EXHIBIT (C)(1)
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AGREEMENT AND PLAN OF MERGER
among
STERLING SOFTWARE, INC.
STERLING SOFTWARE (SOUTHWEST), INC.
and
INTERLINK COMPUTER SCIENCES, INC.
dated as of March 23, 1999
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TABLE OF CONTENTS
Page
ARTICLE I THE OFFER....................................................................... 2
Section 1.1 The Offer..................................................... 2
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Section 1.2 Offer Documents.................................................3
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Section 1.3 Company Actions.................................................4
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Section 1.4 Directors.......................................................6
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ARTICLE II THE MERGER........................................................................8
Section 2.1 The Merger......................................................8
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Section 2.2 Closing.........................................................8
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Section 2.3 Effective Time..................................................8
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Section 2.4 Effects of the Merger...........................................9
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Section 2.5 Certificate of Incorporation; Bylaws............................9
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Section 2.6 Directors; Officers.............................................9
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ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE
OF CERTIFICATES...................................................................9
Section 3.1 Effect on Capital Stock.........................................9
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Section 3.2 Stock Options and Warrants.....................................11
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Section 3.3 Payment for Shares.............................................11
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ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................................13
Section 4.1 Representations and Warranties of Company......................13
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Section 4.2 Representations and Warranties of Parent and
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Purchaser......................................................33
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ARTICLE V CONDUCT OF BUSINESS OF COMPANY...................................................36
Section 5.1 Conduct of Business of Company.................................36
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ARTICLE VI ADDITIONAL COVENANTS.............................................................40
Section 6.1 Company Stockholders Meeting; Preparation of
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the Proxy Statement; Short-Form Merger.........................40
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Section 6.2 Access to Information; Confidentiality.........................41
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Section 6.3 Commercially Reasonable Efforts................................41
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Section 6.4 Public Announcements...........................................42
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Section 6.5 No Solicitation; Acquisition Proposals.........................42
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Section 6.6 Consents, Approvals and Filings................................45
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Section 6.7 Employee Benefit Matters.......................................45
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Section 6.8 Indemnification; Directors' and Officers' Insur-
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ance...........................................................46
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ARTICLE VII CONDITIONS PRECEDENT.............................................................48
Section 7.1 Conditions to Each Party's Obligation to Effect
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the Merger.....................................................48
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Section 7.2 Conditions to Parent's or Purchaser's Obligation
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to Effect the Merger...........................................49
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ARTICLE VIII TERMINATION......................................................................49
Section 8.1 Termination....................................................49
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Section 8.2 Effect of Termination..........................................52
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ARTICLE IX GENERAL PROVISIONS...............................................................52
Section 9.1 Nonsurvival of Representations and Warranties..................52
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Section 9.2 Fees and Expenses..............................................52
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Section 9.3 Definitions....................................................53
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Section 9.4 Amendment and Modification.....................................55
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Section 9.5 Extension; Waiver..............................................55
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Section 9.6 Notices........................................................55
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Section 9.7 Interpretation.................................................56
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Section 9.8 Entire Agreement; No Third-Party Beneficia-
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▇▇▇▇...........................................................56
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Section 9.9 Governing Law..................................................57
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Section 9.10 Assignment.....................................................57
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Section 9.11 Enforcement....................................................57
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Section 9.12 Severability...................................................58
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Section 9.13 Counterparts...................................................58
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EXHIBIT A - Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of March 23, 1999 (this
"Agreement"), is made and entered into among Sterling Software, Inc., a Delaware
corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware
corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and
Interlink Computer Sciences, Inc., a Delaware corporation ("Company").
RECITALS:
A. The Executive Committee of the Board of Directors of Parent and the
respective Boards of Directors of Purchaser and Company have determined that it
would be advisable and in the best interests of their respective stockholders
for Parent to acquire Company by means of a merger of the Purchaser with and
into Company (the "Merger"), on the terms and subject to the conditions set
forth in this Agreement.
B. To effectuate the acquisition, Parent and Company each desire that
Parent cause Purchaser to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.001 per share, of Company (the
"Shares") (including the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Preferred Shares Rights Agreement between
Company and BANKBOSTON, N.A., dated as of February 25, 1998 (the "Company Rights
Agreement")) on the terms and subject to the conditions set forth in this
Agreement and the Offer Documents (as defined in Section 1.2) and the Board of
Directors of Company has unanimously approved such tender offer and is
recommending (subject to the limitations contained herein) that Company's
stockholders accept the tender offer and tender their Shares pursuant thereto.
C. Concurrently with the execution and delivery of this Agreement and as
a condition to Parent's and Purchaser's willingness to enter into this
Agreement, Parent and Purchaser have entered into separate Stockholder
Agreements, dated as of the date hereof (the "Stockholder Agreements"), with
each of the Principal Stockholders (as defined in Section 9.3), pursuant to
which each Principal Stockholder has (x) agreed, among other things, to vote all
Shares owned by such Principal Stockholder in favor of the Merger and (y)
granted to Parent an option to purchase all Shares owned by such Principal
Stockholder.
D. Parent, Purchaser and Company desire to make certain representations
and warranties and to enter into certain covenants in connection with the Offer
(as defined in Section 1.1) and the Merger and also to prescribe various
conditions to the consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and covenants contained in this Agreement, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that none of the events set forth in
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Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the public
announcement of the execution and delivery of this Agreement), Parent shall
cause Purchaser to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to
purchase (the "Offer") all outstanding Shares at a price of $7.00 per share, net
to the seller in cash (as paid pursuant to the Offer, the "Offer
Consideration"). The obligation of Parent and Purchaser to commence the Offer,
to consummate the Offer and to accept for payment and to pay for Shares validly
tendered in the Offer and not withdrawn shall be subject only to those
conditions set forth in Exhibit A hereto.
(b) Without the prior written consent of Company, Purchaser shall
not (and Parent shall cause Purchaser not to) (i) decrease or change the form of
the Offer Consideration or decrease the number of Shares sought pursuant to the
Offer, (ii) impose additional conditions to the Offer, (iii) extend the
expiration date of the Offer beyond the initial expiration date of the Offer
(which shall be the 20th business day after commencement of the Offer), except
(A) as required by applicable law, (B) that if, immediately prior to the
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer constitute more than 75% and less than 90%
of the outstanding Shares, Purchaser may extend the Offer for one or more
periods not to exceed an aggregate of ten business days, notwithstanding that
all conditions to the Offer are satisfied as of such expiration date of the
Offer and (C) that if any condition to the Offer has not been satisfied or
waived, Purchaser may, in its sole discretion, extend the expiration date of the
Offer
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for one or more periods provided, that the expiration date of the Offer may not
be extended beyond July 31, 1999, (iv) waive the condition (the "Minimum
Condition") that there shall be validly tendered and not withdrawn prior to the
time the Offer expires a number of Shares which, when added to the number of
Shares which Parent, Purchaser or any other Subsidiary of Parent "beneficially
owns" (within the meaning of Rule 13d-3 under the Exchange Act), constitutes at
least a majority of the Shares outstanding on a fully-diluted basis on the date
of purchase ("on a fully-diluted basis" meaning, as of any date, the number of
Shares outstanding, together with the Shares which Company may be required to
issue pursuant to warrants, options or obligations outstanding at that date
under employee stock or similar benefit plans or otherwise whether or not vested
or then exercisable), or (v) amend any term or other condition of the Offer in
any manner materially adverse to holders of Shares; provided, however, that,
except as set forth above and subject to applicable legal requirements,
Purchaser may waive any condition to the Offer other than the Minimum Condition
in its sole discretion; and provided further that the Offer may be extended in
connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the United States
Securities and Exchange Commission (the "SEC"). Purchaser shall, on the terms
and subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment, and pay for, in accordance with the terms and subject to the
conditions of the Offer, all Shares validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after the expiration date thereof.
Notwithstanding the foregoing, if all the conditions to the Offer have not been
satisfied or waived at the initial expiration date of the Offer and all such
conditions are reasonably capable of being satisfied within the applicable
period set forth below, the Purchaser shall (i) extend the Offer for 10 business
days from the initial expiration date of the Offer or (ii) extend the Offer for
20 business days from the initial expiration date of the Offer if the condition
contained in Section 7.1(d) hereof has not been satisfied and is reasonably
capable of being satisfied.
Section 1.2 Offer Documents. (a) On the date of commencement of the Offer,
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Parent and Purchaser shall file or cause to be filed with the SEC a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer
which shall contain the offer to purchase and related letter of transmittal and
other ancillary Offer documents and instruments pursuant to which the Offer will
be made (collectively, and with any supplements or amendments thereto, the
"Offer Documents"). Company will promptly supply to Parent and Purchaser in
writing, for inclusion in the Offer Documents, all information concerning
Company required
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under the Exchange Act and the rules and regulations thereunder to be included
in the Offer Documents.
(b) The Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information supplied by Company in writing for
inclusion in the Offer Documents. Each of Parent and the Purchaser further
agrees to take all steps necessary to cause the Offer Documents 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. Each of Parent, Purchaser
and Company shall promptly correct any information provided by them for use in
the Offer Documents if and to the extent that such information shall be or have
become false or misleading in any material respect, and Parent and Purchaser
shall take all lawful action necessary to cause the Offer Documents as so
corrected to be filed promptly with the SEC and to be disseminated to holders of
Shares as and to the extent required by applicable law. Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the SEC.
Parent and Purchaser agree to provide the Company and its counsel any comments
Parent, Purchaser or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Purchaser on a
timely basis the funds necessary to accept for payment and pay for any Shares
that the Purchaser becomes obligated to accept for payment and pay for pursuant
to the Offer.
Section 1.3 Company Actions. (a) Company hereby approves of and consents
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to the Offer and represents and warrants that (i) its Board of Directors (at a
meeting duly called and held) has (A) unanimously determined that each of this
Agreement, the Stockholder Agreements, the Offer and the Merger are fair to and
in the best interests of Company and its stockholders, (B) unanimously approved
this Agreement, the Stockholder Agreements and the transactions contemplated
hereby, including the Offer and the Merger, and such approval is sufficient to
render Section 203 of the Delaware General Corporation Law (the "DGCL")
inapplicable to this
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Agreement and the transactions contemplated hereby, including the Offer and the
Merger, and (C) resolved (subject to the limitations herein contained) to
recommend acceptance of the Offer and adoption of this Agreement by the holders
of Shares, and (ii) ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ has delivered to the Board of Directors of
Company its opinion that the Offer Consideration to be received by the holders
of Shares in the Offer is fair, from a financial point of view, to such holders.
(b) Company shall file with the SEC, simultaneously with the filing
by Parent and Purchaser of the Schedule 14D-1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any supplements or amendments
thereto, the "Schedule 14D-9") containing, subject to the terms of Section 6.5,
such recommendations of the Board of Directors of Company in favor of the Offer
and the adoption of this Agreement. Each of Parent and Purchaser will promptly
supply to Company in writing, for inclusion in the Schedule 14D-9, all
information concerning Parent's Designees (as such term is defined in Section
1.4 hereof), as required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder, and Company shall include such information in the Schedule 14D-9.
Parent will promptly supply to the Company in writing, for inclusion in the
Schedule 14D-9, any information concerning Parent or Purchaser required under
the Exchange Act and the rules and regulations thereunder to be included in the
Schedule 14D-9. The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to Company's shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Company with respect to
information supplied by Parent or the Purchaser in writing for inclusion in the
Schedule 14D-9. Company further agrees to take all steps necessary to cause the
Schedule 14D-9 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. Each of Company, Parent and Purchaser shall promptly correct
any information provided by them for use in the Schedule 14D-9 if and to the
extent that such information shall be or have become false or misleading in any
material respect and Company shall take all lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Shares as and to the extent required by
applicable law. Parent, Purchaser and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 and any amendments
thereto prior to the filing thereof with the SEC. Company agrees to provide the
Parent and its counsel any comments Company or its counsel receive
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from the SEC or its staff with respect to the Schedule 14D-9 promptly after
receipt of such comments.
(c) In connection with the Offer, Company shall promptly furnish
Parent and Purchaser with mailing labels, security position listings and all
available listings or computer files containing the names and addresses of the
record holders of Shares as of the latest practicable date and shall furnish
Parent and Purchaser with such information and assistance (including updated
lists of stockholders, mailing labels and lists of security positions) as Parent
and Purchaser or their agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Purchaser shall, and shall use commercially reasonable
efforts to cause each of their affiliates, associates, partners, employees,
agents and advisors to, hold in confidence the information contained in such
labels, lists and files, and all other information delivered pursuant to this
Section 1.3(c), shall use such information only in connection with the Offer and
the Merger and, if this Agreement is terminated in accordance with its terms,
shall deliver promptly to Company all copies of such information (and any
copies, compilations or extracts thereof or based thereon) then in their
possession or under their control.
Section 1.4 Directors. (a) Promptly after (i) the purchase of and payment
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for any Shares by Purchaser or any of its affiliates pursuant to the Offer as a
result of which Purchaser and its affiliates own beneficially at least a
majority of then outstanding Shares and (ii) compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall occur
later, Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on Company's Board of Directors as is equal to the
product of the total number of directors on such Board (after giving effect to
any increase in the size of such Board pursuant to this Section 1.4) multiplied
by the percentage that the number of Shares beneficially owned by Purchaser at
such time (including Shares so accepted for payment) bears to the total number
of Shares then outstanding. In furtherance thereof, Company shall, upon request
of Parent, use its best efforts promptly either to increase the size of its
Board of Directors or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be so
elected or appointed to Company's Board of Directors, and Company shall take all
actions available to Company to cause such designees of Parent to be so elected
or appointed. At such time, Company shall, if requested by
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Parent, also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number) as
is on Company's Board of Directors of (i) each committee of Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary (as
defined in Section 9.3) of Company and (iii) each committee (or similar body) of
each such board.
(b) Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.4(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 (or
including such information in the Schedule 14D-9 initially filed with the SEC
and distributed to the stockholders of Company) as is necessary to enable
Parent's designees to be elected to Company's Board of Directors. Parent or
Purchaser will supply to Company in writing and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of this Section 1.4 are in addition to and shall not limit any rights
which Purchaser, Parent or any of their affiliates may have as a holder or
beneficial owner of Shares as a matter of applicable law with respect to the
election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 1.4, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the Effective
Time (as defined in Section 1.6 hereof) be, directors of the Company who were
directors of the Company on the date hereof (the "Continuing Directors"),
provided that, if the number of Continuing Directors shall be reduced below two
for any reason, the remaining Continuing Director may designate a person to fill
such vacancy who shall be deemed to be a Continuing Director for all purposes of
this Agreement, or if no Continuing Directors then remain, the other directors
of Company then in office shall designate two persons to fill such vacancies who
will not be officers or employees or affiliates of Company, Parent or either of
their subsidiaries and such persons shall be deemed to be Continuing Directors
for all purposes of this Agreement. From and after the time, if any, that
Parent's designees constitute a majority of Company's Board of Directors and
prior to the Effective Time, any amendment or modification of this Agreement,
any amendment to Company's Certificate of Incorporation or By-Laws inconsistent
with this Agreement, any termination of this Agreement by Company, any extension
of time for performance of any of the obligations of Parent or Purchaser
hereunder, any waiver of any condition to Company's obligations
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hereunder or any of Company's rights hereunder or other action by Company
hereunder may be effected only by the action of a majority of the Continuing
Directors of Company, which action shall be deemed to constitute the action of
any committee specifically designated by the Board of Directors of Company to
approve the actions contemplated hereby and the full Board of Directors of
Company; provided, that, if there shall be no Continuing Directors, such actions
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may be effected by majority vote of the entire Board of Directors of Company.
ARTICLE II
THE MERGER
Section 2.1 The Merger. On the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the DGCL, the Merger shall be
effected and the Purchaser shall be merged with and into Company at the
Effective Time. At the Effective Time, the separate existence of Purchaser shall
cease and Company shall continue as the surviving corporation (as such, the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware.
Section 2.2 Closing. Unless this Agreement shall have been terminated and
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the transactions contemplated hereby shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the conditions
set forth in Article VII, the closing of the Merger (the "Closing") will take
place as soon as practicable, but in no event later than 10:00 a.m. on the tenth
business day (the "Closing Date") following satisfaction or waiver of all of the
conditions set forth in Article VII, other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions, at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless another date, time
or place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. On the Closing Date (or on such other date as
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Parent and Company may agree), the parties hereto shall file with the Secretary
of State of the State of Delaware (the "Delaware State Secretary") a certificate
of merger and any other appropriate documents, executed in accordance with the
relevant provisions of the DGCL, and shall make all other filings or recordings
required under the DGCL and other applicable law in connection with the Merger.
The Merger shall become effective upon the filing of the certificate of merger
with the Delaware State Secretary, or at such later time as is specified in the
certificate of
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merger (the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the effects set
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forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all property of
Company and Purchaser shall vest in the Surviving Corporation, and all
liabilities and obligations of Company and Purchaser shall become liabilities
and obligations of the Surviving Corporation.
Section 2.5 Certificate of Incorporation; Bylaws. At the Effective Time,
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(a) the certificate of incorporation of Company as in effect at the Effective
Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the provisions thereof and applicable law and (b) the bylaws
of Purchaser as in effect at the Effective Time shall, from and after the
Effective Time, be the bylaws of the Surviving Corporation until thereafter
changed or amended in accordance with the provisions thereof and applicable law.
Section 2.6 Directors; Officers. From and after the Effective Time, (a)
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the directors of Purchaser shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be, and (b) the
officers of Company shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of
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the Merger and without any action on the part of any holder of Shares or any
other shares of capital stock of Company or Purchaser:
(a) Common Stock of Purchaser. Each share of common stock, par
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value $0.01 per share, of Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued, fully
paid and
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nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Shares and Parent-Owned Shares. Each
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Share issued and outstanding immediately prior to the Effective Time that is
owned by Company or any Subsidiary (as defined in Section 9.3) of Company or by
Parent, Purchaser or any other Subsidiary of Parent (other than shares in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall automatically be canceled and retired
and shall cease to exist, and no cash or other consideration shall be delivered
or deliverable in exchange therefor.
(c) Conversion of Shares. Each share of Company Common Stock
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(including the associated Rights) issued and outstanding immediately prior to
the Effective Time (other than Shares to be canceled and retired in accordance
with Section 3.1(b) and any Dissenting Shares (as defined in Section 3.1(d))
shall be converted into the right to receive the Offer Consideration, payable to
the holder thereof, without any interest thereon (the "Merger Consideration"),
less any required withholding taxes, upon surrender and exchange of a
Certificate (as defined in Section 3.3).
(d) Dissenting Shares. Notwithstanding anything in this Agreement to
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the contrary, Shares issued and outstanding immediately prior to the Effective
Time held by any person who has the right to demand, and who properly demands,
an appraisal of such Shares ("Dissenting Shares") in accordance with Section 262
of the DGCL (or any successor provision) shall not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect or
otherwise loses such holder's right to such appraisal, if any. If, after the
Effective Time, such holder fails to perfect or loses any such right to
appraisal, each such Share of such holder shall be treated as a Share that had
been converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 3.1(c). At the Effective Time, any
holder of Dissenting Shares shall cease to have any rights with respect thereto,
except the rights provided in Section 262 of the DGCL (or any successor
provision) and as provided in the immediately preceding sentence. Company shall
give prompt notice to Parent of any demands received by Company for appraisal of
Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
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Section 3.2 Stock Options and Warrants.
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(a) The parties hereby agree that (i) neither Purchaser nor
Parent shall assume the outstanding options to purchase shares of Company Common
Stock (collectively, the "Options") under Company's 1992 Stock Option Plan and
1996 Director Stock Option Plan (collectively, the "Stock Option Plans") or
substitute an option to purchase Parent or Purchaser common stock in respect of
such Options, (ii) Options under the Stock Option Plans shall be accelerated and
otherwise treated in accordance with the terms of the applicable Stock Option
Plan document and the various agreements evidencing the Options and (iii)
Company shall take all such action as shall be necessary or appropriate to cause
all Options under the Stock Option Plans to expire no later than the Effective
Time.
(b) Parent and Purchaser shall not assume or continue any
outstanding warrants to purchase shares of Company Common Stock (the
"Warrants"). The parties hereto shall take all appropriate action to provide
that, in accordance with the respective terms of the Warrants, at or prior to
the Effective Time, each holder of an outstanding Warrant shall be entitled to
receive an amount in cash equal to the product of (i) the excess, if any, of the
Offer Consideration over the per share exercise price of such Warrant and (ii)
the number of shares subject to such Warrant.
Section 3.3 Payment for Shares.
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(a) Payment Fund. Concurrently with the Effective Time,
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Parent shall deposit, or shall cause to be deposited, with or for the account of
a bank or trust company having net capital of not less than $100,000,000
designated by Parent, which shall be reasonably satisfactory to Company (the
"Paying Agent"), for the benefit of the holders of Shares, cash in an amount
sufficient to pay the aggregate Merger Consideration payable upon the conversion
of Shares pursuant to Section 3.1(c) (the "Payment Fund").
(b) Letters of Transmittal; Surrender of Certificates.
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As soon as reasonably practicable after the Effective Time, Parent shall
instruct the Paying Agent to mail to each holder of record (other than Company
or any of its Subsidiaries or Parent, Purchaser or any other Subsidiary of
Parent) of a certificate or certificates that, immediately prior to the
Effective Time, evidenced outstanding Shares (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent, and shall be in such form
11
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
the holder of such Certificate shall be entitled to receive in exchange therefor
cash in an amount equal to the product of (i) the number of Shares theretofore
represented by such Certificate and (ii) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. No interest shall be
paid or accrued on any cash payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a person other
than the registered holder of the surrendered Certificate or established to the
satisfaction of Parent and the Surviving Corporation that such taxes have been
paid or are not applicable.
(c) Cancellation and Retirement of Shares; No Further Rights. As of
--------------------------------------------------------
the Effective Time, all Shares (other than Shares to be canceled in accordance
with Section 3.1(b)) issued and outstanding immediately prior to the Effective
Time shall cease to be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of any such Shares shall cease
to have any rights with respect thereto or arising therefrom (including without
limitation the right to vote), except the right to receive the Merger
Consideration, without interest, upon surrender of such Certificate in
accordance with Section 3.3(b), and until so surrendered, each such Certificate
shall represent for all purposes only the right to receive the Merger
Consideration, without interest. The Merger Consideration paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Section 3.3 shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates.
(d) Investment of Payment Fund. The Paying Agent shall invest the
---------------------------
Payment Fund, as directed by Parent, in (i) direct obligations of the United
States of America, (ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either ▇▇▇▇▇'▇
Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates
of deposit, bank repurchase agreements or bankers' acceptances of commercial
banks with capital exceeding
12
$500 million. Any net earnings with respect to the Payment Fund shall be the
property of and paid over to Parent as and when requested by Parent.
(e) Termination of Payment Fund. Any portion of the Payment Fund
---------------------------
which remains undistributed to the holders of Certificates for 180 days after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Certificates that have not theretofore complied with this Section 3.3 shall
thereafter look only to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration.
(f) No Liability. None of Parent, Purchaser, the Surviving
------------
Corporation or the Paying Agent shall be liable to any person in respect of any
payments or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to five years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as defined in Section
4.1(c)), any amounts payable in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(g) Withholding Rights. Parent shall be entitled to deduct and
------------------
withhold, or cause to be deducted or withheld, from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares, Options or
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of
applicable state, local or foreign tax law. To the extent that amounts are so
deducted and withheld, such deducted and withheld amounts shall be treated for
all purposes of this Agreement as having been paid to such holders in respect of
which such deduction and withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Company. Except as set
-----------------------------------------
forth in the Disclosure Schedule, Company represents and warrants to Parent and
Purchaser that all of the statements contained in this Article IV are true and
correct as
13
of the date of this Agreement (or, if made as of a specified date, as of such
date). Each exception set forth in the Disclosure Schedule and each other
response to this Agreement set forth in the Disclosure Schedule is identified by
reference to, or has been grouped under a heading referring to, a specific
individual Section of this Agreement and relates only to such Section, except to
the extent that one section of the Disclosure Schedule specifically refers to
another section thereof.
(a) Organization, Standing and Corporate Power. Each of Company and
------------------------------------------
each Subsidiary of Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Company and each Subsidiary of Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (as defined in Section 9.3) on Company. Company has delivered or
made available to Parent true, complete and correct copies of the certificate of
incorporation and bylaws or comparable governing documents of Company and each
material Subsidiary of Company, in each case as amended to the date of this
Agreement. Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1998 sets forth a true, correct and complete list of all
material Subsidiaries of Company. Except as set forth in Section 4.1(a) of the
Disclosure Schedule and except for directors' qualifying shares, all
Subsidiaries of the Company are wholly owned directly or indirectly by the
Company.
(b) Authority; Noncontravention. Company has the requisite corporate
---------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Company, subject, in the case of the Merger, to the adoption of this
Agreement by its stockholders as contemplated by Section 6.1(a). This Agreement
has been duly executed and delivered by Company and, assuming that this
Agreement constitutes a valid and binding obligation of Parent and Purchaser,
constitutes a valid and binding obligation of Company, enforceable against
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to
14
general principles of equity. Except as specified in Section 4.1(b) of the
Disclosure Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby and compliance with
the provisions hereof will not, (i) conflict with any of the provisions of the
certificate of incorporation or bylaws of Company or the comparable governing
documents of any Subsidiary of Company, in each case as amended to the date of
this Agreement, (ii) subject to the governmental filings and other matters
referred to in Section 4.1(c), conflict with, result in a breach of or default
(with or without notice or lapse of time, or both) under, or give rise to a
material obligation, a right of termination, cancellation or acceleration of any
obligation or a loss of a material benefit under, or require the consent of any
person under, any indenture or other agreement, permit, concession, franchise,
license or similar instrument or undertaking to which Company or any of its
Subsidiaries is a party or by which Company or any of its Subsidiaries or any of
their respective assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in Section 4.1(c), contravene
any domestic or foreign law, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, in the
case of clauses (ii) and (iii) above could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company.
(c) Consents and Approvals. No consent, approval or authorization of,
----------------------
or declaration or filing with, or notice to, any domestic or foreign
governmental agency or regulatory authority (a "Governmental Entity"), which has
not been received or made is required by or with respect to Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Company or the consummation by Company of the transactions contemplated
hereby, except for (i) the filing of premerger notification and report forms
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9 and, if
required by applicable law, the Proxy Statement (as defined in Section 6.1(b)),
(B) such reports under the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby, (iii) the filing of the
certificate of merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business, and (iv) any other consents, approvals,
authorizations, filings or notices the failure to make or obtain which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company.
(d) Capital Structure. The authorized capital stock of Company
-----------------
15
consists solely of (i) 20,000,000 Shares and (ii) 5,000,000 shares of preferred
stock, par value $.001 per share, ("Preferred Shares"). At the close of business
on March 22, 1999: (i) 8,308,107 Shares were issued and outstanding, (ii) no
Preferred Shares were issued and outstanding, (iii) 1,614,896 Shares were
reserved for issuance pursuant to outstanding Options granted under the Stock
Option Plans, (iv) 260,706 Shares were reserved for issuance upon exercise of
the Warrants, (v) no Shares were held by Company in its treasury, (vi) 100,000
shares of Series A Participating Preferred Stock were reserved for issuance
pursuant to the Company Rights Agreement and (vii) 600,000 Shares have been
reserved for issuance under the 1996 Employee Stock Purchase Plan, of which no
more than an additional 80,000 Shares will be issued prior to April 30, 1999.
Except as set forth in the immediately preceding sentence, at the close of
business on March 22, 1999, no shares of capital stock or other equity
securities of Company were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of Company are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as specified above or in Section 4.1(d) of the Disclosure Schedule,
neither Company nor any Subsidiary of Company has or is subject to or bound by
or, at or after the Effective Time will have or be subject to or bound by, any
outstanding option, warrant, call, subscription or other right (including any
preemptive right), agreement or commitment which (i) obligates Company or any
material Subsidiary of Company to issue, sell or transfer, or repurchase, redeem
or otherwise acquire, any shares of the capital stock of Company or any
Subsidiary of Company, (ii) restricts the transfer of any shares of capital
stock of Company or any of its Subsidiaries, or (iii) relates to the voting of
any shares of capital stock of Company or any of its Subsidiaries. No bonds,
debentures, notes or other indebtedness of Company or any Subsidiary of Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the stockholders of Company or
any Subsidiary of Company may vote are issued or outstanding. Section 4.1(d) of
the Disclosure Schedule accurately sets forth information as of the date hereof
regarding the exercise price, date of grant and number of granted Options for
each holder of Options pursuant to any Stock Option Plan. Except as specified in
Section 4.1(d) of the Disclosure Schedule, all of the outstanding shares of
capital stock of each Subsidiary of Company have been duly authorized, validly
issued, fully paid and nonassessable and are owned by Company, by one or more
Subsidiaries of Company or by Company and one or more such Subsidiaries, free
and clear of Liens (as defined in Section 9.3).
(e) SEC Documents. Company has filed all required reports, schedules,
-------------
forms, statements and other documents with the SEC since June 5, 1996
16
(such reports, schedules, forms, statements and other documents being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents as of
such dates, contained any untrue statements of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may otherwise be indicated in the notes
thereto) and fairly present the consolidated financial position of Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end audit
adjustments).
(f) Absence of Certain Changes or Events; No Undisclosed Material
-------------------------------------------------------------
Liabilities.
-----------
(i) Except as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed SEC Documents") or
specified in Section 4.1(f) of the Disclosure Schedule, since the date of the
most recent financial statements included in the Filed SEC Documents, Company
and its Subsidiaries have conducted their businesses only in the ordinary
course, and there has not been: (A) a Material Adverse Effect on Company; (B)
any declaration, setting aside or payment of any dividend or other distribution
in respect of shares of Company's capital stock, or any redemption or other
acquisition by Company of any shares of its capital stock; (C) any increase in
the rate or terms of compensation payable or to become payable by Company or its
Subsidiaries to their directors, officers or key employees, except increases
occurring in the ordinary course of business consistent with past practice; (D)
any entry into, or increase in the rate or terms of, or amendment or
modification to, any bonus, insurance, severance, pension or other employee or
retiree benefit plan, payment, agreement or arrangement made to, for or with any
such directors, officers or key employees, except increases occurring in the
ordinary course of business consistent with past practices or as
17
required by applicable law; (E) any entry into any agreement, commitment or
transaction by Company or any of its material Subsidiaries which is material to
Company and its Subsidiaries taken as a whole, except for agreements,
commitments or transactions entered into in the ordinary course of business
consistent with past practice; (F) any change by Company in accounting methods,
principles or practices, except as required or permitted by generally accepted
accounting principles; (G) any write-off or write-down of, or any determination
to write-off or write-down, any asset of Company or any of its Subsidiaries or
any portion thereof which write-off, write-down or determination exceeds $75,000
individually or $250,000 in the aggregate; (H) any announcement or
implementation of any reduction in force, lay-off, early retirement program,
severance program or other program or effort concerning the termination of
employment of employees of Company or its Subsidiaries; or (I) any announcement
of or entry into any agreement, commitment or transaction by Company or any of
its Subsidiaries to do any of the things described in the preceding clauses (A)
through (H) otherwise than as expressly provided for herein.
(ii) Except as disclosed in the Filed SEC Documents or specified
in Section 4.1(f) of the Disclosure Schedule and liabilities incurred in the
ordinary course of business consistent with past practice since the date of the
most recent financial statements included in the Filed SEC Documents, there are
no liabilities of Company or its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, due, to become due, determined, determinable or
otherwise, having or which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company.
(g) Certain Information. Subject to Parent's and Purchaser's
-------------------
fulfillment of their respective obligations with respect thereto, the Schedule
14D-9 and the Proxy Statement will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law and will conform in all material
respects with the requirements of the Exchange Act and any other applicable law,
and neither the Schedule 14D-9 nor the Proxy Statement will, at the respective
times they are filed with the SEC or published, sent or given to Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading; provided, however, that no representation or warranty is hereby
made by Company with respect to any information supplied by Parent or Purchaser
in writing for inclusion in, or with respect to Parent or Purchaser informa-
18
tion derived from Parent's public SEC filings which is included or incorporated
by reference in, the Schedule 14D-9 or the Proxy Statement. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in, or which may be deemed to be incorporated by reference in, any
of the Offer Documents will, at the respective times the Offer Documents are
filed with the SEC or published, sent or given to Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event with respect to Company, or with
respect to any information supplied by Company for inclusion in any of the Offer
Documents, shall occur which is required to be described in an amendment of, or
a supplement to, any of the Offer Documents, Company shall so describe the event
to Parent.
(h) Real Property; Other Assets. (i) Section 4.1(h)(i) of the
---------------------------
Disclosure Schedule sets forth all of the real property owned in fee by Company
and its Subsidiaries (the "Owned Real Property").
(ii) Company or one of its Subsidiaries has good and
marketable title to each parcel of Owned Real Property and to each other asset
reflected in the latest balance sheet of Company included in the Filed SEC
Documents (other than any such other asset disposed of or consumed in the
ordinary course of business or as specified in Section 4.1(h)(ii) of the
Disclosure Schedule) free and clear of all Liens except (A) those reflected or
reserved against in the latest balance sheet of Company included in the Filed
SEC Documents, (B) taxes and general and special assessments not in default and
payable without penalty and interest, and (C) other Liens that individually or
in the aggregate would not have a Material Adverse Effect on Company.
(iii) Company has heretofore made available to Parent true,
correct and complete copies of all leases, subleases and other agreements
requiring annual payments of $50,000 or more (the "Real Property Leases"), under
which Company or any of its material Subsidiaries uses or occupies or has the
right to use or occupy, now or in the future, any real property or facility (the
"Leased Real Property"), including all modifications, amendments and supplements
thereto. Except in each case where the failure could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Company:
(A) Company or one of its Subsidiaries has a valid and subsisting leasehold
interest in each parcel of Leased Real Property free and clear of all Liens and
each Real
19
Property Lease is in full force and effect, (B) all rent and other sums and
charges payable by Company or its Subsidiaries as tenants thereunder are current
in all material respects, (C) no termination event or condition or uncured
default of a material nature on the part of Company or any such Subsidiary or,
to Company's knowledge, the landlord, exists under any Real Property Lease, and
(D) Company or one of its Subsidiaries is the sole undisputed lessee of each
Leased Real Property, is in actual possession thereof and is entitled to quiet
enjoyment thereof in accordance with the terms of the applicable Real Property
Lease.
(i) Software.
--------
(i) Section 4.1(i)(i) of the Disclosure Schedule sets forth
under the caption "Owned Software" a true, correct and complete list of all
computer programs (source code or object code) owned by Company or any
Subsidiary of Company, including without limitation any computer programs in the
development or testing phase (collectively, the "Owned Software"), and Section
4.1(i)(i) of the Disclosure Schedule sets forth under the caption "Licensed
Software" a true, correct and complete list of all computer programs (source
code or object code) licensed to Company or any Subsidiary of Company by any
third party (other than any off-the-shelf computer program that is so licensed
under a shrink wrap license) (collectively, the "Licensed Software" and,
together with the Owned Software, the "Software").
(ii) Except as specified in Section 4.1(i)(ii) of the Disclosure
Schedule, Company, directly or through its Subsidiaries, has good, marketable
and exclusive title to, and the valid and enforceable power and unqualified
right to sell, license, lease, transfer, use or otherwise exploit, all versions
and releases of the Owned Software and all copyrights thereof, free and clear of
all Liens. Company, directly or through its Subsidiaries, is in actual
possession of the source code and object code for each computer program included
in the Owned Software, and Company, directly or through its Subsidiaries, is in
possession of all other documentation (including without limitation all related
engineering specifications, program flow charts, installation and user manuals)
and know-how required for the effective use of the Software as currently used in
Company's business or as offered or represented to Company's customers or
potential customers. Company, directly or through its Subsidiaries, is in actual
possession of the object code and user manuals for each computer program
included in the Licensed Software, and of the source code when applicable. The
Software constitutes all of the computer programs necessary to conduct Company's
business as now conducted, and includes all of the computer programs used in the
development, marketing, licensing, sale or support of the
20
products and the services presently offered by Company. Except as specified in
Section 4.1(i)(ii) of the Disclosure Schedule, no person other than Company and
its Subsidiaries has any right or interest of any kind or nature in or with
respect to the Owned Software or any portion thereof or any rights to sell,
license, lease, transfer, use or otherwise exploit the Owned Software or any
portion thereof.
(iii) Section 4.1(i)(iii) of the Disclosure Schedule sets forth
a true, correct and complete list, by computer program, of (A) all persons other
than Company and its Subsidiaries that have been provided with the source code
or have a right to be provided with the source code (including any such right
that may arise after the occurrence of any specified event or circumstance,
either with or without the giving of notice or passage of time or both) for any
of the Owned Software, and (B) all source code escrow agreements relating to any
of the Owned Software (setting forth as to any such escrow agreement the source
code subject thereto and the names of the escrow agent and all other persons who
are actual or potential beneficiaries of such escrow agreement), and lists all
agreements and arrangements pursuant to which the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby would entitle any third party or parties to receive
possession of the source code for any of the Owned Software or any related
technical documentation. Except as specified in Section 4.1(i)(iii) of the
Disclosure Schedule, no person (other than Company and its Subsidiaries and any
person that is a party to a contract referred to in clause (v) of the first
sentence of Section 4.1(l) that restricts such person from disclosing any
information concerning such source code) is in possession of, or has or has had
access to, any source code for any computer program included in the Owned
Software.
(iv) There are no defects in any computer program included in
the Software that would adversely affect the functioning thereof in accordance
with any published specifications therefor or which would cause the Software to
fail to be Year 2000 compliant. Without limiting the generality of the
foregoing, all of the Software has the following properties and capabilities:
(A) the capability to correctly recognize and accurately process dates expressed
as a four-digit number (or the binary equivalent or other machine readable
iteration thereof) (collectively, the "Four-Digit Dates"); (B) the capability to
accurately execute calculations using Four-Digit Dates; (C) the functionality
(both on-line and batch), including entry, inquiry, maintenance and update, to
support processing involving Four-Digit Dates; (D) the capability to generate
interfaces and reports that support processing involving Four-Digit Dates; (E)
the capability to generate and successfully transition, without human
intervention, into the year 2000 using the correct system date and to thereafter
21
continue processing with Four-Digit Dates; and (F) the capability to provide
correct results in forward and backward data calculations spanning century
boundaries, including the conversion of pre-2000 dates currently stored as two-
digit dates; provided, however, that no representation or warranty is made as to
the effect that defects in computer programs, hardware or systems provided by
third parties (or the inability of any such programs, hardware or systems, other
than those contemplated by the documentation for the Software to be used in
conjunction with the Software, to properly exchange date data with the Software)
may, when used in conjunction with the Software, have on the foregoing
capabilities. Each computer program included in the Software is in machine
readable form and contains all current revisions. Section 4.1(i)(iv) of the
Disclosure Schedule sets forth a true, correct and complete list of any current
developments or maintenance efforts with respect to the Owned Software,
including without limitation the development of new computer programs,
enhancements or revisions to existing computer programs included in the Owned
Software and software fixes in progress for any person to whom or to which
Company or a Subsidiary of Company has sold, licensed, leased, transferred or
otherwise furnished Software or related products or services.
(v) Except as specified in Section 4.1(i)(v) of the Disclosure
Schedule, none of the sale, license, lease, transfer, use, reproduction,
distribution, modification or other exploitation by Company, any Subsidiary of
Company or any of their respective successors or assigns of any version or
release of any computer program included in the Software obligates or will
obligate Company, any Subsidiary of Company or any of their respective
successors or assigns to pay any royalty, fee or other compensation to any other
person.
(vi) Neither Company nor any of its Subsidiaries markets, or
has marketed, and none of them has supported or is obligated to support, any
Licensed Software.
(vii) Except as specified in Section 4.1(i)(vii) of the
Disclosure Schedule, no agreement, license or other arrangement pertaining to
any of the Software (including without limitation any development, distribution,
marketing, user or maintenance agreement, license or arrangement) to which
Company or any Subsidiary of Company is a party will terminate or become
terminable by any party thereto as a result of the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
22
(j) Intellectual Property.
---------------------
(i) Section 4.1(j)(i) of the Disclosure Schedule sets forth
a true, correct and complete list (including, to the extent applicable,
registration, application or file numbers) of all patents, trademarks, trade
names, service marks, domain names and registered copyrights and material non-
registered copyrights used by Company or any Subsidiary of Company which are
material to the conduct of Company's business, and all registrations of or
applications for registration of any of the foregoing, including any additions
thereto or extensions, continuations, renewals or divisions thereof (setting
forth the registration, issue or serial number and a description of the same)
(collectively, together with all trade dress, trade secrets, processes,
formulae, designs, know-how and other intellectual property rights that are so
used, the "Intellectual Property"). Parent has heretofore been furnished with
true, correct and complete copies of each registration or application for
registration covering any of the Intellectual Property which is registered with,
or in respect of which any application for registration has been filed with, any
Governmental Entity.
(ii) The Intellectual Property includes all of the
intellectual property rights owned or licensed by Company and its Subsidiaries
that are reasonably necessary to conduct Company's business as it is now
conducted or is expected to be conducted, and includes all of the intellectual
property rights owned by or licensed to Company and its Subsidiaries that are
used in the development, marketing, licensing or support of the Software.
Except as specified in Section 4.1(j)(ii) of the Disclosure Schedule, (A)
Company, directly or through its Subsidiaries, has good, marketable and
exclusive title to, and the valid and enforceable power and unqualified right to
use, the Intellectual Property free and clear of all Liens and (B) no person or
entity other than Company and its Subsidiaries has any right or interest of any
kind or nature in or with respect to the Intellectual Property or any portion
thereof or any rights to use, market or exploit the Intellectual Property or any
portion thereof.
(k) No Infringement. Except as specified in Section 4.1(k) of
---------------
the Disclosure Schedule, neither the existence nor the sale, license, lease,
transfer, use, reproduction, distribution, modification or other exploitation by
Company, any Subsidiary of Company or any of their respective successors or
assigns of any Software or Intellectual Property, as such Software or
Intellectual Property, as the case may be, is or was, or is currently
contemplated to be, sold, licensed, leased, transferred, used or otherwise
exploited by such persons, does, did or will (i) infringe on any patent,
trademark, copyright or other right of any other person, (ii) constitute
23
a misuse or misappropriation of any trade secret, know-how, process, proprietary
information or other right of any other person, or (iii) entitle any other
person to any interest therein, or right to compensation from Company, any
Subsidiary of Company or any of their respective successors or assigns, by
reason thereof (it being understood and agreed that, insofar as the foregoing
representation and warranty relates to Software and Intellectual Property that
is licensed to Company or any Subsidiary of Company by any third party, such
representation and warranty is made only to Company's knowledge). Except as
specified in Section 4.1(k) of the Disclosure Schedule, neither Company nor any
of its Subsidiaries has received any complaint, assertion, threat or allegation
or otherwise has notice of any lawsuit, claim, demand, proceeding or
investigation involving matters of the type contemplated by the immediately
preceding sentence or is aware of any facts or circumstances that could
reasonably be expected to give rise to any such lawsuit, claim, demand,
proceeding or investigation. Except as specified in Section 4.1(k) of the
Disclosure Schedule, there are no restrictions on the ability of Company, any
Subsidiary of Company or any of their respective successors or assigns to sell,
license, lease, transfer, use, reproduce, distribute, modify or otherwise
exploit any Software or Intellectual Property.
(l) Material Contracts. There have been made available to Parent
------------------
and its representatives true, correct and complete copies of all of the
following contracts to which Company or any of its Subsidiaries is a party or by
which any of them is bound (collectively, the "Material Contracts"): (i)
contracts with any current officer or director of Company; (ii) contracts
involving an initial fee of $100,000 or more pursuant to which Company or any of
its Subsidiaries licenses other persons to use the Software and pursuant to
which other persons license Company or any of its Subsidiaries to use the
Licensed Software; (iii) contracts (A) for the sale of any of the assets of
Company or any of its Subsidiaries, other than contracts entered into in the
ordinary course of business or (B) for the grant to any person of any
preferential rights to purchase any of its assets; (iv) contracts which restrict
Company or any of its Subsidiaries from competing in any line of business or
with any person in any geographical area or which restrict any other person from
competing with Company or any of its Subsidiaries in any line of business or in
any geographical area; (v) contracts which are material to Company and which
restrict Company or any of its Subsidiaries from disclosing any information
concerning or obtained from any other person or which restrict any other person
from disclosing any information concerning or obtained from Company or any of
its Subsidiaries; (vi) contracts with any stockholders of Company; (vii)
acquisition, merger, asset purchase or sale agreements involving aggregate
consideration of $500,000 or more; (viii) agreements, arrange-
24
ments, transactions or understandings with any Affiliate that would be required
to be disclosed under Item 404 of Regulation S-K under the Securities Act; and
(ix) contracts which contain a "change in control" or similar provision. Except
as specified in Section 4.1(l) of the Disclosure Schedule, all of the Material
Contracts are in full force and effect and are the legal, valid and binding
obligation of Company and/or its Subsidiaries, enforceable against them in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Except as specified in Section 4.1(l) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is in breach
or default in any material respect under any Material Contract nor, to the
knowledge of Company, is any other party to any Material Contract in breach or
default thereunder in any material respect.
(m) Litigation, etc. Except as specified in Section 4.1(m) of
---------------
the Disclosure Schedule or the Filed SEC Documents, (i) there is no suit, claim,
action, proceeding (at law or in equity) or investigation pending or, to the
knowledge of Company, threatened against Company or any of its Subsidiaries
before any court or other Governmental Entity, and (ii) neither Company nor any
of its Subsidiaries is subject to any outstanding order, writ, judgement,
injunction, decree or arbitration order or award that, in any such case
described in clauses (i) and (ii), has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company. As
of the date hereof, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Company, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by this
Agreement.
(n) Compliance with Applicable Laws. All federal, state, local
-------------------------------
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for each
of Company and its Subsidiaries to own, lease or operate its properties and
assets and to carry on its business as now conducted have been obtained or made,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or default could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. To the Company's knowledge, Company and its
Subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, and neither Company
nor any of its Subsidiaries has received notification of any
25
asserted present or past failure to so comply.
(o) Environmental Laws. Except as specified in Section 4.1(o) of
------------------
the Disclosure Schedule and as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company: (A)
neither Company nor any of its Subsidiaries has violated or is in violation of
any Environmental Law (as defined in Section 9.3); (B) to the knowledge of
Company, neither Company nor any of its Subsidiaries is liable for any off-site
contamination; (C) to the knowledge of Company, neither Company nor any of its
Subsidiaries has any liability or remediation obligation under any Environmental
Law; (D) no assets of Company or any of its Subsidiaries are subject to pending
or threatened Liens under any Environmental Law; (E) to the knowledge of
Company, Company and its Subsidiaries have all Permits required under any
Environmental Law ("Environmental Permits"); and (F) Company and its
Subsidiaries are in compliance with their respective Environmental Permits.
(p) Taxes. Except as specified in Section 4.1(p) of the
-----
Disclosure Schedule, as of the date hereof and as of the Effective Time:
(i) Except where the failure to do so could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Company, each of Company and each Subsidiary of Company (and any affiliated
or unitary group of which any such person was a member) has (A) timely filed all
federal, state, local and foreign returns, declarations, reports, estimates,
information returns and statements, including combined unitary or consolidated
returns for any group of entities ("Returns") required to be filed by or for it
in respect of any Taxes (as hereinafter defined) and has caused such Returns as
so filed to be true, correct and complete, (B) established reserves that are
reflected in Company's most recent financial statements included in the Filed
SEC Documents and that as so reflected are adequate for the payment of all Taxes
not yet due and payable with respect to the results of operations of Company and
its Subsidiaries through the date hereof, and (C) timely withheld and paid over
to the proper taxing authorities all Taxes and other amounts required to be so
withheld and paid over. Each of Company and each Subsidiary of Company (and any
affiliated or unitary group of which any such person was a member) has timely
paid all Taxes currently due and payable except for those contested in good
faith and for which adequate reserves have been provided for in Company's
financial statements.
26
(ii) (A) The Returns of Company, each of its Subsidiaries and
any affiliated, consolidated, combined or unitary group that includes Company or
any of its Subsidiaries either have been examined and settled with the
appropriate Tax authority or closed by virtue of the expiration of the
applicable statute of limitations and (B) except for alleged deficiencies which
have been finally and irrevocably resolved, neither Company nor any of its
Subsidiaries have received formal or informal notification that any deficiency
for any Taxes, the amount of which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company, has been
or will be proposed, asserted or assessed against Company or any of its
Subsidiaries by any federal, state, local or foreign taxing authority or court
with respect to any period.
(iii) Neither Company nor any of its Subsidiaries has (A)
executed or entered into with the IRS or any other taxing authority any
agreement or other document that continues in force and effect beyond the
Effective Time and that extends or has the effect of extending the period for
assessments or collection of any federal, state, local or foreign Taxes, (B)
executed or entered into with the IRS or any other taxing authority any closing
agreement or other similar agreement (nor has Company or any of its Subsidiaries
received any ruling, technical advice memorandum or similar determination)
affecting the determination of Taxes required to be shown on any Return not yet
filed, or (C) requested any extension of time to be granted to file after the
Effective Time any Return required by applicable law to be filed by it.
(iv) Neither Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Company or any of its
Subsidiaries.
(v) Neither Company nor any of its Subsidiaries is a party to,
is bound by or has any obligation under any tax sharing agreement or similar
agreement or arrangement.
(vi) Neither Company nor any of its Subsidiaries has agreed to
make, nor is required to make, any material adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise and, to the
knowledge of Company, the IRS has not proposed any such adjustment or change in
accounting method.
27
(vii) Neither Company nor any of its Subsidiaries is, or
has been, a United States Real Property Holding Corporation within the meaning
of Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(viii) Except for the group of which Company is presently a
member, Company has never been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code, other than as a common parent
corporation, and each of Company's Subsidiaries has never been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, except where Company was the common parent of such affiliated group.
(ix) Neither Company nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted, or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(x) There are no Tax liens upon any asset of Company or
any of its Subsidiaries except liens for Taxes not yet due.
(xi) No power of attorney currently in force has been
granted by Company or any of its Subsidiaries concerning any Tax matter.
(xii) Neither Company nor any of its Subsidiaries has made
a disclosure on a Return pursuant to Section 6662 of the Code.
For purposes of this Agreement, "Taxes" shall mean all federal,
state, local, foreign income, property, sales, excise, employment, payroll,
franchise, withholding and other taxes, tariffs, charges, fees, levies, imposts,
duties, licenses or other assessments of every kind and description, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority.
(q) Benefit Plans. Section 4.1(q) of the Disclosure Schedule
-------------
sets forth a true, correct and complete list of all the material "employee
benefit plans" (as that phrase is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) in each case, that
is sponsored, maintained or contributed to or required to be contributed to by
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with
28
Company would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA, or to which Company or an ERISA Affiliate is party, whether
written or oral, for the benefit of any current or former employee, officer or
director of Company or any of its Subsidiaries ("Company ERISA Plans") and any
other material benefit or compensation plan, program or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by Company or an ERISA Affiliate, whether written or oral, for
the benefit of any current or former employee, officer or director of Company or
any of its Subsidiaries (Company ERISA Plans and such other plans being
referred to as "Company Plans"). Company has furnished or made available to
Parent and its representatives a true, correct and complete copy of every
document pursuant to which each Company Plan is established or operated
(including any summary plan descriptions), a written description of any Company
Plan for which there is no written document, and the three most recent annual
reports, financial statements and actuarial valuations with respect to each
Company Plan. Except as specified in Section 4.1(q) of the Disclosure Schedule:
(i) none of the Company ERISA Plans is a "multiemployer
plan" within the meaning of ERISA;
(ii) none of the Company Plans promises or provides retiree
health benefits or retiree life insurance benefits to any person;
(iii) none of the Company Plans provides for payment of a
benefit, the increase of a benefit amount, the payment of a contingent benefit
or the acceleration of the payment or vesting of a benefit determined or
occasioned, in whole or in part, by reason of the execution of this Agreement or
the consummation of the transactions contemplated by this Agreement;
(iv) neither Company nor any of its Subsidiaries has an
obligation to adopt, or is considering the adoption of, any new benefit or
compensation plan, program or arrangement or, except as required by law, the
amendment of an existing Company Plan;
(v) each Company ERISA Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination notification,
advisory and/or opinion letter, as applicable, from the IRS that it is so
qualified or still has remaining a period of time under applicable Treasury
Regulations or Internal Revenue Service pronouncements in which to apply for
such a letter and to make any
29
amendments necessary to obtain a favorable determination and nothing has
occurred since the date of such letter that could reasonably be expected to
affect the qualified status of such Company ERISA Plan;
(vi) each Company Plan has been operated in accordance
with its terms and the requirements of all applicable law, and no prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code has
occurred with respect to any Company ERISA Plan;
(vii) neither Company nor any of its Subsidiaries or
members of their "controlled group" has incurred any direct or indirect
liability under ERISA or the Code in connection with the termination of,
withdrawal from or failure to fund, any Company ERISA Plan or other retirement
plan or arrangement, and no fact or event exists that could reasonably be
expected to give rise to any such liability;
(viii) the aggregate accumulated benefit obligations of each
Company ERISA Plan subject to Title IV of ERISA (as of the date of the most
recent actuarial valuation prepared for such Company ERISA Plan and based on the
discount rate and other actuarial assumptions used in such valuation) do not
exceed the fair market value of the assets of such Company ERISA Plan (as of the
date of such valuation);
(ix) Company is not aware of any claims relating to the
Company Plans, other than routine claims for benefits;
(x) None of the Company Plans provides for benefits or
other participation therein, and Company has received no claims or demands for
participation in or benefits under any Company Plan, by any individual
classified or treated by Company as an independent contractor; and
(xi) no Right (as such term is defined in the Company's
1992 Stock Option Plan) that has been granted by the Company or any of its
Subsidiaries is outstanding;
provided, however, that the failure of the representations
set forth in clauses (v), (vi), (vii), (ix) and (x) to be true and correct shall
not be deemed to be a breach of any such representation unless such failures
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Company.
30
(r) Absence of Changes in Benefit Plans. Except as disclosed in
-----------------------------------
the Filed SEC Documents or in Section 4.1(r) of the Disclosure Schedule, since
the date of the most recent audited financial statements included in the Filed
SEC Documents, neither Company nor any of its material Subsidiaries has adopted
or agreed to adopt any collective bargaining agreement or any Company Plan.
(s) Labor Matters.
-------------
(i) Except as specified in Section 4.1(s)(i) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is a party to
any employment, labor or collective bargaining agreement, and there are no
employment, labor or collective bargaining agreements which pertain to employees
of Company or any of its Subsidiaries. Company has heretofore made available to
Parent true, complete and correct copies of the agreements set forth in Section
4.1(s)(i) of the Disclosure Schedule, together with all amendments,
modifications, supplements or side letters affecting the duties, rights and
obligations of any party thereunder.
(ii) No employees of Company or any of its Subsidiaries are
represented by any labor organization and, to the knowledge of Company, no labor
organization or group of employees of Company or any of its Subsidiaries has
made a pending demand for recognition or certification. There are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority and, to the knowledge of Company, there are no
organizing activities involving Company or any of its Subsidiaries pending with
any labor organization or group of employees of Company or any of its
Subsidiaries.
(iii) Except as specified in Section 4.1(s)(iii) of the
Disclosure Schedule, there are no (A) unfair labor practice charges, grievances
or complaints pending or threatened in writing by or on behalf of any employee
or group of employees of Company or any of its material Subsidiaries, or (B)
complaints, charges or claims against Company or any of its material
Subsidiaries pending, or, to the knowledge of Company, threatened in writing to
be brought or filed, with any Governmental Entity or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by Company or any of its
Subsidiaries.
(t) Brokers. No broker, investment banker, financial advisor or
-------
31
other person, other than ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, the fees and expenses of which will
be paid by Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Company.
(u) Written Opinion of Financial Advisor. Company has received
------------------------------------
the written opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, dated March 23, 1999 (a true, correct
and complete copy of which has been delivered to Parent by Company), to the
effect that, based upon and subject to the matters set forth therein and as of
the date thereof, the Offer Consideration and the Merger Consideration to be
received by the holders of Shares in the Offer and the Merger, respectively, is
fair, from a financial point of view, to such holders and such opinion has not
been withdrawn or modified.
(v) Voting Requirements. In the event that Section 253 of the
-------------------
DGCL is inapplicable and unavailable to effectuate the Merger, the affirmative
vote of the holders of a majority of the outstanding Shares entitled to vote at
the Stockholders Meeting (as defined in Section 6.1(a)) with respect to the
adoption of this Agreement is the only vote of the holders of any class or
series of Company's capital stock or other securities required in connection
with the consummation by Company of the Merger and the other transactions
contemplated hereby to be consummated by Company. The restrictions contained in
Section 203 of the DGCL are not applicable to this Agreement, the Stockholder
Agreements and the transactions contemplated hereby and thereby, including the
Offer, the Merger and the acquisition of Shares pursuant to the Stockholder
Agreements. No other state takeover statute or similar statute applies or
purports to apply to the Offer, the Merger or the other transactions
contemplated hereby.
(w) Company Rights Agreement. Company and its Board of Directors
------------------------
have taken all action to amend the Company Rights Agreement (the "Rights
Amendment") which may be necessary under the Company Rights Agreement so that
the Offer and the execution and delivery of this Agreement (and any amendments
thereto by the parties hereto) and the Stockholder Agreements, and the
consummation of the Merger and the transactions contemplated hereby and by the
Stockholder Agreements, will not cause (i) Parent or Purchaser to constitute an
"Acquiring Person" (as defined in the Company Rights Agreement), (ii) a
"Distribution Date," "Section 13 Event," "Triggering Event," or "Shares
Acquisition Date" (each as defined in the Company Rights Agreement) to occur or
(iii) the Rights (as defined in the Company Rights Agreement) to become
exercisable pursuant to Section 11(a)(ii) thereof or otherwise. The Rights
Amendment is sufficient to render
32
the Rights inoperative with respect to the acquisition of Shares by Parent,
Purchaser or their affiliates pursuant this Agreement, the Offer and/or the
Stockholder Agreements. As a result of the Rights Amendment, the Rights shall
not be exercisable upon or at any time after the acceptance for payment of
Shares pursuant to the Offer and/or the purchase of, or right to acquire, Shares
pursuant to the Stockholder Agreements. A true and correct copy of the Rights
Amendment has been delivered to Parent.
(x) Selesta Litigation. The Settlement Agreement, dated
------------------
February, 1999, by and among Selesta Integrazioni, Selesta Gestione Centri and
Gruppo Selesta (including, without limitation, Selesta Auditing, Selesta
Gestione Centri Operations, Selesta Gestione Centri Applications, Selesta
Technologie and Selesta Gestion Centros) (collectively "Selesta"), on the one
hand; and the Company and Interlink France S.A.R.L., Franco Rasello and RASCA
s.a.s. di Ing. Franco Rasello & C., and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Integrazione Sistemi
s.a.s. di Ing. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & C., on the other hand (the "Selesta Settlement
Agreement"), is a valid and binding obligation of the parties thereto,
enforceable in accordance with its terms. Neither the Company nor Selesta has
breached any provision of, or is in default in any respect under, and no
condition exists which, with the passage of time, the giving of notice of, or
both would result in a default by the Company or Selesta under, the terms of the
Selesta Settlement Agreement. The Company has provided to Parent a true, correct
and complete copy of the Selesta Settlement Agreement.
(y) Except as specified in Section 4.1(y) of the Disclosure
Schedule, Company is not a party to any confidentiality, nondisclosure or
similar agreement which contains any "standstill" provisions or similar
restrictions on Acquisition Proposals (as defined in Section 6.5) by any third
party.
Section 4.2 Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser represent and warrant to Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
------------------------------------------
and Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business. Parent has
delivered or made available to the Company complete and correct copies of the
Certificate of Incorporation and By-laws (or similar charter documents) of
Parent and Purchaser, in each case as amended to the date hereof.
33
(b) Authority; Noncontravention. Parent and Purchaser have the
---------------------------
requisite corporate power and authority to enter into this Agreement. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated
hereby have been duly authorized by the Executive Committee of the Board of
Directors of Parent and the Board of Directors of Purchaser and have been
duly approved by Parent as sole stockholder of Purchaser, and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of
Parent and Purchaser and, assuming this Agreement constitutes a valid and
binding obligation of Company, constitutes a valid and binding obligation
of each of Parent and Purchaser, enforceable against each such party in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby and compliance
with the provisions of this Agreement will not (i) conflict with any of the
provisions of the certificate of incorporation or bylaws of Parent or
Purchaser, in each case as amended to the date of this Agreement, (ii)
subject to the governmental filings and other matters referred to in
Section 4.2(c), conflict with, result in a breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a material
obligation, a right of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or require the consent of
any person under, any indenture, or other agreement, permit, concession,
franchise, license or similar instrument or undertaking to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of their
respective assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in Section 4.2(c),
contravene any law, rule or regulation, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, in
the case of clauses (ii) and (iii) above, could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Parent.
(c) Consents and Approvals. No consent, approval or
----------------------
authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or
with respect to Parent or Purchaser in connection with the execution and
delivery of this Agreement by Parent or Purchaser or the consummation by
Parent or Purchaser, as the case may be, of any of the transactions
contemplated hereby, except for (i) the filing of premerger notification
and report forms under the HSR Act, (ii) the filing with the SEC of (A) the
Schedule
34
14D-1 and (B) such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby,
(iii) the filing of the certificate of merger with the Delaware State
Secretary and appropriate documents with the relevant authorities of
other states in which Company is qualified to do business, and (iv) any
other consents, approvals, authorizations, filings or notices the failure
to make or obtain which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(d) Certain Information. Subject to Company's fulfillment of
-------------------
its obligations hereunder with respect thereto, the Offer Documents will
contain (or will be amended in a timely manner so as to contain) all
information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other
applicable law and will conform in all material respects with the
requirements of the Exchange Act and any other applicable law, and the
Offer Documents will not, at the respective times they are filed with the
SEC or published, sent or given to Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that no representation or warranty is hereby
made by Parent or Purchaser with respect to any information supplied by
Company in writing for inclusion in, or with respect to Company information
derived from Company's public SEC filings which is included or incorporated
by reference in the Offer Documents. None of the information supplied or to
be supplied by Parent or Purchaser for inclusion or incorporation by
reference in, or which may be deemed to be incorporated by reference in,
the Schedule 14D-9 or the Proxy Statement will, at the respective times the
Schedule 14D-9 and the Proxy Statement are filed with the SEC or published,
sent or given to Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent or Purchaser,
or with respect to any information supplied by Parent or Purchaser for
inclusion in the Schedule 14D-9 or the Proxy Statement, shall occur which
is required to be described in an amendment of, or a supplement to, such
document, Parent or Purchaser shall so describe the event to Company.
(e) Financing. Parent and Purchaser collectively have cash on
---------
hand or financing commitments from financially responsible third parties,
or a combination thereof, in an aggregate amount sufficient to enable
Parent and Pur-
35
chaser to pay in full (i) the Offer Consideration, (ii) the Merger
Consideration, and (iii) all fees and expenses payable by Parent and
Purchaser in connection with this Agreement and the transactions
contemplated hereby.
(f) Interim Operations of the Purchaser. The Purchaser has
-----------------------------------
engaged in no significant business activities prior to the date hereof.
ARTICLE V
CONDUCT OF BUSINESS OF COMPANY
Section 5.1 Conduct of Business of Company. Except as expressly
------------------------------
provided for herein or in the Disclosure Schedule, during the period from
the date of this Agreement to the Effective Time, Company shall, and shall
cause each of its Subsidiaries to, act and carry on its business only in
the ordinary course of business consistent with past practice and, to the
extent consistent therewith, use commercially reasonable efforts to
preserve intact its current business organizations, keep available the
services of its current key officers and employees and preserve the
goodwill of those engaged in material business relationships with Company,
and to that end, without limiting the generality of the foregoing, Company
shall not, and shall not permit any of its Subsidiaries to, without the
prior consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, securities or other
property) in respect of, any of its outstanding capital stock (other than,
with respect to a Subsidiary of Company, to its corporate parent), (B)
split, combine or reclassify any of its outstanding capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its outstanding capital stock, or (C)
purchase, redeem or otherwise acquire any shares of outstanding capital
stock or any rights, warrants or options to acquire any such shares,
except, in the case of this clause (C), for the acquisition of Shares from
holders of Options in full or partial payment of the exercise price payable
by such holder upon exercise of Options;
(ii) issue, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible or
exchangeable securities, other than upon the exercise of Options and
Warrants outstanding on the date of this Agreement;
36
(iii) amend its certificate of incorporation, bylaws or
other comparable charter or organizational documents or amend or redeem the
Company Rights Agreement;
(iv) directly or indirectly acquire, make any
investment in, or make any capital contributions to, any person other than
in the ordinary course of business consistent with past practice;
(v) make any new capital expenditure or expenditures
in excess of $50,000 individually, or $250,000 in the aggregate, other than
as specified in the Company's budget for capital expenditures made
available to Parent or the specific capital expenditures disclosed and set
forth on Schedule 5.1 of the Disclosure Schedule;
(vi) except for software licenses in the ordinary
course of business, enter into, amend or terminate any Material Contract,
or waive, release or assign any material rights or claims;
(vii) directly or indirectly sell, pledge or otherwise
dispose of or encumber any of its properties or assets that are material to
its business, except for sales, pledges or other dispositions or
encumbrances in the ordinary course of business consistent with past
practice;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, other than indebtedness
owing to or guarantees of indebtedness owing to Company or any direct or
indirect wholly owned Subsidiary of Company or (B) make any loans or
advances to any other person, other than to Company or to any direct or
indirect wholly owned Subsidiary of Company and other than routine advances
to employees consistent with past practice, except, in the case of clause
(A), for borrowings under existing credit facilities described in the Filed
SEC Documents in the ordinary course of business consistent with past
practice;
(ix) grant or agree to grant to any officer, employee
or consultant any increase in wages or bonus, severance, profit sharing,
retirement, deferred compensation, insurance or other compensation or
benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any existing Company Plans, except
as may be required under existing agreements or by
37
law;
(x) accelerate the payment, right to payment or
vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits;
(xi) enter into or amend any employment, consulting,
severance or similar agreement with any individual;
(xii) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization or any agreement relating
to an Acquisition Proposal (as defined in Section 6.5(d)), except as
provided for in Section 6.5;
(xiii) make or rescind any tax election or settle or
compromise any income tax liability of Company or of any of its
Subsidiaries involving on an individual basis more than $100,000;
(xiv) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (x) of any
such claims, liabilities or obligations in the ordinary course of business
and consistent with past practice or (y) of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of Company and its
consolidated Subsidiaries;
(xv) except as required by GAAP, make any change in any
method of accounting or accounting practice or policy, except as required
by any changes in generally accepted accounting principles;
(xvi) settle any action, suit, claim, investigation or
proceeding (legal, administrative or arbitrative) in an amount in excess
of $50,000, except in connection with the Selesta litigation described in
Section 4.1(x);
(xvii) permit any material insurance policy naming it as
a beneficiary or a loss payable payee to be cancelled or terminated without
notice to Parent, except in the ordinary course of business and consistent
with past practice;
(xviii) enter into any agreement, understanding or commit-
38
ment that restrains, limits or impedes Company's ability to compete with or
conduct any business or line of business, including, but not limited to,
geographic limitations on Company's activities;
(xix) plan, announce, implement or effect any reduction
in force, lay-off, early retirement program, severance program or other
program or effort concerning the termination of employment of employees of
Company or its Subsidiaries, provided, however, that routine employee
terminations for cause shall not be considered subject to this clause
(xix);
(xx) accelerate the collection of any account
receivable or delay the payment of any account payable, or otherwise reduce
the assets or increase the liabilities of Company or any of its
Subsidiaries otherwise than in the ordinary course of business consistent
with past practice, in any such case with the purpose or effect of using
the resulting increase in the cash flow of Company or any of its
Subsidiaries to reduce the total indebtedness of Company and its
Subsidiaries for money borrowed;
(xxi) willfully take any action that would result in (i)
any of its representations and warranties set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) except to the extent such action is otherwise
expressly contemplated by this Agreement, any of the conditions to the
Offer set forth in Exhibit A not being satisfied; or
(xxii) authorize any of, or commit or agree to take any
of, the foregoing actions in respect of which it is restricted by the
provisions of this Section 5.1 except to the extent such action is
otherwise expressly contemplated by this Agreement.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 Company Stockholders Meeting; Preparation of the Proxy
------------------------------------------------------
Statement; Short-Form Merger.
----------------------------
(a) As soon as practicable following the acceptance for
payment
39
of and payment for Shares by Purchaser in the Offer, if required by law to
consummate the Merger, Company shall take all action necessary, in
accordance with the DGCL, the Exchange Act and other applicable law and its
certificate of incorporation and bylaws to convene and hold a special
meeting of the stockholders of Company (the "Stockholders Meeting") for the
purpose of considering and voting upon this Agreement and to solicit
proxies pursuant to the Proxy Statement in connection therewith. The Board
of Directors of Company shall recommend that the holders of Shares vote in
favor of the adoption of this Agreement at the Stockholders Meeting and
shall cause such recommendation to be included in the Proxy Statement. At
the Stockholders Meeting, Parent and Purchaser shall cause all of the
Shares owned by them to be voted in favor of the adoption of this
Agreement.
(b) Company, if requested by Parent, shall promptly prepare and
file with the SEC a proxy statement or information statement (together with
any supplement or amendment thereto, the "Proxy Statement") relating to the
Stockholder Meeting in accordance with the Exchange Act and the rules and
regulations thereunder. Parent, Purchaser and Company will cooperate with
each other in the preparation of the Proxy Statement. Without limiting the
generality or effect of the foregoing, Company shall use its commercially
reasonable efforts to respond to all SEC comments with respect to the Proxy
Statement and, subject to compliance with SEC rules and regulations, to
cause the Proxy Statement to be mailed to Company's stockholders at the
earliest practicable date. Each of Parent and Purchaser shall promptly
supply to Company in writing, for inclusion in the Proxy Statement, all
information concerning Parent and Purchaser required under the Exchange Act
and the rules and regulations thereunder to be included in the Proxy
Statement.
(c) Notwithstanding the foregoing clauses (a) and (b), in the
event that Purchaser or any other wholly owned Subsidiary of Parent shall
acquire at least 90% of the outstanding Shares in the Offer, the parties
hereto shall, at the request of Purchaser, take all necessary actions to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of Company,
in accordance with Section 253 of the DGCL.
(d) Parent shall: (i) cause Purchaser promptly to submit this
Agreement for adoption by its sole stockholder; (ii) cause the outstanding
shares of capital stock of Purchaser to be voted in favor of the adoption
of this Agreement; and (iii) cause to be taken all additional actions
necessary for Purchaser to adopt this Agreement.
40
Section 6.2 Access to Information; Confidentiality. Company
--------------------------------------
shall, and shall cause each of its Subsidiaries to, afford to Parent and
its officers, employees, counsel, financial advisors and other
representatives access during the period prior to the Effective Time to all
of Company's and its Subsidiaries' properties, books, contracts,
commitments, Returns, personnel and records and, during such period,
Company shall, and shall cause each of its Subsidiaries to, furnish as
promptly as practicable to Parent such information concerning Company's and
its Subsidiaries' businesses, properties, financial condition, operations
and personnel as Parent may from time to time request. Any such
investigation by Parent shall not affect the representations or warranties
of Company contained in this Agreement. Except as required by law, Parent
and Company will hold, and will use commercially reasonable efforts to
cause its directors, officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any non-public
information obtained from the other in confidence to the extent required
by, and in accordance with the provisions of, the letter agreement (the
"Letter Agreement"), dated December 21, 1998, between Parent and Company
with respect to confidentiality and other matters.
Section 6.3 Commercially Reasonable Efforts. On the terms and
-------------------------------
subject to the conditions set forth in this Agreement, including, without
limitation, Section 6.5 hereof, each of the parties shall use its
commercially reasonable efforts to take, or cause to be taken, all actions,
and do, or cause to be done, and assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer,
the Merger and the other transactions contemplated hereby, including the
satisfaction of the respective conditions set forth in Article VII.
Section 6.4 Public Announcements. Parent and Purchaser, on the one
--------------------
hand, and Company, on the other hand, shall attempt in good faith to
consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release, SEC filing
(including without limitation the Offer Documents, the Schedule 14D-9 and
the Proxy Statement) or other public statements with respect to the
transactions contemplated hereby, including the Offer and 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, by court
process or by obligations pursuant to any listing agreement with any
national securities exchange.
Section 6.5 No Solicitation; Acquisition Proposals. (a) Company
--------------------------------------
shall
41
not, nor shall it permit any of its Subsidiaries to, nor shall it authorize
(and shall use its best efforts not to permit) any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, Company or any of its Subsidiaries to, (i) solicit or
initiate, or intentionally encourage, directly or indirectly, any inquiries
relating to, or the submission of, any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal, or, in connection with any Acquisition Proposal, furnish to
any Person any information or data with respect to or access to the
properties of Company or any of its Subsidiaries, or take any other action,
to knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal or (iii) enter
into any agreement with respect to any Acquisition Proposal or approve or
resolve to approve any Acquisition Proposal; provided, that nothing
contained in this Section 6.5 or any other provision hereof shall prohibit
Company or Company's Board of Directors from (i) taking and disclosing to
Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act, or (ii) making such disclosure to Company's stockholders
as, in the good faith judgment of Company's Board of Directors, after
consultation with outside counsel, is required under, or is necessary to
comply with, applicable law, provided that Company may not, except as
permitted by Section 6.5(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend any Acquisition Proposal, or
enter into any agreement with respect to any Acquisition Proposal. Upon
execution of this Agreement, Company will immediately cease any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the
foregoing, prior to the time of acceptance of Shares for payment pursuant
to the Offer, Company may furnish information concerning its and/or its
Subsidiaries' business, properties or assets to any person or group and may
negotiate and participate in discussions and negotiations with such person
or group concerning an Acquisition Proposal, provided that such person or
group shall have entered into a confidentiality agreement, the
confidentiality provisions of which shall be no more favorable to such
third party than those provided for in the Letter Agreement, if:
(x) such Person or group has submitted a Superior
Proposal; and
(y) in the opinion of Company's Board of Directors
such action is required to discharge the Board's fiduciary duties to
Company's
42
stockholders under applicable law, determined only after consultation
with independent legal counsel to Company.
Company will promptly (but in no case later than 24 hours) notify Parent in
writing of the existence of any proposal, discussion, negotiation or
inquiry received by Company regarding any Acquisition Proposal, and Company
will promptly communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive regarding any Acquisition
Proposal (and will promptly provide to Parent copies of any written
materials received by Company in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal
or inquiry or engaging in such discussion or negotiation. Company will
promptly provide to Parent any non-public information concerning Company
provided to any other person in connection with any Acquisition Proposal
which was not previously provided to Parent. Company will keep Parent
informed of the status and details of any such Acquisition Proposal and of
any amendments or proposed amendments to any Acquisition Proposal and of
the status of any discussions or negotiations relating to any Acquisition
Proposal and will promptly (but in no case later than 24 hours) notify
Parent of any determination by Company's Board of Directors that a Superior
Proposal has been made.
(b) Except as set forth in this Section 6.5, neither the Board
of Directors of Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Board of Directors of
Company of the Offer, this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or
(iii) enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing or anything else herein, subject to
compliance with the provisions of this Section 6.5, prior to the time of
acceptance for payment of Shares pursuant to the Offer, Company's Board of
Directors may withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal,
in each case at any time after the third business day following Parent's
receipt of written notice (including by facsimile) from Company advising
Parent that the Board of Directors of Company has received a Superior
Proposal which it intends to accept, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal, but only if Company shall have caused its financial and
legal advisors to negotiate with Parent to make such adjustments to the
terms and conditions of this Agreement as would enable Company to
proceed with the transactions
43
contemplated hereby on such adjusted terms.
(c) Nothing in this Section 6.5, and no action taken by the Board
of Directors of Company pursuant to this Section 6.5, will (i) permit Company to
enter into any agreement providing for any transaction contemplated by an
Acquisition Proposal for as long as this Agreement remains in effect or (ii)
affect in any manner any other obligation of Company under this Agreement.
(d) For purposes of this Agreement, "Acquisition Proposal" means
any bona fide offer, proposal or other indication of interest regarding any of
the following (other than the transactions provided for in this Agreement
involving Company): (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction involving
the Company or any of its Subsidiaries; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of a significant portion of the
assets of Company and its Subsidiaries, taken as a whole, in a single
transaction or series of related transactions (other than sales of inventory or
used equipment in the ordinary course of business); (iii) any purchase of, or
tender offer or exchange offer for, 20% percent or more of the outstanding
shares of capital stock of Company by any person or the filing of a registration
statement under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. For purposes of this Agreement,
"Superior Proposal" means an unsolicited Acquisition Proposal on terms which the
Board of Directors of Company determines in good faith to be more favorable to
Company's stockholders than the Offer and the Merger (based on advice of
Company's independent financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger); for which financing, to the extent
required, is then committed or which, in the good faith reasonable judgment of
the Board of Directors of Company (based on advice from Company's independent
financial advisor) is reasonably capable of being financed by such third party
provided that the Board of Directors of the Company has also, among other
things, duly considered the timing of such Acquisition Proposal and the
likelihood that such Acquisition Proposal will be consummated.
Section 6.6 Consents, Approvals and Filings. Upon the terms and subject
-------------------------------
to the conditions hereof, each of the parties hereto shall (a) make promptly its
respective filings, and thereafter make any other required submissions, under
the HSR Act and the Exchange Act, with respect to the Offer, the Merger and the
other
44
transactions contemplated hereby and (b) use commercially reasonable efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Offer, the Merger and the other
transactions contemplated hereby, including without limitation using
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and parties to contracts with Company and its Subsidiaries as are necessary for
the consummation of the Offer, the Merger and the other transactions
contemplated hereby and to fulfill the conditions to the Offer and the Merger;
provided, however, that in no event shall Parent or any of its Subsidiaries be
required to agree or commit to divest, hold separate, offer for sale, abandon,
limit its operation of or take similar action with respect to any assets
(tangible or intangible) or any business interest of it or any of its
Subsidiaries (including without limitation the Surviving Corporation after
consummation of the Offer or the Merger) in connection with or as a condition to
receiving the consent or approval of any Governmental Entity (including without
limitation under the HSR Act). In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their commercially reasonable efforts to take all such action.
Section 6.7 Employee Benefit Matters.
------------------------
(a) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, honor and
provide for payment of all accrued obligations and benefits under all Company
Plans and employment or severance agreements disclosed on the Disclosure
Schedule between Company and persons who are or had been employees of Company or
any of its Subsidiaries at or prior to the Effective Time ("Covered Employees"),
all in accordance with their respective terms.
(b) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, provide Covered
Employees who remain in the employ of Company or any of its Subsidiaries with
employee benefits that are reasonably comparable to the employee benefits
provided to similarly situated employees of Parent or any such Subsidiary who
are not Covered Employees. To the extent that Covered Employees are included in
any benefit plan of Parent or its Subsidiaries, Parent agrees that the Covered
Employees shall receive credit under such plan (other than any such plan
providing for sabbati-
45
cals) for service prior to the Effective Time with Company and its Subsidiaries
to the same extent such service was counted under similar Company Plans for
purposes of eligibility, vesting, eligibility for retirement (but not for
benefit accrual) and, with respect to vacation, disability and severance,
benefit accrual. To the extent that Covered Employees are included in any
medical, dental or health plan other than the plan or plans they participated in
at the Effective Time, Parent agrees that any such plans shall not include pre-
existing condition exclusions, except to the extent such exclusions were
applicable under the similar Company Plan at the Effective Time, and shall
provide credit for any deductibles and co-payments applied or made with respect
to each Covered Employee in the calendar year of the change.
(c) Notwithstanding anything in this Agreement to the contrary,
from and after the Effective Time, the Surviving Corporation will have sole
discretion over the hiring, promotion, retention, firing and other terms and
conditions of the employment of employees of the Surviving Corporation. Except
as otherwise provided in this Section 6.7, nothing herein shall prevent Parent
or the Surviving Corporation from amending or terminating any Company Plan in
accordance with its terms.
(d) "Offering Periods" under the Company 1996 Employee Stock
Purchase Plan (the "ESPP") shall terminate on the earlier to occur of (i) April
30, 1999, or (ii) the expiration date of the Offer, and the Company shall cause
written notice to be given to participants in accordance with the terms of the
ESPP. No further Offering Period under the ESPP shall be created.
Section 6.8 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) For a period of four years after the Effective Time, the
provisions with respect to indemnification set forth in the certificate of
incorporation and bylaws of Purchaser as in effect on the date of this Agreement
(true, correct and complete copies of which have been provided to Company) shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of Company in respect of actions
or omissions occurring at or prior to the Effective Time (including without
limitation the transactions contemplated by this Agreement), unless such
modification is required by law.
(b) From and after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, indemnify, defend and hold harmless each
person who
46
is now, or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer or director of Company (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) incurred in connection with any
threatened or actual action, suit or proceeding based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of Company ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, this Agreement or the transactions contemplated hereby, in each
case, to the full extent that a corporation is permitted under the DGCL to
indemnify its own directors or officers, as the case may be. In the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Party, the indemnifying party shall assume and direct all aspects of
the defense thereof, including settlement, and the Indemnified Party shall
cooperate in the vigorous defense of any such matter. The Indemnified Party
shall have a right to participate in (but not control) the defense of any such
matter with its own counsel and at its own expense. The indemnifying party shall
not settle any such matter unless (i) the Indemnified Party gives prior written
consent, which shall not be unreasonably withheld, or (ii) the terms of the
settlement provide that the Indemnified Party shall have no responsibility for
the discharge of any settlement amount and impose no other obligations or duties
on the Indemnified Party and the settlement discharges all rights against
Indemnified Party with respect to such matter. In no event shall the
indemnifying party be liable for any settlement effected without its prior
written consent. Any Indemnified Party wishing to claim indemnification under
this Section 6.8(b), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Parent and the Surviving Corporation
(but the failure so to notify shall not relieve the indemnifying party from any
liability which it may have under this Section 6.8(b) except to the extent such
failure prejudices such indemnifying party), and shall deliver to Parent and
the Surviving Corporation the undertaking contemplated by Section 145(e) of the
DGCL. The Indemnified Parties as a group will be represented by a single law
firm with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties. The rights to
indemnification under this Section 6.8(b) shall continue in full force and
effect for a period of four years from the Effective Time; provided, however,
that all rights to indemnification in respect of any Indemnified Liabilities
asserted or made within such period shall continue until the disposition of such
Indemnified Liabilities.
47
(c) For a period of two years after the Effective Time Parent
shall cause to be maintained in effect policies of directors' and officers'
liability insurance, for the benefit of those persons who are covered by
Company's directors' and officers' liability insurance policies at the Effective
Time, providing coverage with respect to matters occurring prior to the
Effective Time that is at least equal to the coverage provided under Company's
current directors' and officers' liability insurance policies, to the extent
that such liability insurance can be maintained at an annual cost to Parent not
greater than 150 percent of the premium for the current Company directors' and
officers' liability insurance; provided that if such insurance cannot be so
maintained at such cost, Parent shall maintain as much of such insurance as can
be so maintained at a cost equal to 150 percent of the current annual premiums
of Company for such insurance.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction or written waiver on or prior to the Closing Date of the
following conditions:
(a) Completion of the Offer. Purchaser shall have accepted for
-----------------------
payment and paid for all Shares validly tendered in the Offer and not withdrawn;
provided, however, that neither Parent nor Purchaser may invoke this condition
if Purchaser shall have failed to purchase Shares so tendered and not withdrawn
in violation of the terms of this Agreement or the Offer.
(b) Stockholder Approval. This Agreement shall have been adopted
--------------------
by the affirmative vote of the holders of the requisite number of shares of
capital stock of Company if such vote is required pursuant to Company's
certificate of incorporation, the DGCL or other applicable law.
(c) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, the party so invoking this condition shall have
complied with its obligations under
48
Section 6.3 and Section 6.6 and the parties hereto shall have used commercially
reasonable efforts to lift or remove such order, injunction, restraint or
prohibition.
(d) HSR Act. All necessary waiting periods under the HSR Act
-------
applicable to the Merger shall have expired or been earlier terminated.
Section 7.2 Conditions to Parent's or Purchaser's Obligation to Effect the
--------------------------------------------------------------
Merger. The obligation of Parent and/or Purchaser to effect the Merger shall be
------
subject to the satisfaction or written waiver on or prior to the Closing Date of
the following condition: No outstanding Option shall entitle the holder thereof,
at the Effective Time or thereafter, to purchase any capital stock of Company.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of Company:
(a) By the mutual written consent of Parent and Company; provided,
--------
however, that if Parent shall have a majority of the directors pursuant to
-------
Section 1.4, such consent of Company may only be given if approved by the
Continuing Directors.
(b) By either of Parent or Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting the
transactions contemplated hereby on the terms contemplated by this Agreement or
(ii) any Governmental Entity shall have issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action the parties
hereto shall use their commercially reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree, ruling or other action shall have
become final and non-appealable.
(c) By either of Parent or Company if the consummation of the
Offer shall not have occurred on or before July 31, 1999; provided, however,
-------- -------
that the party seeking to terminate this Agreement pursuant to this Section
8.1(c) shall not
49
have breached in any material respect its obligations under this Agreement;
(d) By Company:
(i) if Company has entered into an agreement with respect
to a Superior Proposal or Company or the Board of Directors of Company has
approved or recommended a Superior Proposal in accordance with Section 6.5(b),
provided Company has complied with all provisions of Section 6.5, including the
notice provisions therein, and that it simultaneously terminates this Agreement
and makes simultaneous payment to the Parent of the Termination Fee and the
Expenses (as such terms are defined in Section 9.2); or
(ii) if Parent or Purchaser shall have terminated the Offer
or the Offer expires without Parent or Purchaser, as the case may be, purchasing
any Shares pursuant thereto; provided that Company may not terminate this
Agreement pursuant to this Section 8.1(d)(ii) if Company is in material breach
of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that Company
may not terminate this Agreement pursuant to this Section 8.1(d)(iii) if Company
is in material breach of this Agreement; or
(iv) if there shall be a material breach by either Parent or
Purchaser of any of their representations, warranties, covenants or agreements
contained in this Agreement, except where such breach does not have a material
adverse effect on the ability of Parent or Purchaser to consummate the Offer or
the Merger.
(e) By Parent or Purchaser:
(i) (A) if, prior to the purchase of the Shares pursuant to
the Offer, the Board of Directors of Company shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser, its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
recommended or approved, or announced a neutral position with respect to, an
Acquisition Proposal or upon request of Parent, shall fail to reaffirm its
approval and recommendation of the Offer, the Merger Agreement, or the Merger;
or
50
(B) if there shall have been a material breach by the Company of
any provision of Section 6.5; or
(ii) if the Offer has expired or terminated without Parent or
Purchaser purchasing any Shares thereunder and, pursuant to Exhibit A and
Article I hereof, the Purchaser is neither required to accept and pay for the
Shares tendered in the Offer nor extend the expiration date of the Offer,
provided that Parent or Purchaser may not terminate this Agreement pursuant to
--------
this Section 8.1(e)(ii) if Parent or Purchaser is in material breach of this
Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Exhibit A hereto which occurrence is incapable of being
cured or remediated prior to the initial expiration date of the Offer, Parent,
Purchaser or any of their affiliates shall have failed to commence the Offer on
or prior to five business days following the date of the initial public
announcement of the Offer, provided that Parent or Purchaser may not terminate
this Agreement pursuant to Section 8.1(e)(iii) if Parent or Purchaser is in
material breach of this Agreement; or
(iv) if any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the Shares; or
(v) if there shall be a breach by Company of any of its
representations or warranties, contained in this Agreement (without reference to
any "Material Adverse Effect" or "materiality" qualifications contained therein)
which breach causes a Material Adverse Effect on Company and is incapable of
being cured prior to the twentieth business day following the initial expiration
date of the Offer or there shall be a material breach by Company of any of its
covenants or agreements contained in this Agreement.
Section 8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Company or Parent or Purchaser as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Purchaser or Company, other than
the provisions of Section 4.1(t), Section 6.2, this Section 8.2 and Article IX
and except to the extent
51
that such termination results from the willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 Fees and Expenses. (a) Except as provided in Section 9.2(b)
-----------------
below, all fees and expenses incurred in connection with the Offer, the Merger,
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) If (x) Parent or Purchaser terminates this Agreement
pursuant to Section 8.1(e)(i), or (y) Company terminates this Agreement pursuant
to Section 8.1(d)(i), then in each case, Company shall pay, or cause to be paid
to Parent, at the time of termination, an amount equal to $2,870,000 (the
"Termination Fee") and an amount equal to Parent's and Purchaser's actual and
reasonably documented out-of-pocket expenses incurred by Parent or Purchaser in
connection with the Offer, the Merger, this Agreement and the consummation of
the transactions contemplated hereby up to a maximum expense reimbursement
amount of $718,000 (the "Expenses"). In addition, if this Agreement is
terminated by Parent or Purchaser pursuant to Section 8.1(e)(ii) solely as a
result of the failure of the Minimum Condition or by Company pursuant to Section
8.1(d)(ii) and, in each case at the time of such termination, Parent is not in
material breach of this Agreement and there has been previously publicly
announced, and not withdrawn, an Acquisition Proposal, and, if Company shall
thereafter, within 9 months after such termination, enter into an agreement with
respect to such Acquisition Proposal, then Company shall pay the Termination Fee
concurrently with entering into any such agreement. If this Agreement is
terminated by Parent or Purchaser pursuant to Section 8.1(e)(v), then Company
shall pay Parent the Expenses. Any payments required to be made pursuant to this
Section 9.2 shall be made by wire transfer of same day funds to an
52
account designated by Parent.
Section 9.3 Definitions. For purposes of this Agreement:
-----------
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "business day" means any day other than Saturday, Sunday or
any other day on which banks in the City of New York are required or permitted
to close;
(c) "Disclosure Schedule" means the disclosure schedule delivered
by Company to Parent and Purchaser simultaneously with the execution of this
Agreement;
(d) "Environmental Laws" means any federal, state or local law
relating to: (i) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (iii) otherwise relating to
pollution of the environment or the protection of human health;
(e) "Hazardous Substances" means: (i) those substances defined in
or regulated under the following federal statutes and their state counterparts,
as each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas and any mixtures thereof; (iv) radon; (v) any
other contaminant; and (vi) any substance with respect to which any Governmental
Entity requires environmental investigation, monitoring, reporting or
remediation;
(f) "knowledge" means the actual knowledge of any executive
officer of Company or Parent, as the case may be, after making due inquiry under
the circumstances;
53
(g) "Liens" means, collectively, all pledges, claims, liens,
charges, mortgages, conditional sale or title retention agreements,
hypothecations, collateral assignments, security interests, easements and other
encumbrances of any kind or nature whatsoever;
(h) a "Material Adverse Effect" with respect to any person means
any event, change, occurrence, effect, fact or circumstance having, or which
could reasonably be expected to have, a material adverse effect on (i) the
ability of such person to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or (ii) the financial condition,
results of operations, value or business of such person and its Subsidiaries
taken as a whole; except for those changes, events and effects that (i) are
caused by conditions affecting the United States or world economy as a whole or
affecting the industry in which such entity competes as a whole, which
conditions do not affect such entity in a materially disproportionate manner, or
(ii) are related to or result from announcement or pendency of the Merger or the
Offer;
(i) the "NYSE" means the New York Stock Exchange;
(j) a "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity;
(k) "Principal Stockholders" means Cisco Systems, Inc., Advent
International Corp. and certain affiliates thereof, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. Berkeley, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇;
(l) a "Subsidiary" of any person means any other person of which
(i) the first mentioned person or any Subsidiary thereof is a general partner,
(ii) voting power to elect a majority of the board of directors or others
performing similar functions with respect to such other person is held by the
first mentioned person and/or by any one or more of its Subsidiaries, or (iii)
at least 50% of the equity interests of such other person is, directly or
indirectly, owned or controlled by such first mentioned person and/or by any one
or more of its Subsidiaries.
Section 9.4 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of Company contemplated
hereby, by written agreement of the parties hereto (which in the case of Company
54
shall include approvals as contemplated in Section 1.4(c)), at any time prior to
the Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration or otherwise adversely affect the
rights of such stockholders.
Section 9.5 Extension; Waiver. Subject to Section 1.4 hereof, at any time
-----------------
prior to the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement, or (c) subject to Section 9.4, waive compliance with any of the
agreements or conditions of the other parties contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in a written instrument executed and delivered by a duly
authorized officer on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 9.6 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to Parent or to Purchaser, to
Sterling Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
55
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Company, to
Interlink Computer Sciences, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. Berkeley
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.7 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
Section 9.8 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (except for the letter agreement referenced in
the last sentence of Section 6.2). Other than the provisions of Section 6.8,
this Agreement is not intended to confer upon any person (including without
limitation any employees or former employees of Company), other than the parties
hereto, any rights or
56
remedies.
Section 9.9 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.10 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment without
such prior written consent shall be null and void, except that Parent and/or
Purchaser may assign this Agreement to any direct or indirect wholly owned
Subsidiary of Parent without the prior consent of Company; provided that Parent
and/or Purchaser, as the case may be, shall remain liable for all of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.11 Enforcement. Irreparable damage would occur in the event that
-----------
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the personal jurisdiction
of the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware) in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (iii) shall not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than the Court of Chancery in and for New Castle
County in the State of Delaware (or, if such court lacks subject matter
jurisdiction, any appropriate state or federal court in New Castle County in the
State of Delaware).
57
Section 9.12 Severability. Whenever possible, each provision or portion of
------------
any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 9.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
58
IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
STERLING SOFTWARE, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President
STERLING SOFTWARE (SOUTHWEST), INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
INTERLINK COMPUTER SCIENCES, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Berkeley
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Berkeley
Title: President and Chief
Executive Officer
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement and Plan of Merger (the "Agreement") of which this
Exhibit A is a part. Notwithstanding any other provision of the Offer and
subject to the terms of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may amend the Offer consistent with the terms of the Agreement or
terminate the Offer and not accept for payment any tendered Shares, if (i) there
shall not have been validly tendered and not withdrawn prior to the expiration
of the Offer such number of Shares which, when added to the Shares, if any,
beneficially owned by Parent or Purchaser, would constitute at least a majority
of the Shares outstanding on a fully diluted basis on the date of purchase ("on
a fully-diluted basis" meaning, as of any date, the number of Shares
outstanding, together with the Shares which Company may be required to issue
pursuant to warrants, options or obligations outstanding at that date under
employee stock or similar benefit plans or otherwise whether or not vested or
then exercisable) (the "Minimum Condition"), (ii) any applicable waiting period
under the HSR Act has not expired or been terminated, or (iii) at any time on or
after the date of the Agreement and prior to the Expiration Date, any of the
following events shall occur and be continuing and shall not have resulted from
the breach by Parent or Purchaser of any of their obligations under the
Agreement:
(a) there shall be pending any suit, action or proceeding brought by
any third party that has a high likelihood of success on the merits or by any
Governmental Entity before any court of competent jurisdiction (i) seeking to
prohibit or impose any material limitations on Parent's or Purchaser's ownership
or operation (or that of any of their respective Subsidiaries or affiliates) of
all or a material portion of their or Company's businesses or assets, (ii)
seeking to compel Parent or Purchaser or their respective Subsidiaries and
affiliates to dispose of or hold separate any material portion of the business
or assets of Company or Parent and their respective Subsidiaries, in each case
taken as a whole, as a result of the Agreement, (iii) challenging the
acquisition by Parent or Purchaser of any Shares pursuant to the Offer, (iv)
seeking to restrain or prohibit the making or consumma-
A-1
tion of the Offer or the Merger or the performance of any of the transactions
contemplated by the Agreement, (v) seeking to obtain from Company any damages
(including damages against Company's directors or officers for which they may
seek indemnification from Company) that would be reasonably likely to have a
Material Adverse Effect on Company, (vi) seeking to impose material limitations
on the ability of Purchaser, or rendering Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, or (vii) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
Purchaser or Parent on all matters properly presented to Company's stockholders;
or
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above; or
(c) (i) the representations and warranties of Company contained
in Sections 4.1(b), 4.1(u), 4.1(v), 4.1(w), 4.1(x) and the first five sentences
of Section 4.1(d) of the Agreement shall not be true and correct in all material
respects as of the date of consummation of the Offer as though made on or as of
such date (other than any such representations and warranties that by their
terms address only matters as of another specified dated, which shall be true
and correct only as of such other specified date) and (ii) all other
representations and warranties of Company contained in the Agreement, which
representations and warranties shall be deemed for purposes of this condition
not to include any qualification or limitation with respect to materiality
(whether by reference to "Material Adverse Effect" or otherwise), shall not be
true and correct as of the date of consummation of the Offer as though made on
or as of such date (other than representations and warranties that by their
terms address matters only as of another specified date, which shall be true and
correct only as of such other specified date), except in the case of this clause
(ii) where the matters in respect of which such representations and warranties
are not true and correct, in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect on Company, with the
same effect as though such representations and warranties were made as of the
date of consummation of the Offer; or
A-2
(d) there shall have occurred a Material Adverse Effect on
Company; or
(e) Company's Board of Directors (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, (ii) shall have recommended or announced a neutral
position with respect to an Acquisition Proposal, (iii) shall have adopted any
resolution tion to effect any of the foregoing, or (iv) upon request of Parent,
shall fail to reaffirm its approval or recommendation of the Offer, the Merger
Agreement, or the Merger; or
(f) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or announced its intention to
acquire (including by commencement of a tender or exchange offer) beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the Shares; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms;
which in the sole good faith judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by Parent
or Purchaser) giving rise to such condition makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may (except for the Minimum Condition) be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent or Purchaser. The failure by Parent or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
A-3