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Exhibit (1)
AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
EAGLE MERGER CORP.
and
SOFTWORKS, INC.
dated as of
December 21, 1999
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer...................................................................... 2
Section 1.2 Company Actions................................................................ 3
Section 1.3 Directors...................................................................... 4
Section 1.4 The Merger..................................................................... 6
Section 1.5 Effective Time................................................................. 6
Section 1.6 Closing ...................................................................... 6
Section 1.7 Directors and Officers of the Surviving Corporation............................ 6
Section 1.8 Subsequent Actions............................................................. 7
Section 1.9 Shareholders' Meeting.......................................................... 7
Section 1.10 Merger Without Meeting of Shareholders......................................... 8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock................................................... 8
Section 2.2 Exchange of Certificates...................................................... 9
Section 2.3 Dissenting Shares............................................................. 11
Section 2.4 Company Stock Options......................................................... 11
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1 Organization and Qualification; Subsidiaries.................................. 13
Section 3.2 Certificate of Incorporation and By-Laws...................................... 13
Section 3.3 Capitalization................................................................ 14
Section 3.4 Authority Relative to this Agreement.......................................... 15
Section 3.5 Board Approvals Regarding Transactions; Vote Required......................... 15
Section 3.6 Agreements.................................................................... 16
Section 3.7 No Conflict; Required Filings and Consents.................................... 17
Section 3.8 Compliance; Permits........................................................... 17
Section 3.9 SEC Filings; Financial Statements............................................. 18
Section 3.10 Absence of Certain Changes or Events.......................................... 19
Section 3.11 No Undisclosed Liabilities.................................................... 19
Section 3.12 Absence of Litigation......................................................... 19
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Section 3.13 Employee Benefit Plans, Options and Employment
Agreements........................................................... 20
Section 3.14 Labor Matters................................................................. 22
Section 3.15 Properties; Encumbrances...................................................... 23
Section 3.16 Taxes......................................................................... 23
Section 3.17 Environmental Matters......................................................... 25
Section 3.18 Intellectual Property......................................................... 26
Section 3.19 Insurance..................................................................... 27
Section 3.20 Restrictions on Business Activities........................................... 28
Section 3.21 Information in Schedule 14D-9................................................. 28
Section 3.22 Information in Proxy Statement................................................ 28
Section 3.23 Interested Party Transactions................................................. 29
Section 3.24 Change in Control Payments.................................................... 29
Section 3.25 Year 2000 Compliance.......................................................... 29
Section 3.26 No Existing Discussions....................................................... 30
Section 3.27 Opinion of Financial Advisor.................................................. 31
Section 3.28 Brokers....................................................................... 31
Section 3.29 Books and Records............................................................. 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Section 4.1 Organization.................................................................. 32
Section 4.2 Authority Relative to this Agreement.......................................... 32
Section 4.3 No Conflict; Required Filings and Consents.................................... 32
Section 4.4 Information in Offer Document................................................. 33
Section 4.5 Information in Proxy Statement................................................ 33
Section 4.6 Sufficient Funds.............................................................. 33
Section 4.7 Purchaser's Operations........................................................ 34
Section 4.8 Brokers or Finders............................................................ 34
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company............................................. 34
Section 5.2 Access; Confidentiality....................................................... 37
Section 5.3 Reasonable Best Efforts....................................................... 38
Section 5.4 Employee Benefits............................................................. 39
Section 5.5 No Solicitation of Competing Transaction...................................... 40
Section 5.6 Transfer of Major Shareholder's Shares........................................ 42
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Section 5.7 Publicity..................................................................... 42
Section 5.8 Notification of Certain Matters............................................... 42
Section 5.9 Directors' and Officers' Insurance and Indemnification........................ 42
Section 5.10 State Takeover Laws........................................................... 43
Section 5.11 Purchaser Compliance.......................................................... 43
Section 5.12 Delivery of Financial Information............................................. 43
Section 5.13 Grant of Option............................................................... 44
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.................... 44
Section 6.2 Conditions to Parent's and Purchaser's Obligations to
Effect the Merger.................................................... 45
ARTICLE VII
TERMINATION
Section 7.1 Termination................................................................... 45
Section 7.2 Effect of Termination......................................................... 48
ARTICLE VIII
DEFINITIONS AND INTERPRETATION
Section 8.1 Definitions................................................................... 48
Section 8.2 Interpretation................................................................ 59
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses............................................................. 61
Section 9.2 Amendment and Modification.................................................... 62
Section 9.3 Survival of Representations and Warranties.................................... 62
Section 9.4 Notices....................................................................... 63
Section 9.5 Counterparts.................................................................. 64
Section 9.6 Entire Agreement; No Third Party Beneficiaries................................ 64
Section 9.7 Severability.................................................................. 64
Section 9.8 Governing Law................................................................. 65
Section 9.9 Enforcement................................................................... 65
Section 9.10 Time of Essence............................................................... 65
Section 9.11 Extension; Waiver............................................................. 65
Section 9.12 Assignment.................................................................... 66
Annex A
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 21, 1999, by and
among ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, a Massachusetts corporation, Eagle Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Parent, and Softworks,
Inc., a Delaware corporation. Certain capitalized terms used in this Agreement
have the meanings ascribed to them in Article VIII on page 48.
WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company has approved and deems it advisable and in the best interests of its
shareholders to consummate the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser make a
cash tender offer to acquire any and all shares of the issued and outstanding
common stock, $.001 par value per share, of the Company for $10.00 per share,
net to the seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company has approved this
Agreement and the Merger following the Offer in accordance with the DGCL and
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Company Board of Directors has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares accept the Offer and approve this Agreement and each of the
Transactions upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger; and
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein, the
Trustees and the Major Shareholder, concurrently herewith, are entering into a
Stock Tender Agreement dated as of the date hereof, with Parent and Purchaser,
pursuant to which the Major Shareholder is agreeing, among other things, to
tender the Shares held by the Major Shareholder in the Offer, to grant Parent an
option to purchase such Shares under certain circumstances and to grant
Purchaser a proxy
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with respect to the voting of such Shares, all upon the terms and subject to the
conditions set forth in the Stock Tender Agreement; and
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
certain shareholders of the Company, concurrently herewith, are entering into a
Stockholders' Stock Tender Agreement dated as of the date hereof, with Parent
and Purchaser, pursuant to which such shareholders are agreeing, among other
things, to tender the Shares held by each of them in the Offer, to grant Parent
an option to purchase such Shares under certain circumstances and to grant
Purchaser a proxy with respect to the voting of such Shares, all upon the terms
and subject to the conditions set forth in the Stockholders' Stock Tender
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 and none of the events set forth in Annex A shall
have occurred and be existing, as promptly as practicable (but in no event later
than five business days after the public announcement of the execution of this
Agreement), Purchaser shall commence (within the meaning of Rule 14d-2
promulgated under the Exchange Act) a cash tender offer to acquire any and all
Shares at the Offer Price. Subject to the Minimum Condition and subject to the
other conditions set forth in Annex A hereto, Purchaser shall use reasonable
efforts to consummate the Offer in accordance with its terms and to accept for
payment and pay for Shares tendered pursuant to the Offer as soon as Purchaser
is legally permitted to do so under applicable law. The Offer shall be made by
means of the Offer to Purchase and shall be subject to the Minimum Condition and
the other conditions set forth in Annex A hereto and shall reflect, as
appropriate, the other terms set forth in this Agreement. If on the initial
scheduled expiration date of the Offer, which shall be no earlier than twenty
business days after the date the Offer is commenced, all conditions to the
Offer will not have been satisfied or waived, Purchaser may, from time to time,
in its sole discretion, extend the expiration date of the Offer. In addition,
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Purchaser may, but shall not have the obligation to, increase the amount it
offers to pay per Share in the Offer, and the Offer may be extended to the
extent required by law in connection with such increase, in each case without
the consent of the Company. If, immediately prior to the expiration date of the
Offer (as it may be extended), the Shares tendered and not withdrawn pursuant to
the Offer constitute less than 90% of the outstanding Shares, Purchaser may
extend the Offer for a period not to exceed ten business days, notwithstanding
that all conditions to the Offer are satisfied as of such expiration date of the
Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent
and Purchaser shall file with the SEC a tender offer statement on Schedule 14D-1
with respect to the Offer. The Schedule 14D-1 will include, as exhibits, the
Offer to Purchase and a form of letter of transmittal and summary advertisement.
Company and its counsel shall be given the opportunity to review the Schedule
14D-1 before it is filed with the SEC.
(c) Parent and Purchaser will take all steps necessary to cause the
Offer Documents to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and Purchaser, on the one hand, and the Company, on the
other hand, will promptly correct any information provided by it for use in the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect, and Purchaser will take all steps necessary
to cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws.
Section 1.2 Company Actions.
(a) As soon as practicable on the date the Offer is commenced, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9, which shall, subject to the provisions of Section 5.5(b),
contain the recommendation referred to in clause (iii) of Section 3.5. At the
time the Offer Documents are first mailed to the shareholders of the Company,
the Company shall mail or cause to be mailed to the shareholders of the Company
such Schedule 14D-9 together with such Offer Documents. The Company further
agrees to take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of the Shares, as and to the extent required by
applicable federal securities laws. Each of the Company, on the one hand, and
Parent and Purchaser, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the
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Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given the
opportunity to review the Schedule 14D-9 before it is filed with the SEC. In
addition, the Company agrees to provide Parent, Purchaser and their counsel with
any comments, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments or other communications.
(b) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listing, or computer file containing the names and addresses
of all recordholders of the Shares as of the most recent practicable date, and
shall furnish Purchaser with such additional information (including, but not
limited to, lists of holders of the Shares, updated daily, and their addresses,
mailing labels and lists of security positions) and assistance as Purchaser or
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and Purchaser shall hold in confidence
the information contained in any of such labels and lists and the additional
information referred to in the preceding sentence, will use such information
only in connection with the Offer, and, if this Agreement is terminated, will
upon request of the Company deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
Section 1.3 Directors.
(a) Upon the purchase of Shares pursuant to the Offer and from time to
time thereafter, subject to compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, Parent shall be entitled to designate
such number of directors of the Company, rounded down to the next whole number,
as is equal to the product of the total number of directors on such Board
(giving effect to the directors designated by Parent pursuant to this sentence)
multiplied by the Board Fraction. In furtherance thereof, the Company shall,
upon request of the Parent, use its reasonable best efforts promptly either to
increase the size of the Company Board of Directors or to secure the
resignations of such number of its incumbent directors, or both, as is necessary
to enable such designees of Parent to be so elected or appointed to the Company
Board of Directors, and the Company shall take all actions available to the
Company to cause such designees of Parent to be so elected or appointed at such
time. At such time, the Company shall, if requested by Parent, also take all
action necessary to cause Persons designated by Parent to constitute the
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same Board Fraction of (i) each committee of the Company Board of Directors,
(ii) each board of directors (or similar body) of each Company Subsidiary of the
Company and (iii) each committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in
order to fulfill its obligations under Section 1.3(a), including mailing to
shareholders the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected or appointed to the Company
Board of Directors immediately after the purchase of and payment for any Shares
by Parent or any of its Subsidiaries as a result of which Parent and its
Subsidiaries own beneficially at least a majority of then outstanding Shares.
Parent or Purchaser will supply the Company all information with respect to
either of them and their nominees, officers, directors and Affiliates required
to be disclosed by such Section 14(f) and Rule 14f-1. The provisions of this
Section 1.3 are in addition to and shall not limit any rights which Purchaser,
Parent or any of their Affiliates may have as a holder or beneficial owner of
Shares as a matter of law with respect to the election of directors or
otherwise.
(c) In the event that Parent's designees are elected or appointed to
the Company Board of Directors, until the Effective Time, the Company Board of
Directors shall have at least two directors who are Independent Directors,
provided that, in such event, if the number of Independent Directors shall be
reduced below two for any reason whatsoever, any remaining Independent Directors
(or Independent Director, if there be only one remaining) shall be entitled to
designate Persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate two Persons to fill such vacancies
who shall not be shareholders, Affiliates or associates of Parent or Purchaser,
and such Persons shall be deemed to be Independent Directors for purposes of
this Agreement. Notwithstanding anything in this Agreement to the contrary, in
the event that Parent's designees constitute a majority of the directors on the
Company Board of Directors, the affirmative vote of a majority of the
Independent Directors shall be required after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, to (a) amend or
terminate this Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies hereunder, or (c) take any other action
under or in connection with this Agreement if such action materially and
adversely affects holders of Shares other than Parent or Purchaser; provided,
that if there shall be no such directors, such actions may be effected by
unanimous vote of the entire Company Board of Directors.
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Section 1.4 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company and Purchaser shall consummate a
merger pursuant to which (a) Purchaser shall be merged with and into the Company
and the separate corporate existence of Purchaser shall thereupon cease, (b) the
Company shall be the successor or surviving corporation in the Merger and shall
continue to be governed by the laws of the State of Delaware, and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Section 1.4. Pursuant to the Merger and effective
immediately following the Merger, (x) the Purchaser Charter, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such certificate of incorporation, and (y) the Purchaser By-Laws, as
in effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Corporation until thereafter amended as provided by law, by such
certificate of incorporation or by such by-laws. The Merger shall have the
effects specified in the DGCL.
Section 1.5 Effective Time. Parent, Purchaser and the Company will
cause a certificate of merger to be executed and filed on the Closing Date (or
on such other date as Parent and the Company may agree) with the Secretary of
State of Delaware as provided in the DGCL. The Merger shall become effective on
the date on which such certificate of merger is duly filed with the Secretary of
State of the State of Delaware or such other time as is agreed upon by the
parties and specified in such certificate of merger.
Section 1.6 Closing. The closing of the Merger shall take place at
10:00 a.m. on a date to be agreed upon by the parties, and if such date is not
agreed upon by the parties, the Closing shall occur on the second business day
after satisfaction or waiver of all of the conditions set forth in Article VI,
at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
Section 1.7 Directors and Officers of the Surviving Corporation. The
directors and officers of Purchaser at the Effective Time shall, from and after
the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and the by-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
Company Board of Directors or in any office of the Surviving Corporation, such
vacancy may thereafter be filled in the manner provided by law.
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Section 1.8 Subsequent Actions. If at any time after the Effective Time
the Surviving Corporation will consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Purchaser, all such deeds, bills of
sale, instruments of conveyance, assignments and assurances and to take and do,
in the name and on behalf of each of such corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
Section 1.9 Shareholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through the Company Board of Directors, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its shareholders as promptly as practicable following the acceptance
for payment and purchase of Shares by Purchaser pursuant to the Offer for
the purpose of considering and taking action upon the approval of the
Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use
its reasonable best efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any
amendment or supplement thereto to be mailed to its shareholders,
provided that no amendment or supplement to such proxy or information
statement will be made by the Company without consultation with Parent
and its counsel;
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(iii) include in the Proxy Statement the recommendation of the
Company Board of Directors that shareholders of the Company vote in favor
of the approval of the Merger and the approval and adoption of this
Agreement; and
(iv) use its reasonable best efforts to solicit from holders of
Shares proxies in favor of the Merger and take all other action necessary
or, in the reasonable opinion of Parent, advisable to secure any vote or
consent of shareholders required by the Company Charter and the DGCL, or
other applicable law, to effect the Merger.
(b) Parent will provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement.
(c) Parent shall vote, or cause to be voted, in favor of the approval
of the Merger and the approval and adoption of this Agreement:
(i) all shares of capital stock of Purchaser, and
(ii) all Shares owned by Parent, Purchaser or any of Parent's other
Subsidiaries.
Section 1.10 Merger Without Meeting of Shareholders. Notwithstanding
Section 1.9, in the event that Parent, Purchaser and any other Subsidiaries of
Parent shall acquire in the aggregate a number of the outstanding shares of each
class of capital stock of the Company, pursuant to the Offer or otherwise,
sufficient to enable Purchaser or the Company to cause the Merger to become
effective without a meeting of shareholders of the Company, the parties hereto
shall, at the request of Parent and subject to Article VI, take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of shareholders of the
Company, in accordance with Section 253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any further action on the part of the holders
of any Shares or holders of Purchaser Common Stock:
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(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each Share
owned by the Company as treasury stock and each Share owned by Parent, Purchaser
or any other wholly owned Subsidiary of Parent (other than shares in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with Section 2.1(b) and other than any
Dissenting Shares) shall be converted into the right to receive the Offer Price,
payable to the holder thereof, without interest, upon surrender of the
certificate formerly representing such Share in the manner provided in Section
2.2. From and after the Effective Time, all such converted Shares shall no
longer be outstanding and shall be deemed to be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect to such shares except the right to
receive the Merger Consideration therefor, without interest, upon the surrender
of such certificate in accordance with Section 2.2 or the right, if any, to
receive payment from the Surviving Corporation of the "fair value" of such
Shares as determined in accordance with Section 262 of the DGCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company to act
as agent for the holders of the Shares in connection with the Merger to receive
in trust the funds to which holders of the Shares shall become entitled pursuant
to Section 2.1(c). At the Effective Time, Parent or Purchaser shall deposit, or
cause to be deposited, with the Paying Agent for the benefit of holders of
Shares the aggregate consideration to which such holders shall be entitled at
the Effective Time pursuant to Section 2.1(c). Such funds shall be invested as
directed by Parent or the Surviving Corporation pending payment thereof by the
Paying Agent to holders of the Shares. Earnings from such investments shall be
the sole and exclusive property of Purchaser and the Surviving Corporation, and
no part of such earnings shall accrue to the benefit of holders of Shares.
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(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a Certificate or Certificates, (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 not inconsistent
with this Agreement as Parent may specify) and (ii) instructions for use in
effecting the surrender of Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law.
(d) Termination of Fund; No Liability. At any time following one year
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any earnings received
with respect thereto) that had been made available to the Paying Agent and that
have not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) and only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest
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thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor
the Paying Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 2.3 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
Dissenting Shares shall not be converted into or represent a right to receive
cash pursuant to Section 2.1, but the holder thereof shall be entitled to only
such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.3(a), if any holder of
Shares who demands appraisal of his Shares under the DGCL effectively with draws
or loses (through failure to perfect or otherwise) his right to appraisal, then
as of the Effective Time or the occurrence of such event, whichever later
occurs, such holder's Shares shall automatically be converted into and represent
only the right to receive the Merger Consideration as provided in Section
2.1(c), without interest, upon surrender of the certificate or certificates
representing such Shares pursuant to Section 2.2.
(c) The Company shall give Parent (i) prompt notice of any written
demands received by the Company for appraisal or payment of the fair value of
any Shares, withdrawals of such demands, and any other instruments served on the
Company pursuant to the DGCL and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the DGCL. Except
with the prior written consent of Parent, the Company shall not voluntarily make
any payment with respect to any demands for appraisal or settle or offer to
settle any such demands.
Section 2.4 Company Stock Options.
(a) As of the Effective Time, each holder of a Company Option shall
become entitled to receive, as set forth herein, a Cash Amount and/or a Parent
Option in respect of such Company Option. The Cash Amount, if any, payable with
respect to each Company Option shall be payable with respect to each Company
Option issued pursuant to the Company Incentive Plan (other than any such option
which has been designated as a 1999 Option). As of the Effective Time, each
outstanding Company Option issued pursuant to the Company Incentive Plan (other
than any such option which has been designated as a 1999 Option) shall
automatically be cancelled upon payment of the Cash Amount. In addition, as of
the Effec-
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tive Time, each outstanding 1999 Option shall automatically be converted into a
Parent Option, as set forth below. With respect to any such Parent Option, (i)
the number of shares of Parent Common Stock subject to such Parent Option will
be determined by multiplying the number of Shares subject to the 1999 Option by
the Option Exchange Ratio, rounding any fractional share down to the nearest
whole share, and (ii) the exercise price per share of such Parent Option will be
determined by dividing the exercise price per share applicable to the 1999
Option by the Option Exchange Ratio, and rounding the exercise price thus
determined up to the nearest whole cent. Except as provided above, the converted
or substituted Parent Options shall be subject to the same terms and conditions
(including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the 1999 Option immediately prior to the
Effective Time.
(b) The Company will take all necessary and appropriate actions so that
all stock option, incentive or other equity-based plans established by the
Company or any Company Subsidiary shall terminate as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of
Company or any Company Subsidiary shall be deleted, terminated and of no further
force or effect as of the Effective Time.
(c) If and to the extent necessary or required by the terms of the
plans governing Company Options or pursuant to the terms of any Company Option
granted thereunder, the Company shall use its reasonable best efforts to obtain
the consent of each holder of outstanding Company Options to the foregoing
treatment of such Company Options.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule, the Company represents
and warrants to Parent and Purchaser that all of the statements contained in
this Article III are true and correct as of the date of this Agreement (or, if
made as of a specified date, as of such date), and will be true and correct as
of the Closing Date as though made on the Closing Date. Each exception set forth
in the Disclosure Schedule and each other response to this Agreement set forth
in the Disclosure Schedule is identified by reference to, or has been grouped
under a heading referring to, a specific individual section of this Agreement
and relates only to such section,
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except to the extent that one portion of the Disclosure Schedule specifically
refers to another portion thereof, identifying such other portion by section
reference or similar specific cross reference.
Section 3.1 Organization and Qualification; Subsidiaries. The Company
and each Company Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority necessary to own, lease and
operate the properties it purports to own, lease or operate and to carry on its
business as it is now being conducted or presently proposed to be conducted. The
Company and each Company Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole. A true, complete and correct list of all of the Company Subsidiaries,
together with the jurisdiction of incorporation of each such Company Subsidiary,
the authorized capitalization of each such Company Subsidiary, and the
percentage of each such Company's Subsidiary's outstanding capital stock owned
by the Company or another Company Subsidiary, is set forth in Section 3.1 of the
Disclosure Schedule. The Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by the Company and
comprising less than one percent of the outstanding stock of such company.
Section 3.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a true, complete and correct copy of the Company
Charter and the Company By-Laws and has made available to Parent true, complete
and correct copies of the Subsidiary Documents. There has been no amendment to
or change in any of the Company Charter or Company By-Laws since the time of
their delivery to Parent by the Company. The Company Charter, Company By-Laws
and Subsidiary Documents are in full force and effect. Neither the Company nor
any Company Subsidiary is in violation of any of the provisions of the Company
Charter, Company By-Laws or Subsidiary Documents, as the case may be.
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Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of fifty
million (50,000,000) Shares and two million (2,000,000) shares of Preferred
Stock. As of the close of business on December 20, 1999, (i) 17,373,191 Shares
are issued and outstanding; (ii) no Shares are held in the treasury of the
Company; (iii) no shares of Preferred Stock are issued and outstanding; and (iv)
an aggregate of 6,064,825 Shares are reserved for issuance upon exercise of
Company Options granted pursuant to the Company Stock Option Plan and the
Company Incentive Plan. All the outstanding shares of the Company's capital
stock are, and all Shares reserved for issuance as specified above, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be, duly authorized, validly issued, fully paid
and nonassessable. None of the outstanding shares of the Company's capital stock
have been issued in violation of any federal or state securities laws. The
Company has delivered to Parent a complete and correct list, as of the close of
business on December 20, 1999, of the number of shares of the Company's capital
stock subject to outstanding stock options (and the exercise prices thereof) or
other rights to purchase or receive shares of the Company's capital stock. Since
December 20, 1999, there have been no changes to the authorized capital stock of
the Company or the number of Shares or shares of Preferred Stock outstanding
except for issuances of Shares upon exercise of Company Options outstanding as
of such date and reflected on the list delivered to Parent described in the
preceding sentence. Since December 20, 1999, no options or rights of any kind to
acquire any shares of capital stock of the Company have been issued, granted or
otherwise committed. All of the outstanding shares of capital stock of each
Company Subsidiary are duly authorized, validly issued, fully paid and
nonassessable, and all such shares (other than directors' qualifying shares in
the case of foreign Subsidiaries) are owned by the Company or a Company
Subsidiary free and clear of all Liens. There are no accrued and unpaid
dividends with respect to any outstanding shares of capital stock of the
Company.
(b) Except as described under Section 3.3(a), there are no equity
securities of any class of the Company or any Company Subsidiary or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. Except as described under Section 3.3(a), there are
no options, warrants, calls, rights, commitments or agreements of any character
to which the Company or any Company Subsidiary is a party, or by which the
Company or any Company Subsidiary is bound, 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 of the Company or any Company
Subsidiary or obligating the Company or any Company Subsidiary to grant, extend
or accelerate
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the vesting of or enter into any such option, warrant, call, right, commitment
or agreement. There is no Voting Debt of the Company or any Company Subsidiary
issued and outstanding. There are no voting trusts (other than the Voting
Trust), proxies or other similar agreements or understandings with respect to
the shares of capital stock of the Company or any Company Subsidiary. There are
no obligations, contingent or otherwise, 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 or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity.
Section 3.4 Authority Relative to this Agreement. Subject only to the
approval of the Company's shareholders described below, the Company has all
necessary corporate power and authority to execute and deliver this Agreement
and each instrument required hereby to be executed and delivered at the Closing
by the Company and to perform its obligations hereunder and to consummate the
Transactions to which it is a party. The execution and delivery of this
Agreement and each instrument required hereby to be executed and delivered at
the Closing by the Company and the consummation by the Company of the Merger and
the Transactions to which it is a party have been duly and validly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval of this Agreement and the Merger by the Company's shareholders
under the DGCL and the Company Charter by the affirmative vote of the holders of
a majority of outstanding Shares. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Purchaser, as applicable, constitutes the
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law).
Section 3.5 Board Approvals Regarding Transactions; Vote Required. The
Company Board of Directors, at a meeting duly called and held, has (i)
unanimously determined that each of the Agreement, the Offer and the Merger are
advisable, fair to and in the best interests of the shareholders of the Company,
(ii) approved the Transactions, (iii) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares to Purchaser
pursuant to the Offer and approve and adopt this Agreement and the Merger, (iv)
determined to waive any rights the Company may have under any agreement or
otherwise to object to the transfer to Purchaser in the Offer of all Shares held
by the Major Shareholder, and
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(v) consented to the transfer to Purchaser of all such Shares, and none of the
afore said actions by the Company Board of Directors has been amended, rescinded
or modified. The action taken by the Company Board of Directors constitutes
approval of the Merger and the other Transactions by the Company Board of
Directors under (a) the provisions of Section 203 of the DGCL such that Section
203 of the DGCL does not apply to the execution, delivery or performance of this
Agreement, the Stock Tender Agreement or the Stockholders' Stock Tender
Agreement or the consummation of the Merger or the Transactions and (b) Article
Eleventh of the Company Charter such that the affirmative vote of the holders of
a majority of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve this
Agreement and the Merger. No other state takeover statute is applicable to the
Merger or the other Transactions. No vote of any class or series of the
Company's capital stock is necessary to approve any of the Transactions other
than the Merger.
Section 3.6 Agreements.
(a) Section 3.6(a) of the Disclosure Schedule sets forth a list of all
Company Agreements (i) which contain non-competition or similar restrictive
provisions with respect to the Company; (ii) which are material to the Company's
business or operations; (iii) whereby the Company is obligated to make royalty
payments to third parties; (iv) with consultants involved in the development of
any of the Company's Products or services; and (v) with the Major Shareholder or
any of its Affiliates or Associates.
(b) (i) Neither the Company nor any Company Subsidiary has breached, is
in default under, or has received written notice of any breach of or default
under any Material Contract, (ii) to the Company's knowledge, no other party to
any Material Contract has breached or is in default of any of its obligations
thereunder, (iii) each Material Contract is in full force and effect, except in
any such case for breaches, defaults or failures to be in full force and effect
that is not currently having or would not have a material adverse effect on the
Company and the Company Subsidiaries, taken as a whole, and (iv) each Material
Contract is a legal, valid and binding obligation of the Company or Company
Subsidiary and, to the knowledge of the Company, each of the other parties
thereto, and is enforceable in accordance with its terms, except that the
enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity.
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Section 3.7 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and each instrument
required hereby to be executed and delivered by the Company at the Closing does
not, the performance by the Company of this Agreement, and the consummation by
the Company of the Transactions will not, (i) conflict with or violate the
Company Charter or Company By-Laws, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any Company
Subsidiary or by which any of their respective properties is bound or affected,
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default), or impair the Company's
or any of its Subsidiaries' rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the properties or assets of the Company or any Company Subsidiary pursuant to,
any Company Agreement, except in the case of (ii) and (iii) for any such
conflicts, violations, breaches, defaults or other occurrences that would not
have a material adverse effect on the Company and the Company Subsidiaries,
taken as a whole.
(b) The execution and delivery of this Agreement or any instrument
required hereby to be executed and delivered by the Company at the Closing does
not, the performance by the Company of this Agreement, and the consummation by
the Company of the Transactions to which it is a party will not require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) the filings, consents and approvals as
may be required under the HSR Act, (ii) the filing of the Schedule 14D-9, the
Proxy Statement and any filings required by Rule 14f-1 promulgated under the
Exchange Act with the SEC in accordance with the Exchange Act, (iii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal and state securities laws
and the laws of any foreign country, (iv) the filing and recordation of
appropriate merger or other documents as required by the DGCL, and (v) such
other consents, approvals, authorizations or permits which, if not obtained or
made, would not have a material adverse effect on the Company and the Company
Subsidiaries, taken as a whole.
Section 3.8 Compliance; Permits.
(a) Neither the Company nor any Company Subsidiary is in conflict with,
or in default or violation of (and has not received any notices of violation
with respect to), any law, rule, regulation, order, judgment or decree
applicable to the Company or any Company Subsidiary or by which any of their
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respective properties is bound or affected, and the Company is not aware of any
such conflict, default or violation thereunder, except in each case for any such
conflicts, defaults or violations that is not currently having or would not have
a material adverse effect on the Company and the Company Subsidiaries, taken as
a whole.
(b) The Company and the Company Subsidiaries hold all Company Permits.
The Company Permits are in full force and effect, have not been violated in any
respect that is currently having or would have a material adverse effect on the
Company and the Company Subsidiaries, taken as a whole and, to the knowledge of
the Company, no suspension, revocation or cancellation thereof has been
threatened and there is no action, proceeding or investigation pending or,
threatened regarding suspension, revocation or cancellation of any Company
Permits, except where the suspension, revocation or cancellation of such Company
Permits would not have a material adverse effect on the Company and the Company
Subsidiaries, taken as a whole.
Section 3.9 SEC Filings; Financial Statements.
(a) The Company has timely filed and made available to Parent all
Company SEC Documents. The Company SEC Documents (i) at the time filed, complied
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Company SEC Documents or necessary in order to make the statements in such
Company SEC Documents, in light of the circumstances under which they were made,
not misleading. No Company Subsidiary is required to file any forms, reports,
schedules, statements or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes), contained in the Company SEC Documents, including any
Company SEC Documents filed after the date of this Agreement until the Closing,
complied, as of its respective date, in all material respects with all
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, was prepared in accordance with GAAP (except as
may be indicated in the notes thereto) applied on a consistent basis throughout
the periods involved and fairly presented the consolidated financial position of
the Company and its Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial
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statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
Section 3.10 Absence of Certain Changes or Events. Since the Balance
Sheet Date, the Company has conducted its business in the ordinary course
consistent with past practice and, since such date, there has not occurred: (i)
any change, development, event or other circumstance, situation or state of
affairs that has had or may reasonably be expected to have a material adverse
effect on the Company and the Company Subsidiaries, taken as a whole; (ii) any
damage to, destruction or loss of any asset of the Company or any Company
Subsidiary (whether or not covered by insurance) that could reasonably be
expected to have a material adverse effect on the Company and the Company
Subsidiaries, taken as a whole; (iii) any material change by the Company in its
accounting methods, principles or practices; (iv) any material revaluation by
the Company of any of its assets, including, without limitation, writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business consistent with past practice; (v) any sale of a
material amount of assets (tangible or intangible) of the Company; or (vi) any
other action or event that would have required the consent of Parent pursuant to
Section 5.1 had such action or event occurred after the date of this Agreement.
Section 3.11 No Undisclosed Liabilities. Except as disclosed in the
Company SEC Documents, neither the Company nor any Company Subsidiary has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
adequately provided for in the Balance Sheet, (b) incurred in the ordinary
course of business consistent with past practice and not required under GAAP to
be reflected in the Balance Sheet, (c) incurred since the Balance Sheet Date in
the ordinary course of business consistent with past practice, (d) incurred in
connection with this Agreement or (e) which would not have a material adverse
effect on the Company and the Company Subsidiaries, taken as a whole.
Section 3.12 Absence of Litigation. There are no claims, actions,
suits, proceedings or investigations (i) pending against the Company or any
Company Subsidiary or any properties or assets of the Company or any Company
Subsidiary or (ii) to the knowledge of the Company, threatened against the
Company or any Company Subsidiary, or any properties or assets of the Company or
any Company Subsidiary, which may be reasonably expected to have a material
adverse effect on the Company and the Company Subsidiaries, taken as a whole. To
the knowledge of the Company, there are no claims, actions, suits, proceedings
or investigations against the Major Shareholder that relate to the business,
properties or
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assets of the Company or any Company Subsidiary or that could result in any
liability to the Company or any Company Subsidiary.
Section 3.13 Employee Benefit Plans, Options and Employment Agreements.
(a) Section 3.13(a) of the Disclosure Schedule lists all employee
benefit plans of the Company, the Company Subsidiaries or any ERISA Affiliate,
whether or not incorporated, that together with the Company would be deemed a
single employer within the meaning of Section 4001(b) of ERISA, including,
without limitation, any employment agreements or any pension, retirement,
profit-sharing, bonus, stock option, incentive, deferred compensation,
severance, termination pay, welfare or other similar plan, contract, agreement,
arrangement or practice in which one or more employees (including, without
limitation, former employees or beneficiaries of employees or former employees)
of the Company or a Company Subsidiary participates or is eligible to
participate. For these purposes, such Plans shall include, without limitation,
any employee benefit plan (as such term is described in Section 3(3) of ERISA,
or any plan, practice or arrangement that constitutes a "fringe benefit" plan,
vacation plan or policy, sick leave program, medical, disability or life
insurance plan (including, without limitation, those employment or other
agreements that contain "golden parachute" provisions). Neither the Company nor
any Company Subsidiary has established or maintains any plan, program or
arrangement to provide post-retirement medical benefits to any employee, former
employee or beneficiary of any employee or former employee, other than coverage
mandated by applicable law. Each Plan has been administered in material
compliance with its terms and is in compliance with ERISA and the regulations
promulgated thereunder (to the extent applicable), as well as with all other
applicable federal, state and local statutes and regulations.
(b) Each Qualified Plan has been determined by the IRS to be so
qualified and the Company is not aware of any fact or circumstance which could
adversely effect such qualified status. All reports and other documents required
by law or contract to be filed with any Governmental Entity or distributed to
plan participants or beneficiaries have been timely filed or distributed. Copies
of the Plans and any amendments or trusts related thereto, Form 5500 (including
financial audits and schedules thereto as required by law) for the immediately
preceding three years, summary plan descriptions, and the most recent
determination letters or determination letter requests have been made available
to Parent. Neither the Company nor any Company Subsidiary nor any Plan has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No Plan has incurred an accumulated funding
deficiency, as defined in
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Section 412(a) of the Code and Section 302 of ERISA, and neither the Company nor
any Company Subsidiary has incurred any resulting liability for excise tax under
Sections 4975 or 4976 of the Code or penalty pursuant to Sections 409 or 502(i)
of ERISA due to the IRS or the PBGC. There has been no termination, partial
termination or discontinuance of contributions to any Qualified Plan without
notice to and approval by the IRS. No Title IV Plan is or has been maintained by
the Company or any ERISA Affiliate. There have been no "reportable events" (as
such phrase is defined in Section 4043 of ERISA) with respect to any Qualified
Plan. The Company and its ERISA Affiliates do not have and never have had any
obligation to contribute to or other liability with respect to any
"multi-employer plan" (as such term is defined in Section 4001(a)(3) of ERISA).
(c) Section 3.13(c) of the Disclosure Schedule sets forth a true,
complete and correct list of (i) all employment or consulting agreements with
employees of the Company or any Company Subsidiary obligating the Company or any
Company Subsidiary to make annual cash payments in an amount exceeding $100,000;
(ii) all employees of the Company or any Company Subsidiary who have executed a
non-competition agreement with the Company or any of its Subsidiaries; (iii) all
Severance Agreements, programs and policies of the Company or any Company
Subsidiary with or relating to its employees; and (iv) all plans, programs,
agreements and other arrangements of the Company or any Company Subsidiary with
or relating to its respective employees which contain change in control
provisions. True, complete and correct copies of each of the foregoing
agreements have been made available to Parent.
(d) No liability under Title IV or Section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the PBGC (which premiums have been paid when due).
(e) All contributions required to be made with respect to any Plan on
or prior to the Effective Time have been timely made or are reflected on the
Balance Sheet. There are no pending or, to the Company's knowledge, threatened
or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(f) The consummation of the Merger or the other Transactions will not,
either alone or in combination with another event, (i) entitle any current or
former employee or officer of the Company or any Company Subsidiary to sever-
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ance pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation due any such employee or officer.
(g) There is no contract, agreement, plan or arrangement, including
but not limited to the provisions of this Agreement, covering any employee or
former employee of the Company or any Company Subsidiary that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G or 162(m) of the Code.
Section 3.14 Labor Matters.
(a) The Company and its Subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practices;
(b) There are no controversies pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened, between the Company or any of
its Subsidiaries and any of their respective employees, consultants or
independent contractors, which controversies have had or may reasonably be
expected to have a material adverse effect on the Company and the Company
Subsidiaries, taken as a whole;
(c) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
Persons employed by the Company or any Company Subsidiary, nor does the Company
or any Company Subsidiary know of any activities or proceedings of any labor
union to organize any such employees;
(d) The Company has no knowledge of any labor disputes, strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of, or consultants or independent contractors to, the Company; and
(e) There are no labor disputes, strikes, slowdowns, work stop pages,
lockouts, or threats thereof, by or with respect to any employees of, or
consultants or independent contractors to, any Company Subsidiary, except such
disputes, strikes, slowdowns, work stoppages, lockouts, or threats thereof that
would not have a material adverse effect on the Company and the Company
Subsidiaries taken as a whole.
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Section 3.15 Properties; Encumbrances. The Company and each Company
Subsidiary has good, valid and marketable title to, or a valid leasehold
interest in, all the properties and assets that it purports to own or lease
(real, personal and mixed, tangible and intangible), including, without
limitation, all the properties and assets reflected in the Balance Sheet (except
for personal property sold since the Balance Sheet Date in the ordinary course
of business consistent with past practice), except as would not have a material
adverse effect on the Company and the Company Subsidiaries, taken as a whole.
All properties and assets reflected in the Balance Sheet are free and clear of
all Liens, except for Liens reflected on the Balance Sheet and Liens for current
taxes not yet due and other Liens that do not materially detract from the value
or impair the use of the property or assets subject thereto.
Section 3.16 Taxes.
(a) The Company and each Company Subsidiary has filed with the
appropriate taxing authorities all Tax Returns required to be filed by them,
except where the failure to file such Tax Returns would not have a material
adverse effect on the Company and the Company Subsidiaries, taken as a whole.
All Taxes due and owing by the Company and the Company Subsidiaries have been
paid or adequately reserved for, except to the extent any failure to pay or
reserve would not have a material adverse effect on the Company and the Company
Subsidiaries, taken as a whole, or except to the extent such Taxes are being
contested in good faith by appropriate proceedings (to the extent that any such
proceedings are required). There are no Tax Liens on any assets of the Company
or any Company Subsidiary other than Liens relating to Taxes not yet due and
payable. Neither the Company nor any Company Subsidiary has granted any waiver
of any statute of limitations with respect to, or any extension of a period for
the assessment of, any Tax. The accruals and reserves for Taxes (including
deferred taxes) reflected in the Balance Sheet are in all material respects
adequate to cover all Taxes accruable through the date thereof (including
interest and penalties, if any, thereon and Taxes being contested) in accordance
with GAAP applied on a consistent basis with the Balance Sheet.
(b) Neither the Company nor any Company Subsidiary is, or has been, a
United States real property holding corporation (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(c) The Company and each Company Subsidiary has withheld with respect
to its employees all federal and state Taxes required to be withheld, except to
the extent any failure to withhold would not have a material adverse effect
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on the Company and the Company Subsidiaries, taken as a whole. Neither the
Company nor any Company Subsidiary has been delinquent in the payment of any
Tax, except to the extent any failure to pay such Tax would not have a material
adverse effect on the Company and the Company Subsidiaries, taken as a whole.
Neither the Company nor any Company Subsidiary has received any written notice
of any Tax deficiency outstanding, proposed or assessed against the Company or
any Company Subsidiary. Neither the Company nor any of its Subsidiaries has
received any written notice of any audit examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any Tax
Return of the Company or any of its Subsidiaries. Neither the Company nor any
Company Subsidiary has filed any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by
the Company. Neither the Company nor any Company Subsidiary is a party to or
bound by any tax indemnity, tax sharing or tax allocation agreements. Except for
the group of which the Company and its Subsidiaries are now currently members,
neither the Company nor any of its Subsidiaries has ever been a member of an
affiliated group of corporations within the meaning of Section 1504 of the Code,
or any similar affiliated, consolidated, combined, unitary or similar group for
tax purposes under state, local or foreign law, or has any liability for Taxes
of any Person (other than the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign
law as a transferee or successor, by contract or otherwise. Neither the Company
nor any Company Subsidiary has or will have any liability for Taxes for any
taxable period or portion thereof ending on or before the Closing Date
(including any liability for Taxes of the Major Shareholder or any past or
present Subsidiary of the Major Shareholder under Treasury Regulation Section
1.1502-6 or any similar provision of state, local or foreign law), other than
Taxes of the Company or any Company Subsidiary for the taxable periods beginning
on or after January 1, 1999 and ending on or before the Closing Date to the
extent that such Taxes will be included in accordance with GAAP in the reserve
for Taxes reflected in the financial statements of the Company and the Company
Subsidiaries which include such periods. Neither the Company nor any Company
Subsidiary has agreed to make nor is it required to make any material adjustment
under Section 481(a) of the Code by reason of a change in accounting method or
otherwise. 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 for
tax-free treatment under Section 355(a) of the Code, either (i) in the two years
prior to the date of this Agreement or (ii) in a distribution which 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.
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(d) As soon as practicable after the public announcement of the
execution of this Agreement, the Company will provide Parent with written
schedules of (i) the taxable years of the Company for which the statute of
limitations with respect to Taxes have not expired, (ii) with respect to Taxes,
those years for which examinations have been completed, those years for which
examinations are presently being conducted, those years for which examinations
have not yet been initiated and those years for which required Tax Returns have
not yet been filed, (iii) all elections with respect to Taxes affecting the
Company as of the date hereof, (iv) the Company's basis in each Company
Subsidiary, (v) the earnings and profits (including any adjustment required by
Section 1503(e) of the Code) for each Company Subsidiary, and (vi) the foreign
countries in which the Company or its Subsidiaries has or has had a permanent
establishment, as defined in any applicable Tax treaty or convention between the
United States and such foreign country.
Section 3.17 Environmental Matters.
(a) The Company and each Company Subsidiary is in full compliance with
all applicable Environmental Laws except where the failure to be in compliance
with such Environmental Laws would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole; neither the Company nor any of
its Subsidiaries has received any communication from a Governmental Entity,
citizens group, employee or other Person that alleges that the Company or any
Company Subsidiary is not in such full compliance; and there are no
circumstances that may prevent or interfere with such full compliance in the
future, except where the failure to be in full compliance would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
(b) There is no Environmental Claim pending against the Company or any
of its Subsidiaries or, to the Company's knowledge, threatened against any
Person whose liability for any Environmental Claim the Company or any Company
Subsidiary has or may have retained or assumed either contractually or by
operation of law.
(c) To the knowledge of the Company, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including
the Release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably be expected to constitute the basis for an
Environmental Claim against the Company or any Company Subsidiary or against
any Person whose liability for any Environmental Claim the Company or any
Company
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Subsidiary has or may have retained or assumed either contractually or by
operation of law.
(d) The Company and its Subsidiaries have delivered or otherwise made
available for inspection to Parent true, complete and correct copies of any
reports, studies, analyses, tests or monitoring possessed by the Company or its
Subsidiaries pertaining to Materials of Environmental Concern in, on, beneath or
adjacent to any property currently or formerly owned, operated or leased by the
Company or its Subsidiaries or regarding the Company's or its Subsidiaries'
compliance with applicable Environmental Laws.
Section 3.18 Intellectual Property.
(a) The Company or its Subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use, all Company Intellectual Property
Rights. Set forth in Section 3.18(a) of the Disclosure Schedule is a list of (i)
all Company-owned patent applications and issued patents, trademark applications
and registrations, material unregistered trademarks and registered copyrights
and (ii) all Intellectual Property of third parties used in or with the
Company's Products or services.
(b) Either the Company or one of its Subsidiaries is the sole and
exclusive owner of all right, title and interest in and to (free and clear of
any Liens), or is the exclusive or non-exclusive licensee of, the Company
Intellectual Property Rights, and, in the case of Company Intellectual Property
Rights owned by the Company or any Company Subsidiary, has sole and exclusive
rights (and is not contractually obligated to pay any compensation to any third
party in respect thereof) to the use thereof and the material covered thereby.
Major Shareholder has no rights in or to any of the Company Intellectual
Property Rights. No claims with respect to the Company Intellectual Property
Rights have been asserted or are, to the Company's knowledge, threatened by any
Person (i) to the effect that the manufacture, sale, licensing or use of any of
the Products or services of the Company or any Company Subsidiary as now
manufactured, sold or licensed or used or proposed for manufacture, use, sale or
licensing by the Company or any Company Subsidiary infringes on any intellectual
property or other proprietary rights of any third party, (ii) against the use by
the Company or any Company Subsidiary of any Trademarks, Trade Secrets,
Copyrights, Patents, technology, or know-how or applications used in the
business of the Company and its Subsidiaries as currently conducted or as
presently proposed to be conducted, or (iii) challenging the ownership or use by
the Company or any Company Subsidiary or the validity of any of the Company
Intellectual Property Rights. All Patents, Trademarks and Copyrights held by the
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Company and its Subsidiaries and used in the business of the Company or its
Subsidiaries as currently conducted or as presently proposed to be conducted are
valid, subsisting, in full force and effect, and have not expired or been
cancelled or abandoned. To the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any Company Subsidiary. No Company
Intellectual Property Right or Product or service of the Company or any Company
Subsidiary is subject to any outstanding decree, order, judgment or stipulation
restricting in any manner the use, sale or licensing thereof by the Company or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
entered into any agreement under which the Company or its Subsidiaries is
restricted from using or licensing any Company Intellectual Property Rights or
selling or otherwise distributing any of its Products or services.
(c) The consummation of the Transactions to which the Company is a
party will not result in any loss or impairment of the Company's, or any Company
Subsidiary's ownership of or right to use any of the material Company
Intellectual Property Rights, nor require the consent of any Governmental Entity
or third party with respect to any of the material Company Intellectual Property
Rights.
(d) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of any part of the Company Intellectual Property Rights on behalf
of the Company have executed nondisclosure agreements that adequately protect
the Company's proprietary interests in the Company Intellectual Property Rights
and either (i) have been a party to a "work-for-hire" arrangement or agreements
with the Company to the extent permitted by applicable national and state law
that has accorded the Company full, effective, exclusive and original ownership
of all tangible and intangible property thereby arising, or (ii) have executed
appropriate instruments of assignment in favor of the Company as assignee that
have conveyed to the Company effective and exclusive ownership of all tangible
and intangible property thereby arising. No current or former partner, director,
officer, or employee of the Company (or any predecessor in interest) will, after
giving effect to the transactions contemplated herein, own or retain any rights
in or to any of the Company Intellectual Property Rights.
Section 3.19 Insurance. All fire and casualty, general liability,
business interruption, product liability, sprinkler and water damage insurance
policies and other forms of insurance maintained by the Company or any Company
Subsidiary are with reputable insurance carriers, provide adequate coverage for
all normal risks incident to the business of the Company and its Subsidiaries
and their
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respective properties and assets and are in character and amount and with such
deductibles and retained amounts as generally carried by Persons engaged in
similar businesses and subject to the same or similar perils or hazards.
Section 3.20 Restrictions on Business Activities. Except for this
Agreement, to the Company's knowledge, there is no agreement, judgement,
injunction, order or decree binding upon the Company or any Company Subsidiary
which has or could reasonably be expected to have the effect of prohibiting or
impairing any business practice of the Company or any Company Subsidiary,
acquisition of property by the Company or any Company Subsidiary or the conduct
of business by the Company or any Company Subsidiary as currently conducted or
as proposed to be conducted by the Company.
Section 3.21 Information in Schedule 14D-9. The information supplied
by the Company expressly for inclusion in the Offer Documents and the Schedule
14D-9 will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published or sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information furnished by Parent, Purchaser or Major Shareholder for
inclusion in the Schedule 14D-9.
Section 3.22 Information in Proxy Statement. The Proxy Statement, if
any, will not, at the date mailed to Company shareholders and at the time of the
meeting of Company shareholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading, except that no representation is made by the Company with respect to
statements made therein based on information furnished by Parent, Purchaser or
Major Shareholder for inclusion in the Proxy Statement. The Proxy Statement will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
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Section 3.23 Interested Party Transactions. Since the date of the
Company's proxy statement dated June 25, 1999, no event has occurred that would
be required to be reported as a Certain Relationship or Related Transaction,
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Section 3.24 Change in Control Payments. Neither the Company nor any
Company Subsidiary has any plans, programs or agreements to which they are
parties, or to which they are subject, pursuant to which payments (or
acceleration of benefits) may be required upon, or may become payable directly
or indirectly as a result of, a change of control of the Company.
Section 3.25 Year 2000 Compliance.
(a) All of (i) the internal information technology systems used in
the business or operations of the Company and its Subsidiaries, including,
without limitation, computer hardware systems, software, applications, firmware,
equipment containing embedded microchips and other embedded systems, and (ii)
the software, hardware, firmware and other technology that constitute part of
the Products and services manufactured, marketed, licensed or sold by the
Company or any Company Subsidiary to third parties are Year 2000 Compliant and
will not be adversely affected with respect to functionality, interoperability,
connectivity, performance, reliability or volume capacity (including without
limitation the processing, storage, recall and reporting of data) by the passage
of any date, including without limitation the year change from December 31, 1999
to January 1, 2000, except where the failure to be Year 2000 Compliant or
adversely affected with respect to functionality, interoperability,
connectivity, performance, reliability or volume capacity by the passage of any
date would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. To the Company's knowledge, Company software,
hardware, firmware and other technology that constitute part of the Products or
services manufactured, marketed, licensed or sold by the Company or any Company
Subsidiary to third parties as used in conjunction with third party software,
hardware, firmware and other technology are Year 2000 Compliant, unless
non-compliance arises solely from said third-party software, hardware, firmware
and other technology.
(b) To the Company's knowledge, all third-party systems used in
connection with the business, Products, services or operations of the Company or
any Company Subsidiary, including, without limitation, any system belonging to
any of the Company's or its Subsidiaries' vendors, co-venturers, service
providers or customers are Year 2000 Compliant. The Company and its Subsidiaries
have received satisfactory written assurances and warranties from all of their
respective
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vendors, co-venturers, service providers and customers that are material to the
ongoing operation of the business of the Company and its Subsidiaries that past
and future Products, software, equipment, components or systems provided by such
parties are (or in the case of future Products, will be) Year 2000 Compliant.
(c) The Company has conducted "year 2000" audits with respect to (i)
each of the internal information technology systems used in the business,
Products, services and operations of the Company and its Subsidiaries, including
without limitation computer hardware systems, software, applications, firmware,
equipment containing embedded microchips and other embedded systems, and (ii)
all of the software, applications, hardware, firmware and other technology which
constitute part of the Products and services manufactured, marketed, performed
or sold by the Company or any of its Subsidiaries or licensed by the Company or
any of its Subsidiaries to third parties. The Company has obtained "year 2000"
certifications with respect to all material third-party systems used in
connection with the business or operations of the Company and its Subsidiaries,
including without limitation systems belonging to the vendors, co-venturers,
service providers and customers of the Company of any or its Subsidiaries. At
the request of Parent, the Company shall make available to Parent true, complete
and correct copies of all "year 2000" audits, certifications, reports and other
similar documents that have been prepared or performed by or on behalf of the
Company or any third party with respect to the systems, business, operations,
Products or services of the Company or any of its Subsidiaries.
(d) Neither the Company nor any Company Subsidiary has provided any
representation, warranty or guarantee for any Product sold or licensed, or
service provided, by the Company or its Subsidiaries to the effect that such
Product or service (i) complies with or accounts for the fact of the year change
from December 31, 1999 to January 1, 2000, (ii) will not be adversely affected
with respect to functionality, interoperability, connectivity, performance,
reliability or volume capacity (including without limitation the processing
storage, recall and reporting of data) by the passage of any date, including
without limitation the year change from December 31, 1999 to January 1, 2000 or
(iii) is otherwise Year 2000 Compliant.
Section 3.26 No Existing Discussions. As of the date hereof, the
Company is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition Proposal or any
other substantially similar proposal.
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Section 3.27 Opinion of Financial Advisor. The financial advisor of
the Company, SoundView Technology Group, Inc., has delivered to the Company an
opinion dated December 20, 1999 to the effect that as of the date of this
Agreement, the consideration to be received in the Merger by the Company's
shareholders is fair, from a financial point of view, to the shareholders of the
Company. The Company has provided a complete and correct copy of such opinion to
Parent. The Company has received the consent of such financial advisor to the
inclusion of its opinion in the Schedule 14D-9.
Section 3.28 Brokers. No broker, finder or investment banker (other
than SoundView Technology Group, Inc., whose brokerage, finder's or other fee
will be paid by the Company) is entitled to any brokerage, finder's or other fee
or commission in connection with any of the Transactions based upon arrangements
made by or on behalf of the Company or any Company Subsidiary. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and SoundView Technology Group, Inc. pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
hereunder.
Section 3.29 Books and Records. The books of account, minute books,
stock record books and other records of the Company and its Subsidiaries are
complete and correct in all material aspects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act, including an adequate system of internal controls.
The minute books of the Company and, to the knowledge of the Company, the minute
books of each of its Subsidiaries contain accurate and complete records of all
meetings held of, and corporate action taken by, the shareholders of the Company
or its Subsidiaries, as the case may be, the Company Board of Directors and
committees of the Company Board of Directors, the board of directors of each
Company Subsidiary and any committees thereof, as the case may be, and no
meeting of any of such shareholders, the Company Board of Directors or
committees of the Company Board of Directors or, to the knowledge of the
Company, the board of directors of any Company Subsidiary or any committees
thereof, has been held for which minutes have not been prepared and are not
contained in such minute books.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company that:
Section 4.1 Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority necessary to own, lease and operate the properties it purports to
own, lease or operate and to carry on its business as it is now being conducted
or presently proposed to be conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority,
would not have a material adverse effect on Parent and its Subsidiaries.
Section 4.2 Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and each instrument required hereby to be executed and delivered
at the Closing by Parent and Purchaser and to perform its obligations hereunder
and to consummate the Transactions. The execution and delivery of this Agreement
and each instrument required hereby to be executed and delivered at the Closing
by Parent and Purchaser and the consummation by Parent and Purchaser of the
Merger and the Transactions have been duly and validly authorized by all
necessary corporate action on the part of Parent and Purchaser. This Agreement
has been duly and validly executed and delivered by Parent and Purchaser and,
assuming the due authorization, execution and delivery by the Company,
constitutes the legal, valid and binding obligation of each of Parent and
Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or at law).
Section 4.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and each instrument
required hereby to be executed and delivered at Closing by Parent and Purchaser
do not, and the performance by Parent and Purchaser of this Agreement, and the
consummation by Parent and Purchaser of the Transactions will not, (i)
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conflict with or violate the Parent Charter, the Parent By-Laws, the Purchaser
Charter or the Purchaser By-Laws or (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or Purchaser by which
any of their respective properties is bound or affected, except in the case of
(ii) for any such conflicts, violations, breaches, defaults or other occurrences
that would not have a material adverse effect on Parent and its Subsidiaries,
taken as a whole.
(b) The execution and delivery of this Agreement or any instrument
required hereby to be executed and delivered by Parent and Purchaser at the
Closing does not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity, except (i) the filing of the
pre-merger notification report under the HSR Act, (ii) the filing of the
Schedule 14D-1 and the Offer Documents with the SEC, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the laws
of any foreign country, (iv) the filing and recordation of appropriate merger or
other documents as required by the DGCL and (v) such other consents, approvals,
authorizations or permits which, if not obtained or made, would not have a
material adverse effect on Parent and its Subsidiaries, taken as a whole.
Section 4.4 Information in Offer Document. The Schedule 14D-1 and
the Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or
Purchaser with respect to information furnished by the Company expressly for
inclusion in the Offer Documents.
Section 4.5 Information in Proxy Statement. None of the information
furnished by Parent or Purchaser expressly for inclusion in the Proxy Statement
will, at the date mailed to shareholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading.
Section 4.6 Sufficient Funds. Parent has available sufficient funds
to purchase all of the Shares outstanding on a fully diluted basis at the Offer
Price and to pay all fees and expenses related to the Transactions.
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Section 4.7 Purchaser's Operations. Purchaser was formed solely for
the purpose of engaging in the Transactions and has not engaged in any business
activities or conducted any operations other than in connection with the
Transactions.
Section 4.8 Brokers or Finders. No broker, finder or investment
banker (other than Broadview International LLC, whose brokerage, finder's or
other fee will be paid by Parent) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that prior to the Effective Time, except (i) as expressly
contemplated by this Agreement, (ii) as set forth in Section 5.1 of the
Disclosure Schedule, or (iii) as agreed in writing by Parent, after the date
hereof:
(a) the business of the Company and each Company Subsidiary shall be
conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and each of the Company and its
Subsidiaries shall use its reasonable best efforts to preserve its business
organization intact, keep available the services of its current officers and
employees and maintain its existing relations with franchisees, customers,
suppliers, creditors, business partners and others having business dealings with
it, to the end that the goodwill and ongoing business of each of them shall be
unimpaired at the Effective Time;
(b) neither the Company nor any Company Subsidiary shall: (i) amend
its certificate of incorporation or by-laws or similar organizational documents,
(ii) issue, sell, transfer, pledge, dispose of or encumber any shares of any
class or series of its capital stock or Voting Debt, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of any class or series of its capital stock or
any Voting Debt, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Company Options outstanding on the date hereof,
(iii) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series of its
capital stock; (iv) split, combine or reclassify any
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shares of any class or series of its stock; or (v) redeem, purchase or otherwise
acquire directly or indirectly any shares of any class or series of its capital
stock, or any instrument or security which consists of or includes a right to
acquire such shares;
(c) neither the Company nor any Company Subsidiary shall (i) incur
or modify any indebtedness or other liability, other than in the ordinary and
usual course of business and consistent with past practice and in any event not
in excess of $50,000; or (ii) modify, amend or terminate any Company Agreement
or waive, release or assign any material rights or claims, except in the
ordinary course of business and consistent with past practice;
(d) neither the Company nor any Company Subsidiary shall: (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with past
practice; (ii) modify the terms of any indebtedness or other liability; (iii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person;
(iv) make any loans, advances or capital contributions to, or investments in,
any other Person (other than to or in wholly owned Subsidiaries of the Company);
or (v) enter into any material commitment or transaction (including, but not
limited to, any capital expenditure or purchase, sale or lease of assets or real
estate), except in the case of (v) in the ordinary course of business and in any
event not in excess of $1,000,000;
(e) neither the Company nor any Company Subsidiary shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other
than in the ordinary and usual course of business and consistent with past
practice; or
(f) except as otherwise specifically provided in this Agreement,
make any change in the compensation payable or to become payable to any of its
officers, directors, employees, agents or consultants (other than normal
recurring increases in wages to employees who are not officers or directors or
Affiliates in the ordinary course of business consistent with past practice) or
to Persons providing management services, or enter into or amend any employment,
severance, consulting, termination or other agreement or employee benefit plan
or make any loans to any of its officers, directors, employees, Affiliates,
agents or consultants or make any change in its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to an employee
benefit plan or otherwise;
(g) except as otherwise specifically contemplated by this Agreement,
pay or make any accrual or arrangement for payment of any pension, retire-
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ment allowance or other employee benefit pursuant to any existing plan,
agreement or arrangement to any officer, director, employee or Affiliate or pay
or agree to pay or make any accrual or arrangement for payment to any officers,
directors, employees or Affiliates of the Company of any amount relating to
unused vacation days, except payments and accruals made in the ordinary course
of business consistent with past practice; adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits pursuant to any
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any director, officer, employee, agent or consultant, whether past or
present; or amend in any material respect any such existing plan, agreement or
arrangement in a manner inconsistent with the foregoing;
(h) neither the Company nor any Company Subsidiary shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except policies providing
coverage for losses not in excess of $50,000;
(i) neither the Company nor any Company Subsidiary shall enter into
any contract or transaction relating to the purchase of assets other than in the
ordinary course of business consistent with past practice and in no such case
for assets in excess of $50,000;
(j) neither the Company nor any Company Subsidiary shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice to any Person who is not an Affiliate of the
Company, of claims, liabilities or obligations reflected or reserved against in,
or contemplated by, the Financial Statements;
(k) neither the Company nor any Company Subsidiary will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(l) neither the Company nor any Company Subsidiary will (i) change
any of the accounting methods used by it unless required by GAAP or (ii) make
any material election relating to Taxes, change any material election relating
to Taxes already made, adopt any material accounting method relating to Taxes,
change
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any material accounting method relating to Taxes unless required by GAAP, enter
into any closing agreement relating to Taxes, settle any claim or assessment
relating to Taxes or consent to any claim or assessment relating to Taxes or any
waiver of the statute of limitations for any such claim or assessment;
(m) neither the Company nor any Company Subsidiary will take, or
agree to commit to take, any action that would or is reasonably likely to result
in any of the conditions to the Offer set forth in Annex A or any of the
conditions to the Merger set forth in Article VI not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time, or that would
impair the ability of the Company, Parent, Purchaser or the holders of Shares
to consummate the Offer or the Merger in accordance with the terms hereof or
materially delay such consummation; and
(n) neither the Company nor any Company Subsidiary will enter into
an agreement, contract, commitment or arrangement to do any of the foregoing, or
to authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 5.2 Access; Confidentiality. The Company shall (and shall
cause each Company Subsidiary to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent,
full access upon prior notice during normal business hours throughout the period
prior to the Appointment Date to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each Company Subsidiary to) furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request. After the Appointment Date, the Company shall
provide Parent and such Persons as Parent shall designate with all such
information, at any time as Parent shall request. Until the Appointment Date,
unless otherwise required by law or in order to comply with disclosure
requirements applicable to the Offer Documents or the Proxy Statement, each
party agrees that it (and its Subsidiaries and its and their respective
representatives) shall hold in confidence all non-public information acquired
in accordance with the provisions of the Confidentiality Agreement.
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Section 5.3 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Parent, Purchaser and the Company agree to use
their respective reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable (subject to any applicable laws) to consummate and make effective the
Merger and the other Transactions as promptly as practicable including, but not
limited to, (i) the preparation and filing of all forms, registrations and
notices required to be filed to consummate the Merger and the other Transactions
and the taking of such actions as are necessary to obtain any requisite
approvals, consents, orders, exemptions or waivers by any third party or
Governmental Entity, and (ii) the satisfaction of the other parties' conditions
to Closing. In addition, no party hereto shall take any action after the date
hereof that would reasonably be expected to materially delay the obtaining of,
or result in not obtaining, any permission, approval or consent from any
Governmental Entity necessary to be obtained prior to Closing. Notwithstanding
the foregoing, or any other covenant herein contained, in connection with the
receipt of any necessary approvals under the HSR Act, neither the Company nor
any Company Subsidiary shall be entitled to divest or hold separate or otherwise
take or commit to take any action that limits Parent's or Purchaser's freedom of
action with respect of, or their ability to retain, the Company or any Company
Subsidiary or any material portions thereof or any of the businesses, product
lines, properties or assets of the Company or any Company Subsidiary, without
Parent's prior written consent.
(b) Prior to the Closing, each party shall promptly consult with the
other parties hereto with respect to, provide any necessary information with
respect to, and provide the other parties (or their respective counsel) with
copies of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement, the Merger and the other Transactions. Each party hereto
shall promptly inform the other of any communication from any Governmental
Entity regarding any of the Transactions. If any party hereto or Affiliate
thereof receives a request for additional information or documentary material
from any such Governmental Entity with respect to any of the Transactions, then
such party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, the Company shall use its reasonable
best efforts to effect such transfers, amendments or modifications.
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(c) The Company and Parent shall file as soon as practicable
notifications under the HSR Act and respond as promptly as practicable to any
inquiries received from the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice for additional
information or documentation and respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
Governmental Entity in connection with antitrust matters. Concurrently with the
filing of notifications under the HSR Act or as soon thereafter as practicable,
the Company and Parent shall each request early termination of the HSR Act
waiting period.
(d) Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to require Parent, Purchaser or the Company to commence any litigation
against any entity in order to facilitate the consummation of any of the
Transactions or to defend against any litigation brought by any Governmental
Entity seeking to prevent the consummation of any of the Transactions.
(e) Subject to compliance with applicable law, from the date hereof
until the Effective Time, the Company shall confer on a regular and frequent
basis with one or more representatives of the Parent to report operational
matters that are material and the general status of ongoing operations.
Section 5.4 Employee Benefits. (a) Parent and Purchaser agree that,
as soon as reasonably practicable following the Effective Time and for a
three-year period following the Effective Time, the Surviving Corporation and
its Subsidiaries and successors shall provide to the Retained Employees employee
plans and programs that provide benefits that are no less favorable in the
aggregate than those provided to employees of Parent generally during such time.
Except as otherwise provided in Section 5.4(c) hereof, until such time as the
Retained Employees are provided with employee plans and programs in accordance
with the preceding sentence, Parent shall cause the Surviving Corporation and
its Subsidiaries to provide the Retained Employees with the employee plans and
programs provided to such employees on the date hereof. With respect to such
benefits, service accrued by such Retained Employees during employment with the
Company and its Subsidiaries prior to the Effective Time shall be recognized for
all purposes, except to the extent necessary to prevent duplication of benefits.
(b) The Company and each Company Subsidiary shall take all necessary
and appropriate actions so that, as of the Effective Time, (i) only employees
of the Company and Company Subsidiaries participate in any Plan (including any
necessary action so that no current or former employee of Major Shareholder
shall participate in any Plan following the Effective Time (except to the extent
any
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such employee of Major Shareholder is employed by the Company or a Company
Subsidiary as of the Effective Time)) and (ii) any cost-sharing, employee
pooling or other agreement or arrangement involving any Plan and any current or
former employee of Major Shareholder is terminated. The Company agrees to inform
Parent with respect to the details of any action required by the preceding
sentence and to consult with Parent with respect to such actions prior to their
consummation.
(c) The Company shall take all necessary and appropriate actions to
terminate, prior to the Effective Time, the Softworks Retirement 401(k) Plan.
Section 5.5 No Solicitation of Competing Transaction.
(a) Neither the Company nor any Company Subsidiary or Affiliate of
the Company shall (and the Company shall cause the officers, directors,
employees, representatives and agents of the Company, each Company Subsidiary
and each Affiliate of the Company, including, but not limited to, investment
bankers, attorneys and accountants, not to), (i) directly or indirectly,
encourage, solicit or facilitate any inquiries or proposals that constitute, or
could reasonably be expected to lead to, an Acquisition Proposal or (ii)
participate in or initiate discussions or negotiations concerning, or provide
any information to, any Person or group (other than Parent, any of its
Affiliates or representatives) relating to, an Acquisition Proposal; provided,
however, that if, at any time prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company Board of Directors determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's shareholders under
applicable law, the Company may, in response to a Superior Proposal that was not
solicited by it or that did not otherwise result from a breach of this Section
5.5(a), and subject to providing prior written notice of its decision to take
such action to Parent and compliance with Section 5.5(c), (x) furnish
information with respect to the Company and any Company Subsidiary to any Person
making a Superior Proposal pursuant to a confidentiality agreement containing
terms no less favorable to the Company than the Confidentiality Agreement and
(y) participate in discussions or negotiations regarding the Superior Proposal.
(b) Except as set forth below in this subsection (b), neither the
Company Board of Directors nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board of Directors or
any committee thereof of the Offer, this Agreement or the Merger, (ii) approve
or recommend or propose to approve or recommend, any Acquisition Proposal or
(iii) enter into a letter of intent, agreement in principle, acquisition
agreement or any
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other agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the time of acceptance for payment of Shares pursuant to the
Offer, in response to a Superior Proposal that was not solicited by the Company
and that did not otherwise result from a breach of Section 5.5(a), the Company
Board of Directors may (subject to this sentence and the provisions of Section
7.1) terminate this Agreement but only after the seventh business day following
Parent's receipt of written notice from the Company advising Parent that the
Company Board of Directors has received a Superior Proposal that it intends to
accept, specifying the material terms and conditions of such Superior Proposal,
identifying the Person making such Superior Proposal, but only if the Company
shall have first caused its financial and legal advisors to negotiate with
Parent to make such adjustments in the terms and conditions of this Agreement as
would enable the Company to proceed with the transactions contemplated herein on
such adjusted terms; provided, however, that no such termination shall be
effective until the Company makes payment to Parent of funds as required by
Section 9.1(b).
(c) The Company agrees that as of the date hereof, it, its
Subsidiaries and Affiliates (and their respective officers, directors,
employees, representatives and agents) shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
(other than Parent, Purchaser or their respective representatives) conducted
heretofore with respect to any Acquisition Proposal. The Company shall notify
Parent immediately after receipt by the Company (or its advisors) of any
Acquisition Proposal or any request for nonpublic information in connection with
an Acquisition Proposal or for access to the properties, books or records of the
Company or any Company Subsidiary by any Person that informs the Company that it
is considering making, or has made, an Acquisition Proposal. Such notice to
Parent shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact. The Company shall keep Parent informed of all
material developments and the status of any Acquisition Proposal, any
negotiations or discussions with respect to any Acquisition Proposal or any
request for nonpublic information in connection with any Acquisition Proposal or
for access to the properties, books or records of the Company or any Company
Subsidiary by any Person that is considering making, or has made, an Acquisition
Proposal. The Company shall provide Parent with copies of all documents received
from or delivered or sent to any Person that is considering making or has made
an Acquisition Proposal.
(d) Nothing contained in this Section 5.5 or any other provision
hereof shall prohibit the Company or the Company Board of Directors from (i)
taking and disclosing to the Company's shareholders a position with respect to a
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tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act, or (ii) making such disclosure to the
Company's shareholders as, in the good faith judgment of the Company Board of
Directors, after receiving advice from outside counsel, is required under
applicable law, provided that the Company may not, except as permitted by
Section 5.5(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal.
Section 5.6 Transfer of Major Shareholder's Shares. The Company
hereby waives any rights the Company may have under any agreement or otherwise
to object to the transfer to Purchaser or Parent of any or all Shares held by
the Major Shareholder and hereby covenants not to consent to the transfer of any
Shares held by the Major Shareholder to any other Person unless (i) the Company
will have obtained the specific, prior written consent of Parent with respect to
any such transfer or (ii) this Agreement will have been terminated pursuant to
Article VII.
Section 5.7 Publicity. Parent and the Company shall consult with
each other before issuing any press release or making any public statement with
respect to this Agreement, the Offer, the Merger or any other Transaction and
shall not issue any such press release or make any such public statement without
the prior written consent of the other party, which shall not be unreasonably
withheld or delayed; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the rules and
regulations of a national securities exchange if it has used all reasonable
efforts to consult with the other party prior thereto.
Section 5.8 Notification of Certain Matters. The Company shall give
prompt notice to Parent, of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Effective Time, and (ii) any material failure of the
Company, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.8 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.9 Directors' and Officers' Insurance and Indemnification.
(a) For three years after the Effective Time, Parent and the Surviving
Corporation
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shall jointly and severally indemnify, defend and hold harmless each Indemnified
Party against all losses, claims, damages, liabilities, costs, fees and
expenses, including reasonable fees and disbursements of counsel and judgments,
fines, losses, claims, liabilities and amounts paid in settlement (provided that
any such settlement is effected with the written consent of the Parent or the
Surviving Corporation, which consent shall not be unreasonably withheld) arising
out of actions or omissions occurring at or prior to the Effective Time to the
full extent required under applicable Delaware law, the terms of the Company
Charter or the Company By-Laws, as in effect at the date hereof; provided, that,
in the event any claim or claims are asserted or made within such three-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance for a period of not less
than three years after the Effective Date; provided, that Parent may substitute
therefor policies of substantially equivalent coverage and amounts containing
terms no less favorable to the former directors or officers of the Company to
which such insurance applies; provided, further, that in no event shall the
Company be required to pay aggregate premiums for insurance under this Section
5.9(b) in excess of 200% of the aggregate premiums paid by the Company in 1999
on an annualized basis for such purpose; and provided, further, that if the
Parent or the Surviving Corporation is unable to obtain the amount of insurance
required by this Section 5.9(b) for such aggregate premium, Parent or the
Surviving Corporation shall obtain as much insurance as can be obtained for an
annual premium not in excess of 200% of the aggregate premiums paid by the
Company in 1999 on an annualized basis for such purpose.
Section 5.10 State Takeover Laws. Notwithstanding any other
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Company Board of Directors. If any state
takeover statute other than Section 203 of the DGCL becomes or is deemed to
become applicable to the Agreement, the Offer, the acquisition of Shares
pursuant to the Offer or the Merger or the other Transactions, the Company shall
take all action necessary to render such statute inapplicable to all of the
foregoing.
Section 5.11 Purchaser Compliance. Parent shall cause Purchaser to
comply with all of its obligations under or related to this Agreement.
Section 5.12 Delivery of Financial Information. The Company shall,
at the request of Parent, promptly prepare and deliver to Parent an unaudited
consolidated balance sheet of the Company, as of a date specified by Parent,
together with
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unaudited consolidated statements of (i) income and (ii) cash flows of the
Company for such period specified by Parent, each of which shall fairly present
in all material respects the financial position of the Company as of such date
and for the period then ended.
Section 5.13 Grant of Option. To the extent permitted by law, rule
or regulation without shareholder approval, the Company hereby grants to
Purchaser an option to purchase from the Company such number of Shares as will
result in the Purchaser owning 90.1% of the total number of Shares, at a price
per Share equal to the Offer Price. Such option shall be exercisable by Parent
or any of its Subsidiaries only after the purchase of and payment for Shares
pursuant to the Offer as a result of which Parent and its Subsidiaries own
beneficially at least a majority of the then outstanding Shares. That portion of
the purchase price owing upon exercise of such option which equals the product
of (a) the number of Shares purchased pursuant to such option multiplied by (b)
the par value per Share shall be paid to the Company in cash by wire transfer or
cashier's check, and the balance of the purchase price shall be paid by delivery
to the Company of a non-interest bearing unsecured demand note of Purchaser.
Such option may be exercised on two day's written notice given by Purchaser to
the Company.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) Shareholder Approval. This Agreement shall have been approved
and adopted by the requisite vote of the holders of the Shares, if required by
applicable law, in order to consummate the Merger;
(b) Statutes; Court Orders; Injunctions. No statute, rule or
regulation shall have been enacted or promulgated by any Governmental Entity
which restrains, enjoins or otherwise prevents or prohibits the consummation of
the Merger; and there shall not be any preliminary or permanent injunction or
other order of any federal, state or foreign court or any federal, state or
foreign governmen-
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tal authority or regulatory agency, body or court in effect precluding
consummation of the Merger;
(c) Purchase of Shares in Offer. Parent, Purchaser or their
Affiliates shall have purchased Shares pursuant to the Offer; and
(d) HSR Approval. Any applicable waiting periods under the HSR Act
shall have expired or been terminated.
Section 6.2 Conditions to Parent's and Purchaser's Obligations to
Effect the Merger. The obligations of Parent and Purchaser to consummate the
Merger shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, any and all of which may be waived in whole or
in part by the Parent and Purchaser, to the extent permitted by applicable law.
(a) Compliance with Obligations. All actions contemplated by
Section 2.4 shall have been taken;
(b) Representations and Warranties. The representations and
warranties of the Company set forth in Article III shall be true in all material
respects on the date of this Agreement and as of the Effective Time; and
(c) Covenants. The Company shall have complied in all material
respects with its obligations under the terms of this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) Subject to Section 1.3(c), by the mutual written consent of
Parent and the Company;
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any Shares
being purchased pursuant thereto or (y) Purchaser shall not have accepted
for
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payment any Shares pursuant to the Offer by April 15, 2000; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of Purchaser to purchase the Shares pursuant to the Offer on or
prior to such date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their reasonable efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
acceptance for payment of, or payment for, Shares pursuant to the Offer or
the Merger and such order, decree, ruling or other action shall have
become final and non-appealable.
(c) By the Company:
(i) if Parent, Purchaser or any of their Affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that
the Company may not terminate this Agreement pursuant to this Section
7.1(c)(i) if the Company is at such time in material breach of its
obligations under this Agreement;
(ii) as permitted by Section 5.5(b), provided the Company has
complied with all provisions thereof, including the notice provisions
therein, and provided further that the termination described in this
Section 7.1(c)(ii) shall not be effective unless and until the Company
makes payment to Parent of funds as required by Section 9.1(b);
(iii) if Parent or Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
cannot be or has not been cured within 15 days after the giving of written
notice by the Company to Parent or Purchaser, as applicable.
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by Parent
or Purchaser of their obligations hereunder, which makes it impossible to
satisfy any of the conditions set forth in Annex A hereto, Parent, ▇▇▇-
▇▇
▇▇
chaser, or any of their Affiliates shall have failed to commence the Offer
on or prior to the fifth business day following the date of the initial
public announcement of the Offer;
(ii) if, prior to the purchase of Shares by Purchaser pursuant
to the Offer, the Company Board of Directors shall have withdrawn,
modified or changed in a manner adverse to Parent or Purchaser its
approval or recommendation of the Offer, this Agreement or the Merger or
shall have recommended an Acquisition Proposal or shall have executed an
agreement in principle or definitive agreement relating to an Acquisition
Proposal or similar business combination with a Person other than Parent,
Purchaser or their Affiliates;
(iii) if, prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in this Agreement which would give
rise to the failure of a condition set forth in paragraph (f) or (g) of
Annex A hereto, which breach cannot be or has not been cured within 15
days after the giving of written notice by Parent to the Company; or
(iv) if, prior to the purchase of Shares pursuant to the
Offer, Major Shareholder shall have breached any representation, warranty,
covenant or other agreement contained in the Stock Tender Agreement which
would give rise to the failure of a condition set forth in paragraph (h)
of Annex A hereto, which breach cannot be or has not been cured within 15
days after the giving of written notice by Parent to the Company; or
(v) if, prior to the purchase of Shares pursuant to the Offer,
there shall have been entered any injunction with respect to the
performance by Major Shareholder or the Trustees of their respective
obligations set forth in the Stock Tender Agreement relating to the
tendering of the Shares beneficially owned by the Major Shareholder in the
Offer, the granting of an option to Parent to purchase the Shares
beneficially owned by the Major Shareholder or the granting of a proxy
with respect to, or the agreement to vote, the Shares beneficially owned
by the Major Shareholder, which judgment, order or injunction has not been
withdrawn or rendered inapplicable to the obligations of the Major
Shareholder or the Trustees under the Stock Tender Agreement within 15
days of being so enacted, entered, enforced, promulgated or deemed
applicable; provided, however, that Parent shall not be entitled to
terminate this Agreement pursuant to this Section
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7.1(b)(v) until after the initial scheduled expiration date of the Offer
and if the Minimum Condition is otherwise satisfied as of such date.
Section 7.2 Effect of Termination. In the event of the termination
or abandonment of the Transactions by any party hereto pursuant to the terms of
this Agreement, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination or abandonment of the Transactions is made, and there shall be no
liability on the part of Parent, Purchaser or the Company except (A) for fraud
or for breach of this Agreement prior to such termination or abandonment of the
Transactions, (B) as set forth in Section 9.1 and (C) that the provisions of the
Confidentiality Agreement will continue in full force and effect.
ARTICLE VIII
DEFINITIONS AND INTERPRETATION
Section 8.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context clearly requires
otherwise:
"Acquisition Proposal" shall mean any proposal or offer to acquire,
directly or indirectly, any part of the business or properties of the Company or
any Company Subsidiary or any capital stock of the Company or any Company
Subsidiary, whether by sale of assets, tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transactions involving the Company or any Company Subsidiary,
division or operating or principal business unit of the Company.
"1999 Option" shall mean (i) a Company Option issued pursuant to the
Company's 1999 Stock Option Plan and (ii) a Company Option issued pursuant to
the Company Incentive Plan with respect to which accelerated vesting upon a
change in control of the Company has been waived.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Agreement" or "this Agreement" shall mean this Agreement and Plan
of Merger, together with the Exhibits and Appendices hereto and the Disclosure
Schedule.
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"Appointment Date" shall mean the time the persons designated by
Purchaser have been elected to, and shall constitute a majority of, the Company
Board of Directors pursuant to Section 1.3.
"Associate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Balance Sheet" shall mean the most recent audited balance sheet of
the Company and its consolidated Subsidiaries included in the Financial
Statements.
"Balance Sheet Date" shall mean the date of the Balance Sheet.
"Board Fraction" shall mean a fraction, the numerator of which shall
be the number of Shares that Parent and its Subsidiaries beneficially own at the
time of calculation of the Board Fraction, and the denominator of which shall be
the total number of Shares then outstanding.
"Cash Amount" shall mean the product of (i) the excess, if any, of
the Merger Consideration over the exercise price per Share of such Company
Option and (ii) the number of Shares subject to such Company Option.
"Certificate" shall mean a certificate that immediately prior to the
Effective Time represented Shares which were converted pursuant to Section 2.1
into the right to receive the Merger Consideration.
"Closing" shall mean the closing referred to in Section 1.6.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Softworks, Inc., a Delaware corporation.
"Company Agreement" shall mean any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation or
arrangement, whether written or oral, to which the Company or any Company
Subsidiary is a party or by which any of them or any of their properties or
assets may be bound.
"Company Board of Directors" shall mean the board of directors of
the Company.
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"Company By-Laws" shall mean the By-Laws, as amended to date, of
the Company.
"Company Charter" shall mean the Certificate of Incorporation, as
amended to date, of the Company.
"Company Intellectual Property Rights" shall mean all Intellectual
Property that is currently used in the business of the Company or any Company
Subsidiary or that is necessary to conduct the business of the Company and its
Subsidiaries as presently conducted or as currently proposed to be conducted.
"Company Incentive Plan" shall mean the Softworks, Inc. 1998 Long-
Term Incentive Plan, as amended.
"Company Option" shall mean an option to purchase Shares that has
been granted by the Company and is outstanding at the Effective Time.
"Company Permits" shall mean all permits, licenses, easements,
variances, exemptions, consents, certificates, authorizations, registrations,
orders and other approvals from Governmental Entities that are material to the
operation of the business of the Company and each Company Subsidiary, taken as a
whole, as it is now being conducted.
"Company SEC Documents" shall mean each form, report, schedule,
statement and other document required to be filed by the Company since May 28,
1998 under the Exchange Act or the Securities Act, including any amendment to
such document, whether or not such amendment is required to be so filed.
"Company Stock Option Plan" shall mean the Softworks, Inc. 1999
Stock Option Plan, as amended.
"Company Subsidiary" shall mean each Person that is a Subsidiary of
the Company.
"Company's knowledge" or "knowledge of the Company" shall mean the
knowledge that the directors and officers of the Company and its Subsidiaries
and the employees of the Company and its Subsidiaries having responsibility for
the particular subject matter at issue have or would possess after reasonable
investigation and inquiry.
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"Confidentiality Agreement" shall mean the Bilateral Confidentiality
Agreement dated November 1, 1998, as amended January 12, 1999, March 9, 1999 and
December, 1999, between the Company and Parent.
"Copyrights" shall mean U.S. and foreign registered and unregistered
copyrights (including, but not limited to, those in computer software and
databases), rights of publicity and all registrations and applications to
register the same.
"DGCL" shall mean the General Corporation Law of the State of
Delaware, as amended from time to time.
"Disclosure Schedule" shall mean the disclosure schedule of even
date herewith prepared and signed by the Company and delivered to Parent and
Purchaser simultaneously with the execution hereof.
"Dissenting Shares" shall mean any Shares as to which the holder
thereof has demanded appraisal with respect to the Merger in accordance with
Section 262 of the DGCL and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal.
"Effective Time" shall mean the date on which the certificate of
merger referred to in Section 1.5 is duly filed with the Secretary of State of
the State of Delaware or such other time as is agreed upon by the parties and
specified in such certificate of merger.
"Environmental Claim" shall mean any claim, action, investigation or
notice by any Person alleging potential liability for investigatory, cleanup or
governmental response costs, or natural resources or property damages, or
personal injuries, attorney's fees or penalties relating to (i) the presence, or
Release into the environment, of any Materials of Environmental Concern at any
location owned or operated by the Company or any Company Subsidiary, now or in
the past, or (ii) any violation, or alleged violation, of any Environmental
Law.
"Environmental Law" shall mean each federal, state, local and
foreign law and regulation relating to pollution, protection or preservation of
human health or the environment including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata, and natural
resources, and including, without limitation, each law and regulation relating
to emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the generation, storage,
containment (whether above ground or underground), disposal, transport or
handling of Materials of Environmental Concern, or the
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preservation of the environment or mitigation of adverse effects thereon and
each law and regulation with regard to record keeping, notification, disclosure
and reporting requirements respecting Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Financial Statements" shall mean the financial statements of the
Company included in the Company SEC Documents.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" shall mean a court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, whether domestic or foreign.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"Indemnification Agreement" shall mean the Indemnification Agree-
ment, dated December 21, 1999, by and among Parent, Purchaser and Major Share
holder.
"Indemnified Party" shall mean each present and former officer and
director of the Company and its Subsidiaries, and each person who becomes an
officer or director of the Company or any of its Subsidiaries prior to the
Effective Time.
"Independent Directors" shall mean directors of the Company who are
directors on the date hereof and who are not Affiliates of Parent or Purchaser.
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"Intellectual Property" shall mean all of the following: Trademarks,
Patents, Copyrights, Trade Secrets and Licenses.
"IRS" shall mean the Internal Revenue Service.
"Licenses" shall mean all licenses and agreements pursuant to which
the Company has acquired rights in or to any Trademarks, Trade Secrets, Patents
or Copyrights, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing.
"Liens" shall mean security interests, liens, claims, pledges,
agreements, limitations in voting rights, charges or other encumbrances of any
nature whatsoever.
"Major Shareholder" shall mean Computer Concepts Corp., a Delaware
corporation.
"Material Contract" shall mean any agreements, contracts or other
instruments required to be disclosed in Section 3.6(a) of the Disclosure
Schedule.
"Materials of Environmental Concern" shall mean pollutants,
contaminants, toxic or hazardous substances, materials and wastes, petroleum and
petroleum products, asbestos and asbestos-containing materials, polychlorinated
biphenyls, radon and lead or lead-based paints and materials.
"Merger" shall mean the merger of Purchaser with and into the
Company referred to in Section 1.4.
"Merger Consideration" shall mean an amount of cash equal to the
Offer Price, which amount shall not include interest, regardless of when paid.
"Minimum Condition" shall mean the condition that, pursuant to the
Offer, there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer, not less than that number of Shares which, together
with the Shares owned by Parent and Purchaser on the date hereof, constitutes at
least a majority of the Shares outstanding on a fully diluted basis (after
giving effect to the conversion or exercise of all outstanding options, warrants
and other rights and securities exercisable or convertible into Shares, whether
or not exercised or converted at the time of determination).
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"Minimum Termination Fee" shall mean the sum of $9,130,942 in
U.S. currency.
"NYSE" shall mean the New York Stock Exchange.
"Offer" shall mean the cash tender offer to be made by Purchaser
pursuant to Section 1.1 to acquire any and all issued and outstanding Shares at
the Offer Price.
"Offer Documents" shall mean the Offer to Purchase and a form of
letter of transmittal and summary advertisement filed as exhibits to the
Schedule 14D-1, together with any amendments and supplements thereto.
"Offer Price" shall mean $10.00 per Share net to the seller in cash,
or such increased amount, if any, as Purchaser may offer to pay as contemplated
by Section 1.1(a) and Section 5.5(b).
"Offer to Purchase" shall mean the offer to purchase included in the
Schedule 14D-1 filed with the SEC pursuant to Section 1.1(b).
"Option Exchange Ratio" shall mean (x) the Merger Consideration
divided by (y) the average of the closing prices of Parent Common Stock on the
NYSE during the twenty trading days preceding the fifth trading day prior to the
Closing Date.
"Parent" shall mean ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, a Massachusetts corporation.
"Parent By-Laws" shall mean the Amended and Restated By-Laws of
Parent, as amended to date.
"Parent Charter" shall mean the Restated Articles of Organization,
as amended to date, of Parent.
"Parent Common Stock" shall mean shares of common stock, par value
$.01 per share, of Parent.
"Parent Option" shall mean an option to purchase shares of Parent
Common Stock.
"Patents" shall mean issued U.S. and foreign patents and pending
patent applications, patent disclosures, and any and all divisions,
continuations,
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continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights.
"Paying Agent" shall mean the bank or trust company designated by
Parent to act as agent for the holders of the Shares pursuant to Section 2.2(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
or organization.
"Plans" shall mean a plan, program, agreement, arrangement or
program required to be included in the Disclosure Schedule pursuant to Section
3.13(a).
"Preferred Stock" shall mean the preferred stock, par value $.001
per share, of the Company.
"Product" shall mean any product designed, manufactured, shipped,
sold, marketed, distributed and/or otherwise introduced into the stream of
commerce by or on behalf of the Company or any Company Subsidiary, including,
without limitation, any product sold in the United States by the Company or any
Company Subsidiary as the distributor, agent, or pursuant to any other
contractual relationship with a non-U.S. manufacturer.
"Proxy Statement" shall mean the proxy statement to be filed, if
necessary, by the Company with the SEC pursuant to Section 1.9(a)(ii), together
with all amendments and supplements thereto and including the exhibits thereto.
"Purchaser" shall mean Eagle Merger Corp., a Delaware corporation
that is a wholly owned subsidiary of Parent.
"Purchaser By-Laws" shall mean the By-Laws of Purchaser, as
amended to date.
"Purchaser Charter" shall mean the Certificate of Incorporation of
Purchaser, as amended to date.
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"Purchaser Common Stock" shall mean common stock, par value $.01 per
share, of Purchaser.
"Qualified Plan" shall mean a Plan that is intended to qualify under
Section 401(a) of the Code.
"Release" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, groundwater and surface or subsurface strata) or into or out
of any property, including the movement of Materials of Environmental Concern
through or in the air, soil, surface water, groundwater or property.
"Retained Employees" shall mean those Persons who were employees of
the Company or any Company Subsidiary immediately prior to the Effective Time.
"Schedule 14D-l" shall mean the Schedule 14D-1 filed by Purchaser
with the SEC pursuant to Section 1.1(b), together with all amendments and
supplements thereto and including the exhibits thereto.
"Schedule 14D-9" shall mean the Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company with the SEC pursuant to
Section 1.2(a), together with all amendments and supplements thereto and
including the exhibits thereto.
"SEC" shall mean the United States Securities and Exchange Com-
mission.
"Section 203 Approval" shall mean the action taken by the Company
Board of Directors referred to in Section 3.5 causing Section 203 of the DGCL
not to apply to this Agreement or the other Transactions.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Severance Agreements" shall mean employment and severance
agreements and arrangements, as amended through the date hereof, with respect to
employees and former employees of the Company.
"Shares" shall mean shares of common stock, par value $.001, issued
by the Company.
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"Stock Tender Agreement" shall mean the Stock Tender Agreement,
dated as of the date hereof, among Parent, Purchaser, the Major Shareholder and
the Trustees, pursuant to which the Trustees have agreed, among other things, to
tender in the Offer the Shares owned by the Major Shareholder and held in the
Voting Trust and to grant Parent an option to purchase such Shares and to grant
Purchaser a proxy with respect to the voting of such Shares upon the terms and
subject to the conditions set forth therein.
"Stockholders' Stock Tender Agreement" shall mean the Stockholders'
Stock Tender Agreement, dated as of the date hereof, among Parent, Purchaser and
each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
pursuant to which each such individual has agreed, among other things, to tender
in the Offer the Shares owned by such individual and to grant Parent an option
to purchase such Shares and to grant Purchaser a proxy with respect to the
voting of such Shares upon the terms and subject to the conditions set forth
therein.
"Subsidiary" shall mean, with respect to any party, any corporation
or other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries or (b) such party or any other Subsidiary of such party is a
general partner (excluding any such partnership where such party or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership).
"Subsidiary Documents" shall mean the charter and by-laws (or
equivalent organizational documents), as amended to date, of each Company
Subsidiary.
"Superior Proposal" shall mean any proposal or offer made by a third
party to acquire, directly or indirectly, including pursuant to a sale of
assets, tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction,
for consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the Shares of Company Common Stock then outstanding or
all or substantially all the assets of the Company and otherwise on terms which
the Company Board of Directors determines in its good faith judgment (after
receipt of (i) an opinion of a financial advisor of nationally recognized
reputation that the such proposal is superior, from a financial
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point of view, to the Offer and the Merger, and (ii) an opinion 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 of Directors to violate its fiduciary duties to the Company's shareholders
under applicable law), to be more favorable to the Company's stockholders than
the Offer and Merger and which is not subject to the receipt of any necessary
financing or which, in the good faith judgment of the Company Board of
Directors, is reasonably capable of being obtained by such third party.
"Surviving Corporation" shall mean the successor or surviving
corporation in the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, tariffs, imposts, penalties or other assessments of any kind imposed by
any federal, state, local or foreign governmental authority, including, but not
limited to, income, gross receipts, excise, profits, ad valorem, net worth,
value added, service, special assessments, workers' compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
real or personal property, sales, gain, use, license, custom duty, unemployment,
capital stock, transfer, franchise, payroll, withholding, social security,
minimum estimated, and other taxes, and shall include interest, penalties or
additions attributable thereto.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Termination Fee" shall mean the sum of $10,572,670.00 in U.S.
currency.
"Title IV Plan" shall mean a Plan that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code.
"Trademarks" shall mean U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same.
"Trade Secrets" shall mean all categories of trade secrets as
defined in the Uniform Trade Secrets Act including, but not limited to, business
information, technology, know-how or applications.
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"Transactions" shall mean the transactions provided for or
contemplated by this Agreement, the Stock Tender Agreement and the Stockholders'
Stock Tender Agreement, including but not limited to the Offer and the Merger.
"Trustees" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇, solely in their capacities as trustees under the Voting Trust Agreement.
"Voting Debt" shall mean indebtedness having general voting rights
and debt convertible into securities having such rights.
"Voting Trust" shall mean the voting trust created pursuant and
subject to the terms and conditions of the Voting Trust Agreement.
"Voting Trust Agreement" shall mean the Voting Trust Agreement,
dated as of August 3, 1998, between the Company, the Major Shareholder and the
Trustees.
"Year 2000 Compliant" shall mean that the applicable system,
Product, service or item: (i) will accurately receive, record, store, provide,
recognize, recall and process all date and time data from, during, into and
between the years 1999, 2000 and 2001, and all years pertinent thereafter; (ii)
will accurately perform all date-dependent calculations and operations
(including without limitation, mathematical operations, sorting, comparing and
reporting) from, during, into and between the years 1999, 2000 and 2001, and all
pertinent years thereafter; and (iii) will not malfunction, cease to function or
provide invalid or incorrect results as a result of (A) the change of years from
1999 to 2000 or from 2000 to 2001, (B) date data, including date data which
represents or references different centuries, different dates during 1999, 2000
and 2001, or more than one century or (C) the occurrence of any particular date;
in each case without human intervention, provided, in each case, that all
software, applications, hardware and other systems used in conjunction with such
system or item that are not owned or licensed by the Company or any Company
Subsidiary correctly exchange date data with or provide data to such system or
item.
Section 8.2 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
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(b) Whenever the words "include", "includes" or "including" are used
in this Agreement they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
(d) The plural of any defined term shall have a meaning correlative
to such defined term, and words denoting any gender shall include all genders.
Where a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(g) As used in this Agreement, any reference to any event, change or
effect being material or having a material adverse effect on or with respect to
any entity (or group of entities taken as a whole) means such event, change or
effect is materially adverse to (i) the consolidated financial condition,
businesses or results of operations of such entity as a whole (or, if used with
respect thereto, of such group of entities taken as a whole) or (ii) the ability
of such entity (or group) to consummate the Transactions.
(h) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses. (a) Except as specifically provided
to the contrary in this Agreement, including Section 9.1(b), all reasonable
costs and expenses incurred in connection with this Agreement and the
consummation of the Transactions shall be paid by the party incurring such costs
and expenses.
(b) If
(i) the Company shall enter into an agreement which accepts or
implements another Acquisition Proposal;
(ii) either the Company or Parent terminates or abandons the
Transactions pursuant to Section 7.1(b)(i) and prior thereto there shall
have been publicly announced another Acquisition Proposal;
(iii) the Company shall terminate or abandon the Transactions
pursuant to Section 7.1(c)(ii);
(iv) Parent shall terminate or abandon the Transactions
pursuant to Section 7.1(d)(ii); or
(v) Parent shall terminate or abandon the Transactions
pursuant to Section 7.1(d)(iii) as a result of a breach of the provisions
of Section 5.5 hereof or the intentional or willful breach of any other
provision hereof (it being understood that such right of termination or
abandonment is subject to the time period afforded the Company to cure
such breach pursuant to Section 7.1(d)(iii));
then the Company shall pay to Parent an amount equal to the Termination Fee plus
an amount equal to Parent's actual and reasonably documented out-of-pocket fees
and expenses incurred by Parent and Purchaser in connection with the Offer, the
Merger, this Agreement and the consummation of the Transactions. The Termination
Fee and Parent's good faith estimate of its expenses shall be paid in same day
funds concurrently with the execution of an agreement referred to in subsection
(i) above or any termination or abandonment referred to in subsections (ii),
(iii) or (iv) above, whichever shall first occur, together with delivery of a
written acknowledgment by the Company of its obligation to reimburse Parent for
its actual expenses in excess of such estimated expense payment.
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(c) If
(i) Parent shall terminate or abandon the Transactions
pursuant to Section 7.1(d)(iv); or
(ii) the Offer shall have expired without the Minimum
Condition having been satisfied, and the Major Shareholder shall, for any
reason, not have fully satisfied its obligations under the Stock Tender
Agree ment to (i) tender the Shares subject to the Stock Tender Agreement
in the Offer, (ii) grant the option to Parent to purchase the Shares
subject to the Stock Tender Agreement and consummate any sale upon
exercise of such option or (iii) grant the proxy with respect to, or vote,
the Shares subject to the Stock Tender Agreement as set forth therein;
then the Company shall pay to Parent an amount equal to the Minimum Termination
Fee plus an amount equal to Parent's actual and reasonably documented
out-of-pocket fees and expenses incurred by Parent and Purchaser in connection
with the Offer, the Merger, this Agreement and the consummation of the
Transactions. The Minimum Termination Fee and Parent's good faith estimate of
its expenses shall be paid in same day funds concurrently with the execution of
an agreement referred to in subsection (i) above or any termination or
abandonment referred to in subsections (ii), (iii) or (iv) above, whichever
shall first occur, together with delivery of a written acknowledgment by the
Company of its obligation to reimburse Parent for its actual expenses in excess
of such estimated expense payment.
Section 9.2 Amendment and Modification. Subject to applicable law
and Section 1.3, this Agreement may be amended, modified and supplemented in any
and all respects, whether before or after any vote of the shareholders of the
Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 1.3(c)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the shareholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 9.3 Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective
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Time as necessary to effect the terms and provisions of the Indemnification
Agree ment.
Section 9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Corporate Development
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office of the General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
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(b) if to the Company, to:
Softworks, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 9.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Indemnification Agreement and the Confidentiality Agreement
(including the documents and the instruments referred to herein and therein):
(a) constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof, and (b) except as provided in Sections 2.4
and 5.9 are not intended to confer upon any Person other than the parties hereto
and thereto any rights or remedies hereunder.
Section 9.7 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete
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specific words or phrases, or to replace any invalid, void or unenforceable term
or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
Section 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 9.9 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 court of the United States
located in the Commonwealth of Massachusetts or in Massachusetts state court,
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 Federal court located in the Commonwealth of
Massachusetts or any Massachusetts state court in the event any dispute arises
out of this Agreement or any of the Transactions contemplated by this Agreement,
(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 and (c) agrees that it
will not bring any action relating to this Agree ment or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the Commonwealth of Massachusetts.
Section 9.10 Time of Essence. Each of the parties hereto hereby
agrees that, with regard to all dates and time periods set forth or referred to
in this Agreement, time is of the essence.
Section 9.11 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 of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 9.2, waive compliance by the other parties 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 those rights.
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Section 9.12 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that Purchaser may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent or to any direct or indirect wholly owned Subsidiary of Parent.
Subject to the preceding sentence, this Agree ment will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed under seal by their respective officers thereunto
duly authorized as of the date first written above.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President/CEO
EAGLE MERGER CORP.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
SOFTWORKS, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
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Annex A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of)
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Agreement), Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any Shares
not then paid for, if (i) any applicable waiting period under the HSR Act has
not expired or terminated, (ii) the Minimum Condition has not been satisfied, or
(iii) at any time on or after the date of the Agreement and before the scheduled
expiration date of the Offer, any of the following events shall occur or shall
be determined by Purchaser to have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (i) seeking to prohibit or impose any
material limitations on Parent's or Purchaser's ownership or operation (or that
of any of their respective Subsidiaries or Affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
Purchaser or their respective Subsidiaries and Affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or Purchaser of any Shares under the Offer
or pursuant to the Stock Tender Agree ment or the Stockholders' Stock Tender
Agreement, seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other transactions
contemplated by this Agreement, the Stock Tender Agreement or the Stockholders'
Stock Tender Agreement, or seeking to obtain from the Company, Parent or
Purchaser any damages that are material in relation to the Company and its
Subsidiaries, taken as a whole, (iii) seeking to impose material limitations on
the ability of Purchaser, or rendering Purchaser unable, to accept for payment,
pay for or purchase some or all of the Shares pursuant to the Offer and the
Merger, (iv) seeking to impose material limitations on the ability of Purchaser
or Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's shareholders, or (v) which
otherwise is reasonably likely to have a material adverse affect on the
consolidated financial condition, businesses or results of operations of the
Company and its Subsidiaries, taken as a whole; or
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(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through (v)
of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE or in the NASDAQ
National Market System, for a period in excess of three hours (excluding
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 or foreign governmental authority on the extension of credit
by banks or other financial institutions, (v) any decline in either the Dow
▇▇▇▇▇ Industrial Average or the Standard & Poor's Index of 500 Industrial
Companies by an amount in excess of 15% measured from the close of business on
the date of this Agreement, or (vi) 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 (vii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(d) there shall have occurred any material adverse change (or any
development that, insofar as reasonably can be foreseen, is reasonably likely to
result in any material adverse change) in the consolidated financial condition,
businesses, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole; or
(e) the Company Board of Directors or any committee thereof (i)
shall have withdrawn, modified or changed in a manner adverse to Parent or Pur-
chaser its approval or recommendation of the Offer, this Agreement or the
Merger, (ii) shall have recommended the approval or acceptance of an Acquisition
Proposal from, or similar business combination with, a Person other than Parent,
Purchaser or their Affiliates, (iii) shall have executed an agreement in
principle or definitive agreement relating to an Acquisition Proposal from, or
similar business combination with, a Person other than Parent, Purchaser or
their Affiliates or (iv) shall have adopted any resolution to effect any of the
foregoing which, in the sole judgment of Parent in any such case, and regardless
of the circumstances (including any action or
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inaction by Parent or Purchaser) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance or payment; or
(f) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be true
and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each case as
of the date of this Agree ment and as of the scheduled expiration date of the
Offer; or
(g) 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 Agree
ment; or
(h) (A) any of the representations and warranties of the Major
Shareholder set forth in the Stock Tender Agreement that are qualified as to
materiality shall not be true and correct and any such representations and
warranties that are not so qualified shall not be true and correct in any
material respect, in each case as of the date of this Agreement and as of the
scheduled expiration date of the Offer; (B) either the Major Shareholder or the
Trustees 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 Major
Shareholder or the Trustees to be performed or complied with by them under the
Stock Tender Agreement; or (C) there shall be any judgment, order or injunction
enacted, entered, enforced, promulgated or deemed applicable to the respective
obligations of the Major Shareholder or the Trustees under the Stock Tender
Agreement, relating to the tendering of the Shares beneficially owned by the
Major Shareholder in the Offer, the granting of an option to Parent to purchase
the Shares beneficially owned by Major Shareholder and the granting of a proxy
with respect to, and the agreement to vote, the Shares beneficially owned by
the Major Shareholder, which judgments, order or injunction, after the initial
scheduled expiration date of the Offer, has not been withdrawn or rendered
inapplicable to the obligations of the Major Shareholder or the Trustees under
the Stock Tender Agreement within 15 days of being so enacted, entered,
enforced, promulgated or deemed applicable.
(i) all consents necessary to the consummation of the Offer or the
Merger including, without limitation, consents from parties to loans, contracts,
leases or other agreements and consents from governmental agencies, whether
federal, state or local shall not have been obtained, other than consents the
failure to obtain which would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole; or
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(j) this Agreement shall have been terminated in accordance with its
terms;
which in the sole judgment, exercised reasonably, of Parent or Purchaser, in any
such case, and regardless of the circumstances (including any action or inaction
by Parent or Purchaser) giving rise to such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser, may be waived by Parent or Purchaser, in whole or in part, at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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