Exhibit 2.8
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AGREEMENT AND PLAN OF MERGER
among
STERLING SOFTWARE, INC.
STERLING SOFTWARE (ARIZONA), INC.
and
COREDATA, INC.
dated as of July 12, 1999
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TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER.. 1
ARTICLE I THE MERGER..................................................... 2
Section 1.1 The Merger............................................... 2
Section 1.2 Closing.................................................. 2
Section 1.3 Effective Time........................................... 2
Section 1.4 Effects of the Merger.................................... 2
Section 1.5 Certificate of Incorporation; Bylaws..................... 3
Section 1.6 Directors; Officers...................................... 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITALSTOCK OF THE
CONSTITUENT CORPORATIONS.................................................... 3
Section 2.1 Effect on Capital Stock.................................. 3
Section 2.2 Stock Options............................................ 5
ARTICLE III PAYMENT FOR SHARES............................................. 5
Section 3.1 Payment for Shares....................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................. 8
Section 4.1 Representations and Warranties of Company................ 8
Section 4.2 Representations and Warranties of Parent and
Merger Sub............................................... 23
ARTICLE V CONDUCT OF BUSINESS OF COMPANY................................. 25
Section 5.1 Conduct of Business of Company........................... 25
ARTICLE VI ADDITIONAL COVENANTS........................................... 27
Section 6.1 Preparation of the Proxy Statement....................... 27
Section 6.2 Stockholders Meeting..................................... 28
Section 6.3 Access to Information; Confidentiality................... 28
Section 6.4 Reasonable Best Efforts.................................. 28
Section 6.5 Public Announcements..................................... 29
Section 6.6 No Solicitation; Acquisition Proposals................... 29
Section 6.7 Consents, Approvals and Filings.......................... 31
Section 6.8 Board Action Relating to Stock Option Plans.............. 31
Section 6.9 Employee Benefit Matters................................. 31
ARTICLE VII CONDITIONS PRECEDENT........................................... 32
Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger............................................... 32
Section 7.2 Conditions to Obligations of Parent and Merger Sub....... 32
Section 7.3 Conditions to Obligations of Company..................... 33
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 34
Section 8.1 Termination.............................................. 34
Section 8.2 Effect of Termination.................................... 35
Section 8.3 Amendment................................................ 35
Section 8.4 Extension; Waiver........................................ 35
Section 8.5 Procedure for Termination, Amendment, Extension
or Waiver................................................ 36
ARTICLE IX GENERAL PROVISIONS............................................. 36
Section 9.1 Nonsurvival of Representations and Warranties............ 36
Section 9.2 Fees and Expenses........................................ 36
Section 9.3 Definitions.............................................. 36
Section 9.4 Notices.................................................. 38
Section 9.5 Interpretation........................................... 39
Section 9.6 Entire Agreement; Third-Party Beneficiaries.............. 39
Section 9.7 Disclosure Schedules..................................... 39
Section 9.8 Governing Law............................................ 40
Section 9.9 Assignment............................................... 40
Section 9.10 Enforcement.............................................. 41
Section 9.11 Severability............................................. 41
Section 9.12 Counterparts............................................. 41
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of July 12, 1999 (this
"Agreement"), is made and entered into among Sterling Software, Inc., a Delaware
corporation ("Parent"), Sterling Software (Arizona), Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Parent ("Merger Sub"),
and CoreData, Inc., an Arizona corporation ("Company").
RECITALS:
A. The Executive Committee of the Board of Directors of Parent and the
respective Boards of Directors of Merger Sub and Company have determined that it
would be advisable and in the best interests of their respective stockholders
for Parent to acquire Company, by means of a merger of Merger Sub with and into
Company (the "Merger"), on the terms and subject to the conditions set forth in
this Agreement.
B. Concurrently with the execution and delivery of this Agreement and as
a condition to Parent's and Merger Sub's willingness to enter into this
Agreement, Parent has entered into a Shareholder Agreement, dated as of the date
hereof (the "Shareholder Agreement"), with each of the Stockholders (as
hereinafter defined), pursuant to which each Stockholder has (x) agreed, among
other things, to vote all shares of capital stock of Company owned by such
Stockholder in favor of the approval of this Agreement and (y) granted to Parent
an option to purchase all shares of capital stock of Company owned by such
Stockholder.
C. Parent, Merger Sub and Company desire to make certain
representations, warranties and covenants in connection with the Merger and to
prescribe various conditions to the consummation of the Merger.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained in this Agreement, the parties hereto hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. On the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL") and the Arizona Business Corporation Act (the "ABCA"), the
Merger shall be effected and Merger Sub shall be merged with and into Company at
the Effective Time (as hereinafter defined). At the Effective Time, the
separate existence of Merger Sub shall cease and Company shall continue as the
surviving corporation (sometimes hereinafter referred to as the "Surviving
Corporation").
Section 1.2 Closing. Unless this Agreement shall have been terminated and
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the transactions herein contemplated shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the conditions
set forth in Article VII, the closing of the Merger (the "Closing") will take
place as soon as practicable, but in no event later than 10:00 a.m. on the
second business day (the "Closing Date") following satisfaction or waiver of all
of the conditions set forth in Article VII, other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions, at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, 919 Third Avenue, New York, New York, unless another date, time or
place is agreed to in writing by the parties hereto.
Section 1.3 Effective Time. On the Closing Date (or on such other date as
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Parent and Company may agree), the parties hereto (a) shall file with the
Secretary of State of the State of Delaware (the "Delaware State Secretary") a
certificate of merger (the "Delaware Certificate of Merger") and any other
appropriate documents, executed in accordance with the relevant provisions of
the DGCL (b) shall file with the Corporation Commission of the State of Arizona
(the "Arizona Corporation Commission") a certificate of merger (the "Arizona
Certificate of Merger") and any other appropriate documents, executed in
accordance with the relevant provisions of the ABCA, and (c) shall make all
other filings or recordings required under the DGCL and ABCA in connection with
the Merger. The Merger shall become effective upon the filing of the Delaware
Certificate of Merger and the filing of the Arizona Certificate of Merger, or at
such later time as may be specified in the Delaware Certificate of Merger or the
Arizona Certificate of Merger (the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
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forth in the applicable provisions of the DGCL and the ABCA. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
property of Company and Merger Sub shall vest in the Surviving Corporation, and
all liabilities of Company and Merger Sub shall become the liabilities of the
Surviving Corporation.
Section 1.5 Certificate of Incorporation; Bylaws. At the Effective Time,
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(a) the certificate of incorporation of Merger Sub as in effect at the Effective
Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the
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provisions thereof and applicable law and (b) the bylaws of Merger Sub as in
effect at the Effective Time shall, from and after the Effective Time, be the
bylaws of the Surviving Corporation until thereafter changed or amended in
accordance with the provisions thereof and applicable law.
Section 1.6 Directors; Officers. From and after the Effective Time, (a)
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the directors of Merger Sub shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be, and (b) the
officers of Merger Sub shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
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the Merger and without any action on the part of any holder of shares of
Company's common stock, no par value per share (the "Common Shares"), shares of
Company's Class A Preferred Stock, no par value per share (the "Class A
Preferred Shares"), the Company's Class B Preferred Stock, no par value per
share (the "Class B Preferred Shares"), and the Company's Class C Preferred
Stock, no par value per share (the "Class C Preferred Shares", and, together
with the Class A Preferred Shares, the Class B Preferred Shares, and the Common
Shares, the "Shares"), or any other capital stock of Company or any shares of
capital stock of Merger Sub:
(a) Common Stock of Merger Sub. Each share of common stock, par
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value $.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Shares and Company-Owned Shares. Each
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Share issued and outstanding immediately prior to the Effective Time that is
owned by Company (other than shares in trust accounts, managed accounts,
custodial accounts and the like that are beneficially owned by third parties)
shall automatically be canceled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or deliverable in exchange
therefor.
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(c) Conversion of Shares. Each Share issued and outstanding
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immediately prior to the Effective Time (other than Shares to be canceled and
retired in accordance with Section 2.1(b) and any Dissenting Shares (as
hereinafter defined)) shall be converted into the right to receive $2.5795 per
Share (the "Merger Consideration"), upon surrender of the certificate formerly
representing such Share in accordance with this Agreement.
(d) Dissenting Shares. Notwithstanding anything in this Agreement
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to the contrary, any Shares issued and outstanding immediately prior to the
Effective Time held by a holder who has the right to demand, and who properly
demands, payment for such Shares ("Dissenting Shares") in accordance with
Sections 10-1301 through 10-1331 of the ABCA (together with any successor
provisions, the "Appraisal Provisions") shall not be converted into a right to
receive the applicable Merger Consideration, unless such holder fails to perfect
or otherwise loses such holder's right to payment in accordance with the
Appraisal Provisions. If, after the Effective Time, such holder fails to perfect
or loses any such right, each such Share of such holder shall be treated as a
Share that had been converted as of the Effective Time into the right to receive
the applicable Merger Consideration in accordance with Section 2.1(c). At the
Effective Time, any holder of Dissenting Shares shall cease to have any rights
with respect thereto, except the rights provided in the Appraisal Provisions and
as provided in the immediately preceding sentence. Company shall give prompt
notice to Parent of any demands received by Company for payment in accordance
with the Appraisal Provisions, and Parent shall have the right to participate in
and direct all negotiations and proceedings with respect to such demands.
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
Section 2.2 Stock Options.
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(a) Immediately prior to the Effective Time, each holder of a then-
outstanding option to purchase Common Shares (a "Company Option") under the
Company's 1997 Stock Option Plans (the "Stock Option Plans") will be entitled to
receive from the Company or Parent, and shall receive, in settlement of each
Company Option a cash amount (the "Option Cash Amount"), which amount shall be
advanced to Company by Parent. All Options shall terminate as of the Effective
Time. The Option Cash Amount shall be payable with respect to that number of
Common Shares which may be purchased by the holder of such Company Option
pursuant to the terms thereof. The Option Cash Amount shall be equal to the
product of (i) the excess, if any, of the Common Merger Consideration over the
exercise price
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per Share of such Company Option and (ii) the number of Shares constituting such
Company Option.
(b) Except as may be otherwise agreed to by Parent and the Company,
the Stock Option Plan established by the Company 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 shall be deleted, terminated and of no further force or
effect as of the Effective Time.
(c) Company shall use its best efforts to obtain all necessary
waivers, consents or releases from holders of Options granted under the Stock
Option Plan and take any such other action as may be reasonably necessary to
give effect to the transactions contemplated by Section 2.2(a).
ARTICLE III
PAYMENT FOR SHARES
Section 3.1 Payment for Shares.
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(a) Payment Fund. Concurrently with the Effective Time, Parent
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shall deposit, or shall cause to be deposited, with or for the account of a bank
or trust company designated by Parent, which shall be reasonably satisfactory to
Company (the "Exchange Agent"), for the benefit of the holders of Shares, cash
in an amount sufficient to pay the aggregate Merger Consideration payable upon
the conversion of Shares pursuant to Section 2.1(c) (the "Payment Fund").
(b) Letters of Transmittal; Surrender of Certificates. As soon as
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reasonably practicable after the Effective Time, Parent shall instruct the
Exchange Agent to mail to each holder of record (other than Company or Parent,
Merger Sub or any other Subsidiary of Parent) of a certificate or certificates
that, immediately prior to the Effective Time, evidenced outstanding Shares (the
"Certificates"), (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent, and
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the applicable Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
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such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor cash in an amount equal to the
product of (i) the number of Shares theretofore represented by such Certificate
and (ii) the applicable Merger Consideration, and the Certificate so surrendered
shall forthwith be canceled. No interest shall be paid or accrued on any cash
payable upon the surrender of any Certificate. If payment is to be made to a
person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the surrendered Certificate or established to the satisfaction of
Parent and the Surviving Corporation that such taxes have been paid or are not
applicable.
(c) Cancellation and Retirement of Shares; No Further Rights. As of
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the Effective Time, all Shares (other than Shares to be canceled in accordance
with Section 2.1(b)) issued and outstanding immediately prior to the Effective
Time shall cease to be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of any such Shares shall cease
to have any rights with respect thereto or arising therefrom (including without
limitation the right to vote), except the right to receive the applicable Merger
Consideration, without interest, upon surrender of such Certificate in
accordance with Section 3.1(b), and until so surrendered, each such Certificate
shall represent for all purposes only the right to receive the applicable Merger
Consideration, without interest. The Merger Consideration paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates.
(d) Investment of Payment Fund. The Exchange Agent shall invest the
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Payment Fund, as directed by Parent, in (i) direct obligations of the United
States of America, (ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either ▇▇▇▇▇'▇
Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates
of deposit, bank repurchase agreements or bankers' acceptances of commercial
banks with capital exceeding $500 million. Any net earnings with respect to the
Payment Fund shall be the property of and paid over to Parent as and when
requested by Parent.
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(e) Termination of Payment Fund. Any portion of the Payment Fund
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which remains undistributed to the holders of Certificates for 180 days after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Certificates that have not theretofore complied with this Article III shall
thereafter look only to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration.
(f) No Liability. None of Parent, Merger Sub, the Surviving
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Corporation or the Exchange Agent shall be liable to any person in respect of
any payments or distributions payable from the Payment Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to five
(5) years after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as hereinafter
defined)), any amounts payable in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(g) Withholding Rights. Parent and Merger Sub shall be entitled to
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deduct and withhold, or cause to be deducted or withheld, from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares, Options or
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of applicable state, local or foreign
tax law. To the extent that amounts are so deducted and withheld, such deducted
and withheld amounts shall be treated for all purposes of this Agreement as
having been paid to such holders in respect of which such deduction and
withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Company. Company represents
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and warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. Company is a
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corporation duly organized, validly existing and in good standing under the laws
of
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the State of Arizona and has the requisite corporate power and authority to
carry on its business as now being conducted. Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
(as hereinafter defined) on Company. Company has delivered to Parent true,
complete and correct copies of the articles of incorporation and by-laws of
Company, in each case as amended to the date of this Agreement. The Company has
no Subsidiaries.
(b) Authority; Noncontravention. Company has the requisite corporate
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power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Company, subject to the approval of this Agreement by its stockholders as
contemplated by Section 6.2. This Agreement has been duly executed and
delivered by Company and, assuming that this Agreement constitutes a valid and
binding obligation of Parent and Merger Sub, constitutes a valid and binding
obligation of Company, enforceable against Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity. Except as specified in
Section 4.1(b) of the Disclosure Schedule, the execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, (i) conflict with any of the
provisions of the articles of incorporation or by-laws of Company, in each case
as amended to the date of this Agreement, (ii) subject to the governmental
filings and other matters referred to in Section 4.1(c), conflict with, result
in a breach of or default (with or without notice or lapse of time, or both)
under, or give rise to a material obligation, a right of termination,
cancellation or acceleration of any obligation or a loss of a material benefit
under, or require the consent of any person under, any indenture or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which Company is a party or by which Company or any of its assets
is bound or affected, or (iii) subject to the governmental filings and other
matters referred to in Section 4.1(c), contravene any applicable domestic or
foreign law, rule or regulation or any order, writ, judgment, injunction,
decree, determination or award currently in effect, which, in the case of
clauses (ii) and (iii) above could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Company.
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(c) Consents and Approvals. No consent, approval or authorization of,
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or declaration or filing with, or notice to, any domestic or foreign
governmental agency or regulatory authority (a "Governmental Entity") which has
not been received or made is required by or with respect to Company in
connection with the execution and delivery of this Agreement by Company or the
consummation by Company of the transactions contemplated hereby, except for (i)
the filing of the Delaware Certificate of Merger with the Delaware Secretary of
State and the filing of the Arizona Certificate of Merger with the Arizona
Corporation Commissioner, (ii) such other consents, approvals, authorizations,
filings or notices as are specified in Section 4.1(c) of the Disclosure
Schedule, and (iii) any other consents, approvals, authorizations, filings or
notices the failure to make or obtain which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
(d) Capital Structure. The authorized capital stock of Company
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consists solely of: 10,000,000 Common Shares; 3,000,000 Class A Preferred
Shares; 2,000,000 Class B Preferred Shares; and1,000,000 Class C Preferred
Shares. As of the date hereof: (i) 2,090,207 Common Shares are issued and
outstanding; (ii) 1,000,000 Class A Preferred Shares are issued and outstanding;
(iii) 1,800,000 Class B Preferred Shares are issued and outstanding; (iv)
120,000 Class C Preferred Shares are issued and outstanding; (v) 240, 376 Common
Shares are reserved for issuance pursuant to outstanding Options granted under
the Stock Option Plan and 100,000 Common Shares are reserved for issuance in
connection with an option held by the ▇▇▇▇▇ Family Trust and 102,642 Common
Shares are reserved for issuance to Micro Age, pursuant to certain antidilution
provisions of its Convertible Preferred Stock and Warrant Purchase Agreement;
(vi) 1,000,000 Common Shares were reserved for issuance upon conversion of
Series A Preferred Shares; (vii) 1,800,000 Common Shares were reserved for
issuance upon conversion of Series B Preferred Shares; (viii) 120,000 Common
Shares were reserved for issuance upon conversion of Series C Preferred Shares;
and (ix) no Common Shares were held by Company in its treasury. Except as set
forth in the immediately preceding sentence, as of the date hereof, no shares of
capital stock or other equity securities of Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of Company are
and all Common Shares which could be issued pursuant to the exercise of
outstanding Company Options or other options described in clause (v) above will
be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as specified above or in Section 4.1(d) of the
Disclosure Schedule, Company does not have and is not subject to or bound by or,
at or after the Effective Time will
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not have or be subject to or bound by, any outstanding option, warrant, call,
subscription or other right (including any preemptive right), agreement or
commitment which (i) obligates Company to issue, sell or transfer, or
repurchase, redeem or otherwise acquire, any shares of the capital stock of
Company, (ii) restricts the transfer of any shares of capital stock of Company,
or (iii) relates to the voting of any shares of capital stock of Company. No
bonds, debentures, notes or other indebtedness of Company having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of Company may vote are issued or
outstanding.
(e) Financial Statements. The Company has delivered to the Parent and
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Merger Sub the audited financial statements of the Company as of, and for the
years ended December 31, 1996, 1997 and 1998 (together with the notes thereto),
certified by the Company's independent public accountants, and accompanied by
their reports thereon (the "Audited Financial Statements"). The Company also
has delivered to the Parent and Merger Sub the unaudited financial statements of
the Company as of June 30, 1999 and for the six (6) months then ended
(collectively, with the Audited Financial Statements, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
the books and records of the Company in accordance with generally accepted
accounting principles ("GAAP"). The Financial Statements fairly present, in all
material respects, (a) the assets, liabilities and financial condition of the
Company, as at the dates thereof, and (b) the results of operations and cash
flows of the Company for the periods then ended. The statements of income and
retained earnings and cash flows included in the Financial Statements do not
contain any material items of special or nonrecurring income not earned in the
ordinary course of business and consistent with applicable industry standards
and practice.
(f) Absence of Certain Changes or Events; No Undisclosed Material
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Liabilities.
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(i) Except as specified in Section 4.1(f)(i) of the
Disclosure Schedule, since the date of the Audited Financial Statements, Company
has conducted its business only in the ordinary course, and there has not been:
(A) any Material Adverse Change; (B) any declaration, setting aside or payment
of any dividend or other distribution in respect of shares of Company's capital
stock, or any redemption or other acquisition by Company of any shares of its
capital stock; (C) any increase in the rate or terms of compensation payable or
to become payable by Company to its directors, officers or key employees, except
increases occurring in the ordinary course of business consistent with past
practice; (D) any entry into, or
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increase in the rate or terms of, any bonus, insurance, severance, pension or
other employee or retiree benefit plan, payment or arrangement made to, for or
with any such directors, officers or key employees, except increases occurring
in the ordinary course of business consistent with past practices or as required
by applicable law; (E) any entry into any agreement, commitment or transaction
by Company which is material to Company, except for agreements, commitments or
transactions entered into in the ordinary course of business consistent with
past practice; (F) any change by Company in accounting methods, principles or
practices, except as required or permitted by GAAP; (G) any write-off or write-
down of, or any determination to write-off or write-down, any asset of Company
or any portion thereof which write-off, write-down or determination exceeds
$5,000 individually or $25,000 in the aggregate; (H) any announcement or
implementation of any reduction in force, lay-off, early retirement program,
severance program or other program or effort concerning the termination of
employment of employees of Company; or (I) any announcement of or entry into any
agreement, commitment or transaction by Company to do any of the things
described in the preceding clauses (A) through (H) otherwise than as expressly
provided for herein.
(ii) Except as disclosed in the Financial Statements or
specified in Section 4.1(f)(ii) of the Disclosure Schedule and liabilities
incurred in the ordinary course of business consistent with past practice and of
the same type and magnitude as those set forth in the Financial Statements since
the date of the most recent Financial Statements, there are no liabilities of
Company of any kind whatsoever, whether accrued, contingent, absolute, due, to
become due, determined, determinable or otherwise.
(g) Real Property; Other Assets.
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(i) The Company does not own any real property in fee.
(ii) Company has heretofore made available to Parent true,
correct and complete copies of all leases, subleases and other agreements (the
"Real Property Leases") under which Company uses or occupies or has the right to
use or occupy, now or in the future, any real property or facility (the "Leased
Real Property"), including all modifications, amendments and supplements
thereto. Except in each case where the failure could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Company:
(A) Company has a valid and subsisting leasehold interest in each parcel of
Leased Real Property free and clear of all Liens and each Real Property Lease is
in full force and effect, (B) all rent and other sums and charges payable by
Company as tenants thereunder are current in all
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material respects, (C) no termination event or condition or uncured default of a
material nature on the part of Company or, to Company's knowledge, the landlord,
exists under any Real Property Lease, and (D) Company is the sole undisputed
lessee of each Leased Real Property, is in actual possession thereof and is
entitled to quiet enjoyment thereof in accordance with the terms of the
applicable Real Property Lease.
(h) Software.
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(i) Section 4.1(h)(i) of the Disclosure Schedule sets forth
under the caption "Owned Software" a true, correct and complete list of all
computer programs (source code or object code) owned by Company, including
without limitation any computer programs in the development or testing phase
(collectively, the "Owned Software"), and Section 4.1(h)(i) of the Disclosure
Schedule sets forth under the caption "Licensed Software" a true, correct and
complete list of all computer programs (source code or object code) licensed to
Company by another person (other than any off-the-shelf computer program that is
so licensed under a shrink wrap license) (collectively, the "Licensed Software"
and, together with the Owned Software, the "Software").
(ii) Except as specified in Section 4.1(h)(ii) of the
Disclosure Schedule, Company has good, marketable and exclusive title to, and
the valid and enforceable power and unqualified right to sell, license, lease,
transfer, use or otherwise exploit, all versions and releases of the Owned
Software and all copyrights thereof, free and clear of all Liens. Company is in
actual possession of (A) the source code and object code for each computer
program included in the Owned Software, and (B) the object code and, to the
extent required for the effective use of the Software as currently used in
Company's business or as offered or represented to Company's customers or
potential customers, the source code, for each computer program included in the
Licensed Software. Company is in possession of all other documentation
(including without limitation all related engineering specifications, program
flow charts, installation and user manuals) and know-how required for the
effective use of the Software as currently used in Company's business or as
offered or represented to Company's customers or potential customers. The
Software constitutes all of the computer programs necessary to conduct Company's
business as now conducted, and includes all of the computer programs used in the
development, marketing, licensing, sale or support of the products and the
services presently offered by Company. Except as specified in Section 4.1(h)(ii)
of the Disclosure Schedule, no person other than Company has any right or
interest of any kind or nature in or with respect to the Owned Software or any
portion thereof or any rights to sell, license, lease, transfer, use or
otherwise exploit the Owned Software or any portion thereof.
12
(iii) Section 4.1(h)(iii) of the Disclosure Schedule sets forth
a true, correct and complete list, by computer program, of (A) all persons other
than Company that have been provided with the source code or have a right to be
provided with the source code (including any such right that may arise after the
occurrence of any specified event or circumstance, either with or without the
giving of notice or passage of time or both) for any of the Owned Software, and
(B) all source code escrow agreements relating to any of the Owned Software
(setting forth as to any such escrow agreement the source code subject thereto
and the names of the escrow agent and all other persons who are actual or
potential beneficiaries of such escrow agreement), and identifies with
specificity all agreements and arrangements pursuant to which the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby would entitle any third party or parties to
receive possession of the source code for any of the Owned Software or any
related technical documentation. Except as specified in Section 4.1(h)(iii) of
the Disclosure Schedule, no person (other than Company and any person that is a
party to a contract referred to in clause (v) of the first sentence of Section
4.1(k) that restricts such person from disclosing any information concerning
such source code) is in possession of, or has or has had access to, any source
code for any computer program included in the Owned Software.
(iv) There are no defects in any computer program included in
the Software that would adversely affect the functioning thereof in accordance
with any published specifications therefor or which would cause the Owned
Software or, to Company's knowledge, the Licensed Software, to fail to be Year
2000 compliant in all material respects. Without limiting the generality of the
foregoing, all of the Owned Software and, to Company's knowledge, all of the
Licensed Software has the following properties and capabilities: (A) the
capability to correctly recognize and accurately process dates expressed as a
four-digit number (or the binary equivalent or other machine readable iteration
thereof) (collectively, the "Four-Digit Dates"); (B) the capability to
accurately execute calculations using Four-Digit Dates; (C) the functionality
(both on-line and batch), including entry, inquiry, maintenance and update, to
support processing involving Four-Digit Dates; (D) the capability to generate
interfaces and reports that support processing involving Four-Digit Dates; (E)
the capability to generate and successfully transition, without human
intervention, into the Year 2000 using the correct system date and to thereafter
continue processing with Four-Digit Dates; and (F) the capability to provide
correct results in forward and backward data calculations spanning century
boundaries, including the conversion of pre-2000 dates currently stored as two-
digit dates; provided, however, that no representation or warranty is made as to
the effect that defects in computer
13
programs, hardware or systems provided by third parties (or the inability of any
such programs, hardware or systems, other than those contemplated by the
documentation for the Software to be used in conjunction with the Software, to
properly exchange date data with the Software) may, when used in conjunction
with the Software, have on the foregoing capabilities. Except as specified in
Section 4(1)(h)(iv) of the Disclosure Schedule, the Company has made no
representations, warranties or disclosures of any sort regarding the Company's
or any of the Software's Year 2000 compliance. Each computer program included in
the Software is in machine readable form and contains all current revisions.
Section 4.1(h)(iv) of the Disclosure Schedule sets forth a true, correct and
complete list of any current developments or maintenance efforts with respect to
the Owned Software, including without limitation the development of new computer
programs, enhancements or revisions to existing computer programs included in
the Owned Software.
(v) Except as specified in Section 4.1(h)(v) of the
Disclosure Schedule, none of the sale, license, lease, transfer, use,
reproduction, distribution, modification or other exploitation by Company, or
any of its successors or assigns of any version or release of any computer
program included in the Software obligates or will obligate Company or any of
its successors or assigns to pay any royalty, fee or other compensation to any
other person.
(vi) Company does not market and has not marketed, and has not
supported and is not obligated to support, any Licensed Software.
(vii) Except as specified in Section 4.1(h)(vii) of the
Disclosure Schedule, no agreement, license or other arrangement pertaining to
any of the Software (including without limitation any development, distribution,
marketing, user or maintenance agreement, license or arrangement) to which
Company is a party will terminate or become terminable by any party thereto as a
result of the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(i) Intellectual Property.
---------------------
(i) Section 4.1(i)(i) of the Disclosure Schedule sets forth a
true, correct and complete list (including, to the extent applicable,
registration, application or file numbers) of all patents, trademarks, trade
names, service marks, domain names and registered and material unregistered
copyrights used by Company in connection with the conduct of Company's business,
and all registrations of or applications for registration of any of the
foregoing, including any additions thereto or
14
extensions, continuations, renewals or divisions thereof (setting forth the
registration, issue or serial number and a description of the same)
(collectively, together with all trade dress, trade secrets, processes,
formulae, designs, know-how and other intellectual property rights that are so
used, the "Intellectual Property"). Parent has heretofore been furnished with
true, correct and complete copies of each U.S. and foreign registration or
application for U.S. or foreign registration covering any of the Intellectual
Property which is registered with, or in respect of which any application for
registration has been filed with, any U.S. Governmental Entity or foreign
government equivalent entity. All such registrations and applications are valid
and subsisting, in full force and effect, and have not been cancelled, expired
or abandoned. Company is listed in the records of the appropriate U.S.
Governmental Entity or foreign government equivalent entity as the sole owner of
record for each such application and registration.
(ii) The Intellectual Property includes all of the
intellectual property rights owned or licensed by Company that are reasonably
necessary to conduct Company's business as it is now conducted, and includes all
of the intellectual property rights owned or licensed by Company that are used
in the development, marketing, licensing or support of the Software. Except as
specified in Section 4.1(i)(ii) of the Disclosure Schedule, (A) Company has
good, marketable and exclusive title to, and the valid and enforceable power and
unqualified right to use, the Intellectual Property free and clear of all Liens
and (B) no person or entity other than Company has any right or interest of any
kind or nature in or with respect to the Intellectual Property or any portion
thereof or any rights to use, market or exploit the Intellectual Property or any
portion thereof.
(iii) Company takes reasonable measures to protect the
confidentiality of its material trade secrets, know-how or other confidential
information, including requiring employees, independent contractors and
licensees having access thereto to execute written non-disclosure agreements
that adequately protect Company's proprietary interests in and to such trade
secrets, know-how and other confidential information.
(j) No Infringement.
---------------
(i) Except as specified in Section 4.1(j)(i) of the
Disclosure Schedule, neither the existence nor the sale, license, lease,
transfer, use, reproduction, distribution, modification or other exploitation by
Company, or any of its successors or assigns of any Software or Intellectual
Property, as such Software or Intellectual Property, as the case may be, is or
was, or is currently contemplated to be, sold,
15
licensed, leased, transferred, used or otherwise exploited by such persons,
does, did or will (A) infringe, whether directly, by inducement, contributorily,
vicariously or otherwise ("Infringe"), any patent, trademark, copyright or other
right of any other person, (B) constitute a misuse or misappropriation of any
trade secret, know-how, process, proprietary information or other right of any
other person, or (C) entitle any other person to any interest therein, or right
to compensation from Company, or any of its successors or assigns, by reason
thereof. Except as specified in Section 4.1(j)(i) of the Disclosure Schedule,
the Company has not received any complaint, assertion, threat or allegation or
otherwise has notice of any lawsuit, claim, demand, proceeding or investigation
involving either matters of the type contemplated by the immediately preceding
sentence or otherwise challenging the ownership, use, validity or enforceability
of any Intellectual Property, nor is Company aware of any facts or circumstances
that could reasonably be expected to give rise to any such lawsuit, claim,
demand, proceeding or investigation. Except as specified in Section 4.1(j)(i) of
the Disclosure Schedule, there are no restrictions on the ability of Company, or
any of its successors or assigns to sell, license, lease, transfer, use,
reproduce, distribute, modify or otherwise exploit any Software or Intellectual
Property.
(ii) Except as specified in Schedule 4.1(j)(ii) of the
Disclosure Schedule, Company is not aware of any Infringement, misappropriation
or other violation of any Software or Intellectual Property, and no lawsuit,
claim, demand, proceeding or investigation has been brought by Company against
any third party.
(k) Material Contracts. There have been made available to Parent
------------------
and its representatives true, correct and complete copies of all of the
following contracts to which Company is a party or by which it is bound
(collectively, the "Material Contracts"): (i) contracts with any current officer
or director of Company; (ii) contracts pursuant to which Company licenses other
persons to use the Software and pursuant to which other persons license Company
to use the Licensed Software; (iii) contracts (A) for the sale of any of the
assets of Company, other than contracts entered into in the ordinary course of
business or (B) for the grant to any person of any preferential rights to
purchase any of its assets; (iv) contracts which restrict Company from competing
in any line of business or with any person in any geographical area or which
restrict any other person from competing with Company in any line of business or
in any geographical area; (v) contracts which restrict Company from disclosing
any information concerning or obtained from any other person or which restrict
any other person from disclosing any information concerning or obtained from
Company; (vi) indentures, credit agreements, security agreements, mortgages,
guarantees, promissory notes and other contracts relating to the borrowing of
money; and (vii) all other agreements, contracts or instruments entered into
16
outside of the ordinary course of business or which are material to Company.
Except as specified in Section 4.1(k) of the Disclosure Schedule, all of the
Material Contracts are in full force and effect and are the legal, valid and
binding obligation of Company, enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except
as specified in Section 4.1(k) of the Disclosure Schedule, Company is not in
breach or default in any material respect under any Material Contract nor, to
the knowledge of Company, is any other party to any Material Contract in breach
or default thereunder in any material respect.
(l) Litigation, etc. As of the date hereof, except as specified in
---------------
Section 4.1(l) of the Disclosure Schedule, (i) there is no suit, claim, action,
proceeding (at law or in equity) or investigation pending or, to the knowledge
of Company, threatened against Company before any court or other Governmental
Entity, and (ii) the Company is not subject to any outstanding order, writ,
judgement, injunction, decree or arbitration order or award that, in any such
case described in clauses (i) and (ii), has had or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Company.
As of the date hereof, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Company, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by this
Agreement.
(m) Compliance with Applicable Laws. All federal, state, local and
-------------------------------
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for each
of Company to own, lease or operate its properties and assets and to carry on
its business as now conducted have been obtained or made, and there has occurred
no default under any such Permit, except for the lack of Permits and for
defaults under Permits which lack or default could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company.
Except as disclosed in Section 4.1(m) of the Disclosure Schedule, Company are in
compliance with all applicable statutes, laws, ordinances, rules, orders and
regulations of any Governmental Entity.
(n) Environmental Laws. Except as specified in Section 4.1(n) of the
------------------
Disclosure Schedule and as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company: (A)
Company has not violated or is in violation of any Environmental Law; (B) none
of the Leased Real Property (including without limitation soils and surface and
ground waters) are
17
contaminated with any Hazardous Substance in quantities which require
investigation or remediation under Environmental Laws; (C) Company is not liable
for any off-site contamination; (D) Company has no any liability or remediation
obligation under any Environmental Law; (E) no assets of Company are subject to
pending or threatened Liens under any Environmental Law; (F) Company have all
Permits required under any Environmental Law ("Environmental Permits"); and (G)
Company is in compliance with its respective Environmental Permits.
(o) Taxes. Except as specified in Section 4.1(o) of the Disclosure
-----
Schedule:
(i) Company has (A) timely filed all federal, state, local and
foreign Tax Returns (as hereinafter defined), required to be filed by or for it
in respect of any Taxes (as hereinafter defined) and all such Tax Returns are
true, correct and complete, (B) established reserves that are reflected in the
Financial Statements and that as so reflected are adequate for the payment of
all Taxes not yet due and payable with respect to the results of operations of
Company through the date hereof, and (C) timely withheld and paid over to the
proper taxing authorities all Taxes and other amounts required to be so withheld
and paid over. Company has timely paid all Taxes that are required to be paid.
(ii) (A) The Tax Returns of Company either have been examined and
settled with the appropriate Tax authority or closed by virtue of the expiration
of the applicable statute of limitations, (B) all examinations described in
clause (A) have been completed without the assertion of material deficiencies,
and (C) except for alleged deficiencies which have been finally and irrevocably
resolved, Company has not received formal or informal notification that any
deficiency for any Taxes, the amount of which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company,
has been or will be proposed, asserted or assessed against Company by any
federal, state, local or foreign taxing authority or court with respect to any
period.
(iii) Company has not (A) executed or entered into with the IRS
or any other taxing authority any agreement or other document that continues in
force and effect beyond the Effective Time and that extends or has the effect of
extending the period for assessments or collection of any federal, state, local
or foreign Taxes, (B) executed or entered into with the IRS or any other taxing
authority any closing agreement or other similar agreement (nor has Company
received any ruling, technical advice memorandum or similar determination)
affecting the determination of Taxes required to be shown on any Tax Return not
yet filed, or
18
(C) requested any extension of time to be granted to file after the Effective
Time any Tax Return required by applicable law to be filed by it.
(iv) Company has not made an election under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by Company. None of the assets of Company is required to be treated
as being owned by any other person pursuant to the "safe harbor" leasing
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954 as formerly
in effect.
(v) Company (i) is not a party to, is bound by or has any
obligation under any tax sharing agreement or similar agreement or arrangement
or (ii) has no liability for Taxes of any party (other than Company) 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.
(vi) Company has not agreed to make, nor is it required to make, any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise and, to the knowledge of Company, the IRS has not proposed
any such adjustment or change in accounting method.
(vii) Company is not, nor has been, a United States Real Property
Holding Corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(viii) Company has never been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code.
(ix) Company is not a party to any agreement, contract, arrangement
or plan that has resulted, or would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(x) There are no Tax liens upon any assets or properties of
Company except for statutory liens not yet due.
(xi) No audits or other administrative proceedings or court
proceedings are presently pending or threatened with regard to any Taxes or Tax
Return of the Company (other than those being contested in good faith and for
which
19
adequate reserves have been established) and no material issues have been raised
by any Tax authority in connection with any Tax or Tax Return.
For purposes of this Agreement, the term "Taxes" means all taxes,
charges, fees, levies or other assessments, including, without limitation, all
income, gross receipts, excise, property, sales, use, occupation, transfer,
license, ad valorem, gains, profits, gift, estimated, social security,
unemployment, disability, premium, recapture, credit, payroll, withholding,
severance, stamp, capital stock, franchise and other taxes or similar charges of
any kind imposed by any governmental entity, including any interest and
penalties on or additions to or in respect of a failure to comply with any
requirement relating to any Tax Return. For purposes of this Agreement, the
term "Tax Return" means any report, return or other information or document
required to be supplied to a Tax authority or jurisdiction in connection with
Taxes, including, without limitation, combined, unitary or consolidated returns
for any group of entities.
(p) Benefit Plans.
-------------
(i) Section 4.1(p) of the Disclosure Schedule sets forth a
true, correct and complete list of all the employee benefit plans (as that
phrase is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) maintained or contributed to (or to which Company
has any obligation to contribute) for the benefit of any current or former
employee, officer or director of the Company ("Company ERISA Plans") and any
other benefit or compensation plan, program or arrangement maintained or
contributed to (or to which Company has any obligation to contribute) for the
benefit of any current or former employee, officer or director of the Company
(Company ERISA Plans and such other plans being referred to as "Company Plans").
Company has furnished or made available to Parent and its representatives a
true, correct and complete copy of every document pursuant to which each Company
Plan is established or operated (including any summary plan descriptions), a
written description of any Company Plan for which there is no written document,
and the three most recent annual reports, financial statements and actuarial
valuations with respect to each Company Plan.
(ii) Except as specified in Section 4.1(p) of the Disclosure
Schedule:
(A) none of the Company ERISA Plans is a
"multiemployer plan" within the meaning of ERISA;
20
(B) none of the Company Plans promises or provides
retiree health benefits or retiree life insurance benefits to any
person;
(C) none of the Company Plans provides for payment
of a benefit, the increase of a benefit amount, the payment of a
contingent benefit or the acceleration of the payment or vesting of a
benefit by reason of the execution of this Agreement or the
consummation of the transactions contemplated by this Agreement;
(D) Company does not have an obligation to adopt,
and is not considering the adoption of, any new benefit or
compensation plan, program or arrangement or, except as required by
law, the amendment of an existing Company Plan;
(E) each Company ERISA Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that it is so qualified and nothing
has occurred since the date of such letter that could reasonably be
expected to affect the qualified status of such Company ERISA Plan;
(F) each Company Plan has been operated in
accordance with its terms and the requirements of all applicable law,
and no prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any Company
ERISA Plan;
(G) Company has not incurred any direct or indirect
liability under ERISA or the Code in connection with the termination
of, withdrawal from or failure to fund, any Company ERISA Plan or
other retirement plan or arrangement, and no
21
fact or event exists that could reasonably be expected to give rise to
any such liability;
(H) the aggregate accumulated benefit obligations
of each Company ERISA Plan subject to Title IV of ERISA (as of the
date of the most recent actuarial valuation prepared for such Company
ERISA Plan and based on the discount rate and other actuarial
assumptions used in such valuation) do not exceed the fair market
value of the assets of such Company ERISA Plan (as of the date of such
valuation);
(I) Company is not aware of any claims relating to
the Company Plans, other than routine claims for benefits; and
(J) None of the Company Plans provides for benefits
or other participation therein, and Company has received no claims or
demands for participation in or benefits under any Company Plan, by
any individual classified or treated by the Company as an independent
contractor;
provided, however, that the failure of the representations set forth in clauses
(v), (vi), (vii), (ix) and (x) to be true and correct shall not be deemed to be
a breach of any such representation unless such failures could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Company.
(q) Absence of Changes in Benefit Plans. Except as disclosed in
-----------------------------------
Section 4.1(q) of the Disclosure Schedule, since the date of the most recent
Audited Financial Statements, Company has not adopted or agreed to adopt any
collective bargaining agreement or any Company Plan.
(r) Labor Matters.
-------------
(i) Except as specified in Section 4.1(r)(i) of the Disclosure
Schedule, Company is not a party to any employment, labor or collective
bargaining agreement, and there are no employment, labor or collective
bargaining agreements which pertain to employees of Company. Company has
heretofore made available to Parent true, complete and correct copies of the
agreements set forth in
22
Section 4.1(r)(i) of the Disclosure Schedule, together with all amendments,
modifications, supplements or side letters affecting the duties, rights and
obligations of any party thereunder.
(ii) No employees of Company are represented by any labor
organization and, to the knowledge of Company, no labor organization or group of
employees of Company has made a pending demand for recognition or certification.
There are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority and, to the knowledge of Company, there are no
organizing activities involving Company pending with any labor organization or
group of employees of Company.
(iii) Except as specified in Section 4.1(r)(iii) of the
Disclosure Schedule, there are no (A) unfair labor practice charges, grievances
or complaints pending or threatened in writing by or on behalf of any employee
or group of employees of Company, or (B) complaints, charges or claims against
Company pending, or threatened in writing to be brought or filed, with any
Governmental Entity or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment of any
individual by Company.
(s) Brokers. No broker, investment banker, financial advisor or
-------
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Company.
(t) Voting Requirements. The affirmative votes of each of the
-------------------
holders of a majority of the outstanding Shares entitled to vote at the
Stockholders Meeting with respect to the approval of this Agreement, taken as a
whole, and the affirmative votes of the holders of a majority of each Class of
Preferred Stock are the only votes of the holders of any class or series of
Company's capital stock or other securities required in connection with the
consummation by Company of the Merger and the other transactions contemplated
hereby to be consummated by Company. The Company is not subject to any Arizona
"fair price," "business combination," "control share acquisition" or similar
statute which would apply to the transactions contemplated by this Agreement.
(u) Certain Information. The Proxy Statement (as hereinafter
defined) will, at the time it is mailed to the stockholders of Company, at any
time that
23
it is amended or supplemented and at the time of the Stockholders Meeting
referred to in Section 6.2, not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; provided, however, that no representation or
warranty is made by Company with respect to statements made therein based on
information supplied by Parent or Merger Sub specifically for inclusion therein.
Section 4.2 Representations and Warranties of Parent and Merger Sub.
-------------------------------------------------------
Parent and Merger Sub represent and warrant to Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
------------------------------------------
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated.
(b) Authority; Noncontravention. Parent and Merger Sub have the
---------------------------
requisite corporate power and authority to enter into this Agreement. The
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly authorized by the Executive Committee of the Board of Directors
of Parent and the Board of Directors of Merger Sub and have been duly approved
by Parent as sole stockholder of Merger Sub, and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Merger Sub and, assuming this
Agreement constitutes a valid and binding obligation of Company, constitutes a
valid and binding obligation of each of Parent and Merger Sub, enforceable
against each such party in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby and compliance with the
provisions of this Agreement will not (i) conflict with any of the provisions of
the certificate of incorporation or bylaws of Parent or Merger Sub, in each case
as amended to the date of this Agreement, (ii) subject to the governmental
filings and other matters referred to in Section 4.2(c), conflict with, result
in a breach of or default (with or without notice or lapse of time, or both)
under, or give rise to a material obligation, a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar instrument or
undertaking to which Parent or Merger Sub
24
is a party or by which Parent or Merger Sub or any of their respective assets is
bound or affected, or (iii) subject to the governmental filings and other
matters referred to in Section 4.2(c), contravene any law, rule or regulation,
or any order, writ, judgment, injunction, decree, determination or award
currently in effect, which, in the case of clauses (ii) and (iii) above, could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
(c) Consents and Approvals. No consent, approval or authorization of,
----------------------
or declaration or filing with, or notice to, any Governmental Entity which has
not been received or made is required by or with respect to Parent or Merger Sub
in connection with the execution and delivery of this Agreement by Parent or
Merger Sub or the consummation by Parent or Merger Sub, as the case may be, of
any of the transactions contemplated hereby, except for (i) the filing of the
Delaware Certificate of Merger with the Delaware Secretary of State and the
filing of the Arizona Certificate of Merger with the Arizona Corporation
Commissioner, and (iv) any other consents, approvals, authorizations, filings or
notices the failure to make or obtain which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
(d) Financing. Parent and Merger Sub collectively have cash on hand
---------
or financing commitments from financially responsible third parties, or a
combination thereof, in an aggregate amount sufficient to enable Parent and
Merger Sub to (i) pay in full the Merger Consideration and all fees and expenses
payable by Parent and Merger Sub in connection with this Agreement and the
transactions contemplated thereby and (ii) satisfy and discharge such of
Company's existing indebtedness as, pursuant to its terms, will become due and
payable prior to its stated maturity as a result of the consummation of the
transactions contemplated hereby.
ARTICLE V
CONDUCT OF BUSINESS OF COMPANY
Section 5.1 Conduct of Business of Company. Except as expressly provided
------------------------------
for herein, during the period from the date of this Agreement to the Effective
Time, Company shall, act and carry on its business only in the ordinary course
of business consistent with past practice and, to the extent consistent
therewith, use reasonable efforts to preserve intact its current business
organizations, keep available the services of its current key officers and
employees and preserve the goodwill of those engaged in material business
relationships with Company, and to that end,
25
without limiting the generality of the foregoing, Company shall not, without the
prior consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, securities or other property) in respect
of, any of its outstanding capital stock, (B) split, combine or reclassify any
of its outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (C) purchase, redeem or otherwise acquire any
shares of outstanding capital stock or any rights, warrants or options to
acquire any such shares, except, in the case of this clause (C), for the
acquisition of Shares from holders of Options in full or partial payment of the
exercise price payable by such holder upon exercise of Options;
(ii) issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into or exchangeable for, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible or exchangeable securities, other
than upon the exercise of Options outstanding on the date of this Agreement;
(iii) amend its articles of incorporation, by-laws or other
organizational documents;
(iv) directly or indirectly acquire, make any investment in, or make
any capital contributions to, any person other than in the ordinary course of
business consistent with past practice;
(v) directly or indirectly sell, pledge or otherwise dispose of or
encumber any of its properties or assets that are material to its business,
except for sales, pledges or other dispositions or encumbrances in the ordinary
course of business consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, other than indebtedness owing to or
guarantees of indebtedness owing to Company or (B) make any loans or advances to
any other person, other than routine advances to employees consistent with past
practice;
(vii) grant or agree to grant to any officer, employee or consultant
any increase in wages or bonus, severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, or establish any
26
new compensation or benefit plans or arrangements, or amend or agree to amend
any existing Company Plans, except as may be required under existing agreements
or by law;
(viii) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits;
(ix) enter into or amend any employment, consulting, severance or
similar agreement with any individual;
(x) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization or any agreement relating to an Acquisition
Proposal (as hereinafter defined);
(xi) make any tax election or settle or compromise any Tax
liability of Company involving on an individual basis more than $10,000;
(xii) make any change in any method of accounting or accounting
practice or policy (including any method, practice or policy relating to Taxes),
except as required by any changes in generally accepted accounting principles or
otherwise required by law;
(xiii) enter into any agreement, understanding or commitment that
restrains, limits or impedes Company's ability to compete with or conduct any
business or line of business;
(xiv) except as specified in Section 5.1 of the Disclosure
Schedule, plan, announce, implement or effect any reduction in force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of Company;
(xv) accelerate the collection of any account receivable or delay
the payment of any account payable, or otherwise reduce the assets or increase
the liabilities of Company otherwise than in the ordinary course of business
consistent with past practice, in any such case with the purpose or effect of
using the resulting increase in the cash flow of Company to reduce the total
indebtedness of Company for money borrowed; or
27
(xvi) authorize any of, or commit or agree to take any of,
the foregoing actions in respect of which it is restricted by the provisions of
this Section 5.1.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 Preparation of the Proxy Statement. As soon as practicable
----------------------------------
following the date hereof, Company shall prepare a proxy statement (the "Proxy
Statement"), with respect to the transactions contemplated hereby. Company,
Parent and Merger Sub shall cooperate with each other in the preparation of the
Proxy Statement. Company shall use all reasonable efforts to cause the Proxy
Statement to be mailed to the stockholders of Company at the earliest
practicable date.
Section 6.2 Stockholders Meeting. Company shall take all action
--------------------
necessary, in accordance with the ABCA and other applicable law and its articles
of incorporation and by-laws, to convene and hold a special meeting of the
stockholders of Company (the "Stockholders Meeting") as promptly as practicable
after the date hereof for the purpose of considering and voting upon this
Agreement and to solicit proxies pursuant to the Proxy Statement in connection
therewith. Subject to the provisions of Section 6.6(b), the Board of Directors
of Company shall recommend that the holders of Shares vote in favor of the
approval of this Agreement at the Stockholders Meeting and shall cause such
recommendation to be included in the Proxy Statement. At the Stockholders
Meeting, Parent and Merger Sub shall vote any Shares beneficially owned by them
(which may be voted by them pursuant to applicable law) in favor of the approval
of this Agreement.
Section 6.3 Access to Information; Confidentiality. Each of Parent and
--------------------------------------
Company shall afford to the other and its officers, employees, counsel,
financial advisors and other representatives access during the period prior to
the Effective Time to all its properties, books, contracts, commitments, Tax
Returns, personnel and records and, during such period, each of Parent and
Company shall furnish as promptly as practicable to the other such information
concerning its business, properties, financial condition, operations and
personnel as the other may from time to time request. Any such investigation by
Parent or Company shall not affect the representations or warranties contained
in this Agreement. Except as required by law, Parent and Company will hold, and
will cause its directors, officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to
28
hold, any non-public information obtained from the other in confidence to the
extent required by, and in accordance with the provisions of, the letter
agreement, dated January 21, 1999, between Parent and Company with respect to
confidentiality and other matters.
Section 6.4 Reasonable Best Efforts. On the terms and subject to the
-----------------------
conditions set forth in this Agreement, each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and do, or
cause to be done, and assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated hereby, including the satisfaction of the respective conditions set
forth in Article VII.
Section 6.5 Public Announcements. Parent and Merger Sub, on the one hand,
--------------------
and Company, on the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release, filing with the Securities and Exchange Commission or other public
statements with respect to the transactions contemplated hereby, including the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, by court process or by obligations pursuant to any listing agreement with
any national securities exchange.
Section 6.6 No Solicitation; Acquisition Proposals.
--------------------------------------
(a) During the period from and including the date of this
Agreement to and including the Effective Time, Company shall not, and shall not
authorize or permit any of its affiliates, officers, directors, employees,
agents or representatives (including without limitation any investment banker,
financial advisor, attorney or accountant retained by Company), to, directly or
indirectly, initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries, any expression of interest or the making of any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal,
or enter into or maintain or continue discussions or negotiate with any person
in furtherance of such inquiries or to obtain an Acquisition Proposal or agree
to or endorse any Acquisition Proposal; provided, however, that nothing in this
Agreement shall prohibit the Board of Directors of Company, prior to the time at
which this Agreement shall have been approved by Company's stockholders, from
furnishing information to, or entering into, maintaining or continuing
discussions or negotiations with, any person that makes an unsolicited, bona
fide written Acquisition Proposal after the date hereof if, and to the extent
that, the Board of Directors of
29
Company, after consultation with and based upon the advice of independent legal
counsel, determines in good faith that (i) such Acquisition Proposal would be
more favorable to Company's stockholders than the Merger, and (ii) the failure
to take such action would result in a breach by the Board of Directors of
Company of its fiduciary duties to Company's stockholders under applicable law,
and, prior to furnishing any non-public information to such person, Company
receives from such person an executed confidentiality agreement with provisions
no less favorable to Company than the letter agreement relating to the
furnishing of confidential information of Company to Parent referred to in the
last sentence of Section 6.3. Company shall promptly (and, in any event within
24 hours) notify Parent after receipt of any Acquisition Proposal or any request
for information relating to Company for access to the properties, books or
records of Company by any person who has informed Company that such person is
considering making, or has made, an Acquisition Proposal (which notice shall
identify the person making, or considering making, such Acquisition Proposal and
shall set forth the material terms of any Acquisition Proposal received), and
Company shall keep Parent informed in reasonable detail of the terms, status and
other pertinent details of any such Acquisition Proposal.
(b) During the period from and including the date of this
Agreement to and including the Effective Time, neither the Board of Directors of
Company nor any committee thereof shall withdraw or modify, or propose publicly
to withdraw or modify, in a manner adverse to Parent or Merger Sub, the approval
of this Agreement or the transactions contemplated hereby or the recommendation
referred to in the penultimate sentence of Section 6.2; provided, however, that
nothing contained in this Agreement will prohibit the Board of Directors of
Company from withdrawing or modifying the recommendation referred to in the
penultimate sentence of Section 6.2 following the receipt by Company after the
date hereof, under circumstances not involving any breach of the provisions of
Section 6.6(a), of an unsolicited Acquisition Proposal if, and to the extent
that, the Board of Directors of Company, after consultation with and based upon
the advice of independent legal counsel, determines in good faith that (i) the
transactions contemplated by such Acquisition Proposal would be more favorable
to Company's stockholders than the transactions contemplated hereby, and (ii)
the failure to take such action would result in a breach by the Board of
Directors of Company of its fiduciary duties to Company's stockholders under
applicable law.
(c) Nothing in this Section 6.6, and no action taken by the
Board of Directors of the Company pursuant to this Section 6.6, will (i) have
any effect on Company's obligations under the first sentence of Section 6.2,
which obligations shall be absolute and unconditional, (ii) permit Company to
terminate this Agreement
30
except in accordance with the provisions of Section 8.1, (iii) permit Company to
enter into any agreement providing for any transaction contemplated by an
Acquisition Proposal for as long as this Agreement remains in effect, or (iv)
affect in any manner any other obligation of Company under this Agreement.
(d) For purposes of this Agreement, "Acquisition Proposal" means
an inquiry, offer, proposal or other indication of interest regarding any of the
following (other than the transactions contemplated by this Agreement with
Parent or Merger Sub) involving Company: (i) any merger, consolidation, share
exchange, recapitalization, business combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of all or substantially all the assets of Company, in a single transaction or
series of related transactions; (iii) any offer to purchase 20% percent or more
of the outstanding shares of capital stock of Company; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
Section 6.7 Consents, Approvals and Filings. Upon the terms and subject
-------------------------------
to the conditions hereof, each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Merger and the other
transactions contemplated hereby, including without limitation using its
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with Company as are necessary for the consummation of the Merger
and the other transactions contemplated hereby and to fulfill the conditions to
the Merger; provided, however, that in no event shall Parent or any of its
Subsidiaries be required to agree or commit to divest, hold separate, offer for
sale, abandon, limit its operation of or take similar action with respect to any
assets (tangible or intangible) or any business interest of it or any of its
Subsidiaries (including without limitation the Surviving Corporation after
consummation of the Merger) in connection with or as a condition to receiving
the consent or approval of any Governmental Entity. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such action.
Section 6.8 Board Action Relating to Stock Option Plan. As soon as
------------------------------------------
practicable following the date of this Agreement, the Board of Directors of
Company (or, if appropriate, any committee administering the Stock Option Plan)
shall adopt such resolutions and take such actions as may be required to cause
each outstanding
31
Option to be automatically converted, at the Effective Time, into the right to
receive the Option Cash Amount for such Option in accordance with Section 2.2
and shall make such other changes to the Stock Option Plan as it deems
appropriate to give effect to the Merger (subject to the approval of Parent,
which shall not be unreasonably withheld).
Section 6.9 Employee Benefit Matters.
------------------------
(a) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, honor and
provide for payment of all accrued obligations and benefits under all Company
Plans and employment or severance agreements between Company and persons who are
or had been employees of Company at or prior to the Effective Time ("Covered
Employees"), all in accordance with their respective terms.
(b) Notwithstanding anything in this Agreement to the contrary,
from and after the Effective Time, the Surviving Corporation will have sole
discretion over the hiring, promotion, retention, firing and other terms and
conditions of the employment of employees of the Surviving Corporation. Except
as otherwise provided in this Section 6.9, nothing herein shall prevent Parent
or the Surviving Corporation from amending or terminating any Company Plan in
accordance with its terms.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger is subject to the
satisfaction or written waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
by the affirmative vote of the holders of the requisite number of shares of
capital stock of Company in the manner required pursuant to Company's articles
of incorporation and by-laws, the ABCA and other applicable law.
(b) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the
32
Merger shall be in effect; provided, however, that the party invoking this
condition shall have complied with its obligations under Section 6.7.
Section 7.2 Conditions to Obligations of Parent and Merger Sub. The
--------------------------------------------------
obligation of each of Parent and Merger Sub to effect the Merger is further
subject to satisfaction or written waiver on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties and Covenants. The
--------------------------------------------
representations and warranties of Company contained in this Agreement which are
not qualified by "materiality" or "Material Adverse Effect" shall be true and
accurate in all material respects, and the representations and warranties that
are qualified by "materiality" or "Material Adverse Effect" shall be true and
accurate in all respects, in each case when made and as of the Closing Date
(except for those representations and warranties that address matters only as of
a particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period) and
Company shall have performed or complied with any obligation, agreement or
covenant required by the Agreement to be performed or complied with by it prior
to the Closing, and Parent and Merger Sub shall have received a certificate to
such effect dated the Closing Date and executed by a duly authorized officer of
Company.
(b) No Material Adverse Change. Since the date of this Agreement,
--------------------------
Company shall not have experienced any Material Adverse Change.
(c) Certain Litigation. There shall not be pending or threatened
------------------
any suit, action or proceeding seeking to restrain or prohibit the Merger or
seeking to obtain from Parent or Company or any of their respective affiliates
in connection with the Merger any material damages, or seeking any other relief
that, following the Merger, would materially limit or restrict the ability of
Parent and its Subsidiaries to own and conduct both the assets and businesses
owned and conducted by Parent and its Subsidiaries prior to the Merger and the
assets and businesses owned and conducted by Company prior to the Merger.
(d) Consents. All consents, authorizations, orders and approvals
--------
of (or filings or registrations with) any Governmental Entity or any other
person required to be obtained or made prior to the Effective Time in connection
with the execution, delivery and performance of this Agreement shall have been
obtained or made, except for the filing of the certificates of merger pursuant
to Section 1.3 and
33
except where the failure to have obtained or made such consents, authorizations,
orders, approvals, filings or registrations could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Surviving Corporation.
Section 7.3 Conditions to Obligations of Company. The obligation of
------------------------------------
Company to effect the Merger is further subject to satisfaction or written
waiver on or prior to the Closing Date of the following conditions:
(a) Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of each of Parent and Merger Sub contained in this Agreement
which are not qualified by "materiality" or "Material Adverse Effect" shall be
true and accurate in all material respects, and the representations and
warranties that are qualified by "materiality" or "Material Adverse Effect"
shall be true and accurate in all respects, in each case when made and as of the
Closing Date (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period) and Parent and Merger Sub shall have performed or complied with any
obligation, agreement or covenant required by the Agreement to be performed or
complied with by either of them prior to the Closing, and Company shall have
received a certificate to such effect dated the Closing Date and executed by a
duly authorized officer of Parent and Merger Sub.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of Company,
in any one of the following circumstances:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and Company.
(b) By Parent or Company, if the Effective Time shall not have
occurred on or before August 31, 1999, otherwise than as a result of any
material breach of any provision of this Agreement by the party seeking to
effect such termination.
34
(c) By Parent or Company, if any federal or state court of
competent jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling, or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and non-appealable, provided that neither party
may terminate this Agreement pursuant to this Section 8.1(a)(iii) if it has not
complied with its obligations under Section 6.7.
(d) By Parent, if the Stockholders Meeting shall have been held
and this Agreement shall not have been approved by the affirmative vote of the
holders of the requisite number of shares of capital stock of Company.
(e) By Parent, if (A) the Board of Directors of Company or any
committee thereof shall have (1) withdrawn or modified, in a manner adverse to
Parent or Merger Sub, its approval of this Agreement or the transactions
contemplated hereby or the recommendation referred to in the penultimate
sentence of Section 6.2, (2) approved, endorsed or recommended to its
stockholders an Acquisition Proposal, or (3) resolved to do any of the foregoing
or (B) if the Stockholders Meeting shall not have been held by August 15, 1999
as a result of a breach by Company of its obligations under Section 6.2.
(f) By Parent or Company, if (A) the other party shall have failed
to comply in any material respect with any of the material covenants and
agreements contained in this Agreement to be complied with or performed by such
party at or prior to such date of termination, and such failure continues for 20
business days after the actual receipt by such party of a written notice from
the other party setting forth in detail the nature of such failure, or (B) the
representations and warranties of the other party contained in this Agreement,
which representations and warranties shall be deemed for purposes of this
Section 8.1(a)(vi) not to include any qualification or limitation with respect
to materiality (whether by reference to a "Material Adverse Effect" or
otherwise), shall have been untrue in any respect on the date when made (or in
the case of any representations and warranties that are made as of a different
date, as of such different date) and the matters in respect of which such
representations and warranties shall have been untrue, in the aggregate, have
had or could reasonably be expected to have a Material Adverse Effect on such
other party.
Section 8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1(a) hereof, this Agreement
(except for the provisions of Section 4.1(s), the last sentence of Section 6.3,
this
35
Section 8.2 and Article IX) shall forthwith become void and cease to have
any force or effect, without any liability on the part of any party hereto or
any of its affiliates; provided, however, that nothing in this Section 8.2 shall
relieve any party to this Agreement of liability for any breach of this
Agreement.
Section 8.3 Amendment. Subject to any applicable provisions of the DGCL
---------
and the ABCA, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after approval of this Agreement at the Stockholders Meeting, no amendment shall
be made which would reduce the amount or change the type of consideration into
which each Share shall be converted upon consummation of the Merger. This
Agreement may not be modified or amended except by written agreement executed
and delivered by duly authorized officers of each of the respective parties.
Section 8.4 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 Section 8.3, waive compliance with any of the agreements or
conditions of the other parties contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in a written instrument executed and delivered by a duly authorized
officer on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
Section 8.5 Procedure for Termination, Amendment, Extension or Waiver. A
---------------------------------------------------------
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 shall, in order to be effective, require in the case of Parent, Merger Sub
or Company, action by its Board of Directors or the duly authorized designee of
its Board of Directors.
36
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 Fees and Expenses. Whether or not the Merger shall be
-----------------
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby, provided that the expenses incurred by the
Company shall not exceed $75,000.
Section 9.3 Definitions. For purposes of this Agreement:
-----------
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "business day" means any day other than Saturday, Sunday or
any other day on which banks in the City of New York are required or permitted
to close;
(c) "Disclosure Schedule" means the disclosure schedule delivered
by Company to Parent and Merger Sub simultaneously with the execution of this
Agreement;
(d) "Environmental Laws" means any federal, state or local law
relating to: (i) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (iii) otherwise relating to
pollution of the environment or the protection of human health;
(e) "Hazardous Substances" means: (i) those substances defined in
or regulated under the following federal statutes and their state counterparts,
as each
37
may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas and any mixtures thereof; (iv) radon; (v) any
other contaminant; and (vi) any substance with respect to which any Governmental
Entity requires environmental investigation, monitoring, reporting or
remediation;
(f) "knowledge" means the actual knowledge of any executive officer
of Company or Parent, as the case may be, after reasonable inquiry under the
circumstances;
(g) "Liens" means, collectively, all pledges, claims, liens,
charges, mortgages, conditional sale or title retention agreements,
hypothecations, collateral assignments, security interests, easements and other
encumbrances of any kind or nature whatsoever;
(h) "Material Adverse Change" means any one or more changes, events
or occurrences which have had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company;
(i) a "Material Adverse Effect" with respect to any person means a
material adverse effect on (i) the ability of such person to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby or (ii) the condition (financial or otherwise), assets, liabilities
(actual or contingent), results of operations or business of such person and its
Subsidiaries taken as a whole;
(j) a "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(k) "Stockholders" means ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, the
▇▇▇▇▇ Family Trust, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, MicroAge, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇.
(l) a "Subsidiary" of any person means any other person of which
(i) the first mentioned person or any Subsidiary thereof is a general partner,
(ii) voting power to elect a majority of the board of directors or others
performing similar functions with respect to such other person is held by the
first mentioned person
38
and/or by any one or more of its Subsidiaries, or (iii) at least 50% of the
equity interests of such other person is, directly or indirectly, owned or
controlled by such first mentioned person and/or by any one or more of its
Subsidiaries.
Section 9.4 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to Parent or to Merger Sub, to
Sterling Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Company, to
CoreData, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which shall not constitute notice) to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.5 Interpretation. When a reference is made in this Agreement to
--------------
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
Section 9.6 Entire Agreement; Third-Party Beneficiaries. This Agreement
-------------------------------------------
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (except for the letter agreement referenced in
the last sentence of Section 6.3). This Agreement is not intended to confer
upon any person (including without limitation any employees or former employees
of Company), other than the parties hereto, any rights or remedies.
Section 9.7 Disclosure Schedules.
--------------------
(a) On or prior to the date hereof, Company shall have delivered
to Parent and Merger Sub the Disclosure Schedule setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision of this
Agreement or as an exception to one or more representations or warranties
contained in Article IV or to one or more covenants contained in Article VI,
provided, that the mere inclusion of an item on the Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by a
party that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to cause a Material Adverse
Change. Each section of the Disclosure Schedule shall contain (including by
cross-reference) all disclosures required or applicable to such section,
regardless of whether such information is also disclosed on another section of
the Disclosure Schedule.
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(b) From time to time prior to the Closing Date, Company shall
promptly amend, update or supplement the Disclosure Schedule. If the disclosure
in the updated Disclosure Schedule represents a change from the matters
previously disclosed therein which reflects the occurrence or result of a
Material Adverse Change, Parent and Merger Sub shall have the right to terminate
this Agreement by delivering, within five (5) business days after receipt of
such updated or supplemented Disclosure Schedule, written notice of its election
to terminate. Upon a failure to effectively exercise a termination right as
provided in the immediately preceding sentence, then Parent and Merger Sub shall
be deemed to have waived such right to object to such updated or supplemented
Disclosure Schedule, which thereafter shall be deemed to have cured any
misrepresentation or breach of warranty that otherwise might have existed by
reason of any development or change disclosed in such amended, updated or
supplemented Disclosure Schedule.
Section 9.8 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.9 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment without
such prior written consent shall be null and void, except that Parent and/or
Merger Sub may assign this Agreement to any direct or indirect wholly owned
Subsidiary of Parent without the prior consent of Company; provided that Parent
and/or Merger Sub, as the case may be, shall remain liable for all of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.10 Enforcement. Irreparable damage would occur in the event that
-----------
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in any appropriate state court in the State of Arizona or federal court in
Maricopa County in the State of Arizona, this being in addition to any other
remedy to which they are entitled at law or in equity. Each of the parties
hereto (i) shall submit itself to the personal jurisdiction of
41
any appropriate state court in the State of Arizona or federal court in Maricopa
County in the State of Arizona in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) shall not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, and (iii) shall not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
any appropriate state court in State of Arizona or federal court in Maricopa
County in State of Arizona.
Section 9.11 Severability. Whenever possible, each provision or portion
------------
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 9.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
[signature page follows]
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IN WITNESS WHEREOF, Parent, Merger Sub and Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
STERLING SOFTWARE, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Senior Vice President, General Counsel and Secretary
STERLING SOFTWARE (ARIZONA), INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Vice President and Secretary
COREDATA, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇▇▇▇▇▇
President
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