
by the Company or any of its subsidiaries, of any employment,
consulting, severance or termination agreement with any
director, officer, employee, agent or contractor of the
Company or any of its subsidiaries;
(vii) any damage, destruction or loss, whether or not
covered by insurance, that has or could reasonably be expected
to have a Company Material Adverse Effect; or
(viii) any change in accounting methods, principles
or practices by the Company materially affecting its assets,
liabilities or business.
SECTION 3.8 COMPLIANCE WITH APPLICABLE LAW.
(a) The Company and each of its subsidiaries currently holds
and is in compliance with the terms of all licenses, permits, and
authorizations necessary for the lawful conduct of its business, and
has complied with, and neither the Company nor any of its subsidiaries
is in violation of, or in default under, the applicable statutes, laws,
ordinances, rules, regulations, orders, or decrees of any federal,
state, local or foreign governmental bodies, agencies, or authorities
having, asserting or claiming jurisdiction over it or over any part of
its operations or assets, except for violations or defaults that could
not reasonably be expected to result in a Company Material Adverse
Effect.
(b) No investigation or review by any governmental or
regulatory bodies, agencies, or authorities with respect to the Company
or any of its subsidiaries is pending or, to the knowledge of the
Company, threatened, nor, to the knowledge of the Company, have any
governmental bodies or authorities or regulatory agencies indicated any
intention to conduct such an investigation or review, and no fine has
been levied against, or order entered with respect to, the Company or
any subsidiary by any governmental body or authority or regulatory
agency.
SECTION 3.9 TERMINATION, SEVERANCE, AND EMPLOYMENT
AGREEMENTS. Set forth on Section 3.9 of the Disclosure Letter is a complete
and accurate list of each:
13
(a) employment, severance, or collective bargaining agreement
not terminable without liability or obligation to the Company or any of
its subsidiaries on 60 days' or less notice;
(b) agreement with any director, affiliate, executive officer,
or other key employee (or any member of the immediate family of any of
the foregoing), agent, or contractor of the Company or any subsidiary
of the Company:
(i) the benefits of which are contingent, or the
terms of which are materially altered, on the occurrence of a
transaction involving the Company or any subsidiary of the
Company of the nature of any of the transactions contemplated
by this Agreement or relating to an actual or potential change
in control of the Company or any of its subsidiaries; or
(ii) providing any term of employment or other
compensation guarantee or extending severance benefits or
other benefits after termination not comparable to benefits
available to employees, agents, or contractors generally;
(c) agreement, plan, or arrangement under which any person may
receive payments that may be subject to the tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") or
included in the determination of such person's "parachute payment"
under Section 280G of the Code; and
(d) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan, or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
SECTION 3.10 EMPLOYEE BENEFITS; LABOR MATTERS.
(a) Set forth in Section 3.10 of the Disclosure Letter is a
complete and correct list of all "Employee Benefit Plans" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all plans or policies providing for "fringe
benefits" (including but not limited to vacation, paid holidays,
personal leave, employee discounts, educational benefits or similar
programs), and each other bonus, incentive compensation, deferred
compensation, profit sharing, stock, severance, retirement, health,
life, disability, group insurance, employment, stock option, stock
purchase, stock appreciation right, supplemental unemployment, layoff,
consulting, or any other similar plan, agreement, policy or
understanding (whether written or oral, qualified or nonqualified), and
any trust, escrow or other agreement related
14
thereto, which (i) is maintained or contributed to by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate has any liability, or (ii) provides benefits, or describes
policies or procedures applicable, to any officer, employee, director,
former officer, former employee or former director of the Company or
any ERISA Affiliate, or any dependent thereof, regardless of whether
funded (each, an "Employee Plan," and collectively, the "Employee
Plans"). The term "ERISA Affiliate" shall mean any corporation, trade
or business the employees of which, together with the employees of the
Company, are required to be treated as employed by a single employer
under the provisions of ERISA or Code Section 414.
(b) Neither the Company nor any ERISA Affiliate has at any
time maintained any plan subject to the provisions of Title IV of ERISA
or Section 412 of the Code or contributed, or been obligated to
contribute, to any "multiemployer plan" within the meaning of ERISA
Section 4001(a)(3).
(c) With respect to each Employee Plan intended to constitute
a qualified plan under Code Section 401(a):
(i) such plan has satisfied in form the requirements
of such qualification except to the extent amendments are not
required by law to be made until after the Closing Date;
(ii) the Internal Revenue Service has issued a
favorable determination letter as to the qualified status of
the plan;
(iii) there has been no termination or partial
termination of the plan; and
(iv) the plan has been operated and administered in
material compliance with its terms and applicable laws.
(d) Each Employee Benefit Plan has been operated in material
compliance with ERISA, the Code, and other applicable law.
(e) With respect to each Employee Benefit Plan, the Company
has furnished to Merger Sub true, correct and complete copies of:
(i) the plan documents (including amendments
and summary plan descriptions);
(ii) the most recent determination letter received
from the Internal Revenue Service;
15
(iii) the annual reports (Form 5500) required to be
filed for the three most recent plan years of each such
Employee Benefit Plan; and
(iv) all related trust agreements, insurance
contracts or other funding agreements that implement such
Employee Benefit Plan.
(f) Except as set forth on Section 3.10 of the Disclosure
Letter and to the extent of coverage required under Code Section 4980B,
no written or oral representations have been made by, or on behalf of,
the Company or any of its subsidiaries to any employee or officer or
former employee or officer of the Company promising or guaranteeing any
coverage under any employee welfare benefit plan (as defined in ERISA
Section 3(1)) for any period of time beyond the end of the current plan
year.
(g) Except as set forth on Section 3.10 of the Disclosure
Letter, the consummation of the transactions contemplated by this
Agreement will not:
(i) accelerate the time of payment or vesting, or
increase the amount of compensation (including amounts due
under an Employee Benefit Plan) due to any employee, officer,
former employee or former officer of Merger Sub; or
(ii) require the Company to make a larger
contribution to, or pay greater benefits or provide owner
rights under, any Employee Benefit Plan than it otherwise
would.
(h) No condition exists that would subject Merger Sub, any
ERISA Affiliate or the Company to any excise tax, penalty tax or fine
related to any Employee Benefit Plan, including, but not limited to a
violation of Section 406(a) or (b) of ERISA or any "prohibited
transaction" (as defined in Code Section 4975(c)(1)).
(i) Other than routine claims for benefits, there are no
actions, suits, claims, audits or investigations pending or, to the
knowledge of the Company, threatened against, or with respect to, any
of the Employee Benefit Plans or their assets; and all contributions
required to be made to the Employee Benefit Plans have been made
timely.
(j) Except as set forth in Section 3.9 of the Disclosure
Letter, all employees of the Company and its subsidiaries are
terminable at the will of the Company, and neither the Company, nor any
present or former director, officer, employee or agent of the Company
has made any binding commitments of the Company or any of its
subsidiaries, written or verbal, to any present or former, director,
officer, employee or agent concerning his term, condition, benefits or
16
employment (other than as expressly required by law or stated in an
applicable Employee Benefit Plan).
(k) All reports, returns or filings required by any government
agency have been timely filed in accordance in all material respects
with all applicable requirements, except as could not reasonably be
expected to have a Company Material Adverse Effect.
(l) None of the Company or any of its subsidiaries is a party
to any collective bargaining or other labor union contract. No
collective bargaining agreement is being negotiated by the Company or
any of its subsidiaries. The Company and its subsidiaries are in
compliance in all material respects with all applicable laws respecting
employment, employment practices and wages and hours. There is no
pending or, to the knowledge of the Company, threatened labor dispute,
strike or work stoppage against the Company or any of its subsidiaries
that may materially interfere with respective business activities of
the Company or any of its subsidiaries. None of the Company, its
subsidiaries or any of their respective representatives or employees
has committed any material unfair labor practices in connection with
the operation of the respective businesses of the Company and its
subsidiaries, and there is no pending or, to the knowledge of the
Company, threatened charge or complaint against the Company or any of
its subsidiaries by the National Labor of Relations Board or any
comparable state agency.
(m) Set forth on Section 3.10(m) of the Disclosure Letter is a
complete list of all current employees, temporary employees,
contractors and consultants of the Company and its subsidiaries
including date of hiring, current title and compensation, and date and
amount of last increase in compensation.
SECTION 3.11 TAXES.
(a) The Company and its subsidiaries have timely filed all
federal income tax returns and reports and other material returns and
reports relating to federal, state, local, and foreign taxes required
to be filed. Such reports and returns are true, correct and complete,
except for such failures to be true, correct and complete as could not
reasonably be expected to result in a Company Material Adverse Effect.
(b) The Company and its subsidiaries have paid or made
adequate provision for all taxes owed except taxes that if not so paid
or provided for could not reasonably be expected to result in a Company
Material Adverse Effect, and, except as disclosed in Section 3.11 of
the Disclosure Letter, no unpaid deficiencies in taxes or other
governmental charges for any period have been proposed or assessed by
any government taxing authority and, to the knowledge of the Company,
no government tax authority is threatening to propose or
17
assess against the Company or any of its subsidiaries any such
deficiency or charge that could reasonably be expected to result in a
Company Material Adverse Effect.
(c) The Company and its subsidiaries have withheld or
collected and paid over to the appropriate governmental authorities or
are properly holding for such payment all taxes required by law to be
withheld or collected, except for such failures to have so withheld or
collected and paid over, or to be so holding for payment as could not
reasonably be expected to result in a Company Material Adverse Effect.
(d) There are no material liens for taxes upon the assets of
the Company or its subsidiaries, other than liens for current taxes not
yet due and payable and liens for taxes that are being contested in
good faith by appropriate proceedings diligently prosecuted and listed
on Section 3.11 of the Disclosure Letter.
(e) Neither the Company nor any of its subsidiaries has agreed
to or is required to make any adjustment under Section 481(a) of the
Code.
(f) Neither the Company nor any of its subsidiaries has made
any election under Section 341(f) of the Code.
(g) There are no outstanding agreements, waivers or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of, taxes
due from or with respect to the Company or any of its subsidiaries for
any taxable period.
(h) No claim has been made by a taxing authority in a
jurisdiction in which the Company does not file tax returns that the
Company is required to file tax returns in such jurisdiction, and, to
the Company's knowledge, no taxing authority could reasonably make such
a claim.
(i) The Company has not been a member of an affiliated group
as defined in Section 1504 of the Code (or any analogous combined,
consolidated or unitary group as defined under state, local or foreign
income tax law) other than one of which the Company was the common
parent.
(j) The Company has no obligation or liability for the payment
of taxes of any other person arising as a result of any obligation to
indemnify another person or as a result of the Company assuming or
succeeding to the tax liability of any other person as a successor,
transferee or otherwise.
18
(k) The Company will not be required to include any amount in
taxable income for any taxable period (or portion thereof) ending after
the Effective Time as a result of:
(i) a change in method of accounting for a taxable
period ending prior to the Effective Time;
(ii) any "closing agreement" as described in Section
7121 of the Code (or corresponding provision of state, local
or foreign income tax laws) entered into prior to the
Effective Time;
(iii) any sale reported on the installment method
that occurred prior to the Effective Time; or
(iv) any prepaid amount received prior to the
Effective Time.
(l) All taxes accrued but not yet due and all contingent
liabilities for taxes are adequately reflected in the reserves for
taxes in the financial statements contained in the Company Reports.
(m) Except as set forth on Section 3.11 of the Disclosure
Letter, there has been no "ownership change" as described in Section
382 of the Code that has resulted in any limitation on the Company's
ability to offset pre-change losses against its taxable income.
(n) The amounts of the Company's net operating loss
carryforwards, and the years in which such carryforwards will expire if
not used, are as set forth in the financial statements filed with the
Company Reports.
SECTION 3.12 LITIGATION. Except as set forth on Section 3.12 of the
Disclosure Letter, there is no suit, claim, action, proceeding, or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries or any of their respective properties or assets before
any court, regulatory agency, or tribunal. Neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction, or decree.
SECTION 3.13 ENVIRONMENTAL MATTERS.
(a) Except for matters disclosed in Section 3.13 of the
Disclosure Letter and except for matters that could not reasonably be
expected to result in a Company Material Adverse Effect:
(i) the properties, operations and activities of the
Company and its subsidiaries are and have at all times been in
compliance with all applicable Environmental Laws (as defined
below);
19
(ii) the Company and its subsidiaries and the
properties and operations of the Company and its subsidiaries
are not subject to any existing, pending or, to the knowledge
of the Company, threatened action, suit, claim, investigation,
inquiry or proceeding by or before any governmental authority
under any Environmental Laws;
(iii) all notices, permits, licenses, consents,
authorizations, approvals, certificates variances, filings or
similar authorizations ("Environmental Permits"), if any,
required to be obtained or filed by the Company or any of its
subsidiaries under any Environmental Laws in connection with
any aspect of the business of the Company or its subsidiaries,
including without limitation those relating to the generation,
management, treatment, storage, transportation, Disposal (as
defined below) or Release (as defined below) of a hazardous or
otherwise regulated substance, have been duly obtained or
filed and will remain valid and in effect after the Merger,
and the Company and its subsidiaries are in compliance with
the terms and conditions of all such Environmental Permits;
(iv) the Company and its subsidiaries have satisfied
and are currently in compliance with all financial
responsibility requirements applicable to their operations and
imposed by any governmental authority under any Environmental
Laws;
(v) to the Company's knowledge, there are no
environmental conditions existing on any property of the
Company or its subsidiaries or resulting from the Company's or
such subsidiaries' operations or activities, past or present,
at any location, that would give rise to any on-site or
off-site Remediation (as defined below) obligations imposed on
the Company or any of its subsidiaries under any Environmental
Laws or that would negatively affect the soil, groundwater or
surface water or human health;
(vi) to the Company's knowledge, since the effective
date of the relevant requirements of applicable Environmental
Laws and the extent required by such applicable Environmental
Laws, all Hazardous Substances (as defined below) generated by
the Company and its subsidiaries have been transported only by
carriers authorized under Environmental Laws to transport such
substances and wastes, and disposed of only to treatment,
storage, and disposal facilities authorized under
Environmental Laws to treat, store or dispose of such
substances and wastes;
(vii) there has been no exposure of any person or
property to Hazardous Substances, nor has there been any
Release of Hazardous
20
Substances into the environment by the Company or its
subsidiaries or in connection with their properties or
operations that could reasonably be expected to give rise to
any claim against the Company or any of its subsidiaries for
damages or compensation; and
(viii) the Company and its subsidiaries have made
available to Parent all internal and external environmental
audits and studies, consent decrees, injunctions, orders and
all correspondence on substantial environmental matters
(including any Remediation) in the possession of the Company
or its subsidiaries relating to any of the current or former
properties or operations of the Company and its subsidiaries.
(b) For purposes of this Agreement, the term:
(i) "Disposal" shall mean discharging, depositing,
injecting, dumping, spilling, leaking, or placing any
Hazardous Material into, on or under any land or water so that
such Hazardous Material or any constituent thereof may enter
the environment or be emitted into the air or discharged into
any waters, including groundwater;
(ii) "Environmental Laws" shall mean any and all
federal, state and local laws, statutes, ordinances, codes,
rules, regulations, licenses, permits, authorizations,
decisions, orders, injunctions, or decrees of any governmental
body, authority or regulatory agency pertaining to health,
safety, or the environment in effect in any and all
jurisdictions in which the Company and its subsidiaries own
property or conduct business;
(iii) "Hazardous Material" shall mean any substance
whether solid, liquid or gaseous that: (x) is listed, defined
or regulated as a "hazardous substance," "hazardous material,"
"hazardous waste," "extremely hazardous waste," "toxic
substance," "sludge," "solid waste," "pollutant,"
"contaminant," or otherwise classified as a hazardous, or
toxic, in or pursuant to any Environmental Law; (y) is or
contains asbestos, radon, any polychlorinated biphenyl, urea
formaldehyde foam insulation, explosive or radioactive
material, crude oil or any fraction thereof, or motor fuel or
other refined or process petroleum hydrocarbons; or (z) causes
or poses a threat to cause a contamination or nuisance to the
property or any adjacent property or a hazard to the
environment or the health or safety of persons on or about the
property or any adjacent property;
(iv) "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing into the environment
that is not authorized by
21
Permit required by or from any federal, state, or local
governmental body pursuant to any Environmental Law;
(v) "Remediation" shall mean those actions taken in
the event of a Release or threatened Release of a Hazardous
Material into the environment, to prevent or minimize the
Release of a Hazardous Material so that it does not migrate to
cause substantial danger to present or future public health or
welfare of the environment and includes, but is not limited to
storage, confinement, dikes, trenches, ditches, clay cover,
neutralization, cleanup, recycling, reuse, diversion,
destruction, segregation dredging, excavation, repair,
replacement, collection, treatment, incineration, monitoring,
storage, transportation, and destruction.
SECTION 3.14 VOTING REQUIREMENTS.
(a) The Board of Directors of the Company at a meeting
duly called and held:
(i) determined that the Merger is advisable and
fair and in the best interests of the Company and its
stockholders;
(ii) approved the Merger and this Agreement and the
transactions contemplated by this Agreement;
(iii) recommended approval of this Agreement and the
Merger by the Company's stockholders and directed that the
Merger and this Agreement be submitted for consideration by
the Company's stockholders; and
(iv) taken all necessary action to assure that this
Agreement, the Merger and all other transactions contemplated
by this Agreement are not to be subject to ss.203 of the DGCL.
(b) The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote is the only
vote of the holders of any class or series of the Company's capital
stock necessary to approve the Merger, this Agreement and the
transactions contemplated by this Agreement.
SECTION 3.15 FINDERS AND INVESTMENT BANKERS; TRANSACTION EXPENSES.
Neither the Company nor any of its officers or directors has employed any
investment banker, business consultant, financial advisor, broker or finder in
connection with the transactions contemplated by this Agreement, except for
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx (the "Advisor"), or incurred any liability for any
investment banking, business consultancy, financial advisory, brokerage or
finders' fees or commissions in connection
22
with the transactions contemplated hereby, except for fees payable to the
Advisor (as reflected in the letter agreement dated September 22, 2000 between
Advisor and the Company, copies of which the Company has delivered to Parent).
The fee payable under such letter agreement upon the consummation of the
transactions contemplated by this Agreement, including fees for Advisor's
fairness opinion is set forth on Section 3.15 of the Disclosure Letter.
SECTION 3.16 INSURANCE. The Company and each of its subsidiaries is
currently insured, and during each of the past five calendar years has been
insured, for reasonable amounts against such risks as companies engaged in a
similar business and similarly situated would, in accordance with good business
practice, customarily be insured. Section 3.16 of the Disclosure Letter contains
a complete listing of all insurance (and all self-insurance arrangements)
maintained by the Company as of the date hereof that provides coverage for any
current or contingent claim, indicating the form of coverage, name of carrier
and broker, coverage limits and premium, expiration dates, deductibles, and all
endorsements.
SECTION 3.17 TITLE TO PROPERTIES; ENTIRE BUSINESS.
(a) The Company and its subsidiaries have good title or a
valid and subsisting leasehold interest in and to or a valid and
enforceable license to use all material assets, properties and rights
owned, used or held for use by them in the conduct of their respective
businesses, in each case, free and clear of any liens, claims or
encumbrances other than Permitted Liens (as defined below). The Company
and its subsidiaries own or have sufficient right to use all assets and
properties necessary to conduct their businesses in the manner in which
they are currently conducted.
(b) As used in this Agreement, a "Permitted Lien" means:
(i) a lien of a landlord, carrier, warehouseman,
mechanic, materialman, or any other statutory lien arising in
the ordinary course of business that does not materially
detract from the value of the encumbered property or assets or
does not materially detract from or interfere with the use of
the encumbered property or assets in the ordinary course of
business;
(ii) a lien for taxes not yet due or being diligently
contested in good faith in appropriate proceedings and that
will not result in a Company Material Adverse Effect;
(iii) with respect to the right of the Company or its
subsidiaries to use any property leased to the Company or its
subsidiaries, a lien that arises by the terms of the
applicable lease;
23
(iv) a purchase money security interest arising in
the ordinary course of business that does not materially
detract from the value of the encumbered property or assets or
does not materially detract from or interfere with the use of
the encumbered property or assets in the ordinary course of
business; or
(v) any other lien that does not materially detract
from the value of the encumbered property or assets or does
not materially detract from or interfere with the use of the
encumbered property or assets in the ordinary course of
business.
SECTION 3.18 INTELLECTUAL PROPERTY RIGHTS.
(a) Except as set forth on Section 3.18 of the Disclosure
Letter, there are no registered patents, trademarks, service marks,
trade names or copyrights (the "Registered Intellectual Property"), or
applications for or licenses (to or from the Company or any of its
subsidiaries) with respect to any Registered Intellectual Property that
are material to the Company and its subsidiaries taken as a whole,
that:
(i) are owned by the Company or any of its
subsidiaries, or with respect to which the Company or any of
its subsidiaries has any rights; or
(ii) are used, whether directly or indirectly, by the
Company or any of its subsidiaries.
(b) The Company has good title to its DIAMOND-Registered
Trademark- 725 and DIAMOND-Registered Trademark- products, including,
without limitation, DIAMOND-Registered Trademark- 725 and
DIAMOND-Registered Trademark- C/S products, and all source code,
algorithms, specifications, documentation and user and training
materials relating to the same (collectively, the "DIAMOND Products"),
free and clear of any liens, claims or encumbrances other than
Permitted Liens. The DIAMOND Products are listed on Section 3.18(b)
of the Disclosure Letter. The Company owns no other software products,
and has no software products in development. The Company and its
subsidiaries own all rights to market, sell, license, install,
maintain and otherwise use the DIAMOND Products without infringing
on or otherwise acting adversely to the rights or claimed rights of
any person. To the knowledge of the Company, none of the Company's
existing or contemplated development efforts with respect to the
DIAMOND Products or future products of the Company infringe on or
will infringe on or otherwise adversely affect the rights or claimed
rights of any person.
(c) Except as set forth on Section 3.18 of the Disclosure
Letter (and excluding the DIAMOND Products), the Company and its
subsidiaries have the right to use the Registered Intellectual Property
set forth on Section 3.18 of the
24
Disclosure Letter, and any other computer software and software
licenses, intellectual property, proprietary information, trade
secrets, trademarks, trade names, copyrights, material and
manufacturing specifications, drawings and designs used by the Company
or any of its subsidiaries (collectively, "Intellectual Property"),
without infringing on or otherwise acting adversely to the rights or
claimed rights of any person, except to the extent such infringement or
actions adverse to another's rights or claimed rights could not
reasonably be expected to have a Company Material Adverse Effect.
(d) The Company and its subsidiaries have taken all
commercially reasonable actions to protect, and to prevent the
unauthorized disclosure of, each item of Intellectual Property
(including, without limitation, the DIAMOND Products), owned by them,
including, without limitation, through the use of written nondisclosure
agreements. Except as disclosed in Section 3.20(a) of the Disclosure
Letter, the Company has not disclosed the source code for any of the
DIAMOND Products.
(e) Except as set forth on such Section 3.18 of the Disclosure
Letter, neither the Company nor any of its subsidiaries is obligated to
pay any royalty or other consideration material to the Company and its
subsidiaries taken as a whole to any person in connection with the
Company's use or ownership of any Intellectual Property (including the
DIAMOND Products).
(f) Except as set forth on such Section 3.18 of the Disclosure
Letter and as could not reasonably be expected to have a Company
Material Adverse Effect, to the Company's knowledge, no other person is
infringing on the rights of the Company and its subsidiaries in any of
their Intellectual Property (including the DIAMOND Products).
SECTION 3.19 MAJOR CUSTOMERS.
(a) Section 3.19 of the Disclosure Letter contains a list of:
(i) all customers for which the Company provides maintenance services
with respect to its DIAMOND Products; (ii) the Company's ten largest
DIAMOND-Registered Trademark- 725 C/S active customers (in terms of
revenues for the nine-month period ended June 30, 2000); (iii) the
Company's ten largest DIAMOND-Registered Trademark- 950 C/S active
customers (in terms of revenues for the nine-month period ended
June 30, 2000); (iv) all customers that generated in excess of
$25,000 in revenue for the Company and its subsidiaries during the
nine-month period ended June 30, 2000 (all of such customers described
in the preceding clauses (i) through (iv) collectively, the "Major
Customers"); (v) the amount of revenues attributable to each Major
Customer in the fiscal year ended September 30, 1999; (vi) the
amount of revenues attributable to each Major Customer during the
nine-month period ended June 30, 2000; (vii) the scheduled expiration
date of the respective contracts between the Company and its
subsidiaries and the Major Customers
25
(the "Customer Contracts"), as applicable; and (viii) the provisions of
each Customer Contract relating to a change of control of the Company
or its subsidiaries, as applicable.
(b) Except as set forth in Section 3.19(b) of the Disclosure
Letter or except as could not reasonably be expected to have a Company
Material Adverse Effect, since September 30, 1999: (i) none of the
Major Customers has terminated or altered its relationship with the
Company other than in the ordinary course of business, or, to the
Company's knowledge, threatened to do so or otherwise notified the
Company of its intention to do so; and (ii) there has been no dispute
with any of the Major Customers.
(c) Without limiting the foregoing SECTION 3.19(B), it is
acknowledged and agreed that (i) any termination or material alteration
(other than in the ordinary course of business) of the Company's
relationship with, (ii) any notification of any material threat or
intention to so terminate or materially alter the Company's
relationship with, and (iii) any notification of any material dispute
with, any of the customers designated by the Parent and listed on
Section 3.19(c) of the Disclosure Letter since September 30, 1999 will
constitute a "Company Material Adverse Effect" for purposes of this
Agreement.
SECTION 3.20 CONTRACTS.
(a) Set forth on Section 3.20(a) of the Disclosure Letter is a
list of all contracts or agreements (i) granting any party any access
or rights, contingent or otherwise, to the DIAMOND Products; (ii)
granting any party the right, contingent or otherwise, (A) to
sublicense the DIAMOND Products to any other party or (B) to provide
third parties any services using, or access to, the DIAMOND Products,
including, without limitation, the right to act as a service bureau or
provide the software on a time share basis; (iii) granting any license
to the source code for the DIAMOND Products; and (iv) obligating the
Company to provide, or pursuant to which the Company provides, products
or services without compensation or below the cost to the Company to
provide such products or services.
(b) Set forth on Section 3.20(b) of the Disclosure Letter is a
list of each contract or agreement to which the Company or any of its
subsidiaries is a party or to which the Company, any of its
subsidiaries or any of their respective assets is in any way bound or
obligated, pursuant to which the Company or any of its subsidiaries
could be required to make or entitled to receive aggregate payments or
other value in excess of $25,000 or that is otherwise material to the
Company and its subsidiaries. Each contract disclosed on Section
3.20(a) of the Disclosure Letter or Section 3.20(b) of the Disclosure
Letter is, to the extent it purports to be, a valid and legally binding
obligation of the Company or of its subsidiaries and, to the knowledge
of the Company, the other parties thereto, as applicable, and is in
full force and effect. Neither the Company, any of its
26
subsidiaries nor, to the knowledge of the Company, any other party
thereto is in violation of or in default under (nor does there exist
any condition which upon the passage of time or the giving of notice,
or both, would cause such a violation or default under) any loan or
credit agreement, note, bond, mortgage, indenture, lease or any other
contract, agreement, arrangement or understanding to which it is a
party or by which it or any of its properties or assets is bound,
except for violations or defaults that could not reasonably be expected
to have a Company Material Adverse Effect.
SECTION 3.21 INSIDER INTERESTS.
(a) Except as set forth on Section 3.21 of the Disclosure
Letter, no stockholder beneficially owning in excess of 5% of the
Company Common Stock, officer, director, employee (or any member of the
immediate family of any of the foregoing) or agent of the Company or
any of its subsidiaries or any affiliate of any officer or director of
the Company or any of its subsidiaries (as the term "affiliate" is
defined in Rule 12b-2 under the Exchange Act):
(i) has any interest in any assets or property
(whether real or personal, tangible or intangible) of or used
in the business of the Company or any subsidiary of the
Company (other than as an owner of outstanding securities of
the Company);
(ii) has any direct or indirect interest of any
nature whatsoever in any person or business which competes
with, conducts any business similar to, has any arrangement or
agreement (including arrangements regarding the shared use of
personnel or facilities) with (whether as a customer or
supplier or otherwise), or is involved in any way with, the
Company or any subsidiary of the Company; or
(iii) is indebted or otherwise obligated to the
Company (other than expense advances in the ordinary course of
business).
(b) The Company is not indebted or otherwise obligated to any
such person described in SECTION 3.21(A), except for amounts due under
normal arrangements applicable to all employees generally as to salary
or reimbursement of ordinary business expenses not unusual in amount or
significance.
(c) As of the date of this Agreement, except for claims and
proceedings listed on Section 3.21 of the Disclosure Letter, to the
knowledge of the Company, there are no losses, claims, damages, costs,
expenses, liabilities or judgments which would entitle any director,
officer or employee (or any member of the immediate family of any of
the foregoing) of the Company or any of its subsidiaries to
indemnification by the Company or its subsidiaries under
27
applicable law, the certificate of incorporation or bylaws of the
Company or any of its subsidiaries or any insurance policy maintained
by the Company or any of its subsidiaries.
SECTION 3.22 NONCOMPETITION; RESTRICTIONS ON BUSINESS. Except as
described in Section 3.22 of the Disclosure Letter, the Company and its
subsidiaries are not, and after the Effective Time neither the Surviving
Corporation nor Parent will be (by reason of any agreement to which the Company
is a party), subject to any noncompetition, limitation on its ability to provide
services or products to any customer or potential customer, or similar
restriction on their respective businesses.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Merger
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority and any necessary governmental authority to carry on its business
as now conducted. Each of Parent and Merger Sub is duly qualified or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except for failures to be so duly
qualified or licensed and in good standing as could not reasonably be expected
to result in a Parent Material Adverse Effect. For purposes of this Agreement,
"Parent Material Adverse Effect" or "Parent Material Adverse Change" means in
each case any change or effect that, individually or when taken together with
all such other changes or effects, could reasonably be expected to be materially
adverse to the condition (financial or other), business, operations, properties,
assets, liabilities, prospects, results of operations, or legal or regulatory
environment of Parent and its subsidiaries, taken as a whole, or to adversely
affect the ability of Parent and Merger Sub to perform their respective
obligations under this Agreement.
SECTION 4.2 CORPORATE AUTHORIZATION.
(a) Each of Parent and Merger Sub has the full corporate power
and authority to execute and deliver this Agreement and to consummate
the transactions contemplated by this Agreement.
(b) The execution, delivery, and performance by each of Parent
and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the Merger and of the other transactions contemplated by
this Agreement have been duly and validly authorized by Parent as sole
stockholder of Merger Sub and by the Board of Directors of each of
Parent and Merger Sub and no
28
other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement.
(c) This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub and constitutes a valid and
binding obligation of each of Parent and Merger Sub, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor's rights and to
general equity principles.
SECTION 4.3 APPROVALS; NO VIOLATIONS.
(a) No filing with, and no permit, authorization, consent, or
approval of, any foreign or domestic public body or authority is
necessary for the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement, except:
(i) the filing of a premerger notification and report
form under the HSR Act;
(ii) the filing with the SEC of such reports under
the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement;
and
(iii) the filing of the certificate of merger with
the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company
is qualified to do business.
(b) Except as set forth on Section 4.3(b) of the Disclosure
Letter, the execution and delivery of this Agreement by Parent and
Merger Sub, the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement and the compliance by them
with any of the provisions of this Agreement will not:
(i) conflict with or result in any breach of any
provision of the organizational documents or bylaws of Parent
or Merger Sub;
(ii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination,
cancellation, or acceleration) or require any authorization,
consent or approval under, any of the terms, conditions, or
provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement, or other instrument or obligation
to which Parent or Merger Sub is a party
29
or by which either of them or any of their respective
properties or assets may be bound; or
(iii) violate or require any authorization, consent
or approval under any order, writ, injunction, decree,
statute, rule, or regulation applicable to Parent or Merger
Sub or any of their respective properties or assets, except
such violations, conflicts, breaches, defaults, terminations,
or accelerations referred to in this SECTION 4.3 as could not,
individually or in the aggregate, reasonably be expected to
result in a Parent Material Adverse Effect.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) Except as expressly contemplated by this Agreement during
the period from the date of this Agreement to the Effective Time:
(i) the Company and each of its subsidiaries will
conduct its business solely in the ordinary course consistent
with past practices;
(ii) neither the Company nor any of its subsidiaries
will intentionally take or willfully omit to take any action
that results in or could reasonably be expected to result in,
a Company Material Adverse Effect; and
(iii) the Company will use its commercially
reasonable efforts to preserve intact the business
organization of the Company and each of its subsidiaries, to
keep available the services of its and their present officers
and key employees and consultants, and to maintain
satisfactory relationships with customers, agents, reinsurers,
suppliers, and other persons having business relationships
with the Company or its subsidiaries.
(b) Without limiting the provisions of SECTION 5.1(A), except
as otherwise expressly provided in this Agreement, neither the Company
nor any of its subsidiaries will:
(i) issue, sell, or dispose of additional shares of
capital stock of any class (including shares of Company Common
Stock) of the Company or any of its subsidiaries, or
securities convertible into or exchangeable for any such
shares or securities, or any rights, warrants, or options to
acquire any such shares or securities, other than shares of
Company
30
Common Stock issued upon exercise of the options disclosed in
Section 3.3 of the Disclosure Letter, in each case in
accordance with the terms of such options or as disclosed on
Section 3.3 of the Disclosure Letter;
(ii) redeem, purchase, or otherwise acquire, or
propose to redeem, purchase, or otherwise acquire, any of its
outstanding capital stock, or other securities of the Company
or any of its subsidiaries;
(iii) split, combine, subdivide, or reclassify any of
its capital stock or declare, set aside, make, or pay any
dividend or distribution on any shares of its capital stock
except for dividends or distributions to the Company and its
subsidiaries from their respective subsidiaries;
(iv) sell, pledge, dispose of, or encumber any of its
assets, except for sales, pledges, dispositions, or
encumbrances in the ordinary course of business consistent
with past practices or between the Company and its
subsidiaries;
(v) incur or modify any indebtedness or issue or sell
any debt securities, or assume, guarantee, endorse, or
otherwise as an accommodation become absolutely or
contingently responsible for obligations of any other person,
or make any loans or advances;
(vi) adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other
employee benefit agreements, trusts, plans, funds, or other
arrangements for the benefit or welfare of any director,
officer, or employee, or (except for normal increases in the
ordinary course of business that are consistent with past
practices and that, in the aggregate, do not result in a
material increase in benefits); increase in any manner the
compensation or fringe benefits of any director, officer, or
employee or pay any benefit not required by any existing plan
or arrangement (including, without limitation, the granting or
vesting of stock options or stock appreciation rights) or take
any action or grant any benefit not expressly required under
the terms of any existing agreements, trusts, plans, funds, or
other such arrangements or enter into any contract, agreement,
commitment, or arrangement to do any of the foregoing; or make
or agree to make any payments to any directors, officers,
agents, contractors, or employees relating to a change or
potential change in control of the Company; notwithstanding
the foregoing, the Company may, upon, reasonable prior notice
to Parent, make amendments to Company Benefit Plans that are
required by applicable law;
31
(vii) acquire by merger, consolidation, or
acquisition of stock or assets any corporation, partnership,
or other business organization or division or make any
investment either by purchase of stock or securities,
contributions to capital (other than to wholly-owned
subsidiaries), property transfer, or purchase of any material
amount of property or assets, in any other person;
(viii) amend its certificate of incorporation, bylaws
or other comparable charter or organizational documents, or
alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure
or ownership of any material subsidiary of the Company;
(ix) take any action other than in the ordinary
course of business and consistent with past practices, to pay,
discharge, settle, or satisfy any claim, liability, or
obligation (absolute or contingent, accrued or unaccrued,
asserted or unasserted, or otherwise);
(x) change any method of accounting or accounting
practice used by the Company or any of its subsidiaries,
except for any change required by reason of a concurrent
change in generally accepted accounting principles;
(xi) revalue in any respect any of its assets,
including, without limitation, writing off notes or accounts
receivable other than in the ordinary course of business
consistent with past practices;
(xii) authorize any new capital expenditure or
expenditures that, individually, is in excess of $50,000 or,
in the aggregate, are in excess of $100,000;
(xiii) make any tax election, settle or compromise
any federal, state, or local tax liability or consent to the
extension of time for the assessment or collection of any
federal, state, or local tax;
(xiv) settle or compromise any pending or threatened
suit, action, or claim material to the Company and its
subsidiaries taken as a whole or relevant to the transactions
contemplated by this Agreement;
(xv) authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation
or dissolution of the Company;
(xvi) enter into any collective bargaining agreement;
32
(xvii) engage in any transaction with, or enter into
any agreement, arrangement or understanding with, directly or
indirectly, any of the Company's affiliates (or any member of
their respective families) other than pursuant to such
agreements existing on the date of this Agreement and
disclosed on the Disclosure Letter or, between the Company and
any of its wholly-owned subsidiaries; or
(xviii) voluntarily take any action or willfully omit
to take any action that could make any representation or
warranty in ARTICLE III untrue or incorrect in any material
respect at any time, including as of the date of this
Agreement and as of the Effective Time, as if made as of such
time.
SECTION 5.2 PROXY STATEMENT.
(a) Promptly after the execution of this Agreement, the
Company and Parent will cooperate with each other and use all
commercially reasonable efforts to prepare, and the Company will file
with the SEC, as soon as is reasonably practicable, a proxy statement,
together with a form of proxy, with respect to the Special Meeting (as
defined in SECTION 5.3). For the purposes of this Agreement, the term
"Proxy Statement" means such proxy or information statement filed in
final form with the SEC at the time it initially is mailed to the
stockholders of the Company and all amendments or supplements thereto,
if any, similarly filed and mailed.
(b) The parties will use all commercially reasonable efforts
to have the Proxy Statement cleared by the SEC as promptly as
practicable after filing and, as promptly as practicable after the
Proxy Statement has been so cleared, the Company will mail the Proxy
Statement to the Company's stockholders as of the record date for the
Special Meeting.
(c) The Company represents that none of the information
contained in the Proxy Statement, and Parent and Merger Sub represent
that none of the written information provided or to be provided by them
expressly for use in the Proxy Statement, will, on the date the Proxy
Statement is first mailed to the stockholders of the Company and on the
date of the Special Meeting, be false or misleading with respect to any
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, and
Parent, the Company, and Merger Sub each agrees to correct any
information provided by it for use in the Proxy Statement that has
become false or misleading in any material respect and the Company will
file such amendments and supplements as are necessary.
(d) Provided that Parent and Merger Sub provide all necessary
information they are required to provide for inclusion therein, and
provided
33
further that Parent and Merger Sub have complied with their
obligations under SECTION 5.2(C), the Company agrees that the Proxy
Statement will comply as to form in all material respects with all
applicable requirements of federal securities laws and applicable state
laws.
SECTION 5.3 ACTION OF STOCKHOLDERS OF THE COMPANY; VOTING.
(a) The Company will take all action necessary in accordance
with the DGCL and the certificate of incorporation and bylaws of the
Company, to call, as soon as is practicable, a meeting of its
stockholders (the "Special Meeting") at which the stockholders of the
Company will consider and vote upon the Merger and this Agreement.
Unless the Board of Directors determines in its good faith judgment,
after consultation with outside legal counsel, that its fiduciary
duties require otherwise, the Proxy Statement will contain the
recommendation of the Board of Directors of the Company that the
stockholders of the Company vote to adopt and approve the Merger and
this Agreement. The Company will, at the request of Parent, use all
commercially reasonable efforts to obtain from its stockholders proxies
in favor of such adoption and approval and to take all other action
necessary or helpful to secure the vote or consent of stockholders
required by the DGCL to effect the Merger.
(b) At the Special Meeting, Parent, Merger Sub, and their
subsidiaries will vote, or cause to be voted, all of the shares of
Company Common Stock then owned by any of them in favor of the Merger
and the Agreement.
SECTION 5.4 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions of this Agreement and
to the fiduciary obligations of the Board of Directors of the Company
under applicable law, each of the parties agrees to use their
respective commercially reasonable efforts to take, or cause to be
taken, all actions to do, or cause to be done, all things necessary,
proper, or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement (including
consummation of the Merger) and to cooperate with each other in
connection with the foregoing, including, without limitation, using
their respective commercially reasonable efforts:
(i) to obtain all necessary waivers, consents, and
approvals from other parties to loan agreements, leases, and
other contracts;
(ii) to obtain all necessary consents, approvals, and
authorizations as are required to be obtained under any
federal, state, or foreign law or regulations;
34
(iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the
ability of the parties to consummate the transactions
contemplated by this Agreement;
(iv) to prepare and effect all necessary
registrations and filings; and
(v) to fulfill all conditions to and covenants
contained in this Agreement.
(b) If, after the Effective Time, any action is necessary to
effect the purposes of this Agreement, the proper officers and
directors of each party will take all such necessary action.
SECTION 5.5 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company will give prompt notice to Parent and Merger
Sub, and Parent and Merger Sub will give prompt notice to the Company,
of:
(i) the occurrence, or failure to occur, of any
event, which occurrence or failure could cause any
representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at any time;
(ii) any material failure of the Company, Parent, or
Merger Sub, as the case may be, or of any officer, director,
employee, or agent of the Company, Parent, or Merger Sub, as
the case may be, to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it
under this Agreement;
(iii) any act, omission to act, event, or occurrence
that, with notice, the passage of time, or otherwise, could
result in a Company Material Adverse Effect or a Parent
Material Adverse Effect, as the case may be; and
(iv) any contingent liability of the Company for
which it reasonably believes it will, with the passage of time
or otherwise, become liable.
(b) The notification described in SECTION 5.5(A) will not
affect the representations or warranties of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.6 ACCESS TO INFORMATION.
35
(a) From the date of this Agreement to the Effective Time, the
Company will, and will cause its subsidiaries, officers, directors,
employees, and agents upon reasonable notice to, afford to officers,
employees, and agents of Parent, Merger Sub and their affiliates and
the banks, other financial institutions, and investment bankers working
with Parent or Merger Sub, and their respective officers, employees,
and agents, complete access at all reasonable times to its officers,
employees, agents, properties, books, records, and contracts, and will
furnish Parent, Merger Sub and their affiliates and the banks, other
financial institutions, and investment bankers working with Parent or
Merger Sub, all financial, operating, and other data and information as
they reasonably request. Without limiting the foregoing, the Company
has delivered to Parent the financial statements and operating results
of the Company and its subsidiaries for the months ended July 31 and
August 31, 2000 and the Company will promptly deliver to Parent the
financial statements and operating results of the Company and its
subsidiaries for each month prior to the Closing Date, as they come
available.
(b) Each of Parent and Merger Sub will hold and will cause its
directors, officers, agents, employees, consultants, and advisors to
hold in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents
and information concerning the Company and its subsidiaries furnished
to such persons in connection with the transactions contemplated by
this Agreement (except to the extent that such information can be shown
to have been (i) previously known by such persons from sources other
than the Company, or its directors, officers, representatives, or
affiliates, (ii) in the public domain through no fault of such persons,
or (iii) later lawfully acquired by such persons on a non-confidential
basis from other sources who are not known by Parent or Merger Sub to
be bound by a confidentiality agreement or otherwise prohibited from
transmitting the information to Parent or Merger Sub by a contractual,
legal, or fiduciary obligation) and will not release or disclose such
information to any other person, except its directors, officers,
agents, employees, consultants, and advisors, in connection with this
Agreement who need to know such information. If the transactions
contemplated by this Agreement are not consummated, such confidence
shall be maintained and, if requested by or on behalf of the Company,
Parent and Merger Sub will, and will use all commercially reasonable
efforts to cause their auditors, attorneys, advisors, and other
consultants, agents, and representatives to, return to the Company or
destroy all copies of written information furnished by the Company to
Parent and Merger Sub or their agents, representatives, or advisors. It
is understood that Parent and Merger Sub will be deemed to have
satisfied their obligation to hold such information confidential if
they exercise the same care as they take to preserve confidentiality
for their own similar information.
36
(c) No investigation pursuant to this SECTION 5.6 will affect
any representations or warranties of the parties in this Agreement or
the conditions to the obligations of the parties to this Agreement.
SECTION 5.7 PUBLIC ANNOUNCEMENTS. Parent and Merger Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, or the other transactions contemplated by this Agreement, and
will not issue any such press release or make any such public statement prior to
such consultation, except as may be required by law or the listing requirements
of any securities exchange.
SECTION 5.8 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) Parent and Merger Sub agree that all rights to
indemnification now existing in favor of the directors or officers of
the Company and its subsidiaries as provided in their respective
certificates of incorporation or bylaws and pursuant to the contracts
listed on SCHEDULE 5.8 will, to the extent such rights are in
accordance with applicable law, survive the Merger and stay in effect
in accordance with their respective terms.
(b) In the event any action, suit, proceeding, or
investigation relating to this Agreement or to the transactions
contemplated by this Agreement is commenced by a third party, whether
before or after the Effective Time, the parties to this Agreement
agree, subject to the fiduciary duties of the respective directors of
the Company and Parent, to cooperate and use all commercially
reasonable efforts to defend against and respond to such action, suit,
proceeding, or investigation.
(c) Parent will extend the term of the Company's existing
directors and officers liability insurance policies for three years and
will purchase a six-year tail to be effective for the six-year period
commencing on March 4, 2001 for the Company's director's and officer's
liability insurance policies in effect as of the date hereof.
(d) The covenants contained in this SECTION 5.8 will survive
the Merger and will continue without time limit.
SECTION 5.9 EMPLOYEE OPTIONS. As soon as practicable following the date
of this Agreement, the Company will take such actions as are required to provide
that each of the Employee Options outstanding immediately prior to the
consummation of the Merger, whether or not then exercisable, will be canceled,
if not exercised by the holder thereof immediately prior to the consummation of
the Merger without the incurrence of any liability or obligation on the part of
the Company.
37
SECTION 5.10 OTHER ACTIONS BY THE COMPANY. If any "fair price,"
"moratorium," "control share acquisition," or other form of antitakeover
statute, regulation, charter provision, or contract is or becomes applicable to
the transactions contemplated by this Agreement, the Company and the members of
the Board of Directors of the Company will use their commercially reasonable
efforts to grant such approvals and take such actions as are necessary under
such laws, provisions, or contracts so that the transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or minimize the
effects of such statute, regulation, provision or contract on the transactions
contemplated by this Agreement.
SECTION 5.11 LETTERS OF ACCOUNTANTS. The Company shall use its
commercially reasonable efforts to cause to be delivered to Parent "comfort"
letters of Xxxxxx Xxxxxxxx LLP, the Company's independent public accountants,
dated and delivered on the date on which the Proxy Statement is mailed to the
Company's stockholders and on the Closing Date, each addressed to Parent, in
form and substance reasonably satisfactory to Parent and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 MUTUAL CONDITIONS. The respective obligations of each party
to effect the Merger are subject to the satisfaction prior to the Effective Time
of the following conditions:
(a) This Agreement will have been adopted and approved by the
affirmative vote of the stockholders of the Company in accordance with
the certificate of incorporation and bylaws of the Company, and with
applicable law.
(b) No federal or state statute, rule, regulation, injunction,
decree, or order will be enacted, promulgated, entered, or enforced
that would prohibit consummation of the Merger or of the other
transactions contemplated by this Agreement; provided that the parties
to this Agreement agree to use their respective commercially reasonable
efforts to have any such injunction, decree, or order lifted.
(c) The waiting period applicable to the consummation of the
Merger under the HSR Act will have expired or been terminated.
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
38
(a) Each of the representations and warranties of the Company
contained in this Agreement will be true and correct in all material
respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement
will be true and correct in all respects giving effect to such
standard) as of the Closing Date as though made on and as of the
Closing Date, provided that those representations and warranties that
address matters only as of a particular date will remain true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement will be true and correct in all respects
giving effect to such standard) as of such date. Parent will have
received a certificate of the Chief Executive Officer and Chief
Financial Officer of the Company to such effect.
(b) The Company will 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
Closing Date. Parent will have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company to that
effect.
(c) The Company will have delivered, or caused to be
delivered, to Parent:
(i) a certificate of good standing from the Delaware
Secretary of State and of comparable authority in other
jurisdictions in which the Company and its subsidiaries are
incorporated or qualified to do business stating that each is
a validly existing corporation in good standing;
(ii) duly adopted resolutions of the Board of
Directors and stockholders of the Company approving the
execution, delivery and performance of this Agreement and the
instruments contemplated hereby, certified by the Secretary of
the Company; and
(iii) a true and complete copy of the certificate of
incorporation or comparable governing instruments, as amended,
of the Company and its subsidiaries certified by the Secretary
of State of the state of incorporation or comparable authority
in other jurisdictions, and a true and complete copy of the
bylaws or comparable governing instruments, as amended, of the
Company and its subsidiaries certified by the Secretary of the
Company and its subsidiaries, as applicable.
(d) Parent will have received "comfort letters" from Xxxxxx
Xxxxxxxx LLP on the date the Proxy Statement is mailed to the Company's
stockholders and on the Closing Date.
39
(e) From and including the date of this Agreement, there will
not have occurred a Company Material Adverse Change.
(f) Parent will have received evidence, in form and substance
reasonably satisfactory to it, that all licenses, permits, consents,
approvals, waivers, findings of suitability, authorizations,
qualifications and orders of, and declarations, registrations and
filings required under the terms, conditions or provisions of any item
or matter referenced in SECTION 3.5(B) and SECTION 4.3(B) and required
to be listed on Section 3.5(b) and Section 4.3(b) of the Disclosure
Letter (collectively, "Consents and Filings") have been obtained or
made, as applicable, by the Company, Merger Sub or Parent, as the case
may be, without the imposition of any limitations, prohibitions or
requirements, and are in full force and effect.
(g) Parent shall have received an opinion of counsel to the
Company, Xxxxxx, Xxxx & Xxxxxxxx LLP, in the form of EXHIBIT B. In
rendering such opinion, such counsel may rely on opinions of local
counsel to the extent such counsel deems it reasonable to do so. Such
counsel will also state that the Proxy Statement complied as to form in
all material respects with the requirements of the Exchange Act and the
rules thereunder. In addition, such counsel will state that it has
participated in the preparation of the Proxy Statement and has read the
documents incorporated by reference therein, and that, although such
counsel is not assuming responsibility for the matters stated in the
Proxy Statement, such counsel has no reason to believe that the Proxy
Statement on the date the Proxy Statement was first mailed to the
stockholders of the Company and on the date of the Special Meeting or
the Closing Date, 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 made, in light of the
circumstances under which they were made, not misleading.
(h) Parent shall have received evidence, in form and substance
reasonably satisfactory to it, that all options to purchase shares of
Company Common Stock have been canceled or exercised.
(i) On the Closing Date, Dissenting Shares shall aggregate no
more than 5% of the then outstanding shares of Company Common Stock.
(j) The Company shall have used commercially reasonable
efforts to cause at least 90% of the employees of the Company as of the
date hereof (other than the Designated Employees) to have executed and
delivered to Parent an Associate's Agreement in the form attached
hereto as EXHIBIT C.
(k) Without limiting the provisions of SECTION 6.2(J), the
Company shall have used commercially reasonable efforts to cause all of
the employees of the Company specifically designated by Parent to have
agreed to remain employed
40
by the Surviving Corporation after the Closing, including by having
executed an Associate's Agreement, in the capacities designated by
Parent.
(l) Parent shall have received an executed Non-Competition
Agreement from Xxxxxxx X. Xxxxx in the form attached hereto as EXHIBIT
D.
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are also subject to the
following conditions:
(a) Each of the representations of Parent and Merger Sub
contained in this Agreement will be true and correct in all material
respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement
will be true and correct in all respects giving effect to such
standard) as of the Closing Date as though made on and as of the
Closing Date, provided that those representations and warranties which
address matters only as of a particular date will remain true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement will be true and correct in all respects
giving effect to such standard) as of such date. The Company will have
received a certificate of a Vice President and the Chief Financial
Officer of Parent to such effect.
(b) Parent will have, and will cause Merger Sub to have,
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by them on or prior to the Closing Date. The Company will have received
a certificate of a Vice President and the Chief Financial Officer of
Parent to such effect.
(c) Parent will have delivered to the Company:
(i) certificates of good standing from the Delaware
Secretary of State stating that each of Parent and Merger Sub
is a validly existing corporation in good standing;
(ii) duly adopted resolutions of the Board of
Directors of each of Parent and Merger Sub approving the
execution, delivery and performance of this Agreement and the
instruments contemplated hereby, each certified by the
Secretary or the Assistant Secretary of the Company; and
(iii) a true and complete copy of the certificates of
incorporation, as amended, of Parent and Merger Sub certified
by the Secretary of State of the state of each of their
incorporation, and a true and complete copy of
41
the bylaws, as amended, of Parent and Merger Sub certified by
the Secretary or Assistant Secretary of Parent and Merger Sub,
as applicable.
(d) The Company shall have received an opinion of counsel to
Parent and Merger Sub, Xxxxxx & Xxxx, L.L.P., in the form of EXHIBIT E.
In rendering such opinion, such counsel may rely on opinions of local
counsel to the extent such counsel deems it reasonable to do so.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
approval of this Agreement and the Merger by the Company's stockholders):
(a) by mutual written consent of Parent, Merger Sub, and
the Company;
(b) by Parent and Merger Sub, on the one hand, or the Company,
on the other hand, if any court of competent jurisdiction or other
governmental body has issued a final order, decree, or ruling or taken
any other final action restraining, enjoining, or otherwise prohibiting
the Merger and such order, decree, ruling, or other action is or has
become nonappealable;
(c) by the Company if a person or group has made a bona fide
proposal concerning a Third Party Acquisition (as defined in SECTION
7.3(C)):
(i) that the Board of Directors of the Company
determines in its good faith judgment and in the exercise of
its fiduciary duties, after consultation with its financial
advisors, is a Superior Proposal; and
(ii) as a result of which the Board of Directors of
the Company determines in its good faith judgment, after
consultation with outside legal counsel, that it is obligated
by its fiduciary duties to terminate this Agreement, provided:
(A) that the Company may not terminate this
Agreement pursuant to this SECTION 7.1(C) unless and
until:
(1) three business days have elapsed
following delivery to Parent of a written
notice of such determination by the Board of
Directors of the Company:
42
(I) which notice informs
Parent of the terms and conditions
of the proposed Third Party
Acquisition; and
(II) during such three
business day period the Company
otherwise reasonably cooperates with
Parent with respect thereto
(subject, in the case of this
SECTION 7.1(C)(II)(A)(1)(II), to the
condition that the Board of
Directors of the Company shall not
be required to take any action that
it determines in its good faith
judgment, after consultation with
outside legal counsel, would result
in a violation of its fiduciary
duties to the stockholders under
applicable law) with the intent of
providing Parent with the
opportunity to offer to modify the
terms and conditions of this
Agreement so that the transactions
contemplated hereby may be effected;
and
(2) at the end of such three
business day period the determination of the
Board of Directors of the Company described
in SECTION 7.1(C)(I) continues (after
consultation with its financial advisors) to
be the good faith judgment of the Board of
Directors of the Company, and the provisions
of SECTION 7.1(C)(II) continue to be true;
and
(B) that such termination under this SECTION
7.1(C) will not be effective until payment of the fee
required by SECTION 7.3(B);
(d) by Parent and Merger Sub, if:
(i) there has been a breach (which breach is not
cured or not capable of being cured prior to 10 days following
notice to the Company by Parent of such breach) of any
representation or warranty on the part of the Company having a
Company Material Adverse Effect or materially adversely
affecting or delaying the ability of Parent or Merger Sub to
consummate the Merger;
(ii) there has been a breach (which breach is not
cured or not capable of being cured prior to 10 days following
notice to the Company by Parent of such breach) of any
covenant or agreement on the part of the Company having a
Company Material Adverse Effect or materially adversely
affecting or delaying the ability of Parent or Merger Sub to
consummate the Merger;
43
(iii) the Company, directly or indirectly, solicits,
facilitates, or encourages the initiation of any inquiries or
proposals regarding a Third Party Acquisition in violation of
the first sentence of SECTION 8.7(A), which violation is not
cured prior to 5 days following notice to the Company by
Parent of such violation. The parties hereto understood and
agree that any such violation that results in or leads to, at
any time (before or after such five-day period), a Superior
Proposal or that otherwise materially adversely affects the
ability of the Company to perform its obligations under this
Agreement and consummate the Merger without significant delay
(it being understood and agreed that any delay beyond February
15, 2001 will be deemed a significant delay) (collectively, an
"Adverse Result"), will constitute a violation that was not
cured within such 5 day period; provided however, that the
parties hereto further understand and agree that if the
Company communicates to the party acting as a result of such
violation that the Company is bound by the provisions of
SECTION 8.7(A), and such violation does not result in an
Adverse Result, such violation will be deemed to have been
cured by the Company; provided further, however, that the
opportunity of the Company to so cure any such violation is
expressly conditioned on the Company having diligently taken,
at all times during the term of this Agreement, all reasonable
measures to prevent such violation, including, without
limitation, informing its officers, directors and
representatives of the prohibition contained in the first
sentence of SECTION 8.7(A);
(iv) the Company engages in negotiations with any
person or group (other than Parent or Merger Sub) that has
proposed a Third Party Acquisition except to the extent
permitted by SECTION 8.7;
(v) the Company enters into an agreement, letter of
intent, or arrangement with respect to a Third Party
Acquisition; or
(vi) the Board of Directors of the Company has
withdrawn or modified in a manner adverse to Parent or Merger
Sub its approval or recommendation of this Agreement, or the
Merger or has recommended another transaction, or has adopted
any resolution to effect any of the foregoing;
(e) by the Company if:
(i) there has been a breach (which breach is not
cured or not capable of being cured prior to 10 days following
notice to Parent of such breach) of any representation or
warranty on the part of Parent or Merger Sub having a Parent
Material Adverse Effect or materially adversely affecting or
delaying the ability of Parent or Merger Sub to consummate the
Merger; or
44
(ii) there has been a material breach (which breach
is not cured or not capable of being cured prior to 10 days
following notice to Parent of such breach) of any covenant or
agreement on the part of Parent or Merger Sub having a Parent
Material Adverse Effect or materially adversely affecting or
delaying the ability of the Company to consummate the Merger;
(f) by either Parent or the Company, if the Merger has not
occurred by February 15, 2001, unless the failure to consummate the
Merger is the result of a breach of any covenant set forth in this
Agreement or a material breach of any representation or warranty set
forth in this Agreement by the party seeking to terminate this
Agreement pursuant to this provision; or
(g) by either Parent or the Company (provided that the
terminating party is not in material breach of any of its
representations, warranties, or obligations under this Agreement), if
the approval of the stockholders of the Company required for the
consummation of the Merger shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of the
Company's stockholders or at any adjournment or postponement thereof.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to SECTION 7.1, this Agreement will
become void and have no effect, without any liability on the part of any party
to this Agreement or its affiliates, directors, officers, or stockholders, other
than as provided by this SECTION 7.2 and SECTIONS 5.6(B), 5.7, and 7.3. Nothing
contained in this SECTION 7.2 will relieve any party from liability for any
willful breach of this Agreement.
SECTION 7.3 FEES AND EXPENSES.
(a) In the event Parent and Merger Sub terminate this
Agreement pursuant to SECTION 7.1(D) or the Company terminates this
Agreement pursuant to SECTION 7.1(C), the Company will reimburse
Parent, Merger Sub, and their affiliates and in the event the Company
terminates this Agreement pursuant to Section 7.1(e) Parent will
reimburse the Company and its affiliates (not later than one business
day after submission of statements together with reasonable
documentation therefor) for all out-of-pocket fees and expenses
actually incurred by any of them or on their behalf in connection with
the Merger, and the proposed consummation of all transactions
contemplated by this Agreement (including, without limitation, filing
fees and fees payable to legal counsel, financing sources, investment
bankers, counsel to any of the foregoing, and accountants).
45
(b) If:
(i) (A) Parent and Merger Sub terminate this
Agreement pursuant to SECTIONS 7.1(D)(IV), (V) OR (VI) or in
circumstances that would permit Parent and Merger Sub to
terminate this Agreement pursuant to SECTIONS 7.1(D) (IV), (V)
OR (VI) had a notice of termination specified such SECTION
7.1(D) (IV), (V) OR (VI) or (B) if the Company terminates this
Agreement pursuant to SECTION 7.1(C) or the Parent or the
Company terminate this Agreement pursuant to SECTION 7.1(G),
and in the case of either clause (i)(A) or (i)(B), the Company
has, or within 365 days after a termination pursuant to clause
(i)(A) or (i)(B), the Company enters into, an agreement,
letter of intent, or arrangement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, then in
either case the Company will pay to Parent, within one
business day following the execution and delivery of such
agreement or letter of intent or the entering into of such an
arrangement or the occurrence of such Third Party Acquisition,
as the case may be, or simultaneously with such termination, a
fee, in cash, of $850,000 and reimburse Parent for all
out-of-pocket fees and expenses actually incurred by or on
behalf of Parent or Merger Sub in connection with the Merger
and the proposed consummation of all transactions contemplated
by this Agreement (including, without limitation, filing fees
and fees payable to legal counsel, investment bankers, counsel
to any of the foregoing, and accountants); or
(ii) Parent and Merger Sub terminate this Agreement
pursuant to SECTION 7.1(d)(III), or in circumstances that
would permit Parent and Merger Sub to terminate this Agreement
pursuant to SECTION 7.1(D)(III) had a notice of termination
specified such SECTION 7.1(D)(III), then the Company will pay
to Parent, within one business day following the occurrence of
any event specified in SECTION 7.1(D)(III) or simultaneously
with such termination, a fee, in cash, of $850,000 and
reimburse Parent for all out-of-pocket fees and expenses
actually incurred by or on behalf of Parent or Merger Sub in
connection with the Merger and the proposed consummation of
all transactions contemplated by this Agreement (including,
without limitation, filing fees and fees payable to legal
counsel, investment bankers, counsel to any of the foregoing,
and accountants).
(c) For the purposes of this Agreement, "Third Party
Acquisition" means the occurrence of any of the following events:
(i) the acquisition of the Company by merger or
otherwise by any person or group other than Parent, Merger
Sub, or any affiliate of Parent or Merger Sub (a "Third
Party");
46
(ii) the acquisition by a Third Party of more than
19.9% of the total assets of the Company and its subsidiaries,
taken as a whole;
(iii) the acquisition by a Third Party of 19.9% or
more of the outstanding shares of Company Common Stock from
the Company or any of its affiliates or in a transaction or
series of related transactions that results in a change of
control of the Company;
(iv) the adoption by the Company of a plan of
liquidation of the Company or the declaration or payment of an
extraordinary dividend;
(v) the acquisition by the Company or any of its
subsidiaries of more than 19.9% of the outstanding shares of
Company Common Stock; or
(vi) or any agreement or understanding to do or that
would result in any of the foregoing.
(d) Except as specifically provided in this SECTION 7.3 each
party will bear its own expenses in connection with this Agreement and
the transactions contemplated by this Agreement.
SECTION 7.4 AMENDMENT. This Agreement may not be amended except in an
instrument in writing signed on behalf of all of the parties to this Agreement;
PROVIDED, HOWEVER, that after approval of the Merger and this Agreement by the
stockholders of the Company, no amendment that under applicable law requires
further approval of such stockholders may be made without the further approval
of such stockholders of the Company.
SECTION 7.5 WAIVER.
(a) At any time prior to the Effective Time, whether before or
after the Special Meeting, any party to this Agreement may:
(i) extend the time for the performance of any of the
obligations or other acts of any other party or parties to
this Agreement;
(ii) waive any inaccuracies in the representations
and warranties contained in this Agreement by any other
applicable party or in any documents, certificate, or writing
delivered pursuant to this Agreement by any other applicable
party; or
(iii) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations.
47
(b) Any agreement on the part of a party to this Agreement to
any such extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party by a duly
authorized officer.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
The representations and warranties made in this Agreement will not survive
beyond the Effective Time or the termination of this Agreement, as the case may
be. No investigation made, or information received by, any party to this
Agreement will affect any representation or warranty made by any other party to
this Agreement. The covenants and agreements of the parties to this Agreement
will survive in accordance with their terms.
SECTION 8.2 ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement, together with the Disclosure Letter,
Exhibits and Annexes:
(i) constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement
and supersedes all other prior written agreements and
understandings and all prior and contemporaneous oral
agreements and understandings between the parties to this
Agreement or any of them with respect to the subject matter of
this Agreement; and
(ii) will not be assigned by operation of law or
otherwise, provided that Parent may assign its rights and
obligations under this Agreement, or those of Merger Sub,
including, without limitation, the right to substitute in
place of Merger Sub a subsidiary as one of the constituent
entities to the Merger as provided in SECTION 1.1 to any
direct or indirect subsidiary of Parent, but no such
assignment will relieve the assigning party of its obligations
under this Agreement.
(b) Any purported assignment of this Agreement not made in
accordance with this SECTION 8.2 will be null, void, and of no effect.
SECTION 8.3 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 terms and provisions of this Agreement will
nevertheless remain in full force and effect. Upon any final judicial
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the parties to this Agreement will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
48
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement be consummated to the extent possible.
SECTION 8.4 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed to
have been duly given when delivered in person, by cable, telegram or telex,
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
(a) if to Parent or Merger Sub, to:
Xxxxx Systems Corporation
-------------------------
00000 Xxxx Xxxxxxx Xxxxx
------------------------
Xxxxxx, Xxxxx 00000
------------------------
Attention: Xxxxx X. Xxxxxxx
-----------------
Fax: (000) 000-0000
---------
and
PSC Health Care, Inc.
------------------------
00000 Xxxx Xxxxxxx Xxxxx
------------------------
Xxxxxx, Xxxxx 00000
------------------------
Attention: Xxxxx X. Xxxxxxx
-----------------
Fax: (000) 000-0000
---------
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Fax: (000) 000-0000
(b) if to the Company, to:
Health Systems Design Corporation
---------------------------------
0000 Xxxxxxxx Xxxxx 0000
------------------------
Xxxxxxx, Xxxxxxxxxx 00000
------------------------
Attention: Xxxxxxxxxxx Xxxxx
------------------
Fax: (000) 000-0000
---------
with a copy to:
49
Xxxxxx, Xxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address will be effective only upon
receipt).
SECTION 8.5 GOVERNING LAW. THIS AGREEMENT WILL 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 CONFLICT OF
LAWS.
SECTION 8.6 SPECIFIC PERFORMANCE. Each of the parties to this Agreement
acknowledges and agrees that the other parties to this Agreement would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, each of the parties to this Agreement agrees that each of
them will be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions of this Agreement in any action instituted in any court of
the United States or any state having subject matter jurisdiction, in addition
to any other remedy to which such party may be entitled, at law or in equity.
SECTION 8.7 OTHER POTENTIAL BIDDERS.
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the Company or
any of its subsidiaries, solicit, facilitate, or encourage (including
by way of furnishing information) the initiation of any inquires or
proposals regarding a Third Party Acquisition (any of the foregoing
inquiries or proposals being referred to in this Agreement as an
"Acquisition Proposal"). Nothing contained in this SECTION 8.7(A) or
any other provision of this Agreement shall prevent the Board if it
determines in its good faith judgment, after consultation with outside
legal counsel, that it is required to do so in order to discharge
properly its fiduciary duties, from considering, negotiating, approving
and recommending to the stockholders of the Company an unsolicited bona
fide written Acquisition Proposal which the Board of Directors of the
Company determines in its good faith judgment (after consultation with
its financial advisors) would result in a transaction more favorable to
the Company's stockholders from a financial point of view than the
transaction contemplated by this Agreement (any Acquisition Proposal
meeting such criterion being referred to in this Agreement as a
50
"Superior Proposal"). Nothing in this Agreement shall prohibit the
Company from complying with Item 1012 of Regulation M-A under the
Exchange Act with respect to any tender offer.
(b) The Company shall promptly, but in no event later than 24
hours, notify Parent after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by
any person that informs the Board that it is considering making, or has
made, an Acquisition Proposal. Such notice to Parent shall be made
orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal,
inquiry or contact.
(c) If the Board receives a request for nonpublic information
by a person that makes an unsolicited bona fide Acquisition Proposal
and the Board determines that such Acquisition Proposal is a Superior
Proposal, then, and only in such case, the Company may, subject to the
execution of a confidentiality agreement substantially the same as that
then in effect between the Company and Parent, provide such party with
access to information regarding the Company.
(d) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties
(other than Parent and Merger Sub) conducted heretofore with respect to
any of the foregoing. The Company agrees not to release any third party
from any confidentiality or standstill agreement to which the Company
is a party.
(e) The Company shall ensure that the officers and directors
and each employee that is aware of this Agreement of the Company and
its subsidiaries and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions
described in this SECTION 8.7; and shall be responsible for any breach
of this SECTION 8.7 by such bankers, advisors and representatives.
SECTION 8.8 DESCRIPTIVE HEADINGS; REFERENCES. The descriptive headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. References in this Agreement to Sections, Annexes, and the Disclosure
Letter are references to the Sections, Annexes, and the Disclosure Letter of
this Agreement unless the context indicates otherwise.
SECTION 8.9 PARTIES IN INTEREST. This Agreement will be binding upon
and inure solely to the benefit of each party to this Agreement, and, except as
provided in SECTIONS 5.8 and 8.10, nothing in this Agreement, express or
implied, is intended to
51
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 8.10 BENEFICIARIES. Parent hereby acknowledges that SECTION 5.8
is intended to benefit the indemnified parties referred to in SECTION 5.8, any
of whom will be entitled to enforce SECTION 5.8 against the Surviving
Corporation or the Company, as the case may be.
SECTION 8.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original, but all of
which will constitute one and the same agreement.
SECTION 8.12 OBLIGATIONS. Parent will perform or cause Merger Sub to
perform all of the obligations of Merger Sub under this Agreement, including
consummation of the Merger, in accordance with the terms of this Agreement.
SECTION 8.13 CERTAIN DEFINITIONS. For the purposes of this
Agreement:
(a) the term "subsidiary" means each person in which a person
owns or controls, directly or through one or more subsidiaries, 50
percent or more of the stock or other interests having general voting
power in the election of directors or persons performing similar
functions or 50 percent or more of the equity interests;
(b) the term "person" will be broadly construed to include any
individual, corporation, company, partnership, trust, joint stock
company, association, or other private or governmental entity;
(c) the term "group" has the meaning given in Section 13(d)(3)
of the Exchange Act;
(d) the term "affiliate" has the meaning given in Rule
144(a)(1) under the Securities Act; and
(e) the term "business day" has the meaning given in Rule
14d-1(c)(6) under the Exchange Act.
(f) the term "Disclosure Letter" means the disclosure letter
executed by the Company and Parent, as applicable, concurrently with
the execution and delivery of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
52
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PARENT:
XXXXX SYSTEMS CORPORATION, a
Delaware corporation
By: /s/ XXXXXXX XXXXX
--------------------------------------
Name: XXXXXXX XXXXX
------------------------------------
Title: VICE PRESIDENT
------------------------------------
MERGER SUB:
PSC HEALTH CARE, INC., a Delaware
corporation
By: /s/ XXXX X. XXXXXX
--------------------------------------
Name: XXXX X. XXXXXX
------------------------------------
Title: TREASURER
------------------------------------
COMPANY:
HEALTH SYSTEMS DESIGN CORPORATION, a
Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
--------------------------------------
Name: XXXXXX X. XXXXXXX, M.D.
------------------------------------
Title: PRESIDENT and CHIEF EXECUTIVE OFFICER
---------------------------------------
53
EXHIBIT A-1
PARTIES TO VOTING AGREEMENT
Xxxxxxx X. Xxxxx
J. Xxxxxxx Xxxxxxxxx
Xxxxxxxxx X. Xxxx
X-0-0
XXXXXXX X-0
FORM OF VOTING AGREEMENT
VOTING AGREEMENT
__________, 2000
[PARENT]
-----------------------
-----------------------
-----------------------
Re: Agreement of Stockholders Concerning Transfer and Voting of
Shares of Health Systems Design Corporation
I understand that you and Health Systems Design Corporation (the
"Company"), of which the undersigned is a stockholder, are prepared to enter
into an agreement for the merger of a wholly-owned subsidiary of Parent ("Merger
Sub ") into the Company (the "Merger"), but that you have conditioned your
willingness to proceed with such agreement (the "Agreement") upon your receipt
from me of assurances satisfactory to you of my support of and commitment to the
Merger. I am familiar with the Agreement and the terms and conditions of the
Merger. Terms used but not otherwise defined in this letter will have the same
meanings as are given them in the Agreement. In order to evidence such
commitment and to induce you to enter into the Agreement, I hereby represent and
warrant to you and agree with you as follows:
1. VOTING. I will vote or cause to be voted all shares of capital
stock of the Company owned of record or beneficially owned or held in any
capacity by me or under my control, by proxy or otherwise, in favor of the
Merger and other transactions provided for in or contemplated by the Agreement
and against any inconsistent proposals or transactions. I hereby revoke any
other proxy granted by me and irrevocably appoint you, during the term of this
letter agreement, as proxy for and on behalf of me to vote (including, without
limitation, the taking of action by written consent) such shares, for me and in
my name, place and xxxxx for the matters and in the manner contemplated by this
SECTION 1.
2. OWNERSHIP. As of the date of this letter, my only ownership
of, or interest in, equity securities of the Company, including proxies granted
to me, consists solely of the interests described in SCHEDULE 1 (collectively,
the "Shares").
3. RESTRICTION ON TRANSFER. I will not sell, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein (including the
granting of a proxy to
A-2-1
any person) or agree to sell, transfer, pledge or otherwise dispose of any of
the Shares or any interest therein, unless, as a condition to receipt of such
Shares, the transferee agrees to bound by the terms of this letter.
4. NO SOLICITATION. From the date of this letter until the
termination of this letter, I will not, directly or indirectly, (a) take any
action to solicit, initiate or encourage any Acquisition Proposal or (b) engage
in negotiations or discussions with, or disclose any nonpublic information
relating to the Company or any subsidiary of the Company to, or otherwise
assist, facilitate or encourage, any person (other than Parent and Merger Sub)
that may be considering making, or has made, an Acquisition Proposal. I will
promptly notify Merger Sub after receipt of any Acquisition Proposal or any
indication that any such third party is considering making an Acquisition
Proposal or any request for nonpublic information relating to the Company or any
subsidiary of the Company or for access to the properties, books or records of
the Company or any such subsidiary by any such third party that may be
considering making, or has made, an Acquisition Proposal and will keep Parent
fully informed of the status and details of any such Acquisition Proposal,
indication or request. The foregoing provisions of this SECTION 4 will not be
construed to limit actions taken, or to require actions to be taken, by me that
are required or restricted by my fiduciary duties or my employment duties, or
permitted by the Agreement, and that, in each case, are undertaken in my
capacity as a director or officer of the Company.
5. EFFECTIVE DATE; SUCCESSION; REMEDIES; TERMINATION. Upon your
acceptance and execution of the Agreement, this letter agreement will mutually
bind and benefit you and me, any of our heirs, successors and assigns and any of
your successors. You will not assign the benefit of this letter agreement other
than to a wholly owned subsidiary. We agree that in light of the inadequacy of
damages as a remedy, specific performance will be available to you, in addition
to any other remedies you may have for the violation of this letter agreement.
This letter agreement will terminate on the earlier of (i) the termination of
the Agreement and (ii) February 15, 2001.
6. NATURE OF HOLDINGS; SHARES. All references in this letter to
our holdings of the Shares will be deemed to include Shares held or controlled
by the undersigned, individually, jointly, or in any other capacity, and will
extend to any securities issued to the undersigned in respect of the Shares.
[STOCKHOLDER]:
--------------------------------
Name:
---------------------------
A-2-2
SCHEDULE 1
Class Number of Shares Record Owner Beneficial Owner Proxy Holder
------------------- ----------------- -------------------------- -------------------------- --------------------------
A-2-3
EXHIBIT B
FORM OF OPINION OF COMPANY COUNSEL
[TO COME]
B-1
EXHIBIT C
FORM OF ASSOCIATES AGREEMENT
[TO COME]
C-1
EXHIBIT D
NON-COMPETITION AGREEMENT
[TO COME]
D-1
EXHIBIT E
FORM OF OPINION OF PARENT AND MERGER SUB COUNSEL
[TO COME FROM THE COMPANY]
E-1
