1
Exhibit 2.1
Execution Copy
COMBINATION AGREEMENT
AMONG
AMDOCS LIMITED,
AMDOCS (DENMARK) APS.,
3026191 NOVA SCOTIA ULC
AND
ARCHITEL SYSTEMS CORPORATION
Dated as of March 2, 1999
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TABLE OF CONTENTS
PAGE NO.
1. THE ARRANGEMENT........................................................ 1
1.1 The Arrangement................................................. 1
1.2 Ancillary Agreements............................................ 4
1.3 Adjustments for Capital Changes................................. 4
1.4 Dissenting Shares............................................... 4
1.5 Registration of Amdocs Option Shares............................ 5
1.6 Other Effects of the Arrangement................................ 5
1.7 Management Information Circular/Proxy Statement; Registration
Statement....................................................... 5
1.8 Reorganization.................................................. 6
1.9 Pooling of Interests............................................ 6
1.10 Material Adverse Effect......................................... 6
1.11 Currency........................................................ 7
2. REPRESENTATIONS AND WARRANTIES OF ARCHITEL............................ 7
2.1 Organization; Good Standing; Qualification and Power............ 7
2.2 Capital Structure............................................... 7
2.3 Authority....................................................... 9
2.4 Securities Regulatory Authority Reports and Financial Statements 10
2.5 Information Supplied............................................ 12
2.6 Compliance with Applicable Laws................................. 12
2.7 Litigation...................................................... 12
2.8 ERISA and Employee Benefits..................................... 13
2.9 Absence of Undisclosed Liabilities.............................. 16
2.10 Absence of Certain Changes or Events............................ 16
2.11 Agreements...................................................... 18
2.12 No Defaults..................................................... 20
2.13 Certain Agreements.............................................. 20
2.14 Taxes........................................................... 21
2.15 Intellectual Property........................................... 22
2.16 Products........................................................ 24
2.17 Fees and Expenses............................................... 24
2.18 Insurance....................................................... 25
2.19 Ownership of Property........................................... 25
2.20 Environmental Matters........................................... 25
2.21 Interested Party Transactions................................... 26
2.22 Board Approval.................................................. 26
2.23 Vote Required................................................... 27
2.24 Disclosure...................................................... 27
2.25 Options Plans................................................... 27
2.26 Fairness and Equivalency Opinions............................... 27
2.27 Restrictions on Business Activities............................. 27
2.28 Pooling Matters................................................. 27
2.29 Books and Records............................................... 28
(i)
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2.30 Customers....................................................... 28
2.31 Year 2000 Problem............................................... 28
3. REPRESENTATIONS AND WARRANTIES OF AMDOCS, AMDOCS PARENTCO AND AMDOCS
HOLDCO...................................................................... 28
3.1 Organization; Good Standing; Qualification and Power............ 29
3.2 Capital Structure............................................... 29
3.3 Authority....................................................... 30
3.4 SEC Documents and Financial Statements.......................... 31
3.5 Information Supplied............................................ 32
3.6 Compliance with Applicable Laws................................. 32
3.7 Litigation...................................................... 33
3.8 ERISA and Employee Benefits..................................... 33
3.9 Absence of Undisclosed Liabilities.............................. 35
3.10 Absence of Certain Changes or Events............................ 35
3.11 No Defaults..................................................... 36
3.12 Taxes........................................................... 36
3.13 Intellectual Property........................................... 37
3.14 Fees and Expenses............................................... 38
3.15 Insurance....................................................... 38
3.16 Ownership of Property........................................... 38
3.17 Environmental Matters........................................... 39
3.18 Board Approval.................................................. 39
3.19 Disclosure...................................................... 39
3.20 Restrictions on Business Activities............................. 40
3.21 Pooling Matters................................................. 40
3.22 Books and Records............................................... 40
3.23 Year 2000 Problem............................................... 40
4. ARCHITEL COVENANTS....................................................... 41
4.1 Advice of Changes............................................... 41
4.2 Maintenance of Business......................................... 41
4.3 Conduct of Business............................................. 41
4.4 Shareholder Approval............................................ 44
4.5 Architel Affiliate Agreements................................... 44
4.6 Proxy Statement................................................. 44
4.7 Regulatory Approvals............................................ 45
4.8 Necessary Consents.............................................. 45
4.9 Access to Information........................................... 45
4.10 Satisfaction of Conditions Precedent............................ 45
4.11 No Other Negotiations........................................... 46
4.12 Pooling Letter.................................................. 47
4.13 Pooling Accounting Treatment.................................... 47
5. AMDOCS COVENANTS......................................................... 48
5.1 Advice of Changes............................................... 48
5.2 Maintenance of Business......................................... 48
5.3 Conduct of Business............................................. 48
(ii)
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5.4 Amdocs Affiliate Agreements..................................... 48
5.5 Regulatory Approvals............................................ 49
5.6 Necessary Consents.............................................. 49
5.7 Satisfaction of Conditions Precedent............................ 49
5.8 Indemnification................................................. 49
5.9 Listing......................................................... 50
5.10 Pooling Letter.................................................. 50
5.11 Pooling Accounting Treatment.................................... 50
5.12 Employment and Employee Benefits After the Closing.............. 50
5.13 Directors....................................................... 50
5.14 Issuance of Amdocs Ordinary Shares.............................. 51
5.15 Certain Tax Filings............................................. 51
5.16 Combined Financial Results...................................... 51
6. CLOSING MATTERS.......................................................... 51
6.1 The Closing..................................................... 51
6.2 Ancillary Documents/Reservation of Shares....................... 51
6.3 Exchange of Options............................................. 52
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCHITEL.......................... 52
7.1 Accuracy of Representations and Warranties...................... 52
7.2 Covenants....................................................... 52
7.3 Absence of Material Adverse Change.............................. 53
7.4 Compliance with Law............................................. 53
7.5 Government Consents............................................. 53
7.6 SEC Filings..................................................... 53
7.7 Opinion of Amdocs's Counsel..................................... 53
7.8 Documents....................................................... 53
7.9 Shareholder Approval............................................ 54
7.10 No Legal Action................................................. 54
7.11 Court Approval.................................................. 54
7.12 OSC, Etc........................................................ 54
7.13 Tax Opinion..................................................... 54
7.14 Pooling Opinion................................................. 55
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF AMDOCS, AMDOCS PARENTCO AND AMDOCS
HOLDCO...................................................................... 55
8.1 Accuracy of Representations and Warranties...................... 55
8.2 Covenants....................................................... 55
8.3 Absence of Material Adverse Change.............................. 55
8.4 Compliance with Law............................................. 55
8.5 Government Consents............................................. 56
8.6 SEC Filings..................................................... 56
8.7 Opinion of Architel's Counsel................................... 56
8.8 Documents....................................................... 56
8.9 Architel Approvals.............................................. 56
8.10 No Legal Action................................................. 56
8.11 Pooling Opinion................................................. 57
(iii)
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8.12 Court Approval.................................................. 57
8.13 OSC, Etc........................................................ 57
9. TERMINATION OF AGREEMENT................................................. 57
9.1 Termination..................................................... 57
9.2 Notice of Termination........................................... 59
9.3 Effect of Termination........................................... 59
9.4 Termination Fees................................................ 59
10. SURVIVAL OF REPRESENTATIONS............................................. 60
11. MISCELLANEOUS........................................................... 61
11.1 Governing Law................................................... 61
11.2 Assignment; Binding Upon Successors and Assigns................. 61
11.3 Severability.................................................... 61
11.4 Counterparts.................................................... 61
11.5 Other Remedies.................................................. 61
11.6 Amendment and Waivers........................................... 61
11.7 Expenses........................................................ 62
11.8 Attorneys' Fees................................................. 62
11.9 Notices......................................................... 62
11.10 Construction of Agreement....................................... 64
11.11 No Joint Venture................................................ 64
11.12 Further Assurances.............................................. 64
11.13 Absence of Third Party Beneficiary Rights....................... 64
11.14 Public Announcement............................................. 65
11.15 Entire Agreement................................................ 65
(iv)
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EXHIBITS
Exhibit 1.1 Plan of Arrangement
Exhibit 1.1(i) Amdocs Special Voting Share
Exhibit 1.2(i) Voting and Exchange Trust Agreement
Exhibit 1.2(ii) Support Agreement
Exhibit 2.9 Architel Balance Sheet
Exhibit 3.9 Amdocs Balance Sheet
Exhibit 4.4 Option Agreements
Exhibit 4.5 Architel Affiliate Agreement
Exhibit 5.4 Amdocs Affiliate Agreements
As required by Rule 601(b)(2) of Regulation S-K, the registrant agrees to
furnish supplementally a copy of any omitted exhibit or schedule to the
Commission upon request.
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COMBINATION AGREEMENT
COMBINATION AGREEMENT dated as of March 2, 1999, among Amdocs Limited, a
Guernsey corporation ("Amdocs"), Amdocs (Denmark) ApS., a Danish corporation
("Amdocs Parentco"), 3026191 Nova Scotia ULC, a Nova Scotia unlimited liability
company ("Amdocs Holdco"), and Architel Systems
Corporation, a Canadian corporation ("Architel").
RECITALS
A. The respective Boards of Directors of Architel, Amdocs, Amdocs Parentco and
Amdocs Holdco have approved the transactions contemplated by this Agreement, and
the Board of Directors of Architel has agreed to submit the Plan of Arrangement
(as defined in Section 1.1) and other transactions contemplated hereby to its
shareholders for approval.
B. The Arrangement is intended to be treated as (i) a reorganization of capital
for purposes of section 86 of the Income Tax Act (Canada) (the "ITA"), to the
extent that Exchangeable Shares (as defined below) are received in exchange for
Architel Common Shares (as defined below), (ii) a reorganization pursuant to the
provisions of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended
(the "Code"), and (iii) a "pooling of interests" transaction under Opinion 16 of
the Accounting Principles Board ("APB 16") and applicable rules and regulations
of the Securities and Exchange Commission ("SEC").
C. The parties hereto acknowledge the execution and delivery of that certain
Share Option Agreement dated of even date herewith (the "Amdocs Option
Agreement"), between Architel and Amdocs Parentco concurrently with the
execution and delivery of this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. THE ARRANGEMENT
1.1 The Arrangement.
As promptly as practicable after the execution of this Agreement (the
"Court Application Date"), Architel will apply to the Ontario Court of Justice
(General Division) (the "Court") pursuant to section 192 of the Canada Business
Corporations Act (the "CBCA") for an interim order in form and substance
satisfactory to Amdocs (such approval not to be unreasonably withheld or
delayed) (the "Interim Order") providing for, among other things, the calling
and holding of the Architel Shareholders Meeting (as defined below), to be held
for the purpose of considering and, if deemed advisable, approving the
arrangement (the "Arrangement") under section 192 of the CBCA and pursuant to
the Agreement and Plan of Arrangement substantially in the form of Exhibit 1.1
hereto (the "Plan of Arrangement"). No later than two business days prior to the
Court Application Date, Architel will provide Amdocs with copies of the
application and
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other documents to be filed with the Court in connection with obtaining the
Interim Order, which application and other documents shall be in form and
substance satisfactory to Amdocs (such approval not to be unreasonably withheld
or delayed). If the Architel shareholders approve the Arrangement, thereafter
Architel will take the necessary steps to submit the Arrangement to the Court
and apply for a final order of the Court approving the Arrangement in such
fashion as the Court may direct (the "Final Order"). At 12:01 a.m. (the
"Effective Time") on the date (the "Effective Date") shown on the certificate of
arrangement issued by the Director under the CBCA giving effect to the
Arrangement, the following reorganization of capital and other transactions
shall occur and shall be deemed to occur in the following order without any
further act or formality:
(a) The articles of incorporation of Architel shall be amended to: (i)
delete the preferred shares from the authorized share capital, (ii)
replace the rights, privileges, restrictions and conditions
attaching to the common shares of Architel (the "Architel Common
Shares") with those substantially as set forth in Appendix A to the
Plan of Arrangement and (iii) authorize an unlimited number of
exchangeable shares (the "Exchangeable Shares") and one Class A
Preferred Share (the "Class A Preferred Share") of Architel having
the respective rights, privileges, restrictions and conditions
substantially as set forth in Appendix A to the Plan of Arrangement.
(b) Architel shall issue to Amdocs Holdco one Class A Preferred Share in
consideration of the transfer by Amdocs Holdco to Architel of one
common share, no par value, of Amdocs Holdco. The stated capital of
the Class A Preferred Share shall be equal to the fair market value,
as determined by the board of directors of Architel, of one Amdocs
Ordinary Share (as defined below). No certificate shall be issued in
respect of the Class A Preferred Share.
(c) Each of the Architel Common Shares (other than, for greater
certainty, the Architel Common Share subscribed for by Amdocs Holdco
pursuant to subsection (f) below and the Architel Common Shares held
by Dissenting Shareholders (as hereinafter defined)) will be
exchanged for a number of Exchangeable Shares (the "Exchange Ratio")
at an exchange ratio equal to 0.95 of an Exchangeable Share per
Architel Common Share. Each holder of Architel Common Shares (other
than, for greater certainty, Amdocs Holdco and Dissenting
Shareholders) will receive that whole number of Exchangeable Shares
resulting from the exchange of such holder's Architel Common Shares.
In lieu of fractional Exchangeable Shares, each holder of a Architel
Common Share who otherwise would be entitled to receive a fraction
of an Exchangeable Share shall be paid by Architel an amount
determined in accordance with the Plan of Arrangement.
(d) Upon the exchange referred to in paragraph (c) above, each holder of
a Architel Common Share shall cease to be such a holder, shall have
his name removed from the register of holders of Architel Common
Shares and shall become a holder of the number of fully paid
Exchangeable Shares to which he is entitled as a result of the
exchange referred to in paragraph (c) and such holder's name shall
be added to the register of holders of Exchangeable Shares
accordingly.
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(e) The aggregate stated capital attributable to the Exchangeable Shares
will be equal to the aggregate stated capital attributable to the
Architel Common Shares immediately prior to the Arrangement.
(f) The one outstanding Class A Preferred Share will be exchanged for
one Architel Common Share and the holder thereof shall cease to be a
holder of the Class A Preferred Share, shall have its name removed
from the register of holders of Class A Preferred Shares and shall
become a holder of the one fully paid and non-assessable Architel
Common Share to which it is entitled as a result of the exchange
referred to in this paragraph (f) and such holder's name shall be
added to the register of holders of Architel Common Shares
accordingly.
(g) The stated capital attributable to the one Architel Common Share
shall be equal to the stated capital attributable to the one Class A
Preferred Share prior to the Arrangement.
(h) Each of the then outstanding options to purchase Architel Common
Shares (collectively, the "Architel Options") (including all
outstanding options granted under Architel's 1994 Flexible Share
Incentive Plan, the 1996 Stock Option Plan, Accugraph Corporation
1992 Directors and Officers Stock Option Plan, Accugraph Corporation
Key Employee Stock Option Plan and Accugraph Corporation 1996 Stock
Option Plan (the "Architel Option Plans")) will, without any further
action on the part of any holder thereof, be exchanged for an option
(collectively, the "Amdocs Options") to purchase that number of
ordinary voting shares, par value (pound sterling) 0.01 per share,
of Amdocs (collectively, "Amdocs Ordinary Shares") determined by
multiplying the number of Architel Common Shares subject to such
Architel Option at the Effective Time by the Exchange Ratio (rounded
down to the nearest whole share), at an exercise price per Amdocs
Ordinary Share equal to the the exercise price per Architel Common
Share of such Architel Option immediately prior to the Effective
Time divided by the Exchange Ratio (rounded up to the nearest whole
cent). Except as provided above, the term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of
the Code, if applicable, and all other terms and conditions of the
Architel Options will otherwise continue with respect to the Amdocs
Options. Continuous employment with Architel or any of the Architel
Subsidiaries (as hereinafter defined) will be credited to an
optionee of Architel for purposes of determining the number of
Amdocs Ordinary Shares subject to exercise under an exchanged
Architel Option after the Effective Time.
(i) Amdocs shall issue to and deposit with a Canadian trust company to
be selected by Amdocs (the "Trustee"), a single share of a new class
of preferred share capital having the rights, privileges,
restrictions and conditions substantially as set forth in Exhibit
1.1(i) hereto (the "Amdocs Special Voting Share"), in consideration
of the payment to Amdocs of US$1.00 to be thereafter held of record
by the Trustee as trustee for and on behalf of, and for the use and
benefit of, the holders of the
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Exchangeable Shares in accordance with the Voting and Exchange Trust
Agreement (as hereinafter defined).
(j) Amdocs Holdco shall be entitled to enforce the exchange rights and
call rights set out in Articles 5, 6 and 7 of the Exchangeable Share
Provisions set forth in Appendix A to the Plan of Arrangement and in
Sections 5.1 and 5.2 of the Plan of Arrangement and in exercising
such rights Amdocs Holdco will not be required to purchase
Exchangeable Shares from itself, Amdocs or Amdocs Parentco.
1.2 Ancillary Agreements.
On or before the Effective Date:
(i) Amdocs, Amdocs Parentco, Amdocs Holdco, Architel and the
Trustee shall execute and deliver a Voting and Exchange Trust
Agreement substantially in the form of Exhibit 1.2(i) hereto
(the "Voting and Exchange Trust Agreement").
(ii) Amdocs, Amdocs Parentco, Amdocs Holdco and Architel shall
execute and deliver a Support Agreement substantially in the
form of Exhibit 1.2(ii) hereto (the "Support Agreement").
1.3 Adjustments for Capital Changes.
If, prior to the Effective Time, Amdocs or Architel recapitalizes through
a subdivision of its outstanding shares into a greater number of shares, or a
combination of its outstanding shares into a lesser number of shares, or
reorganizes, reclassifies or otherwise changes its outstanding shares into the
same or a different number of shares of other classes, or declares a dividend on
its outstanding shares payable in shares of its capital stock or securities
convertible into shares of its capital stock, then the Exchange Ratio will be
adjusted appropriately so as to maintain the relative proportionate interests of
the holders of Architel Common Shares and the holders of Amdocs Ordinary Shares.
1.4 Dissenting Shares.
Holders of Architel Common Shares may exercise rights of dissent with
respect to such shares in connection with the Arrangement pursuant to and in the
manner set forth in section 190 of the CBCA and Section 3.1 of the Plan of
Arrangement (such holders referred to as "Dissenting Shareholders"). Architel
shall give Amdocs (i) prompt notice of any written demands of a right of
dissent, withdrawals of such demands, and any other instruments served pursuant
to the CBCA and received by Architel, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to such rights. Architel shall
not, except with the prior written consent of Amdocs, voluntarily make any
payment with respect to any such rights or offer to settle or settle any such
rights. All payments to Dissenting Shareholders shall be the sole responsibility
of Architel, and Amdocs will not directly or indirectly provide any funds for
the purposes of making payments to Dissenting Shareholders. In the event that
Architel does not have sufficient funds to make
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payments to Dissenting Shareholders, Architel will undertake to borrow the funds
necessary to make such payments from sources other than Amdocs or any affiliate
of Amdocs.
1.5 Registration of Amdocs Option Shares.
Amdocs will cause the Amdocs Ordinary Shares issuable upon exercise of the
assumed Architel Options to be registered on Form S-8 promulgated by the SEC as
soon as reasonably practicable after the Effective Time and will use its
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such exchanged
Architel Options shall remain outstanding.
1.6 Other Effects of the Arrangement.
At the Effective Time: (a) the bylaws of Architel immediately prior to the
Effective Time will continue as the bylaws of Architel, subject to later
amendment; (b) the directors of Architel will be as recommended by Amdocs prior
to the Effective Time and will be nominated and appointed to the Board of
Directors of Architel in such a way that a Triggering Event (as defined in
Architel's 1996 Stock Option Plan) or any other similar acceleration provision
under any other of the Architel Option Plans does not occur; (c) the officers of
Architel will be as designated by Amdocs prior to the Effective Time; (d) each
Architel Common Share and each Architel Option outstanding immediately prior to
the Effective Time will be exchanged as provided in Sections 1.1(c) and 1.1(h);
and (e) the Arrangement will, from and after the Effective Time, have all of the
effects provided by applicable law, including, without limitation, the CBCA.
1.7 Management Information Circular/Proxy Statement; Registration
Statement.
(a) As promptly as practicable after execution of this Agreement, and in
any event within 45 days thereafter, Amdocs and Architel shall
prepare a management information circular and proxy statement (the
"Proxy Statement") in connection with the Arrangement. The Proxy
Statement shall constitute (i) the management information circular
of Architel with respect to the Architel Shareholders Meeting
relating to the Arrangement, and (ii) the prospectus with respect to
the issuance by Architel of the Exchangeable Shares in connection
with the Arrangement, which prospectus may, if Amdocs's counsel or
Architel's counsel determines it is required by the Securities Act
of 1933, as amended (the "Securities Act"), be included in a
registration statement filed by Architel on Form F-4 or such other
registration Form as may be applicable (collectively, the "Form
F-4"). Architel shall cause the Proxy Statement to be mailed to its
shareholders as required by the Interim Order and applicable laws no
later than 10 days after the Shelf (as defined below) becomes
effective. Notwithstanding anything in this Agreement to the
contrary, Architel shall be under no obligation to file the Form F-4
if Amdocs shall have determined on the advice of its counsel that
the issuance of the Exchangeable Shares pursuant to the Arrangement
is exempt from the registration requirements of section 5 of the
Securities Act by virtue of section 3(a)(10) thereof. Amdocs will
file a registration statement on Form S-1, F-1 or F-3 (the "Shelf")
in order to register the Amdocs Ordinary Shares to be issued from
time to time after the
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Effective Time upon exchange of the Exchangeable Shares and use its
commercially reasonable efforts to maintain the effectiveness of
such registration for such period as the Exchangeable Shares remain
outstanding, and Amdocs and Architel shall use all commercially
reasonable efforts to cause the Shelf to become effective.
(b) Each party shall promptly furnish to the other party all information
concerning such party and its shareholders as may be reasonably
required in connection with any action contemplated by this Section
1.7. The Proxy Statement and, if required, the Form F-4 and the
Shelf shall comply in all material respects with all applicable
requirements of law. Each of Amdocs and Architel will notify the
other promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or
supplements to the Form F-4 or the Shelf or for additional
information, and will supply the other with copies of all
correspondence with the SEC or its staff with respect to the Form
F-4 or the Shelf. Whenever any event occurs with respect to Architel
which should be set forth in an amendment or supplement to the Proxy
Statement or the Form F-4 or the Shelf, Architel shall promptly
inform Amdocs of such occurrence and cooperate with Amdocs in filing
with the SEC or its staff, and/or mailing to stockholders of
Architel, such amendment or supplement.
1.8 Reorganization.
The parties intend to adopt the Arrangement as a plan of reorganization
under Section 368(a)(1) of the Code and the parties intend to adopt the
Arrangement as a reorganization of capital of Architel under Section 86 of the
ITA, to the extent that the Exchangeable Shares are received in exchange for
Architel Common Shares.
1.9 Pooling of Interests.
The parties intend that the Arrangement be treated as a "pooling of
interests" under APB 16 and applicable SEC rules and regulations. Promptly
following the execution of this Agreement, Amdocs and Architel shall use their
respective commercially reasonable efforts to obtain and deliver to each other
Affiliates Agreements from their respective affiliates, as contemplated by
Section 4.5 and Section 5.4.
1.10 Material Adverse Effect.
In this Agreement, any reference to any event, change or effect being
"material" with respect to any entity or group of entities means any material
event, change or effect related to the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations, results of operations
or prospects of such entity or group of entities. In this Agreement, the term
"Material Adverse Effect" used with respect to a party means any event, change
or effect that is materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations, results of operations
or prospects of such party and its subsidiaries, taken as a whole; provided that
a Material Adverse Effect shall not include (i) any adverse effect resulting
from
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changes in general economic conditions or conditions generally affecting
the telecommunications or software industry or (ii) quarterly fluctuations in
financial results so long as the fluctuations are not attributable to a change
in long term prospects.
1.11 Currency.
Unless otherwise specified, all references in this Agreement to "dollars"
or "$" shall mean United States dollars.
2. REPRESENTATIONS AND WARRANTIES OF ARCHITEL
Except as set forth in a letter dated the date of this Agreement and
delivered by Architel to Amdocs concurrently herewith (the "Architel Disclosure
Letter"), Architel hereby represents and warrants to Amdocs and Amdocs Holdco
that:
2.1 Organization; Good Standing; Qualification and Power.
Each of Architel and each corporation, partnership, company, joint venture
and other entity in which Architel beneficially owns or controls, directly or
indirectly, more than 50% of the equity, voting rights, profits interest,
capital or other similar interest thereof, (the "Architel Subsidiaries") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, has all requisite power and authority and is in
possession of all material franchises, grant authorizations, licenses, permits,
easements, covenants, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate its properties and to carry on its business as now
being conducted and as contemplated to be conducted in the future, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not have a Material Adverse Effect on Architel. Section 2.1 of
the Architel Disclosure Letter sets forth a correct and complete list of the
Architel Subsidiaries, together with the jurisdiction of incorporation or
organization of each Architel Subsidiary, and percentage of each Architel
Subsidiary's outstanding capital stock owned by Architel or another Architel
Subsidiary and a correct and complete list of each jurisdiction in which
Architel and each Architel Subsidiary are duly qualified and in good standing to
do business. Architel has delivered to Amdocs's counsel complete and correct
copies of the certificates or articles of incorporation (or similar documents)
and bylaws of Architel and each Architel Subsidiary, in each case as amended to
the date of this Agreement and currently in effect. Neither Architel nor any of
the Architel Subsidiaries is in violation of any of the provisions of its
articles of incorporation or by-laws or equivalent organizational documents.
Architel is a reporting issuer under the Securities Act (Ontario) and the
equivalent securities laws in all other provinces of Canada, except Quebec, and
is not in default of any requirement of any securities act in Canada or the
regulations thereunder.
2.2 Capital Structure.
(a) Stock and Options. The authorized capital stock of Architel consists
of an unlimited number of Architel Common Shares, without par value,
and an unlimited
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number of Preference Shares, without par value, issuable in series
(the "Architel Preferred Shares"). At the close of business on March
1, 1999, 15,173,023 Architel Common Shares were issued and
outstanding. An aggregate of 2,331,016 Architel Common Shares are
reserved and authorized for issuance pursuant to the Architel Option
Plans in respect of which Architel Options granted pursuant to the
Architel Option Plans to purchase a total of 1,862,418 Architel
Common Shares were outstanding as of March 1, 1999. No Architel
Preferred Shares are issued or outstanding. All issued and
outstanding Architel Common Shares and all issued and outstanding
shares of the capital stock of each of the Architel Subsidiaries
have been duly authorized and validly issued and are fully paid and
non-assessable, are not subject to preemptive rights, are not
subject to any right of rescission, and have been offered, issued,
sold and delivered by Architel and each of the Architel Subsidiaries
in compliance with all registration, qualification and prospectus
requirements (or applicable exemptions therefrom) of applicable
securities laws. Except as set forth in Section 2.1 of the Architel
Disclosure Letter, Architel does not have any subsidiaries or any
equity interest, direct or indirect, in any corporation,
partnership, joint venture or other business entity, and except as
disclosed in the Architel Disclosure Letter, all such equity
interests are held beneficially by Architel free and clear of any
lien, security interest, charge or encumbrance. With respect to each
Architel Subsidiary, the Architel Disclosure Letter lists all
shareholders, the number of shares held by each shareholder, the
number of directors (or local law equivalent) of such Architel
Subsidiary and the officers (or local law equivalent) of such
Architel Subsidiary. Section 2.2(a) of the Architel Disclosure
Letter sets forth a correct and complete list of each Architel
Option outstanding as of the date hereof, including the name of the
holder thereof, the Architel Option Plan pursuant to which such
Architel Option was issued, the grant date, the number of shares
covered by such Architel Option, the per share exercise price and
the vesting schedule applicable to each such Architel Option.
(b) No Other Commitments. Except for the Architel Options disclosed in
Section 2.2(a) above and listed in the Architel Disclosure Letter
and except for the obligations of Architel under this Agreement,
there are no options, warrants, calls, rights (including, without
limitation, stock appreciation rights), commitments, conversion
rights or agreements of any character to which Architel or any of
the Architel Subsidiaries is a party or by which Architel or any of
the Architel Subsidiaries is bound obligating Architel or any of the
Architel Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of capital stock of Architel
or any of the Architel Subsidiaries or securities convertible into
or exchangeable for shares of capital stock of Architel or any of
the Architel Subsidiaries, or obligating Architel or any of the
Architel Subsidiaries to grant, extend or enter into any such
option, warrant, call, right, commitment, conversion right or
agreement. There are no voting trusts or other agreements or
understandings to which Architel is a party with respect to the
voting of the capital stock of Architel or any of the Architel
Subsidiaries.
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(c) Registration Rights. Architel is not under any obligation to
register under the Securities Act or any similar laws of any
jurisdiction any of its presently outstanding securities or any
securities that it may subsequently issue.
2.3 Authority.
(a) Corporate Action. Architel has all requisite corporate power and
authority to enter into this Agreement, the Amdocs Option Agreement
and the Arrangement (subject to its approval by the shareholders of
Architel and by the Court), to perform its obligations hereunder and
thereunder and to consummate the Arrangement and the other
transactions contemplated by this Agreement and the Amdocs Option
Agreement. The execution and delivery of this Agreement and the
Amdocs Option Agreement by Architel and the consummation by Architel
of the Arrangement (subject to its approval by the shareholders of
Architel and the Court) and the other transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action on the part of Architel. This Agreement and the
Amdocs Option Agreement have been duly executed and delivered by
Architel and this Agreement and the Amdocs Option Agreement are
valid and binding obligations of Architel, enforceable in accordance
with their respective terms, except that such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization or other
similar laws affecting or relating to enforcement of creditors'
rights generally and (ii) general equitable principles.
(b) No Conflict. Neither the execution, delivery and performance of this
Agreement, the Amdocs Option Agreement or the Plan of Arrangement by
Architel, nor the consummation of the transactions contemplated
hereby or thereby by Architel nor compliance with the provisions
hereof or thereof by Architel will: (i) conflict with, or result in
any violations of, the articles of incorporation or bylaws of
Architel or the comparable governing instruments of any of the
Architel Subsidiaries, (ii) result in any breach or violation of or
cause a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or the
loss of any material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the
material properties or assets of Architel or any of the Architel
Subsidiaries under, any term, condition or provision of any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, judgment, order, decree, statute, law, ordinance, rule,
license, permit or regulation applicable to Architel or any of the
Architel Subsidiaries or their respective properties or assets,
other than any such breaches, violations, defaults, rights, losses,
liens, security interests, charges or encumbrances which,
individually or in the aggregate, would not have a Material Adverse
Effect on Architel, or (iii) except for the requirement that the
Arrangement be approved by the holders of at least two-thirds (or
such other proportion as may be set out in the Interim Order or
required by applicable securities and stock exchange rules) of the
outstanding Architel Common Shares who are permitted to, and who,
vote in accordance with
16
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the CBCA at the Architel Shareholders Meeting, require any vote of
the holders of the issued and outstanding Architel Common Shares.
(c) Governmental Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any court,
administrative agency, regulatory body or commission or other
governmental authority or instrumentality, whether federal, state or
local and whether domestic or foreign (each a "Governmental
Entity"), is required to be obtained by Architel or any of the
Architel Subsidiaries in connection with the execution and delivery
of this Agreement, the Amdocs Option Agreement or the Plan of
Arrangement or the consummation of the transactions contemplated
hereby or thereby, except for: (i) the filing with the Ontario
Securities Commission ("OSC"), all other Canadian provincial or
territorial securities regulatory authorities having jurisdiction
and the Court, and the SEC on Form 6-K, and the mailing to
shareholders of Architel of the Proxy Statement relating to the
meeting of the shareholders of Architel (the "Architel Shareholders
Meeting") to be held with respect to the approval by Architel's
shareholders of this Agreement and the Arrangement, (ii) the filing
of the Form F-4 or the Shelf or the furnishing to the SEC of such
reports and information under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations
promulgated by the SEC thereunder, as may be required in connection
with this Agreement and the transactions contemplated hereby (the
"SEC Filings"); (iii) approval of the Court to the Arrangement and
the filings of the Articles of Arrangement and any other required
amalgamation, arrangement or other documents as required by the
CBCA; (iv) such filings, authorizations, orders and approvals as may
be required under state "control share acquisition," "anti-takeover"
or other similar statutes and regulations (collectively, "State
Takeover Laws"); (v) such filings, authorizations, orders and
approvals as may be required under the Securities Act (Ontario) and
other relevant Canadian securities statutes, any other applicable
federal, provincial or state securities laws and the rules of the
National Association of Securities Dealers, Inc. (the "NASD") or The
Toronto Stock Exchange (the "TSE"); (vi) such filings and
notifications as may be necessary under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act");
(vii) required notices, filings and consents under the Investment
Canada Act and under the Competition Act (Canada), where the failure
to obtain such consents, approvals, etc., would not prevent or delay
the consummation of the Arrangement or otherwise prevent Architel
from performing its obligations under this Agreement or the Amdocs
Option Agreement and would not reasonably be expected to have a
Material Adverse Effect on Architel.
2.4 Securities Regulatory Authority Reports and Financial Statements.
(a) Canadian Compliance. Since September 30, 1995, Architel has filed
all forms, reports and documents with the OSC required to be filed
by it pursuant to the Securities Act (Ontario) and the regulations
promulgated thereunder, the comparable statutes and regulations of
all other Canadian provincial securities regulatory authorities
having jurisdiction and the applicable policies and rules of
17
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the OSC and all other Canadian provincial securities regulatory
authorities having jurisdiction (collectively, the "Architel
Reports"), all of which complied when filed in all material respects
with all applicable requirements of such statute, regulations,
policies and rules. None of the Architel Reports, at the time filed
or as subsequently amended, 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
therein, in light of the circumstances under which they were made,
not misleading. Prior to the Closing Date, Architel will deliver to
Amdocs's outside counsel correct and complete copies of each
Architel Report.
(b) SEC Documents. Architel has delivered to Amdocs's counsel correct
and complete copies of each report, schedule, registration statement
and definitive proxy statement (other than preliminary material)
filed by Architel with the SEC on or after January 1, 1996 (the
"Architel SEC Documents"), which are all the documents that Architel
was required to file with the SEC on or after such date. As of their
respective dates or, in the case of registration statements, their
effective dates (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), none
of the Architel SEC Documents (including all exhibits and schedules
thereto and documents incorporated by reference therein) contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and the Architel SEC Documents
complied when filed in all material respects with the then
applicable requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations promulgated by the
SEC thereunder. Architel has filed all material documents and
agreements which were required to be filed as exhibits to the
Architel SEC Documents.
(c) Financial Statements. The consolidated balance sheets and the
consolidated statements of operations, retained earnings and changes
in financial position (including the related notes thereto) of
Architel contained in the Architel Reports and the Architel SEC
Documents present fairly the consolidated financial position and the
consolidated results of operations and changes in financial position
of Architel and its consolidated subsidiaries as of the dates or for
the periods presented therein in conformity with Canadian generally
accepted accounting principles ("Canadian GAAP") applied on a
consistent basis during the periods involved, except as otherwise
noted therein and subject in the case of quarterly financial
statements to normal and recurring year-end audit adjustments. Note
14 to Architel's audited financial statements bearing an audit
opinion dated November 9, 1998 (January 22, 1999 for Note 14(j))
fairly describes the principal differences between Canadian GAAP and
United States generally accepted accounting principles ("US GAAP")
as they apply to Architel and reconcile to US GAAP net income and
shareholders equity for the periods and as of the dates therein
indicated. The financial statements of Architel included in the
Architel SEC Documents complied as to form in all material respects
with the then applicable
18
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accounting requirements and the published rules and regulations of
the SEC with respect thereto.
2.5 Information Supplied.
None of the information supplied or to be supplied by Architel for
inclusion or incorporation by reference (a) in the Proxy Statement (and, if
filed, the Form F-4 and Shelf) and (b) in any other document to be filed with
the SEC or any regulatory agency by Architel or Amdocs in connection with the
transactions contemplated by this Agreement will, at the time the Proxy
Statement is mailed to the shareholders of Architel and at the time of the
Architel Shareholders Meeting (and, if filed, at the time the Form F-4 or Shelf
is declared effective, at the Effective Time and on the date of any
post-effective amendment thereto), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the CBCA and applicable
Canadian securities laws and the rules and regulations promulgated thereunder.
If at any time prior to the Effective Time any event relating to Architel or any
of its affiliates, officers or directors should be discovered by Architel that
should be set forth in an amendment to the Form F-4 or Shelf or a supplement to
the Proxy Statement, Architel shall promptly inform Amdocs and shall coordinate
with Amdocs in effecting the filing of such amendment or supplement as promptly
as practicable.
2.6 Compliance with Applicable Laws.
Except as disclosed in Section 2.6 of the Architel Disclosure Letter, the
businesses of Architel and the Architel Subsidiaries are not being conducted in
violation of any law, ordinance, regulation, rule or order of any Governmental
Entity where such violation would have a Material Adverse Effect on Architel.
Except as disclosed in Section 2.6 of the Architel Disclosure Letter, Architel
has not been notified by any Governmental Entity that any investigation or
review with respect to Architel or any of the Architel Subsidiaries is pending
or threatened, nor has any Governmental Entity notified Architel of its
intention to conduct the same. Architel and the Architel Subsidiaries have all
material permits, licenses and franchises from Governmental Entities required to
conduct their businesses as now being conducted, and are in material compliance
with all such permits, licenses and franchises, except for those whose absence
would not have a Material Adverse Effect on Architel.
2.7 Litigation.
Except as disclosed in Section 2.7 of the Architel Disclosure Letter,
there is no suit, action, arbitration, demand, claim or proceeding pending or,
to the best knowledge of Architel, threatened against Architel or any of the
Architel Subsidiaries or any of their respective officers in their capacity as
such that could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Architel; nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Architel or any of the Architel Subsidiaries that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect on
Architel. Architel has made available to Amdocs correct and complete copies
19
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of all audit response letters prepared by its counsel for Architel's auditors in
connection with the last two completed audits of Architel's financial statements
and any such correspondence since the date of the last such audit.
2.8 ERISA and Employee Benefits.
(a) Prior to the Closing Date, Architel shall deliver to Amdocs a
schedule setting forth a list of all employees of Architel and of
any Architel Subsidiary ("Employees") and their salaries (and the
date and amount of their most recent salary increase) and other
benefits and identifies those employees considered key employees by
Architel or any Architel Subsidiary. Section 2.8 of the Architel
Disclosure Letter identifies (i) each "employee benefit plan," as
defined in section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), regardless of whether ERISA is
applicable thereto, and (ii) all other Architel Benefit Arrangements
(as defined below) (including those sponsored by the federal or any
provincial government of Canada), and all other material written or
formal plans or agreements, if any, which currently provides
compensation or benefits to any Employee or former employee of
Architel or any of the Architel Subsidiaries (including any
employment agreements entered into between Architel or any of the
Architel Subsidiaries and any Employee and workers' compensation,
unemployment compensation and other government-mandated programs)
and which is currently or previously was maintained, contributed to
or entered into by Architel or any of the Architel Subsidiaries
under which Architel or any of the Architel Subsidiaries or any
ERISA Affiliate (as defined below) thereof has any present
obligation or liability (collectively, the "Architel Employee
Plans"). For purposes of this Section 2.8, "ERISA Affiliate" shall
mean any entity which is a member of (A) a "controlled group of
corporations," as defined in section 414(b) of the Code, (B) a group
of entities under "common control," as defined in section 414(c) of
the Code, or (C) an "affiliated service group," as defined in
section 414(m) of the Code, or treasury regulations promulgated
under section 414(o) of the Code, any of which includes Architel or
any of the Architel Subsidiaries. Copies of all Architel Employee
Plans (and, if applicable, related trust agreements) and all
amendments thereto and any summary plan descriptions shall have been
delivered to Amdocs or its counsel prior to Closing (as defined in
Section 6.1), together with the three most recent annual reports
(Form 5500, including, if applicable, schedule B thereto) prepared
in connection with any such Architel Employee Plan. All Architel
Employee Plans which individually or collectively would constitute
an "employee pension benefit plan," as defined in section 3(2) of
ERISA (collectively, the "Architel Pension Plans"), are identified
as such in the Section 2.8 of the Architel Disclosure Letter. All
contributions due from Architel or any of the Architel Subsidiaries
through the Effective Time with respect to any of the Architel
Employee Plans has been or will be timely made as required under
ERISA or any other applicable legislation or have been accrued on
Architel's or any such Architel Subsidiary's financial statements as
of December 31, 1998. Except as set forth in Section 2.8(a) of the
Architel Disclosure Letter, each Architel Employee Plan is in
compliance in all material respects with, and has been
20
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maintained in material compliance with its terms and with the
requirements prescribed by, any and all statutes, orders, rules and
regulations, including, without limitation, ERISA and the Code,
which are applicable to such Architel Employee Plans. Each Architel
Employee Plan that is required or intended to be qualified under
applicable law or registered or approved by a governmental agency or
authority has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has
occurred since the date of the last qualification, registration or
approval to adversely affect, or cause, the appropriate governmental
agency or authority to revoke, such qualification, registration or
approval.
(b) No Architel Pension Plan constitutes, or has since the enactment of
ERISA constituted, a "multiemployer plan," as defined in section
3(37) of ERISA. No Architel Pension Plans are subject to Title IV of
ERISA. No "prohibited transaction," as defined in section 406 of
ERISA or section 4975 of the Code, has occurred with respect to any
Architel Employee Plan which is covered by Title I of ERISA which
would result in a material liability to Architel and the Architel
Subsidiaries taken as a whole, excluding transactions effected
pursuant to a statutory or administrative exemption. Nothing done or
omitted to be done and no transaction or holding of any asset under
or in connection with any Architel Employee Plan has or will make
Architel or any officer or director of Architel subject to any
material liability under Title I of ERISA or liable for any material
Tax (as defined in Section 2.14) or penalty pursuant to sections
4972, 4975, 4976 or 4979 of the Code or section 502 of ERISA.
(c) Any Architel Pension Plan which is intended to be qualified under
section 401(a) of the Code (a "Architel 401(a) Plan") is so
qualified and has been so qualified during the period from its
adoption to date, and the trust forming a part thereof is exempt
from tax pursuant to section 501(a) of the Code. Architel has
delivered or prior to the Closing Date will deliver to Amdocs or its
counsel a complete and correct copy of the most recent Internal
Revenue Service determination letter with respect to each Architel
401(a) Plan.
(d) Except for those Architel Benefit Arrangements (as defined below)
regarding severance benefits or employment termination which exist
under the employment laws, regulations or judicial decisions
relating to employers in Canada and other jurisdictions in which
Architel or any Architel Subsidiary has employees ("Employer Laws"),
the Architel Disclosure Letter identifies each employment,
consulting, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing for
insurance coverage (including any self-insured arrangements),
workers' benefits, vacation benefits, severance benefits, disability
benefits, death benefits, hospitalization benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other
forms of incentive compensation or post-retirement insurance,
compensation or benefits for employees, consultants or directors
which (A) is not a Architel Employee Plan, (B)
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is entered into, maintained or contributed to, as the case may be,
by Architel or any of the Architel Subsidiaries and (C) covers any
Employee or former employee of Architel or any of the Architel
Subsidiaries. Such contracts, plans and arrangements as are
described in this Section 2.8(d) are herein referred to collectively
as the "Architel Benefit Arrangements." Each Architel Benefit
Arrangement has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations that are applicable to such Architel
Benefit Arrangement. Architel has delivered to Amdocs or its counsel
a complete and correct copy or description of each Architel Benefit
Arrangement. None of the Architel Benefits Arrangements or Architel
Employee Plans promises or provides retiree medical or retiree
insurance benefits to any current or former employee, other than (i)
coverage mandated by applicable law, (ii) death benefits under any
"pension plan" or (iii) benefits the full cost of which is borne by
the current or former employee (or his beneficiary).
(e) Except as set forth in Section 2.8(e) of the Architel Disclosure
Letter, there has been no amendment to, written interpretation or
announcement by Architel or any of the Architel Subsidiaries
relating to, or change in employee participation or coverage under,
any Architel Employee Plan or Architel Benefit Arrangement that
would increase materially the expense of maintaining such Architel
Employee Plan or Architel Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended
September 30, 1998.
(f) Architel has provided, or will have provided prior to the Closing,
to individuals entitled thereto all required notices and coverage
pursuant to section 4980B of the Code and the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), with
respect to any "qualifying event" (as defined in section 4980B(f)(3)
of the Code) occurring prior to and including the Closing Date (as
defined in Section 6.1), and no material Tax payable on account of
section 4980B of the Code has been incurred with respect to any
Employee or former employees (or their beneficiaries) of Architel or
any of the Architel Subsidiaries.
(g) No benefit payable or which may become payable by Architel or any of
the Architel Subsidiaries pursuant to any Architel Employee Plan or
any Architel Benefit Arrangement or as a result of or arising under
this Agreement shall constitute an "excess parachute payment" (as
defined in section 280G(b)(1) of the Code) which is subject to the
imposition of an excise Tax under section 4999 of the Code or which
would not be deductible by reason of section 280G of the Code.
(h) Architel and each Architel Subsidiary is in compliance in all
material respects with all applicable laws, agreements and contracts
relating to employment, employment practices, wages, hours, and
terms and conditions of employment, including, but not limited to,
employee compensation matters.
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(i) Neither Architel nor any Architel Subsidiary is a party to any
collective bargaining or union agreement, and no such agreement is
or has been applicable to any employees of Architel or any Architel
Subsidiary and no union certification process has been proposed or
threatened.
(j) Architel and each Architel Subsidiary believes it has good labor
relations and there are no complaints, grievances (other than
routine individual grievances) or arbitrations, employment-related
litigation, administrative proceedings or controversies either
pending, or to the best knowledge of Architel, threatened, involving
any current or former employee of Architel or any of the Architel
Subsidiaries; nothing has come to Architel's attention as a result
of the negotiation or entering into of this Agreement that would
lead Architel to believe that the consummation of the transactions
contemplated hereby will have a Material Adverse Effect on Architel
in respect of its labor relations; and neither Architel nor any
Architel Subsidiary has any knowledge that any of its or their key
employees intends to leave its or their employ.
(k) Except as set forth in Section 2.8 of the Architel Disclosure
Letter, neither Architel or any of its Subsidiaries has an
employment contract or material consulting agreement currently in
effect that is not terminable at will (other than agreements with
the sole purpose of providing for the confidentiality of proprietary
information or assignment of inventions), except as such termination
rights are limited under Employer Laws. All Employees and all
officers and consultants of Architel and the Architel Subsidiaries
having access to proprietary information of Architel have executed
and delivered to Architel an agreement regarding the protection of
such proprietary information and the assignment of inventions to
Architel and a non-competition agreement; copies of the forms of all
such agreements have been delivered or made available to Amdocs's
counsel.
2.9 Absence of Undisclosed Liabilities.
At December 31, 1998 (the "Architel Balance Sheet Date"), (i) neither
Architel nor any of the Architel Subsidiaries had any liabilities or obligations
of any nature (matured or unmatured, fixed or contingent) that were material to
Architel and the Architel Subsidiaries, taken as a whole, and were not provided
for in the consolidated balance sheet of Architel at the Architel Balance Sheet
Date, a copy of which is attached hereto as Exhibit 2.9 (the "Architel Balance
Sheet"); and (ii) all reserves established by Architel and set forth in the
Architel Balance Sheet were reasonably adequate.
2.10 Absence of Certain Changes or Events.
Except as disclosed in the Architel Reports and the Architel SEC Documents
filed prior to the date of this Agreement, since the Architel Balance Sheet
Date, Architel and the Architel Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses and there
has not occurred:
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(a) any change in the condition (financial or otherwise), properties,
assets, liabilities, businesses, operations, results of operations
or prospects of Architel and the Architel Subsidiaries that could
reasonably be expected to have a Material Adverse Effect on
Architel;
(b) any amendments or changes in the articles of incorporation or bylaws
of Architel;
(c) any damage, destruction or loss, whether covered by insurance or
not, that could reasonably be expected to have a Material Adverse
Effect on Architel;
(d) any redemption, repurchase or other acquisition of Architel Common
Shares by Architel (other than the repurchase of unvested shares at
cost pursuant to arrangements with terminated employees or
consultants), or any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property)
with respect to Architel Common Shares;
(e) any material increase in or material modification of the
compensation or benefits payable or to become payable by Architel to
any of its directors or employees, except in the ordinary course of
business consistent with past practice;
(f) any material increase in or material modification of any bonus,
pension, insurance or Architel Employee Plan or Architel Benefit
Arrangement (including, but not limited to, the granting of stock
options, restricted stock awards or stock appreciation rights) made
to, for or with any of its employees, other than in the ordinary
course of business consistent with past practice;
(g) any change by Architel in its accounting methods, principles or
practices;
(h) any writing down or writing off of the value of any assets other
than in the ordinary course of business;
(i) any acquisition or sale of a material amount of property or assets
of Architel, other than in the ordinary course of business
consistent with past practice;
(j) any alteration in any term of any outstanding security of Architel;
(k) (A) other than in the ordinary course of business consistent with
past practice or other nonmaterial amounts, any incurrence,
assumption or guarantee by Architel of any debt for borrowed money;
(B) any issuance or sale of any securities convertible into or
exchangeable for debt securities of Architel; or (C) any issuance or
sale of options or other rights to acquire from Architel, directly
or indirectly, debt securities of Architel or any securities
convertible into or exchangeable for any such debt securities;
(l) other than in the ordinary course of business consistent with past
practice or other nonmaterial amounts, any creation or assumption by
Architel of any lien, security interest, charge or encumbrance on
any asset;
24
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(m) any making of any loan, advance or capital contribution to or
investment in any person other than (i) travel loans or advances
made in the ordinary course of business of Architel, (ii) other
loans and advances in an aggregate amount which does not exceed
$100,000 outstanding at any time and (iii) purchases on the open
market of liquid, publicly traded securities;
(n) any entering into, amendment of, relinquishment, termination or
non-renewal by Architel or any Architel Subsidiary of any material
contract, lease transaction, commitment or other right or obligation
other than in the ordinary course of business;
(o) any transfer or grant of a material right (including, without
limitation, under the Architel Intellectual Property Rights (as
defined in Section 2.15 below)), other than those transferred or
granted in the ordinary course of business;
(p) any agreement, arrangement or other transaction with any "affiliate"
or "associate" (as those terms are defined in Rule 405 promulgated
under the Securities Act) of Architel or any Architel Subsidiary,
other than the payment of regular salary and benefits in the
ordinary course of such person's employment with Architel or any
Architel Subsidiary;
(q) any labor dispute or charge of unfair labor practice (other than
routine individual grievances), any activity or proceeding by a
labor union or representative thereof to organize any employees of
Architel or any Architel Subsidiary or any campaign being conducted
to solicit authorization from employees to be represented by such
labor union;
(r) any waiver or release of any material right or claim of Architel or
any Architel Subsidiary; or
(s) any agreement or arrangement made by Architel or any Architel
Subsidiary to take any action which, if taken prior to the date
hereof, would have made any representation or warranty set forth in
this Agreement materially untrue or incorrect as of the date when
made unless otherwise disclosed.
2.11 Agreements.
Section 2.11 of the Architel Disclosure Letter sets forth a list of any of
the following written or oral contracts, agreements and other instruments, and
complete and correct copies of such written contracts, agreements and
instruments have been delivered to Amdocs's counsel:
(a) contract with or commitment to any labor union;
(b) continuing contract for the future purchase, sale, development or
manufacture of products, material, supplies, equipment, software or
services requiring payment to or from Architel or any Architel
Subsidiary in an amount in excess of $500,000 per annum (i) which is
not terminable on 120 days' or less notice without cost or other
25
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liability at or at any time after the Effective Time or (ii) in
which Architel or such Architel Subsidiary has granted or received
manufacturing rights, most favored nations pricing provisions or
exclusive marketing rights relating to any product, group of
products or territory;
(c) contract providing for the development of software for, or license
of software to, Architel or any Architel Subsidiary, or other
Intellectual Property Rights used or incorporated in one or more of
the products referred to in Section 2.16 of the Architel Disclosure
Letter (other than software licensed to Architel or any Architel
Subsidiary from a third party as to which Architel or such Architel
Subsidiary has a fully-paid perpetual license to use and distribute
as Architel or such Architel Subsidiary is currently doing without
any restrictions or requirements as to how the Architel Published
Product is marketed, or that is generally available to the public
from such third party at a per copy license fee of less than $5,000,
but including any site or corporate license and each agreement
providing for either the delivery of source code or the escrow of
source code for the benefit of the licensee or any original
equipment manufacturer ("OEM"), distribution or other agreement that
requires Architel or any Architel Subsidiary to perform any ongoing
development of software including updates and error corrections);
(d) joint venture, partnership or other agreement which has involved or
is reasonably expected to involve a sharing of profits or losses in
excess of $100,000 per annum with any other party;
(e) to the extent not identified in Section 2.8 of the Architel
Disclosure Letter, contract or commitment for the employment of any
officer, employee or consultant or any other type of contract or
understanding with any officer, employee or consultant which is not
immediately terminable without cost or other liability (except for
normal severance benefits available to employees generally as set
forth in any Architel Benefit Plan and except for limitations on
such termination rights as exist under applicable Employer Laws);
(f) indenture, mortgage, promissory note, loan agreement, guarantee or
other agreement or commitment for the borrowing of money, for a line
of credit or for a leasing transaction of a type required to be
capitalized in accordance with Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board;
(g) lease or other agreement under which Architel or any Architel
Subsidiary is lessee of or holds or operates any items of tangible
personal property or real property owned by any third party and
under which payments to such third party exceed $100,000 per annum;
(h) agreement or arrangement for the sale of any assets, properties or
rights having a value in excess of $100,000, other than in the
ordinary course of business consistent with past practice;
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(i) agreement which restricts Architel or any Architel Subsidiary from
engaging in any material aspect of its business or competing in any
line of business in any geographic area or in any functional area or
that requires Architel or any Architel Subsidiary to distribute or
use exclusively a third party technology or product;
(j) agreement between or among Architel or any Architel Subsidiary
regarding intercompany loans, revenue or cost sharing, ownership or
license of Architel IP Rights (as defined in Section 2.15 below),
intercompany royalties or dividends or similar matters;
(k) written dealer, distributor, sales representative, original
equipment manufacturer, value added remarketer, subcontractor or
other agreement for the ongoing distribution of the Architel
Products (as defined in Section 2.16 below);
(l) any other loan or credit agreement, note, bond, mortgage, indenture,
lease or other material agreement which is not otherwise disclosed
elsewhere in the Architel Disclosure Letter, the breach or
termination of which would have a Material Adverse Effect on
Architel;
(m) Architel IP Rights Agreement (as defined in Section 2.15 below) or
other material agreements relating to Architel Products other than
any Architel IP Rights Agreement or other such material agreement
already identified in response to Section 2.11(b) or (c) above or
elsewhere in the Architel Disclosure Letter; and
(n) any material agreement pursuant to which either the execution of
this Agreement by Architel or the consummation of the transaction
contemplated hereby will or may result in (i) a breach by Architel
or any Architel Subsidiary of any term, provisions or condition of
such agreement, or (ii) the ability of the other party thereto to
terminate such agreement or materially change any of the terms,
provisions or conditions thereof.
2.12 No Defaults.
Neither Architel nor any of the Architel Subsidiaries is in default under,
and there exists no event, condition or occurrence which, after notice or lapse
of time, or both, would constitute such a default by Architel or any of the
Architel Subsidiaries under, any contract or agreement to which Architel or any
of the Architel Subsidiaries is a party and which would, if terminated due to
such default, be reasonably likely to have a Material Adverse Effect on
Architel. To Architel's best knowledge, no other party to any such contract or
agreement is in default thereunder, nor, to Architel's best knowledge, does
there exist any event, condition or occurrence which, after notice or lapse of
time, or both, would constitute such a default by any such other party.
2.13 Certain Agreements.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (i) result in any payment
(including, without limitation, severance, unemployment compensation, golden
parachute, bonus or otherwise) becoming due to
27
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any director or employee of Architel or any of the Architel Subsidiaries from
Architel or any of the Architel Subsidiaries under any Architel Employee Plan,
Architel Benefit Arrangement or otherwise, (ii) materially increase any benefits
otherwise payable under any Architel Employee Plan or Architel Benefit
Arrangement or (iii) result in the acceleration of the time of payment or
vesting of any such benefits, including but not limited to the time of exercise
of stock options.
2.14 Taxes.
Except as set forth in Section 2.14 of the Architel Disclosure Letter,
Architel and each of the Architel Subsidiaries have timely filed, or caused to
be filed, all Tax Returns (as defined below) required to be filed by them (all
of which returns were correct and complete in all material respects). Architel
and each of the Architel Subsidiaries have paid or withheld, or caused to be
paid or withheld, all Taxes (as defined below) that are due and payable, or
Architel has provided adequate accruals in accordance with Canadian GAAP in its
financial statements for the periods ending September 30, 1998 and December 31
1998, for any Taxes for any period up to and including those periods covered by
such statements that have not been paid, whether or not shown as being due on
any returns. Since the Architel Balance Sheet Date, no material Tax liability
has been assessed, proposed to be assessed, incurred or accrued other than in
the ordinary course of business. Except for any Taxes for which Architel has
provided adequate accruals in accordance with Canadian GAAP in its financial
statements ending September 30, 1998 and December 31, 1998, Architel and the
Architel Subsidiaries have withheld from all payments made by them, or otherwise
collected, and have remitted all amounts in respect of Taxes required to be
withheld, collected or remitted by them to the applicable governmental authority
within the required time periods. Except for any Taxes for which Architel has
provided adequate accruals in accordance with Canadian GAAP in its financial
statements ending September 30, 1998 and December 31, 1998, neither Architel nor
any of the Architel Subsidiaries has any liability for the Taxes of any other
person, corporation, partnership, trust or other taxpayer. Except as set forth
in Section 2.14 of the Architel Disclosure Letter, there are no audits or
investigations in progress, pending or threatened by Revenue Canada, the
Internal Revenue Service or any other taxing authority, including, without
limitation, any sales tax authority (a "Taxing Authority"), against Architel,
any Architel Subsidiary or any of the assets of Architel or any of the Architel
Subsidiaries, and neither Architel nor any Architel Subsidiary has received any
notification that any material issues have been raised (and are currently
pending) by any Taxing Authority in connection with any of the Tax Returns
referred to above, and no waivers of statutes of limitations have been given or
requested with respect to Architel or any of the Architel Subsidiaries. Except
for any Taxes for which Architel has provided adequate accruals in accordance
with Canadian GAAP in its financial statements ending September 30, 1998 and
December 31, 1998, there are no material proposed (but unassessed) additional
Taxes, none have been asserted and no Tax liens have been filed other than for
Taxes not yet due and payable. Notices of Determination have neither been
requested nor issued by Architel or any of the Architel Subsidiaries. No amount
in respect of any outlay or expense that is deductible for the purposes of
computing the income of Architel or any of the Architel Subsidiaries for the
purposes of the ITA has been owing by Architel or any of the Architel
Subsidiaries, as the case may be, for longer than two years to a person not
dealing at arm's length (for the purposes of the ITA) with Architel or the
Architel Subsidiaries at the time the outlay or expense was incurred. Except as
set forth in Section 2.14 of the Architel Disclosure Letter, there are no
circumstances which exist and
28
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would result in, or which have existed and resulted in, Section 80 of the ITA
applying to Architel or any of the Architel Subsidiaries. Neither Architel nor
any of the Architel Subsidiaries have either directly or indirectly transferred
property to or supplied services to or acquired property or services from a
person, corporation, partnership, trust or other taxpayer with whom it was not
dealing at arm's length (for the purposes of the ITA) for consideration other
than consideration equal to the fair market value of the property or services at
the time of the transfer, supply or acquisition of the property or services.
Architel and the Architel Subsidiaries have not entered into any advance pricing
agreement with any Taxing Authority. Neither Architel nor any corporation to
which Architel is related (for the purposes of the ITA) is a corporation whose
principal business is (i) the lending of money to persons with whom such
corporation is dealing at arm's length (for the purposes of the ITA); (ii) the
purchasing of debt obligations issued to such persons; or (iii) a combination
thereof. None of Architel or any of the Architel Subsidiaries (i) has made an
election to be treated as a "consenting corporation" under section 341(f) of the
Code, or (ii) is a party to any Tax sharing or other similar agreement or
arrangement of any nature with any other person pursuant to which Architel or
any of the Architel Subsidiaries has or could have any liabilities in respect of
Taxes.
As used in this Agreement, "Tax" and "Taxes" means, with respect to any
entity, (A) all income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits or selected items
of income, earnings or profits) and all capital, corporate, gross receipts,
sales, use, turnover, ad valorem, transfer, real or personal property tax,
franchise, license, withholding, payroll, wage, employer health tax, employment,
excise, severance, utility, compensation, social security, workers'
compensation, unemployment insurance or compensation, retirement contribution,
stamp, occupation, premium, property or windfall profits taxes, alternative or
add-on minimum taxes, customs or excise duties or other taxes, fees, assessments
or charges of any kind whatsoever, together with any interest and any penalties
or additional amounts imposed by any taxing authority (domestic or foreign) on
such entity, and any interest, penalties, additional taxes and additions to tax
imposed with respect to the foregoing, and (B) any liability for the payment of
any amount of the type described in the immediately preceding clause (A) as a
result of being a "transferee" (within the meaning of Section 6901 of the Code
or any other applicable law) of another entity or a member of an affiliated or
combined group. As used in this Agreement, "Tax Returns" means all returns
(including informational returns), declarations, reports, statements, claims for
refund, amended returns and declarations of estimated taxes (including any
attached schedules) relating to Taxes.
2.15 Intellectual Property.
Except in each case as disclosed in the Architel Reports and the Architel
SEC Documents filed prior to the date of this Agreement and subject to the
matters disclosed in Section 2.7 of the Architel Disclosure Letter:
(a) Architel and the Architel Subsidiaries own, or have the right to
use, sell, distribute or license all material Intellectual Property
Rights (as defined below) necessary or required for the conduct of
their respective businesses as presently conducted and as proposed
to be conducted by Architel as of the date hereof (such Intellectual
Property Rights being hereinafter collectively referred to as the
"Architel IP
29
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Rights") and such rights to use, sell or license are reasonably
sufficient for such conduct of their respective businesses; Section
2.15 of the Architel Disclosure Letter sets forth a complete and
correct list of all Architel IP Rights and specifies whether each
such right is owned by or licensed to Architel or a Architel
Subsidiary; and, except as set forth in Section 2.15(a) of the
Architel Disclosure Letter, no such license will terminate by its
terms within six months after the date hereof;
(b) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
constitute a material breach of any assignment, conveyance or
agreement governing any Architel IP Right (the "Architel IP Rights
Agreements"), will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any Architel IP
Right or materially impair the right of Architel and/or the Architel
Subsidiaries to use, sell or license any Architel IP Right or
portion thereof (except where such breach, forfeiture or termination
would not have a Material Adverse Effect on Architel);
(c) there are no royalties, honoraria, fees or other payments in excess
of $100,000 payable by Architel or any of the Architel Subsidiaries
to any person by reason of the publication or distribution of the
Architel Published Products (as defined in Section 2.16 below) other
than as set forth in the Architel IP Rights Agreements listed in the
Architel Disclosure Letter;
(d) neither the manufacture, marketing, license, sale or lawful use of
any product currently licensed or sold by Architel or any of the
Architel Subsidiaries or currently under development by Architel or
any of the Architel Subsidiaries violates any license or agreement
between Architel or any of the Architel Subsidiaries and any third
party or infringes any Intellectual Property Right of any other
party; and there is no pending or, to the best knowledge of
Architel, threatened claim or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any Architel
IP Right nor, to the best knowledge of Architel, is there any basis
for any such claim, nor has Architel received any notice asserting
that any Architel IP Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of
any other party, nor, to the best knowledge of Architel, is there
any basis for any such assertion, except to the extent that such
violation(s), or notice or basis therefor, have not had and could
not reasonably be expected to have a Material Adverse Effect on
Architel; and
(e) Architel has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all material Architel IP Rights. All
officers, employees involved in the development of products or
product documentation and consultants of Architel or any of the
Architel Subsidiaries have executed and delivered to Architel or the
Architel Subsidiary an agreement regarding the protection of
proprietary information and the assignment to Architel or the
Architel Subsidiary of all Intellectual Property Rights arising from
the services performed for Architel or the Architel Subsidiary
30
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by such persons; and copies of the forms of all such agreements have
been delivered to Amdocs's counsel. No current or prior officers,
employees or consultants of Architel claim an ownership interest in
any Architel IP Rights as a result of having been involved in the
development of such property while employed by or consulting to
Architel, or otherwise.
Architel has delivered to Amdocs a list of all applications,
registrations, filings and other formal actions made or taken
pursuant to United States, Canadian, provincial, federal, state and
foreign laws by Architel to perfect or protect its interest in
Architel IP Rights, including, without limitation, all patents,
patent applications, trademarks and service marks, trademark and
service xxxx applications, copyrights and copyright applications
and, to the knowledge of Architel, there is no cancellation,
termination or expiration of any such registration or patent that is
reasonably foreseeable and is not intended to be renewed or extended
by Architel, except where the failure to renew or extend would not
have a Material Adverse Effect on Architel. To the best of
Architel's knowledge, it is not using any confidential information
or trade secrets of any former employer of any past or present
employees.
As used herein, the term "Intellectual Property Rights" shall
mean all worldwide industrial and intellectual property rights,
including, without limitation, patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service
marks, service xxxx applications, copyright, copyright applications,
mask works, franchises, licenses, know-how, trade secrets, customer
lists, proprietary processes and formulae, all source and object
code, algorithms, architecture, structure, display screens, layouts,
inventions, development tools and all documentation and media
constituting, describing or relating to the above, including,
without limitation, manuals, memoranda and records.
2.16 Products.
Section 2.16 of the Architel Disclosure Letter sets forth for Architel and
the Architel Subsidiaries a breakdown of revenue by product line for the fourth
quarter of fiscal 1998 and the first quarter of fiscal 1999.
2.17 Fees and Expenses.
Except for the fees and expenses set forth in Section 2.17 of the Architel
Disclosure Letter payable to Xxxxxx Xxxxxxx Canada Limited ("Xxxxxx Xxxxxxx"),
neither Architel nor any of the Architel Subsidiaries has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. Architel has
delivered to Amdocs a complete and correct copy of Architel's agreement with
Xxxxxx Xxxxxxx, pursuant to which Xxxxxx Xxxxxxx shall be entitled to be paid
the foregoing fees and expenses in connection with the transactions contemplated
by this Agreement.
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2.18 Insurance.
Architel and the Architel Subsidiaries maintain and at all times since
January 1, 1996 have maintained fire and casualty, general liability, business
interruption, product liability, sprinkler and water damage and any other
insurance that Architel believes to be reasonably prudent for its business.
Section 2.18 of the Architel Disclosure Letter contains a list of all such
insurance policies presently in effect, and correct and complete copies of all
such policies along with a history of claims made under such policies will have
been provided to Amdocs or its counsel prior to Closing. Architel and each of
the Architel Subsidiaries has fully paid all payments required under the terms
of each of the foregoing insurance policies and neither Architel nor any
Architel Subsidiary has received notice of intent to cancel any of the foregoing
insurance policies. Each of the foregoing insurance policies will continue to be
in full force and effect immediately following the Closing Date.
2.19 Ownership of Property.
Except (a) as disclosed in the Architel Reports and the Architel SEC
Documents filed prior to the date of this Agreement, (b) for liens for current
Taxes not yet delinquent or (c) for liens imposed by law and incurred in the
ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers, materialmen and the like, Architel and each of the
Architel Subsidiaries have good and marketable title to all of their respective
material real and personal property (other than property as to which it is
lessee, in which case it has a valid leasehold interest) and own all of such
property free and clear of all security interests, mortgages, liens, charges,
options and encumbrances. All real and tangible personal property of Architel
and each of the Architel Subsidiaries is generally in good repair and is
operational and usable in the operations of Architel or the Architel
Subsidiaries, subject to ordinary wear and tear and subject to technical
obsolescence. Neither Architel nor any Architel Subsidiary is in violation of
any zoning, building or safety ordinance, regulation or requirement or other law
or regulation applicable to the operation of owned or leased properties (the
violation of which would have a Material Adverse Effect on Architel), or has
received any notice of violation with which it has not complied, except where
such violation would not have a Material Adverse Effect on Architel.
2.20 Environmental Matters.
(a) To Architel's knowledge, during the period that Architel and the
Architel Subsidiaries have leased or owned their respective
properties or owned or operated any facilities, there have been no
disposals, releases, emissions, spills, discharges or threatened
releases of Hazardous Materials (as defined below) on, from or under
such properties or facilities. Architel has no actual knowledge of
any presence, disposals, releases, emissions, spills, discharges or
threatened releases of Hazardous Materials on, from or under any of
such properties or facilities, which may have occurred prior to
Architel or any of the Architel Subsidiaries having taken possession
of any of such properties and facilities. For the purposes of this
Agreement, insofar as properties and facilities in Canada are
concerned, "Hazardous Materials" shall mean any pollutant,
contaminant, chemical, deleterious substance or industrial, toxic or
hazardous waste or substance and,
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insofar as properties and facilities in the United States are
concerned, shall mean any hazardous or toxic substance, material or
waste which is or becomes prior to the Closing regulated under, or
defined as a "hazardous substance," "pollutant," "contaminant,"
"toxic chemical," "hazardous chemical" under, (1) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., as amended ("CERCLA"); (2) any similar
federal, state or local law; or (3) regulations promulgated under
any of the above laws or statutes. Insofar as properties and
facilities in the United States are concerned, the terms "disposal,"
"release" and "threatened release" shall have the definitions
assigned thereto by CERCLA.
(b) To Architel's knowledge, none of the properties, facilities and
operations of Architel and the Architel Subsidiaries is in violation
of any federal, provincial, state, municipal and local laws,
statutes, bylaws, ordinances, regulations and orders ("Environmental
Laws") relating to protection of the environment, occupational
health and safety, industrial hygiene or Hazardous Materials. During
the time that Architel or the Architel Subsidiaries have owned or
leased their respective properties and facilities, neither Architel
nor any of the Architel Subsidiaries nor, to Architel's knowledge,
any third party, has used, generated, manufactured, processed,
treated, disposed of, handled or stored on, under or about such
properties or facilities or transported to or from such properties
or facilities any Hazardous Materials.
(c) There has been no litigation brought or threatened against Architel
or any of the Architel Subsidiaries by, or any settlement reached by
Architel or any of the Architel Subsidiaries with, any party or
parties alleging the presence, disposal, emission, spill, discharge,
release or threatened release of any Hazardous Materials on, from or
under any properties or facilities.
2.21 Interested Party Transactions.
Schedule 2.21 of the Architel Disclosure Letter sets forth a current list
of all directors, officers and affiliates of Architel and each Architel
Subsidiary. Except as disclosed in the Architel Reports and the Architel SEC
Documents filed prior to the date of this Agreement, no officer or director of
Architel or any affiliate or associate of any such person has had, either
directly or indirectly, a material interest in: (i) any person or entity which
purchases from or sells, licenses or furnishes to Architel or any of the
Architel Subsidiaries any goods, property, technology or intellectual or other
property rights or services; or (ii) any contract or agreement to which Architel
or any of the Architel Subsidiaries is a party or by which it may be bound or
affected.
2.22 Board Approval.
The Board of Directors of Architel has, as of the date hereof, (i)
approved this Agreement, the Stock Option Agreement and the Arrangement, (ii)
determined that the Arrangement is in the best interests of the shareholders of
Architel and is on terms that are fair to such shareholders and (iii) resolved
to recommend that the shareholders of Architel approve the Arrangement.
33
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2.23 Vote Required.
The affirmative vote of two-thirds of the votes cast by the holders of the
outstanding Architel Common Shares entitled to be cast (or such other vote as
may be set out in the Interim Order or required by applicable securities and
stock exchange rules) is the only vote of the holders of any class or series of
Architel's capital stock necessary to approve the Arrangement.
2.24 Disclosure.
No representation or warranty made by Architel in this Agreement, nor any
document, written information, financial statement, certificate or Exhibit
prepared and furnished or to be prepared and furnished by Architel or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contained any untrue statement of a
material fact when made, or omitted to state a material fact necessary to make
the statements or facts contained herein or therein not misleading in light of
the circumstances under which they were furnished.
2.25 Options Plans.
The entering into of this Agreement and the implementation of the
Arrangement do not constitute a Triggering Event or any equivalent acceleration
provision under any of the Architel Option Plans.
2.26 Fairness and Equivalency Opinions.
Architel's Board of Directors has received a written opinion from Xxxxxx
Xxxxxxx that the Exchange Ratio is fair to Architel's shareholders from a
financial point of view and that an Exchangeable Share represents a
participating security of Architel of equivalent value to an Architel Common
Share for the purposes of the definition of a "going private transaction" in OSC
Policy 9.1.
2.27 Restrictions on Business Activities.
There is no material agreement, judgment, injunction, order or decree
binding upon Architel or any Architel Subsidiary that has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Architel or any Architel Subsidiary, any acquisition of property by
Architel or any Architel Subsidiary or the conduct of business by Architel or
any Architel Subsidiary as currently conducted.
2.28 Pooling Matters.
Neither Architel nor any of its affiliates has taken or agreed to take any
action that (without giving effect to this Agreement, the transactions
contemplated hereby or actions related thereto, or any action taken or agreed to
be taken by Amdocs or any of its affiliates) would adversely affect the ability
of Amdocs to account for the business combination to be effected by the
Arrangement as a pooling of interests under US GAAP.
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2.29 Books and Records.
The books, records and accounts of Architel and the Architel Subsidiaries
(a) have been maintained in accordance with good business practices on a basis
consistent with prior years, (b) are stated in reasonable detail and accurately
and fairly reflect the transactions and dispositions of the assets of Architel
and the Architel Subsidiaries and (c) accurately and fairly reflect the basis
for Architel's financial statements. Architel has devised and maintains a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; and (ii) transactions are recorded as necessary (A) to
permit preparation of financial statements in conformity with Canadian GAAP, US
GAAP or any other criteria applicable to such statements and (B) to maintain
accountability for assets.
2.30 Customers.
Except as set forth in Section 2.30 of the Architel Disclosure Letter,
since September 30, 1998, neither Architel nor any of the Architel Subsidiaries
has lost its relationship with any of its material customers. Neither Architel
nor any of the Architel Subsidiaries has been notified that it will lose, or
suffer any diminution in, its relationship with any such customers. No
representative of any such material customer has notified either Architel or any
of the Architel Subsidiaries that, in the event of a sale or change of control
of Architel, either Architel or any Architel Subsidiary would lose, or suffer
any diminution in, its relationship with any such material customer.
2.31 Year 2000 Problem.
Architel has reviewed its operations and has inquired of third parties
with which Architel and the Architel Subsidiaries have a material relationship
to evaluate the extent to which the business or operations of Architel and the
Architel Subsidiaries will be affected by the Year 2000 Problem. As a result of
such review and inquiries, Architel has no reason to believe, and does not
believe, that (other than as described in Section 2.33 of the Architel
Disclosure Letter) the Year 2000 Problem will have a Material Adverse Effect on
Architel or result in any material loss or interference with any of the business
or operations of Architel and the Architel Subsidiaries. The "Year 2000 Problem"
as used herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
3. REPRESENTATIONS AND WARRANTIES OF AMDOCS, AMDOCS PARENTCO AND AMDOCS
HOLDCO
Except as set forth in a letter dated the date of this Agreement and
delivered by Amdocs to Architel concurrently herewith (the "Amdocs Disclosure
Letter"), Amdocs, Amdocs Parentco and Amdocs Holdco jointly and severally
represent and warrant to Architel that:
35
-29-
3.1 Organization; Good Standing; Qualification and Power.
Each of Amdocs, Amdocs Parentco and Amdocs Holdco and each corporation,
partnership, company, joint venture and other entity in which Amdocs
beneficially owns or controls, directly or indirectly, more than 50% of the
equity, voting rights, profits interest, capital or other similar interest
thereof and which would be a "significant subsidiary" for purposes of Rule
1-02(w) of Regulation S-X under the Exchange Act (the "Amdocs Subsidiaries") is
duly organized, validly existing and in good standing (where applicable) under
the laws of the jurisdiction of its formation, has all requisite power and
authority and is in possession of all material Approvals necessary to own, lease
and operate its properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, other than in such jurisdictions
where the failure so to qualify would not have a Material Adverse Effect on
Amdocs. Amdocs has delivered to Architel's counsel complete and correct copies
of the memorandum of association and articles of association (or other similar
organizational documents) of each of Amdocs, Amdocs Parentco and Amdocs Holdco,
as amended to the date of this Agreement. Neither Amdocs, Amdocs Parentco nor
Amdocs Holdco is in violation of its memorandum of association or articles of
association or equivalent organizational documents.
3.2 Capital Structure.
(a) The authorized share capital Amdocs consists of 500,000,000
Amdocs Ordinary Shares, of which 166,565,324 shares were issued and
outstanding as of February 28, 1999 (the "Measurement Date"),
50,000,000 non-voting Amdocs Ordinary Shares, par value (pound
sterling) 0.01, of which 30,234,700 shares were issued and
outstanding as of the Measurement Date, and 25,000,000 Amdocs
Preferred Shares, of which there were no shares outstanding as of
the Measurement Date. As of the Measurement Date, no Amdocs
Ordinary Shares were held by Amdocs in treasury. An aggregate of
6,600,000 Amdocs Ordinary Shares are reserved and authorized for
issuance pursuant to the Amdocs 1998 Option Plan (the "Amdocs
Option Plan"), in respect of which options ("Amdocs Options") to
purchase a total of 4,083,600 Amdocs Ordinary Shares were
outstanding as of the Measurement Date. All issued and outstanding
Amdocs Ordinary Shares and all issued and outstanding shares of the
capital stock of each of the Amdocs Subsidiaries have been duly
authorized and validly issued, and are fully paid and
nonassessable, are not subject to any preemptive rights or right of
rescission, and have been offered, issued, sold and delivered by
Amdocs in compliance with all registration, qualification and
prospectus requirements (or applicable exemptions therefrom) of
applicable securities laws. Except as set forth in Section 3.2 of
the Amdocs Disclosure Letter, Amdocs does not have any material
subsidiaries or any material equity interest, direct or indirect,
in any corporation, partnership, joint venture or other business
entity. Except as set forth in Section 3.2 of the Amdocs Disclosure
Letter or as disclosed in the Amdocs SEC Documents (as defined
below) filed prior to the date of this Agreement, all of the shares
of capital stock of the Amdocs Subsidiaries are owned by Amdocs or
a Amdocs Subsidiary free and clear of all
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security interests, liens, claims, pledges, agreements, limitations
in Amdocs's voting rights, charges or other encumbrances of any
nature whatsoever.
(b) No Other Commitments. Except as disclosed in the Amdocs SEC
Documents filed prior to the date of this Agreement, and except for
the obligations of Amdocs under this Agreement, there are no
options, warrants, calls, rights (including, without limitation,
stock appreciation rights), commitments, conversion rights or
agreements of any character to which Amdocs or any of the Amdocs
Subsidiaries is a party or by which Amdocs or any of the Amdocs
Subsidiaries is bound obligating Amdocs or any of the Amdocs
Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock of Amdocs or any of
the Amdocs Subsidiaries or securities convertible into or
exchangeable for shares of capital stock of Amdocs or any of the
Amdocs Subsidiaries, or obligating Amdocs or any of the Amdocs
Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment, conversion right or agreement.
There are no voting trusts or other agreements or understandings to
which Amdocs is a party with respect to the voting of the capital
stock of Amdocs or any of the Amdocs Subsidiaries.
(c) Registration Rights. Amdocs is not under any obligation to register
under the Securities Act any of its presently outstanding securities
or any securities that it may subsequently issue.
3.3 Authority.
(a) Corporate Action. Each of Amdocs, Amdocs Parentco and Amdocs Holdco
has all requisite corporate power and authority to enter into this
Agreement and, subject to approval of the Arrangement by the Court,
to perform its obligations hereunder and to consummate the other
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by each of Amdocs, Amdocs Parentco and
Amdocs Holdco and, subject to approval of the Arrangement by the
Court, the consummation by each such party of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of each such party. This Agreement has
been duly executed and delivered by each of Amdocs, Amdocs Parentco
and Amdocs Holdco and is the valid and binding obligation of each
such party enforceable in accordance with its terms, except that
such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general
equitable principles.
(b) No Conflict. Neither the execution, delivery and performance of this
Agreement or the Plan of Arrangement by each of Amdocs, Amdocs
Parentco or Amdocs Holdco, nor the consummation of the transactions
contemplated hereby or thereby by each such party nor compliance
with the provisions hereof or thereof by each such party will: (i)
conflict with, or result in any violations of the memorandum of
association or articles of association or similar organizational
documents of
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Amdocs or any of the Amdocs Subsidiaries; or (ii) result in any
breach or violation of or cause a default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, amendment, cancellation or acceleration of any
obligation contained in, or the loss of any material benefit under,
or result in the creation of any lien, security interest, charge or
encumbrance upon any of the material properties or assets of Amdocs
or any of the Amdocs Subsidiaries under, any term, condition or
provision of any loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement, judgment, order,
decree, statute, law, ordinance, rule, license, permit or regulation
applicable to Amdocs or any of the Amdocs Subsidiaries or their
respective properties or assets, other than any such breaches,
defaults, losses, liens, security interests, charges or encumbrances
which, individually or in the aggregate, would not have a Material
Adverse Effect on Amdocs.
(c) Governmental Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained by Amdocs or any of the Amdocs
Subsidiaries in connection with the execution and delivery of this
Agreement or the Plan of Arrangement or the consummation of the
transactions contemplated hereby or thereby, except for: (i) the
filing with the SEC of (A) the Form F-4 or the Shelf, in each case
if applicable, and (B) such reports and information under the
Exchange Act and the rules and regulations promulgated by the SEC
thereunder, as may be required in connection with this Agreement and
the transactions contemplated hereby; (ii) the filing of the Plan of
Arrangement with Industry Canada and appropriate documents with the
relevant authorities of other states in which Amdocs is qualified to
do business; (iii) such filings, authorizations, orders and
approvals as may be required under State Takeover Laws; (iv) such
filings, authorizations, orders and approvals as may be required
under foreign laws, state securities laws and the New York Stock
Exchange (the "NYSE") and the NASD; (v) such filings and
notifications as may be necessary under the HSR Act; and (vi) where
the failure to obtain such consents, approvals, etc., would not
prevent or delay the consummation of the Arrangement or otherwise
prevent Amdocs from performing its obligations under this Agreement
and would not reasonably be expected to have a Material Adverse
Effect on Amdocs.
3.4 SEC Documents and Financial Statements.
(a) SEC Documents. Amdocs has delivered to Architel's counsel complete
and correct copies of each report, schedule, effective registration
statement and definitive proxy statement (other than preliminary
material) filed by Amdocs with the SEC on or after January 1, 1996
(the "Amdocs SEC Documents"), which are all the documents that
Amdocs was required to file with the SEC on or after such date. As
of their respective dates or, in the case of registration
statements, their effective dates (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such
filing), none of the Amdocs SEC Documents (including all exhibits
and schedules thereto and documents incorporated by
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reference therein) contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and
the Amdocs SEC Documents complied when filed in all material
respects with the then applicable requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and
regulations promulgated by the SEC thereunder. Amdocs has filed all
documents and agreements which were required to be filed as exhibits
to the Amdocs SEC Documents.
(b) Financial Statements. The financial statements of Amdocs included in
the Amdocs SEC Documents complied as to form in all material
respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
were prepared in accordance with US GAAP applied on a consistent
basis during the periods involved (except as may have been indicated
in the notes thereto or, in the case of the unaudited statements, as
permitted by US GAAP) and fairly present (subject, in the case of
the unaudited statements, to normal, year-end audit adjustments) the
consolidated financial position of Amdocs and its consolidated
Amdocs Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the
respective periods then ended.
3.5 Information Supplied.
None of the information supplied or to be supplied by Amdocs for inclusion
or incorporation by reference in the Proxy Statement (and, if filed, the Form
F-4 and the Shelf) will, at the date the Proxy Statement is mailed to the
stockholders of Architel and at the time of the Architel Shareholders Meeting
(and, if filed, at the time the Form F-4 and the Shelf are declared effective)
and on the date of any post-effective amendment thereto, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event relating to Amdocs or any of its affiliates,
officers or directors should be discovered by Amdocs that should be set forth in
an amendment to the Form F-4 or Shelf or a supplement to the Proxy Statement,
Amdocs shall promptly inform Architel and shall coordinate with Architel in
effecting the filing of such amendment or supplement as promptly as practicable.
3.6 Compliance with Applicable Laws.
The businesses of Amdocs and the Amdocs Subsidiaries are not being
conducted in violation of any law, ordinance, regulation, rule or order of any
Governmental Entity where such violation would have a Material Adverse Effect on
Amdocs. Except as disclosed in the Amdocs Disclosure Letter, Amdocs has not been
notified by any Governmental Entity that any investigation or review with
respect to Amdocs or any of the Amdocs Subsidiaries is pending or threatened,
nor has any Governmental Entity notified Amdocs of its intention to conduct the
same. Amdocs and the Amdocs Subsidiaries have all material permits, licenses and
franchises from Governmental Entities required to conduct their businesses as
now being conducted, and are in
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material compliance with all such permits, licenses and franchises, except for
those whose absence would not have a Material Adverse Effect on Amdocs.
3.7 Litigation.
Except as disclosed in the Amdocs SEC Documents filed prior to the date of
this Agreement, there is no suit, action, arbitration, demand, claim or
proceeding pending or, to the best knowledge of Amdocs, threatened against
Amdocs or any of the Amdocs Subsidiaries that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on Amdocs; nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Amdocs or any of the Amdocs Subsidiaries that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on Amdocs. Amdocs has made available to Architel correct
and complete copies of all auditors response letters prepared by its counsel for
Amdocs's auditors in connection with the last two completed audits of Amdocs's
financial statements and any such correspondence since the date of the last such
audit.
3.8 ERISA and Employee Benefits.
(a) The Amdocs Disclosure Letter identifies each "employee benefit
plan," as defined in section 3(3) of ERISA (collectively, the
"Amdocs Employee Plans"). All Amdocs Employee Plans which
individually or collectively would constitute an "employee pension
benefit plan," as defined in section 3(2) of ERISA (collectively,
the "Amdocs Pension Plans"), are identified as such in the Amdocs
Disclosure Letter. All contributions due from Amdocs or any of the
Amdocs Subsidiaries through the Effective Time with respect to any
of the Amdocs Employee Plans has been or will be timely made as
required under ERISA or any other applicable legislation or have
been accrued on Amdocs's or any such Amdocs Subsidiary's financial
statements as of December 31, 1998. Each Amdocs Employee Plan has
been maintained in material compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations, including, without limitation, ERISA and the Code,
which are applicable to such Amdocs Employee Plans.
(b) No Amdocs Pension Plan constitutes, or has since the enactment of
ERISA constituted, a "multiemployer plan," as defined in section
3(37) of ERISA. No Amdocs Pension Plans are subject to Title IV of
ERISA. No "prohibited transaction," as defined in section 406 of
ERISA or section 4975 of the Code, has occurred with respect to any
Amdocs Employee Plan which is covered by Title I of ERISA which
would result in a material liability to Amdocs and the Amdocs
Subsidiaries taken as a whole, excluding transactions effected
pursuant to a statutory or administrative exemption. Nothing done or
omitted to be done and no transaction or holding of any asset under
or in connection with any Amdocs Employee Plan has or will make
Amdocs or any officer or director of Amdocs subject to any material
liability under Title I of ERISA or liable for any material
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Tax or penalty pursuant to sections 4972, 4975, 4976 or 4979 of the
Code or section 502 of ERISA.
(c) Any Amdocs Pension Plan which is intended to be qualified under
section 401(a) of the Code (an "Amdocs 401(A) Plan") is so qualified
and has been so qualified during the period from its adoption to
date, and the trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. Amdocs has delivered to
Architel or its counsel a complete and correct copy of the most
recent Internal Revenue Service determination letter with respect to
each Amdocs 401(a) Plan.
(d) Each Amdocs plan or arrangement (written or oral) providing for
insurance coverage (including any self-insured arrangements),
workers' benefits, vacation benefits, severance benefits, disability
benefits, death benefits, hospitalization benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other
forms of incentive compensation or post-retirement insurance,
compensation or benefits for employees, consultants or directors
(collectively "Amdocs Benefit Arrangements") has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Amdocs Benefit Arrangement.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) by Amdocs or any of the Amdocs
Subsidiaries relating to, or change in employee participation or
coverage under, any Amdocs Employee Plan or Amdocs Benefit
Arrangement that would increase materially the expense of
maintaining such Amdocs Employee Plan or Amdocs Benefit Arrangement
above the level of the expense incurred in respect thereof for the
fiscal year ended September 30, 1998.
(f) Amdocs has provided, or will have provided prior to the Closing, to
individuals entitled thereto all required notices and coverage
pursuant to section 4980B of COBRA, with respect to any "qualifying
event" (as defined in section 4980B(f)(3) of the Code) occurring
prior to and including the Closing Date, and no material Tax payable
on account of section 4980B of the Code has been incurred with
respect to any current or former employees (or their beneficiaries)
of Amdocs or any of the Amdocs Subsidiaries.
(g) No benefit payable or which may become payable by Amdocs or any of
the Amdocs Subsidiaries pursuant to any Amdocs Employee Plan or any
Amdocs Benefit Arrangement or as a result of or arising under this
Agreement shall constitute an "excess parachute payment" (as defined
in section 280G(b)(1) of the Code) which is subject to the
imposition of an excise Tax under section 4999 of the Code or which
would not be deductible by reason of section 280G of the Code.
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(h) Amdocs and each Amdocs Subsidiary is in compliance in all material
respects with all applicable laws, agreements and contracts relating
to employment, employment practices, wages, hours, and terms and
conditions of employment, including, but not limited to, employee
compensation matters.
(i) Amdocs and each Amdocs Subsidiary believes it has good labor
relations; nothing has come to Amdocs's attention as a result of the
negotiation or entering into this Agreement that would lead Amdocs
to believe that the consummation of the transactions contemplated
hereby will have a material adverse effect on labor relations; and
neither Amdocs nor any Amdocs Subsidiary has any knowledge that any
of its or their key employees intends to leave its or their employ.
3.9 Absence of Undisclosed Liabilities.
At December 31, 1998 (the "Amdocs Balance Sheet Date"), (i) neither Amdocs
nor any of the Amdocs Subsidiaries had any liabilities or obligations of any
nature (matured or unmatured, fixed or contingent) which were material to Amdocs
and the Amdocs Subsidiaries, taken as a whole, and were not provided for in the
consolidated balance sheet of Amdocs at the Amdocs Balance Sheet Date, a copy of
which is attached hereto as Exhibit 3.9 (the "Amdocs Balance Sheet"); and (ii)
all reserves established by Amdocs and set forth in the Amdocs Balance Sheet
were reasonably adequate.
3.10 Absence of Certain Changes or Events.
Except as disclosed in the Amdocs SEC Documents filed prior to the date of
this Agreement, since the Amdocs Balance Sheet Date, Amdocs and the Amdocs
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course of such businesses and there has not occurred:
(a) any change in the condition (financial or otherwise), properties,
assets, liabilities, businesses, operations, results of operations
or prospects of Amdocs and the Amdocs Subsidiaries, taken as a whole
that could reasonably be expected to have a Material Adverse Effect
on Amdocs;
(b) any amendments or changes in the certificate of incorporation or
bylaws of Amdocs;
(c) any damage, destruction or loss, whether covered by insurance or
not, that could reasonably be expected to have a Material Adverse
Effect on Amdocs;
(d) any redemption, repurchase or other acquisition of Amdocs Ordinary
Shares by Amdocs (other than the repurchase of unvested shares at
cost pursuant to arrangements with terminated employees or
consultants), or any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property)
with respect to Amdocs Ordinary Shares;
(e) any material alteration in any term of any outstanding security of
Amdocs; or
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(f) any change by Amdocs in its accounting methods, principles or
practices;
(g) any acquisition or sale of a material amount of property or assets
of Amdocs, other than in the ordinary course of business consistent
with past practice;
(h) (A) other than in the ordinary course of business consistent with
past practice or other nonmaterial amounts, any incurrence,
assumption or guarantee by Amdocs of any debt for borrowed money;
(B) any issuance or sale of any securities convertible into or
exchangeable for debt securities of Amdocs; or (C) any issuance or
sale of options or other rights to acquire from Amdocs, directly or
indirectly, debt securities of Amdocs or any securities convertible
into or exchangeable for any such debt securities;
(i) other than in the ordinary course of business consistent with past
practice or other nonmaterial amounts, any creation or assumption by
Amdocs of any mortgage, pledge, security interest or lien or other
encumbrance on any asset;
(j) any transfer or grant of a material right under the Amdocs IP Rights
(as defined in Section 3.13 below), other than those transferred or
granted in the ordinary course of business consistent with past
practices;
(k) any labor dispute or charge of unfair labor practice (other than
routine individual grievances), any activity or proceeding by a
labor union or representative thereof to organize any employees of
Amdocs or any campaign being conducted to solicit authorization from
employees to be represented by such labor union; or
(l) any agreement or arrangement made by Amdocs to take any action
which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement materially
untrue or incorrect as of the date when made unless otherwise
disclosed.
3.11 No Defaults.
Neither Amdocs nor any of the Amdocs Subsidiaries is in default under, and
there exists no event, condition or occurrence which, after notice or lapse of
time, or both, would constitute such a default by Amdocs or any of the Amdocs
Subsidiaries under, any contract or agreement to which Amdocs or any of the
Amdocs Subsidiaries is a party and which would, if terminated or modified, be
reasonably likely to have a Material Adverse Effect on Amdocs.
3.12 Taxes.
Amdocs and each of the Amdocs Subsidiaries have timely filed, or caused to
be filed, all Tax Returns required to be filed by them (all of which returns
were correct and complete in all material respects) and have paid or withheld,
or caused to be paid or withheld, all Taxes that are due and payable, and Amdocs
has provided adequate accruals in accordance with US GAAP in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns. Since the Amdocs Balance Sheet Date, no material Tax
liability has been assessed,
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proposed to be assessed, incurred or accrued other than in the ordinary course
of business. Amdocs and the Amdocs Subsidiaries have withheld from all payments
made by them, or otherwise collected, and have remitted all amounts in respect
of Taxes required to be withheld, collected or remitted by them to the
applicable governmental authority within the required time periods. Neither
Amdocs nor any of the Amdocs Subsidiaries has any liability for the Taxes of any
other person, corporation, partnership, trust or other taxpayer. Except as set
forth in Section 3.12 of the Amdocs Disclosure Letter, there are no audits or
investigations in progress, pending or threatened by the Internal Revenue
Service or any other taxing authority, including, without limitation, any sales
tax authority (a "Taxing Authority"), against Amdocs, any Amdocs Subsidiary or
any of the assets of Amdocs or any Amdocs Subsidiary, and neither Amdocs nor any
Amdocs Subsidiary has received any notification that any material issues have
been raised (and are currently pending) by any Taxing Authority in connection
with any of the Tax Returns referred to above, and no waivers of statutes of
limitations have been given or requested with respect to Amdocs or any of the
Amdocs Subsidiaries. All liability of Amdocs and the Amdocs Subsidiaries for
Taxes has been assessed, or the applicable statute of limitations period has
expired, for all fiscal years up to and including the fiscal year ending
September 30, 1995. There are no material proposed (but unassessed) additional
Taxes, none have been asserted and no Tax liens have been filed other than for
Taxes not yet due and payable. None of Amdocs or any of the Amdocs Subsidiaries
(i) has made an election to be treated as a "consenting corporation" under
section 341(f) of the Code or (ii) is a "personal holding company" within the
meaning of section 542 of the Code. Amdocs is not a "specified financial
institution" or specified person in relation to any such institution for
purposes of subsection 112(2.2) of the Income Tax Act (Canada).
3.13 Intellectual Property.
Except in each case as disclosed in the Amdocs SEC Documents filed prior
to the date of this Agreement:
(a) Amdocs and the Amdocs Subsidiaries own, or have the right to use,
sell or license all material Intellectual Property Rights necessary
or required for the conduct of their respective businesses as
presently conducted (such Intellectual Property Rights being
hereinafter collectively referred to as the "Amdocs IP Rights") and
such rights to use, sell or license are reasonably sufficient for
such conduct of their respective businesses;
(b) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
constitute a material breach of any assignment, conveyance or
agreement governing any Amdocs IP Right (the "Amdocs IP Rights
Agreements"), will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any Amdocs IP Right
or materially impair the right of Amdocs and/or the Amdocs
Subsidiaries to use, sell or license any Amdocs IP Right or portion
thereof (except where such breach, forfeiture or termination would
not have a Material Adverse Effect on Amdocs);
(c) neither the manufacture, marketing, license, sale or lawful use of
any product currently licensed or sold by Amdocs or any of the
Amdocs Subsidiaries or
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currently under development by Amdocs or any of the Amdocs
Subsidiaries violates any license or agreement between Amdocs or any
of the Amdocs Subsidiaries and any third party or infringes any
Intellectual Property Right of any other party; and there is no
pending or, to the best knowledge of Amdocs, threatened claim or
litigation contesting the validity, ownership or right to use, sell,
license or dispose of any Amdocs IP Right nor, to the best knowledge
of Amdocs, is there any basis for any such claim, nor has Amdocs
received any notice asserting that any Amdocs IP Right or the
proposed use, sale, license or disposition thereof conflicts or will
conflict with the rights of any other party, nor, to the best
knowledge of Amdocs, is there any basis for any such assertion,
except to the extent that such violation(s), or notice or basis
therefor, have not had and could not reasonably be expected to have,
a Material Adverse Effect on Amdocs; and
(d) Amdocs has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all material Amdocs IP Rights. All officers,
employees and consultants of Amdocs or any of the Amdocs
Subsidiaries have executed and delivered to Amdocs or the Amdocs
Subsidiary an agreement regarding the protection of proprietary
information. No current or prior officers, employees or consultants
of Amdocs have claimed an ownership interest in any Amdocs IP Rights
as a result of having been involved in the development of such
property while employed by or consulting to Amdocs, or otherwise.
3.14 Fees and Expenses.
Except for the fees and expenses set forth in Section 3.14 of the Amdocs
Disclosure Letter payable to Xxxxxxx, Xxxxx & Co., neither Amdocs or any of the
Amdocs Subsidiaries has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary in connection with the transactions
contemplated by this Agreement.
3.15 Insurance.
Amdocs and the Amdocs Subsidiaries maintain and at all times since January
1, 1996 have maintained fire and casualty, general liability, business
interruption, product liability and sprinkler and water damage insurance that
Amdocs believes to be reasonably prudent for its business.
3.16 Ownership of Property.
Except (a) as disclosed in the Amdocs SEC Documents filed prior to the
date of this Agreement, (b) for liens for current Taxes not yet delinquent or
(c) for liens imposed by law and incurred in the ordinary course of business for
obligations not yet due to carriers, warehousemen, laborers, materialmen and the
like, Amdocs and each of the Amdocs Subsidiaries have good and marketable title
to all of their respective real and personal property (other than property as to
which it is lessee, in which case it has a valid leasehold interest) and own all
of such property free and clear of all security interests, mortgages, liens,
charges, claims, options and encumbrances. All real and tangible personal
property of Amdocs and each of the Amdocs Subsidiaries is generally in
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good repair and is operational and usable in the operations of Amdocs or the
Amdocs Subsidiaries, subject to ordinary wear and tear and subject to technical
obsolescence. Neither Amdocs nor any Amdocs Subsidiary is in violation of any
zoning, building or safety ordinance, regulation or requirement or other law or
regulation applicable to the operation of owned or leased properties or has
received any notice of violation with which it has not complied, except, in such
case, where such violation would not have a Material Adverse Effect on Amdocs.
3.17 Environmental Matters.
(a) To Amdocs's knowledge, during the period that Amdocs and the Amdocs
Subsidiaries have leased or owned their respective properties or
owned or operated any facilities, there have been no disposals,
releases or threatened releases of Hazardous Materials on, from or
under such properties or facilities Amdocs has no actual knowledge
of any presence, disposals, releases or threatened releases of
Hazardous Materials on, from or under any of such properties or
facilities, which may have occurred prior to Amdocs or any of the
Amdocs Subsidiaries having taken possession of any of such
properties or facilities.
(b) To Amdocs's knowledge, none of the properties or facilities of
Amdocs or the Amdocs Subsidiaries is in violation of any federal,
state or local law, ordinance, regulation or order relating to
industrial hygiene or to the environmental conditions on, under or
about such properties or facilities, including, but not limited to,
soil and ground water condition. During the time that Amdocs or the
Amdocs Subsidiaries have owned or leased their respective properties
and facilities, neither Amdocs nor any of the Amdocs Subsidiaries
nor, to Amdocs's knowledge, any third party, has used, generated,
manufactured or stored on, under or about such properties or
facilities or transported to or from such properties or facilities
any Hazardous Materials.
(c) During the time that Amdocs or the Amdocs Subsidiaries have owned or
leased their respective properties and facilities, there has been no
litigation brought or threatened against Amdocs or any of the Amdocs
Subsidiaries by, or any settlement reached by Amdocs or any of the
Amdocs Subsidiaries with, any party or parties alleging the
presence, disposal, release or threatened release of any Hazardous
Materials on, from or under any of such properties or facilities.
3.18 Board Approval.
The Board of Directors of Amdocs has, as of the date hereof, (i) approved
this Agreement and the Arrangement and (ii) determined that the Arrangement is
in the best interests of the stockholders of Amdocs and is on terms that are
fair to such stockholders.
3.19 Disclosure.
No representation or warranty made by Amdocs in this Agreement, nor any
document, written information, financial statement, certificate or exhibit
prepared and furnished or to be
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prepared and furnished by Amdocs or its representatives pursuant hereto or in
connection with the transactions contemplated hereby, when taken together,
contained any untrue statement of a material fact when made, or omitted to state
a material fact necessary to make the statements or facts contained herein or
therein not misleading in the light of the circumstances under which they were
furnished.
3.20 Restrictions on Business Activities.
There is no material agreement, judgment, injunction, order or decree
binding upon Amdocs or any Amdocs Subsidiary that has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Amdocs and the Amdocs Subsidiaries (taken as a whole), any
acquisition of property by Amdocs or any Amdocs Subsidiary or the conduct of
business by Amdocs or any Amdocs Subsidiary as currently conducted.
3.21 Pooling Matters.
Neither Amdocs nor any of its affiliates has taken or agreed to take any
action that (without giving effect to this Agreement, the transactions
contemplated hereby or actions related thereto, or any action taken or agreed to
be taken by Architel or any of its affiliates) would affect the ability of
Amdocs to account for the business combination to be effected by the Arrangement
as a pooling of interests under US GAAP.
3.22 Books and Records.
The books, records and accounts of Amdocs and its Subsidiaries (a) have
been maintained in accordance with good business practices on a basis consistent
with prior years, (b) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of Amdocs and (c)
accurately and fairly reflect the basis for the Amdocs Financial Statements.
Amdocs has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; and (ii)
transactions are recorded as necessary (A) to permit preparation of financial
statements in conformity with US GAAP or any other criteria applicable to such
statements and (B) to maintain accountability for assets.
3.23 Year 2000 Problem.
Amdocs has reviewed its operations and that of any third parties with
which Amdocs and the Amdocs Subsidiaries have a material relationship to
evaluate the extent to which the business or operations of Amdocs and the Amdocs
Subsidiaries will be affected by the Year 2000 Problem. As a result of such
review, Amdocs has no reason to believe, and does not believe, that the Year
2000 Problem will have a Material Adverse Effect on Amdocs or result in any
material loss or interference with any of the business or operations of Amdocs
and the Amdocs Subsidiaries.
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4. ARCHITEL COVENANTS
4.1 Advice of Changes.
During the period from the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement in accordance with its
terms, Architel will promptly advise Amdocs in writing (a) of any event
occurring subsequent to the date of this Agreement that would render any
representation or warranty of Architel contained in this Agreement, if made on
or as of the date of such event or the Effective Time, untrue, inaccurate or
incomplete in any material respect, (b) of any Material Adverse Effect on
Architel and (c) of any breach by Architel of any covenant or agreement
contained in this Agreement. Architel shall deliver to Amdocs as soon as
practicable after the end of each monthly and quarterly accounting period ending
after the date of this Agreement and before the earlier of the Effective Time or
the termination of this Agreement in accordance with its terms, (i) within
thirty-five days after the end of each monthly accounting period, an unaudited
consolidated statement of income for Architel and the Architel Subsidiaries and
an unaudited unconsolidated balance sheet, statement of operations and statement
of changes in financial position for Architel and each of the Architel
Subsidiaries and (ii) within forty-five days after the end of each quarterly
accounting period, an unaudited consolidated balance sheet, statement of
operations and statement of changes in financial position for Architel, all of
which financial statements shall be prepared in the ordinary course of business,
in Canadian dollars and in accordance with Architel's books and records and
Canadian GAAP, together with a reconciliation to US GAAP, and shall fairly
present the consolidated financial position of Architel and the Architel
Subsidiaries as of their respective dates and the results of Architel's and the
Architel Subsidiaries' operations for the periods then ended. Before the earlier
of the Effective Time or the termination of this Agreement in accordance with
its terms, Architel shall, prior to the issuance of any public announcement
regarding its financial results for any period, provide to Amdocs a copy of such
public announcement substantially in the form to be released.
4.2 Maintenance of Business.
During the period from the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement in accordance with its
terms, Architel will use, and will cause each of the Architel Subsidiaries to
use, its diligent commercial efforts to carry on and preserve its business and
its relationships with customers, suppliers, employees, consultants and others
in substantially the same manner as it has prior to the date hereof. If Architel
or any of the Architel Subsidiaries becomes aware of any material deterioration
in the relationship with any material customer, supplier or key employee or
consultant, Architel will promptly bring such information to the attention of
Amdocs in writing and, if requested by Amdocs, Architel will exert its
commercially reasonable efforts to restore the relationship.
4.3 Conduct of Business.
During the period from the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement in accordance with its
terms, Architel will continue to conduct its business and maintain its business
relationships in the ordinary and usual course and
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will not (other than as contemplated in Article 1 of this Agreement), without
the prior consent of Amdocs, which will not be unreasonably withheld:
(a) borrow any money except for amounts that are not in the
aggregate material to the financial condition of Architel and
the Architel Subsidiaries, taken as a whole;
(b) enter into any transaction not in the ordinary course of its
business;
(c) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business consistent with past
practice;
(d) dispose of any material portion of its assets except in the
ordinary course of business consistent with past practice;
(e) enter into any material lease or contract for the purchase or
sale or license of any property, real or personal, except in
the ordinary course of business consistent with past practice;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has
maintained to the date of this Agreement, subject only to
ordinary wear and tear;
(g) pay (or make any oral or written commitments or
representations to pay) any bonus, increased salary or special
remuneration to any director, officer, employee or consultant
(except for normal salary increases and bonuses to employees
and consultants consistent with past practices and except
pursuant to existing arrangements previously disclosed to
Amdocs) or enter into or vary the terms of any employment,
consulting or severance agreement with any officers, directors
or consultants, pay any severance or termination pay (other
than payments made in accordance with plans or agreements
existing on the date hereof and disclosed in the Architel
Disclosure Letter or as required by applicable law), grant any
stock option (except for normal grants to newly hired
employees, consultants and directors and "evergreen" or
incentive grants to existing employees, consultants and
directors pursuant to Architel's existing option plans or
policies consistent with past practice of options to purchase
up to an aggregate of 274,000 Architel Common Shares at the
fair market value of the Architel Common Shares on the date of
grant) or issue any restricted stock, or enter into or modify
any agreement or plan or increase benefits of the type
described in Section 2.8;
(h) enter into any agreement, arrangement or other transaction
with any affiliate or associate of Architel or any Architel
Subsidiary other than intercompany agreements, arrangements or
other transactions in the ordinary course of business
consistent with past practice;
(i) change accounting methods;
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(j) revalue any of its assets or properties other than the writing
off of accounts receivable in the ordinary course of business;
(k) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital stock, or redeem or
otherwise acquire any of its capital stock;
(l) amend or terminate any material contract, agreement or license
to which it is a party except for those amendments or
terminations in the ordinary course of its business,
consistent with past practice, which are not material in
amount or effect;
(m) lend any amount to any person or entity, other than (i)
advances for travel and expenses which are incurred in the
ordinary course of business consistent with past practice and
documented by receipts for the claimed amounts or (ii) any
loans pursuant to any Architel 401(a) Plan.
(n) guarantee or act as a surety for any obligation except for
obligations in amounts that are not material in the aggregate;
(o) waive or release any right or claim except for the waiver or
release of non-material rights or claims in the ordinary
course of business, consistent with past practice or the
waiver or release of rights or claims set forth in the
Architel Disclosure Letter;
(p) issue or sell any shares of its capital stock of any class
(except upon the exercise of a bona fide option or warrant
currently outstanding or permitted to be granted under Section
4.3(g)), or any other of its securities, or issue or create
any warrants, obligations, subscriptions, options (except as
expressly permitted under Section 4.3(g)), convertible
securities or other commitments to issue shares of capital
stock, or accelerate the vesting of any outstanding option or
other security;
(q) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization or agreement
affecting the number or rights of outstanding shares of its
capital stock of any class or affecting any other of its
securities;
(r) subject to Section 9.1(h), merge, consolidate or reorganize
with, or acquire any entity, or enter into any agreement to do
any of the foregoing;
(s) amend its articles of incorporation or bylaws except as
contemplated by this Agreement;
(t) license any Architel IP Rights except in the ordinary course
of business consistent with past practice;
(u) grant any exclusive distribution rights;
(v) agree to any audit assessments by any Tax authority in excess
of $500,000 in the aggregate, except as provided for in the
financial statements of Architel contained in the Architel
Reports;
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(w) change any insurance coverage or issue any certificates of
insurance except in the ordinary course of business consistent
with past practice;
(x) implement any change in its accounting principles, practices
or methods, other than as may be required by Canadian GAAP
and/or US GAAP; or
(y) agree to do, or permit any Architel Subsidiary to do or agree
to do, or enter into negotiations with respect to, any of the
things described in the preceding clauses in this Section 4.3.
4.4 Shareholder Approval.
Architel will call the Architel Shareholders Meeting to be held within
45 days after the later of (i) if the Form F-4 is filed, the date on which the
Form F-4 is declared effective by the SEC and (ii) the date on which the Shelf
is declared effective by the SEC to submit this Agreement, the Arrangement and
related matters for the consideration and approval of Architel's shareholders.
Such approval will be recommended by Architel's Board of Directors and
management, subject to the fiduciary obligations of its directors and officers.
Such meeting will be called, held and conducted, and any proxies will be
solicited, in compliance with applicable law. Concurrently with the execution of
this Agreement, Xxxxxxx X. xxx Xxxxxx and Xxxxx X. Xxxxx (collectively, the
"Architel Principal Shareholders") have executed Voting and Option Agreements in
the form of Exhibit 4.4 (the "Option Agreements"), agreeing, among other things,
to vote in favor of the Arrangement and granting Amdocs Parentco the option to
purchase their Architel Common Shares under certain circumstances.
4.5 Architel Affiliate Agreements.
To ensure that the Arrangement will be accounted for as a "pooling of
interests" and to ensure compliance with Rule 145 of the rules and regulations
promulgated by the SEC under the Securities Act, Architel will use its
commercially reasonable efforts to procure the signature of the Architel
Affiliates and deliver to Amdocs promptly after the execution and delivery of
this Agreement the Architel Affiliates Agreements in the form of Exhibit 4.5
(the "Architel Affiliate Agreements"), pursuant to which the Architel Affiliates
agree that such persons will make no disposition of Architel Common Shares from
the earlier of April 1, 1999 and such time as officers of Architel are
prohibited by Architel company policy from trading in Architel securities
generally, until Amdocs shall have publicly released its first report of
quarterly financial statements that include the combined financial results of
Architel and Amdocs for a period of at least 30 days of combined operations, and
agreeing to certain other restrictions as set forth in such Architel Affiliate
Agreements. For purposes of this Agreement, an "Affiliate" shall have the
meaning referred to in Rule 145 under the Securities Act.
4.6 Proxy Statement.
Architel will mail the Proxy Statement to its shareholders in a timely
manner for the purpose of considering and voting upon the Arrangement at the
Architel Shareholders Meeting. Architel will promptly provide all information
relating to its business or operations necessary for
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inclusion in the Proxy Statement to satisfy all requirements of applicable U.S.
and Canadian state, provincial and federal corporate and securities laws.
Architel shall be solely responsible for any statement, information or omission
in the Proxy Statement relating to it or its Affiliates based upon written
information furnished by it. Architel will not provide to its shareholders or
publish any material concerning it or its Affiliates that violates applicable
Canadian law, the Securities Act or the Exchange Act with respect to the
transactions contemplated hereby.
4.7 Regulatory Approvals.
Architel will promptly execute and file, or join in the execution and
filing, of any application or other document that may be necessary in order to
obtain the authorization, approval or consent of any Governmental Entity, which
may be reasonably required, or which Amdocs may reasonably request, in
connection with the consummation of the transactions contemplated by this
Agreement. Architel will use its commercially reasonable efforts to promptly
obtain all such authorizations, approvals and consents. Without limiting the
generality of the foregoing, as promptly as practicable after the execution of
this Agreement, Architel shall file with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "DOJ"), a
pre-merger notification report under the HSR Act and shall make such filings as
are necessary under the Investment Canada Act and the Competition Act (Canada).
4.8 Necessary Consents.
During the term of this Agreement, Architel will use its commercially
reasonable efforts to obtain such written consents and take such other actions
as may be necessary or appropriate in addition to those set forth in Section 4.7
to allow the consummation of the transactions contemplated hereby and to allow
Architel to carry on its business after the Effective Time.
4.9 Access to Information.
Architel will allow Amdocs and its agents reasonable access to the
files, books, records and offices of Architel and each Architel Subsidiary,
including, without limitation, any and all information relating to Architel's
and each Architel Subsidiary's Taxes, commitments, contracts, leases, licenses
and real, personal and intangible property and financial condition. Architel
will cause its accountants and personnel to cooperate with Amdocs and its agents
in making available to Amdocs all financial and other information reasonably
requested, including, without limitation, the right to examine all working
papers pertaining to all Tax Returns and financial statements prepared or
audited by such accountants.
4.10 Satisfaction of Conditions Precedent.
During the term of this Agreement, Architel will use its commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article 8, and, subject to Section 4.11(b),
Architel will use its commercially reasonable efforts to cause the Arrangement
and the other transactions contemplated by this Agreement to be consummated and
shall take such steps as are appropriate so that the representations and
warranties of Architel in this Agreement remain complete and correct on and as
of the Closing Date.
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4.11 No Other Negotiations.
(a) From and after the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement in
accordance with its terms, Architel and the Architel
Subsidiaries shall not, and shall not permit their respective
officers, employees, representatives, investment bankers,
agents and affiliates to, directly or indirectly, (i) solicit,
initiate or engage in discussions or negotiations with any
person, encourage submission of any inquiries, proposals or
offers by, or take any other action intended or designed to
facilitate the efforts of any person, other than Amdocs,
relating to the possible acquisition of Architel or any of the
Architel Subsidiaries (whether by way of arrangement,
amalgamation, take-over bid, tender offer, purchase of capital
stock, purchase of assets or otherwise) or any material
portion of its or their capital stock or assets (with any such
efforts by any such person, including a firm proposal to make
such an acquisition, to be referred to as an "Acquisition
Proposal"), (ii) provide non-public information with respect
to Architel or any of the Architel Subsidiaries, or afford any
access to the properties, books or records of Architel or the
Architel Subsidiaries, to any person, other than Amdocs,
relating to a possible Acquisition Proposal by any person
other than Amdocs, (iii) make or authorize any statement,
recommendation or solicitation in support of any possible
Acquisition Proposal by any person, other than by Amdocs, or
(iv) enter into an agreement with any person, other than
Amdocs, providing for a possible Acquisition Proposal.
(b) Notwithstanding the foregoing, prior to the Effective Time
nothing contained in this Agreement shall prevent the Board of
Directors of Architel (or its agents pursuant to its
instructions) from (i) engaging in discussions or negotiations
with (but not soliciting or initiating such discussions or
negotiations or encouraging inquiries from) a party concerning
an unsolicited bona fide written Acquisition Proposal which
the Board of Directors of Architel in its good faith judgment
determines, after consultation with its financial advisors,
would result in a transaction that is more favorable to the
shareholders of Architel than the transactions contemplated by
this Agreement (a "Superior Proposal"), (ii) making any
statement or recommendation in support of any Superior
Proposal, in the case of both (i) and (ii) if the Architel
Board of Directors first determines in good faith, based on a
written opinion, or an oral opinion reflected in the minutes
of a meeting of the Architel Board of Directors, of outside
legal counsel, that such action is required by reason of the
fiduciary duties of the members of Architel's Board of
Directors to Architel's shareholders under applicable law.
Except to the extent expressly referenced in this Section
4.11, nothing in such Section however, shall relieve Architel
from complying with the other terms of this Agreement. If
Architel or any of its Subsidiaries receives any unsolicited
offer or proposal to enter negotiations relating to a Superior
Proposal, or any request for non-public information relating
to Architel or any Architel Subsidiary in connection with any
Acquisition Proposal, Architel shall immediately notify Amdocs
thereof, in writing, including information as to the identity
of the party making any such offer proposal or request and the
specific terms of such offer proposal or request, as the case
may
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be. Immediately upon receipt by Architel, Architel shall
immediately provide Amdocs with a true and complete copy of
any Superior Proposal or other written communication
concerning a possible Superior Proposal received from such
third party and of all documents containing or referring to
non-public information of Architel that are supplied to such
third party.
(c) If the Board of Directors of Architel receives a request for
material nonpublic information by a party who makes a bona
fide Acquisition Proposal and the Board of Directors of
Architel determines that such proposal is a Superior Proposal,
then, and only in such case, Architel may, subject to the
execution of a confidentiality agreement substantially similar
to that then in effect between Architel and Amdocs, provide
such party with access to information regarding Architel,
which access shall be no more extensive than that provided to
Amdocs.
(d) Architel shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties
(other than Amdocs) conducted heretofore with respect to any
of the foregoing. Architel agrees not to release any third
party from any confidentiality or standstill agreement with
respect to any of the foregoing to which Architel is a party.
(e) Architel shall ensure that the officers, directors, employees,
agents and affiliates of Architel and the Architel
Subsidiaries and any bankers, investment bankers or other
agents, advisors or representatives retained by Architel are
aware of the restrictions described in this Section 4.11, and
shall be responsible for any breach of this Section 4.11 by
such bankers, investment bankers, officers, directors,
employees, agents, advisors, representatives or affiliates.
4.12 Pooling Letter.
Architel shall use its commercially reasonable efforts to cause to be
delivered to Amdocs and Architel a letter of Deloitte & Touche ("D&T") addressed
to Amdocs, dated as of a date within two business days prior to the Closing
Date, setting forth that Architel will qualify as a combining company in a
pooling-of interests transaction under APB 16 and applicable SEC rules and
regulations ("D&T Pooling Letter").
4.13 Pooling Accounting Treatment.
Architel agrees not to take any action that would adversely affect the
ability of Amdocs to treat the transactions contemplated by this Agreement as a
pooling-of-interests transaction under APB 16 and applicable SEC rules and
regulations.
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5. AMDOCS COVENANTS
5.1 Advice of Changes.
During the period from the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement in accordance with its
terms, Amdocs will promptly advise Architel in writing (a) of any event
occurring subsequent to the date of this Agreement that would render any
representation or warranty of Amdocs, Amdocs Parentco or Amdocs Holdco contained
in this Agreement, if made on or as of the date of such event or the Closing
Date, untrue or inaccurate in any material respect, (b) of any Material Adverse
Effect on Amdocs and (c) of any breach by Amdocs of any covenant or agreement
contained in this Agreement.
5.2 Maintenance of Business.
During the period from the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement in accordance with its
terms, Amdocs will use its diligent commercial efforts to carry on and preserve
its business and its relationships with customers, suppliers, employees and
others in substantially the same manner as it has prior to the date hereof. If
Amdocs becomes aware of any material deterioration in the relationship with any
customer, supplier or key employee, it will promptly bring such information to
the attention of Architel in writing and, if requested by Architel, will exert
its commercially reasonable efforts to restore the relationship.
5.3 Conduct of Business.
During the period from the date of this Agreement until the earlier of
the Closing Date or the termination of this Agreement in accordance with its
terms, Amdocs agrees as to itself and the Amdocs Subsidiaries (except to the
extent that Architel shall otherwise consent in writing, which consent shall not
unreasonably be withheld), to carry on its and the Amdocs Subsidiaries' business
in the ordinary course, to pay its debts and Taxes when due subject to good
faith disputes over such debts or Taxes and to pay or perform other obligations
when due, except to the extent failure to do any of the foregoing would not have
a Material Adverse Effect on Amdocs.
5.4 Amdocs Affiliate Agreements.
To ensure that the Arrangement will be accounted for as a "pooling of
interests," Amdocs will use its commercially reasonable efforts to procure the
signature of the Amdocs Affiliates and deliver to Architel promptly after the
execution and delivery of this Agreement the Amdocs Affiliates Agreements in the
form of Exhibit 5.5 (the "Amdocs Affiliate Agreements"), pursuant to which the
Amdocs Affiliates agree that such persons will make no disposition of Amdocs
Ordinary Shares from the earlier of April 1, 1999 and such time as officers of
Amdocs are prohibited by Amdocs company policy from trading Amdocs securities
generally, until Amdocs shall have publicly released its first report of
quarterly financial statements that include the combined financial results of
Architel and Amdocs for a period of at least 30 days of combined operations,
except as set forth in such agreements.
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5.5 Regulatory Approvals.
Amdocs will promptly execute and file, or join in the execution and
filing, of any application or other document that may be necessary (including
the filing of the Form F-4 or the Shelf, if applicable) in order to obtain the
authorization, approval or consent of any governmental body, federal, state,
local or foreign which may be reasonably required, or which Architel may
reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement. Amdocs will use its commercially reasonable
efforts to promptly obtain all such authorizations, approvals and consents.
Without limiting the generality of the foregoing, as promptly as practicable
after the execution of this Agreement, Amdocs shall file with the FTC and the
DOJ a pre-merger notification report under the HSR Act and shall make such
filings as are necessary under the Investment Canada Act and the Competition Act
(Canada).
5.6 Necessary Consents.
During the term of this Agreement, Amdocs, Amdocs Parentco and Amdocs
Holdco will use their commercially reasonable efforts to obtain such written
consents and take such other actions as may be necessary or appropriate in
addition to those set forth in Section 5.7 to allow the consummation of the
transactions contemplated hereby.
5.7 Satisfaction of Conditions Precedent.
During the term of this Agreement, Amdocs will use its commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent that are set forth in Article 7, and Amdocs will use its commercially
reasonable efforts to cause the Arrangement and the other transactions
contemplated by this Agreement to be consummated.
5.8 Indemnification.
(a) Amdocs agrees that all rights to indemnification or
exculpation now existing in favor of the employees, agents,
directors or officers (the "Indemnified Parties") of Architel
and the Architel Subsidiaries as provided in its articles of
incorporation or bylaws, or in any agreement between an
Indemnified Party and Architel or any of the Architel
Subsidiaries, a copy of which has been provided to Amdocs's
counsel prior to the date of the execution of this Agreement
(an "Indemnification Agreement"), in effect on the date hereof
shall survive the Arrangement and shall continue in full force
and effect for a period of not less than six years from the
Effective Time and Amdocs hereby assumes, effective upon
consummation of the Arrangement, all such liability.
(b) There shall be maintained in effect for not less than six
years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by
Architel in the amounts and with the coverages that can be
obtained with no material increase in premiums from the
premiums in effect on the date of this Agreement (other than
adjustments for the general rate of inflation); Amdocs may,
however, substitute therefor policies of at least the same
coverage containing
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terms and conditions which are no less advantageous, provided
that such substitution shall not result in any gaps or lapses
in coverages with respect to matters occurring prior to the
Effective Time to the extent currently available.
5.9 Listing.
Amdocs will cause the Amdocs Ordinary Shares to be issued from time to
time upon exchange of the Exchangeable Shares and the exercise of the Amdocs
Options to be listed on the NYSE concurrently with the issuance of the
Exchangeable Shares. Amdocs will cause the Exchangeable Shares to be listed on
the TSE or other Canadian securities exchange approved by Amdocs and Architel,
provided such Canadian securities exchange is a prescribed stock exchange under
the regulations to the ITA, concurrently with the issuance of the Exchangeable
Shares.
5.10 Pooling Letter.
Amdocs shall use its commercially reasonable efforts to procure from
Ernst & Young LLP ("E&Y") a letter of E&Y addressed to Amdocs, dated as of a
date within two business days prior to the Closing Date, setting forth the
concurrence of E&Y with the conclusion of Amdocs' management that the
transaction contemplated by this Agreement will qualify as a
pooling-of-interests transaction under APB 16 and applicable SEC rules and
regulations if consummated in accordance with the terms of this Agreement and
the documents ancillary hereto (the "E&Y Pooling Letter").
5.11 Pooling Accounting Treatment.
Amdocs agrees not to take any action that would adversely affect the
ability of Amdocs to treat the transactions contemplated by this Agreement as a
pooling-of-interests transaction under APB 16 and applicable SEC rules and
regulations.
5.12 Employment and Employee Benefits After the Closing.
Amdocs hereby agrees that from and after the Closing, and for a period
of at least 12 months thereafter, Amdocs will provide to the employees who
immediately prior to the Closing were in the employ of Architel or any of the
Architel Subsidiaries and who after the Closing become employees of Amdocs and
remain Amdocs employees during such 12 month period (the "Transferred
Employees"), benefits either (i) under Amdocs's employee benefit plans on
substantially similar terms as Amdocs employees generally, or (ii) under the
Architel Employee Plans substantially similar in the aggregate to those
currently provided to the Transferred Employees under the Architel Employee
Plans. Except as expressly contemplated by this Agreement, Amdocs will, with
respect to Architel Options outstanding at the Effective Time, maintain the
Architel Option Plans, as heretofore modified by any Architel Board of
Directors' resolutions, as in effect on the date hereof.
5.13 Directors.
Amdocs Holdco will elect Xxxx Damp and Xxxx XxXxxxxx as directors of
Architel for the period following the Effective Time until October 1, 2002 and
May 1, 2001, respectively, in such
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a manner that a Triggering Event or other similar acceleration provision under
any of the Architel Option Plans does not occur.
5.14 Issuance of Amdocs Ordinary Shares
Amdocs hereby agrees that all Amdocs Ordinary Shares issued (i) upon
exchange of the Exchangeable Shares in accordance with their terms and (ii) upon
exercise of Amdocs Options in accordance with their terms after the Effective
Date, will, when issued, be validly issued, fully paid and non-assessable.
5.15 Certain Tax Filings.
Amdocs Holdco and/or Amdocs Parentco will file Form 8832 with the U.S.
Internal Revenue Service to be disregarded as an entity for U.S. federal income
tax purposes and such election shall become effective prior to the Effective
Time.
5.16 Combined Financial Results.
If the Effective Time is after August 31, 1999, Amdocs will, with
respect to the full calendar month next following the Effective Time, publicly
release a report that includes the combined financial results of Architel and
Amdocs with respect to such month, within 30 days of the end of such month.
6. CLOSING MATTERS
6.1 The Closing.
Subject to the termination of this Agreement as provided in Article 9
below, the closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Xxxxxxx Xxxxxxxx & Xxxxxxxx, Suite
2400, 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx on a date (the "Closing Date") and at a
time to be mutually agreed upon by the parties, which date shall be no later
than the third business day after all conditions to Closing set forth herein
shall have been satisfied or waived, unless another place, time and date is
mutually selected by Architel and Amdocs. Concurrently with the Closing, the
Plan of Arrangement will be filed with the Director under the CBCA in Ottawa,
Canada.
6.2 Ancillary Documents/Reservation of Shares.
(a) Provided all other conditions of this Agreement have been
satisfied or waived, Architel shall, on the Closing Date, file
Articles of Arrangement pursuant to Section 192 of the CBCA to
give effect to the Plan of Arrangement, such Articles of
Arrangement to contain share conditions for Exchangeable
Shares substantially in the form of those contained in Exhibit
A to the Plan of Arrangement.
(b) Provided all other conditions of this Agreement have been
satisfied or waived, on the Closing Date:
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(i) Amdocs, Amdocs Parentco, Amdocs Holdco and Architel
shall execute and deliver the Support Agreement; and
(ii) Amdocs, Amdocs Parentco, Amdocs Holdco and Architel
and a Canadian trust company to be selected by Amdocs
(the "Trustee") shall execute and deliver the Voting
and Exchange Trust Agreement.
(c) On or before the Closing Date, (i) the Directors of Amdocs
shall have adopted a resolution designating the Amdocs Special
Voting Share, and such resolution shall be in full force and
effect, and (ii) Amdocs shall have reserved for issuance such
number of Amdocs Ordinary Shares as shall be necessary to give
effect to the exchanges and assumptions of options
contemplated hereby.
6.3 Exchange of Options.
Promptly after the Closing Date, Amdocs will notify in writing each
holder of a Architel Option of the exchange of such Architel Option for an
option to acquire Amdocs Ordinary Shares, the number of Amdocs Ordinary Shares
that are then subject to such option, and the exercise price thereof, as
determined pursuant to Section 1.1(h).
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ARCHITEL
The obligations of Architel hereunder are subject to the fulfillment or
satisfaction on or before the Closing, of each of the following conditions (any
one or more of which may be waived by Architel, but only in a writing signed by
Architel):
7.1 Accuracy of Representations and Warranties.
The representations and warranties of Amdocs, Amdocs Parentco and
Amdocs Holdco set forth in Article 3 (as qualified by the Amdocs Disclosure
Letter) shall be true and accurate in all respects on and as of the Closing Date
with the same force and effect as if they had been made at the Closing except
(a) for the representations and warranties contained in Section 3.10(f) through
(k) which shall be true and correct as of the date hereof (b) for changes
contemplated by this Agreement and (c) to the extent the failure of such
representations and warranties to be true and accurate in such respects has not
had and could not reasonably be expected to have a Material Adverse Effect on
Amdocs, and Architel shall receive a certificate to such effect executed by the
Chief Financial Officer of Amdocs Management Ltd.
7.2 Covenants.
Amdocs, Amdocs Parentco and Amdocs Holdco shall have performed and
complied in all material respects with all of their covenants required to be
performed by it under this Agreement or the Plan of Arrangement on or before the
Closing, and Architel shall receive a certificate to such effect signed by the
Chief Financial Officer of Amdocs Management Ltd.
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7.3 Absence of Material Adverse Change.
There shall not have been any event or change since the date hereof
that has a Material Adverse Effect on Amdocs.
7.4 Compliance with Law.
There shall be no order, decree or ruling by any governmental agency or
threat thereof, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Arrangement, which would prohibit or render
illegal the transactions contemplated by this Agreement.
7.5 Government Consents.
There shall have been obtained on or before the Closing such material
permits or authorizations, and there shall have been taken such other action, as
may be required to consummate the Arrangement by any regulatory authority having
jurisdiction over the parties and the actions herein proposed to be taken,
including but not limited to requirements under applicable federal, provincial
and state securities laws and the compliance with, and expiration or termination
of any applicable waiting period under, the HSR Act or the Investment Canada
Act.
7.6 SEC Filings.
The Form F-4 and the Shelf, if filed, shall have been declared
effective under the Securities Act and shall not be the subject of any
stop-order or proceedings seeking a stop-order, and there shall have been no
cease trade order issued by a Canadian securities commission to cease trading
any aspect of the Arrangement.
7.7 Opinion of Amdocs's Counsel.
Architel shall have received from Reboul, MacMurray, Xxxxxx, Xxxxxxx &
Kristol, Xxxxxxx Xxxxxxxx & Xxxxxxxx and Xxxxx Xxxxxxxx, United States, Canadian
and Guernsey counsel to Amdocs, respectively, opinions in customary form in
connection with transactions such as the Arrangement that are reasonably
satisfactory to Architel and its counsel.
7.8 Documents.
Amdocs, Amdocs Parentco and Amdocs Holdco shall have received all
written consents, assignments, waivers, authorizations or other certificates
necessary to provide for the continuation in full force and effect of any and
all material contracts and leases of Amdocs, Amdocs Parentco and Amdocs Holdco
and for Amdocs, Amdocs Parentco and Amdocs Holdco to consummate the transactions
contemplated hereby, except when the failure to receive such consents or other
certificates would not have a Material Adverse Effect on Amdocs.
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7.9 Shareholder Approval.
This Agreement and the Arrangement shall have been approved and adopted
by Architel's shareholders in accordance with applicable law, Architel's
articles of incorporation and bylaws, and the Interim Order.
7.10 No Legal Action.
No temporary restraining order, preliminary injunction or permanent
injunction or other order preventing the consummation of the Arrangement shall
have been issued by any Canadian or U.S. federal, provincial or state court and
remain in effect, nor shall any proceeding seeking any of the foregoing be
pending.
7.11 Court Approval.
The Court shall have issued its final order approving the Arrangement
in form and substance satisfactory to Amdocs and Architel (such approvals not to
be unreasonably withheld or delayed by Amdocs or Architel) and reflecting the
terms hereof.
7.12 OSC, Etc.
All necessary orders shall have been obtained from the OSC and other
relevant Canadian securities regulatory authorities and stock exchanges in
connection with the Arrangement. Amdocs and Architel shall each have filed all
notices and information (if any) required under Part IX of the Competition Act
(Canada) and the applicable waiting periods and any extensions thereof shall
have expired or the parties shall have received an Advance Ruling Certificate
pursuant to Section 102 of the Competition Act (Canada) setting out that the
Director under such Act is satisfied he would not have sufficient grounds on
which to apply for an order in respect of the Arrangement. The Arrangement shall
have received the allowance or approval or deemed allowance or approval by the
responsible Minister under the Investment Canada Act in respect of the
Arrangement, to the extent such allowance or approval is required, on terms and
conditions satisfactory to the parties.
7.13 Tax Opinion.
Architel shall have received (a) an opinion of either Fasken Xxxxxxxx
Xxxxxxx, counsel to Architel, or Xxxxxxx Xxxxxxxx & Xxxxxxxx, counsel to Amdocs,
dated as of the Closing Date, in form and substance reasonably satisfactory to
Architel, to the effect that the Arrangement will be generally treated for
Canadian federal tax purposes as a reorganization of capital for those Architel
Shareholders who hold their Architel Common Shares as capital property for
purposes of the ITA and (b) an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP ("Skadden, Arps"), special counsel to Architel, dated as of the Closing
Date, in form and substance reasonably satisfactory to Architel, substantially
to the effect that, on the basis of the facts, representations and assumptions
set forth in such opinion, it is more likely than not that the Arrangement will
be treated as a reorganization within the meaning of Section 368(a) of the Code.
In rendering such opinions, Xxxxxxx Xxxx and Fasken Xxxxxxxx Xxxxxxx or Xxxxxxx
Xxxxxxxx & Xxxxxxxx may rely upon representations and covenants, including those
contained in certificates of officers of
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Architel, Amdocs Holdco and Amdocs, which representations and covenants are in
form and substance reasonably acceptable to Skadden, Arps.
7.14 Pooling Opinion.
Architel shall have received from D&T and from Amdocs the D&T Pooling
Letter and the E&Y Pooling Letter, respectively, in form and substance
reasonably satisfactory to Architel.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF AMDOCS, AMDOCS PARENTCO AND
AMDOCS HOLDCO
The obligations of Amdocs, Amdocs Parentco and Amdocs Holdco hereunder
are subject to the fulfillment or satisfaction on or before the Closing, of each
of the following conditions (any one or more of which may be waived by Amdocs,
but only in a writing signed by Amdocs):
8.1 Accuracy of Representations and Warranties.
The representations and warranties of Architel set forth in Section 2
(as qualified by the Architel Disclosure Letter) shall be true and accurate in
all respects on and as of the Closing Date with the same force and effect as if
they had been made at the Closing except (a) for changes contemplated by this
Agreement, and (b) to the extent the failure of such representations and
warranties to be true and accurate in such respects has not had and could not
reasonably be expected to have a Material Adverse Effect on Architel, and Amdocs
shall receive a certificate to such effect executed by Architel's Chief
Executive Officer or Chief Financial Officer.
8.2 Covenants.
Architel shall have performed and complied in all material respects
with all of its covenants required to be performed by it under this Agreement or
the Plan of Arrangement on or before the Closing, and Amdocs, Amdocs Parentco
and Amdocs Holdco shall receive a certificate to such effect signed by
Architel's Chief Executive Officer or Chief Financial Officer.
8.3 Absence of Material Adverse Change.
There shall not have been any event or change since the date hereof
that has a Material Adverse Effect on Architel.
8.4 Compliance with Law.
There shall be no order, decree or ruling by any governmental agency or
threat thereof, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Arrangement, which would prohibit or render
illegal the transactions contemplated by this Agreement.
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8.5 Government Consents.
There shall have been obtained on or before the Closing such material
permits or authorizations, and there shall have been taken such other action, as
may be required to consummate the Arrangement by any regulatory authority having
jurisdiction over the parties and the actions herein proposed to be taken,
including but not limited to requirements under applicable federal and state
securities laws and the compliance with, and expiration or termination of any
applicable waiting period under, the HSR Act.
8.6 SEC Filings.
The Form F-4 and the Shelf, if filed, shall have been declared
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop-order, and there shall have been no cease
trade order issued by a Canadian securities commission to cease trading any
aspect of the Arrangement.
8.7 Opinion of Architel's Counsel.
Amdocs shall have received from Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP and from Fasken Xxxxxxxx Xxxxxxx, United States and Canadian counsel to
Architel, respectively, opinions in customary form in connection with
transactions such as the Arrangement that are reasonably satisfactory to Amdocs
and its counsel.
8.8 Documents.
Architel shall have received all written consents, assignments,
waivers, authorizations or other certificates necessary to provide for the
continuation in full force and effect of any and all material contracts and
leases of Architel and for Architel to consummate the transactions contemplated
hereby, except when the failure to receive such consents, or other certificates
would not have a Material Adverse Effect on Architel.
8.9 Architel Approvals.
The principal terms of this Agreement and the Arrangement shall have
been approved and adopted by the Architel shareholders in accordance with
applicable law and Architel's articles of incorporation and bylaws, and Architel
shall not have received on or prior to the Effective Time notice from the
holders of more than 5.00% of the Architel Common Shares of their intention to
exercise their rights of dissent under Section 190 of the CBCA.
8.10 No Legal Action.
No temporary restraining order, preliminary injunction or permanent
injunction or other order preventing the consummation of the Arrangement shall
have been issued by any U.S. or Canadian federal, provincial or state court and
remain in effect, nor shall any proceeding seeking any of the foregoing be
pending.
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8.11 Pooling Opinion.
Amdocs shall have received from Architel and from E&Y the D&T Pooling
Letter and the E&Y Pooling Letter, respectively, in form and substance
reasonably satisfactory to Amdocs.
8.12 Court Approval.
The Court shall have issued its final order approving the Arrangement
and such order shall: (a) be in form and substance satisfactory to Amdocs and
Architel (such approvals not to be unreasonably withheld or delayed by Amdocs or
Architel), (b) reflect the terms hereof and (c) not impose any material
conditions or costs.
8.13 OSC, Etc.
All necessary orders shall have been obtained from the OSC and other
relevant Canadian securities regulatory authorities in connection with the
Arrangement. Amdocs and Architel shall each have filed all notices and
information (if any) required under Part IX of the Competition Act (Canada) and
the applicable waiting periods and any extensions thereof shall have expired or
the parties shall have received an Advance Ruling Certificate pursuant to
Section 102 of the Competition Act (Canada) setting out that the Director under
such Act is satisfied he would not have sufficient grounds on which to apply for
an order in respect of the Arrangement. The Arrangement shall have received the
allowance or approval or deemed allowance or approval by the responsible
Minister under the Investment Canada Act in respect of the Arrangement, to the
extent such allowance or approval is required, on terms and conditions
satisfactory to the parties (including that no material conditions or costs are
imposed).
9. TERMINATION OF AGREEMENT
9.1 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the Arrangement by the shareholders of
Architel:
(a) by mutual agreement of Architel, Amdocs, Amdocs Parentco and
Amdocs Holdco;
(b) by Architel, if (i) there has been a breach by Amdocs of any
representation, warranty, covenant or agreement set forth in
this Agreement on the part of Amdocs, or if any representation
of Amdocs (other than Section 3.21) shall have become untrue,
in either case which has or can reasonably be expected to have
a Material Adverse Effect on Amdocs and which Amdocs fails to
cure within 15 business days after written notice thereof from
Architel (except that no cure period shall be provided for a
breach by Amdocs which by its nature cannot be cured) or (ii)
there has been a breach by Amdocs of its representation in
Section 3.21, or if such representation shall have become
untrue, and which Amdocs fails to cure within 15 business days
(except that no cure period shall be provided for a breach by
Amdocs which by its nature cannot be cured);
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(c) by Amdocs, if there has been a breach by Architel of any
representation, warranty, covenant or agreement set forth in
this Agreement on the part of Architel, or if any
representation of Architel shall have become untrue, in either
case which has or can reasonably be expected to have a
Material Adverse Effect on Architel and which Architel fails
to cure within 15 business days after written notice thereof
from Amdocs (except that no cure period shall be provided for
a breach by Architel which by its nature cannot be cured);
(d) by Architel or Amdocs (provided that such party is not then in
breach of this Agreement) if the shareholders of Architel do
not approve the Arrangement at the Architel Shareholders
Meeting (provided that Architel may not terminate this
Agreement pursuant to this Section 9.1(d) if it has not
complied with its obligations under Section 4.4);
(e) by Architel or Amdocs, if all the conditions for Closing the
Arrangement shall not have been satisfied or waived on or
before 5:00 p.m., Toronto time on September 30, 1999 or such
later date as may be agreed upon in writing by the parties
hereto, other than as a result of a breach of this Agreement
by the terminating party, or in the case of termination by
Architel, a breach by any of the Principal Shareholders of
Architel of the Architel Affiliate Agreements or Option
Agreements referred to in Section 4.4, or, in the case of
either party, a breach by any of its Affiliates of the
Affiliate Agreements referred to in Section 4.5 or Section
5.4;
(f) by Architel or Amdocs, if a permanent injunction or other
order by any Guernsey, U.S. or Canadian federal, provincial or
state court shall have been issued and shall have become final
and nonappealable which would (i) make illegal or otherwise
restrain or prohibit the consummation of the Arrangement, (ii)
prohibit Amdocs's ownership or operation of all or any
material portion of the business or assets of Architel or
(iii) compel Amdocs to dispose of or hold separate all or any
material portion of the business or assets of Architel;
(g) by Amdocs, if the Architel Board of Directors shall have
changed or withdrawn any recommendation in favor of the
Arrangement previously made by it, or shall have made any
recommendation to the shareholders of Architel against the
Arrangement or in support of an Acquisition Proposal (an
"Acquisition Proposal Termination"); or
(h) by Architel, if the Architel Board of Directors determines in
good faith, based on the written opinion, or an oral opinion
written into the minutes of a meeting of the Architel Board of
Directors, of outside legal counsel, that it is required by
its fiduciary duties to recommend to the Architel shareholders
that they vote against the Arrangement and approve instead a
Superior Proposal that is the subject of a firm written offer
from a third party that is capable of consummating such
Acquisition Proposal (a "Superior Proposal Termination").
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9.2 Notice of Termination.
Any termination of this Agreement under Section 9.1 above will be
effective by the delivery of written notice by the terminating party to the
other party hereto.
9.3 Effect of Termination.
In the case of any termination of this Agreement as provided in this
Article 9, this Agreement shall be of no further force and effect (except as
provided in Section 9.4 and Article 11) and nothing herein shall relieve any
party from liability for any breach of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement dated as of January 29, 1999 (the "Confidentiality
Agreement"), between Amdocs and Architel.
9.4 Termination Fees.
(a) If this Agreement is terminated (A) by Amdocs pursuant to
Section 9.1(c) as a result of a material breach by Architel of
any representation, warranty, covenant or agreement set forth
in this Agreement (other than a failure of the condition set
forth in Section 8.3), (B) by Amdocs pursuant to an
Acquisition Proposal Termination under Section 9.1(g), or (C)
by Architel pursuant to a Superior Proposal Termination under
Section 9.1(h); then Amdocs shall deliver to Architel copies
of invoices detailing the fees and expenses incurred by it
with respect to this Agreement and the transactions
contemplated hereby and Architel shall pay to Amdocs (by wire
transfer or cashier's check) the aggregate amount of such
reasonable fees and expenses ("Termination Expenses") within
two business days of the delivery of such invoices to
Architel. If this Agreement is terminated as described in the
previous sentence and, within six months of the date of a
termination described in the previous sentence, Architel
enters into an agreement regarding a Superior Proposal, or a
Superior Proposal in the form of a take-over bid or exchange
offer has been publicly announced or Architel consummates a
Superior Proposal, Architel shall, within two business days
after the earlier of the entering into of such an agreement
regarding a Superior Proposal, such public announcement or the
consummation of any such Superior Proposal, as the case may
be, pay to Amdocs the additional sum of $15.5 million (the
"Termination Fee"). If (1) this Agreement is terminated by
either party pursuant to Section 9.1(d) as a result of the
failure of Architel's shareholders to approve the Arrangement,
(2) prior to the date of such Architel Shareholders Meeting,
Architel shall have received a Superior Proposal or one is
publicly announced, and (3) within six months of the date of
such a termination Architel enters into an agreement regarding
a Superior Proposal, or a Superior Proposal in the form of a
take-over bid or exchange offer has been commenced or Architel
consummates a Superior Proposal, Architel shall, immediately
upon the consummation of such Superior Proposal or any other
Superior Proposal (if consummated within 12 months of the
event set forth in clause (3)) pay to Amdocs both the
Termination Expenses and the Termination Fee. Amdocs shall not
be entitled to receive any
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payment under this Section 9.4(a) if, at the time of delivery
of the applicable notice of termination pursuant to Section
9.2, Amdocs shall have been in breach of this Agreement in a
manner giving rise to Architel's right to terminate this
Agreement pursuant to Section 9.1(b).
(b) Architel's obligations to pay the termination fees set forth
in Section 9.4 are in lieu of any damages or any other payment
which Architel might otherwise be obligated to pay Amdocs as a
result of any termination for which payment is due under
Section 9.4. Amdocs and Architel agree that, in view of the
nature of the issues likely to arise in the event of such a
termination, it would be impracticable or extremely difficult
to fix the actual damages resulting from such termination and
proving actual damages, causation and foreseeability in the
case of such termination would be costly, inconvenient and
difficult. In requiring a party to pay a termination fee as
set forth herein, it is the intent of the parties to provide,
as of the date of this Agreement, for a liquidated amount of
damages to be paid by such party to other party. Such
liquidated amount shall be deemed full and adequate damages
for such termination and is not intended by either party to be
a penalty.
(c) If this Agreement is terminated by Architel pursuant to
Section 9.1(b) as a result of a material breach by Amdocs of
any representation, warranty, covenant or agreement set forth
in this Agreement (other than a failure of the condition set
forth in Section 7.3), Architel shall deliver to Amdocs copies
of invoices detailing the fees and expenses incurred by it
with respect to this Agreement and the transactions
contemplated hereby and Amdocs shall pay to Architel (by wire
transfer or cashier's check) the aggregate amount of such
reasonable fees and expenses within two business days of the
delivery of such invoices to Amdocs.
(d) If Architel shall have terminated this Agreement pursuant to
Section 9.1(b)(ii) (relating to a breach of Amdocs'
representation in Section 3.21), Amdocs shall pay to Architel
cash in the amount of $3.5 million, plus reimbursement for the
aggregate amount of such reasonable fees and expenses referred
to in Section 9.4(c).
10. SURVIVAL OF REPRESENTATIONS
All representations, warranties and covenants of the parties contained
in this Agreement will remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the parties to this Agreement,
until the earlier of the termination of this Agreement and the Closing Date,
whereupon such representations, warranties and covenants will expire (except for
covenants that by their terms survive for a longer period).
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11. MISCELLANEOUS
11.1 Governing Law.
The internal laws of the State of New York (irrespective of its choice
of law principles) will govern the validity of this Agreement, the construction
of its terms and the interpretation and enforcement of the rights and duties of
the parties hereto, except to the extent mandatorily governed by the laws of
Ontario or Guernsey.
11.2 Assignment; Binding Upon Successors and Assigns.
Neither party hereto may assign any of its rights or obligations
hereunder without the prior written consent of the other party hereto. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
11.3 Severability.
If any provision of this Agreement, or the application thereof, will
for any reason and to any extent be invalid or unenforceable, the remainder of
this Agreement and application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the greatest extent possible, the economic, business and other
purposes of the void or unenforceable provision.
11.4 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which will be an original as regards any party whose signature appears thereon
and all of which together will constitute one and the same instrument. This
Agreement will become binding when one or more counterparts hereof, individually
or taken together, will bear the signatures of all the parties reflected hereon
as signatories.
11.5 Other Remedies.
Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby or by law on such party, and the
exercise of any one remedy will not preclude the exercise of any other.
11.6 Amendment and Waivers.
Any term or provision of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound thereby. The waiver by a party of any breach
hereof or default in the performance hereof will not be deemed to constitute a
waiver of any other default or any succeeding breach or default. The Agreement
may
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be amended by the parties hereto at any time before or after approval of
Architel's shareholders, but, after such approval, no amendment will be made
which by applicable law requires the further approval of the Architel's
shareholders without obtaining such further approval.
11.7 Expenses.
Except as provided in Sections 9.4(a), (c) and (d), each party will
bear its respective expenses and legal fees incurred with respect to this
Agreement, and the transactions contemplated hereby. If the Arrangement is
consummated, Amdocs will pay the reasonable accounting fees and expenses,
investment banking fees and expenses not to exceed the amounts specified in the
Architel Disclosure Letter, and reasonable attorneys' fees and expenses incurred
by Architel in connection with the Arrangement.
11.8 Attorneys' Fees.
Should suit be brought to enforce or interpret any part of this
Agreement, the prevailing party will be entitled to recover, as an element of
the costs of suit and not as damages, reasonable attorneys' fees to be fixed by
the court (including, without limitation, costs, expenses and fees on any
appeal). The prevailing party will be entitled to recover its costs of suit,
regardless of whether such suit proceeds to final judgment.
11.9 Notices.
All notices and other communications pursuant to this Agreement shall
be in writing and deemed to be sufficient if contained in a written instrument
and shall be deemed given if delivered personally, by facsimile, sent by
nationally-recognized overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following address (or at such other address for a party as shall be specified by
like notice):
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If to Architel to:
Architel Systems Corporation
000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx X. xxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Fasken Xxxxxxxx Xxxxxxx
Toronto Dominion Centre
Toronto Xxxxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
and to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx XXX
Xxxxx 0000 Xxxxx Xxxxx
Xxxxx Bank Plaza
Toronto, Ontario
M5J 2J4
Attention: Xxxxxxxxxxx X. Xxxxxx
Facsimile: (000) 00000000
If to Amdocs, Amdocs Parentco or Amdocs Holdco to:
c/o Amdocs (UK) Limited
Grand Buildings
0-0 Xxxxxx
Xxxxxx XXXX 0XX
Xxxxxx Xxxxxxx
Facsimile: 00-000-000-0000
with a copy to:
00
-00-
Xxxxxx, XxxXxxxxx, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a facsimile, when the party receiving such copy shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the tenth business day following such
mailing.
11.10 Construction of Agreement.
This Agreement has been negotiated by the respective parties hereto and
their attorneys and the language hereof will not be construed for or against
either party. A reference to a Section or an exhibit will mean a Section in, or
exhibit to, this Agreement unless otherwise explicitly set forth. The titles and
headings herein are for reference purposes only and will not in any manner limit
the construction of this Agreement which will be considered as a whole.
11.11 No Joint Venture.
Nothing contained in this Agreement will be deemed or construed as
creating a joint venture or partnership between any of the parties. No party is
by virtue of this Agreement authorized as an agent, employee or legal
representative of any other party. No party will have the power to control the
activities and operations of any other and their status is, and at all times,
will continue to be, that of independent contractors with respect to each other.
No party will have any power or authority to bind or commit any other. No party
will hold itself out as having any authority or relationship in contravention of
this Section.
11.12 Further Assurances.
Each party agrees to cooperate fully with the other parties and to
execute such further instruments, documents and agreements and to give such
further written assurances as may be reasonably requested by any other party to
evidence and reflect the transactions described herein and contemplated hereby
and to carry into effect the intents and purposes of this Agreement.
11.13 Absence of Third Party Beneficiary Rights.
No provisions of this Agreement are intended, nor will be interpreted,
to provide or create any third party beneficiary rights or any other rights of
any kind in any client, customer, affiliate, stockholder or partner of any party
or any other person or entity unless specifically provided otherwise herein,
and, except as so provided, all provisions hereof will be personal solely
between the parties to this Agreement. Anything contained herein to the contrary
notwithstanding, (a) the holders of Architel Options are intended beneficiaries
of Section 1.4; and (b) the officers and directors of Architel are intended
beneficiaries of Section 5.11.
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11.14 Public Announcement.
Upon execution of this Agreement, Amdocs and Architel promptly will
issue a joint press release approved by both parties announcing the Arrangement.
Thereafter, Amdocs or Architel may issue such press releases, and make such
other disclosures regarding the Arrangement, as it determines (after
consultation with legal counsel) are required under applicable securities laws
or by the NASD, the NYSE or the TSE rules, subject to the prior review of the
other party hereto, provided that to the extent reasonably practicable each
party making any such disclosure will provide advance notice to the other of the
form and content of any such disclosure and opportunity to comment promptly
thereon, and shall in any case promptly deliver to the other party a copy of
such disclosure in the form released.
11.15 Entire Agreement.
This Agreement and the exhibits hereto and the Amdocs Option Agreement
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto other than the
Confidentiality Agreement, which shall remain in full force and effect. The
express terms hereof control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Combination
Agreement as of the date first above written.
ARCHITEL SYSTEMS CORPORATION
By: /s/ Xxx Xxxxxxx
----------------------------
Name: Xxx Xxxxxxx
Title: Director
AMDOCS LIMITED
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: ASO
AMDOCS (DENMARK) ApS.
By: /s/ Xxxxxx X'Xxxxx
----------------------------
Name: Xxxxxx X'Xxxxx
Title: Director
3026191 NOVA SCOTIA ULC
By: /s/ Xxxxxx X'Xxxxx
----------------------------
Name: Xxxxxx X'Xxxxx
Title: Director
