EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER
Dated as of June 10, 2002
Among
IM ACQUISITION, INC.
IM MERGER CORP.
and
TECHNISOURCE, INC.
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TABLE OF CONTENTS
ARTICLE I. The Offer and the Merger..............................................................................2
Section 1.01. The Offer.................................................................................2
Section 1.02. The Merger................................................................................4
Section 1.03. Closing...................................................................................4
Section 1.04. Effective Time............................................................................4
Section 1.05. Effects...................................................................................5
Section 1.06. Articles of Incorporation and By-laws.....................................................5
Section 1.07. Directors.................................................................................5
Section 1.08. Officers..................................................................................5
ARTICLE II. Effect on the Capital Stock of the Constituent Corporations; Exchange of Certificates................5
Section 2.01. Effect on Capital Stock...................................................................5
Section 2.02. Exchange of Certificates..................................................................6
ARTICLE III. Representations and Warranties of the Company.......................................................8
Section 3.01. Organization, Standing and Power..........................................................8
Section 3.02. Company Subsidiaries; Equity Interests....................................................8
Section 3.03. Capital Structure.........................................................................9
Section 3.04. Authority; Execution and Delivery; Enforceability.........................................9
Section 3.05. No Conflicts; Consents...................................................................10
Section 3.06. SEC Documents; Undisclosed Liabilities...................................................11
Section 3.07. Information Supplied.....................................................................12
Section 3.08. Absence of Certain Changes or Events.....................................................12
Section 3.09. Taxes....................................................................................14
Section 3.10. Employees................................................................................15
Section 3.11. Employee Benefits........................................................................15
Section 3.12. Absence of Changes in Benefit Plans......................................................17
Section 3.13. Litigation...............................................................................18
Section 3.14. Compliance with Applicable Laws..........................................................18
Section 3.15. No Illegal Payments, Etc.................................................................18
Section 3.16. Contracts................................................................................18
Section 3.17. Intellectual Property....................................................................20
Section 3.18. Brokers; Schedule of Fees and Expenses...................................................21
Section 3.19. Opinion of Financial Advisor.............................................................21
ARTICLE IV. Representations and Warranties of Parent and Sub....................................................21
Section 4.01. Organization, Standing and Power.........................................................21
Section 4.02. Sub......................................................................................21
Section 4.03. Authority; Execution and Delivery; Enforceability........................................22
Section 4.04. No Conflicts; Consents...................................................................22
Section 4.05. Information Supplied.....................................................................23
Section 4.06. Brokers..................................................................................23
Section 4.07. Financial Ability to Perform.............................................................23
ARTICLE V. Covenants Relating to Conduct of Business............................................................23
Section 5.01. Conduct of Business......................................................................23
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Section 5.02. No Solicitation..........................................................................26
ARTICLE VI. Additional Agreements...............................................................................28
Section 6.01. Preparation of Proxy Statement; Shareholders Meeting.....................................28
Section 6.02. Access to Information; Confidentiality...................................................29
Section 6.03. Reasonable Efforts; Notification.........................................................29
Section 6.04. Stock Options............................................................................30
Section 6.05. Benefit Plans............................................................................31
Section 6.06. Indemnification by Parent................................................................31
Section 6.07. Fees and Expenses........................................................................33
Section 6.08. Public Announcements.....................................................................33
Section 6.09. Transfer Taxes...........................................................................33
Section 6.10. Directors................................................................................33
Section 6.11. Shareholder Litigation...................................................................33
ARTICLE VII. Conditions Precedent...............................................................................34
Section 7.01. Conditions to Each Party's Obligation To Effect The Merger...............................34
ARTICLE VIII. Termination, Amendment and Waiver.................................................................35
Section 8.01. Termination..............................................................................35
Section 8.02. Effect of Termination....................................................................36
Section 8.03. Amendment................................................................................37
Section 8.04. Extension; Waiver........................................................................37
Section 8.05. Procedure for Termination, Amendment, Extension or Waiver................................37
ARTICLE IX. General Provisions..................................................................................38
Section 9.01. Nonsurvival of Representations and Warranties............................................38
Section 9.02. Notices..................................................................................38
Section 9.03. Definitions..............................................................................39
Section 9.04. Interpretation; Disclosure Letters.......................................................40
Section 9.05. Severability.............................................................................40
Section 9.06. Counterparts.............................................................................40
Section 9.07. Entire Agreement; No Third-Party Beneficiaries...........................................40
Section 9.08. Governing Law............................................................................41
Section 9.09. Assignment...............................................................................41
Section 9.10. Enforcement..............................................................................41
Section 9.11. Consents.................................................................................41
Exhibit A Conditions to the Offer
Exhibit B Articles of Incorporation of the Company
Exhibit C Form of Noncompetition and Nonsolicitation Agreement
Company Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER dated as of June 10, 2002, among IM
ACQUISITION, INC., a Delaware corporation ("PARENT"), IM MERGER CORP., a Florida
corporation ("SUB") and a wholly owned subsidiary of Parent, and TECHNISOURCE,
INC., a Florida corporation (the "COMPANY").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "OFFER") to purchase all the outstanding shares of
common stock, par value $0.01 per share, of the Company (the "COMPANY COMMON
STOCK") at a price per share of Company Common Stock of $4.00, net to the seller
in cash, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "MERGER") of Sub into the Company, or (at
the election of Parent) the Company into Sub, on the terms and subject to the
conditions set forth in this Agreement, whereby each issued share of Company
Common Stock not owned directly by Parent or the Company shall be converted into
the right to receive the highest per share cash consideration paid pursuant to
the Offer;
WHEREAS, the Board of Directors of the Company has unanimously
determined that the consideration to be paid for each share of Company Common
Stock in connection with the Offer and the Merger is fair to the holders of such
shares and has resolved to recommend that the holders of such shares of Company
Common Stock accept the Offer and approve this Agreement and each of the
transactions contemplated by this Agreement upon the terms and subject to the
conditions set forth herein;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and Sub
to enter into this Agreement, the Company is entering into a Stock Option
Agreement, dated as of the date hereof (the "STOCK OPTION AGREEMENT"), with
Parent and Sub pursuant to which the Company is granting to Sub an option to
purchase shares of Company Common Stock upon the terms and subject to the
conditions set forth in the Stock Option Agreement; and
WHEREAS, Parent, Sub, and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I.
The Offer and the Merger
Section 1.01. THE OFFER.
(a) Subject to the conditions of this Agreement, as promptly as
practicable after the date of this Agreement, Sub shall, and Parent shall cause
Sub to, commence the Offer within the meaning of the applicable rules and
regulations of the Securities and Exchange Commission (the "SEC") to purchase
for cash all of the shares of Company Common Stock at a price of $4.00 per
share, net to seller in cash (such price, or such higher price as may be paid in
the Offer, being referred to herein as the "OFFER PRICE"). The obligation of Sub
to, and of Parent to cause Sub to, commence the Offer and accept for payment,
and pay for, any shares of Company Common Stock tendered pursuant to the Offer
are subject to the conditions set forth in Exhibit A. The initial expiration
date of the Offer shall be the 20th business day following the commencement of
the Offer (determined using Rules 14d-1(g)(3) and 14d-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")). Sub expressly
reserves the right to waive any condition to the Offer or modify the terms of
the Offer, except that, without the consent of the Company, Sub shall not and
Parent shall not permit Sub to (i) reduce the number of shares of Company Common
Stock subject to the Offer, (ii) reduce the price per share of Company Common
Stock to be paid pursuant to the Offer, (iii) waive or change the Minimum Tender
Condition (as defined in Exhibit A), (iv) modify in any manner adverse to the
holders of Company Common Stock or add to the conditions set forth in Exhibit A,
(v) except as provided in the next sentence, extend the Offer or (vi) change the
form of consideration payable in the Offer. Notwithstanding the foregoing, Sub
may, without the consent of the Company, (A) extend the Offer for the shortest
time periods which are necessary, but in no event more than an additional 60
days, in one or more periods of not more than five business days, if Parent and
Sub are not in material breach of the Agreement and if any of the conditions to
the Offer are not satisfied or waived and such conditions are reasonably capable
of being satisfied, (B) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer and (C) if at the scheduled or any extended expiration
date of the Offer less than 80% of the Fully Diluted Shares (as defined in
Exhibit A) have been validly tendered and not withdrawn in the Offer, extend the
Offer for a period of not more than ten business days in the aggregate beyond
the latest expiration date that would otherwise be permitted under clause (A) or
(B) of this sentence. In addition, Sub may make available a "subsequent offering
period" for up to 20 days in accordance with Rule 14d-11 of the Exchange Act. In
the event that the Minimum Tender Condition has not been satisfied or waived at
the scheduled expiration date of the Offer, Sub shall, and Parent shall cause
Sub to, extend the expiration date of the Offer in such increments as Sub may
determine until the earliest to occur of (w) the satisfaction or waiver of such
condition, (x) Parent reasonably determines that such condition to the Offer is
not capable of being satisfied on or prior to the Outside Date (as defined in
Section 8.01(b)(i)), (y) the termination of this Agreement in accordance with
its terms and (z) the Outside Date. On the terms and subject to the conditions
of the Offer and this Agreement, Sub shall accept for payment and pay for all
shares of Company Common Stock validly tendered and not withdrawn pursuant to
the Offer that Sub becomes obligated to purchase pursuant to the Offer as soon
as practicable after the expiration of the Offer.
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(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer,
which shall contain an offer to purchase and a related letter of transmittal and
summary advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"). Each of Parent, Sub and the Company
shall promptly correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Sub shall take all
steps necessary to amend or supplement the Offer Documents and to cause the
Offer Documents as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable Federal securities laws. Parent and Sub shall give the
Company and its counsel a reasonable opportunity to review and comment on the
Offer Documents prior to their being filed with the SEC or disseminated to the
shareholders of the Company. Parent and Sub shall provide the Company and its
counsel in writing with any comments Parent, Sub or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments and shall provide the Company and its counsel with a
reasonable opportunity to participate in the response of Parent or Sub to such
comments.
(c) Upon the acceptance for payment by Sub of any shares of Company
Common Stock tendered pursuant to the Offer, Parent shall provide or cause to be
provided to Sub on a timely basis the funds necessary to purchase any shares of
Company Common Stock that Sub becomes obligated to purchase pursuant to the
Offer. Subject to Section 5.02(b), the Company hereby approves of and consents
to the Offer, the Merger and the other transactions contemplated by this
Agreement (collectively, the "TRANSACTIONS").
(d) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer, including an information statement (such
Schedule 14D-9, as amended and supplemented from time to time, the "SCHEDULE
14D-9"), describing the recommendations referred to in Section 3.04(b), or any
permitted withdrawal or modification in accordance with Section 5.02(b), and
shall mail the Schedule 14D-9 (including the information statement) to the
holders of Company Common Stock. Each of the Company, Parent and Sub shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
shareholders, in each case as and to the extent required by applicable Federal
securities laws. The Company shall provide Parent and its counsel in writing
with any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
(e) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub as promptly as is reasonably practicable with mailing
labels containing the names and addresses of the record holders of Company
Common Stock as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of shareholders,
security position listings and computer files and all other information as Sub
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may reasonably request in the Company's possession or control regarding the
beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of shareholders, security
position listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's shareholders. Subject to the
requirements of applicable Law (as defined in Section 3.05), and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Transactions, Parent and Sub shall hold in
confidence pursuant to the Confidentiality Agreement (as defined in Section
6.02) the information contained in any such labels, listings and files, shall
use such information only for the purpose of communicating the Offer and
disseminating any other documents necessary to consummate the Offer, the Merger
and the other Transactions and, if this Agreement shall be terminated, shall,
upon request, deliver to the Company all copies of such information then in
their possession or control or the control of their agents or representatives.
Section 1.02. THE MERGER. On the terms and subject to the satisfaction
or waiver of the conditions set forth in this Agreement, and in accordance with
the Florida Business Corporation Act (the "BCA"), Sub shall be merged with and
into the Company at the Effective Time (as defined in Section 1.04). At the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION"). The Surviving Corporation shall possess all the rights,
privileges, immunities, powers and franchises of the Company and Sub, and the
Surviving Corporation shall by operation of law become liable for all of the
debts, liabilities and duties of the Company and Sub. The name of the Surviving
Corporation shall be Technisource, Inc. and the purpose thereof shall be as set
forth in the Amended and Restated Articles of Incorporation of the Surviving
Corporation. Notwithstanding the foregoing, Parent may elect at any time prior
to the Merger, instead of merging Sub into the Company as provided above, to
merge the Company with and into Sub; provided, however, that the Company shall
not be deemed to have breached any of its representations, warranties or
covenants set forth in this Agreement solely by reason of such election. In such
event, the parties shall execute an appropriate amendment to this Agreement to
reflect the foregoing. At the election of Parent, any direct or indirect wholly
owned subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
Section 1.03. CLOSING. The closing (the "CLOSING") of the Merger shall
take place at the offices of Ropes & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by Law, waiver by all parties) of the
conditions set forth in Article VII, or at such other place, time and date as
shall be agreed in writing between Parent and the Company. The date on which the
Closing occurs is referred to in this Agreement as the "Closing Date."
Section 1.04. EFFECTIVE TIME. Prior to the Closing, Parent shall
prepare and give the Company and its counsel the opportunity to review, and on
the Closing Date or as soon as practicable thereafter Parent shall file with the
Secretary of State of the State of Florida, articles of merger or other
appropriate documents (in any such case, the "ARTICLES OF MERGER") executed in
accordance with the relevant provisions of the BCA and shall make all other
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filings or recordings required under the BCA. The Merger shall become effective
at such time as the Articles of Merger are duly filed with such Secretary of
State, or at such other time as Parent and the Company shall agree and specify
in the Articles of Merger (the time the Merger becomes effective being the
"EFFECTIVE TIME").
Section 1.05. EFFECTS. The Merger shall have the effects set forth in
Section 607.1106 of the BCA.
Section 1.06. ARTICLES OF INCORPORATION AND BY-LAWS.
(a) The Articles of Incorporation of the Company shall be amended and
restated at the Effective Time to read in the form of Exhibit B, and, as so
amended, such Articles of Incorporation shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
(b) Subject to Section 6.06, the By-laws of Sub as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable Law.
Section 1.07. DIRECTORS. At the Closing, Parent shall designate the
directors of the Surviving Corporation and such directors shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.08. OFFICERS. At the Closing, Parent shall designate the
officers of the Surviving Corporation and such officers shall hold office until
the earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
ARTICLE II.
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
Section 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of capital
stock of Sub shall be converted into and become a number of fully paid and
non-assessable shares of common stock, par value $0.01 per share, of the
Surviving Corporation ("SURVIVING CORPORATION COMMON STOCK") equal to (i) the
number of shares of Company Common Stock outstanding immediately prior to
Effective Time (excluding any shares of Company Common Stock that are owned by
any subsidiary of the Company or Parent other than Sub) divided by (ii) 1,000;
PROVIDED, HOWEVER, that if the aggregate number of shares of Surviving
Corporation Common Stock into which the capital stock of Sub is to be converted
pursuant to this Section 2.01(a) is not a whole number, such number shall be
rounded up to the next higher whole number.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share
of Company Common Stock that is owned directly by the Company, Parent or Sub
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no other consideration shall be delivered or
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deliverable in exchange therefor. Each share of Company Common Stock that is
owned by any subsidiary of the Company or Parent (other than Sub) shall
automatically be converted into one fully paid and nonassessable share of
Surviving Corporation Common Stock.
(c) CONVERSION OF COMPANY COMMON STOCK.
(i) Subject to Sections 2.01(b) and 2.01(d), each issued share
of Company Common Stock shall be converted into the right to receive in cash the
Offer Price, without interest.
(ii) The cash payable upon the conversion of shares of Company
Common Stock pursuant to this Section 2.01(c) is referred to collectively as the
"MERGER CONSIDERATION". As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive Merger Consideration
upon surrender of such certificate in accordance with Section 2.02, without
interest.
Section 2.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent shall select a
bank or trust company in the United States, reasonably acceptable to the
Company, to act as paying agent (the "PAYING AGENT") for the payment of the
Merger Consideration upon surrender of certificates representing Company Common
Stock. Parent shall take all steps necessary to enable and cause the Surviving
Corporation to provide to the Paying Agent on a timely basis, as and when needed
after the Effective Time, cash necessary to pay for the shares of Company Common
Stock converted into the right to receive cash pursuant to Section 2.01(c) (such
cash being hereinafter referred to as the "EXCHANGE FUND"). If for any reason
(including losses) the Exchange Fund is inadequate to pay the amounts to which
holders of shares of Company Common Stock shall be entitled under this Section
2.02(a), Parent shall take all steps necessary to enable or cause the Surviving
Corporation promptly to deposit in trust additional cash with the Paying Agent
sufficient to make all payments required under this Agreement, and Parent and
the Surviving Corporation shall in any event be jointly and severally liable for
payment thereof. The Exchange Fund shall not be used for any purpose except as
expressly provided in this Agreement.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time but in no event more than 10 days after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates (the "CERTIFICATES") that immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock whose shares were converted into the right to receive Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01, and the Certificate so surrendered shall forthwith be canceled.
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In the event of a transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other Taxes (as defined in Section 3.09(j)) required by reason of
the payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such Tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the shares of Company Common Stock theretofore represented
by such Certificate have been converted pursuant to Section 2.01. If any holder
of shares of Company Common Stock shall be unable to surrender such holder's
Certificates because such Certificates have been lost, mutilated or destroyed,
such holder may deliver in lieu thereof an affidavit and indemnity bond in form
and substance and with surety reasonably satisfactory to the Surviving
Corporation. No interest shall be paid or accrue on the cash payable upon
surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any certificates
formerly representing shares of Company Common Stock are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
(e) NO LIABILITY. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate has not been surrendered prior to
five years after the Effective Time (or immediately prior to such earlier date
on which Merger Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.05)), any such shares, cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
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(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(g) WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable to any holder of Company Common Stock
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Code (as defined
in Section 3.11), or under any provision of state, local or foreign tax Law.
(h) CHARGES AND EXPENSES. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of cash for shares of Company Common Stock.
ARTICLE III.
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as follows:
Section 3.01. ORGANIZATION, STANDING AND POWER.
(a) Each of the Company and each of its subsidiaries (the "COMPANY
SUBSIDIARIES") is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has full corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals, and has made all filings, registrations
and declarations, in each case whether domestic or foreign, necessary to enable
it to own, lease or otherwise hold its properties and assets and to conduct its
businesses as presently conducted in each case other than such franchises,
licenses, permits, authorizations, approvals, filings, registrations and
declarations the lack of which, individually and in the aggregate, has not had
and would not reasonably be expected to have a Company Material Adverse Effect
(as defined in Section 9.03).
(b) The Company and each Company Subsidiary is duly qualified to do
business in each jurisdiction where the nature of its business or its ownership
or leasing of its properties makes such qualification necessary except where the
failure to so qualify has not had and would not reasonably be expected to have a
Company Material Adverse Effect. The Company has made available to Parent true
and complete copies of the articles of incorporation of the Company, as amended
to the date of this Agreement (as so amended, the "COMPANY CHARTER"), and the
by-laws of the Company, as amended to the date of this Agreement (as so amended,
the "COMPANY BY-LAWS"), and the comparable charter and organizational documents
of each Company Subsidiary, in each case as amended through the date of this
Agreement.
Section 3.02. COMPANY SUBSIDIARIES; EQUITY INTERESTS.
(a) Section 3.02 of the Company Disclosure Schedule lists each Company
Subsidiary and its jurisdiction of organization. All the outstanding shares of
capital stock of each "significant subsidiary" (as defined in Regulation S-X of
the Federal securities laws) ("SIGNIFICANT SUBSIDIARY") of the Company have been
validly issued and are fully paid and nonassessable and, except as set forth in
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Section 3.02 of the Company Disclosure Schedule, are owned by the Company, by
another Significant Subsidiary of the Company or by the Company and another
Significant Subsidiary of the Company, free and clear of all pledges, liens,
charges, mortgages, encumbrances and security interests of any kind or nature
whatsoever (collectively, "LIENS").
(b) Except for its interests in the Company Subsidiaries and except for
the ownership interests set forth in Section 3.02 of the Company Disclosure
Schedule, the Company does not own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.
Section 3.03. CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 50,000,000 shares of (the "COMPANY CAPITAL STOCK"). At the
close of business on June 10, 2002, (i) 10,385,000 shares of Company Common
Stock were issued and outstanding, (ii) no shares of Company Common Stock were
held by the Company in its treasury, and (iii) 1,672,157 shares of Company
Common Stock were subject to outstanding Company Stock Options (as defined in
Section 6.04) and 606,943 additional shares of Company Common Stock were
reserved for issuance pursuant to the Company Stock Plans (as defined in Section
6.04). Except as set forth above, at the close of business on June 10, 2002, no
shares of capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. All outstanding shares of Company Capital
Stock are, and all such shares that may be issued prior to the Effective Time
will be when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to or issued in violation of any purchase option,
call option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the BCA, the Company Charter, the Company
By-laws or any Contract (as defined in Section 3.05) to which the Company is a
party or otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Company Common Stock may vote ("VOTING COMPANY DEBT"). Except as set
forth above, as of the date of this Agreement, there are not any options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance units, commitments,
Contracts, arrangements or undertakings of any kind to which the Company or any
Company Subsidiary is a party or by which any of them is bound (i) obligating
the Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, Contract, arrangement or undertaking
or (iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights occurring to holders
of Company Capital Stock. As of the date of this Agreement, there are not any
outstanding contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary.
Section 3.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY.
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(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the Company Shareholder
Approval (as defined below) with respect to the Merger if required by Law, to
consummate the Transactions. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to receipt of the Company Shareholder
Approval. The Company has duly executed and delivered this Agreement, and this
Agreement constitutes its legal, valid and binding obligation (subject to the
Company Shareholder Approval with respect to the Merger if required by Law),
enforceable against it in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of the principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
(b) The Board of Directors of the Company (the "COMPANY BOARD"), at a
meeting duly called and held, duly and unanimously adopted resolutions (i)
approving this Agreement, the Offer, the Merger and the other Transactions, (ii)
determining that the terms of the Offer, the Merger and the other Transactions
are fair to and in the best interests of the Company and its shareholders, (iii)
recommending that the holders of Company Common Stock accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer and (iv)
recommending that the Company's shareholders approve this Agreement. Such
resolutions are sufficient to render inapplicable to Parent and Sub and this
Agreement, the Offer, the Merger and the other Transactions the provisions of
Section 607.0901 and 607.0902 of the BCA. To the Company's knowledge, no other
state takeover statute or similar statute or regulation applies or purports to
apply to the Company with respect to this Agreement, the Offer, the Merger or
any other Transaction. The Company has been advised by each of its directors and
executive officers that, as of the date of this Agreement, each such person
intends to tender all shares of Company Common Stock owned by such person
pursuant to the Offer, except to the extent of any restrictions created by
Section 16(b) of the Exchange Act.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval of this Agreement by the holders of a majority of the outstanding
Company Common Stock (the "COMPANY SHAREHOLDER APPROVAL"). The affirmative vote
of the holders of Company Capital Stock, or any of them, is not necessary to
consummate the Offer or any Transaction other than the Merger.
Section 3.05. NO CONFLICTS; CONSENTS.
(a) Except as set forth in Section 3.05 of the Company Disclosure
Schedule, the execution and delivery by the Company of this Agreement do not,
and the consummation of the Offer, the Merger and the other Transactions and
compliance with the terms hereof will not, result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any Company
Subsidiary under, any provision of (i) the Company Charter, the Company By-laws
or the comparable charter or organizational documents of any Company Subsidiary,
(ii) any contract, lease, license, indenture, note, bond, agreement, permit,
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concession, franchise or other instrument (a "CONTRACT") to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets is bound or (iii) subject to the filings and other matters referred to
in Section 3.05(b), any judgment, order, injunction or decree, domestic or
foreign ("JUDGMENT"), or statute, law (including common law), legislation,
interpretation, ordinance, rule or regulation, domestic or foreign ("LAW"),
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually and in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization
("CONSENT") of, or registration, declaration or filing with, any Federal, state,
local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "GOVERNMENTAL ENTITY") is required to be
obtained or made by or with respect to the Company or any Company Subsidiary in
connection with the execution, delivery and performance of this Agreement or the
consummation of the Transactions, other than (i) if required, compliance with
and filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), (ii) the filing with the SEC of (A) the Schedule 14D-9,
(B) if required, a proxy or information statement relating to the approval of
this Agreement by the Company's shareholders (the "PROXY STATEMENT"), (C) any
information statement (the "INFORMATION STATEMENT") required under Rule 14f-1 in
connection with the Offer and (D) such reports under Section 13 of the Exchange
Act as may be required in connection with this Agreement, the Offer, the Merger
and the other Transactions, (iii) the filing of the Articles of Merger with the
Secretary of State of the State of Florida and appropriate documents with the
relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (iv) such filings as may be required in connection
with the Taxes described in Section 6.09, (v) compliance with and filings under
any foreign jurisdictions, in each case if and to the extent required, and (vi)
such other items that, individually and in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect.
Section 3.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by the Company with the SEC since June 23, 1998 (the "COMPANY SEC
DOCUMENTS"). As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "SECURITIES ACT"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and 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 therein, in light of the circumstances
under which they were made, not misleading. As of the date of this Agreement,
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001 (filed with the SEC on April 1, 2002) (the "2001 FORM 10-K"), its
definitive Proxy Statement with respect to its 2001 Annual Meeting of the
Company's shareholders (filed with the SEC on April 30, 2001), and its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2002 (filed with the SEC on
May 15, 2002) (collectively, the "2002 SEC DOCUMENTS") taken together do 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
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therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the
Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as of the dates of their respective filing, were
prepared in accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Filed Company SEC
Documents (as defined in Section 3.08), neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated subsidiaries or
in the notes thereto, other than liabilities or obligations incurred in the
ordinary course of business consistent with prior practice since the date of the
most recent financial statements included in the Filed Company SEC Documents.
Section 3.07. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, the Schedule 14D-9 or the Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's shareholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting (as defined in Section 6.01), 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 Schedule 14D-9,
the Information Statement and 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 representation is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
Section 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Company SEC Documents filed and publicly available prior to the date of
this Agreement (the "FILED COMPANY SEC DOCUMENTS") or in Section 3.08 of the
Company Disclosure Schedule, from the date of the most recent audited financial
statements included in the Filed Company SEC Documents to the date of this
Agreement, the Company has conducted its business only in the ordinary course,
and during such period there has not been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect;
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(ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock or any repurchase for value by the Company of any Company
Capital Stock;
(iii) any split, combination or reclassification of any
Company Capital Stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock;
(iv) (A) any granting by the Company or any Company Subsidiary
to any current or former director, officer or employee of the Company or any
Company Subsidiary of any increase in compensation, except to the extent
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC Documents or,
with respect to employees (other than directors, officers or key employees) in
the ordinary course of business consistent with prior practice and except for
Company Stock Options that are reflected as outstanding in clause (iii) of
Section 3.03, (B) any granting by the Company or any Company Subsidiary to any
such director, officer or employee of any material increase in severance or
termination pay, except as was required under any employment, severance or
termination policy, practice or agreements in effect as of the date of the most
recent audited financial statements included in the Filed Company SEC Documents
or (C) any entry by the Company or any Company Subsidiary into, or any amendment
of, any employment, severance or termination agreement with any such director,
officer or employee, except for such agreements or amendments with employees
(other than directors, officers or key employees) that are entered into in the
ordinary course of business consistent with prior practice;
(v) any termination of employment or departure of any
executive officer or other key employee of the Company or any Company
Subsidiary;
(vi) any change in accounting methods, principles or practices
by the Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP;
(vii) any material elections with respect to Taxes (as defined
in Section 3.09) by the Company or any Company Subsidiary or settlement or
compromise by the Company or any Company Subsidiary of any material Tax
liability or refund; or
(viii) any notification, or to the knowledge of the Company,
any threat, orally or in writing, that one or more material distributors,
customers or suppliers have terminated or intend to terminate or are considering
terminating their respective business relationships or have modified or intend
to modify such relationships with the Company and the Company Subsidiaries in a
manner which is less favorable to the Company or the Company Subsidiaries or
have agreed not to or will not agree to do business on such terms and subject to
conditions at least as favorable as the terms and conditions provided to the
Company or the Company Subsidiaries on the date of the most recent audited
financial statements included in the Filed Company SEC Documents and the Company
has no knowledge of any facts which would form the basis for such termination or
modification.
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Section 3.09. TAXES. Except as disclosed in Section 3.09 of the Company
Disclosure Schedule:
(a) Each of the Company and each Company Subsidiary has timely filed, or has
caused to be timely filed on its behalf, all Tax Returns required to be filed by
it, and all such Tax Returns are true, complete and accurate, except to the
extent any failure to file or any inaccuracies in any filed Tax Returns,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. All Taxes due and owing by
the Company and each of the Company Subsidiaries have been timely paid, except
to the extent that any failure to pay, individually and in the aggregate, has
not had and would not reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its Company Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return.
(b) The most recent financial statements contained in the Filed Company
SEC Documents reflect an adequate reserve (in accordance with GAAP) for all
Taxes payable by the Company and the Company Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements (in
addition to any reserve for deferred Taxes established to reflect timing
differences between book and tax income). No deficiency with respect to any
Taxes has been proposed, asserted or assessed against the Company or any Company
Subsidiary, and no waivers of the time to assess any such Taxes are pending,
except to the extent any such deficiency or waiver, individually and in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(c) No foreign, federal, state, or local tax audits or administrative
or judicial Tax proceedings are pending or being conducted with respect to the
Company or any of the Company Subsidiaries. All material assessments for Taxes
due with respect to completed and settled audits or proceedings or any concluded
litigation have been fully paid.
(d) There are no material Liens for Taxes (other than for current Taxes
not yet due and payable) on the assets of the Company or any Company Subsidiary.
Neither the Company nor any Company Subsidiary is bound by any agreement with
respect to Taxes.
(e) No claim has been made by any authority in a jurisdiction within
which the Company or any Company Subsidiary does not file Tax Returns that it
is, or may be, subject to taxation by that jurisdiction.
(f) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying or intended to qualify for tax-free treatment under Section 355 of
the Code (A) in the two years prior to the date of this Agreement or (B) in a
distribution that could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Offer or the Merger.
(g) The Company has delivered to Parent correct and complete copies of
all federal, state and local income Tax Returns, examination reports and
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statements of deficiencies assessed against or agreed to by any of the Company
and the Company Subsidiaries for the last three taxable years.
(h) Neither the Company nor any of the Company Subsidiaries is a party
to any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of (i) any "excess
parachute payment" within the meaning of Code ss.280G (or any corresponding
provision of state, local or foreign Tax law) and (ii) any amount that will not
be fully deductible as a result of Code 162(m) (or any corresponding provision
of state, local or foreign Tax law).
(i) Neither the Company nor any of the Company Subsidiaries (A) has
been a member of any "affiliated group" within the meaning of Code ss.1504(a)
(or any similar provision of state, local or foreign law) (an "AFFILIATED
GROUP") filing a consolidated federal income Tax Return (other than a group the
common parent of which was the Company) or (B) has any liability for the Taxes
of any person (other than any of the Company and the Company Subsidiaries) under
Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.
(j) For purposes of this Agreement:
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other person.
"TAX RETURN" means any Federal, state, local, provincial or foreign
Tax return, declaration, statement, report, schedule, form attachment or
information return relating to Taxes and any amendment thereof.
Section 3.10. EMPLOYEES. To the knowledge of the Company, no executive,
key employee, or group of employees has any plans to terminate employment with
the Company or the Company Subsidiaries. The Company and the Company
Subsidiaries have not experienced any labor disputes or work stoppage due to
labor disagreements. The Company and the Company Subsidiaries are in compliance
with all applicable laws respecting employment and employment practices and
terms and conditions of employment. The Company and the Company Subsidiaries
have properly classified individuals as being or not being employees of the
Company or the Company Subsidiaries in accordance with applicable law. The
Company and the Company Subsidiaries are not nor have ever been party to any
collective bargaining agreements and none of the Company or any of the Company
Subsidiaries has been the subject of any organizational activity.
Section 3.11. EMPLOYEE BENEFITS.
(a) Section 3.11 of the Company Disclosure Schedule lists each Employee
Benefit Plan that any of the Company and the Company Subsidiaries maintains or
to which any of the Company and the Company Subsidiaries contributes or has an
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obligation to contribute relating to current or former employees, officers or
directors (or their beneficiaries) of the Company and the Company Subsidiaries
(each a "COMPANY PLAN"). "EMPLOYEE BENEFIT PLAN" means any (a) deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) Employee Welfare Benefit Plan or fringe benefit plan or
program or (c) profit sharing, stock option, stock purchase, equity, stock
appreciation, bonus, incentive deferred compensation, severance plan or other
benefit plan. "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
ss. 3(2). "EMPLOYER WELFARE BENEFIT Plan" has the meaning set forth in ERISA
3(1). "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(i) Each Company Plan (and each related trust, custodial
account insurance contract, or fund) complies in material form and operation
with its terms, the applicable requirements of ERISA, the Code, and other
applicable laws. "CODE" means the Internal Revenue Code of 1986, as amended.
(ii) All required returns, reports and descriptions (including
without limitation Form 5500 Annual Returns/Reports, "top hat" plan notices,
Summary Annual Reports, PBGC-l's, and Summary Plan Descriptions) have been filed
or distributed appropriately and in a timely fashion in accordance with
applicable law with respect to each Company Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code ss. 4980B have been met with respect
to each Company Plan which is an Employee Welfare Benefit Plan subject to such
Part.
(iii) All contributions (including without limitation all
employer contributions and employee salary reduction contributions) which are
(or previously have been) due have been paid in a timely fashion in accordance
with applicable law to each Company Plan which is an Employee Pension Benefit
Plan and all contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee Pension Benefit Plan
or accrued in accordance with the past custom and practice of the Company. All
premiums or other payments which are due for all periods ending on or before the
Closing Date have been paid in a timely fashion with respect to each Company
Plan which is an Employee Welfare Benefit Plan.
(iv) Each Company Plan which is an Employee Pension Benefit
Plan intended to be qualified under Code ss. 401(a) is so qualified.
(v) With respect to each Company Plan, to the extent
applicable or to the extent the Company has been required to prepare or maintain
such documents by applicable law, the Company has delivered to Parent and Sub
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Return/Report, any communication with the
Internal Revenue Service or the Department of Labor regarding the compliance or
non-compliance of any Company Plan with applicable law, and all related trust
agreements, insurance contracts, and other funding agreements which implement
such Employee Benefit Plan.
(b) Except as set forth in Section 3.11 of the Company Disclosure
Schedule, with respect to each Employee Benefit Plan that any of the Company,
the Company Subsidiaries and the Controlled Group of Corporations (as defined in
Code ss. 1563) which includes the Company and the Company Subsidiaries maintains
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or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(i) The Employee Benefit Plan is not, nor has ever been,
subject to Title IV of ERISA or Code ss. 412.
(ii) There have been no Prohibited Transactions with respect
to any such Employee Benefit Plan. Neither the Company nor any Company
Subsidiary has any Liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan. "PROHIBITED TRANSACTION" has the
meaning set forth in ERISA ss. 406 or Code ss. 4975. No action, suit,
proceeding, hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the knowledge of the Company, threatened.
None of the Sellers or the Company has any knowledge of any basis for any such
action, suit, proceeding, hearing, or investigation.
(c) None of the Company and the Company Subsidiaries maintains or ever
has maintained or contributes, ever has contributed, or ever has been required
to contribute to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code ss. 4980B).
(d) No promise or commitment to amend or improve any Employee Benefit
Plan for the benefit of current or former directors, officers, or employees of
the Company or the Company Subsidiaries which is not reflected in the
documentation provided to Parent and Sub has been made.
(e) The transactions contemplated by this Agreement shall not alone or
upon the occurrence of any additional or subsequent event, result in (i) any
payment, of severance or otherwise, or acceleration, vesting or increase in
benefits under any Employee Benefit Plan for the benefit of any current or
former director, officer, or employee of the Company or any of the Company
Subsidiaries, or (ii) any payment or benefit under any Company Plan failing to
be deductible by reason of Code ss. 280G.
(f) Without limitation of the foregoing, to the extent a Company Plan
which is or has been subject to non-discrimination testing requirements under
the Code, ERISA or other applicable law, fails or has failed to satisfy such
requirements as of or before the Effective Time, the Company has taken in a
timely fashion (as determined by applicable law) the necessary corrective action
(which may include, without limitation, qualified nonelective contributions or
corrective distributions) so that the Company Plan successfully passed and
passes the applicable non-discrimination tests in accordance with applicable
law.
Section 3.12. ABSENCE OF CHANGES IN BENEFIT PLANS. Except as disclosed
in the Filed Company SEC Documents or in Section 3.12 of the Company Disclosure
Schedule, from the date of the most recent audited financial statements included
in the Filed Company SEC Documents to the date of this Agreement, there has not
been any adoption or amendment in any material respect by the Company or any
Company Subsidiary of any collective bargaining agreement or any Employee
Benefit Plan of the Company and the Company Subsidiaries. Except as disclosed in
the Filed Company SEC Documents or in Section 3.12 of the Company Disclosure
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Schedule, as of the date of this Agreement there are not any employment,
consulting, indemnification, severance or termination agreements or arrangements
between the Company or any Company Subsidiary and any current or former
employee, officer or director of the Company or any Company Subsidiary, nor does
the Company or any Company Subsidiary have any general severance plan or policy.
Section 3.13. LITIGATION. Except as disclosed in the Filed Company SEC
Documents or in Section 3.13 of the Company Disclosure Schedule, there is no
suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Company Subsidiary (and, as
of the date of this Agreement, the Company is not aware of any basis for any
such suit, action or proceeding) that, individually or in the aggregate, has had
or would reasonably be expected to have a Company Material Adverse Effect, nor
is there any Judgment outstanding against the Company or any Company Subsidiary
that has had or would reasonably be expected to have a Company Material Adverse
Effect.
Section 3.14. COMPLIANCE WITH APPLICABLE LAWS. Except as disclosed in
the Filed Company SEC Documents or in Section 3.14 of the Company Disclosure
Schedule, the Company and the Company Subsidiaries are in compliance with all
applicable Laws, including those relating to occupational health and safety and
the environment, except for instances of noncompliance that, individually and in
the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth in the Filed Company SEC
Documents or in Section 3.14 of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary has received any written communication during
the past two years from a Governmental Entity that alleges that the Company or a
Company Subsidiary is not in compliance in any material respect with any
applicable Law.
Section 3.15. NO ILLEGAL PAYMENTS, ETC. None of the Company or its
Subsidiaries, nor any of their directors, officers, employees or agents, has (a)
directly or indirectly given or agreed to give any illegal gift, contribution,
payment or similar benefit to any supplier, customer, governmental official or
employee or other person who was, is or may be in a position to help or hinder
the Company or any of its Subsidiaries (or assist in connection with any actual
or proposed transaction) or made or agreed to make any illegal contribution, or
reimbursed any illegal political gift or contribution made by any other person,
to any candidate for federal, state, local or foreign public office (i) which
might subject any of the Company and its Subsidiaries to any damage or penalty
in any civil, criminal or governmental litigation or proceeding or (ii) the
non-continuation of which has had or might have, individually or in the
aggregate, a Company Material Adverse Effect or (b) established or maintained
any unrecorded fund or asset or made any false entries on any books or records
for any purpose.
Section 3.16. CONTRACTS. Section 3.16 of the Company Disclosure
Schedule lists the following contracts and other agreements to which any of the
Company and the Company Subsidiaries is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any person providing for lease payments in excess
of $50,000 in any one year;
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(b) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of which
will extend over a period of more than one year and which in each case provides
for aggregate payments of more than $50,000 in any one year;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness or under which it has
imposed a Lien on any of its assets, tangible or intangible;
(e) any agreement concerning confidentiality or noncompetition, other
than standard form non-disclosure agreements with the Company's customers,
consultants or employees;
(f) any agreement relating to the Company and the Company Subsidiaries,
their assets, liabilities and business, or relating to shares of the Company
Common Stock between or among the Company, any of the Company Subsidiaries and
any of their affiliates;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
(h) any collective bargaining agreement;
(i) any agreement providing for the employment or consultancy with any
individual on a full-time, part-time, consulting or other basis or providing
severance or retirement benefits (other than billable consulting agreements
entered into in the ordinary course of business);
(j) any agreement under which it has advanced or loaned any amount to
any of its shareholders, affiliates, directors, officers, or employees other
than in the ordinary course of business;
(k) any agreement under which the consequences of a default or
termination could have a Company Material Adverse Effect; or
(l) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000.
The Company has delivered to Parent and Sub a copy of each written agreement
listed in Section 3.16 of the Company Disclosure Schedule that is correct and
complete in all material respects and a written summary setting forth the
material terms and conditions of each oral agreement referred to in Section 3.15
of the Company Disclosure Schedule. Except as disclosed in Section 3.15 of the
Company Disclosure Schedule, with respect to each such agreement: (i) the
agreement is legal, valid, binding, enforceable, and in full force and effect in
all material respects; (ii) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect in all material respects on
identical terms following the consummation of the transactions contemplated
hereby; (iii) to the knowledge of the Company, no party is in breach or default,
and to the knowledge of the Company, no event has occurred which with notice or
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lapse of time would constitute a material breach or default, or permit
termination, modification, or acceleration, under the agreement; and (iv) no
party has repudiated any material provision of the agreement.
Section 3.17. INTELLECTUAL PROPERTY.
(a) The Company and the Company Subsidiaries own, or are validly
licensed or otherwise have the right to use, all patents, patent rights
(including patent applications and licenses), know-how, trade secrets,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, copyrights and other proprietary intellectual property
rights and computer programs (collectively, "INTELLECTUAL PROPERTY RIGHTS")
which are material to the conduct of the business of the Company and the Company
Subsidiaries taken as a whole and the consummation of the Transactions will not
conflict with, alter or impair any such Intellectual Property Rights. Section
3.17 of the Company Disclosure Schedule sets forth a description of all of the
following with respect to the Company and the Company Subsidiaries: material
patents, material patent rights (including patent applications and licenses),
material inventions that have been identified as active patent matters but for
which applications have not yet been filed, registrations and licenses of
trademarks, trade names, service marks and copyrights, and the geographical
territories in which the foregoing are applicable. Except as set forth in
Section 3.17 of the Company Disclosure Schedule, no claims are pending or, to
the knowledge of the Company, threatened that (i) the Company or any of the
Company Subsidiaries is infringing or otherwise adversely affecting the rights
of any person with regard to any Intellectual Property Right or (ii) assert that
any Intellectual Property Rights owned by the Company or any Company Subsidiary
("OWNED INTELLECTUAL PROPERTY RIGHTS") are invalid or unenforceable. To the
knowledge of the Company, except as set forth in the Filed Company SEC Documents
or Section 3.17 of the Company Disclosure Schedule, no person is infringing the
rights of the Company or any of the Company Subsidiaries with respect to any
Owned Intellectual Property Right.
(b) The Company has timely paid, or caused to be timely paid, all
maintenance, renewal and other similar fees, and has timely met any applicable
working requirements with respect to all Owned Intellectual Property Rights
listed in Section 3.17 of the Company Disclosure Schedule or material to the
Company and the Company Subsidiaries taken as a whole, except as set forth in
Section 3.17 of the Company Disclosure Schedule. With respect to Intellectual
Property Rights other than Owned Intellectual Property Rights ("LICENSED
INTELLECTUAL PROPERTY RIGHTS") that are listed in Section 3.17 of the Company
Disclosure Schedule or material to the Company and the Company Subsidiaries
taken as a whole, the Company is in compliance in all material respects with any
applicable license or similar agreement.
(c) All Owned Intellectual Property Rights listed in Section 3.17 of
the Company Disclosure Schedule or material to the Company and its Subsidiaries
taken as a whole, are free and clear of any Liens (other than Liens that are not
material in amount or that would not reasonably be expected to materially
interfere with such Intellectual Property Rights) and may be freely transferred,
assigned, licensed or sublicensed except as set forth in Section 3.17 of the
Company Disclosure Schedule. The Company's licenses with respect to all Licensed
Intellectual Property Rights that are listed in Section 3.17 of the Company
Disclosure Schedule or material to the Company and the Company Subsidiaries
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taken as a whole are free and clear of any Liens (other than Liens that are not
material in amount or that would not reasonably be expected to materially
interfere with such Licensed Intellectual Property Rights).
(d) The Company is not, and to the knowledge of the Company, no other
party is, in breach or default under the Settlement Agreement between the
Company and Source Services Corporation.
Section 3.18. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc., the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Offer, the Merger and the other Transactions
based upon arrangements made by or on behalf of the Company. The estimated fees
and expenses incurred and to be incurred by the Company in connection with the
Offer, the Merger and the other Transactions (including the fees of ▇▇▇▇▇▇▇
▇▇▇▇▇ and the fees of the Company's legal counsel) are set forth in Section 3.18
of the Company Disclosure Schedule.
Section 3.19. OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, dated the date of this Agreement, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the holders of Company Common Stock is fair to such holders from a
financial point of view and a copy of the signed opinion has been provided to
Parent.
ARTICLE IV.
Representations and Warranties of Parent and Sub
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
Section 4.01. ORGANIZATION, STANDING AND POWER. Each of Parent and Sub
is duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals in each case whether domestic or foreign necessary to enable it to
own, lease or otherwise hold its properties and assets and to conduct its
businesses as presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually and in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on the ability of Parent or Sub to perform its obligations under
this Agreement or a material adverse effect on the ability of Parent or Sub to
consummate the Offer, the Merger and the other Transactions (a "PARENT MATERIAL
ADVERSE EFFECT").
Section 4.02. SUB.
(a) Since the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of this Agreement,
the performance of its obligations hereunder and matters ancillary thereto. Sub
was incorporated solely for the purpose of consummating the Transactions.
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(b) The authorized capital stock of Sub consists of 3,000 shares of
common stock, par value $0.01 per share, all of which have been validly issued,
are fully paid and nonassessable and are owned by Parent free and clear of any
Lien.
Section 4.03. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. Each
of Parent and Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution and
delivery by each of Parent and Sub of this Agreement and the consummation by it
of the Transactions have been duly authorized by all necessary corporate action
on the part of Parent and Sub. Parent, as sole shareholder of Sub, has approved
this Agreement. Each of Parent and Sub has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of the principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
Section 4.04. NO CONFLICTS; CONSENTS.
(a) The execution and delivery by each of Parent and Sub of this
Agreement, do not, and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms hereof will not, result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under, any provision of (i) the
charter, by-laws or other organizational documents of Parent or any of its
subsidiaries, (ii) any Contract to which Parent or any of its subsidiaries is a
party or by which any of their respective properties or assets is bound or (iii)
subject to the filings and other matters referred to in Section 4.04(b), any
Judgment or Law applicable to Parent or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually and in the aggregate, have not
had and would not reasonably be expected to have a Parent Material Adverse
Effect.
(b) No Consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Parent or any of its subsidiaries in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than (i) if required, compliance with and filings under the HSR Act, (ii) the
filing with the SEC of (A) the Offer Documents and (B) such reports under the
Exchange Act as may be required in connection with this Agreement, the Offer,
the Merger and the other Transactions, (iii) the filing of the Articles of
Merger with the Secretary of State of the State of Florida, (iv) such filings as
may be required in connection with the Taxes described in Section 6.09, (v)
compliance with and filings under the laws of certain foreign jurisdictions, in
each case if and to the extent required, and (v) such other items that,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
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Section 4.05. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Offer Documents, the Schedule 14D-9 or the Information Statement will,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's shareholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting, 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 Offer Documents 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 representation is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
Section 4.06. BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Offer, the Merger and the
other Transactions based upon arrangements made by or on behalf of Parent.
Section 4.07. FINANCIAL ABILITY TO PERFORM. Parent has received and
provided the Company with a true and complete copy of the executed Commitment
Letter (the "COMMITMENT LETTER") from Fleet Bank, N.A. Subject to the receipt of
the financing contemplated by the Commitment Letter, Parent and Sub will have as
of the date of Closing cash funds sufficient as and when needed to pay all cash
payments for shares of Company Common Stock and options in the Offer and the
Merger and to pay all related fees and expenses.
ARTICLE V.
Covenants Relating to Conduct of Business
Section 5.01. CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. Except for matters set forth in
Section 5.01 of the Company Disclosure Schedule, expressly agreed to in writing
by Parent or otherwise expressly permitted by this Agreement, from the date of
this Agreement to the earliest to occur of (i) the date of the termination of
this Agreement, (ii) the date directors designated by Parent or Sub have been
elected to and shall constitute a majority of the Company Board (the "CONTROL
DATE") or (iii) the Effective Time, the Company shall, and shall cause each
Company Subsidiary to, conduct the business of the Company and each of the
Company Subsidiaries in the usual, regular and ordinary course in substantially
the same manner as previously conducted and use all reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and keep its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that its goodwill and ongoing business shall be
unimpaired in all material respects at the Effective Time. In addition, and
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without limiting the generality of the foregoing, except for matters set forth
in Section 5.01 of the Company Disclosure Schedule, expressly agreed to in
writing by Parent or otherwise expressly permitted by this Agreement, from the
date of this Agreement to the earliest to occur of the date of the termination
of this Agreement, the Control Date or the Effective Time, the Company shall
not, and shall not permit any Company Subsidiary to, do any of the following
without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned subsidiary of
the Company to its parent, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, or (C) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its
capital stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants or
rights to acquire, any such shares, Voting Company Debt, voting securities or
convertible or exchangeable securities or (D) any "phantom" stock, "phantom"
stock rights, stock appreciation rights or stock-based performance units, other
than the issuance of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement and in accordance with their
present terms;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in or portion
of the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (B) any assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries taken as a whole, except
for purchases of inventory in the ordinary course of business consistent with
past practice;
(v) (A) grant to any current or former director, officer or
employee of the Company or any Company Subsidiary any increase in compensation,
except to the extent required under employment agreements in effect as of the
date of the most recent audited financial statements included in the Filed
Company SEC Documents or, with respect to employees (other than directors,
officers or key employees) in the ordinary course of business consistent with
prior practice, (B) grant to any current or former employee, officer or director
of the Company or any Company Subsidiary any increase in severance or
termination pay, except to the extent required under any agreement in effect as
of the date of the most recent audited financial statements included in the
Filed Company SEC Documents, (C) enter into any employment, consulting,
indemnification, severance or termination agreement with any such employee,
officer or director, (D) establish, adopt, enter into or amend in any material
respect any collective bargaining agreement or Company Benefit Plan or (E) take
any action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent with prior
practice, under any collective bargaining agreement or Company Benefit Plan;
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(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been required
by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of
or subject to any Lien any material properties or assets, except (A) sales of
obsolete assets in the ordinary course of business consistent with past
practice, and (B) sales of inventory in the ordinary course of business
consistent with prior practice;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any Company Subsidiary, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings from
persons that are not directors, officers or employees of the Company or any
Company Subsidiary incurred in the ordinary course of business consistent with
past practice, or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or any direct
or indirect wholly owned subsidiary of the Company or loans, investments and
advances in connection with the sale of the products of the Company and the
Company Subsidiaries in the ordinary course of business consistent with prior
practice to persons that are not directors, Shareholders, officers or employees
of the Company or any Company Subsidiary, not to exceed $10,000 individually or
$100,000 in the aggregate;
(ix) make or agree to make any new capital expenditure or
expenditures that are in excess of $50,000 in the aggregate;
(x) make or change any material Tax election or settle or
compromise any material Tax liability or refund, except for liabilities not in
excess of $10,000 individually or $100,000 in the aggregate;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
in excess of $5,000 individually or $50,000 in the aggregate, other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Filed Company SEC Documents or incurred in the ordinary course of
business consistent with past practice, (B) cancel any indebtedness in excess of
$5,000 individually or $50,000 in the aggregate or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any Company Subsidiary is a party;
(xii) enter into, renew, extend, amend, modify, waive any
material provision of, or terminate any lease or similar commitment, in each
case providing for payments in excess of $10,000 over the term of such lease or
commitment (or until the date on which such lease or commitment may be
terminated by the Company without penalty);
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(xiii) make any intercompany advances or increase in any
management personnel or more than five non-management personnel with respect to
the Company's India operations; or
(xiv) authorize, or commit or agree to take, any of the
foregoing actions.
(b) OTHER ACTIONS. The Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that would reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) any
condition to the Offer set forth in Exhibit A, or any condition to the Merger
set forth in Article VII, not being satisfied; PROVIDED, HOWEVER, that the
obligations set forth in this Section 5.01(b) shall not be deemed to have been
breached as a result of actions by the Company expressly permitted under Section
5.02(b).
(c) ADVICE OF CHANGES. The Company shall promptly advise Parent orally
and in writing of any change or event that has had or would reasonably be
expected to have a Company Material Adverse Effect.
Section 5.02. NO SOLICITATION.
(a) Neither the Company nor any of the Company Subsidiaries or
affiliates shall (and the Company shall cause the officers, directors,
employees, representatives and agents of the Company, each of the Company
Subsidiaries, each affiliate of the Company, including, but not limited to,
investment bankers, attorneys and accountants, not to), directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any person or group (other than Parent, any of
its affiliates or representatives) concerning any Company Takeover Proposal
(defined below in Section 5.02(c)), except that nothing contained in this
Section 5.02 or any other provision hereof shall prohibit the Company or the
Company Board from (i) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company shareholders as, in the good faith judgment of the
Board, after receiving advice from outside counsel, is required under applicable
law, provided that the Company may not, except as permitted by Section 5.02(b),
withdraw or modify, or propose to withdraw or modify, the approval or
recommendation by the Company Board or any such committee of this Agreement, the
Offer or the Merger or its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend any Company Takeover
Proposal, or enter into any agreement with respect to any Company Takeover
Proposal. Upon execution of this Agreement, the Company will immediately cease
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the time of acceptance of shares of Company Common Stock for payment
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to appropriate confidentiality agreements, and may
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negotiate and participate in discussions and negotiations with such entity or
group concerning a Company Takeover Proposal if:
(i) such entity or group has on an unsolicited basis submitted
a bona fide written proposal to the Company Board relating to any such
transaction which the Company Board determines in good faith, represents a
superior transaction to the transactions contemplated hereby and which is not
subject to the receipt of any necessary financing; and
(ii) in the opinion of the Company Board such action is
required to discharge the Company Board's fiduciary duties under applicable law,
determined only after receipt of
(x) advice from the Company's investment banking
firm that the Company Takeover Proposal is superior, from a
financial point of view, to the Offer and the Merger (which
advice may include analysis of the enterprise value if the
Company Board has been advised by independent legal counsel
that its fiduciary duties requires them to do so), and
(y) advice from independent 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 Board to violate its fiduciary duties under
applicable law.
The Company will promptly, but in any event within one business day, notify
Parent of the existence of any proposal, discussion, negotiation or inquiry
received by the Company, and the Company will promptly, but in any event within
one business day, communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will immediately provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent.
(b) Except as set forth below in this subsection (b), neither the
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Sub, the approval,
determination or recommendation by the Company Board or any such committee of
this Agreement, the Offer or the Merger, (ii) approve, determine to be advisable
or recommend or propose to approve, determine to be advisable or recommend, any
Company Takeover Proposal or (iii) enter into any agreement with respect to any
Company Takeover Proposal. Notwithstanding the foregoing, prior to the time of
acceptance for payment of the shares of Company Common Stock pursuant to the
Offer, the Company Board may withdraw or modify its approval, determination or
recommendation of the Offer, this Agreement or the Merger, approve, determine to
be advisable or recommend a Superior Company Proposal (as defined in Section
5.02(c)), or enter into an agreement with respect to a Superior Company
Proposal, in each case at any time after the fifth business day following
Parent's receipt of written notice from the Company advising Parent that the
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Company Board has received a Superior Company Proposal with respect to which it
intends to take any actions referred to herein, specifying the material terms
and conditions of such Superior Company Proposal and identifying the person
making such Superior Company Proposal, but only if prior to such action the
Company shall have caused its financial and legal advisors to negotiate in good
faith 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. In no event will the Company be
required to negotiate with Parent for more than one such five day period.
(c) As used herein, "Company Takeover Proposal" shall mean any proposal
or offer to acquire all or a substantial part of the business or properties of
the Company and the Company Subsidiaries taken as a whole or 10% or more of any
capital stock of the Company or any of the Company Subsidiaries, whether by
merger, tender offer, exchange offer, sale of assets or similar transactions
involving the Company or any Subsidiary, division or operating or principal
business unit of the Company. "Superior Company Proposal" shall mean a Company
Takeover Proposal which (i) satisfies both subsection (i) and subsection (ii) of
Section 5.02(a) and (ii) is reasonably capable of being completed, taking into
account all financial, legal and other aspects of such proposal.
ARTICLE VI.
Additional Agreements
Section 6.01. PREPARATION OF PROXY STATEMENT; SHAREHOLDERS MEETING.
(a) Except as otherwise provided in Section 6.01(b), the Company shall,
as soon as practicable following the expiration of the Offer, prepare and file
with the SEC the Proxy Statement in preliminary form, and each of the Company,
Parent and Sub shall use their best efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto. The Company shall
notify Parent promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to the
Proxy Statement or for additional information and shall supply Parent with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement. If at any time prior to receipt of the Company Shareholder
Approval there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its shareholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. The Company shall use its best efforts to cause the Proxy
Statement in definitive form to be mailed to the Company's shareholders as
promptly as practicable after filing with the SEC.
(b) The Company shall, as soon as practicable following the acceptance
for payment and purchase of the shares of Common Stock by Sub pursuant to the
Offer and, if later, the expiration of any subsequent offer period under Section
1.01(a), duly call, give notice of, convene and hold a meeting of its
shareholders (the "COMPANY SHAREHOLDERS MEETING") for the purpose of seeking the
Company Shareholder Approval. Subject to Section 5.02(b), the Company shall,
through the Company Board, recommend to its shareholders that they give the
Company Shareholder Approval. Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
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Section 6.01(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Company Takeover
Proposal. Notwithstanding the foregoing, if Sub or any other subsidiary of
Parent shall acquire at least 80% of the outstanding shares of each series of
Company Capital Stock, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a shareholders meeting
in accordance with Section 607.1104 of the BCA.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by
Parent, Sub or any other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
Section 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall, and shall cause each of its subsidiaries to, afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial advisors and other
representatives, upon reasonable notice, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its subsidiaries
to, furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request; PROVIDED, HOWEVER, that the Company may withhold the documents and
information described in the Company Disclosure Schedule to the extent required
to comply with the terms of a confidentiality agreement with a third party in
effect on the date of this Agreement; PROVIDED FURTHER, that the Company shall
use all reasonable efforts to obtain, as promptly as practicable, any consent
from such third party required to permit the Company to furnish such documents
and information to Parent.
Section 6.03. REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use all reasonable efforts to take, or
cause to be taken, all reasonable actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things reasonably
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Transactions, including,
when reasonable, seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement; PROVIDED,
HOWEVER, that the obligations set forth in this sentence shall not be deemed to
have been breached as a result of actions by the Company expressly permitted
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under Section 5.02(b). In connection with and without limiting the foregoing,
the Company and the Company Board shall (i) take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to any Transaction or this Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to this Agreement,
take all action necessary to ensure that the Offer, the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger and the other Transactions.
Nothing in this Agreement shall be deemed to require any party to waive any
substantial rights or agree to any substantial limitation on its operations or
to dispose of any significant asset or collection of assets. As promptly as
practicable after the consummation of the Offer, the Company shall use all
reasonable efforts to notify Parent of any actions or nonactions of, waivers,
consents and approvals from, and registrations and filings with, Governmental
Entities, and any consents, approvals or waivers from third parties, that would
be required in connection with the consummation of the Merger in the event that
Parent elects pursuant to Section 1.02 to merge the Company with and into Sub
instead of merging Sub into the Company.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; PROVIDED, HOWEVER, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
Section 6.04. STOCK OPTIONS.
(a) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the Company Stock
Plans) shall adopt such resolutions or take such other actions as are required
to adjust the terms of all outstanding vested Company Stock Options and all
outstanding vested Company SARs heretofore granted under any Company Stock Plan
to provide that each such vested Company Stock Option (and any Company SAR
related thereto) outstanding immediately prior to the first acceptance for
payment of shares of Company Common Stock pursuant to the Offer shall be
canceled in exchange for a cash payment by the Company as soon as practicable
following the first acceptance for payment of shares of Company Common Stock
pursuant to the Offer of an amount equal to (i) the excess, if any, of (x) the
highest price per share of Company Common Stock to be paid pursuant to the Offer
over (y) the exercise price per share of Company Common Stock subject to such
Company Stock Option, multiplied by (ii) the number of shares of Company Common
Stock for which such Company Stock Option shall not theretofore have been
exercised. The Company will be responsible for any required reporting to
Federal, state or local tax authorities.
(b) All amounts payable pursuant to this Section 6.04 shall be subject
to any required withholding of Taxes or proof of eligibility of exemption
therefrom and shall be paid without interest by the Company as soon as
practicable following the first acceptance for payment of shares of Company
Common Stock pursuant to the Offer. The Company shall use its best efforts to
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obtain all consents of the holders of Company Stock Options as shall be
necessary to effectuate the foregoing. Notwithstanding anything to the contrary
contained in this Agreement, payment shall, at Parent's request, be withheld in
respect of any Company Stock Option until all necessary consents with respect to
such Company Stock Option are obtained.
(c) The Company Stock Plans shall terminate as of the Effective Time,
and the provisions in any other Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time no holder of a
Company Stock Option or Company SAR or any participant in any Company Stock Plan
or other Company Benefit Plan shall have any right thereunder to acquire any
capital stock of the Company or the Surviving Corporation.
(d) In this Agreement:
"COMPANY STOCK OPTION" means any option to purchase Company Common
Stock granted under any Company Stock Plan.
"COMPANY SAR" means any stock appreciation right linked to the price of
Company Common Stock AND granted under any Company Stock Plan.
"COMPANY STOCK PLANS" means the Technisource Long-Term Incentive Plan
and all agreements under which there are outstanding options to purchase Company
Common Stock granted to employees, consultants or any other person.
Section 6.05. BENEFIT PLANS.
(a) From and after the Control Date and from and after the Effective
Time, Parent shall cause the Company or the Surviving Corporation, as
applicable, to honor in accordance with their respective terms (as in effect on
the date of this Agreement), all the Company's employment, severance and
termination agreements, plans and policies disclosed in the Company Disclosure
Schedule, including any change in control provisions contained therein.
(b) With respect to any "employee benefit plan", as defined in Section
3(3) of ERISA, maintained by Parent or any of its subsidiaries (including any
severance plan), for all purposes, including determining eligibility to
participate and vesting, service with the Company or any Company Subsidiary
shall be treated as service with Parent or any of its subsidiaries; PROVIDED,
HOWEVER, that such service need not be recognized to the extent that such
recognition would result in any duplication of benefits.
Section 6.06. INDEMNIFICATION BY PARENT.
(a) Parent shall, to the fullest extent permitted by Law, cause the
Company (from and after the Control Date) and the Surviving Corporation (from
and after the Effective Time) to honor all the Company's obligations to
indemnify, defend and hold harmless (including any obligations to advance funds
for expenses) the current and former directors and officers of the Company and
the Company subsidiaries against all losses, claims, damages or liabilities
(including reasonable attorneys' fees) arising out of acts or omissions by any
such directors and officers occurring prior to the Effective Time to the maximum
extent that such obligations of the Company exist on the date of this Agreement,
whether pursuant to the Company Charter, the Company By-laws, the BCA,
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individual indemnity agreements or otherwise, and such obligations shall survive
the Merger and shall continue in full force and effect in accordance with the
terms of the Company Charter, the Company By-laws, the BCA and such individual
indemnity agreements from the Effective Time until the expiration of the
applicable statute of limitations with respect to any claims against such
directors or officers arising out of such acts or omissions. In the event a
current or former director or officer of the Company or any of the Company
subsidiaries is entitled to indemnification under this Section 6.06(a), such
director or officer shall be entitled to reimbursement from the Company (from
and after the Control Date) or the Surviving Corporation (from and after the
Effective Time) for reasonable attorney fees and expenses incurred by such
director or officer in pursuing such indemnification, including payment of such
fees and expenses by the Surviving Corporation or the Company, as applicable, in
advance of the final disposition of such action upon receipt of an undertaking
by such current or former director or officer to repay such payment if it shall
be adjudicated that such current or former director or officer was not entitled
to such payment.
(b) From and after the Control Date and for a period of six years after
the Effective Time, Parent shall cause to be maintained in effect, at no cost to
the insureds thereunder, a "tail policy" based on the current policies of
directors' and officers' liability insurance maintained by the Company (provided
that Parent may substitute therefor policies with reputable and financially
sound carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events, errors or omissions which occurred at or before
the Effective Time; PROVIDED, however, that Parent shall not be obligated to
make annual premium payments for such insurance to the extent such premiums
exceed 150% of the annual premiums paid as of the date hereof by the Company for
such insurance (such 150% amount, the "MAXIMUM PREMIUM"). If such insurance
coverage cannot be obtained at all, or can only be obtained at an annual premium
in excess of the Maximum Premium, Parent shall maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Premium. The Company represents to Parent that the Maximum
Premium is $118,500.
(c) The Company will maintain, through the Effective Time, the
Company's existing directors' and officers' insurance in full force and effect
without reduction of coverage.
(d) The By-Laws of the Surviving Corporation shall contain the
provisions that are set forth, as of the date of this Agreement, in Article VI
of the By-Laws of the Company, which provisions shall not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who at
or at any time prior to the Effective Time were directors, officers, employees
or other agents of the Company (and during such period the Articles of
Organization of the Company shall not be amended, repealed or otherwise modified
in any manner that would have the effect of so amending, repealing or otherwise
modifying such provisions of the By-Laws).
(e) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
and the continuing or surviving entity does not assume the obligations of the
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Surviving Corporation set forth in this Section 6.06, or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Surviving Corporation assume, as a matter of law or otherwise, the
obligations set forth in this Section 6.06.
(f) Parent guarantees that if for any reason the Company or the
Surviving Corporation, as the case may be, shall not meet its obligations
pursuant to this Section 6.06, it shall meet such obligations in full when and
as such obligations arise.
Section 6.07. FEES AND EXPENSES. All fees and expenses incurred in
connection with the Merger and the other Transactions shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
Section 6.08. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable Law (including foreign regulations relating to competition), court
process or by obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.09. TRANSFER TAXES. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("TRANSFER TAXES") incurred in
connection with the Transactions shall be paid by the party upon whom the
primary burden for payment is placed by the applicable law. Each party shall
cooperate with the other in preparing, executing and filing any Tax Returns with
respect to such Transfer Taxes and shall use reasonable efforts to avail itself
of any available exemptions from such Transfer Taxes, and shall cooperate in
providing any information and documentation that may be necessary to obtain such
exemptions.
Section 6.10. DIRECTORS. Promptly upon the first acceptance for payment
of, and payment by Sub for, any shares of Company Common Stock pursuant to the
Offer, Sub shall be entitled to designate four directors to the Company Board.
Subject to applicable Law, the Company shall take all action requested by Parent
necessary to effect any such election, including mailing to its shareholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company shall
make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company shall promptly obtain the resignation
of each of its current directors (with the exception of C. ▇▇▇▇▇▇▇ ▇▇▇▇▇).
Section 6.11. SHAREHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any Transaction;
PROVIDED, HOWEVER, that Parent shall have the right to prevent the Company from
entering into any such settlement without Parent's consent if Parent agrees to
indemnify the Company and each director of the Company for the amount of its,
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his or her liability, if any, arising from the underlying claim, net of any
insurance proceeds received by such person, that is in excess of the amount for
which such person would have been liable under such settlement.
Section 6.12. CONSENT TO TRANSACTIONS. At the request of Parent, the
Company will use its best efforts to obtain promptly the written consent of the
lessors to the execution and delivery by the Company of this Agreement, the
consummation of the Offer and Merger and the other Transactions and the
compliance by the Company with the terms hereof with respect to the real
property leases listed on Section 3.5(a) of the Company Disclosure Schedule.
Section 6.13. AFFILIATE LOANS. The Company shall use its best efforts
to collect, prior to or as of Closing, any and all outstanding amounts owed to
the Company under the loans listed in Section 3.16(j) of the Company Disclosure
Schedule.
ARTICLE VII.
Conditions Precedent
Section 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. The Company shall have obtained the Company
Shareholder Approval, if required.
(b) ANTITRUST. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired. Any consents, approvals and filings under any other foreign
antitrust Law the absence of which would prohibit the consummation of Merger,
shall have been obtained or made.
(c) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated, enforced or issued by
any Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger or the other Transactions shall be in effect;
PROVIDED, HOWEVER, that prior to asserting this condition each of the parties
shall have used all reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) ACCEPTANCE OF SHARES PURSUANT TO THE OFFER. Sub shall have accepted
shares of Company Common Stock for payment pursuant to the Offer; PROVIDED, that
the obligation of a party to effect the Merger shall not be conditioned on the
fulfillment of the condition set forth in this clause (d) if the failure of Sub
to accept shares of Company Common Stock for payment pursuant to the Offer shall
have constituted or resulted from a material breach of the Offer or this
Agreement by such party.
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ARTICLE VIII.
Termination, Amendment and Waiver
Section 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of Company
Shareholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Offer is not consummated on or before September 30,
2002, or in the event the Parent and Sub notify the Company not later than five
days prior to such date that they in good faith have determined that additional
time is required to consummate the Offer, October 31, 2002 (the "OUTSIDE DATE"),
unless the failure to consummate the Offer by the Outside Date is the result of
a willful and material breach of this Agreement by the party seeking to
terminate this Agreement;
(ii) if any Governmental Entity issues an order, decree or
ruling or takes any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, shares of Company
Common Stock pursuant to the Offer or the Merger and such order, decree, ruling
or other action shall have become final and nonappealable;
(iii) if as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted shares of
Company Common Stock for payment pursuant to the Offer; PROVIDED, HOWEVER, that
the right to terminate this Agreement pursuant to this clause (iii) shall not be
available to any party whose failure to fulfill any of its obligations under
this Agreement results in the failure of any such condition or if the failure of
such condition results from facts or circumstances that constitute a willful
material breach of any representation or warranty under this Agreement by such
party; or
(iv) if, upon a vote at a duly held meeting to obtain the
Company Shareholder Approval, the Company Shareholder Approval is not obtained;
PROVIDED, that Parent may not terminate this Agreement under this Section
8.01(b)(iv) if the Company Common Stock owned by Sub, Parent or any other
subsidiary of Parent shall not have been voted in favor of obtaining the Company
Shareholder Approval;
(c) by Parent prior to the acceptance for payment and payment for the
shares of Company Common Stock in the Offer, if the Company breaches or fails to
perform in any material respect any of its representations, warranties or
covenants contained in this Agreement (other than a breach or failure to perform
for which Parent has the right to terminate this Agreement pursuant to Section
8.01(d)(ii)), which breach or failure to perform (i) would give rise to the
failure of a condition set forth in Exhibit A, and (ii) cannot be or has not
been cured within 30 days after the giving of written notice to the Company of
such breach (provided that Parent is not then in material breach of any
representation, warranty or covenant contained in this Agreement); or
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(d) by Parent prior to the acceptance for payment and payment for the
shares of Company Common Stock in the Offer:
(i) if the Company Board or any committee thereof withdraws or
modifies in a manner adverse to Parent or Sub, or publicly proposes to withdraw
or modify in a manner adverse to Parent or Sub, its approval or recommendation
of this Agreement, the Offer or the Merger, fails to recommend to the Company's
shareholders that they accept the Offer and give the Company Shareholder
Approval or publicly approves or recommends, or publicly proposes to approve or
recommend, any Company Takeover Proposal; or
(ii) if the Company or any of its officers, directors,
employees, representatives, affiliates or agents takes any of the actions that
would be proscribed by Section 5.02 but for the exceptions therein allowing
certain actions to be taken in the case of circumstances satisfying both
subsection (i) and subsection (ii) of Section 5.02(a); or
(e) by the Company prior to the acceptance for payment and payment for
the shares of Company Common Stock in the Offer in accordance with Section
8.05(b); PROVIDED, HOWEVER, that the Company shall have complied with all
provisions thereof, including the notice provisions therein; or
(f) by the Company prior to the acceptance for payment and payment for
the shares of Company Common Stock in the Offer, if Parent breaches or fails to
perform in any material respect any of its representations, warranties or
covenants contained in this Agreement, which breach or failure to perform cannot
be or has not been cured within 30 days after the giving of written notice to
Parent of such breach (provided that the Company is not then in material breach
of any representation, warranty or covenant contained in this Agreement); or
(g) by the Company if Parent, Sub or any of their affiliates shall have
failed to commence the Offer by the tenth business day following the date of the
initial public announcement of the execution of this Agreement; provided that
the Company may not terminate this Agreement pursuant to this Section 8.01(g) if
the Company is in material breach of this Agreement.
Section 8.02. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either the Company
or Parent as provided in Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of
Parent, Sub or the Company, other than as specifically provided herein and
except as provided in any of Section 6.07, this Section 8.02 and Article IX,
which provisions shall survive such termination, and except to the extent that
such termination results from the willful and material breach by a party of any
representation, warranty or covenant set forth in this Agreement.
(b) If Parent or Sub exercises its right to terminate this Agreement
under Section 8.01(d) or the Company exercises its right to terminate this
Agreement under Section 8.01(e), the Company shall pay to Parent upon demand
$1,250,000 (the "TERMINATION FEE"), payable in same-day funds, to reimburse
Parent for its time, expense, lost opportunity costs and other costs and damages
associated with pursuing the Merger.
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(c) If within six months after termination of this Agreement (other
than a termination pursuant to any of Sections 8.01(b), 8.01(f) or 8.01(g)), the
Company shall enter into any agreement relating to a Company Takeover Proposal
with a person or entity other than Parent or Sub or a Company Takeover Proposal
with a person or entity other than Parent or Sub shall otherwise be consummated,
then immediately prior to, and as a condition of, the entering into of such
agreement or the consummation of such transaction, as the case may be, the
Company shall pay to Parent upon demand the Termination Fee, payable in same-day
funds, to reimburse Parent for its time, expense, lost opportunity costs and
other costs and damages associated with pursuing the Merger; provided that no
such amount shall be payable if the Termination Fee shall have been paid in
accordance with Section 8.02(b) of this Agreement.
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due under
this Section 8.02, the Company shall pay the costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee or obligation at the publicly
announced prime rate of Citibank, N.A. in effect from time to time from the date
such fee or obligation was required to be paid.
Section 8.03. AMENDMENT. This Agreement may be amended by the parties
at any time before or after receipt of the Company Shareholder Approval;
PROVIDED, HOWEVER, that after receipt of the Company Shareholder Approval, there
shall be made no amendment that by Law requires further approval by the
shareholders of the Company without the further approval of such shareholders;
and PROVIDED, FURTHER, that after this Agreement is adopted by the Company's
shareholders, no such amendment or modification shall be made that reduces the
amount or changes the form of Merger Consideration or otherwise materially and
adversely affects the rights of the Company's shareholders hereunder, without
the further approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
Section 8.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
Section 8.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER.
(a) A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require, in the case
of each of Parent, Sub or the Company, action by its Board of Directors.
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(b) The Company may terminate this Agreement pursuant to Section
8.01(e) only if (i) the Company Board has received a Superior Company Proposal,
(ii) in light of such Superior Company Proposal the Company Board shall have
determined in good faith, after consultation with outside counsel, that it is
necessary for the Company Board to withdraw or modify its approval or
recommendation of this Agreement, the Offer or the Merger in order to act in a
manner consistent with its fiduciary duty under applicable Law, (iii) the
Company has notified Parent in writing of the determinations described in clause
(ii) above, (iv) at least five business days following receipt by Parent of the
notice referred to in clause (iii) above, and taking into account any revised
proposal made by Parent since receipt of the notice referred to in clause (iii)
above, such Superior Company Proposal remains a Superior Company Proposal and
the Company Board has again made the determinations referred to in clause (ii)
above, (v) the Company is in compliance with Section 5.02 (other than breaches
that, individually and in the aggregate, are not material and do not prejudice
Parent's rights under this Agreement), (vi) the Company Board concurrently
approves, and the Company concurrently enters into, a definitive agreement
providing for the implementation of such Superior Company Proposal and (vii)
Parent is not at such time entitled to terminate this Agreement pursuant to
Section 8.01(c).
ARTICLE IX.
General Provisions
Section 9.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
Section 9.02. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (i) seven days after mailing by certified mail, (ii) when delivered by
hand, (iii) upon confirmation of receipt by telecopy or (iv) one business day
after sending by overnight delivery service, 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 Sub, to
IM Acquisition, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
Technisource, Inc.
Gulf Atlantic Building
Suite 200
1901 W. Cypress Creek Road
Ft. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Holland & Knight
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.03. DEFINITIONS. For purposes of this Agreement:
An "AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the business, business prospects, affairs, condition (financial or
otherwise), operations or results of operation of the Company and the Company
Subsidiaries, taken as a whole, (ii) the ability of the Company to perform its
obligations under this Agreement or (iii) the ability of the Company to
consummate the Offer, the Merger and to perform its obligations under the Option
Agreement; PROVIDED HOWEVER, that a "Company Material Adverse Effect" shall not
include any change or effect resulting from or attributable to (i) the
announcement or pendency of this Agreement or the transactions contemplated
hereby, or (ii) any decrease in the market price of the shares of Common Stock
(but not any change or effect underlying such stock price decrease that would
otherwise constitute a "Company Material Adverse Effect").
-39-
A "KEY EMPLOYEE" means an employee of the Company or any Company
Subsidiary whose total annual compensation (including incentive compensation),
after giving effect to any increase after the date of this Agreement, exceeds
$85,000.
A "PERSON" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "SUBSIDIARY" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
"TO THE KNOWLEDGE" of any specified corporation means to the actual
knowledge of any director or officer of such corporation.
Section 9.04. INTERPRETATION; DISCLOSURE LETTERS. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Any matter disclosed in
any section of the Company Disclosure Schedule shall be deemed disclosed only
for the purposes of the specific Sections of this Agreement to which such
section relates, provided that a disclosure of a specific item in any one
section of the Company Disclosure Schedule shall also be deemed a disclosure as
to all other applicable sections of the Company Disclosure Schedule if either
(x) there is an explicit cross-reference to another section or sections of the
Company Disclosure Schedule, or (y) the Parent could reasonably be expected to
ascertain the scope of the modification to another representation
notwithstanding the absence of a cross-reference.
Section 9.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 9.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 9.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, taken together with the Company Disclosure Schedule and the
Confidentiality Agreement, (a) constitute the entire agreement, and supersede
-40-
all prior agreements and understandings, both written and oral, among the
parties with respect to the Transactions and (b) except for the provisions of
Article II, Section 6.04 and Section 6.06, are not intended to confer upon any
person other than the parties any rights or remedies.
Section 9.08. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.09. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent or as collateral to the senior lenders to Sub and Parent, but no such
assignment shall relieve Sub of any of its obligations under this Agreement. Any
purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
Section 9.10. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any New York state court or any
Federal court located in the State of New York, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any New York state court or any Federal court located in the State of New
York in the event any dispute arises out of this Agreement or any Transaction,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, (c) agrees that it
will not bring any action arising out of or relating to this Agreement or any
Transaction in any court other than any New York state court or any Federal
court sitting in the State of New York and (d) waives any right to trial by jury
with respect to any action related to or arising out of this Agreement or any
Transaction.
Section 9.11. CONSENTS. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in Sections 8.04 and 8.05. Sub hereby agrees that any consent or
waiver of compliance given by Parent hereunder shall be conclusively binding
upon it, whether given expressly on its behalf or not.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-41-
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
IM ACQUISITION, INC.
By: ______________________________
Name:
Title:
IM MERGER CORP.
By: ______________________________
Name:
Title:
TECHNISOURCE, INC.
By: _______________________________
Name:
Title:
-42-
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
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 Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Company Common Stock which, together with
that number of shares of Company Common Stock owned by Parent, Sub and Parent's
other subsidiaries, would represent at least two-thirds of the Fully Diluted
Shares (the "MINIMUM TENDER CONDITION") and (ii) any waiting period under the
HSR Act applicable to the purchase of shares of Company Common Stock pursuant to
the Offer shall have expired or been terminated. The term "FULLY DILUTED SHARES"
means all outstanding securities entitled generally to vote in the election of
directors of the Company on a fully diluted basis, after giving effect to the
exercise or conversion of all options, rights and securities exercisable or
convertible into such voting securities. Furthermore, notwithstanding any other
term of the Offer or this Agreement, Sub shall not be required to accept for
payment or to pay for any shares of Company Common Stock not already accepted
for payment or paid for, and may terminate or amend the Offer, (A) with the
consent of the Company or (B) without the consent of the Company at any time on
or after the date of this Agreement and before the first acceptance of such
shares for payment or the payment therefor when any of the following conditions
exists:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity, or pending any suit, action or proceeding with a
reasonable likelihood of success by any other person, (i) challenging the
acquisition by Parent or Sub of any Company Common Stock, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger, or seeking to
obtain from the Company, Parent or Sub any damages that are material in relation
to the Company and its subsidiaries taken as a whole after taking into account a
reasonable estimate of insurance proceeds reasonably likely to be obtained by
the Company at the conclusion of such suit, (ii) seeking to prohibit or impose
any material limitations on the ownership or operation by the Company, Parent or
any of their respective subsidiaries of any material portion of the business or
assets of the Company and its subsidiaries taken as whole or Parent and its
subsidiaries taken as a whole, or to compel the Company, Parent or any of their
respective subsidiaries to dispose of or hold separate any material portion of
the business or assets of the Company and its subsidiaries taken as whole or
Parent and its subsidiaries taken as a whole, as a result of the Offer, the
Merger or any other Transaction, (iii) seeking to impose material limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including the right to vote
the Company Common Stock acquired by it on all matters properly presented to the
A-1
shareholders of the Company or (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company and the Company Subsidiaries; provided, in each
case, that Parent shall have used all reasonable efforts to cause any such
action or proceeding to be dismissed;
(b) any Law or Judgment enacted, entered, enforced, promulgated,
amended or issued with respect to, or deemed applicable to, or any required
consent or approval withheld with respect to, (i) Parent, the Company or any of
their respective subsidiaries or (ii) the Offer, the Merger or any other
Transaction, by any Governmental Entity, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in paragraph (a)
above;
(c) since the date of the most recent audited financial statements
included in the Filed Company SEC Documents there shall have occurred any event,
change, effect or development that, individually or in the aggregate, has had,
or would reasonably be expected to have, a Company Material Adverse Effect;
(d) the Company Board or any committee thereof shall have withdrawn or
modified in a manner adverse to Parent or Sub, or publicly proposed to withdraw
or modify in a manner adverse to Parent or Sub, its approval or recommendation
of this Agreement, the Offer or the Merger, failed to recommend to the Company's
shareholders that they accept the Offer and give the Company Shareholder
Approval, failed to timely file SEC Schedule 14D-9 evidencing such favorable
recommendation, or approved or recommended, or publicly proposed to approve or
recommend, any Company Takeover Proposal;
(e) (i) any of the representations and warranties of the Company
contained in Sections 3.03, 3.06, 3.08, 3.09, 3.13, 3.14, 3.15 and 3.16 of this
Agreement that is qualified as to materiality shall not be true and correct or
any such representation and warranty that is not so qualified shall not be true
and correct in any material respect, as of the date of this Agreement and as of
such time, except to the extent such representation and warranty expressly
relates to an earlier date (in which case such determination shall be on and as
of such earlier date) or (ii) the failure, individually or in the aggregate, of
any representation and warranty of the Company other than those listed in clause
(i) above to be true and correct causes or would be reasonably likely to cause a
Company Material Adverse Effect;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement, which failure to perform or comply cannot be or has not been cured
within five days after the giving of written notice to the Company of such
breach;
(g) all consents or approvals necessary to the consummation of the
Offer or the Merger including, without limitation, consents from parties to
loans, contracts, leases or other agreement shall not have been obtained, other
than consents the failure of which to obtain would not have a Company Material
Adverse Effect;
(h) neither ▇▇▇▇▇▇▇ ▇▇▇▇▇ nor the Company Board shall have withdrawn or
modified in a material way the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by the holders of Company Common Stock is fair to
such holders from a financial point of view;
A-2
(i) since the date of this Agreement, the Company and each of the
Company Subsidiaries shall have been operated other than in the normal course
(consistent with past custom and practice) or shall have, without the prior
written consent of Parent, (A) issued any stock interests or granted any options
or warrants or other commitments with respect to any of its equity or debt
securities; (B) paid any dividends or made any distributions or loans to its
shareholders; (C) incurred any additional loans or debt (other than in the
ordinary course of business); (D) altered, rescinded or amended any provision of
the Company Charter or Company By-laws; (E) made any capital expenditures in
excess of an aggregate of $50,000; (F) declared bonus amounts in excess of those
consistent with past practice or increased compensation above present levels
other than regularly scheduled seniority increases to non-officer employees
consistent with past practice; (G) entered into or amended any (i) employment
agreements (other than consultant employment or engagement agreements entered
into in the ordinary course of business and consistent with past practice), (ii)
change of control agreements, or (iii) severance agreements; or (H) otherwise
taken any actions that would materially adversely affect Parent's, Sub's or the
Company's ability to consummate the Offer or the Merger, or that would be
reasonably likely to result in a Company Material Adverse Effect;
(j) the Offer or the Merger shall be subject to any anti-takeover
legislation, including but not limited to Sections 607.0901 or 607.0902 of the
BCA;
(k) Parent shall not have entered into noncompetition and
nonsolicitation agreements substantially in the form of Exhibit C hereto with
each of C. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, which agreements
may provide that they shall only be effective upon the consummation of the
Offer;
(l) the Company shall not have executed appropriate joinder
documentation with respect to the Parent's existing credit agreement with Fleet;
(m) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, American
Stock Exchange or in the Nasdaq National Market, for a period in excess of three
hours (excluding any coordinated trading halt triggered solely as a result of a
specified decrease in a market index for a period of less than two days and
suspensions or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions), (ii) a declaration of a
banking moratorium or any 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, (iv) any limitation (whether or not mandatory) by
any United States governmental authority on the extension of credit by banks or
other financial institutions, (v) a change in general financial bank or capital
market conditions which materially or 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;
(n) this Agreement shall have been terminated in accordance with its
terms; or
(o) Parent, Sub and the Company shall not have entered into an
agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ in a form reasonably acceptable to Parent, Sub
and ▇▇. ▇▇▇▇▇▇▇▇▇, pursuant to which ▇▇. ▇▇▇▇▇▇▇▇▇ shall provide consulting
A-3
services after the Effective Time to the Parent and Surviving Corporation, and
at no cost to the Parent or the Surviving Corporation, in connection with
agreements, contracts, understandings and commitments that require certain
security clearances issued by Government Entities ("DISCO Agreements"); provided
that (I) such consulting services are similar in nature, responsibility and
effort required to the services ▇▇. ▇▇▇▇▇▇▇▇▇ provides the Company as of the
date hereof in connection with DISCO Agreements and (II) that the Parent and Sub
negotiate in good faith to reach such agreement.
which, in the reasonable judgment of Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including any
action or inaction by Parent or any of its affiliates), makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and, subject to Section 1.01(a), may be asserted by Sub or Parent regardless of
the circumstances giving rise to such condition or may be waived by Sub and
Parent in whole or in part at any time and from time to time in their sole
discretion (subject to the terms of this Agreement). The failure by Parent, Sub
or any other affiliate of Parent at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
A-4
EXHIBIT B
ARTICLES OF INCORPORATION
B-1
EXHIBIT C
FORM OF NONCOMPETITION AND NONSOLICITATION AGREEMENT
C-1