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EXHIBIT 1
ACQUISITION AGREEMENT AND PLAN OF MERGER
by and among
INTERVOICE, INC.
INTERVOICE ACQUISITION SUBSIDIARY III, INC.
and
BRITE VOICE SYSTEMS, INC.
dated as of
April 27, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I - THE OFFER AND MERGER..................................................................................2
Section 1.1 The Offer..............................................................................2
Section 1.2 The Company Actions....................................................................3
Section 1.3 Directors..............................................................................5
Section 1.4 The Merger.............................................................................6
Section 1.5 Effective Time.........................................................................6
Section 1.6 Closing................................................................................7
Section 1.7 Directors and Officers of the Surviving Corporation....................................7
Section 1.8 Effect of the Merger...................................................................7
Section 1.9 Subsequent Actions.....................................................................7
Section 1.10 Stockholders' Meeting..................................................................7
Section 1.11 Proxy Statement/Registration Statement.................................................8
Section 1.12 Directors of InterVoice................................................................8
ARTICLE II - CONVERSION OF SECURITIES.............................................................................9
Section 2.1 Conversion of Capital Stock............................................................9
Section 2.2 Dissenting Shares.....................................................................10
Section 2.3 Surrender of All Shares of Common Stock; Stock Transfer Books.........................11
Section 2.4 The Company Stock Plans...............................................................12
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................13
Section 3.1 Organization; Qualification; Charter and Bylaws.......................................13
Section 3.2 Capitalization........................................................................15
Section 3.3 Authorization; Validity of Agreement; Company Action..................................16
Section 3.4 Consents and Approvals; No Violations.................................................16
Section 3.5 SEC Reports and Financial Statements..................................................17
Section 3.6 Absence of Certain Changes............................................................18
Section 3.7 No Undisclosed Liabilities............................................................18
Section 3.8 Claims................................................................................18
Section 3.9 Employee Benefit Plans; ERISA.........................................................19
Section 3.10 Taxes.................................................................................22
Section 3.11 Contracts.............................................................................24
Section 3.12 Real Property and Leased Property.....................................................25
Section 3.13 Intellectual Property.................................................................26
Section 3.14 Year 2000 Compliance..................................................................30
Section 3.15 Labor Matters.........................................................................31
Section 3.16 Compliance with Laws..................................................................32
Section 3.17 Environmental Matters.................................................................32
Section 3.18 Product Liability.....................................................................33
Section 3.19 Information in Disclosure Documents...................................................33
Section 3.20 Potential Conflict of Interest........................................................34
Section 3.21 Insurance.............................................................................34
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Section 3.22 Suppliers and Customers...............................................................34
Section 3.23 Accounts Receivable; Inventory........................................................35
Section 3.24 Title and Condition of Properties.....................................................35
Section 3.25 Illegal Payments......................................................................36
Section 3.26 Phoenix Acquisition...................................................................36
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER .........................................36
Section 4.1 Organization; Qualification; Charter and Bylaws.......................................36
Section 4.2 Capitalization........................................................................37
Section 4.3 Authorization; Validity of Agreement; Necessary Corporate Action......................39
Section 4.4 Consents and Approvals; No Violations.................................................39
Section 4.5 SEC Reports and Financial Statements..................................................40
Section 4.6 Absence of Certain Changes............................................................40
Section 4.7 No Undisclosed Liabilities............................................................40
Section 4.8 Claims................................................................................41
Section 4.9 Employee Benefit Plans; ERISA.........................................................41
Section 4.10 Taxes.................................................................................44
Section 4.11 Contracts.............................................................................46
Section 4.12 Real Property and Leased Property.....................................................47
Section 4.13 Intellectual Property.................................................................48
Section 4.14 Year 2000 Compliance..................................................................52
Section 4.15 Labor Matters.........................................................................53
Section 4.16 Compliance with Laws..................................................................53
Section 4.17 Environmental Matters.................................................................53
Section 4.18 Product Liability.....................................................................54
Section 4.19 Information in Disclosure Documents...................................................54
Section 4.20 Potential Conflict of Interest........................................................55
Section 4.21 Insurance.............................................................................55
Section 4.22 Suppliers and Customers...............................................................56
Section 4.23 Accounts Receivable; Inventory........................................................56
Section 4.24 Title and Condition of Properties.....................................................56
Section 4.25 Illegal Payments......................................................................57
Section 4.26 Financing.............................................................................57
Section 4.27 Shares Owned by Parent, Purchaser and Affiliates......................................57
ARTICLE V - CONDUCT OF BUSINESS PENDING THE MERGER...............................................................57
Section 5.1 Acquisition Proposals.................................................................57
Section 5.2 Interim Operations of the Company.....................................................58
Section 5.3 No Solicitation and Fiduciary Out.....................................................60
ARTICLE VI - ADDITIONAL AGREEMENTS...............................................................................61
Section 6.1 Additional Agreements.................................................................61
Section 6.2 Notification of Certain Matters.......................................................62
Section 6.3 Access; Confidentiality...............................................................62
Section 6.4 Consents and Approvals................................................................63
Section 6.5 Brokers or Finders....................................................................63
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Section 6.6 Publicity.............................................................................64
Section 6.7 Directors' and Officers' Insurance and Indemnification................................64
Section 6.8 Purchaser Compliance..................................................................65
Section 6.9 Nasdaq National Market Listing and De-Listing.........................................65
Section 6.10 Agreement of Affiliates...............................................................65
Section 6.11 Reasonable Best Efforts...............................................................65
Section 6.12 No Repurchase of Parent Common Stock..................................................66
Section 6.13 Company Stock Plan Amendments.........................................................66
ARTICLE VII - CONDITIONS.........................................................................................66
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger............................66
Section 7.2 Conditions to Obligations by Parent and the Purchaser to Effect the Merger............67
ARTICLE VIII - TERMINATION.......................................................................................67
Section 8.1 Termination...........................................................................67
Section 8.2 Effect of Termination.................................................................68
ARTICLE IX - MISCELLANEOUS.......................................................................................70
Section 9.1 Amendment and Modification............................................................70
Section 9.2 Non-survival of Representations and Warranties........................................70
Section 9.3 Expenses..............................................................................70
Section 9.4 Notices...............................................................................70
Section 9.5 Interpretation........................................................................71
Section 9.6 Counterparts..........................................................................71
Section 9.7 Entire Agreement; No Third Party Beneficiaries........................................71
Section 9.8 Severability..........................................................................72
Section 9.9 Governing Law.........................................................................72
Section 9.10 Assignment............................................................................72
Exhibit A - Stockholders' Agreement
Exhibit B - Affiliate Letter
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Index of Defined Terms
Defined Term Section No.
------------ -----------
1984 Plan.......................................................................................................2.4
1994 Plan.......................................................................................................2.4
Acquisition Proposal............................................................................................5.1
Acquisition Proposal Interest...................................................................................5.1
Affiliate Agreement............................................................................................6.10
Affiliate Letter...............................................................................................6.10
Agreement..................................................................................................Recitals
Appointment Date................................................................................................5.2
Articles of Incorporation.......................................................................................1.4
Audit.......................................................................................................3.10(b)
Average Trading Price.....................................................................................2.1(b)(1)
Bank...........................................................................................................4.26
By-Laws......................................................................................................1.2(a)
Cash Amount...............................................................................................2.1(b)(2)
Cash Share Number.........................................................................................2.1(b)(1)
Certificates.................................................................................................2.3(b)
Claims ........................................................................................................ 3.8
Closing.........................................................................................................1.6
Closing Date....................................................................................................1.6
Code....................................................................................................3.9(b)(vii)
Commitment Letter..............................................................................................4.26
Common Stock...............................................................................................Recitals
Company....................................................................................................Recitals
Company Agreements..............................................................................................3.4
Company Balance Sheet.......................................................................................3.23(a)
Company's Board of Directors...............................................................................Recitals
Company Disclosure Schedules............................................................................Article III
Company Material Adverse Effect..............................................................................3.1(a)
Company SEC Documents...........................................................................................3.5
Company Stock Plans.............................................................................................2.4
Company Year 2000 Representations...........................................................................3.14(b)
Computer Software...........................................................................................3.13(b)
Confidentiality Agreement....................................................................................5.3(b)
D&O Insurance................................................................................................6.7(b)
Date-Sensitive Data.........................................................................................3.14(c)
Date-Sensitive System.......................................................................................3.14(d)
Debt Financing.................................................................................................4.26
Director Plan...................................................................................................2.4
Dissenting Shares............................................................................................2.1(b)
Dissenting Stockholders......................................................................................2.1(b)
Effective Time..................................................................................................1.5
Encumbrances.................................................................................................3.2(b)
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Environmental Claim.........................................................................................3.17(c)
Environmental Laws..........................................................................................3.17(a)
ERISA Affiliate..............................................................................................3.9(a)
ERISA Plans..................................................................................................3.9(a)
ESPP............................................................................................................2.4
Exchange Act.................................................................................................1.1(a)
Exchange Agent...............................................................................................2.3(a)
Excluded Shares..............................................................................................2.1(b)
Exercise/No Dissenters Presumption...........................................................................2.1(b)
Financial Statements............................................................................................3.5
GAAP............................................................................................................3.5
Governmental Entity.............................................................................................3.4
HSR Act.........................................................................................................3.4
Indebtedness.................................................................................................3.2(d)
Indemnified Party............................................................................................6.7(a)
Independent Directors........................................................................................1.3(c)
Intellectual Property.......................................................................................3.13(d)
KGCC.......................................................................................................Recitals
▇▇▇▇▇▇ Act..................................................................................................3.13(n)
Licensed Product Software...................................................................................3.13(d)
Lower Collar.................................................................................................2.1(b)
Major Stockholders.........................................................................................Recitals
Materials of Environmental Concern..........................................................................3.17(a)
Merger..........................................................................................................1.4
Merger Consideration.........................................................................................2.1(b)
Minimum Condition............................................................................................1.1(a)
NGCL.......................................................................................................Recitals
Offer......................................................................................................Recitals
Offer Documents..............................................................................................1.1(c)
Offer Price................................................................................................Recitals
Offer to Purchase............................................................................................1.1(a)
Other Products..............................................................................................3.14(b)
Parent.....................................................................................................Recitals
Parent Agreements...............................................................................................4.4
Parent Balance Sheet .......................................................................................4.23(a)
Parent Claims...................................................................................................4.8
Parent Common Stock.......................................................................................2.1(b)(1)
Parent Computer Software....................................................................................4.13(b)
Parent Disclosure Schedules..............................................................................Article IV
Parent ERISA Affiliate ......................................................................................4.9(a)
Parent ERISA Plans ..........................................................................................4.9(a)
Parent Financial Statements.....................................................................................4.5
Parent Intellectual Property ...............................................................................4.13(d)
Parent Licensed Product Software ...........................................................................4.13(d)
Parent Material Adverse Effect...............................................................................4.1(a)
Parent Other Products ......................................................................................4.14(b)
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Parent Plans.................................................................................................4.9(a)
Parent Preferred Stock ..................................................................................... 4.2(a)
Parent Product Software ....................................................................................4.13(c)
Parent Real Property........................................................................................4.12(a)
Parent SEC Documents ...........................................................................................4.5
Parent SPD ..............................................................................................4.9(b)(vi)
Parent Stock Plans...........................................................................................4.2(a)
Parent Voting Debt...........................................................................................4.2(a)
Parent Work For Hire Agreements ............................................................................4.13(g)
Parent Year 2000 Representations ...........................................................................4.14(b)
Payment Fund.................................................................................................2.3(a)
PBGC.........................................................................................................3.9(c)
Person..........................................................................................................9.5
Plans........................................................................................................3.9(a)
Preferred Stock .............................................................................................3.2(a)
Product Software............................................................................................3.13(c)
Proxy Statement.............................................................................................1.11(a)
PTSOP ..........................................................................................................2.4
Purchaser..................................................................................................Recitals
Purchaser Common Stock..........................................................................................2.1
Real Property...............................................................................................3.12(a)
Registration Statement .....................................................................................1.11(a)
Rights.........................................................................................................1.11
Schedule 14D-l...............................................................................................1.1(c)
Schedule 14D-9...............................................................................................1.2(b)
SEC..........................................................................................................1.1(c)
Secretaries of State............................................................................................1.5
Securities Act..............................................................................................1.11(a)
Shares.....................................................................................................Recitals
Software Acquisition Agreements.............................................................................3.13(g)
SPD......................................................................................................3.9(b)(iv)
Special Meeting.............................................................................................1.10(a)
Spread ......................................................................................................2.4(i)
Stockholders' Agreement....................................................................................Recitals
Subsidiary...................................................................................................3.1(a)
Superior Proposal............................................................................................5.3(b)
Surviving Corporation...........................................................................................1.4
Tax Authority ..............................................................................................3.10(b)
Tax or Taxes................................................................................................3.10(b)
Tax Returns.................................................................................................3.10(b)
Termination Fee..............................................................................................8.2(e)
Transactions.................................................................................................1.2(a)
Voting Debt..................................................................................................3.2(a)
WARN Act....................................................................................................3.15(b)
Warrant.........................................................................................................2.5
Work For Hire Agreements....................................................................................3.13(g)
Year 2000 Compliant.........................................................................................3.14(e)
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ACQUISITION AGREEMENT AND PLAN OF MERGER
THIS ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of April 27, 1999, is made by and among InterVoice, Inc., a Texas corporation
("Parent"), InterVoice Acquisition Subsidiary III Inc., a Nevada corporation and
a wholly owned subsidiary of Parent (the "Purchaser"), and Brite Voice Systems,
Inc., a Kansas corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective stockholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser make a
cash tender offer (the "Offer") to acquire 9,158,155 shares of the issued and
outstanding common stock, no par value per share (the "Shares" or "Common
Stock"), of the Company, for Thirteen and 40/100s Dollars ($13.40) per share,
net to the seller in cash (such price, or any such higher price per Share as may
be paid in the Offer, being referred to herein as the "Offer Price");
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, the Purchaser and the Company have each approved
the Merger (as hereinafter defined) following the Offer in accordance with the
Kansas General Corporation Code (the "KGCC") and the Nevada General Corporation
Law (the "NGCL") and upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company (the "Company's Board of
Directors") has determined that the consideration to be paid for each Share in
the Offer and in the Merger is fair to the holders of such Shares and has
resolved to recommend that the holders of such Shares accept the Offer and
approve this Agreement and each of the transactions contemplated hereby upon the
terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(the "Major Stockholders") concurrently herewith are entering into a
Stockholders' Agreement (the "Stockholders' Agreement"), dated as of the date
hereof, with Parent and the Purchaser, in the form attached hereto as Exhibit A,
pursuant to which the Major Stockholders have agreed, among other things, to
tender any Shares held by each such Major Stockholder in the Offer, to agree to
the cancellation of any stock options each such Major Stockholder holds on the
date hereof and receive the Spread (as hereinafter defined) per Share in payment
therefor, and to grant Parent a proxy with respect to the voting of such Shares
in favor of the Merger upon the terms and subject to the conditions set forth
therein; and
WHEREAS, the Company, Parent and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
shall have occurred and be existing, as promptly as practicable (but in no event
later than five (5) business days after the public announcement of the execution
of this Agreement), the Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) the Offer at the Offer Price and, subject to there being validly tendered
and not withdrawn prior to the expiration of the Offer, 9,158,155 Shares
(including Shares owned by Parent, the Purchaser or any affiliates thereof) (the
"Minimum Condition") and to the other conditions set forth in Annex I hereto,
shall use its best efforts to consummate the Offer in accordance with its terms.
The obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex I hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") subject to the Minimum Condition and the
other conditions set forth in Annex I hereto and reflecting, where appropriate,
the other terms set forth in this Agreement. The Purchaser shall not amend or
waive the Minimum Condition (other than, at Purchaser's option, to lower the
Minimum Condition to a majority of the issued and outstanding Common Stock on a
fully diluted basis) and shall not decrease, or change the form of, the Offer
Price or decrease the number of Shares sought, or amend any other condition of
the Offer in any manner adverse to the holders of the Shares or impose any
condition to the consummation of the Offer beyond the Minimum Condition and the
conditions set forth in Annex I hereto without the written consent of the
Company; provided, however, that if on the initial scheduled expiration date of
the Offer, which shall be twenty-one (21) business days after the date the
Offer is commenced, all conditions to the Offer will not have been satisfied or
waived, the Purchaser may, from time to time, in its sole discretion, extend the
expiration date and; provided further, however, that if on the initial scheduled
expiration date of the Offer any conditions to the Offer that are reasonably
capable of being satisfied within ten (10) business days, including the Minimum
Condition, will not have been satisfied or waived, the Purchaser shall extend
the expiration date for a minimum of ten (10) business days. In no event shall
the Purchaser be obligated to extend the Offer beyond June 30, 1999. The
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 Shares tendered as
soon as it is legally permitted to do so under applicable law.
(b) If more than 9,158,155 Shares are validly tendered prior to the
expiration date, as may be extended pursuant to Section 1.1(a), and not
withdrawn, the Purchaser will, upon the terms and subject to the conditions of
the Offer, accept for payment (and thereby purchase) the Shares purchased in the
Offer on a pro rata basis, with adjustments to avoid purchases of fractional
shares of Common Stock, based on the number of Shares validly tendered prior to
the expiration date and
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not withdrawn by each tendering stockholder. Subject to the terms of this
Agreement, the Purchaser reserves the right (but shall not be obligated) to
accept for payment more than 9,158,155 Shares pursuant to the Offer.
(c) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). 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 or sent to the Company's
stockholders, 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 made 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 furnished by the Company expressly
for inclusion in the Offer Documents. The information supplied by the Company
expressly for inclusion in the Offer Documents and by Parent or the Purchaser
expressly for inclusion in the Schedule 14D-9 (as hereinafter defined) will 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
made therein, in light of the circumstances under which they were made, not
misleading.
(d) Each of Parent and the Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, will promptly correct any information provided
by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and the
Purchaser further will take all steps necessary to cause the Schedule 14D-1 or
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given the reasonable opportunity to review the initial Schedule 14D-1
before it is filed with the SEC. In addition, Parent and the Purchaser will
provide the Company and its counsel with any comments or other communications,
whether written or oral, Parent, the Purchaser or their counsel may receive from
time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments or other communications.
Section 1.2 The Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Company's Board of Directors, at a meeting duly called and
held prior to the execution hereof (i) has unanimously determined that each of
this Agreement, the Offer and the Merger (as hereinafter defined) are fair to
and in the best interests of the stockholders of the Company, (ii) has duly and
unanimously approved this Agreement, the Stockholder Agreement, and the
transactions contemplated hereby and thereby, including the Offer and the Merger
(collectively, the
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"Transactions"), and such approval constitutes approval of the Offer, this
Agreement, the Stockholder Agreement, and the transactions contemplated hereby
and thereby, including the Merger, for purposes of Section 17-12,101 of the
KGCC, such that Section 17-12,101 of the KGCC will not apply to the transactions
contemplated hereby or thereby, (iii) has unanimously resolved to recommend that
the stockholders of the Company accept the Offer, tender their Shares thereunder
to the Purchaser and approve and adopt this Agreement and the Merger, and (iv)
has unanimously resolved to amend the By-laws of the Company (the "By-Laws") to
ensure that the provisions of Sections 17-1286 through 17-1298 of the KGCC do
not apply to the Company, the rights of its stockholders and the Transactions
contemplated by this Agreement.
(b) As soon as practicable on the date the Offer is commenced, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments or supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the provisions of Section 5.3(c) hereof, contain the recommendation referred to
in clause (iii) of Section 1.2(a) hereof. 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 or sent to the
Company's stockholders, 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 made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or the Purchaser expressly for inclusion in the Schedule 14D-9. The
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 the Shares, in
each case, as and to the extent required by applicable federal securities laws.
The Company shall mail, or cause to be mailed, such Schedule 14D-9 to the
stockholders of the Company at the same time the Offer Documents are first
mailed to the stockholders of the Company. Each of the Company, on the one hand,
and Parent and the Purchaser, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case, as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given the opportunity to review
the Schedule 14D-9 before it is filed with the SEC. In addition, the Company
agrees to provide Parent, the Purchaser and their counsel with any comments,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of all record holders of Shares, each as of a recent date, and shall
promptly furnish the Purchaser with such additional information (including, but
not limited to, updated mailing labels, security position listings and available
listings or computer files containing the names and addresses of all
recordholders of Shares, or any of such other information and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of the Shares).
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Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for any Shares by the
Purchaser pursuant to the Offer, and from time to time thereafter as Shares are
acquired by the Purchaser, Parent shall, subject to meeting the Minimum
Condition, be entitled to designate such number of directors, rounded down to
the next whole number, on the Company's Board of Directors as is equal to the
product of the total number of directors on such Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the number of Shares that the Purchaser or any affiliate of the
Purchaser owns beneficially bears to the total number of shares of Common Stock
then issued and outstanding. In furtherance thereof, the Company shall, within
twenty-four (24) hours of written request of Parent, either increase the size of
its Board of Directors or use its best efforts to secure the resignations of
such number of its incumbent directors, or both as is directed by Parent to
enable Parent's designees to be elected to the Company's Board of Directors and
shall take all actions available to the Company to cause Parent's designees to
be so elected. At such time, the Company shall, if requested by Parent, also
cause persons designated by Parent to constitute at least the same percentage
(rounded down to the next whole number) as is on the Company's Board of
Directors of (i) each committee of the Company's Board of Directors, (ii) each
board of directors (or similar body), of each Subsidiary (as hereinafter
defined) of the Company (to the extent such action is feasible and reasonable),
and (iii) each committee (or similar body) of each such board (to the extent
such action is feasible and reasonable).
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order
to fulfill its obligations under Section 1.3(a) hereof, and shall include in the
Schedule 14D-9 mailed to stockholders promptly after the commencement of the
Offer (or an amendment thereof or an information statement pursuant to Rule
14f-1 if the Purchaser has not theretofore designated directors) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under Section 1.3(a) hereof. Parent or the Purchaser shall supply the Company
such information with respect to either of them and their nominees, officers,
directors and affiliates as is required by such Section 14(f) and Rule 14f-1.
The provisions of this Section 1.3 are in addition to and shall not limit any
rights which Parent, the Purchaser or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company's
Board of Directors subject to the other terms of this Agreement and until the
Effective Time (as hereinafter defined), the Company's Board of Directors shall
have at least one (1) director who is a director on the date hereof and who is
neither an officer of the Company nor a designee, stockholder, affiliate or
associate (within the meaning of the federal securities laws) of Parent (one (1)
or more of such directors, the "Independent Directors"); provided that, in such
event, if the number of Independent Directors shall be reduced below two (2) for
any reason whatsoever, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall be deemed an Independent
Director for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate one (1) person to fill one (1) of
the vacancies who shall not be a stockholder, affiliate or associate of Parent
or the Purchaser and such person shall be deemed to be an Independent Director
for purposes of this Agreement. Notwithstanding anything in this Agreement to
the contrary, in the
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event that Parent's designees are elected to the Company's Board of Directors,
after the acceptance for payment of Shares pursuant to the Offer and prior to
the Effective Time, the affirmative vote of a majority of the Independent
Directors shall be required to (a) amend or terminate this Agreement on behalf
of the Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder, (c) extend the time for performance of the Purchaser's
obligations hereunder, (d) amend the Company's Articles of Incorporation (as
hereinafter defined) or By-Laws, or (e) take any other action by the Company's
Board of Directors under or in connection with this Agreement.
Section 1.4 The Merger. Upon the terms and subject to the conditions of
this Agreement at the Effective Time, the Company and the Purchaser shall
consummate a merger (the "Merger") pursuant to which (a) the Purchaser shall be
merged with and into the Company and the separate corporate existence of the
Purchaser shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Kansas, and (c) the separate corporate existence of the Company with
all of its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Section 1.4. Pursuant to
the Merger, (x) Article III of the Articles of Incorporation of the Company (the
"Articles of Incorporation"), shall be amended in its entirety to read as
follows:
"ARTICLE III
Capital Stock
The aggregate number of shares which the corporation shall
have authority to issue is twenty-five thousand (25,000), no par value
per share, to be designated "Common Stock"."
As so amended, the Articles of Incorporation shall be the articles of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation and (y) the By-Laws, as in effect
immediately prior to the Effective Time (as hereinafter defined), shall be the
By-Laws of the Surviving Corporation until thereafter amended as provided by
law, by such Articles of Incorporation or by such By-Laws.
Section 1.5 Effective Time. Parent, the Purchaser and the Company shall
cause (i) a Certificate of Merger the content of which shall comply with the
KGCC and (ii) Articles of Merger or Exchange, the content of which shall comply
with the NGCL, each to be executed and filed on the Closing Date (as hereinafter
defined) (or on such other date as Parent and the Company may agree) with each
of the Secretary of State of Kansas and the Secretary of State of Nevada (the
"Secretaries of State"), as the case may be, in such form as required by, and
executed in accordance with, the relevant provisions of the KGCC and the NGCL.
The Merger shall become effective on the date on which the Certificate of Merger
and the Articles of Merger or Exchange are duly filed with the Secretaries of
State or such time as is agreed upon by the parties and specified in the
Certificate of Merger and the Articles of Merger or Exchange, and such time is
hereinafter referred to as the "Effective Time."
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Section 1.6 Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second (2nd) business day after satisfaction or waiver of
all of the conditions set forth in Article VII hereof (the "Closing Date"), at
the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in writing by the parties
hereto.
Section 1.7 Directors and Officers of the Surviving Corporation. The
directors and officers of the Purchaser at the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and the By-Laws. If, at the Effective Time, a
vacancy shall exist on the Company's Board of Directors or in any office of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
Section 1.8 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the KGCC and the
NGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and the Purchaser shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and the Purchaser shall become
the debts, liabilities and duties of the Surviving Corporation including,
without limitation, the Debt Financing (as hereinafter defined) referred to in
Annex I and Section 4.26.
Section 1.9 Subsequent Actions. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
rights, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.10 Stockholders' Meeting.
(a) In order to consummate the Merger, the Company, acting through its
Board of Directors, shall, in accordance with applicable law duly call, give
notice of, convene and hold a special meeting of its stockholders (the "Special
Meeting") as promptly as practicable following the acceptance for payment and
purchase of the Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the adoption
of this Agreement. Subject to its fiduciary obligations, the Company's Board of
Directors shall recommend such approval, and the Company shall take all lawful
action to solicit such approval. Parent shall vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the approval and adoption
of this Agreement.
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Section 1.11 Proxy Statement/Registration Statement.
(a) As promptly as practicable after the date hereof, the Company and
Parent shall prepare and file with the SEC under the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, a proxy
statement/prospectus (the "Proxy Statement") with respect to the Special
Meeting, including a registration statement, together with all amendments and
supplements thereto, if any (the "Registration Statement"), on an appropriate
form for the purpose of registering under the Securities Act the offering, sale,
and delivery of Parent Common Stock (as hereinafter defined), together with
preferred share purchase rights issuable pursuant to Parent's Amended and
Restated Rights Agreement dated as of December 12, 1994 (the "Rights"), to be
issued to the stockholders of the Company pursuant to the Merger. Parent and the
Company shall use all reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after the
filing thereof. Parent or the Company, as the case may be, shall notify the
other promptly of the receipt of any comments on, or any requests for amendments
or supplements to, the Proxy Statement or the Registration Statement by the SEC,
and each shall supply the other with copies of all correspondence between it and
its representatives, on the one hand, and the SEC or members of its staff, on
the other, with respect to the Proxy Statement or the Registration Statement.
Parent or the Company, as the case may be, after consultation with and the
consent of the other, shall use its reasonable best efforts to respond promptly
to any comments made by the SEC with respect to the Proxy Statement or the
Registration Statement. The Company shall obtain the approval of Parent, and
Parent shall obtain the approval of the Company, before making any filings with
the SEC pertaining to the Proxy Statement or the Registration Statement or any
matter pertaining to this Agreement.
(b) Parent, the Purchaser and the Company each agrees promptly to
correct any information provided by it for use in the Proxy Statement or the
Registration Statement if and to the extent that such information shall have
become false or misleading in any material respect, and Parent and the Company
further agree to take all steps necessary to cause the Proxy Statement or the
Registration Statement as so corrected to be filed with the SEC and to be
disseminated promptly to holders of shares of Company Stock, in each case as and
to the extent required by applicable law. Parent shall also take any action
reasonably required to be taken under any applicable state securities laws in
connection with the issuance of the Parent Common Stock pursuant to the Merger,
and the Company shall furnish all information concerning the Company and its
stockholders as may be reasonably requested in connection with any such action.
(c) As promptly as practicable after the Registration Statement has
been declared effective by the SEC, the Company shall mail the Proxy Statement
to its stockholders as of the record date for the Special Meeting.
Section 1.12 Directors of InterVoice. Promptly following the Effective
Time, Parent will cause its Board of Directors to fill one (1) vacant position
on its Board of Directors with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, no par value per share, of the Purchaser
("Purchaser Common Stock"):
(a) Each share of Purchaser Common Stock issued and outstanding
immediately before the Effective Time shall be converted into, and shall
thereafter represent, one validly issued, fully paid and nonassessable share of
common stock, no par value per share, of the Surviving Corporation.
(b) Each share of Common Stock issued and outstanding immediately prior
to the Effective Time (other than (i) Shares purchased in the Offer or otherwise
owned by Parent, the Purchaser or any other direct or indirect Subsidiary (as
hereinafter defined) of Parent, (ii) Shares that are owned by the Company or any
direct or indirect Subsidiary of the Company and in each case not held on behalf
of third parties, or (iii) Shares ("Dissenting Shares") that are owned by
stockholders ("Dissenting Stockholders") that have properly exercised appraisal
rights pursuant to Section 17-6712 of the KGCC (collectively, the "Excluded
Shares")) shall be converted into the right to receive the merger consideration
(the "Merger Consideration") calculated under either method (1) or method (2),
as applicable:
(1) If the Purchaser purchases 9,158,155 Shares in the Offer (the "Cash
Share Number") or, in the sole discretion of Purchaser, more than the
Cash Share Number, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than Excluded Shares)
will be converted into the right to receive that number of fully paid
and nonassessable shares of common stock, no par value per share, of
Parent (the "Parent Common Stock") equal to the quotient of (x) the
Offer Price divided by (y) the average of the per share closing price
of the Parent Common Stock on the Nasdaq National Market for the
twenty-five (25) trading days immediately preceding the Effective Time
(the "Average Trading Price"), provided that, for purposes of this
Agreement, the Average Trading Price shall be at least equal to the
Lower Collar (as hereinafter defined) and shall not exceed $14.00 per
share; or
(2) If the Purchaser lowers the Minimum Condition as provided in
Section 1.1(a) and the number of Shares purchased in the Offer is less
than the Cash Share Number, each share of Common Stock issued and
outstanding immediately prior to the Effective Time (other than
Excluded Shares) will be converted into the right to receive (a) an
amount in cash equal to the quotient of (w) the difference between (i)
the product of the Offer Price multiplied by the Cash Share Number and
(ii) the aggregate purchase price payable pursuant to this Agreement
for the number of Shares actually purchased in the Offer, divided by
(x) a number of shares equal to (A) the total number of shares of
Common Stock issued and outstanding immediately prior to the Effective
Time (B) less the Excluded Shares (C) plus the Dissenting Shares (such
quotient referred to as the "Cash Amount"), plus (b) that number of
shares of Parent Common Stock equal to the quotient of (y) the
difference between the Offer Price and the Cash Amount, divided by (z)
the Average Trading Price.
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For purposes of this Section 2.1(b), the "Lower Collar" is $8.00,
provided, however, if a Lower Collar of $8.00 would result in the issuance of
more than 5,719,877 shares of Parent Common Stock in the Merger (assuming for
purposes of this calculation that all outstanding stock options under the
Company Stock Plans (as hereinafter defined) that shall not have been cancelled
or repurchased by the Company pursuant to Section 2.4 hereof at or prior to the
completion of the Offer are exercised in full immediately prior to the Effective
Time and that there are no Dissenting Shares (the "Exercise/No Dissenters
Presumption")), the Lower Collar shall be an amount per share equal to the
product of (i) $8.00 multiplied by (ii) a fraction of which (A) the numerator is
the total number of shares of Parent Common Stock that would be issued in the
Merger if the Lower Collar were $8.00, assuming the Exercise/No Dissenters
Presumption, and (B) the denominator is 5,719,877.
All calculations under this Section 2.1 shall be made to the nearest
cent or to the nearest one ten-thousandth of a share of Parent Common Stock.
(c) All shares of Common Stock issued and outstanding immediately prior
to the Effective Time shall no longer be outstanding and shall be canceled and
retired and shall cease to exist (in the case of Excluded Shares other than
Dissenting Shares, without the payment of any consideration therefor), and each
certificate formerly representing any of such Shares, other than Excluded
Shares, shall thereafter represent only the right to receive the Merger
Consideration and the right, if any, to receive cash in lieu of fractional
shares pursuant to Section 2.3(e) hereof, without interest, upon the surrender
of such certificate in accordance with Section 2.3(b) hereof.
(d) The number of shares of Parent Common Stock to be delivered in the
Merger, as determined pursuant to Section 2.1(b) hereof, shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into shares of
Parent Common Stock), reorganization, recapitalization or other like change with
respect to Parent Common Stock the record date for which shall occur after the
date hereof and prior to the Effective Time.
Section 2.2 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with Section 17-6712 of the KGCC, and as
of the Effective Time has neither effectively withdrawn nor lost his right to
such appraisal, shall not be converted into or represent a right to receive the
Merger Consideration pursuant to Section 2.1 hereof, but the holder thereof
shall be entitled to only such rights as are granted by the KGCC.
(b) Notwithstanding the provisions of Section 2.2(a) above, if any
holder of Shares who demands appraisal of such holder's Shares under the KGCC
effectively withdraws or loses (through failure to perfect or otherwise) such
holder's right to appraisal, then as of the Effective Time or the occurrence of
such event, whichever later occurs, such holder's Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration
and the right, if any, to receive cash in lieu of fractional shares pursuant to
Section 2.3(e) hereof, without interest, upon surrender of the certificate or
certificates representing such Shares pursuant to Section 2.3 hereof and such
Shares shall not constitute Excluded Shares.
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(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served pursuant to the KGCC and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the KGCC. The Company shall not voluntarily make any payment
with respect to any demands for appraisal and shall not, except with the prior
written consent of Parent, settle or offer to settle any such demands.
Section 2.3 Surrender of All Shares of Common Stock; Stock
Transfer Books.
(a) Before the Effective Time, the Purchaser shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
holders of Shares in connection with the Merger (the "Exchange Agent"). Parent
shall deposit, or cause to be deposited, in trust with the Exchange Agent for
the benefit of holders of Shares (other than the Excluded Shares), certificates
representing Parent Common Stock and (if applicable) cash comprising the
aggregate Merger Consideration pursuant to Section 2.1(b) hereof (the "Payment
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions, make the
payments or deliveries referred to in this Section 2.3(a) out of the Payment
Fund. The Payment Fund shall not be used for any other purpose except as
expressly provided in this Agreement.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted pursuant to
Section 2.1(b) hereof into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected and
that the risk of loss of and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions not inconsistent with this Agreement as Parent may
specify) and (ii) instructions for use in effecting the surrender of
Certificates in exchange for (A) certificates representing shares of Parent
Common Stock comprising the Merger Consideration , (B) if applicable, cash
comprising the Merger Consideration and (C) cash in lieu of fractional shares.
Upon surrender of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing that
number of whole shares of Parent Common Stock that such holder is entitled to
receive pursuant to Section 2.1(b) hereof, and (y) a check in the amount (after
giving effect to any required tax withholdings) of (A) any cash comprising the
Merger Consideration, plus (B) any cash in lieu of fractional shares, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock, together with a check for any cash to be paid upon due surrender
of the Certificate, may be issued and/or paid to such a transferee if the
Certificate formerly representing such Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid, in form and substance reasonably satisfactory to Parent and the Exchange
Agent. If any check or any certificate for shares of Parent Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the person requesting such exchange shall have paid any transfer and other taxes
required by reason of the issuance of certificates for shares of Parent Common
Stock in a name other
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than that of the registered holder of the Certificate surrendered, or shall have
established to the satisfaction of Parent and the Exchange Agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.3, each Certificate (other than certificates for Excluded Shares)
shall be deemed at any time after the Effective Time to represent only the right
to receive the Merger Consideration.
(c) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
shares of any class of capital stock thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates evidencing
ownership of the Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law.
(d) Promptly following the date that is one (1) year after the
Effective Time, Parent shall be entitled to require the Exchange Agent to
deliver to it any portion of the Payment Fund (including the proceeds of any
investments thereof and any Parent Common Stock) that remains unclaimed by the
stockholders of the Company, Certificates and other documents in its possession
relating to the transactions contemplated hereby, which had been made available
to the Exchange Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to Parent
and the Surviving Corporation (subject to abandoned property, escheat or similar
laws) only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Notwithstanding any other provision of this Agreement, no
fractional shares of Parent Common Stock will be issued and any holder of Shares
entitled to receive a fractional share of Parent Common Stock but for this
Section 2.3(e) shall be entitled to receive a cash payment in lieu thereof,
which payment shall represent such holder's proportionate interest in a share of
Parent Common Stock based on the Average Trading Price.
Section 2.4 The Company Stock Plans.
Schedule 2.4 of the Company Disclosure Schedules (as hereinafter
defined) sets forth the number of optionees and the number of shares of Common
Stock covered by outstanding options for each of the 1984 Incentive Stock Option
Plan (the "1984 Plan"), the 1990 Non-Employee Director Stock Option Plan (the
"Director Plan"), the 1994 Stock Option Plan (the "1994 Plan"), and the
Perception Technology Corporation Stock Option Plan (the "PTSOP"), which
collectively constitute all of the plans of the Company under which any stock
options are outstanding (collectively, the "Company Stock Plans"). The Company
will take, or cause to be taken, the following actions with respect to the
Company Stock Plans and the Employee Stock Purchase Plan (the "ESPP"):
(i) Promptly upon commencement of the Offer, the Company will
use its best efforts to enter into agreements with optionees to cancel,
prior to the completion of the Offer, all outstanding stock options
under the Company Stock Plans, whether or not then exercisable
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and whether or not "in the money" or "underwater." Except as otherwise
provided in the Stockholders' Agreement, in consideration for the
cancellation of the outstanding "in the money" stock options pursuant
to this Section 2.4, the Company shall pay to the holders of such stock
options an amount, in cash, equal to the product of (A) the difference
between the Offer Price and the per share exercise price of such stock
options multiplied by (B) the number of shares of Common Stock covered
by such stock options (the "Spread"), and with respect to all
outstanding "underwater" options, if any, to be canceled pursuant to
this Section 2.4, the Company shall pay, in cash, such amounts as the
Parent and the Company mutually agree to be appropriate.
(ii) The payments for outstanding stock options under the 1984
Plan, the Director Plan, the 1994 Plan and the PTSOP will be (i) made
by the Company subject to the Purchaser having completed the Offer and
(ii) paid at or prior to the completion of the Offer.
(iii) Effective upon completion of the Offer (but in any event
prior to June 30, 1999 unless the Offer is extended past such date),
the Company will terminate the ESPP and refund in cash to participants
their respective account balances.
Section 2.5 Repurchase of Warrant. The Company has entered into a
binding agreement with AT&T Corp. pursuant to which the Company will repurchase
and cancel for $7,500,000 in cash, subject to and promptly after consummation of
the Offer, the Common Stock Purchase Warrant dated December 12, 1997 and related
Warrant Purchase Agreement of even date therewith (collectively, the "Warrant")
issued by the Company to AT&T Corp.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedules delivered to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedules") setting forth,
among other things, specific exceptions to the Company's representations and
warranties set forth herein, the Company represents and warrants to Parent and
the Purchaser as set forth below. Each exception set forth in the Company
Disclosure Schedules is identified by reference to, or has been grouped under a
heading referring to, a specific individual section of this Agreement and,
except as otherwise specifically stated with respect to such exception, relates
only to such section.
Section 3.1 Organization; Qualification; Charter and Bylaws.
(a) The Company and each of its Subsidiaries is a corporation,
partnership or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to have such
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as hereinafter defined). As used in this
Agreement, the term "Subsidiary" shall mean, with respect to any party, any
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corporation or other organization, whether incorporated or unincorporated or
domestic or foreign to the United States of which (i) such party or any other
Subsidiary of such party is a general partner (excluding such partnerships where
such party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. As used in this Agreement, a "Company
Material Adverse Effect" means any event, change in or effect on the business of
the Company or its Subsidiaries, taken as a whole, that is or would be expected
to be materially adverse to (i) the business, operations, properties (including
intangible properties), financial condition or results of operations or
prospects of the Company or its Subsidiaries, taken as a whole, or (ii) the
ability of the Company to consummate any of the Transactions or to perform its
obligations under this Agreement, but such definition shall not include (A) any
material adverse change due to the transactions contemplated by this Agreement,
(B) any material adverse change in the Company's established industry as a
whole, or (C) a material adverse change in the general economic conditions of
the United States of America. The exception of clause (A), (B) and (C) from the
definition of Company Material Adverse Effect shall not otherwise affect the
conditions set forth in Annex I or Article VII hereof. Set forth in Schedule
3.1(a) of the Company Disclosure Schedules is a complete list of the Company's
Subsidiaries, including the respective jurisdictions in which such Subsidiaries
are organized and the Company's ownership of each.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not individually
or in the aggregate have a Company Material Adverse Effect. Except as set forth
in Schedule 3.1(b) of the Company Disclosure Schedules, the Company does not own
(i) any equity interest in any corporation or other entity or (ii) marketable
securities where the Company's equity interest in any entity exceeds five
percent (5%) of the outstanding equity of such entity on the date hereof.
(c) The Company has made available to Parent accurate and complete
copies of (i) the Articles and/or Certificates of Incorporation and By-Laws of
the Company and each of its Subsidiaries (certified by the respective
Secretaries of State of the Company's, and each of its Subsidiaries'
jurisdiction of incorporation and the secretary or an assistant secretary of the
Company, and each of its Subsidiaries, respectively) as currently in effect,
(ii) the stock records of the Company, and each of its Subsidiaries and (iii)
(A) the minutes of all meetings of the Company's, and its United Kingdom
Subsidiary's, Boards of Directors, any committees of such Boards, and the
Company's, and its United Kingdom Subsidiary's, shareholders (and all consents
in lieu of such meetings, each for the past five (5) years and (B) the minutes
of all meetings of the remaining Subsidiaries' Boards of Directors, and
committees of such Boards, and each of such Subsidiaries' shareholders (and all
consents in lieu of such meetings) each for the past two (2) years. Such
records, minutes, and consents accurately reflect the stock ownership of the
Company, and each of its Subsidiaries and all actions taken by the Company at
such meetings, and each of its Subsidiaries' Boards, any committees of such
Boards, and the Company's, and each of its Subsidiaries', shareholders. Neither
the Company nor any of its Subsidiaries is in violation of any provision of its
respective Articles of Incorporation or By-Laws, except where such violation
would not result in a Company Material Adverse Effect.
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Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 30,000,000
Shares, and 10,000,000 of preferred stock, no par value per share (the
"Preferred Stock"). As of the date hereof, (i) 12,271,928 Shares are issued and
outstanding, (ii) no shares of Preferred Stock are issued and outstanding),
(iii) no Shares are issued and held in the treasury of the Company, and (iv) a
total of 3,783,451 Shares are reserved for issuance pursuant to the 1984 Plan,
the Directors Plan, the 1994 Plan, the PTSOP, the ESPP and the Warrant. Schedule
3.2(a)(i) of the Company Disclosure Schedules sets forth the number of shares of
Common Stock reserved for future issuance or purchase pursuant to each of the
1984 Plan, the Directors Plan, the 1994 Plan, the PTSOP, the ESPP and the
Warrant. Schedule 3.2(a)(ii) of the Company Disclosure Schedules sets forth the
number of shares subject to each outstanding option, and the exercise price
thereof. All the outstanding shares of the Company's capital stock are, and all
shares of Common Stock which may be issued pursuant to the exercise of
outstanding options will be, when issued in accordance with the terms thereof,
duly authorized, validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except as disclosed in this
Section 3.2 or as set forth in Schedule 3.2(a)(ii) of the Company Disclosure
Schedules, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, and
(iii) there are no outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company or any Subsidiary or affiliate of the Company or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity. The Company
has no obligation to grant any options in the future other than pursuant to the
Company Stock Plans.
(b) Except as set forth in Schedule 3.2(b) of the Company Disclosure
Schedules, all of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by Company, directly or indirectly, and all
such shares have been validly issued and are fully paid and nonassessable and
are owned by either the Company or one of its Subsidiaries free and clear of all
liens, charges, security interests, options, claims, mortgages, pledges,
transfer restrictions or other encumbrances and restrictions of any nature
whatsoever ("Encumbrances"), except for those directors' qualifying shares of
capital stock of such Subsidiaries not material in amount and subject to
repurchase or cancellation arrangements.
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(c) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
(d) Other than as set forth on Schedule 3.2(d) of the Company
Disclosure Schedules or the Company's Financial Statements (as hereinafter
defined), there is no outstanding Indebtedness (as hereinafter defined) of the
Company or any of its Subsidiaries. Except as identified in Schedule 3.2(d) of
the Company Disclosure Schedules, no Indebtedness of the Company or its
Subsidiaries contains any restriction upon (i) the prepayment of such
Indebtedness, (ii) the incurrence of Indebtedness (including the Debt Financing)
by the Company or its Subsidiaries, respectively, (iii) the ability of the
Company or its Subsidiaries to grant any liens on their properties or assets, or
(iv) the ability of the Company to enter into this Agreement or to consummate
the Merger. For purposes of this Agreement, "Indebtedness" shall include (v) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (w) any
other indebtedness which is evidenced by a note, bond, debenture or similar
instrument, (x) all obligations under financing leases, (y) all liabilities
secured by any lien on any property and (z) all guarantee obligations.
(e) Except as set forth in Schedule 3.2(e) of the Company Disclosure
Schedules, since January 1, 1995, the Company has not entered into any material
agreement involving the acquisition, sale or disposition of any class of capital
stock or assets of the Company or any of its Subsidiaries, by merger or
otherwise; and except as disclosed on Schedule 3.2(e) of the Company Disclosure
Schedules, to the best of knowledge of the Company, none of the Company or any
of its Subsidiaries is in breach of, or subject to a claim of default under, any
such agreements listed on such Schedule.
Section 3.3 Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and corporate authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by the Company of this Agreement, and the
consummation by it of the Transactions, have been duly and validly authorized by
its Board of Directors and, except for obtaining the approval of its
stockholders as contemplated by Section 1.10 hereof, no other corporate action
on the part of the Company is necessary to authorize the execution and delivery
by the Company of this Agreement, and the consummation by it of the Transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and, assuming due and valid authorization, execution and delivery hereof
by Parent and the Purchaser, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
Section 3.4 Consents and Approvals; No Violations. Except as set forth
in Schedule 3.4 of the Company Disclosure Schedules and for such filings,
permits, authorizations, consents and approvals as are contemplated by this
Agreement or may be required under, and other applicable
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requirements of, the Exchange Act and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), none of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the Transactions or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation, the By-Laws or similar
organizational documents of the Company or any of its Subsidiaries, state
securities laws or blue sky laws and the KGCC, (ii) require any filing with, or
permit, authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(collectively, the "Company Agreements") or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of its Subsidiaries or any of their properties or assets, except in the case of
clause (ii), (iii) or (iv) where failure to obtain such permits, authorizations,
consents or approvals or to make such filings, or where such violations,
breaches or defaults which would not, individually or in the aggregate, have a
Company Material Adverse Effect. Schedule 3.4 of the Company Disclosure
Schedules sets forth a list of all third party consents and approvals required
to be obtained in connection with this Agreement under the Company Agreements
prior to the consummation of the transactions contemplated by this Agreement.
Section 3.5 SEC Reports and Financial Statements. The Company has filed
with the SEC, and has heretofore made available to Parent, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1996 under the Exchange Act or the Securities
Act (as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"). As of their respective dates, or if
amended, as of the date of the last such amendment, the Company SEC Documents,
including, without limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements included in the Company SEC
Documents (the "Financial Statements") (i) have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, (ii) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (iii) have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and (iv) fairly present in all material respects the consolidated financial
position and the consolidated results of operations and cash flows (and changes
in financial position, if any) of the Company and its consolidated Subsidiaries
as of the times and for the periods referred to therein.
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Section 3.6 Absence of Certain Changes. Except as set forth in Schedule
3.6 of the Company Disclosure Schedules or in the Company SEC Documents filed
prior to the date hereof, since December 31, 1998, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course. From December 31, 1998 through the date of this Agreement, there
has not occurred (i) any event, change or effect (including the incurrence of
any liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Company Material Adverse Effect,
(ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the equity
interests of the Company or any of its Subsidiaries or (iii) any change in
accounting principles or methods, except insofar as may be required by a change
in GAAP. Since December 31, 1998 neither the Company nor any of its Subsidiaries
has taken any of the actions prohibited by Section 5.2 hereof that would have a
Company Material Adverse Effect.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice since December 31,
1998, (ii) created pursuant to the terms of this Agreement or (iii) as disclosed
in Schedule 3.7 of the Company Disclosure Schedules or (iv) as disclosed in
Schedule 3.8(a) of the Company Disclosure Schedules, neither the Company nor any
of its Subsidiaries, to the best of its knowledge, has incurred any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
that have, or would be reasonably likely to have, a Company Material Adverse
Effect and would be required to be reflected or reserved against on a
consolidated balance sheet of the Company and its Subsidiaries (including the
notes thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1998. Schedule 3.7 of the Company Disclosure Schedules sets forth the amount
of principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of the Company and its Subsidiaries which will accelerate or become
due or result in a right of redemption or repurchase on the part of the holder
of such Indebtedness (with or without due notice or lapse of time) as a result
of this Agreement, the Merger or the other Transactions contemplated hereby or
thereby. For purposes of this Agreement, "to the best of its knowledge" (or
similar reference to the subject entity's knowledge) means the knowledge of or
receipt of notice (oral or written) by any of the executive officers (who have
worked on the Transactions) or directors of the entity in question, as such
knowledge has been obtained in the normal conduct of the business of the entity
in question or in connection with the schedules to this Agreement and the
furnishing of information to the other party or parties, as applicable, to the
Transactions as contemplated by this Agreement after having made a reasonable
investigation and due inquiry of the accuracy of the representations and
warranties made by such entity in question, to the extent feasible given
confidentiality considerations, in this Agreement or in any document,
certificate or other writing furnished by such entity pursuant hereto or in
connection herewith.
Section 3.8 Claims. Except as set forth on Schedule 3.8(a) of the
Company Disclosure Schedules or in the Company SEC Documents, as of the date
hereof, there is no suit, written claim, written demand, action, proceeding,
including, without limitation, any arbitration proceeding or alternative dispute
resolution proceeding, or to the best knowledge of the Company, investigation
pending or, to the best knowledge of the Company, threatened against or
affecting, the Company or any of its Subsidiaries (collectively, "Claims"), that
would reasonably be expected to have a Company Material Adverse Effect. Except
as set forth on Schedule 3.8(b) of the Company Disclosure Schedules or in the
Company SEC Documents, there is no Claim or Claims that, either individually or
in the aggregate, if adversely determined, would have a Company Material Adverse
Effect.
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Section 3.9 Employee Benefit Plans; ERISA.
(a) Schedule 3.9(a) of the Company Disclosure Schedules contains a true
and complete list of each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or any of its Subsidiaries, or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), that together with
the Company or any of its Subsidiaries would be deemed a "single employer"
within the meaning of Section 4001(b)(1) of ERISA, for the benefit of any
current or former employee or director of the Company, or any of its
Subsidiaries or any ERISA Affiliate (the "Plans"). Schedule 3.9(a) of the
Company Disclosure Schedules identifies each of the Plans that is an "employee
welfare benefit plan," or "employee pension benefit plan" as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). Except as required by applicable
law, none of the Company, any of its Subsidiaries nor any ERISA Affiliate has
any formal plan or commitment, whether legally binding or not, to create any
additional Plan or modify or change any existing Plan that would affect any
current or former employee or director of the Company, any of its Subsidiaries
or any ERISA Affiliate.
(b) With respect to each of the Plans, the Company has heretofore
delivered to the Purchaser true and complete copies of each of the following
documents, as applicable:
(i) a copy of the Plan documents (including all amendments
thereto) for each written Plan or a written description of any Plan
that is not otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service
Form 5500 Series, if required under ERISA, with respect to each ERISA
Plan for the last three (3) Plan years ending prior to the date of this
Agreement for which such a report was required to be filed;
(iii) a copy of the actuarial report, if required under ERISA,
with respect to each ERISA Plan for the last three (3) Plan years
ending prior to the date of this Agreement;
(iv) a copy of the most recent Summary Plan Description
("SPD"), together with all Summaries of Material Modification issued
with respect to such SPD, if required under ERISA, with respect to each
ERISA Plan, and all other material employee communications relating to
each ERISA Plan;
(v) if the Plan is funded through a trust or any other funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if
any;
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(vi) all contracts relating to the Plans with respect to which
the Company, any of its Subsidiaries or any ERISA Affiliate may have
any liability, including insurance contracts, investment management
agreements, subscription and participation agreements and record
keeping agreements; and
(vii) the most recent determination letter received from the
IRS with respect to each Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) No liability under Title IV of ERISA has been incurred by the
Company, any of its Subsidiaries or any ERISA Affiliate since the effective date
of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, or any of its Subsidiaries or any ERISA
Affiliate of incurring any liability under such Title, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC"), which payments
have been or will be made when due. To the extent this representation applies to
Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only with
respect to the ERISA Plans but also with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which the
Company, any of its Subsidiaries or any ERISA Affiliate made, or was required to
make, contributions during the past six (6) years.
(d) The PBGC has not instituted proceedings pursuant to Section 4042 of
ERISA to terminate any of the ERISA Plans subject to Title IV of ERISA, and no
condition exists that presents a material risk that such proceedings will be
instituted by the PBGC.
(e) With respect to each of the ERISA Plans that is subject to Title IV
of ERISA, the present value of accumulated benefit obligations under such ERISA
Plan, as determined by the ERISA Plan's actuary based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Plan's actuary with respect to such ERISA Plan, did not, as of
its latest valuation date, exceed then current value of the assets of such Plan
allocable to such accumulated benefit obligations.
(f) None of the Company, any of its Subsidiaries, any ERISA Affiliate,
any of the ERISA Plans, any trust created thereunder, nor to best knowledge of
the Company, any trustee or administrator thereof has engaged in a transaction
or has taken or failed to take any action in connection with which the Company,
any of its Subsidiaries or any ERISA Affiliate could be subject to any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Sections 4975(a) or (b), 4976 or 4980B of
the Code.
(g) All contributions and premiums that the Company, any of its
Subsidiaries or any ERISA Affiliate is required to pay under the terms of each
of the ERISA Plans and Section 412 of the Code, have, to the extent due, been
paid in full or properly recorded on the financial statements or records of the
Company or its Subsidiaries, and none of the ERISA Plans or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the ERISA
Plans ended prior to the date of this Agreement. No lien has been imposed under
Section 412 (n) of the Code or Section 302 (f) of ERISA on the assets of the
Company, any
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of its Subsidiaries or any ERISA Affiliate, and no event or circumstance has
occurred that is reasonably likely to result in the imposition of any such lien
on any such assets on account of any ERISA Plan.
(h) With respect to any ERISA Plan that is a "multi-employer plan," as
such term is defined in Section 3 (37) of ERISA, (i) neither the Company, any of
its Subsidiaries nor any ERISA Affiliate has, since September 26, 1980, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, (ii) no event has
occurred that presents a material risk of a complete or partial withdrawal,
(iii) none of the Company, any of its Subsidiaries or any ERISA Affiliate has
any contingent liability under Section 4204 of ERISA, (iv) no circumstances
exist that present a material risk that any such multi-employer plan will go
into reorganization, and (v) the aggregate withdrawal liability of the Company,
each of its Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by the Company, each of its Subsidiaries and all of its ERISA
Affiliates had occurred under each such multi-employer plan on the date hereof,
would be zero.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code.
(j) Each of the ERISA Plans that is intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified. the Company has
applied for and received a currently effective determination letter from the IRS
stating that it is so qualified, and no event has occurred which would affect
such qualified status.
(k) Each of the ERISA Plans that is intended to qualify under Section
501(c)(9) of the Code is so qualified and meets the requirements of Section
505(c) of the Code and the regulations thereunder.
(l) Except as set forth in Schedule 3.9(l) of the Company Disclosure
Schedules, no amounts payable under any of the Plans or any other contract,
agreement or arrangement with respect to which the Company or any of its
Subsidiaries may have any liability could fail to be deductible for federal
income tax purposes by virtue of Section 162(m) or Section 280G of the Code.
(m) Except as set forth in Schedule 3.9(m) of the Company Disclosure
Schedules, no Plan provides death or medical benefits (whether or not insured),
with respect to current or former employees of the Company, its Subsidiaries or
any ERISA Affiliate after retirement or other termination of service (other than
(i) coverage mandated by applicable laws, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of the Company, any of its Subsidiaries or an ERISA Affiliate, or (iv)
benefits, the full direct cost of which is borne by the current or former
employee (or beneficiary thereof)).
(n) Except as set forth in Schedule 3.9(n) of the Company Disclosure
Schedules and as provided in Section 2.4 hereof, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee, officer or director of the Company, any of its Subsidiaries or
any ERISA Affiliate to severance pay, unemployment compensation or any other
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similar termination payment, or (ii) accelerate the time of payment or vesting,
or increase the amount of or otherwise enhance any benefit due any such
employee, officer or director.
(o) There are no pending or, to the best knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan by any employee or
beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefits).
(p) Except as set forth in Schedule 3.9(p) of the Company Disclosure
Schedules, no Plan is currently under examination by, and there are no issues
related to the Plans currently pending before, the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or any court.
(q) There are no material liabilities under any foreign laws with
respect to the Plans.
Section 3.10 Taxes.
(a) Except as set forth in Schedule 3.10 of the Company Disclosure
Schedules:
(i) the Company and its Subsidiaries have (A) duly filed (or
there have been filed on their behalf) with the appropriate Tax
Authorities (as hereinafter defined) all Tax Returns (as hereinafter
defined) required to be filed by them on or prior to the date hereof
(except where the failure to file a Tax Return would not have a
material adverse effect on the entity failing to file such Tax Return),
and such Tax Returns are true, correct and complete in all material
respects, and (B) duly paid in full or made provision in accordance
with GAAP (or there has been paid or provision has been made on their
behalf) for the payment of all Taxes (as hereinafter defined) for all
periods (or portions thereof) ending on or prior to the date hereof;
(ii) there are no liens for Taxes upon any property or assets
of the Company or any Subsidiary thereof, except for liens for Taxes
not yet due and for which adequate reserves have been established in
accordance with GAAP;
(iii) within the past three (3) years, neither the Company nor
any of its Subsidiaries has made any change in tax reporting method,
received a ruling from any Tax Authority or signed an agreement with
regard to Taxes;
(iv) no federal, state, local or foreign Audits (as
hereinafter defined) are pending with regard to any Taxes or Tax
Returns of the Company or its Subsidiaries and, to the best knowledge
of the Company and its Subsidiaries, no Audit is threatened;
(v) the Tax Returns of the Company and its Subsidiaries have
been examined by the applicable Taxing Authorities (or the applicable
statutes of limitation for the assessment of Taxes for such periods
have expired) for all periods through and including December 31, 1994,
and no material adjustments were asserted as a result of such
examinations which have not been resolved and fully paid, and no issue
has been raised by any Tax Authority in any Audit of the Company or its
Subsidiaries that, if raised with respect to any other period not
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so audited, could be expected to result in a proposed material
deficiency for any period not so audited;
(vi) there are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against the Company or any
of its Subsidiaries, and no power of attorney granted by either the
Company or any of its Subsidiaries with respect to any Taxes is
currently in force;
(vii) neither the Company nor any of its Subsidiaries is a
party to any agreement providing for the allocation, indemnification,
or sharing of Taxes;
(viii) neither the Company nor any of its Subsidiaries is a
party to any agreement, contract or arrangement that could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code or in payments
that will not be deductible under Section 162(m) of the Code;
(ix) neither the Company nor any of its Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code or made or filed an
election under Sections 108, 441 or 1017 of the Code;
(x) neither the Company nor any of its Subsidiaries is a party
to any safe harbor lease within the meaning of Section 168(f)(8) of the
Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982;
(xi) neither the Company nor any of its Subsidiaries is liable
for any material Taxes to any foreign Tax Authority. The Company and
its Subsidiaries do not have and have not had a permanent establishment
in any foreign country, as defined in the applicable Tax treaty or
convention between the United States and such foreign country;
(xii) neither the Company nor any of its Subsidiaries is
required to include in income any adjustment under Section 481(a) of
the Code by reason of a change in accounting method initiated by the
Company or any of its Subsidiaries and the Internal Revenue Service has
not proposed any such adjustment or change in accounting method;
(xiii) neither the Company nor any of its Subsidiaries is a
partner in any joint venture, partnership or other arrangement or
contract that could be treated as a partnership for federal income tax
purposes;
(xiv) other than as a result of the Transactions contemplated
herein, none of the Company's tax attributes are subject to the
limitations of Sections 382, 383 or 384 of the Code or Section
1.1502-21(c) of the Treasury Regulations (as hereinafter defined); and
(xv) since its formation, the Company has been a member of an
affiliated group of corporations within the meaning of Section 1504 of
the Code, with respect to which the Company is and at all times has
been the common parent, and has joined in or expects to join in the
filing of a consolidated federal income tax return for all its Tax
periods ending on or
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prior to the Effective Time. Neither the Company nor any of its
Subsidiaries has been a member of any other affiliated group of
corporations within the meaning of Section 1504 of the Code.
(b) "Audit" means any audit, assessment, or other examination relating
to Taxes by any Tax Authority or any judicial or administrative proceedings
relating to Taxes. "Tax" or "Taxes" means all federal, state, local, and foreign
taxes, and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or penalties
applicable thereto, imposed by any Tax Authority. "Tax Authority" means the
Internal Revenue Service and any other domestic or foreign governmental
authority responsible for the administration of any Taxes. "Tax Returns" mean
all federal, state, local and foreign tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto.
"Treasury Regulations" means one or more treasury regulations promulgated under
the Code by the Treasury Department of the United States.
Section 3.11 Contracts.
For purposes of this Agreement, the Company Agreements consist of the
following:
(a) all sales and distribution contracts of the Company or its
Subsidiaries with respect to which at least an aggregate of $500,000 in
revenues and/or orders were received or revenued thereunder since
January 1, 1998, which sales and distribution contracts are identified
(to the best knowledge of the Company) on Schedule 3.11(a) of the
Company Disclosure Schedules;
(b) all supply agreements material to the business of the
Company under which products were bought or licensed since January 1,
1998 for resale or relicense, which supply agreements are identified
(to the best knowledge of the Company) in Schedule 3.11(b) to the
Company Disclosure Schedules;
(c) all supply agreements for the purchase of goods, software
(other than commercially available or "shrink wrap" software) or other
products for the Company's or its Subsidiaries' internal use under
which orders aggregating at least $250,000 were placed thereunder since
January 1, 1998, which internal supply agreements are identified in
Schedule 3.11(c) of the Company Disclosure Schedules;
(d) the form of confidentiality agreement that has customarily
been used between the Company and its employees, a copy of which is
included as Schedule 3.11(d) of the Company Disclosure Schedules;
(e) the form of agreement generally used by the Company in
engaging independent contractors, a copy of which is included as
Schedule 3.11(e) of the Company Disclosure Schedules;
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(f) all agreements (irrespective of date of execution)
pursuant to which the Company has escrowed source code, which
agreements are identified (to the best knowledge of the Company) in
Schedule 3.11(f) of the Company Disclosure Schedules; and
(g) all powers of attorney (irrespective of date of execution)
of a material nature (excluding usual and customary powers of attorney
for filing trademarks and patents, and usual and customary powers of
attorney for filing documents with governmental authorities and
otherwise complying with corporate formalities in foreign
jurisdictions) executed by the Company or its Subsidiaries in favor of
one or more third parties, which powers of attorney are identified (to
the best knowledge of the Company) in Schedule 3.11(g) of the Company
Disclosure Schedules.
To the best knowledge of the Company, each Company Agreement is a valid and
binding agreement in full force and effect, except where the failure to be valid
and binding and in full force and effect would not have a Company Material
Adverse Effect. To the best knowledge of the Company, there are no defaults, or
events which, with notice or the lapse of time, or both, would result in a
default under any of the Company Agreements, except such defaults and events
that would not, in the aggregate, have a Company Material Adverse Effect.
Section 3.12 Real Property and Leased Property.
(a) Schedule 3.12(a) of the Company Disclosure Schedules sets forth a
complete list of all real property owned by the Company or its Subsidiaries (the
"Real Property"). Except as set forth in Schedule 3.12(a) of the Company
Disclosure Schedules, the Company or its Subsidiaries has good and marketable
title to the Real Property, free and clear of all Encumbrances. Copies of (i)
all deeds, title insurance policies and surveys of the Real Property and (ii)
all documents evidencing all Encumbrances upon the Real Property have been
furnished to Parent. There are no proceedings, claims, disputes or conditions
affecting any Real Property that might curtail or interfere with the use of such
property, nor is an action of condemnation or eminent domain pending or to the
best knowledge of the Company, threatened for all or any portion of the Real
Property. Except as disclosed in Schedule 3.12(a) of the Company Disclosure
Schedules, neither the Company nor any of its Subsidiaries is a party to any
lease, assignment or similar arrangement under which the Company or a Subsidiary
is a lessor, assignor or otherwise makes available for use by any third party
any portion of the Real Property.
(b) Within the prior twelve (12) months of the date of this Agreement,
neither the Company nor any of its Subsidiaries has received any notice of or
other writing referring to any requirements or recommendations by any insurance
company that has issued a policy covering any part of the Real Property or by
any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of the Real
Property. The plumbing, electrical, heating, air conditioning, ventilating and
all other structural or material mechanical systems in the buildings upon the
Real Property are in working order and working condition, so as to be adequate
for the operation of the business of the Company and its Subsidiaries as
heretofore conducted, and the roof, basement and foundation walls of all
buildings on the Real Property are free of leaks and other material defects,
except for any matter otherwise covered by this sentence which does not have,
individually or in the aggregate, a Company Material Adverse Effect.
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(c) The Company and its Subsidiaries have obtained all appropriate
licenses, permits, easements and rights of way, including proofs of dedication,
required to use and operate the Real Property, as well as the properties listed
on Schedule 3.12(e) of the Company Disclosure Schedules, in the manner in which
the Real Property is currently being used and operated, except for such
licenses, permits or rights of way the failure of which to have obtained does
not have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries has received
notification that the Company or a Subsidiary is in violation of any applicable
building, zoning, anti-pollution, health or other law, ordinance or regulation
in respect of the Real Property or structures or their operations thereon and,
to the best knowledge of the Company, no such violation exists.
(e) Set forth on Schedule 3.12(e) of the Company Disclosure Schedules
is a list of all real property leases to which the Company or any of its
Subsidiaries is a party and that extend for a more than one (1) year after the
date of this Agreement. The Company and each of its Subsidiaries has a good and
valid leasehold interest in all properties held by them under lease listed on
Schedule 3.12(e) of the Company Disclosure Schedules. The lessee under each such
lease and its predecessor under each such lease, if any, has been in peaceable
possession (or remedied any claims relating thereto) of the property covered
thereby since the commencement of the original term of such lease. No waiver,
indulgence or postponement of the lessee's material obligations under any such
lease has been granted by the lessor, and no waiver, indulgence or postponement
of the lessor's obligations thereunder has been granted by the lessee. The
lessee under each such lease is not in breach of or in default under such lease,
nor has any event occurred which (with or without the giving of notice or the
passage of time or both) would constitute a default by the lessee under such
lease or cause a the Company Material Adverse Effect, and the lessee has not
received any notice from, or given any notice to, the lessor indicating that the
lessee or the lessor is in breach of or in default under such lease that would
cause a Company Material Adverse Effect. To the best knowledge of the Company
and each of its Subsidiaries, none of the lessors under such leases is in breach
thereof or in default thereunder.
Section 3.13 Intellectual Property.
(a) Schedule 3.13(a) of the Company Disclosure Schedules is a true and
complete list of all (i) patents and patent applications, (ii) trademark
registrations and applications, (iii) service ▇▇▇▇ registrations and
applications, (iv) Product Software (as hereinafter defined), (v) copyright
registrations and applications, (vi) material unregistered trademarks and
service marks, and (vii) Internet domain names used or held for use in
connection with the business of the Company or any of its Subsidiaries, together
with all material licensing, sub-licensing, distribution, consignment and
similar agreements related to the foregoing (whether the Company or any of its
Subsidiaries is the licensee or licensor thereunder) other than distribution and
licensing agreements relating to Product Software and Computer Software (as
hereinafter defined) entered into in the ordinary course of business. Other than
as listed in Schedule 3.11(f) of the Company Disclosure Schedules, and for
contracts covered by that provision, no agreement licensing the Intellectual
Property (as hereinafter defined) of the Company to any licensee creates an
option for such licensee to purchase any of the
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Intellectual Property owned by the Company, its Subsidiaries or affiliates, or
would in any other way require the transfer of the Intellectual Property owned
by the Company, its Subsidiaries or any affiliate of the Company to such
licensee. The Company or one of its Subsidiaries currently is listed in the
records of the appropriate United States, state or foreign agency as the sole
owner of record for each application and registration listed in Schedule 3.13(a)
of the Company Disclosure Schedules.
(b) The term "Computer Software" shall mean, other than off-the-shelf
applications and Product Software, the following as used in the current business
of the Company or any of its Subsidiaries and which are material to the current
business of the Company: (i) any and all computer programs and applications
consisting of sets of statements and instructions to be used directly or
indirectly in computer software or firmware whether in source code or object
code form, (ii) databases and compilations, including without limitation any and
all data and collections of data, whether machine readable or otherwise, (iii)
all currently used versions of the foregoing including, without limitation, all
screen displays and designs thereof, and all component modules of source code or
object code or natural language code therefor, and whether recorded on papers,
magnetic media or other electronic or non-electronic device, (iv) all
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, (v) all documentation, including without
limitation all technical and user manuals and training materials, relating to
the foregoing, and all content contained on all World Wide Web sites of the
Company or any of its Subsidiaries.
(c) The term "Product Software" shall mean the following as currently
used in as part of the products of the Company and any of its Subsidiaries: (i)
any and all computer programs and applications consisting of sets of statements
and instructions to be used directly or indirectly in computer software or
firmware whether in source code or object code form, included in or with any
products currently or heretofore sold, licensed or leased or offered for sale,
license or lease by the Company or any of its Subsidiaries (excluding software
developed specifically and solely for a customer or distributor of the Company
or any of its Subsidiaries and which is not offered to any other customers or
distributors of the Company or any of its Subsidiaries), (ii) databases and
compilations for or of any of the foregoing, including without limitation any
and all data and collections of data, whether machine readable or otherwise,
(iii) all versions of the foregoing including, without limitation, all screen
displays and designs thereof, and all component modules of source code or object
code or natural language code therefor, and whether recorded on papers, magnetic
media or other electronic or non-electronic device, (iv) all descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, (v) all documentation, including without limitation all
technical and user manuals and training materials, relating to the foregoing,
and all content contained on all World Wide Web sites of the Company or any of
its Subsidiaries.
(d) Except as set forth on Schedule 3.13(d)(1) of the Company
Disclosure Schedules, the Company and its Subsidiaries, to the best knowledge of
the Company, own or have the right to use all patents, patent applications,
patent rights, copyrights, trademarks, trademark rights, trade names, trade name
rights, and service marks, and all goodwill of the business associated
therewith, trade secrets, technology and know-how, Computer Software other than
off-the-shelf applications, Product Software, Internet domain names,
registrations for and applications for registration of trademarks, service marks
and copyrights, and other confidential or proprietary rights and information and
all technical and user manuals and documentation made or used in connection with
any of the foregoing,
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used anywhere in the world in connection with the businesses of the Company or
any of its Subsidiaries as currently conducted (collectively, the "Intellectual
Property"), free and clear of all Encumbrances of any nature. Except as set
forth on Schedule 3.13(d)(2) of the Company Disclosure Schedules, the Company
and its Subsidiaries own the Product Software or have a valid right or with
respect to prior agreements had a valid right at the time of such agreement to
grant the rights and licenses in and to the Product Software currently or
heretofore set forth in the agreements between the Company or any of its
Subsidiaries and their respective customers, licensors, lessees, distributors
and other resellers. Schedule 3.13(d)(3) of the Company Disclosure Schedules
sets forth a true and complete list of all Product Software which is not
completely and solely owned by the Company and/or its Subsidiaries which is
material to the current business of the Company (collectively, "Licensed Product
Software"). The agreements described on Schedule 3.13(d)(3) of the Company
Disclosure Schedules set forth all of the rights and licenses of the Company and
each of its Subsidiaries in and to the Licensed Product Software, and all
restrictions and obligations (including, without limitation, royalty and other
payment obligations) associated with such rights and licenses, and each such
contract is in full force and effect and neither Company nor any of its
Subsidiaries is in material breach of any of its obligations under any such
Agreement. Any Encumbrances set forth on Schedule 3.13(d) of the Company
Disclosure Schedules do not materially detract from the value of the
Intellectual Property subject thereto and do not materially impair the
operations of any of the Company and its Subsidiaries.
(e) All patent, trademark and copyright registrations and applications
for Intellectual Property, whether registered or pending, that are currently
used or planned to be used in and are material to the conduct of the businesses
of the Company and its Subsidiaries as currently conducted, are listed on
Schedule 3.13(a) of the Company Disclosure Schedules. To the best knowledge of
the Company, such patents, trademarks and copyright registrations and
applications (i) are valid, subsisting, in proper form and enforceable, subject
to the rights of third parties, and have been duly maintained, including the
submission of all necessary filings and fees in accordance with the legal and
administrative requirements of the appropriate jurisdictions and (ii) have not
lapsed, expired or been abandoned, and no patent, trademark, copyright,
registration or application for any of the foregoing is the subject of any
opposition, interference, cancellation proceeding or other legal or governmental
proceeding before any governmental, registration or other authority in any
jurisdiction.
(f) To the best knowledge of the Company, the conduct of the businesses
of, and/or the use of the Intellectual Property, by the Company and its
Subsidiaries as currently conducted does not conflict with or infringe in any
way on any proprietary right of any third party. Other than as set forth in
Schedule 3.13(f) of the Company Disclosure Schedules there is no claim, suit,
action, correspondence, proceeding or negotiation pending or, to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries (i) alleging any conflict or infringement with any third party's
proprietary rights, (ii) asserting the Company or any of its Subsidiaries should
consider licensing rights to a third party's patent or other proprietary rights
or (iii) challenging the ownership, use, validity or enforceability of the
Intellectual Property. Each of the Company and its Subsidiaries owns or has the
valid right to use all of the material Intellectual Property used by it or held
for use by it in connection with its business. To the best knowledge of the
Company, there are no conflicts with or infringements of any Intellectual
Property or products of the Company or its Subsidiaries by any third party.
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(g) Except as set forth on Schedule 3.13(g) of the Company Disclosure
Schedules, the Computer Software and Product Software used by the Company or any
of its Subsidiaries in the conduct of their businesses was either: (i) developed
by employees of the Company or such Subsidiary of the Company within the scope
of their employment; (ii) developed on behalf of the Company or any of its
Subsidiaries by a third party, and all ownership rights therein and in any other
associated Intellectual Property have been assigned or otherwise transferred to
or vested in the Company or such Subsidiary of the Company, as the case may be,
pursuant to written agreements ("Work for Hire Agreements"); (iii) acquired from
a third party pursuant to a written assignment or other contract ("Software
Acquisition Agreements") which is in full force and effect and of which neither
the Company nor any of its Subsidiaries is in material breach, or (iv) licensed
from a third party pursuant to a written license or other contract which is in
full force and effect and of which neither the Company nor any of its
Subsidiaries is in material breach. Except as set forth on Schedule 3.13(g)(2)
of the Company Disclosure Schedules, (x) no third party has had access to any of
the source code for any of the Product Software described in clause (i) or (ii)
hereof and (y) no act has been done or omitted to be done by the Company or any
of its Subsidiaries to impair or dedicate to the public or entitle any
Governmental Entity to hold abandoned any of such Computer Software or Product
Software.
(h) To the best knowledge of the Company, no consents, filings, and
authorizations by or with governmental authorities or third parties are
necessary with respect to the consummation of the Transactions contemplated
hereby as they may affect the Intellectual Property.
(i) Neither the Company nor any of its Subsidiaries has entered into
any material consent, forbearance to ▇▇▇, settlement agreement or
cross-licensing arrangement with any person relating to the Intellectual
Property or the intellectual property of any third party other than as may be
contained in the agreements listed in Schedule 3.13(i) of the Company Disclosure
Schedules, or which is not material to the current business or products of the
Company.
(j) To the best knowledge of the Company, except as set forth on
Schedule 3.13(j) of the Company Disclosure Schedules, the Company and its
Subsidiaries are not, nor will any of them be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any material license, sub-license or other
agreement relating to the Intellectual Property.
(k) No former or present employees, officers or directors of the
Company or any of its Subsidiaries hold any right, title or interest directly or
indirectly, in whole or in part, in or to any Intellectual Property.
(l) No trade secret or confidential know-how or other confidential
information relating to the Company or its Subsidiaries has been disclosed or
authorized to be disclosed to any third party, other than pursuant to a
non-disclosure agreement that fully protects the Company's and its Subsidiaries'
interests in and to such confidential information, except to the extent that the
failure to comply with any of the foregoing could not have, individually or in
the aggregate, a Company Material Adverse Effect.
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(m) As delivered to customers and as modified by the Company, the
Company's Product Software and Other Products (as hereinafter defined) conform
to their respective applicable specifications in all material respects, except
to the extent that the failure to comply with any of the foregoing could not
have, individually or in the aggregate, a the Company Material Adverse Effect.
(n) To the best knowledge of the Company, the conduct of the businesses
of the Company and its Subsidiaries, the use of the Intellectual Property and/or
any advertising or marketing materials used by the Company and its Subsidiaries
in connection with the Product Software or Other Products do not violate any
provision of the Trademark Act of 1946, as amended (the "▇▇▇▇▇▇ Act"), including
without limitation Section 43 thereof, and there are no material misstatements
or omissions in any such materials which would violate any provision of the
▇▇▇▇▇▇ Act, except to the extent that the failure to comply with any of the
foregoing could not have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.14 Year 2000 Compliance.
(a) As of the date hereof, all Date-Sensitive Data and Date-Sensitive
Systems that are material to the business of the Company (each as hereinafter
defined) owned or used by, licensed or sold to the Company or any of its
Subsidiaries other than those set forth in Schedule 3.14(a) of Company
Disclosure Schedules, have been or will be evaluated for Year 2000 Compliance
issues and are Year 2000 Compliant or will be Year 2000 Compliant on or before
January 1, 2000, except to the extent that the failure to comply with any of the
foregoing could not have, individually or in the aggregate, a Company Material
Adverse Effect. The Company has requested representations from each entity that
(i) provides Date-Sensitive Data to the Company or any of its Subsidiaries which
is material to the business of the Company or (ii) processes in any way
Date-Sensitive Data or software (including the Computer Software or the Product
Software) for the Company or any of its Subsidiaries. The Company has obtained
or will use reasonable efforts to obtain written representations from each
entity that provides any material product or service to the Company or any of
its Subsidiaries that is dependent on Year 2000 Compliant Date-Sensitive Data or
Year 2000 Compliant Date-Sensitive Systems, that any of such entity's
Date-Sensitive Data and/or Date- Sensitive Systems that are used for, or on
behalf of, the Company or any of its Subsidiaries are Year 2000 Compliant,
except to the extent that the failure to comply with any of the foregoing in
this Section 3.14 could not have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) As of the date hereof, all Product Software and all other products
sold, licensed or leased by the Company or any of its Subsidiaries which are, or
are used with, Date-Sensitive Systems or which process Date-Sensitive Data (the
"Other Products"), when used in accordance with their associated specifications
and other documentation, are Year 2000 Compliant subject to the express terms
and conditions of the Company's documentation attached as Schedule 3.14(b) of
the Company Disclosure Schedules (the "Company Year 2000 Representations"),
except to the extent that the failure to comply with any of the foregoing could
not have, individually or in the aggregate, a Company Material Adverse Effect.
To the best knowledge of Company, (a) the Company and its Subsidiaries have made
reasonable efforts not to make written representations concerning any Product
Software or other products of the Company or its Subsidiaries, which are in
addition to or inconsistent with the Company Year 2000 Representations and (b)
any such representations which are in addition to or inconsistent with the
Company Year 2000 Representations, will not, individually or in the aggregate,
have a Company Material Adverse Effect.
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(c) "Date-Sensitive Data" means any data of any type that includes date
information or which is otherwise derived from or dependent on date information.
(d) "Date-Sensitive System" means any software or hardware system or
component, including any electronic or electronically controlled system, that
processes any Date-Sensitive Data and that is installed, in development or on
order.
(e) "Year 2000 Compliant" means (x) with respect to Date-Sensitive
Data, that such data is in proper four digit CCYY format (or windowed around an
appropriate 100-year period which includes dates on, before and after January 1,
2000) and accurate for all dates in the twentieth and twenty-first centuries
without ambiguity, and (y) with respect to Date-Sensitive Systems, that such
Systems at all times accurately exchange, recognize, report and process all
Date-Sensitive Data, including for the twentieth and twenty-first centuries,
including but not limited to calculating, comparing, sequencing and storing such
Date Sensitive Data (including all leap year considerations), when used as a
stand-alone system or in combination with other software or hardware.
Section 3.15 Labor Matters.
(a) Except as set forth on Schedule 3.15(a) of the Company Disclosure
Schedules, (i) there is no labor strike, dispute, slowdown, stoppage or lock-out
pending, or to the best knowledge of the Company, threatened against or
affecting the Company and during the past two (2) years from the date of this
Agreement there has not been any such action, (ii) the Company is not a party to
or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company, (iii) none of
the employees of the Company is represented by any labor organization and the
Company does not have any knowledge of any union organizing activities among the
employees of the Company within the past two (2) years, nor does any question
concerning representation exist concerning such employees, (iv) there are no
written personnel policies, rules or procedures applicable to employees of the
Company, other than those set forth on Schedule 3.15(a) of the Company
Disclosure Schedules, true and correct copies of which have heretofore been
delivered to Parent, (v) to the best of its knowledge, the Company is, and has
at all times been, in compliance, in all material respects, with all applicable
laws respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other applicable laws that would cause a Company Material Adverse Effect,
(vi) there is no unfair labor practice charge or written complaint against the
Company pending or, to the best knowledge of the Company, threatened before the
National Labor Relations Board or any similar state, local or foreign agency,
(vii) there is no grievance arising out of any collective bargaining agreement
or other grievance procedure, (viii) no charges with respect to or relating to
the Company are pending before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices, (ix) the Company has not received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws to conduct an investigation with respect to or relating to
the Company and no such investigation is
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in progress, and (x) there are no complaints, lawsuits or other proceedings
pending or, to the best knowledge of the Company, threatened in any forum by or
on behalf of any present or former employee of the Company, any applicant for
employment or classes of the foregoing alleging breach of any express or implied
contract for employment, any laws governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment relationship.
(b) The Company represents and warrants that (i) any liabilities under
the Worker Adjustment and Retraining Notification Act (the "WARN Act") arising
out of the Asset Purchase Agreement dated September 23, 1997, with IT Network,
Inc., were covered by an indemnification provision that terminated on April 23,
1999, and as of the date of this Agreement, the Company has not been advised of
any WARN Act claims arising out of that transaction that would have given rise
to IT Network Inc.'s indemnification obligation; (ii) to the best knowledge of
the Company, neither ProfitSource Corporation nor TSL Services, Inc. has
effectuated a "plant closing" or "mass layoff" (as defined by the WARN Act)
since December 14, 1998, which is the effective date of the Stock Purchase
Agreement between the Company and BVS Investco, Inc., TSL Services, Inc., and
ProfitSource Corporation; (iii) except for those matters addressed in subparts
(i) and (ii) of this paragraph, the Company has not experienced an "employment
loss" (as defined by the WARN Act) at any site of employment that would qualify
as a "plant closing" or "mass layoff" (as defined by the WARN Act) since the
enactment of the WARN Act; and (iv) during the three-month period ending March
31, 1999, the individuals whose employment with the Company terminated at each
single site of employment (as defined by 20 C.F.R. Section 639.3(i)) are as set
forth on Schedule 3.15(b) of the Company Disclosure Schedules.
Section 3.16 Compliance with Laws. To the best of its knowledge, the
Company and each of its Subsidiaries has complied in a timely manner and in all
material respects with all laws, rules and regulations, ordinances, judgments,
decrees, orders, writs and injunctions of all United States federal, state,
local and foreign governments and agencies thereof which affect the business,
properties or assets of the Company and its Subsidiaries, and no notice, charge,
claim, action or assertion has been received by the Company or any of its
Subsidiaries or has been filed, commenced or, to the best knowledge of the
Company, threatened against the Company or any of its Subsidiaries alleging any
violation of any of the foregoing. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except where
the failure to be in full force and effect would not have a Company Material
Adverse Effect.
Section 3.17 Environmental Matters.
(a) Except as set forth in Schedule 3.17(a) of the Company Disclosure
Schedules, each of the Company and its Subsidiaries is in full compliance with
all federal, state, local and foreign laws and regulations relating to pollution
or protection of human health or the environment, including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata, and
natural resources (together "Environmental Laws" and including, without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic or
hazardous substances or wastes, petroleum and petroleum products,
polychlorinated biphenyls (PCBs), or asbestos or asbestos-containing materials
("Materials of Environmental Concern")), or otherwise relating to the
manufacture, processing, distribution, use,
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treatment, storage, disposal, transport or handling of Materials of
Environmental Concern, except where the failure so to comply would not cause a
Company Material Adverse Effect. Such compliance includes, but is not limited
to, the possession by the Company and each of its Subsidiaries of all permits
and other governmental authorizations required under all applicable
Environmental Laws, and compliance with the terms and conditions thereof. All
permits and other governmental authorizations currently held by the Company and
each of its Subsidiaries pursuant to the Environmental Laws are identified in
Schedule 3.17(a) of the Company Disclosure Schedules.
(b) Except as set forth in Schedule 3.17(b) of the Company Disclosure
Schedules, neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority or
citizens group that alleges that the Company or any of its Subsidiaries is not
in full compliance with any Environmental Laws. The Company has provided to
Parent such information, if any, that is in the possession of or reasonably
available to the Company regarding environmental matters pertaining to or the
environmental condition of the business of the Company and its Subsidiaries, or
the compliance (or noncompliance) by the Company and its Subsidiaries with any
Environmental Laws.
(c) Except as set forth in Schedule 3.17(c) of the Company Disclosure
Schedules, there is no claim, action, cause of action, investigation or notice
(written or oral) (together, "Environmental Claim") by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, death, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its Subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or threatened against the
Company or any of its Subsidiaries, or against any person or entity whose
liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing, except
as set forth in Schedule 3.17(d) of the Company Disclosure Schedules, to the
best knowledge of the Company, there is no asbestos contained in or forming part
of any building, building component, structure or office space owned, leased,
operated or controlled by the Company or any of its Subsidiaries.
Section 3.18 Product Liability. Except as described in Schedule 3.18 of
the Company Disclosure Schedules, there are not presently pending, or to the
best knowledge of the Company, threatened any criminal, material civil or
administrative actions, suits, demands, claims, hearings, notices of violation,
investigations, proceedings or demand letters relating to any alleged hazard or
alleged defect in design, manufacture, development, programming, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product manufactured,
developed, programmed, distributed, licensed or sold by or on behalf of the
Company and its Subsidiaries.
Section 3.19 Information in Disclosure Documents. None of the
information supplied or to be supplied by the Company for the purpose of
inclusion or incorporation by reference in (i) the Offer Documents, at the time
such documents are first published, sent or given to the holders of
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Shares, and at any time they are amended or supplemented, (ii) the Registration
Statement to be filed with the SEC by Parent in connection with the issuance of
Parent Common Stock in the Merger, at the time the Registration Statement is
filed with the SEC or at the time it becomes effective under the Securities Act,
(iii) the Proxy Statement at the date it is first mailed to the Company's
stockholders or at the time of the Special Meeting, or (iv) any syndication or
other materials to be delivered to potential financing sources in connection
with the Transactions or otherwise in connection with the Debt Financing at the
date such materials are first delivered, will 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. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representations and warranties are made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Purchaser for inclusion or incorporation by reference in
the Proxy Statement or contained in the Parent SEC Documents (as hereinafter
defined) incorporated by reference in the Offer Documents, the Registration
Statement, the Proxy Statement or the syndication or other materials.
Section 3.20 Potential Conflict of Interest. Except as set forth in
Schedule 3.20 of the Company Disclosure Schedules or in the Company SEC
Documents filed prior to the date hereof, since December 31, 1998, there have
been no transactions, agreements, arrangements or understandings between the
Company or its Subsidiaries, on the one hand, and their respective affiliates,
on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act. Except as set forth in Schedule 3.20 of
Company Disclosure Schedules or in the Company SEC Documents filed prior to the
date hereof, no officer of the Company or any of its Subsidiaries owns, directly
or indirectly, any interest in (excepting not more than one percent (1%) stock
holdings for investment purposes in securities of publicly held and traded
companies) or is an officer, director, employee or consultant of any person
which is a competitor, lessor, lessee, customer or supplier of the Company or
any of its Subsidiaries; and no officer or director of the Company or any of its
Subsidiaries (i) owns, directly or indirectly, in whole or in part, any
Intellectual Property which the Company or any of its Subsidiaries is using or
the use of which is necessary for the business of the Company or its
Subsidiaries; (ii) has any claim, charge, action or cause of action against the
Company or any of its Subsidiaries, except for claims for accrued vacation pay,
accrued benefits under the Plans and similar matters and agreements existing on
the date hereof; (iii) has made, on behalf of the Company or any of its
Subsidiaries, any payment or commitment to pay any commission, fee or other
amount to, or to purchase or obtain or otherwise contract to purchase or obtain
any goods or services from, any other Person of which any officer or director of
the Company or any of its Subsidiaries, or, to the best knowledge of the
Company, a relative of any of the foregoing, is a partner or stockholder (except
stock holdings solely for investment purposes in securities of publicly held and
traded companies); or (iv) owes any money to the Company or any of its
Subsidiaries.
Section 3.21 Insurance. The Company and each of its Subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of the
Company and its Subsidiaries. There is no material claim pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
Subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
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Section 3.22 Suppliers and Customers. Since December 31, 1998, no
material licensor, vendor, supplier, licensee or customer of the Company or any
of its Subsidiaries has canceled or otherwise modified its relationship with the
Company or its Subsidiaries and, to the best knowledge of the Company, (i) no
such person has any intention to do so, and (ii) the consummation of the
transactions contemplated hereby will not adversely affect any of such
relationships in any material respect, except to the extent the failure to
comply with any of the foregoing could not have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.23 Accounts Receivable; Inventory.
(a) Subject to any reserves set forth in the consolidated balance sheet
of the Company included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 as filed with the SEC (the "Company Balance Sheet"), the
accounts receivable shown in the Company Balance Sheet arose in the ordinary
course of business, were not, as of the date of the Company Balance Sheet,
subject to any material discount, contingency, claim of offset or recoupment or
counterclaim, and represented, as of the date of the Company Balance Sheet, bona
fide claims against debtors for sales, leases, licenses and other charges. All
accounts receivable of the Company and its Subsidiaries arising after the date
of the Company Balance Sheet through the date of this Agreement arose in the
ordinary course of business and, as of the date of this Agreement, are not
subject to any material discount, contingency, claim of offset or recoupment or
counterclaim, except for normal reserves consistent with past practice. The
amount carried for doubtful accounts and allowances disclosed in the Company
Balance Sheet is believed by the Company as of the date of such the Company
Balance Sheet to be sufficient to provide for any losses which may be sustained
or failure to realize the accounts receivable shown in the Company Balance
Sheet.
(b) As of the date of the Company Balance Sheet, the inventories shown
on the Company Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were manufactured or acquired in the ordinary course of
business and, as of the date of this Agreement, have been replenished in all
material respects in the ordinary course of business consistent with past
practices. All such inventories are valued on the Company Balance Sheet in
accordance with GAAP, applied on a basis consistent with the Company's past
practices, and provision has been made or reserves have been established on the
Company Balance Sheet, in each case in an amount believed by the Company as of
the date of this Agreement to be adequate, for all slow-moving, obsolete or
unusable inventories.
Section 3.24 Title and Condition of Properties. The Company and its
Subsidiaries have good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Company Balance Sheet or
acquired after December 31, 1998, except for (A) assets which have been disposed
of to nonaffiliated third parties since December 31, 1998, in the ordinary
course of business, (B) Encumbrances reflected in the Company Balance Sheet, (C)
Encumbrances or imperfections of title which are not, individually or in the
aggregate, material in character, amount or extent and which do not materially
detract from the value or materially interfere with the present or presently
contemplated use of the assets subject thereto or affected thereby, and
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(D) liens for current Taxes not yet due and payable. All of the machinery,
equipment and other tangible personal property and assets owned or used by the
Company or its Subsidiaries are operational, except for ordinary wear and tear
not caused by neglect, and are usable in the ordinary course of business.
Section 3.25 Illegal Payments. To the best knowledge of the Company,
none of the Company or any of its Subsidiaries or any director, officer,
employee, or agent of the Company or any of its Subsidiaries has, directly or
indirectly, paid or delivered any fee, commission, or other sum of money or item
of property however characterized to any broker, finder, agent, government
official, or other person, in the United States or any other country, in any
manner related to the business or operations of the Company or any of its
Subsidiaries, which the Company or any of its Subsidiaries or any such director,
officer, employee, or agent knows or has reason to believe to have been illegal
under any applicable law, including but not limited to the Foreign Corrupt
Practices Act.
Section 3.26 Phoenix Acquisition. Any agreement or letter of intent
between the Company and Phoenix Wireless Group, Inc. is non-binding on the
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
Except as set forth in the schedules delivered to the Company prior to
the execution of this Agreement (the "Parent Disclosure Schedules") setting
forth, among other things, specific exceptions to Parent's and Purchaser's
representations and warranties set forth herein, Parent and the Purchaser
represent and warrant to the Company as set forth below. Each exception set
forth in the Parent Disclosure Schedules is identified by reference to, or has
been grouped under a heading referring to, a specific individual section of this
Agreement and, except as otherwise specifically stated with respect to such
exception, relates only to such section.
Section 4.1 Organization; Qualification; Charter and Bylaws.
(a) Parent and each of its Subsidiaries is a corporation, partnership
or other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such governmental
approvals would not, individually or in the aggregate, have a Parent Material
Adverse Effect (as hereinafter defined). As used in this Agreement, "Parent
Material Adverse Effect" means any event, change in or effect on the business of
Parent or its Subsidiaries, taken as a whole, that is or would be expected to be
materially adverse to (i) the business, operations, properties (including
intangible properties), financial condition or results of operations or
prospects of Parent or its Subsidiaries, taken as a whole, or (ii) the ability
of Parent to consummate any of the Transactions or to perform its obligations
under this Agreement or the Stockholders' Agreement, but such definition shall
not include (A) any material adverse change
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due to the transactions contemplated by this Agreement, (B) any material adverse
change in the Parent's established industry as a whole, or (C) a material
adverse change in the general economic conditions of the United States of
America. Set forth in Schedule 4.1(a) of the Parent Disclosure Schedules is a
complete list of Parent's Subsidiaries, including the respective jurisdictions
in which such Subsidiaries are organized and Parent's ownership of each.
(b) Parent and each of its Subsidiaries is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not individually or in
the aggregate have a Parent Material Adverse Effect. Except as set forth in
Schedule 4.1(b) of the Parent Disclosure Schedules, Parent does not own (i) any
equity interest in any corporation or other entity or (ii) marketable securities
where Parent's equity interest in any entity exceeds five percent (5%) of the
outstanding equity of such entity on the date hereof.
(c) Parent has made available to the Company accurate and complete
copies of (i) the Articles and/or Certificates of Incorporation and By-Laws of
Parent and each of its material Subsidiaries (certified by the respective
Secretaries of State of Parent's, and each of its material Subsidiaries'
jurisdiction of incorporation and the secretary or an assistant secretary of
Parent, and each of its Subsidiaries, respectively) as currently in effect, (ii)
the stock records of Parent and each of its Subsidiaries and (iii) (A) the
minutes of all meetings of Parent's and its material Subsidiaries' Boards of
Directors, any committees of such Boards, and Parent's, and its material
Subsidiaries', shareholders (and all consents in lieu of such meetings) each for
the past five (5) years and (B) the minutes of all meetings of the remaining
Subsidiaries' Board of Directors, and committees of such Boards, and each of
such Subsidiaries' shareholders (and all consents in lieu of such meetings) each
for the past two (2) years (other than InterVoice Limited (Private Limited
Company), InterVoice da Brasil Ltd., InterVoice Communications International,
Inc., VoicePlex Corporation, InterVoice International, Inc. and Phone Star
Corp., none of which Subsidiaries is material to Parent). Such records, minutes,
and consents accurately reflect the stock ownership of the Company, and each of
its Subsidiaries and all actions taken by Parent at such meetings, and each of
its Subsidiaries' Boards, any committees of such Board, and Parent's, and each
of its Subsidiaries' shareholders. Neither Parent nor any of its Subsidiaries is
in violation of any provision of its respective Articles of Incorporation or
By-Laws, except where such violation would not result in a Parent Material
Adverse Effect.
Section 4.2 Capitalization.
(a) The authorized capital stock of Parent consists of 62,000,000
shares of Parent Common Stock and 2,000,000 shares of preferred stock, $100 par
value per share ("Parent Preferred Stock"). As of the date hereof, (i)
28,743,102 shares of Parent Common Stock, together with associated Rights, are
issued and outstanding, (ii) no shares of Parent Preferred Stock are issued and
outstanding, (iii) 5,994,800 shares of Parent Common Stock are issued and held
in the treasury of Parent, (iv) a total of 5,819,507 shares of Parent Common
Stock are reserved for issuance pursuant to the 1990 Incentive Stock Option
Plan, the 1990 Non-Qualified Stock Option Plan for Non- Employees, the 1984
Incentive Stock Option Plan, the 1998 Stock Option Plan, the Restricted Stock
Plan and the Employee Stock Purchase Plan (collectively, the "Parent Stock
Plans"). Schedule
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4.2(a)(i) of the Parent Disclosure Schedules sets forth the maximum number of
shares of Common Stock reserved for future issuance or purchase pursuant to each
Parent Stock Plan, the number of shares of Common Stock available for issuance
or purchase pursuant to each Parent Stock Plan, the aggregate number of shares
subject to outstanding options under the Parent Stock Plan, and the respective
exercise prices thereof. All the outstanding shares of Parent's capital stock
are, and all shares which may be issued pursuant to the exercise of outstanding
options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Parent Voting Debt") of Parent
or any of its Subsidiaries issued and outstanding. Except as disclosed in this
Section 4.2 or as set forth in Schedule 4.2(a)(ii) of the Parent Disclosure
Schedules, (i) there are no shares of capital stock of Parent authorized, issued
or outstanding, (ii) there are no existing options, warrants, calls, pre-emptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of Parent or
any of its Subsidiaries, obligating Parent or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Parent Voting Debt of, or other equity interest in, Parent or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating Parent or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, and (iii) there are no
outstanding contractual obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Shares, or the capital stock of
Parent or any Subsidiary or affiliate of Parent or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.
(b) Except as set forth in Schedule 4.2(b) of the Parent Disclosure
Schedules, all of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by Parent, directly or indirectly, and all
such shares have been validly issued and are fully paid and nonassessable and
are owned by either Parent or one of its Subsidiaries free and clear of all
Encumbrances except for those directors' qualifying shares of capital stock of
such Subsidiaries not material in amount and subject to repurchase or
cancellation arrangements.
(c) There are no voting trusts or other agreements or understandings to
which Parent or any of its Subsidiaries is a party with respect to the voting of
the capital stock of Parent or any of the Subsidiaries.
(d) Other than as set forth on Schedule 4.2(d) of the Parent Disclosure
Schedules or the Parent Financial Statements (as hereinafter defined), there is
no outstanding Indebtedness of Parent or any of its Subsidiaries. Except as
identified in Schedule 4.2(d) of the Parent Disclosure Schedules, no
Indebtedness of Parent or its Subsidiaries contains any restriction upon (i) the
prepayment of such Indebtedness, (ii) the incurrence of Indebtedness (including
the Debt Financing) by Parent or its Subsidiaries, respectively, (iii) the
ability of Parent or its Subsidiaries to grant any liens on their properties or
assets or (iv) the ability of the Parent or its Subsidiaries to enter into this
Agreement or consummate the Merger.
(e) Except as set forth in Schedule 4.2(e) of the Parent Disclosure
Schedules, since January 1, 1995, Parent has not entered into any material
agreement involving the acquisition, sale
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or disposition of any class of capital stock or assets of Parent or any of its
Subsidiaries, by merger or otherwise; and except as disclosed on Schedule 4.2(e)
of the Parent Disclosure Schedules, to the best knowledge of Parent, none of
Parent or any of its Subsidiaries is in breach of, or subject to a claim of
default under, any such agreements listed on such Schedule.
Section 4.3 Authorization; Validity of Agreement; Necessary Corporate
Action.
Each of Parent and the Purchaser has full corporate power and corporate
authority to execute and deliver this Agreement and the Stockholders' Agreement
and to consummate the Transactions. The execution, delivery and performance by
Parent of this Agreement and the Stockholders' Agreement, and the consummation
by it of the Transactions, have been duly and validly authorized by their
respective Boards of Directors and no other corporate action on the part of
Parent is necessary to authorize the execution and delivery by Parent and the
Purchaser of this Agreement and the Stockholders' Agreement, and the
consummation by them of the Transactions contemplated hereby. Each of this
Agreement and the Stockholders' Agreement has been duly executed and delivered
by Parent and the Purchaser and, assuming due and valid authorization, execution
and delivery hereof and thereof by the Company, is a valid and binding
obligation of Parent and the Purchaser enforceable against Parent and the
Purchaser in accordance with its terms except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
Section 4.4 Consents and Approvals; No Violations. Except as set forth
in Schedule 4.4 of the Parent Disclosure Schedules and for filings, permits,
authorizations, consents and approvals as are contemplated by this Agreement or
may be required under, and other applicable requirements of, the Exchange Act
and the HSR Act, none of the execution, delivery or performance of this
Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the Transactions or compliance by Parent or the Purchaser with any
of the provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation, the By-Laws or similar
organizational documents of Parent or any of its Subsidiaries, state securities
laws or blue sky laws, and the Texas Business Corporations Act or the NGCL, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound (collectively, the "Parent Agreements")
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, except in the case of clause (ii), (iii) or (iv) where failure to obtain
such permits, authorizations, consents or approvals or to make such filings, or
where such violations, breaches or defaults which would not, individually or in
the aggregate, have a Parent Material Adverse Effect. Schedule 4.4 of the Parent
Disclosure Schedules sets forth a list of all third party consents and approvals
required to be obtained in connection with this Agreement under the Parent
Agreements prior to the consummation of the transactions contemplated by this
Agreement.
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Section 4.5 SEC Reports and Financial Statements. Parent has filed with
the SEC, and has heretofore made available to the Company, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1996, under the Exchange Act or the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "Parent SEC Documents"). As of their respective dates,
or if amended, as of the date of the last such amendment, the Parent SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading and (b) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, and the applicable rules and regulations of the SEC thereunder.
None of Parent's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements included in the Parent SEC
Documents (the "Parent Financial Statements") (i) have been prepared from, and
are in accordance with, the books and records of Parent and its consolidated
Subsidiaries, (ii) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (iii) have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and (iv) fairly present in all material respects the consolidated
financial position and the consolidated results of operations and cash flows
(and changes in financial position, if any) of Parent and its consolidated
Subsidiaries as of the times and for the periods referred to therein.
Section 4.6 Absence of Certain Changes. Except as set forth in Schedule
4.6 of the Parent Disclosure Schedules or in the Parent SEC Documents filed
prior to the date hereof, since February 28, 1998, Parent and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual
course. From February 28, 1998 through the date of this Agreement, there has not
occurred (i) any event, change or effect (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Parent Material Adverse Effect, (ii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the equity interests of
Parent or any of its Subsidiaries or (iii) any change in accounting principles
or methods, except insofar as may be required by a change in GAAP.
Section 4.7 No Undisclosed Liabilities. Except (a) as disclosed in the
Parent Financial Statements and (b) for liabilities and obligations (i) incurred
in the ordinary course of business and consistent with past practice since
February 28, 1998 (ii) created pursuant to the terms of this Agreement or (iii)
as disclosed in Schedule 4.7 of the Parent Disclosure Schedules or (iv) as
disclosed in Schedule 4.8(a) of the Parent Disclosure Schedules, neither Parent
nor any of its Subsidiaries, to the best of its knowledge, has incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that have, or would be reasonably likely to have a Parent Material
Adverse Effect and would be required to be reflected or reserved against on a
consolidated balance sheet of Parent and its Subsidiaries (including the notes
thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of Parent and its Subsidiaries as of February 28,
1998. Schedule 4.7 of the Parent Disclosure Schedules sets forth the amount of
principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of Parent and its Subsidiaries which will accelerate or become due
or result in a right of redemption or repurchase on the part of the holder of
such Indebtedness (with or without due notice or lapse of time) as a result of
this Agreement, the Merger or the other Transactions contemplated hereby or
thereby.
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Section 4.8 Claims. Except as set forth on Schedule 4.8(a) of the
Parent Disclosure Schedules or in the Parent SEC Documents, as of the date
hereof, there is no suit, written claim, written demand, action, proceeding,
including, without limitation, any arbitration proceeding or alternative dispute
resolution proceeding, or to the best knowledge of Parent, investigation pending
or, to the best knowledge of Parent, threatened against or affecting, Parent or
any of its Subsidiaries (collectively, "Parent Claims"), that would reasonably
be expected to have a Parent Material Adverse Effect. Except as set forth on
Schedule 4.8(b) of the Parent Disclosure Schedules or in the Parent SEC
Documents, there is no Parent Claim or Parent Claims that, either individually
or in the aggregate, if adversely determined, would have a Parent Material
Adverse Effect.
Section 4.9 Employee Benefit Plans; ERISA.
(a) Schedule 4.9(a) of the Parent Disclosure Schedules contains a true
and complete list of each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by Parent or any of its Subsidiaries, or by any trade or
business, whether or not incorporated (a "Parent ERISA Affiliate"), that
together with Parent or any of its Subsidiaries would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA, for the benefit of
any current or former employee or director of Parent, or any of its Subsidiaries
or any Parent ERISA Affiliate (the "Parent Plans"). Schedule 4.9(a) of the
Parent Disclosure Schedules identifies each of the Parent Plans that is an
"employee welfare benefit plan," or "employee pension benefit plan" as such
terms are defined in Sections 3(1) and 3(2) of ERISA (such plans being
hereinafter referred to collectively as the "Parent ERISA Plans"). Except as
required by applicable law, none of Parent, any of its Subsidiaries nor any
Parent ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Parent Plan or modify or change any
existing Parent Plan that would affect any current or former employee or
director of Parent, any of its Subsidiaries or any Parent ERISA Affiliate.
(b) With respect to each of the Parent Plans, Parent has heretofore
delivered to the Company true and complete copies of each of the following
documents, as applicable:
(i) a copy of the Parent Plan documents (including all
amendments thereto) for each written Parent Plan or a written
description of any Parent Plan that is not otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service
Form 5500 Series, if required under ERISA, with respect to each Parent
ERISA Plan for the last three (3) Parent Plan years ending prior to the
date of this Agreement for which such a report was required to be
filed;
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(iii) a copy of the actuarial report, if required under ERISA,
with respect to each Parent ERISA Plan for the last three (3) Plan
years ending prior to the date of this Agreement;
(iv) a copy of the most recent Parent Summary Plan Description
("Parent SPD"), together with all Summaries of Material Modification
issued with respect to such Parent SPD, if required under ERISA, with
respect to each Parent ERISA Plan, and all other material employee
communications relating to each Parent ERISA Plan;
(v) if the Parent Plan is funded through a trust or any other
funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements
thereof, if any;
(vi) all contracts relating to the Parent Plans with respect
to which Parent, any of its Subsidiaries or any Parent ERISA Affiliate
may have any liability, including insurance contracts, investment
management agreements, subscription and participation agreements and
record keeping agreements; and
(vii) the most recent determination letter received from the
IRS with respect to each Parent Plan that is intended to be qualified
under Section 401(a) of the Code.
(c) No liability under Title IV of ERISA has been incurred by Parent,
any of its Subsidiaries or any Parent ERISA Affiliate since the effective date
of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to Parent, or any of its Subsidiaries or any ERISA
Affiliate of incurring any liability under such Title, other than liability for
premiums due PBGC, which payments have been or will be made when due. To the
extent this representation applies to Sections 4064, 4069 or 4204 of Title IV of
ERISA, it is made not only with respect to the Parent ERISA Plans but also with
respect to any employee benefit plan, program, agreement or arrangement subject
to Title IV of ERISA to which Parent, any of its Subsidiaries or any Parent
ERISA Affiliate made, or was required to make, contributions during the past six
(6) years.
(d) The PBGC has not instituted proceedings pursuant to Section 4042 of
ERISA to terminate any of the Parent ERISA Plans subject to Title IV of ERISA,
and no condition exists that presents a material risk that such proceedings will
be instituted by the PBGC.
(e) With respect to each Parent ERISA Plan that is subject to Title IV
of ERISA, the present value of accumulated benefit obligations under such Parent
ERISA Plan, as determined by the Parent ERISA Plan's actuary based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Parent ERISA Plan,
did not, as of its latest valuation date, exceed then current value of the
assets of such Plan allocable to such accumulated benefit obligations.
(f) None of Parent, any of its Subsidiaries, any Parent ERISA
Affiliate, any of the Parent ERISA Plans, any trust created thereunder, nor to
Parent's and the Purchaser's best knowledge, any trustee or administrator
thereof has engaged in a transaction or has taken or failed to take any action
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in connection with which Parent, any of its Subsidiaries or any Parent ERISA
Affiliate could be subject to any material liability for either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Sections 4975(a) or (b), 4976 or 4980B of the Code.
(g) All contributions and premiums that Parent, any of its Subsidiaries
or any Parent ERISA Affiliate is required to pay under the terms of each of the
Parent ERISA Plans and Section 412 of the Code, have, to the extent due, been
paid in full or properly recorded on the financial statements or records of
Parent or its Subsidiaries, and none of the Parent ERISA Plans or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the Parent
ERISA Plans ended prior to the date of this Agreement. No lien has been imposed
under Section 412 (n) of the Code or Section 302 (f) of ERISA on the assets of
Parent, any of its Subsidiaries or any Parent ERISA Affiliate, and no event or
circumstance has occurred that is reasonably likely to result in the imposition
of any such lien on any such assets on account of any Parent ERISA Plan.
(h) With respect to any Parent ERISA Plan that is a "multi-employer
plan," as such term is defined in Section 3 (37) of ERISA, (i) neither Parent,
any of its Subsidiaries nor any Parent ERISA Affiliate has, since September 26,
1980, made or suffered a "complete withdrawal" or a "partial withdrawal," as
such terms are respectively defined in Sections 4203 and 4205 of ERISA, (ii) no
event has occurred that presents a material risk of a complete or partial
withdrawal, (iii) none of Parent, any of its Subsidiaries or any Parent ERISA
Affiliate has any contingent liability under Section 4204 of ERISA, (iv) no
circumstances exist that present a material risk that any such multi-employer
plan will go into reorganization, and (v) the aggregate withdrawal liability of
Parent, each of its Subsidiaries and the Parent ERISA Affiliates, computed as if
a complete withdrawal by Parent, each of its Subsidiaries and all of its Parent
ERISA Affiliates had occurred under each such multi-employer plan on the date
hereof, would be zero.
(i) Each of the Parent Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code.
(j) Each of the Parent ERISA Plans that is intended to be "qualified"
within the meaning of Section 401 (a) of the Code is so qualified. Parent has
applied for and received a currently effective determination letter from the IRS
stating that it is so qualified, and no event has occurred which would affect
such qualified status.
(k) Each of the Parent ERISA Plans that is intended to qualify under
Section 501(c)(9) of the Code is so qualified and meets the requirements of
Section 505(c) of the Code and the regulations thereunder.
(l) Except as set forth in Schedule 4.9(l) of the Parent Disclosure
Schedules, no amounts payable under any of the Parent Plans or any other
contract, agreement or arrangement with respect to which Parent or any of its
Subsidiaries may have any liability could fail to be deductible for federal
income tax purposes by virtue of Section 162(m) or Section 280G of the Code.
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(m) Except as set forth in Schedule 4.9(m) of the Parent Disclosure
Schedules, no Parent Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of Parent, its
Subsidiaries or any Parent ERISA Affiliate after retirement or other termination
of service (other than (i) coverage mandated by applicable laws, (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of Parent, any of its Subsidiaries or an
Parent ERISA Affiliate, or (iv) benefits, the full direct cost of which is borne
by the current or former employee (or beneficiary thereof)).
(n) Except as set forth in Schedule 4.9(n) of the Parent Disclosure
Schedules and as provided in Section 2.4 hereof, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee, officer or director of Parent, any of its Subsidiaries or any
Parent ERISA Affiliate to severance pay, unemployment compensation or any other
similar termination payment, or (ii) accelerate the time of payment or vesting,
or increase the amount of or otherwise enhance any benefit due any such
employee, officer or director.
(o) There are no pending or, to the best knowledge of Parent,
threatened or anticipated claims by or on behalf of any Plan by any employee or
beneficiary under any such Parent Plan or otherwise involving any such Plan
(other than routine claims for benefits).
(p) Except as set forth in Schedule 3.9(p) of the Company Disclosure
Schedules, no Plan is currently under examination by, and there are no issues
related to the Plans currently pending before, the Internal Revenue Service,
Department of Labor, Pension Benefit Guaranty Corporation or any court.
(q) There are no material liabilities under any foreign laws with
respect to the Plans.
Section 4.10 Taxes.
(a) Except as set forth in Schedule 4.10 of the Parent Disclosure
Schedules:
(i) Parent and its Subsidiaries have (A) duly filed (or there
have been filed on their behalf) with the appropriate Tax Authorities
all Tax Returns required to be filed by them on or prior to the date
hereof (except where the failure to file a Tax Return would not have a
material adverse effect on the entity failing to file such Tax Return),
and such Tax Returns are true, correct and complete in all material
respects, and (B) duly paid in full or made provision in accordance
with GAAP (or there has been paid or provision has been made on their
behalf) for the payment of all Taxes for all periods (or portions
thereof) ending on or prior to the date hereof;
(ii) there are no liens for Taxes upon any property or assets
of Parent or any Subsidiary thereof, except for liens for Taxes not yet
due and for which adequate reserves have been established in accordance
with GAAP;
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(iii) within the past three (3) years, neither Parent nor any
of its Subsidiaries has made any change in tax reporting method,
received a ruling from any Tax Authority or signed an agreement with
regard to Taxes;
(iv) no federal, state, local or foreign Audits are pending
with regard to any Taxes or Tax Returns of Parent or its Subsidiaries
and, to the best knowledge of Parent and its Subsidiaries, no Audit is
threatened;
(v) the Tax Returns of Parent and its Subsidiaries have been
examined by the applicable Taxing Authorities (or the applicable
statutes of limitation for the assessment of Taxes for such periods
have expired) for all periods through and including February 28, 1995,
and no material adjustments were asserted as a result of such
examinations which have not been resolved and fully paid, and no issue
has been raised by any Tax Authority in any Audit of Parent or its
Subsidiaries that, if raised with respect to any other period not so
audited, could be expected to result in a proposed material deficiency
for any period not so audited;
(vi) there are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against Parent or any of
its Subsidiaries, and no power of attorney granted by either Parent or
any of its Subsidiaries with respect to any Taxes is currently in
force;
(vii) neither Parent nor any of its Subsidiaries is a party to
any agreement providing for the allocation, indemnification, or sharing
of Taxes;
(viii) neither Parent nor any of its Subsidiaries is a party
to any agreement, contract or arrangement that could result, separately
or in the aggregate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code or in payments that will
not be deductible under Section 162(m) of the Code;
(ix) neither Parent nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or made or filed an
election under Sections 108, 441 or 1017 of the Code;
(x) neither Parent nor any of its Subsidiaries is a party to
any safe harbor lease within the meaning of Section 168(f)(8) of the
Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982;
(xi) neither Parent nor any of its Subsidiaries is liable for
any material Taxes to any foreign Tax Authority. Parent and its
Subsidiaries do not have and have not had a permanent establishment in
any foreign country, as defined in the applicable Tax treaty or
convention between the United States and such foreign country;
(xii) neither Parent nor any of its Subsidiaries is required
to include in income any adjustment under Section 481(a) of the Code by
reason of a change in accounting method initiated by Parent or any of
its Subsidiaries and the Internal Revenue Service has not proposed any
such adjustment or change in accounting method;
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(xiii) neither Parent nor any of its Subsidiaries is a partner
in any joint venture, partnership or other arrangement or contract that
could be treated as a partnership for federal income tax purposes;
(xiv) other than as a result of the Transactions contemplated
herein, none of Parent's tax attributes are subject to the limitations
of Sections 382, 383 or 384 of the Code or Treasury Regulation Section
1.1502-21(c); and
(xv) since its formation, Parent has been a member of an
affiliated group of corporations within the meaning of Section 1504 of
the Code, with respect to which Parent is and at all times has been the
common parent, and has joined in or expects to join in the filing of a
consolidated federal income tax return for all its Tax periods ending
on or prior to the Effective Time. Neither Parent nor any of its
Subsidiaries has been a member of any other affiliated group of
corporations within the meaning of Section 1504 of the Code.
Section 4.11 Contracts.
For purposes of this Agreement, the Parent Agreements consist of the
following:
(a) all sales and distribution contracts of Parent or its
Subsidiaries with respect to which at least an aggregate of $500,000 in
revenues and/or orders were received or revenued thereunder since March
1, 1998, which sales and distribution contracts are identified (to the
best knowledge of Parent) on Schedule 4.11(a) of the Parent Disclosure
Schedules;
(b) all supply agreements material to the business of Parent
under which products were bought or licensed since March 1, 1998 for
resale or relicense, which supply agreements are identified (to the
best knowledge of Parent) in Schedule 4.11(b) to the Parent Disclosure
Schedules;
(c) all supply agreements for the purchase of goods, software
(other than commercially available or "shrink wrap" software) or other
products for Parent's or its Subsidiaries' internal use under which
orders aggregating at least $250,000 were placed thereunder since March
1, 1998, which internal supply agreements are identified in Schedule
4.11(c) of the Parent Disclosure Schedules;
(d) the form of confidentiality agreement that has customarily
been used between Parent and its employees, a copy of which is included
as Schedule 4.11(d) of the Parent Disclosure Schedules;
(e) the form of agreement generally used by Parent in engaging
independent contractors, a copy of which is included as Schedule
4.11(e) of the Parent Disclosure Schedules;
(f) the form of agreement pursuant to which Parent has
generally escrowed source code, a copy of which is included as Schedule
4.11(f) of the Parent Disclosure Schedules; and
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(g) all powers of attorney (irrespective of date of execution)
of a material nature (excluding usual and customary powers of attorney
for filing trademarks and patents, and usual and customary powers of
attorney for filing documents with governmental authorities and
otherwise complying with corporate formalities in foreign jurisdictions
executed by Parent or its Subsidiaries) in favor of one or more third
parties, which powers of attorney are identified (to the best knowledge
of Parent) in Schedule 4.11(g) of the Parent Disclosure Schedules.
To the best knowledge of Parent, each Parent Agreement is a valid and binding
agreement in full force and effect, except where the failure to be valid and
binding and in full force and effect would not have a Parent Material Adverse
Effect. To the best knowledge of Parent, there are no defaults, or events which,
with notice or the lapse of time, or both, would result in a default under any
of the Parent Agreements, except such defaults and events that would not, in the
aggregate, have a Parent Material Adverse Effect.
Section 4.12 Real Property and Leased Property.
(a) Schedule 4.12(a) of the Parent Disclosure Schedules sets forth a
complete list of all real property owned by Parent or its Subsidiaries (the
"Parent Real Property"). Except as set forth in Schedule 4.12(a) of the Parent
Disclosure Schedules, Parent or its Subsidiaries has good and marketable title
to the Parent Real Property, free and clear of all Encumbrances. Copies of (i)
all deeds, title insurance policies and surveys of the Parent Real Property and
(ii) all documents evidencing all Encumbrances upon the Parent Real Property
have been furnished to Parent. There are no proceedings, claims, disputes or
conditions affecting any Parent Real Property that might curtail or interfere
with the use of such property, nor is an action of condemnation or eminent
domain pending or to the best knowledge of Parent and the Purchaser, threatened
for all or any portion of the Parent Real Property. Except as disclosed in
Schedule 4.12(a) of the Parent Disclosure Schedules, neither Parent nor any of
its Subsidiaries is a party to any lease, assignment or similar arrangement
under which Parent or a Subsidiary is a lessor, assignor or otherwise makes
available for use by any third party any portion of the Real Property.
(b) Within the prior twelve (12) months of the date of this Agreement,
neither Parent nor any of its Subsidiaries has received any notice of or other
writing referring to any requirements or recommendations by any insurance
company that has issued a policy covering any part of the Parent Real Property
or by any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of the
Parent Real Property. The plumbing, electrical, heating, air conditioning,
ventilating and all other structural or material mechanical systems in the
buildings upon the Parent Real Property are in working order and working
condition, so as to be adequate for the operation of the business of Parent and
its Subsidiaries as heretofore conducted, and the roof, basement and foundation
walls of all buildings on the Parent Real Property are free of leaks and other
material defects, except for any matter otherwise covered by this sentence which
does not have, individually or in the aggregate, a Parent Material Adverse
Effect.
(c) Parent and its Subsidiaries have obtained all appropriate licenses,
permits, easements and rights of way, including proofs of dedication, required
to use and operate the Parent Real Property, as well as the properties listed on
Schedule 4.12(e) of the Parent Disclosure Schedules, in
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the manner in which the Parent Real Property is currently being used and
operated, except for such licenses, permits or rights of way the failure of
which to have obtained does not have, individually or in the aggregate, a Parent
Material Adverse Effect.
(d) Neither Parent nor any of its Subsidiaries have received
notification that Parent or a Subsidiary is in violation of any applicable
building, zoning, anti-pollution, health or other law, ordinance or regulation
in respect of the Real Property or structures or their operations thereon and,
to the best of Parent's knowledge, no such violation exists.
(e) Set forth on Schedule 4.12(e) of the Parent Disclosure Schedules is
a list of all real property leases to which Parent or any of its Subsidiaries is
a party and that extend for a more than one (1) year after the date of this
Agreement. Parent and each of its Subsidiaries has a good and valid leasehold
interest in all properties held by them under lease listed on Schedule 4.12(f)
of the Parent Disclosure Schedules. The lessee under each such lease and its
predecessor under each such lease, if any, has been in peaceable possession (or
remedied any claims relating thereto) of the property covered thereby since the
commencement of the original term of such lease. No waiver, indulgence or
postponement of the lessee's material obligations under any such lease has been
granted by the lessor or of the lessor's obligations thereunder by the lessee.
The lessee under each such lease is not in breach of or in default under such
lease, nor has any event occurred which (with or without the giving of notice or
the passage of time or both) would constitute a default by the lessee under such
lease or cause a Parent Material Adverse Effect, and the lessee has not received
any notice from, or given any notice to, the lessor indicating that the lessee
or the lessor is in breach of or in default under such lease that would cause a
Parent Material Adverse Effect. To the best knowledge of Parent and each of its
Subsidiaries, none of the lessors under such leases is in breach thereof or in
default thereunder.
Section 4.13 Intellectual Property.
(a) Schedule 4.13(a) of the Parent Disclosure Schedules is a true and
complete list of all (i) patents and patent applications, (ii) trademark
registrations and applications, (iii) service ▇▇▇▇ registrations and
applications, (iv) Parent Product Software (as hereinafter defined), (v)
copyright registrations and applications, (vi) material unregistered trademarks
and service marks, and (vii) Internet domain names used or held for use in
connection with the business of Parent or any of its Subsidiaries, together with
all material licensing, sub-licensing, distribution, consignment and similar
agreements relating to the foregoing (whether Parent or any of its Subsidiaries
is the licensee or licensor thereunder) other than distribution and licensing
agreements relating to Parent Product Software and Parent Computer Software (as
hereinafter defined) entered into in the ordinary course of business. Other than
as listed in Schedule 4.11(f) of the Parent Disclosure Schedules, and for
contracts covered by that provision, no agreement licensing the Parent
Intellectual Property (as hereinafter defined) to any licensee creates an option
for such licensee to purchase any of the Parent Intellectual Property owned by
Parent, its Subsidiaries or affiliates, or would in any other way require the
transfer of the Intellectual Property owned by Parent, its Subsidiaries or any
affiliate of Parent to such licensee. Parent or one of its Subsidiaries
currently is listed in the records of the appropriate United States, state or
foreign agency as the sole owner of record for each application and registration
listed in Schedule 4.13(a) of the Parent Disclosure Schedules.
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(b) The term "Parent Computer Software" shall mean, other than
off-the-shelf applications and Parent Product Software, the following as used in
the current business of Parent or any of its Subsidiaries and which are material
to the current business of Parent: (i) any and all computer programs and
applications consisting of sets of statements and instructions to be used
directly or indirectly in computer software or firmware whether in source code
or object code form, (ii) databases and compilations, including without
limitation any and all data and collections of data, whether machine readable or
otherwise, (iii) all currently used versions of the foregoing including, without
limitation, all screen displays and designs thereof, and all component modules
of source code or object code or natural language code therefor, and whether
recorded on papers, magnetic media or other electronic or non-electronic device,
(iv) all descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, (v) all documentation, including
without limitation all technical and user manuals and training materials,
relating to the foregoing, and all content contained on all World Wide Web sites
of Parent or any of its Subsidiaries.
(c) The term "Parent Product Software" shall mean the following as
currently used in as part of the products of Parent and any of its Subsidiaries:
(i) any and all computer programs and applications consisting of sets of
statements and instructions to be used directly or indirectly in computer
software or firmware whether in source code or object code form, included in or
with any products currently or heretofore sold, licensed or leased or offered
for sale, license or lease by Parent or any of its Subsidiaries (excluding
software developed specifically and solely for a customer or distributor of
Parent or any of its Subsidiaries and which is not offered to any other
customers or distributors of Parent or any of its Subsidiaries), (ii) databases
and compilations for or of any of the foregoing, including without limitation
any and all data and collections of data, whether machine readable or otherwise,
(iii) all versions of the foregoing including, without limitation, all screen
displays and designs thereof, and all component modules of source code or object
code or natural language code therefor, and whether recorded on papers, magnetic
media or other electronic or non-electronic device, (iv) all descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, (v) all documentation, including without limitation all
technical and user manuals and training materials, relating to the foregoing,
and all content contained on all World Wide Web sites of Parent or any of its
Subsidiaries.
(d) Except as set forth on Schedule 4.13(d)(1) of the Parent Disclosure
Schedules, Parent and its Subsidiaries, to the best knowledge of Parent, own or
have the right to use all patents, patent applications, patent rights,
copyrights, trademarks, trademark rights, trade names, trade name rights, and
service marks, and all goodwill of the business associated therewith, trade
secrets, technology and know-how, Parent Computer Software other than
off-the-shelf applications, Parent Product Software, Internet domain names,
registrations for and applications for registration of trademarks, service marks
and copyrights, and other confidential or proprietary rights and information and
all technical and user manuals and documentation made or used in connection with
any of the foregoing, used anywhere in the world in connection with the
businesses of Parent or any of its Subsidiaries as currently conducted
(collectively, the "Parent Intellectual Property"), free and clear of all
Encumbrances of any nature. Except as set forth on Schedule 4.13(d)(2) of the
Parent Disclosure Schedules, Parent and its Subsidiaries own the Parent Product
Software or have a valid right or with respect to prior to agreements had a
valid right at the time of such agreement to grant the rights and licenses in
and to the Parent Product Software currently or heretofore set forth in the
agreements between Parent or any of its Subsidiaries and their respective
customers, licensors, lessees,
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distributors and other resellers. Schedule 4.13(d)(3) of the Parent Disclosure
Schedules sets forth a true and complete list of all Parent Product Software
which is not completely and solely owned by Parent and/or its Subsidiaries which
is material to the current business of Parent (collectively, the "Parent
Licensed Product Software"). The agreements described on Schedule 4.13(d)(3) of
the Parent Disclosure Schedules set forth all of the rights and licenses of
Parent and each of its Subsidiaries in and to the Parent Licensed Product
Software, and all restrictions and obligations (including, without limitation,
royalty and other payment obligations) associated with such rights and licenses,
and each such contract is in full force and effect and neither Parent nor any of
its Subsidiaries is in material breach of any of its obligations under any such
Agreement. Any Encumbrances set forth on Schedule 4.13(d) of the Parent
Disclosure Schedules do not materially detract from the value of the Parent
Intellectual Property subject thereto and do not materially impair the
operations of any of Parent and its Subsidiaries.
(e) All patent, trademark and copyright registrations and applications
for Parent Intellectual Property, whether registered or pending, are currently
used or planned to be used in and are material to the conduct of the businesses
of Parent and its Subsidiaries as currently conducted, are listed on Schedule
4.13(a) of the Parent Disclosure Schedules. To the best knowledge of Parent and
the Purchaser, such patents, trademarks and copyright registrations and
applications (i) are valid, subsisting, in proper form and enforceable, subject
to the rights of third parties, and have been duly maintained, including the
submission of all necessary filings and fees in accordance with the legal and
administrative requirements of the appropriate jurisdictions and (ii) have not
lapsed, expired or been abandoned, and no patent, trademark, copyright,
registration or application for any of the foregoing is the subject of any
opposition, interference, cancellation proceeding or other legal or governmental
proceeding before any governmental, registration or other authority in any
jurisdiction.
(f) To the best knowledge of Parent and the Purchaser, the conduct of
the businesses of, and/or the use of the Parent Intellectual Property by, Parent
and its Subsidiaries as currently conducted does not conflict with or infringe
in any way on any proprietary right of any third party. Other than as set forth
in Schedule 4.13(f) of the Parent Disclosure Schedules there is no claim, suit,
action, correspondence, proceeding or negotiation pending or, to the best
knowledge of Parent and the Purchaser, threatened against Parent or any of its
Subsidiaries (i) alleging any conflict or infringement with any third party's
proprietary rights, (ii) asserting Parent or any of its Subsidiaries should
consider licensing rights to a third party's patent or other proprietary rights
or (iii) challenging the ownership, use, validity or enforceability of the
Parent Intellectual Property. Each of Parent and its Subsidiaries owns or has
the valid right to use all of the material Parent Intellectual Property used by
it or held for use by it in connection with its business. To the best knowledge
of Parent and the Purchaser, there are no conflicts with or infringements of any
Parent Intellectual Property or products of Parent or its Subsidiaries by any
third party.
(g) Except as set forth on Schedule 4.13(g)(1) of the Parent Disclosure
Schedules, the Parent Computer Software and the Parent Product Software used by
Parent or any of its Subsidiaries in the conduct of their businesses was either:
(i) developed by employees of Parent or such Subsidiary of Parent within the
scope of their employment; (ii) developed on behalf of Parent or any of its
Subsidiaries by a third party, and all ownership rights therein and in any other
associated Parent Intellectual Property have been assigned or otherwise
transferred to or vested in Parent or such Subsidiary of Parent, as the case may
be, pursuant to written agreements ("Parent Work for Hire
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Agreements"); (iii) acquired from a third party pursuant to a Software
Acquisition Agreement which is in full force and effect and of which neither
Parent nor any of its Subsidiaries is in material breach, or (iv) licensed from
a third party pursuant to a written license or other contract which is in full
force and effect and of which neither Parent nor any of its Subsidiaries is in
material breach. Except as set forth on Schedule 4.13(g)(2) of the Parent
Disclosure Schedules, (x) no third party has had access to any of the source
code for any of the Parent Product Software described in clause (i) or (ii)
hereof and (y) no act has been done or omitted to be done by Parent or any of
its Subsidiaries to impair or dedicate to the public or entitle any Governmental
Entity to hold abandoned any of such Parent Computer Software or Parent Product
Software.
(h) To the best knowledge of Parent and the Purchaser, no consents,
filings, and authorizations by or with governmental authorities or third parties
are necessary with respect to the consummation of the Transactions contemplated
hereby as they may affect the Intellectual Property.
(i) Neither Parent nor any of its Subsidiaries has entered into any
material consent, forbearance to ▇▇▇, settlement agreement or cross-licensing
arrangement with any person relating to the Parent Intellectual Property or the
intellectual property of any third party other than as may be contained in the
agreements listed in Schedule 4.13(i) of the Parent Disclosure Schedules, or
which is not material to the current business or products of Parent.
(j) To the best knowledge of Parent, except as set forth on Schedule
4.13(j) of the Parent Disclosure Schedules, Parent and its Subsidiaries are not,
nor will any of them be as a result of the execution and delivery of this
Agreement or the performance of Parent's obligations under this Agreement, in
breach of any material license, sub-license or other agreement relating to the
Parent Intellectual Property.
(k) No former or present employees, officers or directors of Parent or
any of its Subsidiaries hold any right, title or interest directly or
indirectly, in whole or in part, in or to any Parent Intellectual Property.
(l) No trade secret or confidential know-how or other confidential
information relating to Parent or its Subsidiaries has been disclosed or
authorized to be disclosed to any third party, other than pursuant to a
non-disclosure agreement that fully protects Parent's and its Subsidiaries'
interests in and to such confidential information, except to the extent that the
failure to comply with any of the foregoing could not have, individually or in
the aggregate, a Parent Material Adverse Effect.
(m) As delivered to customers and as modified by Parent, the Parent
Product Software and the Parent Other Products (as hereinafter defined) conform
to their respective applicable specifications in all material respects, except
to the extent that the failure to comply with any of the foregoing could not
have, individually or in the aggregate, a Parent Material Adverse Effect.
(n) To the best knowledge of Parent and the Purchaser, the conduct of
the businesses of Parent and its Subsidiaries, the use of the Parent
Intellectual Property and/or any advertising or marketing materials used by
Parent and its Subsidiaries in connection with the Parent Product Software or
Parent Other Products do not violate any provision of the ▇▇▇▇▇▇ Act, including
without limitation Section 43 thereof, and there are no material misstatements
or omissions in any such
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materials which would violate any provision of the ▇▇▇▇▇▇ Act, except to the
extent that the failure to comply with any of the foregoing could not have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.14 Year 2000 Compliance.
(a) As of the date hereof, all Date-Sensitive Data and Date-Sensitive
Systems that are material to the business of Parent owned or used by, licensed
or sold to Parent or any of its Subsidiaries other than those set forth in
Schedule 4.14(a) of the Parent Disclosure Schedules, have been or will be
evaluated for Year 2000 Compliance issues and are Year 2000 Compliant or will be
Year 2000 Compliant on or before January 1, 2000, except to the extent that the
failure to comply with any of the foregoing could not have, individually or in
the aggregate, a Parent Material Adverse Effect. Parent has requested
representations from each entity that (i) provides Date-Sensitive Data to Parent
or any of its Subsidiaries which is material to the business of Parent or (ii)
processes in any way Date-Sensitive Data or software (including the Parent
Computer Software or the Parent Product Software) for Parent or any of its
Subsidiaries. Parent has obtained or will use reasonable efforts to obtain
written representations from each entity that provides any material product or
service to Parent or any of its Subsidiaries that is dependent on Year 2000
Compliant Date-Sensitive Data or Year 2000 Compliant Date-Sensitive Systems,
that any of such entity's Date-Sensitive Data and/or Date-Sensitive Systems
that are used for, or on behalf of, Parent or any of its Subsidiaries are Year
2000 Compliant, except to the extent that the failure to comply with any of the
foregoing in this Section 4.14 could not have, individually or in the aggregate,
a Parent Material Adverse Effect.
(b) As of the date hereof, all Parent Product Software and all other
products sold, licensed or leased by Parent or any of its Subsidiaries which
are, or are used with, Date-Sensitive Systems or which process Date-Sensitive
Data ( the "Parent Other Products"), when used in accordance with their
associated specifications and other documentation, are Year 2000 Compliant
subject to the express terms and conditions of Parent's documentation attached
as Schedule 4.14(b) of the Parent Disclosure Schedules (the "Parent Year 2000
Representations"), except to the extent that the failure to comply with any of
the foregoing could not have, individually or in the aggregate, a Parent
Material Adverse Effect. To the best knowledge of Parent, (a) Parent and its
Subsidiaries have made reasonable efforts not to make written representations
concerning any Parent Product Software or other products of Parent or its
Subsidiaries, which are in addition to or inconsistent with the Parent Year 2000
Representations and (b) any such representations which are in addition to or
inconsistent with the Parent Year 2000 Representations, will not, individually
or in the aggregate, have a Parent Material Adverse Effect.
Section 4.15 Labor Matters. Except as set forth on Schedule 4.15(a) of
the Parent Disclosure Schedules, (i) there is no labor strike, dispute,
slowdown, stoppage or lock-out pending, or to the knowledge of Parent,
threatened against or affecting Parent and during the past two (2) years from
the date of this Agreement there has not been any such action, (ii) Parent is
not a party to or bound by any collective bargaining or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of Parent, (iii)
none of the employees of Parent is represented by any labor organization and
Parent does not have any knowledge of any union organizing activities among the
employees of Parent within the past two (2) years, nor does any question
concerning representation exist
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concerning such employees, (iv) there are no written personnel policies, rules
or procedures applicable to employees of Parent, other than those set forth on
Schedule 4.15(a) of the Parent Disclosure Schedules, true and correct copies of
which have heretofore been delivered to the Company, (v) to the best knowledge
of Parent and the Purchaser, Parent is, and has at all times been, in
compliance, in all material respects, with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable laws that would cause a Parent Material Adverse Effect, (vi) there is
no unfair labor practice charge or written complaint against Parent pending or,
to the knowledge of Parent, threatened before the National Labor Relations Board
or any similar state, local or foreign agency, (vii) there is no grievance
arising out of any collective bargaining agreement or other grievance procedure,
(viii) no charges with respect to or relating to Parent are pending before the
Equal Employment Opportunity Commission or any other agency responsible for the
prevention of unlawful employment practices, (ix) Parent has not received notice
of the intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation with respect
to or relating to Parent and no such investigation is in progress, and (x) there
are no complaints, lawsuits or other proceedings pending or, to the knowledge of
Parent, threatened in any forum by or on behalf of any present or former
employee of Parent, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract or employment, any laws
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship.
Section 4.16 Compliance with Laws. To the best of its knowledge, Parent
and each of its Subsidiaries has complied in a timely manner and in all material
respects with all laws, rules and regulations, ordinances, judgments, decrees,
orders, writs and injunctions of all United States federal, state, local and
foreign governments and agencies thereof which affect the business, properties
or assets of Parent and its Subsidiaries, and no notice, charge, claim, action
or assertion has been received by Parent or any of its Subsidiaries or has been
filed, commenced or, to Parent's knowledge, threatened against Parent or any of
its Subsidiaries alleging any violation of any of the foregoing. All licenses,
permits and approvals required under such laws, rules and regulations are in
full force and effect except where the failure to be in full force and effect
would not have a Parent Material Adverse Effect.
Section 4.17 Environmental Matters.
(a) Except as set forth in Schedule 4.17(a) of the Parent Disclosure
Schedules, each of Parent and its Subsidiaries is in full compliance with all
Environmental Laws, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern, except where the failure so to comply would
not cause a Parent Material Adverse Effect. Such compliance includes, but is not
limited to, the possession by Parent and each of its Subsidiaries of all permits
and other governmental authorizations required under all applicable
Environmental Laws, and compliance with the terms and conditions thereof. All
permits and other governmental authorizations currently held by Parent and each
of its Subsidiaries pursuant to the Environmental Laws are identified in
Schedule 4.17(a) of the Parent Disclosure Schedules.
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(b) Except as set forth in Schedule 4.17(b) of the Parent Disclosure
Schedules, neither Parent nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority or
citizens group that alleges that Parent or any of its Subsidiaries is not in
full compliance with any Environmental Laws. Parent has provided to the Company
such information, if any, that is in the possession of or reasonably available
to Parent regarding environmental matters pertaining to or the environmental
condition of the business of Parent and its Subsidiaries, or the compliance (or
noncompliance) by Parent and its Subsidiaries with any Environmental Laws.
(c) Except as set forth in Schedule 4.17(c) of the Parent Disclosure
Schedules, there is no Environmental Claim by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, death, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by Parent or any of its Subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or threatened against Parent
or any of its Subsidiaries, or against any person or entity whose liability for
any Environmental Claim Parent has retained or assumed either contractually or
by operation of law.
(d) Without in any way limiting the generality of the foregoing, except
as set forth in Schedule 4.17(d) of the Parent Disclosure Schedules, to the best
knowledge of Parent and the Purchaser, there is no asbestos contained in or
forming part of any building, building component, structure or office space
owned, leased, operated or controlled by Parent or any of its Subsidiaries.
Section 4.18 Product Liability. Except as described in Schedule 4.18 of
the Parent Disclosure Schedules, there are not presently pending, or to the best
knowledge of Parent, threatened any criminal, material civil or administrative
actions, suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or alleged defect
in design, manufacture, development, programming, materials or workmanship,
including any failure to warn or alleged breach of express or implied warranty
or representation, relating to any product manufactured, developed, programmed,
distributed, licensed or sold by or on behalf of Parent and its Subsidiaries.
Section 4.19 Information in Disclosure Documents. None of the
information supplied or to be supplied by Parent for the purpose of inclusion or
incorporation by reference in (i) the Schedule 14D-9 at the time such document
is first published, sent or given to the holders of Shares, and at any time it
is amended or supplemented, (ii) the Registration Statement to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger, at the time the Registration Statement is filed with the SEC or at the
time it becomes effective under the Securities Act or (iii) the Proxy Statement
at the date it is first mailed to the Company's stockholders or at the time of
the Special Meeting, will 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, no misleading. The Registration Statement will comply as to form
in all material respects with the requirements of the Securities Act and the
rules and regulations thereunder, except that no representations and warranties
are made by Parent with respect
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to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the
Registration Statement or contained in the Company SEC Documents incorporated by
reference in the Registration Statement or the Proxy Statement.
Section 4.20 Potential Conflict of Interest. Except as set forth in
Schedule 4.20 of the Parent Disclosure Schedules or in the Parent SEC Documents
filed prior to the date hereof, since February 28, 1998 there have been no
transactions, agreements, arrangements or understandings between Parent or its
Subsidiaries, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act. Except as set forth in Schedule 4.20 of the Parent
Disclosure Schedules or in the Parent SEC Documents filed prior to the date
hereof, no officer of Parent or any of its Subsidiaries owns, directly or
indirectly, any interest in (excepting not more than 1% stock holdings for
investment purposes in securities of publicly held and traded companies) or is
an officer, director, employee or consultant of any person which is a
competitor, lessor, lessee, customer or supplier of Parent or any of its
Subsidiaries; and no officer or director of Parent or any of its Subsidiaries
(i) owns, directly or indirectly, in whole or in part, any Parent Intellectual
Property which Parent or any of its Subsidiaries is using or the use of which is
necessary for the business of Parent or its Subsidiaries; (ii) has any claim,
charge, action or cause of action against Parent or any of its Subsidiaries,
except for claims for accrued vacation pay, accrued benefits under the Plans and
similar matters and agreements existing on the date hereof; (iii) has made, on
behalf of Parent or any of its Subsidiaries, any payment or commitment to pay
any commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any other Person of
which any officer or director of Parent or any of its Subsidiaries, or, to the
best knowledge of Parent and the Purchaser, a relative of any of the foregoing,
is a partner or stockholder (except stock holdings solely for investment
purposes in securities of publicly held and traded companies); or (iv) owes any
money to Parent or any of its Subsidiaries.
Section 4.21 Insurance. Parent and each of its Subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of Parent and
its Subsidiaries. There is no material claim pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Parent and its Subsidiaries are
otherwise in compliance in all material respects with the terms of such policies
and bonds. Parent has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
Section 4.22 Suppliers and Customers. Since February 28, 1998, no
material licensor, vendor, supplier, licensee or customer of Parent or any of
its Subsidiaries has canceled or otherwise modified its relationship with Parent
or its Subsidiaries and, to the best knowledge of Parent and the Purchaser, (i)
no such person has any intention to do so, and (ii) the consummation of the
transactions contemplated hereby will not adversely affect any of such
relationships in any material respect, except to the extent that the failure to
comply with any of the foregoing could not have, individually or in the
aggregate, a Parent Material Adverse Effect.
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Section 4.23 Accounts Receivable; Inventory.
(a) Subject to any reserves set forth in the consolidated balance sheet
of Parent included in Parent's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1998 as filed with the SEC (the "Parent Balance Sheet"), the
accounts receivable shown in the Parent Balance Sheet arose in the ordinary
course of business, were not, as of the date of the Parent Balance Sheet,
subject to any material discount, contingency, claim of offset or recoupment or
counterclaim, and represented, as of the date of the Parent Balance Sheet, bona
fide claims against debtors for sales, leases, licenses and other charges. All
accounts receivable of Parent and its Subsidiaries arising after the date of the
Parent Balance Sheet through the date of this Agreement arose in the ordinary
course of business and, as of the date of this Agreement, are not subject to any
material discount, contingency, claim of offset or recoupment or counterclaim,
except for normal reserves consistent with past practice. The amount carried for
doubtful accounts and allowances disclosed in the Parent Balance Sheet is
believed by Parent as of the date of such Parent Balance Sheet to be sufficient
to provide for any losses which may be sustained or failure to realize the
accounts receivable shown in the Parent Balance Sheet.
(b) As of the date of the Parent Balance Sheet, the inventories shown
on the Parent Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were manufactured or acquired in the ordinary course of
business and, as of the date of this Agreement, have been replenished in all
material respects in the ordinary course of business consistent with past
practices. All such inventories are valued on the Parent Balance Sheet in
accordance with GAAP, applied on a basis consistent with Parent's past
practices, and provision has been made or reserves have been established on the
Parent Balance Sheet, in each case in an amount believed by Parent as of the
date of this Agreement to be adequate, for all slow-moving, obsolete or unusable
inventories.
Section 4.24 Title and Condition of Properties. Parent and its
Subsidiaries have good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Parent Balance Sheet or
acquired after November 30, 1998, except for (A) assets which have been disposed
of to nonaffiliated third parties since November 30, 1998 in the ordinary course
of business, (B) Encumbrances reflected in the Parent Balance Sheet, (C)
Encumbrances or imperfections of title which are not, individually or in the
aggregate, material in character, amount or extent and which do not materially
detract from the value or materially interfere with the present or presently
contemplated use of the assets subject thereto or affected thereby, and (D)
liens for current Taxes not yet due and payable. All of the machinery, equipment
and other tangible personal property and assets owned or used by Parent or its
Subsidiaries are operational, except for ordinary wear and tear not caused by
neglect, and are usable in the ordinary course of business.
Section 4.25 Illegal Payments. To the best knowledge of Parent and the
Purchaser, none of Parent or any of its Subsidiaries or any director, officer,
employee, or agent of Parent or any of its Subsidiaries has, directly or
indirectly, paid or delivered any fee, commission, or other sum of money or item
of property however characterized to any broker, finder, agent, government
official, or other person, in the United States or any other country, in any
manner related to the business or operations of Parent or any of its
Subsidiaries, which Parent or any of its Subsidiaries or any such director,
officer, employee, or agent knows or has reason to believe to have been illegal
under any applicable law, including but not limited to the Foreign Corrupt
Practices Act.
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Section 4.26 Financing. In order to finance the Transactions, Parent
and the Purchaser have obtained a commitment letter dated April 26, 1999 (the
"Commitment Letter") from Bank of America National Trust and Savings Association
(the "Bank"), pursuant to which the Bank has committed, subject to the terms and
conditions thereof, to provide Purchaser financing in aggregate amount of $150
million (the "Debt Financing"), a true and correct copy of which has been
previously provided to the Company. Subject to the terms and conditions of the
Commitment Letter (including the conditions to funding) and this Agreement, the
Debt Financing is sufficient to consummate the Transactions. Assuming the
accuracy of the Company's representations and warranties contained in this
Agreement, Parent believes (based upon the facts known to Parent as of the date
of this Agreement) that each of the conditions to the completion of the Debt
Financing contained in the Commitment Letter will be satisfied on or prior to
the initial scheduled expiration date of the Offer.
Section 4.27 Shares Owned by Parent, Purchaser and Affiliates. Except
for 100,000 Shares held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and except for any Shares that
could be deemed to be beneficially owned (as defined in Rule 13d-3 promulgated
under the Exchange Act) by Parent or the Purchaser under the Stockholders'
Agreement, to the best knowledge of Parent and the Purchaser, none of Parent,
the Purchaser nor any of their respective Affiliates beneficially owns any
Shares.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Acquisition Proposals. The Company will notify the
Purchaser within twenty-four (24) hours if any proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated or continued with, the Company or its officers, directors,
employees, investment bankers, attorneys, accountants or other agents, in each
case in connection with any Acquisition Proposal (as defined below) or the
making of an Acquisition Proposal ("Acquisition Proposal Interest") indicating,
in connection with such notice, the terms and conditions of any Acquisition
Proposals or offers. The Company agrees that it, as of March 15, 1999, ceased
and caused to be terminated any activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal Interest.
The Company agrees that it shall keep Parent informed, on a current basis, of
the status and terms of any Acquisition Proposal Interest. As used in this
Agreement, "Acquisition Proposal" shall mean any tender or exchange offer
involving the Company, any proposal for a merger, consolidation or other
business combination involving the Company, any proposal or offer to acquire in
any manner a substantial equity interest in, or a substantial portion of the
business or assets of, the Company (other than immaterial or insubstantial
assets or inventory in the ordinary course of business or assets held for sale),
any proposal or offer with respect to any recapitalization or restructuring with
respect to the Company or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to the Company other
than pursuant to the Transactions to be effected pursuant to this Agreement.
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Section 5.2 Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, (ii) as
set forth in Schedule 5.2 of the Company Disclosure Schedules, or (iii) as
agreed in writing by Parent, after the date hereof, and prior to the time the
designees of Parent have been elected to, and shall constitute a majority of,
the Company's Board of Directors pursuant to Section 1.3 hereof (the
"Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course and, to the extent consistent therewith,
each of the Company and its Subsidiaries shall use its best efforts to preserve
its business organization intact and maintain its existing relations with
customers, suppliers, employees, creditors, business partners and others having
business dealings with it, such that its good will and ongoing business shall be
unimpaired at the Effective Time of the Merger;
(b) The Company will not, directly or indirectly, (i) except upon
exercise of the options or other rights to purchase shares of Common Stock
pursuant to presently outstanding stock options under the plans described in
Section 2.4 hereof, issue, sell, transfer or pledge or agree to sell, issue,
transfer or pledge any treasury stock of the Company or any capital stock of any
of its Subsidiaries beneficially owned by it, (ii) amend its Articles of
Incorporation or By-Laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or any outstanding capital stock of
any of the Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i) declare,
set aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (ii) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options (including any automatic grants of options under
the Company Stock Plans), warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than (A) Shares reserved for issuance on the date hereof
pursuant to the exercise of options outstanding on the date hereof under the
plans described in Section 2.4 hereof and (B) Shares issued under the ESPP if
the Offer extends beyond June 30, 1999; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any assets, other than in the ordinary
and usual course of business and consistent with past practice, or incur or
modify any indebtedness or other liability, other than in the ordinary and usual
course of business and consistent with past practice; or (iv) redeem, purchase
or otherwise acquire, directly or indirectly, any shares of any class or series
of its capital stock, or any instrument or security which consists of or
includes a right to acquire such shares (other than the cancellation of options
outstanding on the date hereof pursuant to Section 2.4 hereof);
(d) neither the Company nor any of its Subsidiaries shall make any
change in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants (other than general increases in
wages to employees who are not officers or directors or affiliates in the
ordinary course consistent with past practice), or to Persons (as hereinafter
defined) providing management services, enter into or amend any employment,
severance, consulting, termination or other agreement or plan or make any loans
to any of its officers, directors, employees, affiliates, agents or consultants
or make any change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons pursuant to any Plan or otherwise;
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(e) neither the Company nor any of its Subsidiaries shall pay or make
any accrual or arrangement for payment of any pension, retirement allowance or
other employee benefit pursuant to any existing Plan, agreement or arrangement
to any officer, director, employee or affiliate or pay or agree to pay or make
any accrual or arrangement for payment to any officers, directors, employees or
affiliates of the Company of any amount relating to unused vacation days, except
payments and accruals made in the ordinary course consistent with past practice;
adopt or pay, grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other Plan,
agreement or arrangement, or any employment or consulting agreement with or for
the benefit of any director, officer, employee, agent or consultant, whether
past or present; or amend in any material respect any such existing Plan,
agreement or arrangement in a manner inconsistent with the foregoing, except
that the Company and its Subsidiaries may continue to make quarterly bonus
payments to certain key employees consistent with past business practice in an
aggregate amount not to exceed $1.8 million;
(f) the Company shall not modify, amend or terminate any of the Company
Agreements, and neither the Company nor any of its Subsidiaries shall waive,
release or assign any material rights or claims under any of the Company
Agreements, except in the ordinary course of business and consistent with past
practice;
(g) neither the Company nor any of its Subsidiaries will cause any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Parent;
(h) neither the Company nor any of its Subsidiaries will (i) incur or
assume any long-term debt, or except in the ordinary course of business and in
an amount consistent with past practice, incur or assume any short-term
indebtedness; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iii) make any loans, advances or capital contributions to, or
investments in, any other Person; or (iv) enter into any material commitment or
transaction (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets or real estate), any agreement to develop
customized software products out of the ordinary course of business;
(i) neither the Company nor any of its Subsidiaries will change any of
the accounting methods used by it unless required by GAAP, make any Tax election
or change any Tax election already made or settle any Tax Audit, other than in
the ordinary course of business;
(j) neither the Company nor any of its Subsidiaries will pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the ordinary
course of business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company;
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(k) neither the Company nor any of its Subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries will take, or agree
to commit to take, any action that would or is reasonably likely to result in
any of the conditions to the Merger set forth in Article VII or any of the
conditions to the Offer set forth in Annex I not being satisfied, or would make
any representation or warranty of the Company contained herein inaccurate in any
respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger in
accordance with the terms hereof or materially delay such consummation; and
(m) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or
authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 5.3 No Solicitation and Fiduciary Out.
(a) Except as provided in Section 5.3(b) hereof, the Company will not,
and will ensure that its officers, directors, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal, (ii) enter into any agreement with respect to any
Acquisition Proposal, or (iii) in the event of an unsolicited Acquisition
Proposal for the Company, engage in negotiations or discussions with, or provide
any information or data to, any Person (other than Parent, any of its affiliates
or representatives) relating to any Acquisition Proposal; provided, however,
that nothing contained in this Section 5.3 or any other provision hereof shall
prohibit the Company or the Company's Board of Directors from (i) taking and
disclosing to the Company's stockholders, its 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 the Company's
stockholders as is reasonably deemed necessary, in the good faith judgment of
the Company's Board of Directors after receipt of advice from outside legal
counsel to the Company that such disclosure is required under applicable law and
that the failure to make such disclosure would cause the Company's Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to a confidentiality
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement, dated March 12, 1999 entered into between Parent
and the Company (the "Confidentiality Agreement") and may negotiate and
participate in discussions and negotiations with such Person concerning an
Acquisition Proposal if (x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company relating to any such
transaction which the Company's Board of Directors determines in good faith,
after receiving advice from a nationally recognized investment banking firm,
represents a superior transaction to the Offer and the Merger and (y) the
Company's Board of Directors determines in good faith, only after receipt of
written advice from outside legal counsel to the Company, that the failure to
provide such
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information or access or to engage in such discussions or negotiations would
cause the Company's Board of Directors to violate its fiduciary duties to the
Company's stockholders under applicable law (an Acquisition Proposal which
satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). The Company shall promptly, and in any event within one (1) business
day following receipt of a Superior Proposal, notify Parent of the receipt of
the same and prior to providing any such party with any material non-public
information. The Company shall promptly provide to Parent any material
non-public information regarding the Company provided to any other party which
was not previously provided to Parent.
(c) Except as set forth herein, neither the Company's Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or the Purchaser, the approval
or recommendation by such Board of Directors or any such committee 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, prior to the
time of acceptance for payment of Shares in the Offer, the Company's Board of
Directors may (subject to the terms of this sentence and the following sentence)
enter into an acquisition agreement with respect to a Superior Proposal, in
which event the Company may take any of the actions set forth in clauses (i)
through (iii) of the immediately preceding sentence; provided, however, that the
Company shall not enter into an acquisition agreement with respect to a Superior
Proposal unless the Company shall have furnished Parent with written notice not
later than the first to occur of (i) 12:00 noon three (3) business days in
advance of any date that it intends to enter into such acquisition agreement or
(ii) two (2) business days prior to the expiration of the Offer; and shall have
caused its financial and legal advisors to negotiate with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the Transactions contemplated herein on such adjusted
terms.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Additional Agreements. Subject to the terms and conditions
as herein provided, the Company, Parent and the Purchaser will each comply in
all material respects with all applicable laws and with all applicable rules and
regulations of any governmental authority to achieve the satisfaction of the
Minimum Condition and all conditions set forth in Annex I attached hereto and
Article VII hereof, and to consummate and make effective the Merger and the
other Transactions contemplated hereby.
Section 6.2 Notification of Certain Matters. The Company shall give
prompt notice to Parent and the Purchaser, and Parent and the Purchaser shall
give prompt notice to the Company, of (i) the occurrence, or non-occurrence of
any event whose occurrence, or non-occurrence causes
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either (x) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time that would have a Company Material Adverse Effect or (y) any
condition set forth in Annex I to be unsatisfied in any material respect at any
time from the date hereof to the date the Purchaser purchases Shares pursuant to
the Offer and (ii) any failure of the Company, the Purchaser or Parent, as the
case may be, or any officer, director, employee or agent thereof, to comply with
or satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.2 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 6.3 Access; Confidentiality.
(a) From the date hereof to the Effective Time, upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources (and their counsel
or representatives) and other representatives of Parent, full access, during
normal business hours during the period prior to the Appointment Date, to all
its properties, books, contracts, commitments and records and, during such
period, the Company shall (and shall cause each of its Subsidiaries to) furnish
promptly to the Parent (and such other persons) (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Access shall include the right to conduct such
studies, demonstrations and tests of the Company's Product Software and Other
Products as Parent, in its reasonable discretion, shall deem appropriate. After
the Appointment Date, the Company shall provide Parent and such persons as
Parent shall designate with all such information, at such time as Parent shall
request. Unless otherwise required by law and until the Appointment Date, Parent
and the Purchaser will hold any such information which is non-public in
confidence in accordance with, and will otherwise abide by, the provisions of
the Confidentiality Agreement. No investigation pursuant to this Section 6.3(a)
shall affect any representation or warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel,
agents and other representatives shall cooperate with Parent and the Purchaser
(and such other persons) by providing information about the Company which is
necessary for Parent and the Purchaser and its accountants, agents, counsel and
other representatives to prepare the Disclosure Documents and to satisfy other
reasonable requests with respect to such documents. Notwithstanding the
penultimate sentence of Section 6.3(a) above, Parent and the Purchaser may
disclose, or cause their representatives to disclose, and at the request of
Parent or the Purchaser, the Company shall and shall cause its Subsidiaries to
disclose information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the Transactions contemplated
by this Agreement in the Disclosure Documents and to prospective financing
sources in connection with the Transactions contemplated hereby.
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Section 6.4 Consents and Approvals.
(a) Each of Parent, the Purchaser and the Company will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this Agreement and the Transactions
(which actions shall include, without limitation, furnishing all information
required under the HSR Act and in connection with approvals of or filings with
any other Governmental Entity) and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with this Agreement and
the Transactions. Each of the Company, Parent and the Purchaser will, and will
cause each of its respective Subsidiaries to, take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, the Purchaser, the Company or any of their
respective Subsidiaries in connection with the Transactions or the taking of any
action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions necessary
to file on the date this Agreement is executed notifications under the HSR Act
and to respond as promptly as practicable to any inquiries received from the
Federal Trade Commission and the Antitrust Division of the Department of Justice
for additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
(c) All costs and expenses of obtaining or effecting any and all of the
consents, approvals, orders, authorizations, waivers, declarations, filings and
registrations referred to in this Section 6.4 shall be borne by the party
incurring the same, except that Parent hereby agrees to pay any applicable
filing fee (and limited strictly to such filing fee) related to notification
under the HSR Act.
Section 6.5 Brokers or Finders. The Company represents, as to itself
and its Subsidiaries and affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee from the Company or any
of its Subsidiaries in connection with any of the transactions contemplated by
this Agreement except for U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. whose fees are set
forth in a true, correct and complete copy of the engagement letter attached as
Schedule 6.5 of the Company Disclosure Schedules. Parent represents, as to
itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee from Parent or any of its Subsidiaries in connection
with any of the transactions contemplated by this Agreement except for
NationsBank ▇▇▇▇▇▇▇▇▇▇ Securities whose fees are set forth in a true, correct
and complete copy of the engagement letter attached as Schedule 6.5 of the
Parent Disclosure Schedules. Except as set forth on Schedule 6.5 of the Company
Disclosure Schedules, the Company shall indemnify and hold harmless Parent and
the Purchaser from and against any and all losses, claims, damages, and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee or any other commission or similar fee, brokerage
commission, or similar payment in connection with any transaction contemplated
hereby asserted by any Person on the basis of any act or statement made or
alleged to have been made by the Company or any of its affiliates. Except as
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set forth on Schedule 6.5 of the Parent Disclosure Schedules, Parent and the
Purchaser shall indemnify and hold harmless the Company from and against any and
all losses, claims, damages, and liabilities (including legal and other expenses
reasonably incurred in connection with investigating or defending any claims or
actions) with respect to any finder's fee or any other commission or similar
fee, brokerage commission, or similar payment in connection with any transaction
contemplated hereby asserted by any Person on the basis of any act or statement
made or alleged to have been made by Parent or any of its affiliates.
Section 6.6 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party believes, after receiving the advice of
outside counsel, may be required by law or by any listing agreement with a
national securities exchange or trading market. Information included in
Disclosure Documents shall not be deemed to constitute public disclosure for
purposes of this Section 6.6.
Section 6.7 Directors' and Officers' Insurance and
Indemnification.
(a) For five (5) years after the Effective Time, Parent and the
Surviving Corporation (or any successor to the Surviving Corporation) shall
indemnify, defend and hold harmless the present and former officers and
directors of the Company and its Subsidiaries, and persons who become any of the
foregoing prior to the Effective Time (each an "Indemnified Party") against all
losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the written consent of the Parent or the Surviving
Corporation, which consent shall not unreasonably be withheld)) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent permissible under the KGCC, the terms of the Company's Articles of
Incorporation or By-Laws, as in effect at the date hereof; provided, that in the
event any claim or claims are asserted or made within such five (5) year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
period of not less than five (5) years after the Effective Time; provided, that
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
canceled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall Parent be required to pay aggregate
premiums for insurance under this Section 6.7(b) in excess of $250,000;
provided, further, that if the Parent or the Surviving Corporation is unable to
obtain the amount of insurance required by this Section 6.7(b) for such
aggregate premium, Parent or the Surviving Corporation shall obtain as much
insurance as can be obtained for $250,000.
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Section 6.8 Purchaser Compliance. Parent shall cause the Purchaser to
comply with all of its obligations under or related to this Agreement.
Section 6.9 Nasdaq National Market Listing and De-Listing. Parent shall
use its best efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for listing on the Nasdaq National Market subject to
official notice of issuance, prior to the Closing Date. Parent shall use its
best efforts to the extent feasible to cause the Shares to continue to be listed
on the Nasdaq National Market and registered under the Exchange Act until the
Effective Time. Parent shall use its best efforts to cause the Shares to be
de-listed from the Nasdaq National Market and de-registered under the Exchange
Act as soon as possible following the Effective Time.
Section 6.10 Agreement of Affiliates. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "Affiliate Letter") identifying all persons who
are, or may be deemed to be, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable best efforts
to cause each such person who is identified as an "affiliate" in the Affiliate
Letter to deliver to Parent, prior to the Effective Time, a written agreement
(the "Affiliate Agreement") in substantially the form attached hereto as Exhibit
B.
Section 6.11 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the conditions
of this Agreement, the Purchaser and the Company agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under any
applicable laws to consummate and make effective the transactions contemplated
by this Agreement as promptly as practicable including, but not limited to (i)
the preparation and filing of all forms, registrations and notices required to
be filed to consummate the transactions contemplated by this Agreement and the
taking of such actions as are necessary to obtain any requisite approvals,
consents, orders, exemptions or waivers by any third party or Governmental
Entity, (ii) the preparation of any Offering Documents, the Registration
Statement or Disclosure Documents requested by the Purchaser, (iii) the
obtainment by Parent of the Debt Financing and (iv) the satisfaction of the
other parties' conditions to Closing. In addition, no party hereto shall take
any action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult with the
other parties hereto with respect to, provide any necessary information with
respect to and provide the other (or its counsel) copies of, all filings made by
such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement. Each party hereto shall promptly
inform the other parties of any communication from any Governmental Entity
regarding any of the transactions contemplated by this Agreement. If any party
hereto or affiliate thereof receives a request for additional information or
documentary material from any such Government Entity with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party,
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an appropriate response in compliance with such request. To the extent that
transfers of permits or environmental permits are required as a result of
execution of this Agreement or consummation of the transactions contemplated
hereby, the Company shall use its best efforts to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require the Purchaser to defend against any litigation brought by any
Governmental Entity seeking to prevent the consummation of the transactions
contemplated hereby.
Section 6.12 No Repurchase of Parent Common Stock. Prior to the Merger,
Parent will not repurchase any shares of Parent Common Stock.
Section 6.13 Company Stock Plan Amendments. Prior to or
contemporaneously with the closing of the Offer, the Company will amend (i) its
401(k) plan so as to insure that neither Parent nor its Subsidiaries (other than
the Company) will become participating employees in such plan and (ii) the
Directors Plan to preclude any further grants of options thereunder.
ARTICLE VII
CONDITIONS
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 on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by Parent,
the Purchaser, or the Company, as the case may be, to the extent permitted by
applicable law:
(a) Stockholder Approval. The Merger and this Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, as
required by the KGCC and the NGCL;
(b) Statutes, Court Orders. No statute, rule or regulation shall have
been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger; and there shall be no order or injunction of a court
of competent jurisdiction in effect precluding consummation of the Merger;
(c) Purchase of Shares in Offer. The Purchaser shall have made, or
caused to be made, the Offer and shall have purchased, or caused to be
purchased, 9,158,155 Shares pursuant to the Offer; provided, that this condition
shall be deemed to have been satisfied with respect to the obligation of Parent
and the Purchaser to effect the Merger if the Purchaser fails to accept for
payment or pay for Shares pursuant to the Offer in violation of the terms of the
Offer or of this Agreement;
(d) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose and no similar proceeding
in respect of the Proxy Statement shall have been initiated or threatened by the
SEC; and
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(e) HSR Approval. The applicable waiting period under the HSR Act shall
have expired or early termination shall have been granted with respect to the
Offer.
Section 7.2 Conditions to Obligations by Parent and the Purchaser to
Effect the Merger. The obligations of Parent and the Purchaser to consummate the
Merger are further subject to fulfillment of the condition that all actions
contemplated by Section 2.5 hereof shall have been taken, which condition may be
waived by Parent and the Purchaser.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval of the Merger:
(a) By mutual written consent of Parent and the Company; or
(b) By Parent if the Offer shall have expired or been terminated
without any Shares being purchased thereunder by the Purchaser as a result of
the occurrence of any of the events set forth in Annex I; or
(c) By either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement; or
(d) By Parent if, without any material breach by the Purchaser of its
obligations under this Agreement, the purchase of Shares pursuant to the Offer
shall not have occurred on or before three (3) months from date of this
Agreement; or
(e) By the Company if, without any material breach by the Company of
its obligations under this Agreement, the purchase of Shares pursuant to the
Offer shall not have occurred on or before three (3) months from date of this
Agreement; or
(f) By the Company (i) if there shall be a material breach of any of
Parent or the Purchaser's representations, warranties or covenants hereunder,
which breach cannot be or has not been cured within thirty (30) days of the
receipt by Parent of written notice thereof from the Company or (ii) to allow
the Company to enter into an agreement in accordance with Section 5.3(c) hereof
with respect to a Superior Proposal which the Company's Board of Directors has
determined is more favorable to the stockholders of the Company than the
transactions contemplated hereby;
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provided, however, if termination is pursuant to clause (ii) of this Section
8.1(f), that it has complied with all provisions thereof, including the notice
provision therein, and that it makes simultaneous payment of the Termination Fee
(as hereinafter defined), plus any amounts then due as a reimbursement of
expenses pursuant to Section 8.2(b) hereof; or
(g) By Parent, if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached any representation, warranty or covenant
or other agreement contained in this Agreement, which breach (i) would give rise
to the failure of a condition set forth in paragraph (f) or (g) of Annex I
hereto and (ii) cannot be or has not been cured within thirty (30) days of the
receipt by the Company of written notice thereof from Parent; or
(h) By Parent, at any time prior to the purchase of the Shares pursuant
to the Offer, if (i) the Company's Board of Directors shall withdraw, modify, or
change its recommendation or approval in respect of this Agreement or the Offer
in a manner adverse to the Purchaser, (ii) the Company's Board of Directors
shall have recommended any proposal other than by Parent or the Purchaser in
respect of an Acquisition Proposal, (iii) the Company shall have exercised a
right with respect to an Acquisition Proposal referenced in Section 5.3(b)
hereof and shall, directly or through its representatives, continue discussions
with any third party concerning an Acquisition Proposal, which proposal contains
a proposal as to price (without regard to whether such proposal specifies a
particular price or range of potential prices), for more than twenty (20)
business days after the date of receipt of such Acquisition Proposal, (iv) an
Acquisition Proposal that is publicly disclosed shall have been commenced,
publicly proposed or communicated to the Company which contains a proposal as to
price (without regard to whether such proposal specifies a specific price or a
range of potential prices) and the Company shall not have rejected such proposal
within twenty (20) business days of its receipt or, if sooner, the date its
existence first becomes publicly disclosed; or
(i) By Parent, as soon as practicable after the expiration of the
Offer, if the Bank shall not have extended the Debt Financing to Purchaser in
accordance with the Commitment Letter and Parent shall have determined in good
faith that it cannot obtain debt financing within thirty-five (35) business days
after commencement of the Offer from any other source on terms at least as
favorable in the aggregate as the terms set forth in the Commitment Letter; or
(j) By the Company, at the initial scheduled expiration date of the
Offer or any extended expiration date of the Offer, if at such time (i) Parent
shall not have obtained the Debt Financing or waived the condition set forth in
subparagraph (k) of Annex I hereto and (ii) the Minimum Condition and all other
conditions set forth in Annex I (other than those set forth in paragraph (k)
thereof) have been satisfied or, to the extent such conditions may be so waived,
waived by Parent.
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in
Section 8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void and
there shall be no liability on the part of Parent, the Purchaser or the Company,
except (i) as set forth in this Section 8.2 and in Sections 6.3(a), 6.5 and 9.3
hereof and (ii) nothing herein shall relieve any party from liability for any
willful and material breach of this Agreement.
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(b) If (i) Parent shall have terminated this Agreement pursuant to
Section 8.1(h) hereof, (ii) Parent shall have terminated this Agreement pursuant
to Section 8.1(g) hereof and within twelve (12) months following the date of any
such termination, an acquisition pursuant to an Acquisition Proposal shall have
been consummated or (iii) the Company shall have terminated this Agreement
pursuant to Section 8.1(f)(ii), then in any such case the Company shall pay in
immediately available funds simultaneously with such termination if pursuant to
Section 8.1(f)(ii) hereof and promptly, but in no event later than two (2)
business days after the date of such termination if pursuant to Section 8.1(h)
hereof or the consummation of the acquisition contemplated by the Acquisition
Proposal following a termination pursuant to Section 8.1(g), to Parent a
Termination Fee, which fee shall be payable by wire transfer to such account as
Parent may designate in writing to the Company.
(c) Notwithstanding the provisions set forth in Section 8.2(a) and
Section 8.2(b) above, if this Agreement is terminated by Parent pursuant to
Section 8.1(i) hereof or by the Company pursuant to Section 8.1(j) hereof and
Parent is not entitled to terminate, withdraw or not consummate the Offer under
one or more of the conditions to the Offer set forth in Annex I to this
Agreement (other than the condition set forth in subparagraph (k) of Annex I),
Parent shall pay the Termination Fee to the Company in immediately available
funds. Payment of the Termination Fee shall be made within two (2) business days
after Parent's or the Company's termination of this Agreement pursuant to
Section 8.1(i) or Section 8.1(j).
(d) Notwithstanding the provisions set forth in Sections 8.2(a) and
Section 8.2(b) above, if at least a majority of the issued and outstanding
Common Stock on a fully diluted basis has been validly tendered and not
withdrawn prior to the expiration of the Offer, and this Agreement is terminated
by Parent pursuant to Section 8.1(b) or by the Company pursuant to Section
8.1(e) hereof, Parent shall pay the Termination Fee to the Company in
immediately available funds if Parent or the Company terminates this Agreement
solely as a result of the Minimum Condition not having been satisfied, with
payment of the Termination Fee to be made within two (2) business days after
Parent's or the Company's termination of this Agreement.
(e) For purposes of this Agreement, the term "Termination Fee" shall
mean an amount equal to $4,975,000, plus an amount, not in excess of $1,000,000,
equal to the actual and reasonably documented out-of-pocket expenses incurred by
either Parent or Purchaser, on the one hand, or the Company, on the other hand,
as the case may be, in connection with the Offer, the Merger, this Agreement,
the Stockholders' Agreement and the consummation of the transactions
contemplated hereby and thereby.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable law and
Section 1.3(c) hereof, this Agreement may be amended, modified and supplemented
in any and all respects, whether before or after any vote of the stockholders of
the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors or equivalent governing
bodies, at any time prior to the Effective Time with respect to any of the terms
contained
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herein; provided that after the approval of this Agreement by the shareholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 9.2 Non-survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
Section 9.3 Expenses. Except as expressly set forth in Section 6.4(c)
and 8.2(b) hereof, all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses.
Section 9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service, such as Federal Express, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or the Purchaser, to:
InterVoice, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Corporate Counsel
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
InterVoice Acquisition Subsidiary III, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Corporate Counsel
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ & Knight, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Company, to:
Brite Voice Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 9.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the term "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement,
the term "Person" shall mean a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or organization.
Section 9.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein):
(a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and
(b) except as provided in Sections 2.4 and 6.7 hereof, are not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 9.8 Severability. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority
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declares that any term or provision hereof is invalid, void or unenforceable,
the parties agree that the court asking such determination shall have the power
to reduce the scope, duration, area or applicability of the term or provision,
to delete specific words or phrases, or to replace any invalid, void or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
Section 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without giving
effect to the principles of conflicts of law thereof.
Section 9.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. 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. Notwithstanding the foregoing, if any party assigns its rights under
this Agreement, such party shall not be deemed to have been released from its
respective obligations set forth herein.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers hereunto duly
authorized as of the date first written above.
INTERVOICE, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
INTERVOICE ACQUISITION SUBSIDIARY,
III, INC.
By /s/ ▇▇▇-▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇-▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
BRITE VOICE SYSTEMS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board, President
and Chief Executive Officer
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ANNEX I
Certain Conditions of the Offer. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time in its sole discretion (to the
extent as permitted by this Agreement), the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to the 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 terminate or amend the Offer as to any Shares not then paid for,
if (i) as of the expiration date of the Offer (A) any applicable waiting period
under the HSR Act has not expired or terminated or (B) the Minimum Condition has
not been satisfied, or (ii) at any time on or after the date of this Agreement
and before the time of acceptance for payment for any such Shares, any of the
following events shall occur:
(a) there shall be threatened in writing or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material portion
of their (to the extent it relates to the Offer or Merger) or the Company's
businesses or assets, or to compel Parent or the Purchaser or their respective
Subsidiaries and affiliates to dispose of or hold separate any material portion
of the business or assets of the Company and its Subsidiaries or (to the extent
it relates to the Offer or Merger) Parent and its Subsidiaries, in each case
taken as a whole, (ii) challenging the acquisition by Parent or the Purchaser of
any Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement, or seeking to obtain from the
Company, and (to the extent it relates to the Offer or Merger) Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of the Purchaser, or render the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, or (iv) 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
it on all matters properly presented to the Company's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction (other than a temporary or preliminary injunction that is removed
within ten (10) days) enacted, entered, enforced, promulgated, or deemed
applicable, pursuant to an authoritative interpretation by or on behalf of a
Governmental Entity, 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 HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market for a period in excess of
twenty-four (24) hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to market
A-1
82
conditions), (ii) a declaration of a general banking moratorium or any general
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States (which shall not include the United States' participation in the NATO
peacekeeping mission in the provinces of the former Yugoslavia (including but
not limited to Serbia, Kosovo and Albania)), (iv) any material limitation by any
United States governmental authority on the extension of credit generally by
banks or other lending institutions, or (v) a change in general financial, bank
or capital market conditions which materially and adversely affects the ability
of financial institutions in the United States to extend credit or syndicate
loans or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(d) since December 31, 1998, there shall have occurred any change (or
any development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any change) that constitutes a Company Material Adverse
Effect;
(e) (i) the Company's Board of Directors or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or this Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 5.3(c) of this Agreement;
(f) any of the representations and warranties of the Company set forth
in the Merger Agreement shall not be true and correct, in each case (i) as of
the date referred to in any representation or warranty which addresses matters
as of a particular date, or (ii) as to all other representations and warranties,
as of the date of this Agreement and as of the scheduled expiration of the Offer
and such inaccuracy individually or in the aggregate would have a Company
Material Adverse Effect;
(g) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under this Agreement and such failure individually or in the aggregate would
have a Company Material Adverse Effect;
(h) the Purchaser shall have failed to receive a certificate executed
by the President or a Vice President of the Company, dated as of the scheduled
expiration of the Offer, to the effect that the conditions set forth in
paragraphs (f) and (g) of this Annex I have not occurred;
(i) all consents, permits and approvals of Governmental Entities and
other persons listed in Schedule 3.4 of the Company Disclosure Schedules and
identified with an asterisk shall not have been obtained with no material
adverse conditions attached and no material expense imposed on the Company or
any of its Subsidiaries;
(j) this Agreement shall have been terminated in accordance with its
terms; and
(k) Parent and/or the Purchaser shall not have received the Debt
Financing for the Transactions contemplated by the Commitment Letter from the
Bank, and Parent shall have determined in good faith that it cannot obtain debt
financing from any other source within thirty-five
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(35) business days after commencement of the Offer on terms at least as
favorable in the aggregate as the terms set forth in the Commitment Letter.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such conditions (including any action or inaction
by Parent or the Purchaser) and may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in the sole discretion of
Parent or the Purchaser, except as otherwise provided by this Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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EXHIBIT A
FORM OF STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of April 27,
1999, is made by and among InterVoice, Inc., a Texas corporation ("Parent"),
InterVoice Acquisition Subsidiary III, Inc., a Nevada corporation and a wholly
owned subsidiary of Parent (the "Purchaser") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ (on his own behalf, as well as on behalf of his minor
children for whom ▇▇. ▇▇▇▇▇ acts as custodian for 80,000 shares of Common Stock
(as hereinafter defined) beneficially owned by his minor children), ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇, III (collectively, the "Stockholders").
WHEREAS, the Stockholders are, as of the date hereof, the record and
beneficial owners of approximately 3,090,541 shares (as may be adjusted from
time to time pursuant to Section 6 hereof, the "Shares") of common stock, no par
value (the "Common Stock") of Brite Voice Systems, Inc., a Kansas corporation
(the "Company");
WHEREAS, certain of the Stockholders also own options to purchase
shares of Common Stock (the "Stock Options") pursuant to various stock option
plans maintained by the Company;
WHEREAS, Parent, the Purchaser and the Company concurrently herewith
are entering into an Acquisition Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), which provides, among other things, for
the acquisition of the Company by Parent by means of a cash tender offer (the
"Offer") for up to 9,158,155 shares of Common Stock and for the subsequent
merger (the "Merger") of the Purchaser with and into the Company upon the terms
and subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and the Purchaser
to enter into the Merger Agreement, and in order to induce Parent and the
Purchaser to enter into the Merger Agreement, the Stockholders have agreed to
enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Parent and the Purchaser of the Merger Agreement, the foregoing preamble and the
mutual representations, warranties, covenants and agreements set forth herein
and therein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Representations and Warranties of the Stockholders. Each
Stockholder hereby, severally and not jointly, represents and warrants to Parent
and the Purchaser as follows:
(a) Such Stockholder is the record and beneficial owner of that number
of shares of Common Stock set forth below opposite such Stockholder's name:
85
Shares
Name of Common Stock
---- ---------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,141,962
---------------
▇▇▇ ▇▇▇▇▇▇▇ 25,000
---------------
▇▇▇▇ ▇. ▇▇▇▇▇ 1,225,106
---------------
▇▇▇▇ ▇. ▇▇▇▇▇, as custodian 80,000
---------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ 472,621
---------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 25,321
---------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 115,000
---------------
▇▇▇ ▇. ▇▇▇▇▇▇ 0
---------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 3,698
---------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, III 1,833
---------------
(b) Such Stockholder holds Stock Options covering that number of shares
of Common Stock set forth below opposite such Stockholder's name:
Share of Common Stock
Name Covered by Stock Options
---- ------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 4,500
------------------------
▇▇▇ ▇▇▇▇▇▇▇ 0
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ 4,500
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, as custodian 0
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ 0
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 139,000
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,000
------------------------
▇▇▇ ▇. ▇▇▇▇▇▇ 140,000
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 142,750
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, III 23,500
------------------------
(c) Such Stockholder has all requisite power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, and has taken any necessary action to authorize the execution, delivery
and performance of this Agreement.
(d) This Agreement has been duly authorized, executed and delivered by
such Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
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(e) Neither the execution and delivery of this Agreement nor the
consummation by such Stockholder of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which such Stockholder is a party or bound or to which those Shares or
Stock Options owned by such Stockholder are subject. Consummation by such
Stockholder of the transactions contemplated hereby will not violate, or require
any consent, approval, or notice under, any provision of any judgment, order,
decree, statute, law, rule or regulation applicable to such Stockholder or those
Shares or Stock Options owned by such Stockholder, except for any necessary
filing under Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or state takeover laws.
(f) The certificates representing those Shares owned by such
Stockholder are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
SECTION 2. Representations and Warranties of Parent and the Purchaser.
Each of Parent and the Purchaser hereby, jointly and severally, represents and
warrants to the Stockholders as follows:
(a) Each of Parent and the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the States of Texas and
Nevada, respectively, has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of Parent and the Purchaser and constitutes the legal, valid and binding
obligation of each of Parent and the Purchaser, enforceable against each of them
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) the availability
of the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Parent and the Purchaser of the transactions
contemplated hereby will result in a violation of, or a default under, or
conflict with, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which Parent or the Purchaser is a
party or bound. The consummation by each of Parent and the Purchaser of the
transactions contemplated hereby will not violate, or require any consent,
approval, or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to either Parent or the Purchaser,
except for any necessary filing under the HSR Act or state takeover laws.
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87
SECTION 3. Purchase and Sale of the Shares. Each Stockholder hereby
agrees, severally but not jointly, that he or she shall tender the Shares into
the Offer promptly, and in any event no later than the third (3RD) business day
following the commencement of the Offer, and that the Stockholders shall not
withdraw any Shares so tendered. The Purchaser hereby agrees to purchase all the
Shares so tendered at a price per Share equal to Thirteen and 40/100s Dollars
($13.40) (the "Offer Price") or any higher price that may be paid in the Offer;
provided, however, that the Purchaser's obligation to accept for payment and pay
for the Shares in the Offer is subject to all the terms and conditions of the
Offer set forth in the Merger Agreement and Annex I thereto.
SECTION 4. Transfer of the Shares. Prior to the termination of this
Agreement, except as otherwise provided herein, each Stockholder agrees,
severally but not jointly, not to: (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of the Shares
or the Stock Options; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of those Shares or
Stock Options owned by such Stockholder or any interest therein; (iii) grant any
proxy, power-of-attorney or other authorization or consent in or with respect to
those Shares owned by such Stockholder or grant any power of attorney or other
authorization or consent in or with respect to those Stock Options owned by such
Stockholder; (iv) deposit those Shares owned by such Stockholder into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or (v) take any other action that would in any way restrict, limit or
interfere with the performance of such Stockholder's obligations hereunder or
the transactions contemplated hereby.
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Stockholder hereby irrevocably grants to, and appoints, Parent
and any nominee thereof, as such Stockholder's respective proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Stockholder, to vote those Shares owned by such Stockholder,
or grant a consent or approval in respect of such Shares, in connection with any
meeting of the stockholders of the Company (i) in favor of the Merger, and (ii)
against any action or agreement which would impede, interfere with or prevent
the Merger, including any other extraordinary corporate transaction, such as a
merger, reorganization or liquidation involving the Company and a third party or
any other proposal of a third party to acquire the Company.
(b) Each Stockholder represents, severally but not jointly, that any
proxies, if any, heretofore given in respect of those Shares owned by such
Stockholder are not irrevocable, and that such proxies are hereby revoked.
(c) Each Stockholder hereby affirms, severally but not jointly, that
such Stockholder's irrevocable proxy set forth in this Section 5 is given in
connection with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of such Stockholder under
this Agreement. Each Stockholder hereby further affirms, severally but not
jointly,
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88
that such Stockholder's irrevocable proxy is coupled with an interest and,
except as set forth in Section 9 hereof, is intended to be irrevocable in
accordance with the provisions of Section 17-6502 of the Kansas General
Corporation Code (the "KGCC").
SECTION 6. Certain Events. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by the Stockholders, the number of Shares and the number of shares of
Common Stock covered by the Stock Options shall be adjusted appropriately, and
this Agreement and the obligations hereunder shall attach to any additional
shares of Common Stock or other securities or rights of the Company issued to or
acquired by the Stockholders.
SECTION 7. Stock Option Cash-Out. Subject to the completion of the
Merger, each Stockholder that holds Stock Options as of the date hereof hereby
agrees, severally but not jointly, that he or she shall, in accordance with
Section 2.4 of the Merger Agreement, surrender such Stock Options to the Company
for cancellation prior to the Effective Time (as defined in the Merger
Agreement). Subject to the conditions set forth in the immediately preceding
sentence and within ten (10) days after the Effective Time of the Merger, the
Company will pay the respective holders of those Stock Options that are "in the
money" an amount, in cash, equal to product of (i) the difference between the
Offer Price and the respective per share exercise prices of such Stock Options,
multiplied by (ii) the number of shares of Common Stock covered by the
respective Stock Options.
SECTION 8. Certain Other Agreements.
(a) Except as provided in this Section 8 hereof, each Stockholder will
not, and will ensure that such Stockholder's, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or take any action to facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal (as defined in the Merger Agreement), (ii) enter into any
agreement with respect to any Acquisition Proposal, or (iii) in the event of an
unsolicited Acquisition Proposal for the Company, engage in negotiations or
discussions with, or provide any information or data to, any Person (as defined
in the Merger Agreement) (other than Parent, any of its affiliates or
representatives) relating to any Acquisition Proposal; provided, however, that
nothing contained in this Section 8 or any other provision hereof shall prohibit
Stockholders, on behalf of the Company or the Company's Board of Directors, from
(i) taking and disclosing to the Company's stockholders, its 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
the Company's stockholders as is reasonably deemed necessary, in the good faith
judgment of the Company's Board of Directors after receipt of advice from
outside legal counsel to the Company that such disclosure is required under
applicable law and that the failure to make such disclosure would cause the
Company's Board of Directors to violate its fiduciary duties to the Company's
stockholders under applicable law.
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89
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, each Stockholder may furnish information concerning the
Company's business, properties or assets to any Person pursuant to a
confidentiality agreement with terms no less favorable to such Stockholder and
the Company than those contained in the Confidentiality Agreement, dated March
12, 1999 entered into between Parent and the Company (the "Confidentiality
Agreement") and may negotiate and participate in discussions and negotiations
with such Person concerning an Acquisition Proposal if (x) such entity or group
has on an unsolicited basis submitted a bona fide written proposal to the
Company relating to any such transaction which the Company's Board of Directors
determines in good faith, after receiving advice from a nationally recognized
investment banking firm, represents a superior transaction to the Offer and the
Merger and (y) the Company's Board of Directors determines in good faith, only
after receipt of written advice from outside legal counsel to the Company, that
the failure to provide such information or access or to engage in such
discussions or negotiations would cause the Company's Board of Directors to
violate its fiduciary duties to the Company's stockholders under applicable law
(an Acquisition Proposal which satisfies clauses (x) and (y) being referred to
herein as a "Superior Proposal"). Each Stockholder shall promptly, and in any
event within one (1) business day following receipt of a Superior Proposal,
notify Parent of the receipt of the same and prior to providing any such party
with any material non-public information. Each Stockholder shall promptly
provide to Parent any material non-public information regarding the Company
provided to any other party which was not previously provided to Parent.
(c) Except as set forth herein, no Stockholder shall (i) approve or
recommend or propose to approve or recommend, any Acquisition Proposal or (ii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares in the Offer, each Stockholder may (subject to the terms of this sentence
and the following sentence) enter into an acquisition agreement with respect to
a Superior Proposal, in which event each Stockholder may take any of the actions
set forth in clauses (i) through (ii) of the immediately preceding sentence;
provided, however, that no Stockholder shall enter into an acquisition agreement
with respect to a Superior Proposal unless the Company shall have furnished
Parent with written notice not later than the first to occur of (i) 12:00 noon
three (3) business days in advance of any date that it intends to enter into
such acquisition agreement or (ii) two (2) business days prior to the expiration
of the Offer; and shall have caused its financial and legal advisors to
negotiate with Parent to make such adjustments in the terms and conditions of
this Agreement as would enable the Stockholder to proceed with the Transactions
contemplated herein on such adjusted terms.
SECTION 9. Further Assurances. Each Stockholder shall, upon request of
Parent or the Purchaser, execute and deliver any additional documents and take
such further actions as may reasonably be deemed by Parent or the Purchaser to
be necessary or desirable to carry out the provisions hereof and to vest in
Parent the power to vote those Shares owned by such Stockholder as contemplated
by Section 5 hereof.
SECTION 10. Termination. This Agreement, and all rights and obligations
of the parties hereunder, shall terminate immediately upon the earliest of (a)
the termination of the Merger Agreement in accordance with its terms, (b) the
Effective Time (as defined in the Merger Agreement),
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or (c) written notice by Parent that Parent, in its sole discretion determines
to terminate this Agreement; provided, however, that Section 11 hereof shall
survive any termination of this Agreement.
SECTION 11. Expenses. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
SECTION 12. Public Announcements. The initial press release with
respect to the execution of this Agreement and the Merger Agreement shall be a
joint press release acceptable to Parent, the Purchaser and the Stockholders.
Thereafter, so long as this Agreement is in effect, neither the Parent,
Purchaser, nor the Stockholders, nor any of their respective affiliates shall
issue or cause the publication of any press release or other announcement with
respect to the Merger Agreement, this Agreement or the other Transactions (as
defined in the Merger Agreement) without the prior consultation of the other
party, except as such party believes, after receiving the advice of outside
counsel, may be required by law or by any listing agreement with a national
securities exchange or trading market. Stockholders hereby designate the Company
to represent them in connection with any press releases and announcements.
SECTION 13. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to such terms in the Merger
Agreement.
(b) All notices and other communications hereunder shall be in writing
and shall be deemed given upon (i) transmitter's confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a standard overnight carrier
or when delivered by hand or (iii) the expiration of five (5) business days
after the day when mailed in the United States by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(A) if to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, to:
c/o Brite Voice Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(B) if to ▇▇▇ ▇▇▇▇▇▇▇, to:
c/o Brite Voice Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
7
91
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(C) if to ▇▇▇▇ ▇. ▇▇▇▇▇, Individually or as Custodian, to:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(D) if to ▇▇▇▇▇ ▇. ▇▇▇▇▇, to:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: _______________
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(E) if to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, to:
c/o Brite Voice Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(F) if to ▇▇▇▇ ▇. ▇▇▇▇▇▇, to:
c/o Brite Voice Systems, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(G) if to ▇▇▇ ▇. ▇▇▇▇▇▇, to:
c/o Brite Voice Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(H) if to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, to:
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92
c/o Brite Voice Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
(I) if to ▇▇▇▇ ▇. ▇▇▇▇▇▇, III, to:
c/o The Kelsey Group
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
and
(J) if to Parent or the Purchaser, to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Vice President and Corporate Counsel
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
(c) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(e) This Agreement (including the Merger Agreement and any other
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, whether written and
oral, among the parties hereto with respect to the subject matter hereof.
9
93
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Texas without giving effect to the principles of
conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. 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, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) If any term, provision, covenant, restriction or part of the
Agreement herein is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable (either generally or with respect to
certain of the Shares) or against its regulatory policy, the remainder of the
terms, provisions, covenants, restrictions and parts of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired,
invalidated or removed.
(i) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Dallas, Texas.
The parties hereto consent to personal jurisdiction in any such action brought
in any state or federal court sitting in Dallas, Texas and to service of process
upon it in the manner set forth in Section 12(b) hereof.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholders have
caused this Agreement to be duly executed and delivered as of the date first
written above.
INTERVOICE, INC.
By /s/
-------------------------------------
Name:
--------------------------------
Title:
--------------------------------
INTERVOICE ACQUISITION SUBSIDIARY III,
INC.
By /s/
-------------------------------------
Name:
--------------------------------
Title:
--------------------------------
STOCKHOLDERS
/s/
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/
----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇
/s/
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ (on his own behalf and on
behalf of his minor children with
respect to those Shares for which he
acts as custodian)
/s/
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
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STOCKHOLDERS (continued)
/s/
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/
----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
/s/
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, III
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EXHIBIT B
FORM OF AFFILIATE AGREEMENT
, 1999
-----------
InterVoice, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the provisions of the Acquisition Agreement and
Plan of Merger, dated as of April 27, 1999 (together with any amendments
thereto, the "Merger Agreement"), among Brite Voice Systems, Inc., a Kansas
corporation ("Company"), InterVoice, Inc., a Texas corporation ("Parent") and
InterVoice Acquisition Subsidiary III, Inc., a Nevada corporation, and a wholly
owned subsidiary of Parent ("Purchaser"), pursuant to which, among other things,
Purchaser will be merged with and into Company, with Company continuing as the
surviving corporation (the "Merger"). This agreement constitutes the
undertakings of the undersigned contemplated by Section 6.10 of the Merger
Agreement.
I understand that I may be deemed to be an "affiliate" of Company as
such term is defined for purposes of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and that the
transferability of the shares of common stock, no par value per share, of Parent
(the "Parent Common Stock"), together with associated preferred stock purchase
rights, which I may receive upon the consummation of the Merger in exchange for
my shares of common stock, no par value per share, of Company (the "Shares") may
be restricted. Nothing herein shall be construed as an admission that I am an
affiliate.
I hereby represent, warrant and covenant to Parent that:
(a) I have the full power to execute and deliver this
agreement and to make the representations and warranties herein and to perform
the obligations hereunder;
(b) I will not sell, transfer or otherwise dispose of any of
the shares of Parent Common Stock except (i) pursuant to an effective
registration statement under the Securities Act or (ii) as permitted by, and in
accordance with, Rule 145, if applicable, or another applicable exemption under
the Securities Act; and
(c) I will not exercise appraisal rights in connection with
the Merger.
Parent agrees to cause either or both of the conditions set forth in
Rule 144(c) under the Securities Act to be satisfied at all times during the
period prior to the second anniversary of the Effective Time (as defined in the
Merger Agreement).
I hereby acknowledge that except as otherwise provided in the Merger
Agreement or in the previous paragraph, Parent is under no obligation to
register the sale, transfer or other disposition of
97
the shares of Parent Common Stock or to take any other action necessary for the
purpose of making an exemption from registration available.
I understand that Parent will issue stop transfer instructions to its
transfer agent with respect to the shares of Parent Common Stock that I receive
upon consummation of the Merger and that a restrictive legend will be placed on
the certificates delivered to me evidencing the shares of Parent Common Stock in
substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule
145") promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be sold or otherwise
disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or
unless the proposed sale or disposition can be made in
compliance with Rule 145 or without registration in reliance
on another exemption from registration. Reference is made to
that certain agreement dated _______, 1999 between the Holder
and the Issuer, a copy of which is on file in the principal
office of the Issuer.
Parent agrees to release such stop transfer instructions and to cause
this legend to be removed from the certificates delivered to me evidencing the
shares of Parent Common Stock free of charge to the holder thereof promptly
after the restrictions on transferability of the shares of Parent Common Stock
imposed by Rule 145 are no longer applicable or Parent breaches its obligations
set forth in the first sentence of the fourth paragraph of this agreement, and
after I surrender such certificates to the transfer agent with a request for
such removal.
This agreement shall be binding on successors to Parent and on my
heirs, executors and estate.
I hereby acknowledge that the receipt of this agreement by Parent is an
inducement and a condition to Parent's obligation to consummate the Merger under
the Merger Agreement and this agreement shall be governed by the laws of the
State of Texas.
Very truly yours,
AGREED:
INTERVOICE, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------