EXHIBIT 99(C)(1)
AGREEMENT AND PLAN OF MERGER
Dated as of October 7, 1996
Among
COMPUTER ASSOCIATES INTERNATIONAL, INC.,
TSE-TSEHESE-STAESTSE, INC.
And
CHEYENNE SOFTWARE, INC.
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.1. The Offer................................1
SECTION 1.2. Company Action...........................2
SECTION 1.3. Directors................................2
ARTICLE II
THE MERGER
SECTION 2.1. The Merger...............................3
SECTION 2.2. Conversion of Shares.....................4
SECTION 2.3. Surrender and Payment....................4
SECTION 2.4. Dissenting Shares........................5
SECTION 2.5. Stock Options............................5
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation.............6
SECTION 3.2. Bylaws...................................6
SECTION 3.2. Directors and Officers...................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties
of the Company......................................6
(a) Organization, Standing and Corporate Power......7
(b) Subsidiaries....................................7
(c) Capital Structure...............................7
(d) Authority; Noncontravention.....................8
(e) SEC Documents; Financial Statements; No
Undisclosed Liabilities.......................9
(f) Disclosure Documents............................9
(g) Absence of Certain Changes or Events...........10
(h) Litigation.....................................11
(i) Absence of Changes in Stock and Benefit Plans..11
(j) Participation and Coverage in Benefit Plan.....11
(k) ERISA Compliance...............................12
(l) Taxes..........................................13
(m) State Takeover Statutes; Rights Agreement......14
(n) Brokers; Schedule of Fees and Expenses.........14
(o) Permits; Compliance with Laws..................14
(p) Contracts; Debt Instruments....................14
(q) Opinion of Financial Advisor...................16
(r) Interests of Officers and Directors...........16
Page
(s) Technology.....................................16
(t) Change of Control..............................17
SECTION 4.2. Representations and Warranties
of Parent and Merger Subsidiary.....................17
(a) Organization, Standing and Corporate Power......17
(b) Authority; Noncontravention.....................17
(c) Disclosure Documents............................18
(d) Brokers.........................................18
(e) Delaware Law....................................18
(f) Financing.......................................18
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business....................19
SECTION 5.2. Stockholder Meeting; Proxy Material....20
SECTION 5.3. Access to Information..................21
SECTION 5.4. Other Offers...........................21
SECTION 5.5. State Takeover Statutes; Rights
Agreement..............................21
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary.......22
SECTION 6.2. Voting of Shares.......................22
SECTION 6.3. Indemnification........................22
SECTION 6.4. Employees..............................22
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts;
Notification..........................23
SECTION 7.2. Public Announcements...................24
SECTION 7.3. Confidentiality........................25
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of
Each Party............................25
Page
ARTICLE IX
TERMINATION
SECTION 9.1. Termination............................25
SECTION 9.2. Effect of Termination..................26
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations
and Warranties.......................26
SECTION 10.2. Notices...............................26
SECTION 10.3. Amendments; No Waivers................27
SECTION 10.4. Fees and Expenses.....................28
SECTION 10.5. Successors and Assigns................28
SECTION 10.6. Governing Law.........................28
SECTION 10.7. Counterparts; Effectiveness...........28
AGREEMENT AND PLAN OF MERGER dated as of October 7, 1996
among Computer Associates International, Inc., a Delaware
corporation ("Parent"), Tse-Tsehese-Staestse, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent
("Merger Subsidiary"), and Cheyenne Software, Inc., a
Delaware corporation (the "Company").
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Provided that nothing shall
have occurred that would result in a failure to satisfy any of the
conditions set forth in Annex I hereto, Merger Subsidiary shall, as
promptly as practicable after the date hereof, but in no event later
than five business days following the public announcement of the terms
of this Agreement, commence an offer (the "Offer") to purchase all of
the outstanding shares of common stock, par value $.01 per share (the
"Shares"), including the associated Rights (defined below in Section
4.1(c)) of the Company at a price of $30.50 per Share (including such
associated Rights), net to the seller in cash. The Offer shall be
subject to the condition that there shall be validly tendered in
accordance with the terms of the Offer prior to the expiration date of
the Offer and not withdrawn a number of Shares which, together with the
Shares then owned by Parent and Merger Subsidiary, represents at least a
majority of the total number of outstanding Shares, assuming the
exercise of all outstanding options, rights and convertible securities
(if any) and the issuance of all Shares that the Company is obligated to
issue (such total number of outstanding Shares being hereinafter
referred to as the "Fully Diluted Shares") (the "Minimum Condition") and
to the other conditions set forth in Annex I hereto. Parent and Merger
Subsidiary expressly reserve the right to waive the conditions to the
Offer and to make any change in the terms or conditions of the Offer;
provided that, without the written consent of the Company, no change may
be made which changes the form of consideration to be paid, decreases
the price per Share or the number of Shares sought in the Offer, imposes
conditions to the Offer in addition to those set forth in Annex I,
changes or waives the Minimum Condition, extends the Offer (except as
set forth in the following sentence), or makes any other change to any
condition to the Offer set forth in Annex I which is adverse to the
holders of Shares. Subject to the terms of the Offer in this Agreement
and the satisfaction (or waiver to the extent permitted by this
Agreement) of the conditions to the Offer, Merger Subsidiary shall
accept for payment all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the applicable
expiration date of the Offer and shall pay for all such Shares promptly
after acceptance; provided that Merger Subsidiary may extend the Offer
if, at the scheduled expiration date of the Offer or any extension
thereof any of the conditions to the Offer shall not have been
satisfied, until such time as such conditions are satisfied or waived,
and Merger Subsidiary may extend the Offer for a further period of time
of not more than 20 business days to meet the objective (which is not a
condition to the Offer) that there be validly tendered, in accordance
with the terms of the Offer, prior to the expiration date of the Offer
(as so extended) and not withdrawn a number of Shares, which together
with Shares then owned by Parent and Merger Subsidiary, represents at
least 90% of the Fully Diluted Shares. Subject to Section 9.1, if the
condition set forth in clause (ii) of the first paragraph of Annex I is
not satisfied as of the date the Offer would otherwise have expired,
Merger Subsidiary shall extend the Offer until the earlier of (i) the
date that is 30 days after the first scheduled expiration date and (ii)
the date the condition set forth in clause (ii) of the first paragraph
of Annex I is satisfied.
(b) As soon as practicable on the date of commencement of
the Offer, Parent and Merger Subsidiary shall (i) file with the SEC
(defined below in Section 4.1(a)) a Tender Offer Statement on Schedule
14D-l with respect to the Offer which will contain the offer to purchase
2
and form of the related letter of transmittal (together with any
supplements or amendments thereto, collectively the "Offer Documents")
and (ii) cause the Offer Documents to be disseminated to holders of
Shares. Parent, Merger Subsidiary and the Company each agrees promptly
to correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in
any material respect. Parent and Merger Subsidiary agree to take all
steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-l prior to its being filed with
the SEC.
SECTION 1.2. Company Action. (a) The Company hereby
consents to the Offer and represents that its Board of Directors, at a
meeting duly called and held, has (i) unanimously determined that this
Agreement and the transactions contemplated hereby, including the Offer
and the Merger (defined below in Section 2.1), are fair to and in the
best interest of the Company's stockholders, (ii) unanimously approved
this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, which approval satisfies in full the requirements
of Section 203 of the General Corporation Law of the State of Delaware
(the "Delaware Law"), and (iii) unanimously resolved to recommend
acceptance of the Offer and approval and adoption of this Agreement and
the Merger by its stockholders. The Company further represents that
Lazard Freres & Co. LLC has delivered to the Company's Board of
Directors its opinion that the consideration to be paid in the Offer and
the Merger is fair to the holders of Shares from a financial point of
view. The Company has been advised that all of its directors and
executive officers presently intend either to tender their Shares
pursuant to the Offer or to vote in favor of the Merger. The Company
will promptly furnish Parent and Merger Subsidiary with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and
lists of securities positions of Shares held in stock depositories, in
each case as of the most recent practicable date, and will provide to
Parent and Merger Subsidiary such additional information (including,
without limitation, updated lists of stockholders, mailing labels and
lists of securities positions) and such other assistance as Parent or
Merger Subsidiary may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced the Company will file with the SEC and disseminate to holders
of Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") which shall reflect the recommendations of the
Company's Board of Directors referred to above, subject to the fiduciary
duties of the Board of Directors of the Company as advised in writing by
Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company. The Company,
Parent and Merger Subsidiary each agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.
SECTION 1.3. Directors. (a) Effective upon the acceptance
for payment by Merger Subsidiary of a majority of the Shares pursuant to
the Offer, Parent shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board
of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors (giving effect to the
election of any additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by Parent or Merger
Subsidiary (including Shares accepted for payment) bears to the total
number of Shares outstanding, and the Company shall take all action
necessary to cause Parent's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing
the number of directors, or seeking and accepting resignations of
3
incumbent directors, or both; provided that, prior to the Effective Time
(defined below in Section 2.1), the Company's Board of Directors shall
always have one member who is neither a designee nor an affiliate of
Parent or Merger Subsidiary nor an employee of the Company (an
"Independent Director"). If the number of Independent Directors is
reduced below one for any reason prior to the Effective Time, the
departing Independent Director shall be entitled to designate a person
to fill such vacancy. No action proposed to be taken by the Company to
amend or terminate this Agreement or waive any action by Parent or
Merger Subsidiary shall be effective without the approval of the
Independent Director. At such times, the Company will use its best
efforts to cause individuals designated by Parent to constitute the same
percentage as such individuals represent on the Company's Board of
Directors of (x) each committee of the Board, (y) each board of
directors of each subsidiary (defined below in Section 4.1(a)) and (z)
each committee of each such board.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act
(defined below in Section 4.1(d)) and Rule 14f-l promulgated thereunder.
The Company shall promptly take all actions required pursuant to Section
14(f) and Rule 14f-l in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-l to fulfill its obligations
under this Section 1.3. Parent will supply to the Company in writing
and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time, Merger
Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with the Delaware Law, whereupon the separate existence of
Merger Subsidiary shall cease, and the Company shall be the surviving
corporation (the "Surviving Corporation").
(b) The closing of the Merger (the "Closing") shall take
place on the later of (x) November 30, 1996 and (y) the first business
day on which all of the conditions set forth in Article VIII hereof
shall be fulfilled or waived in accordance with this Agreement. As soon
as practicable following the Closing, the Company and Merger Subsidiary
will file a certificate of merger with the Secretary of State of the
State of Delaware and make all other filings or recordings required by
Delaware Law in connection with the Merger. The Merger shall become
effective at such time as the certificate of merger is duly filed with
the Secretary of State of the State of Delaware or, with the consent of
the Independent Director, at such later time as is specified in the
certificate of merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of the Company and Merger Subsidiary, all as provided under
Delaware Law.
SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or
owned by Parent, Merger Subsidiary or any subsidiary of either of them
immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
4
into and become one share of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation; and
(c) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section 2.2(a) or
as provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$30.50 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration").
SECTION 2.3. Surrender and Payment. (a) Prior to the
Effective Time, Parent shall appoint a bank or trust company (the
"Exchange Agent") for the purpose of exchanging certificates
representing Shares for the Merger Consideration. Parent will make
available to the Exchange Agent, as needed, the Merger Consideration to
be paid in respect of the Shares (the "Exchange Fund"). For purposes of
determining the Merger Consideration to be made available, Parent shall
assume that no holder of Shares will perfect his right to appraisal of
his Shares. Promptly after the Effective Time, Parent will send, or
will cause the Exchange Agent to send, to each holder of Shares at the
Effective Time a letter of transmittal for use in such exchange (which
shall specify that the delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the certificates
representing Shares to the Exchange Agent). The Exchange Agent shall,
pursuant to irrevocable instructions, make the payments provided in this
Section 2.3. The Exchange Fund shall not be used for any other purpose,
except as provided in this Agreement.
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the
Exchange Agent of a certificate or certificates representing such
Shares, together with a properly completed letter of transmittal
covering such Shares and such other documents as may be reasonably
requested, will be entitled to receive the Merger Consideration payable
in respect of such Shares. Until so surrendered, each such certificate
shall, after the Effective Time, represent for all purposes, only the
right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be
paid to a person other than the registered holder of the Shares
represented by the certificate or certificates surrendered in exchange
therefor, it shall be a condition to such payment that the certificate
or certificates so surrendered shall be properly endorsed or otherwise
be in proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of such payment to a person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For
purposes of this Agreement, "person" means an individual, a corporation,
a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any
agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time,
certificates representing Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in this
Article II.
(e) Any portion of the Exchange Fund made available to the
Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by the
holders of Shares six months after the Effective Time shall be returned
to Parent, upon demand, and any such holder who has not exchanged his
Shares for the Merger Consideration in accordance with this Section 2.3
prior to that time shall thereafter look only to Parent for payment of
the Merger Consideration in respect of his Shares. Notwithstanding the
foregoing, Parent shall not be liable to any holder of Shares for any
amount paid to a public official pursuant to applicable abandoned
property laws. Any amounts remaining unclaimed by holders of Shares
5
immediately prior to such time as such amounts would otherwise escheat
to or become property of any governmental entity shall, to the extent
permitted by applicable law, become the property of Parent free and
clear of any claims or interest of any person previously entitled
hereto.
(f) Any portion of the Merger Consideration made available
to the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for
which appraisal rights have been perfected shall be returned to Parent,
upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section
2.2, Shares outstanding immediately prior to the Effective Time and held
by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in
accordance with Delaware Law shall not be converted into a right to
receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Shares, and Parent
shall have the right to participate in all negotiations and proceedings
with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or
settle or offer to settle, any such demands.
SECTION 2.5. Stock Options. (a) At the Effective Time,
each of the then outstanding Company Options (defined below) shall by
virtue of the Merger, and without any further action on the part of any
holder thereof, become fully exercisable and vested and be assumed by
Parent and converted into an option to purchase that number of shares of
common stock, par value $.10 per share ("Parent Common Stock"), of
Parent determined by multiplying the number of Shares subject to such
Company Option at the Effective Time by the quotient obtained by
dividing (x) $30.50 by (y) the average closing price of Parent Common
Stock on the New York Stock Exchange Composite Tape for the 20
consecutive trading days immediately prior to the Effective Time (such
quotient, the "Conversion Number"), at an exercise price per share of
Parent Common Stock equal to the quotient obtained by dividing (x) the
exercise price per Share of such Company Option immediately prior to the
Effective Time by (y) the Conversion Number. If the foregoing
calculation results in an assumed Company Option being exercisable for a
fraction of a share of Parent Common Stock, then the number of shares of
Parent Common Stock subject to such option shall be rounded down to the
nearest whole number of shares. Except as otherwise set forth in this
Section 2.5, the term, status as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder (the "Code"), if applicable, and all
other terms and conditions of Company Options will, to the extent
permitted by law and otherwise reasonably practicable, be unchanged.
The Company shall take, or cause to be taken, all actions which are
necessary, proper or advisable under the Stock Plans to make effective
the transactions contemplated by this Section 2.5. "Company Options"
means any option granted, and not exercised or expired, to a current or
former employee, director or independent contractor of the Company or
any of its subsidiaries or any predecessor thereof to purchase Shares
pursuant to any stock option, stock bonus, stock award, or stock
purchase plan, program, or arrangement of the Company or any of its
subsidiaries or any predecessor thereof (collectively, the "Stock
Plans") or any other contract or agreement entered into by the Company
or any of its subsidiaries.
(b) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery pursuant to the terms set forth in this Section 2.5.
Parent shall cause the shares of Parent Common Stock issuable upon
exercise of the assumed Company Options to be registered, or to be
issued pursuant to a then effective registration statement, no later
than 90 days after the Effective Time on Form S-8 promulgated by the SEC
and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such
6
assumed Company Options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, Parent
shall administer the Company Options assumed pursuant to this Section
2.5 in a manner that complies with Rule 16b-3 promulgated by the SEC
under the Exchange Act, but shall have no responsibility for such
compliance by the Company or its predecessors.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate
of incorporation of Merger Subsidiary in effect at the Effective Time
shall be the certificate of incorporation of the Surviving Corporation
until amended in accordance with applicable law, except that the name of
the Surviving Corporation shall be changed to the name of the Company.
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in
effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 3.3. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed and
qualified in accordance with applicable law, (i) the directors of Merger
Subsidiary at the Effective Time shall be the directors of the Surviving
Corporation, and (ii) the officers of the Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Merger Subsidiary as
follows:
(a) Organization, Standing and Corporate Power. Each of
the Company and each of its Significant Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each of the Company and each of its Significant Subsidiaries
is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) could not
reasonably be expected to have a material adverse effect on the
financial condition, business or results of operations of the Company
and its subsidiaries taken as a whole except that occurrences due solely
to a disruption of the Company's or its subsidiary's businesses solely
as a result of the announcement of the execution of this Agreement and
the transactions proposed to be consummated by this Agreement shall be
excluded from consideration for purposes of the effect of an action or
inaction on the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). The Company has delivered to Parent
complete and correct copies of its Certificate of Incorporation and By-
Laws and the certificates of incorporation and by-laws of its
Significant Subsidiaries which are incorporated in the United States, in
each case as amended to the date of this Agreement. For purposes of
this Agreement, a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person; and a
7
"Significant Subsidiary" means any subsidiary of a person that
constitutes a significant subsidiary of such person within the meaning
of Rule 1-02 of Regulation S-X of the Securities and Exchange Commission
(the "SEC").
(b) Subsidiaries. Section 4.1(b) of the disclosure
schedule delivered by the Company to Parent and Merger Subsidiary prior
to the execution of this Agreement (the "Disclosure Schedule") lists
each subsidiary of the Company and its respective jurisdiction of
incorporation and indicates whether such subsidiary is a Significant
Subsidiary. All the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and nonassessable
and are owned by the Company, by another subsidiary of the Company or by
the Company and another such subsidiary, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens") and free of any other
limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock), other than such
Liens, limitations or restrictions arising in the ordinary and normal
course under applicable law. Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any person.
(c) Capital Structure. The authorized capital stock of the
Company consists of 75,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, par value $.01 per share (the "Preferred
Stock"). At the time of execution of this Agreement, (i) 37,711,424
shares of Common Stock were issued and outstanding, including associated
Preferred Share Purchase Rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of April 15, 1996 (the "Rights Agreement"),
between the Company and Continental Stock Transfer and Trust Company, as
Rights Agent (the "Rights Agent"), (ii) no shares of Preferred Stock
were issued and outstanding, (iii) 2,343,900 shares of Common Stock were
held by the Company in its treasury or by any of the Company's
subsidiaries, and (iv) 5,003,136 shares of Common Stock were reserved
for issuance pursuant to outstanding Company Options. Except as set
forth above, at the time of execution of this Agreement, no shares of
capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of capital
stock of the Company are, and all shares which may be issued pursuant to
the Stock Plans will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
Other than the Shares, there are not any bonds, debentures, notes or
other indebtedness or securities of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which shareholders of the Company may vote.
Except as set forth above and in Section 4.1(c) of the Disclosure
Schedule, there are not any securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities
of the Company or of any of its subsidiaries or obligating the Company
or any of its subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding rights,
commitments, agreements, arrangements or undertakings of any kind
obligating the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock or other voting
securities of the Company or any of its subsidiaries or any securities
of the type described in the two immediately preceding sentences (other
than in connection with the exercise of outstanding Company Options).
The Company has delivered to Parent complete and correct copies of the
Stock Plans and all forms of Company Options. Section 4.1(c) of the
Disclosure Schedule sets forth a complete and accurate list of all
Company Options outstanding as of the date of this Agreement and the
exercise price of each outstanding Company Option.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement
8
and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, to consummate the
transactions contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
except for any required approval by the Company's stockholders in
connection with the consummation of the Merger. This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding agreement of Parent and Merger
Subsidiary, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by this Agreement and compliance with
the provisions of this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its subsidiaries under, (i) the
Certificate of Incorporation or By-Laws of the Company or the comparable
charter or organizational documents of any of its Significant
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject
to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in
the case of clause (ii) or (iii) above, any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate could
not reasonably be expected to (A) have a Material Adverse Effect, (B)
impair the ability of the Company to perform its obligations under this
Agreement or (C) prevent or materially delay consummation of any of the
transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with
or exemption by (collectively, "Consents") any federal, state or local
government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the
Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated by this Agreement, except for
(i) the filing of a premerger notification and report form by the
Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder (the "HSR Act"),
(ii) compliance with any applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), (iii) the filing of a certificate of
merger in accordance with Delaware Law and appropriate documents with
the relevant authorities of other states in which the Company is
qualified to do business, (iv) such notices, filings and consents as may
be required under relevant state property transfer laws, and (v) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings as (A) may be required under the laws of any
foreign country in which the Company or any of its subsidiaries conducts
any business or owns any property or assets or (B) as to which the
failure to obtain or make could not reasonably be expected to (x) have a
Material Adverse Effect or (y) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities. The Company has filed all required reports, schedules,
forms, statements and other documents with the SEC since July 1, 1993
(the "SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), or the Exchange Act, as the case may
be, applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and
9
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Company Filed SEC Documents,
neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) and there is no existing condition, situation or set of
circumstances which are required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the
Company and its consolidated subsidiaries or in the notes thereto,
except for liabilities which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(f) Disclosure Documents. (i) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"),
including, without limitation, the Schedule 14D-9, the proxy or
information statement of the Company (the "Company Proxy Statement"), if
any, to be filed with the SEC in connection with the Merger, and any
amendments or supplements thereto will, when filed, comply as to form in
all material respects with the applicable requirements of the Exchange
Act.
(ii) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the
Company and at the time such stockholders vote on adoption of this
Agreement, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement and
at the time of any distribution thereof, such Company Disclosure
Document will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties contained in
this Section 4.1(f)(ii) will not apply to statements or omissions
included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger Subsidiary
specifically for use therein.
(iii) The information with respect to the Company or any
subsidiary that the Company furnishes to Parent or Merger Subsidiary in
writing specifically for use in the Offer Documents will not, at the
time of the filing thereof, at the time of any distribution thereof and
at the time of the consummation of the Offer, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available prior to the
date of this Agreement (the "Company Filed SEC Documents") and in
Section 4.1(g) of the Disclosure Schedule, since June 30, 1996, the
Company has conducted its business only in the ordinary course
consistent with past practice, and there has not been (i) any event,
occurrence or development of a state of circumstances which has had or
could reasonably be expected to have a Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any outstanding
shares of capital stock or other securities of the Company or any of its
subsidiaries, (iii) any split, combination or reclassification of any of
10
its capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, (iv) (A) any granting by the Company or any
of its subsidiaries to any current or former director, officer or
employee of the Company or any of its subsidiaries of any increase in
compensation or benefits or severance or termination pay or benefits,
except in the ordinary course of business consistent with past practice
or as was required under employment, severance or termination agreements
or plans in effect as of June 30, 1996, or (B) any entry by the Company
or any of its subsidiaries into any employment, deferred compensation,
severance or termination agreement with any such current or former
director, officer or employee, except in the ordinary course of business
consistent with past practice, (v) any damage, destruction or loss,
whether or not covered by insurance, that has had or could have a
Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company or any of its subsidiaries,
except insofar as may have been required by a change in generally
accepted accounting principles, (vii) any amendment of any material term
of any outstanding security of the Company or any of its subsidiaries,
(viii) any incurrence, assumption or guarantee by the Company or any of
its subsidiaries of any indebtedness for borrowed money in the amount of
more than $1,000,000 in the aggregate, (ix) any creation or assumption
by the Company or any of its subsidiaries of any Lien on any asset other
than in the ordinary course of business consistent with past practice,
but in no event in the amount of more than $500,000 for any one
transaction or $1,000,000 in the aggregate, (x) any making of any loan,
advance or capital contributions to or investment in any person other
than in the ordinary course of business consistent with past practice,
but in no event in the amount of more than $500,000 for any one
transaction or $1,000,000 in the aggregate and other than investments in
marketable securities made in the ordinary course of business consistent
with past practice, (xi) any transaction or commitment made, or any
contract or agreement entered into, by the Company or any of its
subsidiaries relating to its assets or business (including the
acquisition or disposition of any assets or the merger or consolidation
with any person) or any relinquishment by the Company or any of its
subsidiaries of any contract or other right, in either case, material to
the Company and its subsidiaries taken as a whole, other than
transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement,
but (without the consent of Parent which shall not be unreasonably
withheld or delayed) in no event representing commitments on behalf of
the Company or any of its subsidiaries of more than $500,000 for any
transaction or $1,000,000 for any series of transactions, (xii) any
material labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its subsidiaries, which
employees were not subject to a collective bargaining agreement at June
30, 1996, or any material lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to such employees or (xiii) any
agreement, commitment, arrangement or undertaking by the Company or any
of its subsidiaries to perform any action described in clauses (i)
through (xii).
(h) Litigation. Except as disclosed in the Company Filed
SEC Documents or in Section 4.1(h) of the Disclosure Schedule, there is
no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
subsidiaries that, individually or in the aggregate, could reasonably be
expected to (i) have a Material Adverse Effect, (ii) impair the ability
of the Company to perform its obligations under this Agreement or (iii)
prevent or materially delay the consummation of the Offer, the Merger or
any of the other transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
of its subsidiaries having, or which, insofar as reasonably can be
foreseen, in the future would have, any such effect. Section 4.1(h) of
the Disclosure Schedule sets forth as of the date hereof, with respect
to any pending suit, action or proceeding to which the Company or any
its subsidiaries is a party and which involves claims which if adversely
determined would exceed $500,000, the forum, the parties thereto, the
subject matter thereof and the amount of damages claimed.
11
(i) Absence of Changes in Stock and Benefit Plans. Except
as disclosed in the Company Filed SEC Documents or Section 4.1(i) of the
Disclosure Schedule, since June 30, 1996, there has not been (i) any
adoption or amendment by the Company or any of its subsidiaries of any
Stock Plan or any acceleration, amendment or change of the period of
exercisability or vesting of any Company Options or restricted stock,
stock bonus or other awards under the Stock Plans (including any
discretionary acceleration of the exercise periods or vesting by the
Company's Board of Directors or any committee thereof or any other
persons administering a Stock Plan) or authorization of cash payments in
exchange for any Company Options, restricted stock, stock bonus or other
awards granted under any of such Stock Plans; or (ii) any adoption or
amendment by the Company or any of its subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, stock appreciation right, retirement,
vacation, severance, disability, death benefit, hospitalization,
medical, workers' compensation, supplementary unemployment benefits or
other plan, arrangement or understanding providing benefits to any
current or former employee, officer or director of the Company or any of
its subsidiaries or any beneficiary thereof entered into, maintained or
contributed to, as the case may be, by the Company or any of its
subsidiaries (collectively, "Benefit Plans") where the expense of such
Benefit Plan, or amendment thereto, as the case may be, is material,
other than those Benefit Plans maintained outside of the United States
primarily for the benefit of persons substantially all of whom are non-
resident aliens with respect to the United States ("Foreign Benefit
Plans").
(j) Participation and Coverage in Benefit Plan. Except for
amendments and other actions described in Section 4.1(i) of the
Disclosure Schedule, except with respect to changes required by
applicable law, and except as disclosed in the Company Filed SEC
Documents or Section 4.1(j) of the Disclosure Schedule, there has been
no written interpretation or announcement (whether or not written) by
the Company or any of its subsidiaries relating to, or change in
employee participation or coverage under, any Benefit Plan, other than a
Foreign Benefit Plan, which would increase materially the expense of
maintaining such Benefit Plan above the level of the expense incurred in
respect thereof for the fiscal year ended on June 30, 1996.
(k) ERISA Compliance. (i) Section 4.1(k) of the
Disclosure Schedule contains a list of (A) all "employee pension benefit
plans" (defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), "employee welfare benefit
plans" (defined in Section 3(l) of ERISA) and all other Benefit Plans
maintained, or contributed to, by the Company or any of its subsidiaries
or ERISA affiliates (defined below) for the benefit of any current or
former employees, officers or directors of the Company or any of its
subsidiaries or ERISA affiliates or under which the Company or any of
its subsidiaries or ERISA affiliates has any liability other than
Foreign Benefit Plans ("U.S. Benefit Plans") and (B) all Stock Plans.
For purposes of this Agreement, "ERISA affiliate" of the Company means
any person which, together with the Company or any of its subsidiaries,
would be treated as a single employer under Section 414 of the Code.
The only Benefit Plans described in clause (A) of the preceding sentence
which constitute an "employee pension benefit plan" defined in Section
3(2) of ERISA (the "Pension Plans") are identified as such in Section
4.1(k) of the Disclosure Schedule.
(ii) Each material U.S. Benefit Plan has been maintained
and administered in compliance in all material respects with its terms
and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations, and is, to the extent required by
applicable law or contract, fully funded without having any material
deficit or material unfunded actuarial liability. Any Benefit Plan
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified and,
except as set forth in Section 4.1(k) of the Disclosure Schedule,
nothing has occurred to cause the loss of such qualified status except
where such occurrence could reasonably be expected to be cured without
the incurrence by the Company of any liability or expense that would be
material to the Company and its subsidiaries.
12
(iii) No Benefit Plan is covered by Title IV of ERISA or
Section 412 of the Code. Neither the Company nor any of its
subsidiaries has incurred or expects to incur any liability under Title
IV of ERISA that has not already been satisfied or any liability or
penalty under Section 4975 or 4980B of the Code or Section 502(i) of
ERISA that has not already been satisfied.
(iv) Except as disclosed in Section 4.1(k)(iv) of the
Disclosure Schedule, there are no pending or anticipated claims against
or otherwise involving any of the Benefit Plans and no suit, action or
other litigation has been brought against or with respect to any Benefit
Plan (excluding, in each case, claims for benefits incurred in the
ordinary course of Benefit Plan activities) which would be material to
the Company and its Subsidiaries.
(v) All material contributions, reserves or premium
payments required to be made as of the date hereof to or with respect to
the Benefit Plans have been made or provided for except to the extent
failure to do so would not impair the continued operation of the
relevant Benefit Plan.
(vi) Except as required by law or as disclosed in Section
4.1(k)(vi) of the Disclosure Schedule, neither the Company nor any of
its subsidiaries has any material obligations for post-retirement or
post-termination health and life benefits under any U.S. Benefit Plan.
(l) Taxes. As used in this Agreement, "tax" or "taxes"
shall include all Federal, state, local and foreign income, property,
sales, excise and other taxes, tariffs or governmental charges or
assessments of any nature whatsoever as well as any interest, penalties
and additions thereto. Except as disclosed in Schedule 4.1(l) of the
Disclosure Schedule:
(i) The Company and each of its subsidiaries have timely
filed all tax returns, statements, reports and forms required to be
filed with any tax authority and in accordance with all applicable laws.
All such tax returns are correct and complete in all material respects.
All taxes owed by the Company and any of its subsidiaries (whether or
not shown on any tax return) have been paid other than where failure to
do so could reasonably be expected to be cured without the incurrence by
the Company of any material liability. There are no material Liens on
any of the assets of the Company or any of its subsidiaries that arose
in connection with any failure (or alleged failure) to pay any tax.
(ii) The Company and each of its subsidiaries has withheld
and timely paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party other than where
failure to do so could reasonably be expected to be cured without the
incurrence by the Company of any material liability.
(iii) Neither the Company nor any of its subsidiaries
expects any authority to assess any additional taxes against the Company
or any of its subsidiaries for any period for which tax returns have
been filed. No dispute or claim concerning any tax liability of the
Company or any of its subsidiaries has been proposed or claimed in
writing by any authority.
(iv) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of taxes or agreed to any
extension of time with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has
filed a consent pursuant to Section 341(f) of the Code concerning
collapsible corporations. Neither the Company nor any of its
subsidiaries is a party to any tax allocation or sharing agreement.
Neither the Company nor any of its subsidiaries has any material
liability for the taxes of any person (other than the Company and any of
13
its subsidiaries that is currently a member of the Company's affiliated
group filing a consolidated federal income tax return) under Treas. Reg.
1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.
(vi) As of the date of the most recent financial statements
included in the Company Filed SEC Documents, the unpaid taxes of the
Company and its subsidiaries did not exceed the liability for taxes
(rather than any reserve for deferred taxes established to reflect
timing differences between book and tax income) set forth on the face of
such financial statements.
(vii) Neither the Company nor any of its subsidiaries is
required to include in income any adjustment pursuant to Section 481(a)
of the Code (or similar provisions of other law or regulations) in its
current or in any future taxable period by reason of a change in
accounting method; nor does the Company or any of its subsidiaries have
any knowledge that the Internal Revenue Service (or other taxing
authority) has proposed or is considering proposing, any such change in
accounting method. Neither the Company nor any of its subsidiaries is a
party to any agreement, contract, or arrangement that, individually or
collectively, could give rise to the payment of any material amount
(whether in cash or property, including Shares) that would not be
deductible pursuant to the terms of Sections 162(a)(1), other than
amounts which may be required to be capitalized pursuant to Section 263
or other applicable sections of the Code, 162(m), 162(n) or 280G of the
Code.
(m) State Takeover Statutes; Rights Agreement. (i) The
Board of Directors of the Company has approved the Offer, the Merger and
this Agreement, and such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement and the other transactions
contemplated hereby, the provisions of Section 203 of Delaware Law. To
the best of the Company's knowledge, no other "fair price",
"moratorium", "control share acquisition", or other anti-takeover
statute or similar statute or regulation, applies or purports to apply
to the Offer, the Merger, this Agreement or any of the other
transactions contemplated hereby.
(ii) The Company has delivered to Parent a complete and
correct copy of the Rights Agreement, including all amendments and
exhibits thereto. The Company has taken, and as soon as possible after
the date hereof (but in no event later than two business days after the
date hereof), the Rights Agent will take, all actions necessary or
appropriate to amend the Rights Agreement to ensure that the execution
of this Agreement, the announcement or making of the Offer, the
acquisition of Shares pursuant to the Offer and the Merger and the other
transactions contemplated in this Agreement will not cause Parent or any
of its affiliates to be considered an Acquiring Person (defined in the
Rights Agreement), the occurrence of a Distribution Date or Shares
Acquisition Date (each defined in the Rights Agreement) or the
separation of the Rights from the underlying Shares, and will not give
the holders thereof the right to acquire securities of any party hereto.
(n) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Lazard
Freres & Co. LLC and Broadview Associates LLC, the fees and expenses of
which will be paid by the Company (and a copy of whose engagement
letters and a calculation of the fees that would be due thereunder has
been provided to Parent), is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its
subsidiaries. Assuming consummation of the Offer and the Merger, no
such engagement letter obligates the Company to continue to use their
services or pay fees or expenses in connection with any future
transaction.
(o) Permits; Compliance with Laws. Each of the Company and
its subsidiaries has in effect all federal, state, local and foreign
governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary
14
for it to own, lease or operate its properties and assets and to carry
on its business as now conducted, and there has occurred no default
under any such Permit, except for the absence of Permits and for
defaults under Permits which absence or defaults, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. The Company and its subsidiaries have been, and are, in
compliance in all material respects with all applicable statutes, laws
or material ordinances, regulations, rules, judgments, decrees or orders
of any Governmental Entity, and neither the Company nor any of its
subsidiaries has received any notice from any Governmental Entity or any
other person that either the Company or any of its subsidiaries is in
violation of, or has violated, in any material respect any applicable
statutes, laws or material ordinances, regulations, rules, judgments,
decrees or orders.
(p) Contracts; Debt Instruments. (i) Except as otherwise
disclosed in Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to or subject
to:
(A) any union contract, or any employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement
providing for future payments, written or oral, with any current or
former officer, consultant, director or employee which (1) exceeds
$200,000 per annum or (2) requires aggregate annual payments or total
payments over the life of such agreement, contract or arrangement to
such current or former officer, consultant, director or employee in
excess of $100,000 or $250,000, respectively, and is not terminable by
it or its subsidiary on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(B) any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of
revenues of $1,000,000 per annum or more with other persons;
(C) any lease for real or personal property in which the amount
of payments which the Company is required to make on an annual basis
exceeds $1,000,000;
(D) to the Company's knowledge, any material agreement, contract,
policy, license, Permit, document, instrument, arrangement or commitment
which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired or adversely
affected by reason of the execution of this Agreement, the closing of
the Offer or the Merger, or the consummation of the other transactions
contemplated hereby;
(E) any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment that limits in any material
respect the freedom of the Company or any subsidiary of the Company to
compete in any line of business or with any person or in any geographic
area or which would so limit in any material respect the freedom of the
Company or any subsidiary of the Company after the Effective Time; or
(F) any other agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment not made in the ordinary
course of business which is material to the Company and its subsidiaries
taken as a whole.
(ii) Neither the Company nor any subsidiary of the Company
is in default in any material respect under the terms of any exclusive
license or distribution agreement or arrangement that, by its terms,
provides for payments to the Company or any of its subsidiaries of
$500,000 or more per annum. To the knowledge of the Company, as of the
date hereof, none of the parties to any of the contracts identified in
Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule or otherwise
15
disclosed in the Company Filed SEC Documents has terminated, or in any
way expressed an intent to materially reduce or terminate the amount of,
its business with the Company or any of its subsidiaries in the future.
(iii) Set forth in Section 4.1(p)(iii) of the Disclosure
Schedule is (A) a list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to
which any indebtedness of the Company or any of its subsidiaries in an
aggregate principal amount in excess of $500,000 is outstanding or may
be incurred and (B) the respective principal amounts currently
outstanding thereunder. For purposes of this Section 4.1(p)(iii),
"indebtedness" shall mean, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or
similar instruments, (C) all obligations of such person upon which
interest charges are customarily paid, (D) all obligations of such
person under conditional sale or other title retention agreements
relating to property purchased by such person, (E) all obligations of
such person issued or assumed as the deferred purchase price of property
or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (F) all capitalized lease obligations
of such person, (G) all obligations of others secured by any Lien on
property or assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of
such person under interest rate or currency swap transactions (valued at
the termination value thereof), (I) all letters of credit issued for the
account of such person (excluding letters of credit issued for the
benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such person
to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar securities
or property, and (K) all guarantees and arrangements having the economic
effect of a guarantee of such person of any indebtedness of any other
person.
(q) Opinion of Financial Advisor. The Company has received
the opinion of Lazard Freres & Co. LLC, dated the date hereof, a copy of
which has been or, within three business days of the date hereof, will
be provided to Parent, to the effect that, as of such date, the
consideration to be paid in the Offer and the Merger is fair to the
Company's stockholders from a financial point of view.
(r) Interests of Officers and Directors. None of the
Company's or any of its subsidiaries' officers or directors has any
interest in any property, real or personal, tangible or intangible,
including inventions, patents, copyrights, trademarks, trade names,
trade secrets or know-how, used in or pertaining to the business of the
Company or that of its subsidiaries, or any supplier, distributor or
customer of the Company or any of its subsidiaries, except for the
normal rights of a stockholder and rights under existing employee
benefit plans and except for any such interest which would not be
required to be disclosed under the Exchange Act.
(s) Technology. (i) The Company and its subsidiaries
exclusively own, or are licensed to use, the rights to all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, maskworks, net lists, schematics, inventories, technology,
trade secrets, source codes, know-how, computer software programs or
applications and tangible or intangible proprietary information or
material that in any material respect are used or proposed by the
Company to be used in the business of the Company and any of its
subsidiaries as currently conducted or proposed by the Company to be
conducted (the "Company Intellectual Property Rights"). Section
4.1(s)(i) of the Disclosure Schedule lists, as of the date hereof, all
material: (A) patents, trademarks, trade names, service marks,
registered and unregistered copyrights, and any applications therefor
included in the Company Intellectual Property Rights, the Company's
currently marketed software products and a list of which, if any, of
such products have been registered for copyright protection with the
United States Copyright Office and any foreign offices; and (B) licenses
and other agreements to which the Company or any of its subsidiaries is
16
a party and pursuant to which the Company or any of its subsidiaries is
authorized to use any Company Intellectual Property Right. Neither the
Company nor any of its subsidiaries is, or as a result of the execution,
delivery or performance of the Company's obligations hereunder will be,
in material violation of, or lose any rights pursuant to, any material
license or agreement described in Section 4.1(s) of the Disclosure
Schedule.
(ii) As of the date hereof, no claims with respect to the
Company Intellectual Property Rights have been asserted or, to the
knowledge of the Company, are threatened by any person nor does the
Company or any subsidiary of the Company know of any valid grounds for
any bona fide claims against the use by the Company or any subsidiary of
the Company of any Company Intellectual Property Rights. All granted
and issued patents and all registered trademarks and service marks
listed in Section 4.1(s)(i) of the Disclosure Schedule and all
copyrights held by the Company or any of its subsidiaries are valid,
enforceable and subsisting. To the Company's knowledge, as of the date
hereof, there has not been and there is not any material unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property Rights by any third party, employee or former employee.
(iii) No Company Intellectual Property Right is subject to
any outstanding order, judgment, decree, stipulation or agreement
restricting in any manner the licensing thereof by the Company or any of
its subsidiaries. Neither the Company nor any of its subsidiaries has
entered into any agreement to indemnify any other person against any
charge of infringement of any Company Intellectual Property Right,
except infringement indemnities agreed to in the ordinary course
included as part of the Company's license agreements. Neither the
Company nor any of its subsidiaries has entered into any agreement
granting any third party the right to bring infringement actions with
respect to, or otherwise to enforce rights with respect to, any Company
Intellectual Property Right owned by the Company. The Company and its
subsidiaries have the exclusive right to file, prosecute and maintain
all applications and registrations with respect to the Company
Intellectual Property Rights owned by the Company.
(t) Change of Control. Except as set forth in Section
4.1(i), 4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not (i) result in or increase in any material
respect the amount of any payment or benefit (including a payment or
benefit contingent on the occurrence of one or more events including,
without limitation, termination of employment) becoming due to any
current or former employee, director or independent contractor of the
Company or any of its subsidiaries, from the Company or any of its
subsidiaries under the terms of any Stock Plan, Benefit Plan or
employment or change of control agreement, or (ii) result in the
acceleration of the time of payment, exercise or vesting of any such
payment or benefits.
SECTION 4.2. Representations and Warranties of Parent and
Merger Subsidiary. Parent and Merger Subsidiary represent and warrant
to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to carry on its
business as now being conducted.
(b) Authority; Noncontravention. Parent and Merger
Subsidiary have all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of
Parent and Merger Subsidiary. This Agreement has been duly executed and
delivered by Parent and Merger Subsidiary and, assuming this Agreement
constitutes a valid and binding agreement of the Company, constitutes a
valid and binding obligation of such party, enforceable against such
17
party in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or result in the creation of any
Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of
Parent or Merger Subsidiary or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to
Parent or Merger Subsidiary or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent, Merger Subsidiary or
any other subsidiary of Parent or their respective properties or assets,
other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the
aggregate would not (A) have a material adverse effect on Parent and its
subsidiaries taken as a whole, (B) impair the ability of Parent and
Merger Subsidiary to perform their respective obligations under this
Agreement or (C) prevent the consummation of any of the transactions
contemplated by this Agreement. No Consent is required by or with
respect to Parent, Merger Subsidiary or any other subsidiary of Parent
in connection with the execution and delivery of this Agreement or the
consummation by Parent or Merger Subsidiary, as the case may be, of any
of the transactions contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form under the HSR Act,
(ii) compliance with any applicable requirements of the Exchange Act,
(iii) the filing of a certificate of merger in accordance with Delaware
Law and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business, (iv) such
notices, filings and consents as may be required under relevant state
property transfer laws and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as (A) may be
required under the laws of any foreign country in which the Company or
any of its subsidiaries conducts any business or owns any property or
assets or (B) as to which the failure to obtain or make could not
reasonably be expected to (x) have a Material Adverse Effect or (y)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
(c) Disclosure Documents. (i) The information with respect
to Parent and its subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not
contain, any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading (A) in the case of the Company Proxy Statement at the time
the Company Proxy Statement or any amendment or supplement thereto is
first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (B) in the case of
any Company Disclosure Document other than the Company Proxy Statement,
at the time of the filing thereof and at the time of any distribution
thereof.
(ii) The Offer Documents, when filed, will comply as to
form in all material respects with the applicable requirements of the
Exchange Act and will not at the time of the filing thereof, at the time
of any distribution thereof or at the time of consummation of the Offer,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading,
provided, that this representation and warranty will not apply to
statements or omissions in the Offer Documents based upon information
furnished to Parent or Merger Subsidiary in writing by the Company
specifically for use therein.
(d) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
18
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of Parent or Merger Subsidiary.
(e) Delaware Law. As of the time immediately prior to the
execution of this Agreement, neither Parent nor any of its subsidiaries
was (i) an "interested stockholder", as such term is defined in Section
203 of the Delaware Law or (ii) an Acquiring Person under the Rights
Agreement.
(f) Financing. Parent will provide or cause to be provided
to Merger Subsidiary the funds necessary to consummate the Offer and the
Merger in accordance with their terms and the terms of this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business. During the period from
the date of this Agreement to the Effective Time, the Company shall, and
shall cause its subsidiaries to, carry on their respective businesses in
the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and
preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them.
Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, the Company shall not,
and shall not permit any of its subsidiaries to, without the prior
written approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect wholly owned
subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (iii) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities (other than in
connection with the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than the issuance of Shares upon the exercise of Company Options
outstanding on the date of this Agreement in accordance with their terms
on such date);
(c) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents;
(d) (i) mortgage or otherwise encumber or subject to any
Lien, any of the Company Intellectual Property Rights or any other
material properties or assets, (ii) except in the ordinary course of
business consistent with past practice and pursuant to existing
contracts or commitments, sell, lease, transfer or otherwise dispose of
any of the Company Intellectual Property Rights or any other material
properties or assets, or (iii) except in the ordinary course of business
consistent with past practice or pursuant to existing contracts or
commitments, license any of the Company Intellectual Property Rights;
19
(e) make or agree to make any new capital expenditures
individually in excess of $250,000;
(f) make any material tax election (unless required by law)
or settle or compromise any material income tax liability;
(g) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice and in
accordance with their terms, of (i) liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Company
Filed SEC Documents or (ii) liabilities incurred in the ordinary course
of business consistent with past practice, or, subject to the fiduciary
duties of the Board of Directors of the Company as advised in writing by
Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any of its
subsidiaries is a party;
(h) commence a lawsuit other than (i) for the routine
collection of bills or (ii) to enforce this Agreement or (iii) in such
cases where the Company in good faith determines that the failure to
commence suit would result in a material impairment of a valuable aspect
of the Company's business, provided that the Company consults with
Parent prior to filing such suit;
(i) (i) enter into or amend any employment agreement, (ii)
enter into any customer sale or license agreement with non-standard
terms or at discounts from list prices from that typically granted to
similarly situated customers in accordance with past practice; provided
that such action with respect to a customer sale or license agreement
that is immaterial in amount and term will not be deemed to violate this
provision if the Company has (A) used its best efforts to ensure
compliance with this provision and (B) taken prompt corrective action in
the event of a violation sufficient to ensure that no similar violation
will occur in the future, (iii) pay commissions to sales employees
except pursuant to quarterly draws consistent with past practice or on
the basis of executed customer contracts with respect to products
actually delivered to customers, (iv) without the consent of Parent
which shall not be unreasonably withheld or delayed, enter into any
contract or series of related contracts in excess of $500,000 for any
contract or $1,000,000 for any series of related contracts, (v) enter
into or amend any agreement or arrangement for professional services or
advice except in the ordinary course of business consistent with past
practice, (vi) enter into any customer agreements providing for product
replacements except in the ordinary course of business consistent with
past practice or (vii) make any determination as to amounts payable
under any plan, arrangement, or agreement, providing for discretionary
incentive compensation or bonus to any officer, director, employee or
independent contractor of the Company or any of its subsidiaries;
(j) hire additional employees except in accordance with
existing budgets; provided that the aggregate number of employees of the
Company and its subsidiaries shall not be increased by more than eight
percent per quarter over the number of employees on the date of this
Agreement;
(k) authorize any of, or commit or agree to take any of,
the foregoing actions; or
(l) (i) take or agree or commit to take any action that
would make any representation or warranty of the Company hereunder
inaccurate in any respect at, or as of any time prior to, the Effective
Time or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time.
20
SECTION 5.2. Stockholder Meeting; Proxy Material. The
Company shall cause a meeting of its stockholders (the "Company
Stockholder Meeting") to be duly called and held as soon as reasonably
practicable following Merger Subsidiary's acquisition of Shares in the
Offer for the purpose of voting on the approval and adoption of this
Agreement and the Merger unless a vote of stockholders of the Company is
not required by Delaware Law. The Directors of the Company shall,
subject to their fiduciary duties as advised in writing by Wachtell,
Lipton, Xxxxx & Xxxx, counsel to the Company, recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders.
In connection with such meeting, the Company (i) will promptly prepare
and file with the SEC, will use all reasonable efforts to have cleared
by the SEC and will thereafter mail to its stockholders as promptly as
practicable the Company Proxy Statement and all other proxy materials
for such meeting, (ii) subject to the fiduciary duties of the Board of
Directors of the Company as advised in writing by Wachtell, Lipton,
Xxxxx & Xxxx, counsel to the Company, will use its best efforts to
obtain the necessary approvals by its stockholders of this Agreement and
the transactions contemplated hereby and (iii) will otherwise comply
with all legal requirements applicable to such meeting.
SECTION 5.3. Access to Information. From the date hereof
until the Effective Time, the Company will give Parent, its counsel,
financial advisors, auditors and other authorized representatives access
(during normal business hours and upon reasonable notice) to the
offices, properties, books and records of the Company and the
subsidiaries, will furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably
request and will instruct the Company's employees, counsel and financial
advisors to cooperate with Parent in its investigation of the business
of the Company and the subsidiaries; provided that no investigation
pursuant to this Section 5.3 shall affect any representation or warranty
given by the Company to Parent hereunder.
SECTION 5.4. Other Offers. Until the termination of this
Agreement, the Company and its subsidiaries will not, and will not
authorize or permit the officers, directors, employees or other agents
of the Company and its subsidiaries to, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Acquisition Proposal
(defined below) or (ii) subject to the fiduciary duties of the Board of
Directors of the Company under applicable law, as advised in writing by
Wachtell, Lipton, Xxxxx & Xxxx, counsel to the Company, engage in
negotiations with, or disclose any nonpublic information relating to the
Company or any of its subsidiaries or afford access to the properties,
books or records of the Company or any of its subsidiaries to, any
person that has advised the Company or otherwise publicized the fact
that such person may be considering making, or that has made, an
Acquisition Proposal; provided, nothing herein shall prohibit the
Company's Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer pursuant to Rules
14d-9 and 14e-2 promulgated under the Exchange Act. The Company will
promptly notify Parent after receipt of any Acquisition Proposal or any
notice that any person is considering making an Acquisition Proposal or
any request for nonpublic information relating to the Company or any of
its subsidiaries or for access to the properties, books or records of
the Company or any of its subsidiaries by any person that has advised
the Company or otherwise publicized the fact that such person may be
considering making, or that has made, an Acquisition Proposal and will
keep Parent informed of the status and details of any such Acquisition
Proposal, indication or request. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any written
indication of interest in, a merger or other business combination
involving the Company or any of its subsidiaries or the acquisition of
any significant equity interest in, or a significant portion of the
assets of, the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement.
SECTION 5.5. State Takeover Statutes; Rights Agreement.
(a) If any "fair price", "control share acquisition", "moratorium" or
other anti-takeover statute, or similar statute or regulation shall
become applicable to the Offer, the Merger or this Agreement, or any
other transactions contemplated hereby, the Company and its Board of
21
Directors shall take all action necessary to ensure that the Offer, the
Merger and the other transactions contemplated hereby, may be
consummated as promptly as practicable on the terms contemplated hereby
and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger and the other transactions contemplated hereby.
(b) Except as otherwise provided in Section 4.1(m)(ii), the
Company shall not redeem the Rights or amend (other than to delay the
Distribution Date or to render the Rights inapplicable to the Offer and
the Merger) or terminate the Rights Agreement prior to the Effective
Time unless required to do so by a court of competent jurisdiction.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary. Parent will
take all action necessary to cause Merger Subsidiary to perform its
obligations under this Agreement and to consummate the Offer and the
Merger on the terms and conditions set forth in this Agreement.
SECTION 6.2. Voting of Shares. Parent agrees to make a
quorum and vote all Shares acquired in the Offer or otherwise
beneficially owned by it in favor of adoption of this Agreement at the
Company Stockholder Meeting.
SECTION 6.3. Indemnification. For six years after the
Effective Time, Parent will indemnify and hold harmless the present and
former officers, directors, employees and agents of the Company (the
"Indemnified Parties") in respect of acts or omissions occurring on or
prior to the Effective Time to the extent provided under the Company's
certificate of incorporation and bylaws in effect on the date hereof;
provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. For four years after
the Effective Time, Parent will cause the Surviving Corporation to
provide officers' and directors' liability insurance in respect of acts
or omissions occurring on or prior to the Effective Time covering each
such person currently covered by the Company's officers' and directors'
liability insurance policy on terms substantially similar to those of
such policy in effect on the date hereof, provided that in satisfying
its obligation under this Section, Parent shall not be obligated to
cause the Surviving Corporation to pay premiums in excess of 105% of the
amount per annum the Company paid in its last full fiscal year, which
amount has been disclosed to Parent and if the Surviving Corporation is
unable to obtain the insurance required by this Section 6.3, it shall
obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount. Without limitation of the foregoing, in
the event any such Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with
any matter relating to the Merger, the Offer or this Agreement occurring
on or prior to the Effective Time, Parent shall pay as incurred such
Indemnified Party's reasonable legal and other expenses (including the
cost of any investigation and preparation) incurred in connection
therewith.
SECTION 6.4. Employees. (a) Parent agrees to honor in
accordance with their terms all Benefit Plans (including employment
agreements) previously delivered to Parent and all accrued benefits
vested thereunder; it being understood and agreed that nothing in this
Section 6.4(a) shall prevent Parent from terminating any such Benefit
Plan in accordance with its terms. For purposes of this Section 6.4(a),
any Benefit Plan that is a Company Filed SEC Document shall be deemed to
have been delivered to Parent.
(b) Parent agrees to provide employees of the Company and
its subsidiaries retained by Parent with employee benefits in the
aggregate no less favorable than those benefits provided to Parent's
similarly situated employees; provided that Parent shall be under no
obligation to retain any employee or group of employees of the Company
or its subsidiaries.
22
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts;
Notification. (a) Each of Parent and the Company shall (i) promptly
make or cause to be made the filings required of such party or any of
its subsidiaries under the HSR Act with respect to the transactions
contemplated by this Agreement, (ii) comply at the earliest practicable
date with any request under the HSR Act for additional information,
documents, or other material received by such party or any of its
subsidiaries from the Federal Trade Commission or the Department of
Justice or any other Governmental Entity in respect of such filings or
such transactions, and (iii) cooperate with the other party in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental
Entity under any Antitrust Laws (defined below) with respect to any such
filing or any such transaction. Each party shall promptly inform the
other party of any communication with, and any proposed understanding,
undertaking, or agreement with, any Governmental Entity regarding any
such filings or any such transaction. Neither party shall participate
in any meeting with any Governmental Entity in respect of any such
filings, investigation, or other inquiry without giving the other party
notice of the meeting and, to the extent permitted by such Governmental
Entity, the opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by
this Agreement under the HSR Act, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended,
and any other federal, state or foreign statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or
threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any Antitrust Law, and, if by mutual
agreement, Parent and the Company decide that litigation is in their
best interests, each of Parent and the Company shall cooperate and use
all reasonable efforts vigorously to contest and resist any such action
or proceeding and to have vacated, lifted, reversed, or overturned any
decree, judgment, injunction or other order, whether temporary,
preliminary or permanent (each an "Order"), that is in effect and that
prohibits, prevents, or restricts consummation of any such transaction.
Each of Parent and the Company shall use all reasonable efforts to take
such action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this
Agreement.
(c) Subject to the fiduciary duties of the Board of
Directors of the Company as advised in writing by Wachtell, Lipton,
Xxxxx & Xxxx, counsel to the Company, each of the parties agrees to use
all reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all other
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all other necessary
registrations and filings (including other filings with Governmental
Entities, if any), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the preparation of the
Company Disclosure Documents and the Offer Documents, and (iv) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.
23
(d) Notwithstanding anything to the contrary in Section
7.1(a), (b) or (c), (i) neither Parent nor any of its subsidiaries shall
be required to divest any of their respective businesses, product lines
or assets, (ii) neither Parent nor any of its subsidiaries shall be
required to take or agree to take any other action or agree to any
limitation that could reasonably be expected to have a material adverse
effect on the business, assets, financial condition, results of
operations or prospects of Parent and its subsidiaries taken as a whole
or of Parent combined with the Surviving Corporation after the Effective
Time, (iii) neither the Company nor its subsidiaries shall be required
to divest any of their respective businesses, product lines or assets,
or to take or agree to take any other action or agree to any limitation
that could reasonably be expected to have a Material Adverse Effect, and
(iv) no party shall be required to agree to the imposition of or to
comply with, any condition, obligation or restriction on Parent or any
of its subsidiaries or on the Surviving Corporation or any of its
subsidiaries of the type referred to in clause (a) or (b) of Annex I and
(v) neither Parent nor Merger Subsidiary shall be required to waive any
of the conditions to the Offer set forth in Annex I or any of the
conditions to the Merger set forth in Section VIII.
(e) Each party shall give prompt notice to the other
parties upon learning of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any respect
or (ii) the failure by it to comply with or satisfy in any respect any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
(f) The Company shall give prompt notice to Parent, and
Parent or Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting it or any of
its subsidiaries (x) which, in the case of the Company, if pending on
the date of this Agreement would have been required to have been
disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l) or
4.1(s) or (y) in the case of any party, which relate to the consummation
of the transactions contemplated by this Agreement.
SECTION 7.2. Public Announcements. Parent and Merger
Subsidiary, on the one hand, and the Company, on the other hand, will
consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Offer and the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national
securities exchange. The parties agree that the initial press release
to be issued with respect to the transactions contemplated by this
Agreement will be in the form previously agreed to by the parties.
SECTION 7.3. Confidentiality. Parent and its subsidiaries
will hold, and will cause their Representatives (defined in the
Confidentiality Agreement, dated October 1, 1996 (the "Confidentiality
24
Agreement"), between Parent and the Company) to hold, any Evaluation
Material (defined in the Confidentiality Agreement) (including any
stockholder information provided pursuant to this Agreement) in
confidence in accordance with the terms of the Confidentiality
Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each Party.
The obligations of the Company, Parent and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the following
conditions:
(i) if required by Delaware Law, this Agreement shall have
been adopted by the stockholders of the Company in accordance with such
Law;
(ii) any applicable waiting period under the HSR Act
relating to the Merger shall have expired;
(iii) no provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the consummation
of the Merger;
(iv) Parent or Merger Subsidiary shall have purchased
Shares in an amount equal to at least the Minimum Condition pursuant to
the Offer; and
(v) other than the filing of the certificate of merger in
accordance with Delaware Law, all Consents required to permit the
consummation of the Merger including those set forth in Sections 4.1(d)
and 4.2(b) shall have been filed, occurred or been obtained (other than
any such Consents the failure to file, occur or obtain in the aggregate,
could not reasonably be expected to (i) have a Material Adverse Effect
or (ii) prevent or materially delay the consummation of the Merger).
ARTICLE IX
TERMINATION
SECTION 9.1. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of
the Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not
been consummated by April 7, 1997 (provided that the party seeking to
terminate this Agreement shall not have breached its obligations under
this Agreement in any material respect);
(c) by either the Company or Parent, if there shall be any
law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is entered
and such judgment, injunction, order or decree shall become final and
nonappealable;
(d) by either the Company or Parent, (x) if Parent shall
have failed to commence the Offer within five business days following
the date of this Agreement (provided that Parent shall not be entitled
to terminate this Agreement pursuant to this sub-clause (x) as a result
25
of its breach of this Agreement), (y) if Parent or Merger Subsidiary
shall not have purchased any Shares pursuant to the Offer prior to
February 21, 1997 or (z) if the Offer shall have been terminated without
Parent or Merger Subsidiary having purchased any Shares pursuant to the
Offer;
(e) by Parent, upon the occurrence of any Trigger Event
described in clauses (i) through (iii) of Section 10.4(b); or
(f) by the Company, upon the occurrence of any Trigger
Event described in clause (i) of Section 10.4(b).
SECTION 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and
of no effect with no liability on the part of any party hereto or their
respective officers and directors, except that the agreements contained
in Sections 7.3, 10.4 and 10.6 shall survive the termination hereof.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time. This Section 10.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 10.2. Notices. All notices, requests and other
communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) or by telecopy (with copies by overnight
courier) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Merger Subsidiary, to
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx
President and Chief Operating Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: 000-000-0000
26
(b) if to the Company, to
Cheyenne Software, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxxxxx, Xxx Xxxx 00000
Attention: XxxXxxx Xxxx
Chairman and Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: 000-000-0000
SECTION 10.3. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if,
and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by the Company, Parent and Merger Subsidiary or in
the case of a waiver, by the party against whom the waiver is to be
effective; provided that after the adoption of this Agreement by the
stockholders of the Company, no such amendment or waiver shall, without
the further approval of such stockholders, alter or change (i) the
amount or kind of consideration to be received in exchange for any
shares of capital stock of the Company, (ii) any term of the certificate
of incorporation of the Surviving Corporation or (iii) any of the terms
or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the
Company.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 10.4. Fees and Expenses.
(a) Except as otherwise provided in this Section, all costs
and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately
available funds, promptly, but in no event later than two business days,
after the termination of this Agreement as a result of the occurrence of
any of the events set forth below (a "Trigger Event") in an amount equal
to (x) $37,500,000, in the case of the occurrence of a Trigger Event
described in clause (i) or (iii) below and (y) $20,000,000, in the case
of the occurrence of a Trigger Event described in clause (ii) below:
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal;
27
(ii) the Company shall have breached or failed to perform in any
respect any of its obligations, covenants or agreements under this
Agreement or any representation or warranty of the Company set forth in
this Agreement (other than any breaches or failures to perform or comply
that, in the aggregate, do not have a Material Adverse Effect); or
(iii) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or this Agreement.
(c) If this Agreement is terminated as a result of the
occurrence of a Trigger Event, in addition to any amounts paid or
payable by the Company to Parent pursuant to Section 10.4(b), the
Company shall assume and pay, or reimburse Parent for, all fees payable
and expenses incurred by Parent (including the fees and expenses of its
counsel) in connection with this Agreement and the transactions
contemplated hereby, up to a maximum of $5,000,000.
SECTION 10.5. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, provided
that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of the
other parties hereto except that Merger Subsidiary may transfer or
assign, in whole or from time to time in part, to one or more of Parent
or any of its wholly-owned subsidiaries, the right to purchase Shares
pursuant to the Offer, but any such transfer or assignment will not
relieve Merger Subsidiary of its obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
SECTION 10.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of New
York, except that the consummation and effectiveness of the Merger shall
be governed by, and construed in accordance with, Delaware Law.
SECTION 10.7. Counterparts; Effectiveness; Interpretation.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto. When a reference is
made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
28
The parties hereto have caused this Agreement to be signed
by their respective authorized officers as of the date first written
above.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By:______/s/ Sanjay Kumar________________
Name: Xxxxxx Xxxxx
Title: President and Chief Operating Officer
TSE-TSEHESE-STAESTSE, INC.
By:______/s/ Sanjay Kumar________________
Name: Xxxxxx Xxxxx
Title: President
CHEYENNE SOFTWARE, INC.
By:______/s/ ReiJane Huai________________
Name: XxxXxxx Xxxx
Title: Chairman and Chief Executive Officer
ANNEX I
Notwithstanding any other provision of the Offer, Parent and
Merger Subsidiary shall not be required to accept for payment or pay for
any Shares, and may terminate the Offer, if (i) by the expiration of the
Offer, the Minimum Condition shall not have been satisfied, (ii) by the
expiration of the Offer, the applicable waiting period under the HSR Act
shall not have expired or been terminated, or (iii) at any time on or
after October 7, 1996 and prior to the acceptance for payment of Shares
pursuant to the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or proceeding
by any Governmental Entity or by any other person, domestic or foreign,
before any Governmental Entity or arbitrator, (i) challenging or seeking
to make illegal, to delay materially or otherwise directly or indirectly
to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Parent or Merger
Subsidiary or the consummation by Parent or Merger Subsidiary of the
Merger, seeking to obtain material damages or otherwise directly or
indirectly relating to the transactions contemplated by this Agreement,
the Offer or the Merger, (ii) seeking to restrain or prohibit Parent's
or Merger Subsidiary's ownership or operation (or that of their
respective subsidiaries or affiliates) of all or any material portion of
the business or assets of the Company and its subsidiaries, taken as a
whole, or of Parent and its subsidiaries, taken as a whole, or to compel
Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, (iii) seeking to impose material
limitations on the ability of Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Parent or any of its subsidiaries or affiliates on
all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Parent or any of its subsidiaries or
affiliates of any Shares, or (v) that otherwise, in the judgment of
Parent, is likely to materially adversely affect the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole;
provided that, in the case of any instituted or pending action or
proceeding described in this subsection (a) above by a person other than
a Governmental Entity, there is a substantial probability of a
determination material and adverse to Parent or any of its subsidiaries
or the Company or any of its subsidiaries in such action or proceeding;
or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to this Agreement, the Offer or
the Merger, by any Governmental Entity or arbitrator other than the
application of the waiting period provisions of the HSR Act to this
Agreement, the Offer or the Merger, that, in the judgment of Parent, is
likely, directly or indirectly, to result in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a
prospective change) in the business, financial condition or results of
operations of the Company or any of its subsidiaries that, in the
reasonable judgment of Parent, is or is likely to have a Material
Adverse Effect; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the American Stock Exchange, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any material limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which would reasonably be
expected to have a Material Adverse Effect or prevent (or materially
delay) the consummation of the Offer or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, a material
acceleration or worsening thereof; or
(e) any Consent (other than the filing of a certificate of merger
or approval by the stockholders of the Company of the Merger (if
required by Delaware Law)) required to be filed, occurred or been
obtained by the Company or any of its subsidiaries or Parent of any of
its subsidiaries (including Merger Subsidiary) in connection with the
execution and delivery of this Agreement, the Offer and the consummation
of the transactions contemplated by this Agreement shall not have been
filed, occurred or been obtained (other than any such Consents the
failure to file, occur or obtain in the aggregate, could not reasonably
be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the Offer or the Merger); or
(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this
Agreement, or any of the representations and warranties of the Company
set forth in this Agreement that is qualified as to materiality shall
not be true when made or at any time prior to consummation of the Offer
as if made at and as of such time, or any of the representations and
warranties set forth in this Agreement that is not so qualified shall
not be true in any material respect when made or at any time prior to
the consummation of the Offer as if made at and as of such time; or
(g) this Agreement shall have been terminated in accordance with
its terms; or
(h) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or this Agreement;
or
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle with respect to any Acquisition Proposal;
which, in the sole judgment of Parent in any such case, and regardless
of the circumstances (including any action or omission by Parent or
Merger Subsidiary) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and
Merger Subsidiary and may be asserted by Parent in its sole discretion
regardless of the circumstances (including any action or omission by
Parent or Merger Subsidiary) giving rise to any such condition or (other
than the Minimum Condition) may be waived by Parent and Merger
Subsidiary in their sole discretion in whole at any time or in part from
time to time. The failure by Parent or Merger Subsidiary at any time to
exercise its rights under any of the foregoing conditions shall not be
deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right which may be asserted at any time
or from time to time. Any determination by Parent concerning the events
described in this Section will be final and binding upon all parties.
