Agreement and Plan of Merger
by and among
ANTEON CORPORATION
BUFFALO ACQUISITION CORPORATION and
ANALYSIS & TECHNOLOGY, INC.
Dated as of March 7, 1999
TABLE OF CONTENTS
ARTICLE I. THE MERGER.......................................................1
SECTION 1.1. The Merger; Closing.....................................1
SECTION 1.2. Effective Time..........................................2
SECTION 1.3. Effect of the Merger....................................2
SECTION 1.4. Certificate of Incorporation and Bylaws.................2
SECTION 1.5. Directors and Officers..................................2
SECTION 1.6. Merger Consideration; Cancellation of Securities........3
SECTION 1.7. Transmittal of Merger Consideration.....................4
SECTION 1.8. Stock Transfer Books....................................5
SECTION 1.9. Dissenters' Rights.......................................6
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................6
SECTION 2.1. Organization and Qualification Subsidiaries.............6
SECTION 2.2. Capitalization..........................................7
SECTION 2.3. Authority Relative to this Agreement....................8
SECTION 2.4. Sec Filings; Financial Statements.......................8
SECTION 2.5. Absence of Certain Changes or Events....................9
SECTION 2.6. No Undisclosed Liabilities..............................10
SECTION 2.7. No Violation............................................10
SECTION 2.8. Absence of Litigation...................................11
SECTION 2.9. Employee Benefit Plans; Employment Agreements...........11
SECTION 2.10. Labor Matters..........................................12
SECTION 2.11. Proxy Statement........................................13
SECTION 2.12. Taxes..................................................13
SECTION 2.13. Environmental Matters..................................14
SECTION 2.14. Brokers................................................16
SECTION 2.15. Intellectual Property..................................16
SECTION 2.16. Compliance with Laws...................................17
SECTION 2.17. Title to Properties....................................17
SECTION 2.18. Contracts and Property.................................18
SECTION 2.19. Governmental Contracts.................................18
SECTION 2.20. Opinion of Financial Advisor...........................19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........19
SECTION 3.1. Organization and Qualification; Subsidiaries............19
SECTION 3.2. Authority Relative to this Agreement....................19
SECTION 3.3. Financing...............................................20
SECTION 3.4. No Violation............................................20
SECTION 3.5. Absence of Litigation...................................20
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SECTION 3.6. Proxy Statement..........................................21
ARTICLE IV. CONDUCT OF BUSINESS PENDING THE MERGER..........................21
SECTION 4.1. Conduct of Business by the Company
Pending the Merger..................................21
SECTION 4.2. No Solicitation..........................................23
ARTICLE V. ADDITIONAL AGREEMENTS............................................25
SECTION 5.1. Proxy Statement..........................................25
SECTION 5.2. Company Shareholders' Meeting............................26
SECTION 5.3. Access to Information....................................26
SECTION 5.4 Consents; Approvals......................................26
SECTION 5.5. Notification of Certain Matters..........................27
SECTION 5.6. Further Assurances.......................................27
SECTION 5.7. Employees, Employee Benefits.............................28
SECTION 5.8. Public Announcements.....................................29
SECTION 5.9. Conveyance Taxes.........................................29
SECTION 5.10. Indemnification, Exculpation and Insurance..............30
SECTION 5.11. Election to Parent's Board of Directors.................31
ARTICLE VI. CONDITIONS TO THE MERGER........................................31
SECTION 6.1. Conditions to Obligation of Each
Party to Effect the Merger..........................31
SECTION 6.2. Additional Conditions to Obligations
of Parent and Merger Sub............................31
SECTION 6.3. Additional Conditions to Obligation of the Company.......33
ARTICLE VII. TERMINATION....................................................33
SECTION 7.1. Termination..............................................33
SECTION 7.2. Effect Of Termination....................................35
SECTION 7.3. Fees and Expenses........................................35
ARTICLE VIII. GENERAL PROVISIONS............................................36
SECTION 8.1. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc................. ........36
SECTION 8.2. Notices.................................................36
SECTION 8.3. Certain Definitions.....................................37
SECTION 8.4. Amendment...............................................38
SECTION 8.5. Waiver..................................................38
SECTION 8.6. Headings................................................39
SECTION 8.7. Severability............................................39
SECTION 8.8. Entire Agreement........................................39
SECTION 8.9. Assignment, Merger Sub..................................39
SECTION 8.10. Parties In Interest....................................39
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SECTION 8.11. Governing Law..........................................39
SECTION 8.12. Counterparts...........................................39
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COMPANY DISCLOSURE LETTER
Section 2.2 Capitalization
Section 2.5 Absence of Certain Changes or Events
Section 2.6 No Undisclosed Liabilities
Section 2.7 No Violation
Section 2.8 Absence of Litigation
Section 2.9(b) Retiree Benefits
Section 2.9(c) ERISA Compliance
Section 2.10 Labor Matters
Section 2.13(a) License, Permits & Approvals
Section 2.13(b) Pending or Threatened Claims
Section 2.13(c) Hazardous Materials
Section 2.13(d) National Priorities List
Section 2.15(a) Company Intellectual Property Rights
Section 2.15(b) Absence of Infringements
Section 4.1(d) Dividends and Other Distributions
Section 4.1(f) Increases in Compensation
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of March 7, 1999 (this
"Agreement"), among Anteon Corporation, a Virginia corporation ("Parent"),
Buffalo Acquisition Corporation, a Connecticut corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Analysis & Technology, Inc., a
Connecticut corporation (the "Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective shareholders for Parent to enter into a strategic business
combination with the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the Merger (the "Merger")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Connecticut Business Corporation Act (the "CBCA") and upon the
terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to the Merger, each outstanding share of common stock of
the Company, no par value per share (the "Company Common Stock" and each share,
a "Share") shall be converted into the right to receive the Merger Consideration
(as defined in Section 1.6(a)), upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. The Merger; Closing.
(a) The Merger. At the Effective Time (as defined in Section 1.2
hereof), and subject to and upon the terms and conditions of this Agreement and
in accordance with the
CBCA, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease upon the filing of a certificate
of merger with the Secretary of the State of the State of Connecticut pursuant
to the CBCA, and the Company shall continue as the surviving corporation being
the successor to all the property, rights, powers, privileges, liabilities and
obligations of both Merger Sub and the Company. The Company as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation" or the "Surviving Company."
(b) The Closing. The closing of the Merger (the "Closing") shall take
place at a time and on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VI, unless another time or date is agreed to in
writing by the parties hereto. The Closing will be held at the offices of ▇▇▇▇,
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 1285 Avenue of the Americas, New York, New
York, unless another place is agreed to in writing by the parties hereto.
SECTION 1.2. Effective Time. Simultaneous with the Closing, the parties
hereto shall cause the Merger to be consummated by filing all necessary
documentation (the "Merger Documents"), together with any required related
certificates, with the Secretary of the State of the State of Connecticut, in
such form as required by, and executed in accordance with the relevant
provisions of the CBCA (the time of such filing, or such later date as is set
forth in the Certificate of Merger, being the "Effective Time").
SECTION 1.3. Effect of the Merger. The Merger shall have the effects set
forth in Section 33-820 of the CBCA.
SECTION 1.4. Certificate of Incorporation and Bylaws. At the Effective Time
the certificate of incorporation and bylaws of the Merger Sub, as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation and bylaws of the Surviving Company (the "certificate of
incorporation" and "bylaws") until thereafter changed or amended as provided
therein or by the CBCA, except that the name of the Surviving Company shall be
changed to "Analysis & Technology, Inc."
SECTION 1.5. Directors and Officers.
(a) Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Company, each to
hold office in accordance with the certificate of incorporation and bylaws,
until their respective successors are duly elected or appointed and qualified.
(b) Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors shall have been duly elected or appointed and shall have
qualified or until their earlier
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death, resignation or removal in accordance with the certificate of
incorporation and bylaws.
SECTION 1.6. Merger Consideration; Cancellation of Securities. At the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holders of any of the Shares:
(a) Merger Consideration. Each Share issued and outstanding
immediately prior to the Effective Time (excluding (i) any Shares to be canceled
pursuant to Section 1.6(b) and (ii) Shares ("Dissenting Shares") that are owned
by shareholders ("Dissenting Shareholders") of the Company who satisfy all of
the requirements to demand payment for such Shares in accordance with Sections
33-855 through 33-872 of the CBCA) shall be converted into the right to receive
Twenty-Six Dollars ($26.00) per share in cash (the "Merger Consideration").
(b) Cancellation of Shares. Each Share owned by the Company, Parent,
Merger Sub or any wholly owned subsidiary of the Company or Parent immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled and retired without
payment of any consideration therefor and cease to exist.
(c) Stock Options. At the Effective Time, each outstanding option to
purchase Company Common Stock (a "Stock Option") granted under the Company's
existing stock option plans (collectively, the "Company Stock Option Plans"),
whether or not then exercisable, shall, by virtue of the Merger, automatically
and without any action on the part of the holder thereof, be converted into the
right to receive cash in an amount (the "Option Consideration") equal to (i) the
excess of the Merger Consideration over the exercise price per share provided in
such Stock Option, multiplied by (ii) the number of shares of Company Common
Stock subject to such Stock Option. The Company agrees to take all actions
necessary, including, without limitation, the giving of appropriate notices to
holders of Stock Options, so that at or before the Effective Time each Stock
Option shall have been terminated or represent the right to receive solely the
Option Consideration.
(d) Common Stock of Merger Sub. Each share of the common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Company. Each certificate
of Merger Sub evidencing ownership of any common stock of Merger Sub shall
evidence, from and after the Effective Time, ownership of such shares of the
Surviving Company.
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SECTION 1.7. Transmittal of Merger Consideration.
(a) Payment Agent. At the Closing, Parent shall deposit, or shall
cause to be deposited, with a payment agent selected by Parent prior to the
Effective Time (the "Payment Agent"), for the benefit of the holders of Shares
and Stock Options, the amount of the product of (i) the Merger Consideration
multiplied by (ii) the number of Shares then issued and outstanding minus the
number of Dissenting Shares plus the amount of cash necessary to redeem the
outstanding Stock Options in accordance with Section 1.6(c) hereof that have not
theretofore been paid and cancelled in accordance with Section 1.6(c) (the
"Payment Fund").
(b) Payment Procedures. Promptly after the Effective Time, Parent and the
Surviving Corporation shall cause the Payment Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time evidenced outstanding Shares (the "Certificates") (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates (or
affidavits of loss in lieu thereof in accordance with Section 1.7(d)) to the
Payment Agent, and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the applicable Merger Consideration.
Upon surrender of a Certificate for cancellation to the Payment Agent together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a check in the amount (after
giving effect to any required tax withholdings) equal to the Merger
Consideration multiplied by the number of Shares theretofore represented by such
Certificate, and the Certificate so surrendered shall forthwith be canceled. No
interest will be paid or accrued on any amount payable upon due surrender of the
Certificates. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, a check for any cash to be
paid upon due surrender of the Certificate may be paid to such transferee if the
Certificate formerly representing such Shares is presented to the Payment Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid. Promptly
after the Effective Time, Parent and the Surviving Company shall cause the
Payment Agent to mail to each holder of a Stock Option outstanding at the
Effective Time (excluding any Stock Option for which payment already has been
made by the Company pursuant to Section 1.6(c) hereof) a check with respect to
all Stock Options held by such holder in an amount determined in accordance with
Section 1.6(c) hereof (after giving effect to any required tax withholdings). No
interest will be paid or accrued on any amount payable pursuant to Section
1.6(c) hereof in respect of Stock Options.
(c) Termination of Payment Fund. Any portion of the Payment Fund that
remains unclaimed by the shareholders of the Company or holders of Stock Options
for 360 days after the Effective Time shall be paid to Parent. Any shareholders
of the
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Company or holders of Stock Options who have not theretofore complied with this
Article I shall thereafter look only to Parent for payment of the applicable
Merger Consideration upon due surrender of their Certificates (or affidavits of
loss in lieu thereof in accordance with Section 1.7(d)), in each case, without
any interest thereon. If any Certificate shall not have been surrendered prior
to two years after the Effective Time (or immediately prior to such earlier date
on which any Merger Consideration or Option Consideration payable to the holder
of such Certificate or Stock Option would otherwise escheat to or become the
property of any governmental authority), any such Merger Consideration or Option
Consideration 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. Notwithstanding the foregoing, none
of Parent, the Surviving Corporation, the Payment Agent or any other Person
shall be liable to any former holder of Shares or Stock Options for any amount
properly delivered to a public official or governmental authority pursuant to
applicable abandoned property, escheat or similar laws.
(d) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact and customary indemnification against loss by the Person
claiming such Certificate to be lost, stolen or destroyed, the Payment Agent
will pay in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration in respect thereof pursuant to Section 1.7(b)
upon receipt by the Payment Agent of such affidavit and indemnification against
loss.
(e) Withholding Rights. Parent, the Surviving Corporation or the
Payment Agent shall be entitled to deduct and withhold from the Merger
Consideration or Option Consideration otherwise payable pursuant to this
Agreement to any holder of Shares or Stock Options such amounts as Parent or the
Payment Agent is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent or the Payment Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares or Stock Options in respect of which such deduction and withholding
was made by Parent or the Payment Agent.
SECTION 1.8. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, the Merger Consideration
delivered upon the surrender of a Certificate in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificate, and there
shall be no further registration of transfers on the records of the Company or
the Surviving Company of Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Company for any reason, they shall be canceled and exchanged as
provided in
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this Article I provided that the Payment Agent shall have received an
appropriate letter of transmittal.
SECTION 1.9. Dissenters' Rights. No Dissenting Shareholder shall be
entitled to receive payment of the applicable Merger Consideration pursuant to
this Article I unless and until such holder shall have failed to perfect or
shall have effectively withdrawn or lost such holder's right to dissent from the
Merger under the CBCA, and any Dissenting Shareholder shall be entitled to only
such rights as are granted by the CBCA with respect to the Shares owned by such
Dissenting Shareholder. If any Person who would otherwise be deemed a Dissenting
Shareholder shall have failed properly to perfect or shall have effectively
withdrawn or lost the right to dissent with respect to any Shares, such shares
shall thereupon be treated as though such shares had been converted into the
right to receive the Merger Consideration pursuant to Section 1.6(a) hereof. The
Company shall give Parent (i) prompt written notice of any dissenters' demands
for payment, attempted withdrawals of such demands and any other instruments
served pursuant to applicable law received by the Company relating to
dissenters' rights and (ii) the opportunity to direct all negotiations with
respect to dissenters under the CBCA. The Company shall not, without the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for payment by Dissenting Shareholders, offer to settle or settle any
such demands or approve any withdrawal of such demands.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
SECTION 2.1. Organization and Qualification; Subsidiaries. Except as set
forth on Section 2.1 of the separate written disclosure letter previously
provided by the Company to Parent (the "Company Disclosure Letter"), the Company
is a corporation and each of its subsidiaries is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation, has the requisite corporate power and authority and is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders ("Approvals") necessary to own,
lease and operate the properties it purports to own, lease or operate and to
carry on its business as it is now being conducted, except where the failure to
have such power, authority or Approval could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect (as
defined below). The Company and each subsidiary is duly qualified or licensed as
a foreign entity to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, leased or operated or the nature of
its activities make such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could
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not, either individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
SECTION 2.2. Capitalization. The authorized capital stock of the Company
consists of 11,250,000 shares of Company Common Stock. As of March 5, 1999, (i)
3,667,469 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) no shares of
Company Common Stock were held by the Company in its treasury, (iii) no shares
of Company Common Stock were held by any subsidiary of the Company, and (iv)
928,976 shares of Company Common Stock were reserved for future issuance
pursuant to outstanding employee stock options granted pursuant to the Company's
Stock Option Plans, its Savings and Investment Plan, its Employee Stock
Ownership Plan and its deferred compensation plans. Except as set forth in
Section 2.2 of the Company Disclosure Letter, no shares of Company Common Stock
have been issued between December 31, 1998 and the date hereof, other than
pursuant to the Company Employee Plans (as defined below). Except as set forth
in Section 2.2 of the Company Disclosure Letter, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued Shares (or other equity interests) of the
Company or of any subsidiary of the Company or obligating the Company or any
subsidiary of the Company to issue or sell any shares of, or other equity
interests in, the Company or any subsidiary of the Company. All shares of
Company Common Stock subject to issuance as aforesaid shall, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, be duly authorized, validly issued, fully paid and nonassessable.
Section 2.2 of the Company Disclosure Letter sets forth the number of issued and
outstanding Stock Options and the exercise prices thereof, as of the date of
this Agreement. Except as set forth in Section 2.2 of the Company Disclosure
Letter, there are no obligations, contingent or otherwise, of the Company or of
any subsidiary of the Company to repurchase, redeem or otherwise acquire any
shares (or other equity interests) of Company Common Stock or the shares (or
other equity interests) of any subsidiary of the Company. Except as set forth in
Section 2.2 of the Company Disclosure Letter, all of the outstanding equity
interest of each subsidiary of the Company are duly authorized, validly issued,
fully paid and nonassessable, and all such equity interests are owned by the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations in voting rights, transfer restrictions, preemptive
rights, charges, or other encumbrances of any nature whatsoever (collectively,
"Liens"), other than Liens for taxes not yet due and payable and Liens being
negotiated in good faith and for which proper reserves exist. Except as set
forth in Section 2.2 of the Company Disclosure Letter, there are no subsidiaries
of the Company and the Company does not own, directly or indirectly, any capital
stock or other equity interest in any corporation, limited liability company,
partnership, joint venture or other entity other than nominal investments in
shares of public companies that are comparable to the Company.
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SECTION 2.3. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and, subject to obtaining any necessary shareholder approval of this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
approval and adoption of this Agreement by at least two-thirds of the voting
power of the outstanding Shares on the record date for determining Shares
entitled to vote at the Company Shareholder's Meeting (as defined below) which
constitutes the only shareholder approval required for consummation of the
Merger). The provisions of Sections 33-841 and 33-845 of the CBCA are not
applicable to this Agreement or the Merger. The board of directors of the
Company has determined that it is advisable and in the best interest of the
Company's shareholders for the Company to enter into a strategic business
combination with Parent upon the terms and subject to the conditions of this
Agreement, and has recommended that the Company's shareholders approve this
Agreement and the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms subject to (i) the effect of applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws affecting creditor's rights generally, (ii) the availability of
equitable remedies, including specific performance and (iii) the enforceability
of legal remedies insofar as such remedies may be subject to overriding
considerations of public policy.
SECTION 2.4. SEC Filings; Financial Statements.
(a) SEC Filings. The Company has filed all forms, reports, exhibits and
other documents required to be filed with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
December 31, 1997 and has made available to Parent (i) its Quarterly Report on
Form 10-Q for the period ended December 31, 1998 and its Annual Report on Form
10-K for the fiscal year ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) all proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held since ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) all other reports or registration statements
(other than reports on Forms 3, 4 or 5 filed on behalf of affiliates of the
Company) filed by the Company with the SEC under the Exchange Act since March
31, 1998 or under the Securities Act since December 31, 1997, and (iv) all
amendments, supplements and exhibits to all such reports and registration
statements filed by the Company with the SEC (collectively, the "Company SEC
Reports"). The Company
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SEC Reports (i) when filed complied with the applicable requirements of the
Securities Act or the Exchange Act and the SEC's rules thereunder, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. No subsidiary
has any class of securities registered pursuant to the Exchange Act.
(b) Financial Statements. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports complies with applicable accounting requirements and the published
rules and regulations of the SEC promulgated under the Securities Act or the
Exchange Act, as the case may be, and was prepared in accordance with Generally
Accepted Accounting Principles applied on a consistent basis throughout the
periods involved ("GAAP") (except as may be indicated in the notes thereto) and
each fairly presents the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
SECTION 2.5. Absence of Certain Changes or Events. Except as set forth in
Section 2.5 of the Company Disclosure Letter or the Company SEC Reports filed
and publicly available prior to the date hereof (the "Filed Company SEC
Reports"), since March 31, 1998, the Company has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any Company Material Adverse Effect; (ii) any change by the Company in its
accounting methods, principles or practices; (iii) any revaluation of any of the
Company's or any subsidiary's assets, including, without limitation, writing off
notes or accounts receivable other than in the ordinary course of business; (iv)
any sale, pledge, disposition of or encumbrance upon a material amount of
property of the Company or of any subsidiary, except in the ordinary course of
business and consistent with past practice; (v) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any class of capital stock, (vi) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (vii) except as reflected
in Section 2.2 of the Company Disclosure Letter, (x) any granting by the Company
or any of its subsidiaries to any executive officer of the Company or
Interactive Media Corporation of any increase in compensation, except for normal
increases in the ordinary course of business consistent with past practice or as
required under employment agreements in effect as of March 31, 1998, (y) any
granting by the Company or any of its subsidiaries to any such executive officer
of any increase in severance or termination pay, except as was required under
any employment, severance or termination agreements in effect as of
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March 31, 1998 or (z) any entry by the Company or any of its subsidiaries into
any employment, severance or termination agreement with any such executive
officer, (viii) any damage, destruction or loss, whether or not covered by
insurance, that has had or could reasonably be expected to have a Company
Material Adverse Effect; (ix) any establishment or increase of benefits under
any plan that would constitute a Company Employee Plan under Section 2.9; or (x)
any material Tax (as defined below) election inconsistent with past practices or
the settlement or compromise of any material Tax liability.
SECTION 2.6. No Undisclosed Liabilities. Except as set forth in Section 2.6
of the Company Disclosure Letter or in the Filed Company SEC Reports, neither
the Company nor any subsidiary of the Company has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, assets (including intangible assets), results of operations or
financial condition of the Company and its subsidiaries taken as a whole, except
liabilities (a) adequately provided for in the Company's balance sheet
(including any related notes thereto) as of December 31, 1998 (the "1998 Company
Balance Sheet"); (b) incurred in the ordinary course of business and not
required under GAAP to be reflected on such balance sheet and not reasonably
expected to have a Company Material Adverse Effect, (c) incurred since December
31, 1998 in the ordinary course of business and consistent with past practice
and not reasonably expected to have a Company Material Adverse Effect or (d) for
monetary obligations incurred, or payments made in connection with the
transactions contemplated by this Agreement to Quarterdeck Investment Partners,
Inc. ("Quarterdeck") not in excess of amounts required by their fee letter,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ("C&L") and KPMG, LLP ("KPMG").
SECTION 2.7. No Violation. Except as set forth in Section 2.7 of the
Company Disclosure Letter, the execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
and the consummation by the Company of the transactions contemplated hereby will
not: (i) conflict with or violate the certificate of incorporation or bylaws of
the Company or any subsidiary of the Company, (ii) conflict with or violate in
any material respect any federal, foreign, state, local or provincial law,
statute, rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to the Company or any subsidiary of the Company or by which any of
their respective properties are bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair the Company's or any such
subsidiary's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material contract, or result in the creation of a Lien on
any of the properties or assets of the Company or any subsidiary of the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any
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subsidiary of the Company is a party or by which the Company or any subsidiary
of the Company or any of their respective properties are bound or affected,
except in the case of clause (iii) for any such breaches, defaults or other
occurrences that could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
SECTION 2.8. Absence of Litigation. Except as set forth in Section 2.8 of
the Company Disclosure Letter or the Filed Company SEC Reports, (i) there are no
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or against any
subsidiary of the Company and (ii) there is no judgment, decree, injunction,
rule or order outstanding against the Company or its subsidiaries other than, in
each case, those that the outcome of which, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect or a
material adverse effect on the Company's ability to consummate the Merger.
SECTION 2.9. Employee Benefit Plans; Employment Agreements.
(a) Benefit Plans. For purposes of this Section 2.9: "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended; "Company ERISA
Affiliate" means any trade or business (whether or not incorporated) which is a
member of a controlled group within the meaning of section 414(b) of the Code,
including the Company or which is under common control with the Company or any
subsidiary of the Company; and "Company Employee Plans" means all bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, employee pension, profit-sharing, savings, retirement,
vacation, life, health, disability, accident insurance and other fringe or
employee benefit plans, programs or arrangements, and any current or former
employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of the Company, as
well as each such plan with respect to which the Company or a Company ERISA
Affiliate could incur liability under applicable law, and excluding agreements
with former employees under which the Company has no remaining monetary
obligations.
(b) Retiree Benefits. Except as set forth in Section 2.9(b) of the
Company Disclosure Letter, none of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person other
than coverage mandated by applicable law or benefits, the full cost of which is
borne by the retiree.
(c) ERISA Compliance. Except as set forth in Section 2.9(c) of the Company
Disclosure Letter or as could not reasonably be expected to have a Company
Material Adverse Effect: (i) the Company and its subsidiaries have complied with
ERISA, the Code and all laws and regulations applicable to the Company Employee
Plans, and, particularly in the case of a Company Employee Plan that is an
employee stock ownership plan, any laws and regulations governing securities,
and each Company Employee Plan has been
-11-
maintained and administered in compliance with its terms; (ii) each Company
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code is the subject of a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and nothing has occurred which could reasonably be expected to impair such
determination; (iii) all payments due from the Company or any Company ERISA
Affiliate to date have been made when due, or if payments have not been made,
they have been properly accrued and recorded on the books of the Company; and
(iv) there are no actions, suits or claims pending (other than routine claims
for benefits) or to the knowledge of the Company threatened with respect to such
Company Employee Plans or against the assets of such Company Employee Plans.
(d) Neither the Company nor any Company ERISA Affiliate maintains or
contributes to, or has within the preceding six years maintained or contributed
to, or has had during such period the obligation to maintain or contribute to,
or may have any liability with respect to, any Company Employee Plan subject to
Title IV of ERISA, or Section 412 of the Code or any "multiple employer plan"
within the meaning of the Code or ERISA.
(e) Except as set forth in Section 2.9(e) of the Company Disclosure
Letter, the consummation of the transactions contemplated by this Agreement is
not reasonably expected to result in any "excess parachute payment" under
section 280G of the Code.
(f) With respect to each Company Employee Plan, the Company has
delivered or made available to Parent or Merger Sub a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate description)
thereof and, to the extent applicable: (A) any related trust agreement or other
funding instrument; (B) the most recent IRS determination letter, if applicable;
(C) any summary plan description and other written communication (or a
description of any oral communications) by the Company to its employees
concerning the benefits provided under the Company Employee Plan; and for the
most recent year (w) the Form 5500 and attached schedules, (x) audited financial
statement, (y) actuarial valuation reports and (z) attorney's response to an
auditor's request for information.
(g) Prior to the Effective Time, the Company will take all steps
necessary to provide that the Company's employee stock ownership plan is not
obligated or permitted to invest in or hold employer securities from and after
the Effective Time.
SECTION 2.10. Labor Matters. Except as set forth in Section 2.10 of the
Company Disclosure Letter, (i) there are no lawsuits or administrative
proceedings pending or, to the knowledge of the Company or any subsidiary of the
Company, threatened, between the Company or any subsidiary of the Company and
any of their respective employees or former employees, other than such pending
or threatened lawsuits or
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administrative proceedings which, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect; and (ii)
neither the Company nor any subsidiary of the Company has any knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company or of any subsidiary of the Company.
SECTION 2.11. Proxy Statement. The information supplied by the Company for
inclusion or incorporation by reference in the proxy statement to be sent to the
shareholders of the Company in connection with the meeting of the shareholders
of the Company to consider approval of this Agreement (the "Company
Shareholders' Meeting" and such proxy statement as amended or supplemented, the
"Proxy Statement") will not, on the date the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to shareholders of the Company,
at the time of the Company Shareholders' Meeting, or at the Effective Time: (i)
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, (ii) omit to state any material fact necessary in order to make
the statements made therein not false or misleading; or (iii) omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Shareholders'
Meeting which has become false or misleading. If at any time prior to the
Effective Time any event relating to the Company or any of its respective
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment or a supplement to the Proxy Statement, the
Company shall promptly inform Parent and Merger Sub. The Proxy Statement shall
comply in all material respects as to form and substance with the requirements
of the Exchange Act and the rules and regulations thereunder.
SECTION 2.12. Taxes.
(a) Tax Definitions. For purposes of this Agreement, "Tax" or "Taxes" shall
mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions
or charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, goods and services, fringe benefits, withholding, sales, use, service,
real or personal property, special assessments, common stock, license, payroll,
withholding, employment, social security, accident compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto;
and "Tax Returns" shall mean returns, reports and information statements with
respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
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(b) Tax Compliance The Company and each subsidiary of the Company have
timely filed all United States federal income Tax Returns and all other material
Tax Returns required to be filed by them. Such returns and reports are correct
and complete in all material respects, or requests for extensions to file such
returns have been granted and have not expired, except to the extent such
failures to file, to be current and complete, or to have such extensions granted
and that remain in effect, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. The Company
and each subsidiary have timely paid or made adequate provision, in accordance
with GAAP, on their books for the payment of all Taxes shown to be due on such
Tax Returns. The charges, accruals and reserves on the books of the Company and
each of its subsidiaries in respect of any liability for Taxes based on or
measured by net income for any years not finally determined or with respect to
which the applicable statute of limitations has not expired are adequate to
satisfy any assessment for such Taxes for any such years. With respect to any
period for which Tax Returns have not yet been filed, or with respect to which
Taxes are not yet due or owing, the Company and each of its subsidiaries have
made sufficient current accruals for such Taxes in accordance with GAAP. All Tax
Returns required to be filed by or with respect to the Company or any of its
subsidiaries after the date hereof and on or before the Effective Time shall be
prepared and timely filed, in a manner consistent with prior years and
applicable Laws.
(c) Tax Deficiencies. No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries for which
adequate reserves are not maintained, except for deficiencies that, individually
or in the aggregate, could not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 2.13. Environmental Matters.
(a) Licenses, Permits and Approvals. Except as set forth in Section
2.13(a) of the Company Disclosure Letter, each of the Company and its
subsidiaries has obtained all licenses, permits, authorizations, approvals and
consents from Governmental or Regulatory Authorities (as defined below) which
are required under any applicable Environmental Law (as defined below) in
respect of its business or operations ("Environmental Permits"), except for such
failures to have Environmental Permits which, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect. Each
of such Environmental Permits is in full force and effect and each of the
Company and its subsidiaries is in compliance with the terms and conditions of
all such Environmental Permits and with any applicable Environmental Law, except
for such failures to be in compliance which, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect.
(b) Pending or Threatened Claims. Except as set forth in Section 2.13(b) of
the Company Disclosure Letter, there is no Environmental Claim (as defined
below) pending
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or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or, to the knowledge of the Company, pending or threatened
against any person or entity whose liability for any Environmental Claim the
Company or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law.
(c) Hazardous Materials. Except as set forth in Section 2.13(c) of the
Company Disclosure Letter, to the knowledge of the Company, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, threatened release or presence of
any Hazardous Material (as defined below) which could form the basis of any
Environmental Claim against the Company or any of its subsidiaries or, to the
knowledge of the Company, against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law, except for such
liabilities which, individually or in the aggregate, could not reasonably be
expected to have a Company Material Adverse Effect.
(d) National Priorities List. Except as set forth in Section 2.13(d)
of the Company Disclosure Letter, to the knowledge of the Company, no site or
facility now or previously owned or operated by the Company or any of its
subsidiaries is listed or proposed for listing on the National Priorities List
promulgated pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations thereunder
("CERCLA").
(e) Environmental Liens. To the Company's knowledge, no Liens have
arisen under or pursuant to any Environmental Law on any site or facility owned
by the Company or any of its subsidiaries, and no action of any Governmental or
Regulatory Authority (as defined below) has been taken or, to the knowledge of
the Company, is in process which could subject any of such properties to such
Liens.
(f) Reports and Studies. To the knowledge of the Company, the Company
has delivered or otherwise made available for inspection to the Parent true,
complete and correct copies and results of any material reports, studies,
analyses, tests or monitoring possessed or initiated by the Company or any of
its subsidiaries and currently in their possession or control pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently or
formerly owned, operated or leased by the Company or any of its subsidiaries, or
regarding the Company's or any of its subsidiaries' compliance with applicable
Environmental Laws.
(g) Environmental Definitions. As used herein: (i) "Governmental or
Regulatory Authority" means any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any foreign
country or
-15-
any domestic or foreign state, county, city or other political subdivision; (ii)
"Environmental Claim" means any written claim, action, cause of action,
investigation, request for information or notice by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) of the
Company or any of its subsidiaries arising out of, based on or resulting from
(A) the presence, or release or threatened release, of any Hazardous Materials
at any location, whether or not owned or operated by the Company or any of its
subsidiaries, or (B) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law; (iii) "Environmental Law" means any
law or order of any Governmental or Regulatory Authority relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of Hazardous Material,
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes into the environment; and (iv) "Hazardous Material" means (A) any
petroleum or petroleum products, flammable materials, radioactive materials,
friable asbestos, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls (PCB's); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(C) any other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
SECTION 2.14. Brokers. No broker, finder or investment banker (other than
Quarterdeck) is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has provided
Parent with a true and correct copy of the fee letter between the Company and
Quarterdeck.
SECTION 2.15. Intellectual Property.
(a) Company Intellectual Property Rights. Except as set forth in
Section 2.15(a) of the Company Disclosure Letter, the Company and its
subsidiaries own or have valid right to exclude others from using the inventions
covered by the Company's patents, to use trademarks, trade names, service marks,
designs, logos, Internet domain names, and any applications therefor,
technology, know-how, trade secrets, computer software programs (including
documentation related thereto) (the "Software") and tangible or intangible
proprietary information or material that are used in or are under current
development for possible use in the business of the Company and its subsidiaries
as currently conducted (the "Company Intellectual Property Rights"), except for
Company
-16-
Intellectual Property Rights where the failure to validly own or validly have a
right to use could not reasonably be expected to have a Company Material Adverse
Effect.
(b) Absence of Infringements. Except as set forth in Section 2.15(b)
of the Company Disclosure Letter, neither the Company nor any subsidiary of the
Company has received any notice of infringement of or violation of, and to the
Company's knowledge, no claim is threatened that challenges the validity,
enforceability, ownership or rights to use, sell or license any Company
Intellectual Property Rights, and there are no infringements or violations by
others with respect to, the Company Intellectual Property Rights, except for
such infringements or violations that individually or in the aggregate, could
not reasonably be expected to have a Company Material Adverse Effect.
(c) Year 2000 Compliance. Except as set forth on Section 2.15(c) of
the Company Disclosure Letter, all Software, hardware, databases, and devices
that run under the control of a microprocessor used by the Company or any of its
subsidiaries (collectively, the "Systems") and each of the products of the
Company or any of its subsidiaries (the "Products") are Year 2000 Compliant,
except for failures to be Year 2000 Compliant as would not have a Company
Material Adverse Effect. As used herein, the term "Year 2000 Compliant" means
that the Systems and Products accurately process date and time data (including,
without limitation, calculating, comparing, and sequencing) from, into, and
between the twentieth and twenty-first centuries, the years 1999 and 2000, and
leap year calculations.
SECTION 2.16. Compliance with Laws. Except as set forth in Section 2.16 of
the Company Disclosure Letter, neither the Company nor any of its subsidiaries
is in conflict with, or in default or violation of, any law, rule, regulation,
order, judgment or decree applicable to the Company or any subsidiary or by
which any property or asset of the Company or any subsidiary is bound or
affected, except for any such conflicts, defaults or violations that would not
in the aggregate have a Company Material Adverse Effect. Except as set forth in
Section 2.16 of the Company Disclosure Letter or in the Filed Company SEC
Reports, the Company and its subsidiaries have all permits, licenses,
authorizations, consents, approvals and franchises from governmental agencies
required to conduct their businesses as now being conducted (the "Company
Permits"), except for such permits, licenses, authorizations, consents,
approvals, and franchises, the absence of which would not in the aggregate have
a Company Material Adverse Effect. Except as set forth in Section 2.16 of the
Company Disclosure Letter or in the Filed Company SEC Reports, the Company and
its subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not in the aggregate have a Company
Material Adverse Effect.
SECTION 2.17. Title to Properties. Each of the Company and its subsidiaries
is the owner of good and marketable fee title to the land described in Section
2.17 of the
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Company Disclosure Letter and to all of the buildings, structures and other
improvements located thereon (collectively, the "Owned Real Property") free and
clear of all Liens, except as covered by a valid title insurance policy, as
described in the Filed Company SEC Reports and the financial statements included
therein, as separately described in Section 2.17 of the Company Disclosure
Letter, liens for current taxes not yet due and Liens or title imperfections
that will not have a Company Material Adverse Effect. The Owned Real Property
constitutes all of the real property owned by the Company and its subsidiaries
on the date hereof.
SECTION 2.18. Contracts and Property. Neither the Company nor any of its
subsidiaries is in default under any contract or agreement, nor does any
condition exist that, with notice or lapse of time or both, would constitute a
default thereunder, except for such defaults as in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company or any of its subsidiaries, no other party to any such
contract or other agreement is in default thereunder, nor does any condition
exist that with notice or lapse of time or both would constitute a default
thereunder, except for such defaults as in the aggregate could not reasonably be
expected to have a Company Material Adverse Effect. Except as separately
identified in Section 2.18 of the Company Disclosure Letter, no approval or
consent of any person is needed in order that any contract or other agreement of
the Company or any of its subsidiaries continue in full force and effect
following the consummation of the transactions contemplated by this Agreement,
except with respect to such contracts or other agreements the default of which
in the aggregate could not reasonably be expected to have a Company Material
Adverse Effect. Neither the Company nor any of its subsidiaries has any
knowledge of a claim, actual, pending or threatened, by any governmental agency,
prime contractor, subcontractor, or supplier with respect to any contract,
purchase order or agreement to which the Company or any of its subsidiaries is a
party, except for such claims that could not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 2.19. Governmental Contracts. Except as set forth in the Filed
Company SEC Reports or Section 2.19 of the Company Disclosure Letter, no audit
or review of any government contract, subcontract or agreement will result in
the disallowance of, or claim for, any amount paid or payable to the Company
under such contract, subcontract or agreement, whether as a result of excess
payments, excess profit recapture or otherwise, except for such disallowances or
claims that individually or in the aggregate could not reasonably be expected to
have a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries has been terminated for default under any government contract,
subcontract or agreement of the Company or any of its subsidiaries since January
1, 1996. There is no event, circumstance or claim which would lead the Company
or any of its subsidiaries to believe that it will receive a termination for
default under any currently effective government contract, subcontract or
agreement of the Company or its subsidiaries. There is no event, circumstance or
claim which would lead
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the Company or any of its subsidiaries to believe that it will receive a
termination for convenience under any currently effective government contract,
subcontract or agreement of the Company or its subsidiaries.
SECTION 2.20. Opinion of Financial Advisor. Quarterdeck has delivered to
the Board of Directors of the Company its oral opinion to the effect that, as of
the date of this Agreement, the Merger Consideration and the Option
Consideration are fair to the Company's stockholders and option holders from a
financial point of view, which opinion was or will promptly after the date of
this Agreement be confirmed in writing and accompanied by an authorization to
include a copy of that opinion in the Proxy Statement. The Company has delivered
or will, promptly after receipt of such written opinion, deliver a signed copy
of that written opinion to the Parent.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as
follows:
SECTION 3.1. Organization and Qualification; Subsidiaries. Parent and
Merger Sub are each a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, lease or
operate and to carry on its business as it is now being conducted, except where
the failure to have such power, authority or Approvals could not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect (as defined below). Parent and Merger Sub are each duly qualified or
licensed as a foreign entity to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated or
the nature of its activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and in good
standing that could not, either individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 3.2. Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and, subject to obtaining any necessary shareholder
approval of this Agreement by Merger Sub, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. 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 and
validly authorized by all necessary corporate action on the part of Parent and
Merger Sub, and no other corporate proceedings on the part of Parent or
-19-
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the approval by Parent as sole
shareholder of Merger Sub). The board of directors of Parent has determined that
it is advisable and in the best interest of Parent's shareholders for Parent to
enter into a strategic business combination with the Company upon the terms and
subject to the conditions of this Agreement. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Parent and Merger Sub enforceable against each in
accordance with its terms subject to (i) the effect of applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other laws
affecting creditor's rights generally; (ii) the availability of equitable
remedies, including specific performance and (iii) the enforceability of legal
remedies insofar as such remedies may be subject to overriding considerations of
public policy..
SECTION 3.3. Financing. The obligations of Parent and Merger Sub to
consummate the Merger and the other transactions contemplated by this Agreement
are not contingent upon the consummation of any financing transaction.
SECTION 3.4. No Violation. The execution and delivery of this Agreement by
Parent and Merger Sub does not, and the performance of this Agreement by Parent
and Merger Sub will not, and the consummation by Parent and Merger Sub of the
transactions contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or bylaws of Parent or Merger Sub, (ii) conflict
with or violate any Laws applicable to Parent or any subsidiary of Parent or by
which any of their respective properties are bound or affected, or (iii) result
in any breach of or constitutes a default (or an event that with notice or lapse
of time or both would become a default) under, or impair Parent's or any such
subsidiary's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material contract, or result in the creation of a Lien on
any of the properties or assets of Parent or any subsidiary of Parent pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any
subsidiary of Parent is a party or by which Parent or any subsidiary of Parent
or any of their respective properties are bound or affected, except in the case
of clause (iii) for any such breaches, defaults or other occurrences that could
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
SECTION 3.5. Absence of Litigation. (i) There are no claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the Parent,
threatened against Parent against any subsidiary of Parent and (ii) there is no
judgment, decree, injunction, rule or order outstanding against Parent or its
subsidiaries, other than, in each case those that the outcome of which,
individually or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect.
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SECTION 3.6. Proxy Statement. The information supplied by Parent to the
Company for inclusion in the Proxy Statement will not, on the date the Proxy
Statement is first mailed to shareholders of the Company (or at the time of any
subsequent amendment or supplement), at the time of the Company Shareholders'
Meeting and at the Effective Time: (i) contain any statement which, at such time
and in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact; (ii) omit to state any material
fact necessary in order to make the statements therein not false or misleading;
or (iii) omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for the
Company Shareholders' Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Parent or any of its
respective affiliates, officers or directors should be discovered by Parent
which should be set forth in a supplement to the Proxy Statement, Parent shall
promptly inform Company.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1. Conduct of Business by the Company Pending the Merger. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, the Company covenants
and agrees that, unless Parent shall otherwise agree, the Company will, and will
cause each of the Company's subsidiaries to, conduct its operations only in the
ordinary course of business consistent with past practice and will use its
reasonable best efforts to, and to cause each of the Company's subsidiaries to
use their reasonable best efforts, preserve intact the business organization of
the Company and each of the Company's subsidiaries, to keep available the
services of the present officers and key employees of the Company and the
Company's subsidiaries, to preserve the goodwill of customers, suppliers and all
other persons having business relationships with the Company and the Company's
subsidiaries and to pay its obligations to its creditors in the ordinary course
of business consistent with its past practices. Without limiting the generality
of the foregoing, the Company also covenants and agrees that during the same
time period, unless Parent shall otherwise agree, neither the Company nor any
subsidiary of the Company shall, directly or indirectly, do any of the following
without the prior consent of Parent:
(a) amend or otherwise change its certificate of incorporation or
bylaws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any capital stock (except for the issuance of Shares issuable
pursuant to Stock Options under the Company
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Stock Option Plans which options are outstanding on the date hereof and the
issuance of Shares of Company Common Stock pursuant to the terms of the
Company's Employee Stock Ownership Plan, the Company's Savings and Investment
Plan and the Company's Deferred Compensation Plans);
(c) sell, pledge, transfer, lease, license, grant, dispose of or
encumber any assets (except for (i) sale of assets in the ordinary course of
business and in a manner consistent with past practice, (ii) disposition of
obsolete or worthless assets and (iii) sales of immaterial assets not in excess
of $100,000 in the aggregate) provided that nothing in this Agreement shall
prevent the Company from making any changes in the timing of the payment of
benefits under the Company's deferred compensation plan;
(d) (i) except as set forth in section 4.1(d) of the Company
Disclosure Letter, declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of the Company Common Stock (or other equity interest), except that a
wholly-owned subsidiary may declare and pay a dividend to the Company, (ii)
split, combine or reclassify the Company Common Stock (or other equity interest)
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares any of its equity securities or
(iii) amend the terms of, repurchase, redeem or otherwise acquire, or permit any
subsidiary (other than as disclosed in Section 2.2 of the Company Disclosure
Letter) to repurchase, redeem or otherwise acquire, any of its securities;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any company, corporation, partnership, association, trust,
unincorporated organization, other entity or group or other business
organization or division thereof; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee (other than guarantees of bank
debt of a subsidiary entered into in the ordinary course of business) or endorse
or otherwise as an accommodation become responsible for, the obligations of any
person, or make any loans or advances, except in the ordinary course of business
consistent with past practice; (iii) enter into or amend any material contract
or agreement other than in the ordinary course of business; (iv) authorize any
new capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $500,000 for the Company and its subsidiaries taken as a
whole, (v) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section 4.1(e); (vi)
authorize any bid and proposal ("B&P") expenditures in excess of $350,000, such
amount representing one-third of the annual budget for B&P, or (vii) authorize
any internal research and development ("IR&D") expenditure in excess of $50,000,
such amount representing one-third of the annual budget for IR&D;
(f) except as set forth in Section 4.1(f) of the Company Disclosure
Letter, increase the compensation payable or to become payable to its officers
or employees,
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except for increases in salary or wages of employees of the Company or of any
subsidiary who are not officers of the Company in accordance with past
practices, or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer (except for
officers who are terminated on an involuntary basis) or other employee of the
Company or of any subsidiary of the Company, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable) except for
changes which may be required under GAAP;
(h) make any material Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign Tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements of the Company or incurred in the ordinary course of
business and consistent with past practice;
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect or prevent the Company
from performing or cause the Company not to perform its covenants under this
Agreement in any material respect; or
(k) waive, release, assign, settle or compromise any material rights,
claims or litigation (including any confidentiality agreement), except as
reasonably may be required to fulfill the Company's fiduciary duties to its
shareholders.
SECTION 4.2. No Solicitation.
(a) Solicitation of Alternative Transactions. The Company shall not,
and shall cause the Company's officers, directors or employees or any investment
banker, financial advisor, representative, advisor, attorney or accountant
retained by or on behalf of it or any subsidiary to not, initiate, solicit or
encourage (including by way of furnishing non-public
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information), or take any other action to facilitate, any inquiries or the
making of any proposal to effect an Alternative Transaction (as defined below),
or enter into discussions, negotiate with or enter into any agreement with any
person or entity regarding an Alternative Transaction, or authorize any of the
officers, directors or employees of the Company or its subsidiaries or any
investment banker, financial advisor, representative, advisor, attorney,
accountant or other representative retained by or on behalf of the Company or
any subsidiary to take any such action; provided, however, that nothing
contained in this subsection (a) shall prohibit the board of directors of the
Company from (i) furnishing information to, or entering into discussions or
negotiations with, any persons or entity in connection with an unsolicited bona
fide proposal by such person or entity relating to an Alternative Transaction if
(A) the board of directors of the Company determines in good faith after
consultation with C&L, that failure to consider the Alternative Transaction
constitutes a breach of its fiduciary duties to the Company's shareholders under
applicable law and the Alternative Transaction is a Superior Proposal (as
defined below) and (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity the Company requires
such person or entity to enter into a confidentiality agreement with the Company
in customary form (but not less favorable to the Company than the
Confidentiality Agreement (as defined below)), (ii) withdrawing or modifying its
recommendation referred to in Section 5.1 following receipt of an unsolicited,
bona fide proposal from a third party regarding an Alternative Transaction which
is a Superior Proposal or entering into an agreement with such third party and
terminating this Agreement pursuant to Section 7.1(f) hereof, if after duly
considering the advice of C&L, the board of directors of the Company determines
in good faith that failure to do so constitutes a breach of its fiduciary duties
to the Company's shareholders under applicable law or (iii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Alternative
Transaction.
(b) Definitions. The following terms shall have the meanings set forth
below:
(i) "Alternative Transaction" means any (A) direct or indirect
acquisition or purchase of Interactive Media Corporation or any
business that constitutes 20% or more of the net revenues, net income
or the assets of the Company and its subsidiaries, taken as a whole,
(B) direct or indirect acquisition or purchase of 20% or more of any
class of equity securities of the Company, (C) tender offer or
exchange offer that if consummated would result in any person or
"group" beneficially owning 20% or more of any class of equity
securities of the Company, or (D) merger, consolidation, business
combination, capitalization, liquidation, dissolution or similar
transaction involving the Company, other than the transactions
contemplated by this Agreement.
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(ii) "Superior Proposal" means a bona fide proposal for an
Alternative Transaction made by a third party on terms and conditions
which the board of directors of the Company determines in its good
faith and reasonable judgment to be more favorable than those
contained in this Agreement.
(c) Termination of Existing Discussions. The Company shall immediately
cease and cause to be terminated any existing discussions or negotiations with
any parties (other than Parent and Merger Sub) conducted heretofore with respect
to any of the foregoing and shall use its best efforts to obtain the return from
all such parties of all copies of any confidential information provided to such
parties by the Company or its representatives that are still in the possession
of such parties.
(d) Communication of Restrictions. The Company shall use its
reasonable best efforts to ensure that the officers, directors and employees of
the Company and of each subsidiary of the Company and any investment banker or
other advisor or representative retained by the Company are aware of the
restrictions described in this Section 4.2.
(e) Agreements With Others. Nothing in this Section 4.2 shall (i)
permit the Company to terminate this Agreement or (ii) permit the Company to
enter into any written agreement with respect to an Alternative Transaction
during the term of this Agreement (it being agreed that during the term of this
Agreement the Company shall not enter into any written agreement with any person
that provides for, or in any way facilitates, an Alternative Transaction, other
than a confidentiality agreement in the form referred to above), it being
understood that Section 7.1(f) sets forth the sole right of the Company to
terminate this Agreement in the circumstances specified in Section 4.2(a)(ii)
above.
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.1. Proxy Statement. As promptly as practicable (but in no event
later than fifteen (15) business days following the date hereof), the Company
shall prepare and file with the SEC the Proxy Statement. Company shall ensure
that, with respect to the preparation and filing of the Proxy Statement, Parent
promptly receives (a) copies of all correspondence with the SEC, (b) copies of
all distributed drafts of the Proxy Statement, and (c) adequate opportunity to
comment substantively upon the aforementioned documents. The Proxy Statement
shall, except under circumstances contemplated by Section 4.2(a)(ii), include
the recommendation of the board of directors of the Company in favor of the
approval of this Agreement.
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SECTION 5.2. Company Shareholders' Meeting. The Company shall call and hold
the Company Shareholders' Meeting as promptly as practicable for the purpose of
voting upon the approval of this Agreement, and the Company shall use its
reasonable best efforts to hold the Company Shareholders' Meeting as soon as
practicable, subject to applicable law. The Company shall use its best efforts
to solicit from its shareholders proxies in favor of the approval of this
Agreement, and shall take all other action necessary or advisable to secure the
vote or consent of shareholders required by the CBCA and the certificate of
incorporation and bylaws of the Company to obtain such approval, except under
circumstances contemplated by Section 4.2(a)(ii).
SECTION 5.3. Access to Information; Confidentiality. Upon reasonable notice
and subject to applicable laws and to restrictions contained in confidentiality
agreements to which such party is subject, the Company shall (and shall cause
its subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of Parent and its financing sources, reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records, shall during such period furnish promptly to
such persons all information concerning its business, properties and personnel
as Parent may reasonably request, and shall make available to such persons the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the Company's properties and personnel as
Parent may reasonably request. Parent and its officers, employees, accountants
and other representatives shall keep such information confidential in accordance
with the terms of the letter agreement, entered into on November 16, 1998 (the
"Confidentiality Agreement") between Parent and the Company. The Company shall
file all reports required to be filed by it with the SEC between the date of
this Agreement and the Effective Time and shall deliver to Parent copies of such
reports promptly after the same are filed.
SECTION 5.4. Consents; Approvals. The Company and Parent shall each use
their reasonable efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all governmental and
regulatory rulings and approvals), and the Company and Parent shall make all
filings (including, without limitation, all filings with governmental or
regulatory agencies) required in connection with the authorization, execution
and delivery of this Agreement by the Company and Parent and the consummation by
them of the transactions contemplated hereby. The Company and Parent shall
furnish all information required to be included in the Proxy Statement, or for
any application or other filing to be made pursuant to the rules and regulations
of any governmental body in connection with the transactions contemplated by
this Agreement. Except where prohibited by applicable statutes and regulations,
and subject to the Confidentiality Agreement, each party shall promptly provide
the other (or its counsel) with copies of all filings made by such party with
any state or federal government entity in connection with this Agreement or the
transactions contemplated hereby.
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SECTION 5.5. Notification of Certain Matters.
(a) Notification. The Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which could
reasonably be expected to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate and (ii) any failure of the Company, Parent
or Merger Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice and further provided that failure to give such
notice shall not be treated as a breach of covenant for the purposes of Section
6.2(b) or 6.3(b) unless the failure to give such notice results in material
prejudice to the other party.
(b) Notice of Objection. The party to which notice is given in
accordance with this Section 5.5 that objects to the information contained in
such notice, together with any prior notice under this Section 5.5 (without
giving effect to any previous waiver or deemed waiver of the matters in such
prior notice or notices) as a material breach of this Agreement must, within
fourteen (14) calendar days of receipt of such notice, provide written notice of
a material breach to the other party. If the party to which a notice is
delivered in accordance with this Section 5.5 does not provide written notice as
provided to the other party within such 14-day period, any breach of a
representation or warranty which could be caused by the information contained in
such notice or any failure of an obligation of the party delivering such notice
which would result from such information shall be deemed waived by the party
receiving such notice.
SECTION 5.6. Further Assurances.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The Company agrees
to use all reasonable efforts to effect a filing pursuant to the Connecticut
Transfer Act (C.G.S. ss. 22a-134 et seq.) with respect to the New London,
Connecticut operations of the Company as described in Section 2.13 of the
Disclosure Letter. The foregoing covenant shall not include any obligation by
Parent to agree to divest, abandon, license or take similar action with respect
to any assets (tangible or intangible) of Parent or the Company which, in the
reasonable judgment of Parent, would materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement.
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(b) If, following the Effective Time, the Surviving Corporation shall
determine or be advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation the right, title or
interest in, to or under any of the rights, properties or assets of the Company
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of the Company or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 5.7. Employees, Employee Benefits.
(a) Affected Employees. Individuals who are employed by the Company
and its subsidiaries as of the Effective Time shall remain employees of the
Surviving Company and its subsidiaries following the Effective Time (each such
employee, an "Affected Employee"); provided however that this Section 5.7 shall
not be construed to limit the ability of the applicable employer to terminate
the employment of any Affected Employee at any time.
(b) Past Service Credit. Parent will, or will cause the Surviving
Company to, give individuals who are employed by the Company and its
subsidiaries as of the Effective Time full credit for purposes of eligibility,
vesting, benefit accrual (excluding, however, benefit accrual under any defined
benefit pension plans) and determination of the level of benefits under any
employee benefit plans or arrangements maintained by Parent or any subsidiary of
Parent for such Affected Employees' service with the Company or any subsidiary
of the Company to the same extent recognized by the Company immediately prior to
the Effective Time.
(c) Limitations and Deductibles. Parent will, or will cause the
Surviving Company to, (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare benefit
plans that such employees may be eligible to participate in after the Effective
Time, other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Effective
Time under any welfare plan maintained for the Affected Employees immediately
prior to the Effective Time, and (ii) provide each Affected Employee with credit
for any co-payments and deductibles paid prior to the Effective Time in
satisfying
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any applicable deductible or out-of-pocket requirements under any welfare plans
that such employees are eligible to participate in after the Effective Time.
(d) Post Closing Coverage and Benefits. For a period of one year
immediately following the Effective Time, the coverage and benefits provided to
the Affected Employees who remain employed with the Surviving Company, Parent or
any subsidiary of Parent pursuant to employee benefit plans or arrangements
maintained by Parent, the Company, or any subsidiary of Parent shall be, in the
aggregate, no less favorable than those provided to the employees of Parent.
(e) Executive Agreements. As of the Effective Time, Parent shall
assume and honor and shall cause the Surviving Company to honor in accordance
with their terms all employment, severance, change of control, and other
compensation agreements and arrangements existing prior to the execution of this
Agreement which are between the Company or any subsidiary of the Company and any
director, officer or employee thereof (each an "Executive Agreement") except as
otherwise expressly agreed between Parent and such person. Parent and the
Company hereby agree that the approval of the Merger by the Company's
shareholders shall constitute a "Change in Control" for purposes of any
Executive Agreement and all other Company Employee Plans, pursuant to the terms
of such plan. Parent's obligations under this Section 5.7(e) are intended to be
for the benefit of, and shall be enforceable by, any Affected Employee to which
such obligations relate.
(f) Severance Pay. Parent shall, or shall cause the Surviving Company
to, pay severance benefits to each of the Affected Employees (other than those
who are parties to the Executive Agreements referred to in Section 5.7(e)) whose
employment is terminated by the Company within ninety (90) days following the
Effective Date equal to two weeks of the Affected Employee's base earnings on
the date the Affected Employee's employment is terminated for each year of
service with the Company or an affiliate, up to a maximum of six months of base
earnings.
SECTION 5.8. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the NASDAQ
Stock Market, Inc. if it has used all reasonable efforts to consult with the
other party.
SECTION 5.9. Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added,
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stock transfer and stamp taxes, any transfer, recording, registration and other
fees, and any similar taxes which become payable by, and are imposed on, the
Company in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
SECTION 5.10. Indemnification, Exculpation and Insurance.
(a) Indemnification. Parent shall cause the Surviving Corporation to
honor the Company's obligations under the Company's certificate of
incorporation, bylaws or any indemnification agreement of the Company in effect
as of the date hereof to indemnify and hold harmless from liabilities for acts
or omissions occurring at or prior to the Effective Time each present and former
director, officer or employee of the Company or any of its subsidiaries to the
fullest extent permitted under applicable law and the Company's certificate of
incorporation and bylaws, including against any costs or expenses (including
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative. Parent shall also advance expenses, as incurred, to the fullest
extent permitted under applicable law and any such applicable indemnification
agreement, provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification. No request for indemnification has
been received by the Company from any person who is party to an indemnification
agreement with the Company and the Company does not have knowledge of any basis
for such a request.
(b) Successors and Assigns. In the event that Parent or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of Parent assume the
obligations set forth in this Section 5.10.
(c) Directors and Officers Liability Insurance. For six years after
the Effective Time, Parent shall maintain or cause to be maintained in effect
the Company's current directors' and officers' liability insurance covering acts
or omissions occurring prior to the Effective Time with respect to those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy on terms with respect to such coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided,
however, that Parent may substitute therefor policies of Parent or its
subsidiaries containing terms with respect to coverage and amount no less
favorable to such directors or officers.
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(d) Rights of Indemnified Parties. The provisions of this Section
5.10: (i) are intended to be for the benefit of, and will be enforceable by,
each indemnified party, his or her heirs and his or her representatives and (ii)
are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
SECTION 5.11. Election to Surviving Company's Board of Directors. Parent
agrees to elect the Company's Chief Executive Officer, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and the
Company's Executive Vice President, Chief Financial and Administrative Officer,
▇▇▇▇▇ ▇. ▇▇▇▇, to the Surviving Company's board of directors at the Effective
Time of the Merger and to have each of such persons continue to be elected and
serve as directors for so long as he continues to be employed by the Surviving
Company.
ARTICLE VI.
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect and no litigation by any
governmental entity seeking any of the foregoing shall have been commenced.
There shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal.
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the consummation of the Merger under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") shall have expired or been
terminated.
(c) Shareholder Approval. This Agreement shall have been approved by
the requisite vote of the shareholders of the Company.
SECTION 6.2. Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true and correct on and as of
the Effective
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Time, except (i) for the impact of the expenses incurred in connection with this
Agreement, (ii) those representations and warranties which address matters only
as of a particular date (which shall remain true and correct as of such date);
and (iii) that those representations and warranties contained in this Agreement
that are not qualified by materiality or a Company Material Adverse Effect
requirement shall be true and correct in all material respects, and that those
representations and warranties that are qualified by materiality or a Company
Material Adverse Effect requirement (or similar concepts) shall be true and
correct, in each case, at the Effective Time, with the same force and effect as
if made on and as of the Effective Time, and Parent and Merger Sub shall have
received a certificate to such effect signed by the President and the Chief
Financial Officer of the Company.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed by the President and the Chief Financial Officer of the
Company.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made ("Material Consents"), by the Company for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company, except
where the failure to receive such Material Consents would not have a Company
Material Adverse Effect.
(d) Material Adverse Effect. Since the date of this Agreement, there shall
not have been a Company Material Adverse Effect;
(e) Government Actions. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any federal or state governmental entity which, in
connection with the grant of a consent or the lapse of a waiting period which is
necessary for the consummation of the Merger ("Requisite Regulatory Approval"),
imposes, in the reasonable judgment of Parent, any condition or restriction upon
the Surviving Company or its subsidiaries (or, in the case of any disposition of
assets required in connection with such Requisite Regulatory Approval, upon
Parent or its subsidiaries), including, without limitation, requirements
relating to the disposition of assets, which in any such case would materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement.
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SECTION 6.3. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and correct
on and as of the Effective Time, except (i) for the impact of the expenses
incurred in connection with this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date); and (iii) that those representations
and warranties contained in this Agreement that are not qualified by materiality
or a Parent Material Adverse Effect requirement shall be true and correct in all
material respects, and that those representations and warranties that are
qualified by materiality or a Parent Material Adverse Effect requirement (or
similar concepts) shall be true and correct, in each case, at the Effective
Time, with the same force and effect as if made on and as of the Effective Time,
and the Company shall have received a certificate to such effect signed by the
President and the Chief Financial Officer of Parent.
(b Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and the Company shall have received a certificate to such
effect signed by the President and the Chief Financial Officer of Parent.
(c) Consents Obtained. All Material Consents required to be obtained
or made by Parent and Merger Sub for the authorization, execution and delivery
of this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by Parent and Merger Sub, except where
the failure to receive such Material Consents would not have a Parent Material
Adverse Effect.
(d) Material Adverse Effect. Since the date of this Agreement, there shall
not have been a Parent Material Adverse Effect.
ARTICLE VII.
TERMINATION
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval hereof by the shareholders
of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
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(b) by either Parent or the Company if the Merger shall not have been
consummated by June 30, 1999 (provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger;
(d) by Parent or the Company if, at the Company Shareholders' Meeting
(including any adjournment or postponement thereof), the requisite vote of the
shareholders of the Company shall not have been obtained;
(e) by Parent, if (i) the board of directors of the Company shall
withdraw, modify or change its recommendation of this Agreement or the Merger in
a manner adverse to Parent or shall have resolved to do any of the foregoing;
(ii) the board of directors of the Company shall have entered into any agreement
respecting any Alternative Transaction other than a Confidentiality Agreement
permitted by Section 4.2(a)(i)(B) hereof, recommended to the shareholders of the
Company an Alternative Transaction or shall not have rejected any proposal
respecting an Alternative Transaction within 10 business days of the making
thereof; (iii) a tender offer or exchange offer for 20% or more of the
outstanding shares of Company Common Stock is commenced (other than by Parent or
an affiliate of Parent), and the board of directors of the Company fails within
10 business days of the commencement thereof to reject such offer or recommends
that the shareholders of the Company not tender their shares in such tender or
exchange offer; or (iv) any person or group other than Parent or its affiliates
acquires beneficial ownership of at least one-third of the outstanding shares of
Company common stock.
(f) by the Company, if it shall exercise the right specified in clause
(ii) of Section 4.2(a) but only if it pays the Termination Fee and expenses
contemplated by Section 7.3; or
(g) by Parent or the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or Parent,
respectively, set forth in this Agreement such that the conditions set forth in
Section 6.2(a) or 6.2(b), or Section 6.3(a) or 6.3(b), would not be satisfied (a
"Terminating Breach"), provided, that if such Terminating Breach is curable
within 30 days of such breach by Parent or the Company, as the case may be,
through the exercise of its reasonable best efforts and for so long as Parent or
the Company, as the case may be, continues during such 30-day period to exercise
such
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reasonable best efforts, neither the Company nor Parent, respectively, may
terminate this Agreement under this Section 7.1(g).
SECTION 7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or shareholders except (i) as set forth in
Section 7.3 hereof, and (ii) nothing herein shall relieve any party from
liability for any breach hereof.
SECTION 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, (i) all fees and expenses
incurred by the parties in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, if the
Merger is not consummated or (ii) if the Merger is consummated, then the
Surviving Company shall pay all such fees and expenses;
(b) If: (1) the Company terminates this Agreement pursuant to Section
7.1(f); or (2) the Parent terminates this Agreement pursuant to Section
7.1(e)(i), (ii) or (iii); then the Company shall pay to the Parent, within one
business day following such termination, a termination fee, in cash, of $5
million; provided, however, that the Company in no event shall be obligated to
pay more than one such fee and the amount of fees paid under this Section 7.3(b)
and the amount of expense reimbursement paid under Section 7.3(c) shall not
exceed $6 million, in the aggregate.
(c) If the Parent or the Company terminates this Agreement pursuant to
Section 7.1(d) and within one year of such termination the Company shall have
consummated an Alternative Transaction, or shall have entered into a definitive
purchase agreement respecting an Alternative Transaction which the Company shall
have consummated within 18 months of such termination, pursuant to which the
holders of the Common Stock have received consideration (including the value of
any retained equity) equal to or greater than the Merger Consideration, then the
Company shall pay to the Parent, within one business day following such
consummation a fee, in cash, of $5 million, provided, however, that the Company
in no event shall be obligated to pay more than one such fee and the amount of
fees paid under this Section 7.3(c) and the amount of expense reimbursement paid
under Section 7.3(d) shall not exceed $6 million, in the aggregate.
(d) Upon the termination of this Agreement under circumstances in which the
Company shall be obligated to pay a fee pursuant to Section 7.3(b) or 7.3(c),
then the Company shall reimburse the Parent (not later than one business day
after submission of statements therefor) for all actual documented out-of-pocket
expenses incurred by or on behalf of it or its affiliates in connection with the
Merger and the consummation of all
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transactions contemplated by this Agreement (including without limitation, fees
and disbursements payable to financing sources, investment bankers, counsel to
the Parent, or Merger Sub or any of the foregoing, and accountants)
("expenses"). In all cases, the total amount of fees paid under Section 7.3(b),
7.3(c) and reimbursement of expenses under this Section 7.3(d) shall not exceed
$6 million.
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.1. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.
(a) Survival. Except as otherwise provided in this Section 8.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations and warranties in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.1, as the case may be.
(b) Company Disclosure Letter. Any disclosure made with reference to one or
more sections of the Company Disclosure Letter shall be deemed disclosed with
respect to each other section therein as to which such disclosure is relevant
provided that such relevance is reasonably apparent.
SECTION 8.2. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or delivered
by a nationally recognized overnight delivery service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address which shall be effective upon receipt):
(a) If to Parent or Merger Sub:
Anteon Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Vice President and General Counsel
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With copies to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to the Company:
Analysis & Technology, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice President
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
CityPlace I - 36th Floor
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
SECTION 8.3. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) "business day" means any day other than a U.S. federal holiday;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "knowledge" or "to the knowledge" when used with respect to Parent or
of the Parent and its subsidiaries means the actual knowledge of an executive
officer of Parent; when used with respect to the Company or the Company and its
subsidiaries means
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the actual knowledge of an executive officer of the Company; in either case,
assuming such executive officer made reasonable inquiry pertaining to the
relevant subject matter;
(e) "Company Material Adverse Effect" means any change or effect that,
individually or in the aggregate, is or could be reasonably expected to be
materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and its
subsidiaries;
(f) "Parent Material Adverse Effect" means any change or effect that,
individually or in the aggregate, is or could reasonably be expected to have a
material adverse effect on the ability of Parent or Merger Sub to consummate the
Merger.;
(g) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(h) "subsidiary" or "subsidiaries" of the Company, the Surviving Company,
Parent or any other person means any corporation, partnership, joint venture or
other legal entity of which the Company, the Surviving Company, Parent or such
other person, as the case may be, (either alone or through or together with any
other subsidiary) owns, directly or indirectly, such amount of the stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity, that the Company, the Surviving Company,
Parent or such other person has the power to elect a majority of the directors
or members of the governing body of such corporation or other legal entity.
SECTION 8.4. Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of
this Agreement by the shareholders of the Company, no amendment may be made
which by law requires further approval by such shareholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.5. Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
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SECTION 8.6. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.7. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 8.8. Entire Agreement. This Agreement and the Company Disclosure
Letter together constitute the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
SECTION 8.9. Assignment, Merger Sub. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
SECTION 8.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except as otherwise
expressly provided herein, nothing contained in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 8.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Connecticut
applicable to contracts executed and fully performed within the State of
Connecticut, without regard to the conflicts of laws provisions thereof.
SECTION 8.12. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ANTEON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
BUFFALO ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
ANALYSIS & TECHNOLOGY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
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