EXHIBIT 2.1
Execution Copy
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE REGISTRY, INC.
GATHERER ACQUISITION CORP.,
THE HUNTER GROUP, INC.
AND
STOCKHOLDER
Dated as of November 15, 1997
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TABLE OF CONTENTS
ARTICLE I THE MERGER......................................................................... 2
SECTION 1.1 The Merger.................................................................... 2
SECTION 1.2 Effective Time................................................................ 2
SECTION 1.3 Effect of the Merger.......................................................... 2
SECTION 1.4 Certificate of Incorporation; By-Laws......................................... 2
SECTION 1.5 Directors and Officers........................................................ 3
SECTION 1.6 Effect on Capital Stock....................................................... 3
SECTION 1.7 Exchange of Certificates...................................................... 5
SECTION 1.8 Stock Transfer Books.......................................................... 7
SECTION 1.9 No Further Ownership Rights in Company Common Stock........................... 7
SECTION 1.10 Lost, Stolen or Destroyed Certificates........................................ 7
SECTION 1.11 Tax and Accounting Consequences............................................... 7
SECTION 1.12 Taking of Necessary Action; Further Action.................................... 7
SECTION 1.13 Material Adverse Effect....................................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................... 8
SECTION 2.1 Organization and Qualification; Subsidiaries.................................. 8
SECTION 2.2 Certificate of Incorporation and By-Laws...................................... 9
SECTION 2.3 Capitalization................................................................ 9
SECTION 2.4 Authority Relative to this Agreement.......................................... 10
SECTION 2.5 No Conflict; Required Filings and Consents.................................... 10
SECTION 2.6 Compliance.................................................................... 11
SECTION 2.7 SEC Filings; Financial Statements............................................. 11
SECTION 2.8 Absence of Certain Changes or Events.......................................... 12
SECTION 2.9 No Undisclosed Liabilities.................................................... 12
SECTION 2.10 Absence of Litigation......................................................... 12
SECTION 2.11 Employee Benefit Plans, Employment Agreements................................. 13
SECTION 2.12 Labor Matters................................................................. 14
SECTION 2.13 Title to Property............................................................. 15
SECTION 2.14 Taxes......................................................................... 15
SECTION 2.15 Environmental Matters......................................................... 16
SECTION 2.16 Intellectual Property......................................................... 17
SECTION 2.17 Immigration Compliance........................................................ 17
SECTION 2.18 Interested Party Transactions................................................. 18
SECTION 2.19 Insurance..................................................................... 18
SECTION 2.20 Pooling Matters............................................................... 18
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SECTION 2.21 Brokers...................................................................... 18
SECTION 2.22 Sections 3-601 et seq. and 3-701 of the MGCL Not
Applicable................................................................. 19
SECTION 2.23 Change in Control Payments................................................... 19
SECTION 2.24 Expenses..................................................................... 19
SECTION 2.25 Full Disclosure.............................................................. 19
SECTION 2.26 No Existing Discussions...................................................... 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB....................................................................... 19
SECTION 3.1 Organization and Qualification; Subsidiaries.................................. 19
SECTION 3.2 Charter and By-Laws........................................................... 20
SECTION 3.3 Capitalization................................................................ 20
SECTION 3.4 Authority Relative to this Agreement.......................................... 21
SECTION 3.5 No Conflict, Required Filings and Consents.................................... 21
SECTION 3.6 SEC Filings; Financial Statements............................................. 22
SECTION 3.7 Pooling Matters............................................................... 22
SECTION 3.8 Ownership of Merger Sub; No Prior Activities.................................. 23
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER............................................ 23
SECTION 4.1 Conduct of Business by the Company Pending the Merger......................... 23
SECTION 4.2 No Solicitation............................................................... 25
SECTION 4.3 Conduct of Business by Parent Pending the Merger.............................. 26
ARTICLE V ADDITIONAL AGREEMENTS.............................................................. 26
SECTION 5.1 HSR Act....................................................................... 26
SECTION 5.2 Stockholder Approval.......................................................... 26
SECTION 5.3 Access to Information; Confidentiality........................................ 26
SECTION 5.4 Consents; Approvals........................................................... 27
SECTION 5.5 Agreements with Respect to Affiliates......................................... 27
SECTION 5.6 Stockholder Agreement and Investment Letter................................... 27
SECTION 5.7 Notification of Certain Matters............................................... 27
SECTION 5.8 Further Action/Tax Treatment.................................................. 27
SECTION 5.9 Public Announcements.......................................................... 28
SECTION 5.10 Pooling Accounting Treatment................................................. 28
SECTION 5.11 Board Representation......................................................... 28
SECTION 5.12 Listing of Parent Shares..................................................... 29
SECTION 5.13 Reorganization Transaction................................................... 29
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ARTICLE VI CONDITIONS TO THE MERGER........................................................... 29
SECTION 6.1 Conditions to Obligation of Each Party to Effect the Merger..................... 29
SECTION 6.2 Additional Conditions to Obligations of Parent and
Merger Sub...................................................................... 30
SECTION 6.3 Additional Conditions to Obligation of the Company
and the Stockholder............................................................. 31
ARTICLE VII TERMINATION..................................................................... 32
SECTION 7.1 Termination..................................................................... 32
SECTION 7.2 Effect of Termination........................................................... 32
SECTION 7.3 Fees and Expenses............................................................... 33
ARTICLE VIII GENERAL PROVISIONS............................................................... 33
SECTION 8.1 Director and Officer Indemnification and Insurance............................ 33
SECTION 8.2 Indemnification................................................................ 34
SECTION 8.3 Survival, Etc.................................................................. 36
SECTION 8.4 Notices........................................................................ 37
SECTION 8.5 Certain Definitions............................................................ 38
SECTION 8.6 Amendment...................................................................... 39
SECTION 8.7 Waiver......................................................................... 39
SECTION 8.8 Headings....................................................................... 39
SECTION 8.9 Severability................................................................... 39
SECTION 8.10 Entire Agreement............................................................... 39
SECTION 8.11 Assignment; Guarantee of Merger Sub............................................ 40
SECTION 8.12 Parties in Interest............................................................ 40
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies Cumulative.......................... 40
SECTION 8.14 Governing Law.................................................................. 40
SECTION 8.15 Counterparts................................................................... 40
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LOCATION OF DEFINED TERMS IN AGREEMENT AND PLAN OF MERGER
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DEFINED TERMS SECTION OF MERGER AGREEMENT
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1997 Company Balance Sheet 2.9
Acquisition Proposal 4.2(a)
Affiliates 8.3
Affiliate Agreement 5.6
Affiliate Letters 5.6
Agreement Preamble
Approvals 2.1
Average Closing Price 1.6(a)
Beneficial Owner 8.3
Blue Sky Laws 2.5(d)
Business Day 8.3
Certificates 1.6(f)
Certificate of Merger 1.2
Code Preamble
Company Preamble
Company Alternative Transaction 7.1
Company Common Stock Preamble
Company Disclosure Schedule Article II Preamble
Company Employee Plans 2.11(a)
Company ERISA Affiliate 2.11(a)
Company Fee 7.3(b)
Company Indemnified Parties 8.1
Company Intellectual Property Rights 2.17(a)
Company Material Adverse Effect 1.13
Company Permits 2.6(b)
Company SEC Reports 2.7(a)
Company Stockholders Meeting 2.13
Company Stock Option Plans 1.6(c)(i)
Confidentiality Letter 5.4
Control 8.3
DGCL Preamble
Effective Time 1.2
Environmental Laws 2.16
ERISA 2.11(a)
Exchange Act 2.5(a)
Exchange Agent 1.7(a)
Exchange Ratio 1.6(a)
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Generally accepted accounting principles 8.3
HSR Act 2.5(d)
IRS 2.14
ISO 1.6(c)
Laws 2.5(c)
Liens 2.3
Merger Preamble
Merger Consideration 1.7(b)
Merger Sub Preamble
Parent Preamble
Parent Common Stock 1.6(a)
Parent Disclosure Schedule Article III Preamble
Parent Material Adverse Effect 1.13
Parent SEC Reports 3.6
Stockholder Preamble
Share Preamble
Surviving Corporation 1.1(b)
Stock Option 1.6(c)
Securities Act 1.6(c)
Subsidiary Documents 2.2
SEC 2.7(a)
Tax 2.14(a)
Tax Returns 2.14(a)
Terminating Breach 7.1(d)
Third Person 8.1(d)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 15, 1997 (this
"Agreement"), among The Registry, Inc., a Massachusetts corporation ("Parent"),
Gatherer Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Merger Sub"), The Hunter Group, Inc., a Maryland corporation (the
"Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual and owner of all of the issued
and outstanding capital stock of the Company ("Stockholder").
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 stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Stockholder and 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 Delaware General Corporation Law (the "DGCL") and
the Maryland General Corporation Law (the "MGCL"), and upon the terms and
subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder; and
WHEREAS, pursuant to the Merger, each outstanding share (each a "Share") of
the Company's common stock, no par value (the "Company Common Stock"), shall be
converted into the right to receive the Merger Consideration (as defined in
Section 1.7(b)), 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, the Company and Stockholder hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.2), and
subject to and upon the terms and conditions of this Agreement, the DGCL and the
MGCL, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger will take place as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Ropes &
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, and subject to
the other provisions of this Agreement, the parties hereto shall cause the
Merger to be consummated by filing a certificate or articles of merger as
contemplated by the DGCL and the MGCL (the "Certificate of Merger"), together
with any required related certificates, with the Secretary of State of the State
of Delaware and the Department of Assessments and Taxation of the State of
Maryland, respectively, in such form as required by, and executed in accordance
with the relevant provisions of, the DGCL and the MGCL (the time of such filing
being the "Effective Time").
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL and MGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.4 Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. Unless otherwise determined by Parent
prior to the Effective Time, the Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with the MGCL and such Certificate of Incorporation.
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(b) By-Laws. Unless otherwise determined by Parent prior to the Effective
Time, the By-Laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the By-Laws of the Surviving Corporation until thereafter amended
in accordance with the MGCL, the Certificate of Incorporation of the Surviving
Corporation and such By-Laws.
SECTION 1.5 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation listed in Schedule 1.5A, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the Surviving Corporation,
and the officers of Merger Sub immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation listed in Schedule 1.5B, in
each case until their respective successors are duly elected or appointed and
qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or any of their respective stockholders:
(a) Conversion of Securities. Each Share issued and outstanding immediately
prior to the Effective Time (excluding any Shares to be canceled pursuant to
Section 1.6(b)) shall be converted, subject to Section 1.6(f), into the right to
receive 9.9543 shares of Parent's common stock, no par value ("Parent Common
Stock", and collectively, the "Parent Shares"), which number of shares is equal
to the quotient of (x) $149,300,000 divided by $41.763 (the average of the
closing price of Parent Common Stock on the Nasdaq National Market for the five
trading days ending one day prior to the date hereof (the "Average Closing
Price")) divided by (y) the total number of Shares (on a fully diluted basis
including Stock Options (as defined below)) issued and outstanding at the
Effective Time (the "Exchange Ratio").
(b) Cancellation. Each Share held in the treasury of the Company, and each
Share owned by Parent, Merger Sub or any direct or indirect 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, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Stock Option Plans and Stock Purchase Plan.
(i) At the Effective Time, Parent will assume the obligations of the
Company under the Company's Employee Non-qualified Stock Option Plan, the
1997 Omnibus Stock Plan, if any, and the 1998 Employee Stock Purchase Plan,
if any (collectively the "Company Stock Option Plans"), and each outstanding
option to purchase Company Common Stock, as amended or modified, (each a
"Stock Option") granted under the Company Stock Option Plans, whether vested
or unvested, shall be deemed assumed by Parent and deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Stock Option prior to the Effective Time, the number (rounded down to
the nearest
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whole number) of shares of Parent Common Stock as the holder of such Stock
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Effective Time
(not taking into account whether or not such Stock Option was in fact
exercisable), at a price per share (rounded up to the nearest whole cent)
equal to (x) the aggregate exercise price for the shares of Company Common
Stock issuable upon exercise of such Stock Option immediately prior to the
Effective Time divided by (y) the number of shares of Parent Common Stock
deemed issuable pursuant to such Stock Option at the Effective Time.
(ii) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an outstanding Stock Option an appropriate notice
setting forth such holder's rights pursuant thereto, and such Stock Option
shall continue in effect on the same terms and conditions (including
antidilution provisions). Parent will comply with the Company Stock Option
Plans.
(iii) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of Parent Shares for delivery pursuant to the
terms set forth in this Section 1.6(c).
(iv) Subject to any applicable limitations under the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "Securities
Act"), Parent shall file a Registration Statement on Form S-8 (or any
successor form), as soon as practicable after the Effective Time, with
respect to the interests in the Company Stock Option Plans and the shares of
Parent Common Stock issuable upon exercise of the Stock Options, and Parent
shall use its best reasonable efforts to maintain the effectiveness of such
registration statement(s) (and maintain the current status of the prospectus
or prospectuses relating thereto) for so long as such Stock Options shall
remain outstanding.
(v) The Company will take all necessary actions pursuant to the Company
Stock Option Plans and the instruments evidencing the Stock Options to
provide for the conversion and assumption of the Stock Options in accordance
with this Section 1.6(c) and will not take any action inconsistent with
Section 5.10 hereof with respect to either the Company Stock Option Plans or
the Stock Options. Such actions will include, without limitation, the
recision of the amendment to the Employee Non-qualified Stock Option Plan
effective January 1, 1997 (the "Plan Recession"), which amendment shall
thereafter be of no further force or effect.
(d) Capital Stock of Merger Sub. Each share of common stock, $.01 par
value, 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, no par value, of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution
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of securities convertible into Parent Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock
occurring after the date hereof and prior to the Effective Time.
(f) Fractional Shares. No certificates or scrip representing less than one
Parent Share shall be issued upon the surrender for exchange of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"). In lieu of any such fractional share,
each holder of Shares who would otherwise have been entitled to a fraction of a
Parent Share upon surrender of Certificates for exchange shall be paid upon such
surrender cash equal to the product of (i) such fraction, multiplied by (ii) the
Average Closing Price.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent. Parent shall supply, or shall cause to be supplied, to
or for the account of Ropes & ▇▇▇▇, or such other person as shall be designated
by Parent (the "Exchange Agent"), in trust for the benefit of the holders of
Company Common Stock, for exchange in accordance with this Section 1.7, through
the Exchange Agent, certificates evidencing the Parent Shares issuable pursuant
to Section 1.6 in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify), and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole Parent Shares which such holder has the right to receive in accordance
with the Exchange Ratio in respect of the Shares formerly evidenced by such
Certificate, (B) any dividends or other distributions to which such holder is
entitled pursuant to Section 1.7(c), and (C) cash in respect of fractional
shares as provided in Section 1.6(f) (the Parent Shares, dividends,
distributions and cash being, collectively, the "Merger Consideration"), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company as of the Effective Time, Parent Shares, dividends and
distributions may be issued and paid in accordance with this Article I to a
transferee if the Certificate evidencing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer pursuant to this Section 1.7(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented Shares
will be deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends and subject to Section 1.6(f), to evidence
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the ownership of the number of full Parent Shares into which such Shares shall
have been so converted.
(c) Distributions With Respect to Unexchanged Parent Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Shares with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the Parent Shares they
are entitled to receive until the holder of such Certificate shall surrender
such Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole Parent Shares issued in exchange therefor, without interest,
at the time of such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole Parent Shares.
(d) Transfers of Ownership. If any certificate for Parent Shares is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it will be a condition to the issuance thereof
that the Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will have
paid to Parent or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for Parent Shares in any
name other than that of the registered holder of the certificate surrendered, or
have established to the satisfaction of Parent or any agent designated by it
that such tax has been paid or is not payable.
(e) No Liability. At any time following one year after the Effective Time,
Parent shall be entitled to require the Exchange Agent to deliver to Parent any
Merger Consideration which had been made available to the Exchange Agent by or
on behalf of Parent and which has not been disbursed to holders of Certificates,
and thereafter such holders shall be entitled to look to Parent only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates. Notwithstanding the foregoing, neither Parent,
Merger Sub nor the Company shall be liable to any holder of Company Common Stock
for any Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock such amounts as Parent or
the Exchange Agent is required to deduct and withhold with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Parent or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares in respect of which such
deduction and withholding was made by Parent or the Exchange Agent.
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SECTION 1.8 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
SECTION 1.9 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
SECTION 1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Parent Shares as
may be required pursuant to Section 1.6; provided, however, that Parent may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
SECTION 1.11 Tax and Accounting Consequences. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Code and (ii) qualify for accounting treatment as a
pooling of interests. The parties hereto hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
SECTION 1.12 Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub, the Company and the Stockholder will take all such reasonable and
lawful action as may be necessary or appropriate in order to effectuate the
Merger in accordance with this Agreement as promptly as possible. If, at any
time after the Effective Time, any such further action is necessary or desirable
to carry out the transactions contemplated by this Agreement, or to vest in the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub, the officers and directors of the Company and Merger Sub immediately prior
to the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
SECTION 1.13 Material Adverse Effect. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other such
similar or related changes, effects or circumstances that have occurred prior to
the date of determination of the occurrence of the Material Adverse Effect, (a)
is
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materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and its subsidiaries
or Parent and its subsidiaries, as the case may be, in each case taken as a
whole (other than changes that are the effect of economic factors affecting the
economy as a whole or changes that are the effect of factors generally affecting
the specific markets in which the Company and its subsidiaries or the Parent and
its subsidiaries, as the case may be, compete), or (b) is reasonably likely to
materially delay or prevent the consummation of the transactions contemplated
hereby. A Material Adverse Effect relating to the Company and its subsidiaries
is referred to as a "Company Material Adverse Effect" and a Material Adverse
Effect relating to Parent and its subsidiaries is referred to as a "Parent
Material Adverse Effect."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each of the Company and the Stockholder hereby represents and warrants to
Parent and Merger Sub that, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof by the Company to Parent that
is arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article II (the "Company Disclosure Schedule"):
SECTION 2.1 Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority 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, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals would not reasonably be expected to have a Company Material Adverse
Effect. Each of the Company and its subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not reasonably be expected to have a Company Material
Adverse Effect. A true and complete list of all of the Company's subsidiaries,
together with the jurisdiction of incorporation of each subsidiary, the
authorized capitalization of each subsidiary, and the percentage of each
subsidiary's outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 2.1 of the Company Disclosure Schedule. The
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity, with respect to which interest the Company has
invested or is required to invest $100,000 or more, excluding
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securities in any publicly traded company held for investment by the Company and
comprising less than five percent of the outstanding stock of such company.
SECTION 2.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws as most recently restated and subsequently amended to
the date hereof and has furnished to Parent the Certificate of Incorporation and
By-Laws (or equivalent organizational documents) of each of its subsidiaries
(the "Subsidiary Documents"). Such Certificate of Incorporation, By-Laws and
Subsidiary Documents are in full force and effect and neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws or Subsidiary Documents, except where
the failure to be in full force and effect or where such violation would not
have a Company Material Adverse Effect.
SECTION 2.3 Capitalization. The authorized capital stock of the Company
consists of 500,000 shares of Company Common Stock. As of the date hereof, (i)
300,000 shares of Company Common Stock were issued and outstanding, all of which
are validly issued, fully paid and nonassessable, (ii) 100,000 shares of Company
Common Stock were reserved for future issuance pursuant to the Company Stock
Option Plans of which 59,133 shares were subject to outstanding Stock Options as
of the date hereof, and (iii) no shares of Company Common Stock were held in
treasury or by subsidiaries of the Company. Other than stock options granted
under the Company Stock Option Plans to employees or the termination of stock
options in accordance with the terms of such stock options (in connection with
employee separations), in each in the ordinary course of business and
consistent with past practice, no material change in such capitalization has
occurred between June 30, 1997 and the date hereof. Other than as set forth in
Section 2.3 of the Company Disclosure Schedule, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
existing on the date hereof to which the Company or a subsidiary or, to the
Company's knowledge, any other person is a party relating to the issued or
unissued capital stock of the Company or any of its subsidiaries or obligating
the Company or any of its subsidiaries to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any of its subsidiaries.
A schedule of stock options issued under the Company Stock Option Plans is
attached to Section 2.3 of the Company Disclosure Schedule. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. There are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or the capital stock of any subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution, guaranty or otherwise) in any such subsidiary or any other entity.
All of the outstanding shares of capital stock of each of the Company's
subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and all such shares are owned by the Company or another subsidiary of the
Company, free and clear of all security interests, liens, claims, pledges,
agreements, limitations in respect of voting rights, charges or other
encumbrances of any nature whatsoever (collectively, the "Liens").
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SECTION 2.4 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and 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
on the part of the Company and the Stockholder. The Board of Directors of the
Company has determined by resolution that it is advisable and in the best
interest of the Company's Stockholder for the Company to enter into the Merger
upon the terms and subject to the conditions of this Agreement, and has
unanimously recommended that the Company's Stockholder approve and adopt this
Agreement and the Merger. This Agreement has been duly and validly executed and
delivered by each of the Company and the Stockholder, and assuming the due
authorization, execution and delivery by Parent and Merger Sub, as applicable,
constitutes a legal, valid and binding obligation of each of the Company and the
Stockholder, enforceable against each of them in accordance with its terms.
SECTION 2.5 No Conflict; Required Filings and Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule includes a list of (i)
all loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, guaranties and standby letters of
credit, equipment leases or lease purchase agreements to which the Company is a
party or by which it is bound and (ii) all contracts, agreements, commitments or
other understandings or arrangements to which the Company is a party or by which
it or any of its properties or assets are bound or affected, but excluding any
contract, agreement, commitment or other understanding or arrangement entered
into in the ordinary course of business and involving, in the case of each of
clauses (i) and (ii) above, payments or receipts by the Company of less than
$100,000 in any single instance but not more than $100,000 in the aggregate
(collectively, the "Contracts").
(b) (i) Neither the Company nor any of its subsidiaries has breached, is in
default under, or has received written notice of any breach of or default under,
any of the Contracts, (ii) to the best knowledge of the Company, no other party
to any of the Contracts has breached or is in default of any of its obligations
thereunder, and (iii) to the best knowledge of the Company, each of the
Contracts is in full force and effect, except as to clauses (i), (ii) and (iii)
above for breaches, defaults or failures to be in full force and effect that is
not currently having or would not reasonably be expected to have a Company
Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected, or (iii) conflict with, result in any breach of or constitute a
default (or an event that with notice
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or lapse of time or both would become a default) under, or impair the Company's
or any of its subsidiaries' rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except as to clauses (i), (ii) and (iii) above for any such conflicts,
violations, breaches, defaults, impairments, alterations or other occurrences
that would not reasonably be expected to have a Company Material Adverse Effect.
(d) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any federal, foreign, state or provincial governmental or regulatory
authority except (i) for applicable requirements, if any, of the Securities Act,
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), state securities laws ("Blue Sky Laws"), the
pre-merger notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the filing and
recordation of appropriate merger or other documents as required by the DGCL and
MGCL, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would be
reasonably expected to have a Company Material Adverse Effect.
SECTION 2.6 Compliance. Neither the Company nor any of its subsidiaries is
in conflict with, or in default or violation of any Law or Approval applicable
to the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected except for any such conflicts,
defaults or violations which would not reasonably be expected to have a Company
Material Adverse Effect.
SECTION 2.7 SEC Filings; Financial Statements.
(a) The Company has made available to Parent its registration statement on
Form S-1 as filed by the Company with the Securities and Exchange Commission
(the "SEC") on October 2, 1997 and all amendments and supplements to such
registration statement filed by the Company with the SEC (collectively, the
"Company SEC Reports"). The Company SEC Reports (i) were prepared in all
material respects in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
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(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents in all material respects 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 and
stockholders equity 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 2.8 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports, or as contemplated by this Agreement, since June 30,
1997, the Company has conducted its business in the ordinary course and there
has not occurred: (a) any Company Material Adverse Effect; (b) any amendments or
changes in the Certificate of Incorporation or By-laws of the Company; (c) any
damage to, destruction or loss of any asset of the Company (whether or not
covered by insurance) that would reasonably be expected to have a Company
Material Adverse Effect; (d) any material change by the Company in its
accounting methods, principles or practices; (e) any material revaluation by the
Company of any of its assets; (f) any other action or event that would have
required the consent of Parent pursuant to Section 4.1 had such action or event
occurred after the date of this Agreement and that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect; or (g) any sale of a material amount of property of the Company
or any of its subsidiaries taken as a whole, except in the ordinary course of
business.
SECTION 2.9 No Undisclosed Liabilities. Except as disclosed in the Company
SEC Reports, neither the Company nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) in the
aggregate adequately provided for in the Company's balance sheet (including any
related notes thereto) as of June 30, 1997 (the "1997 Company Balance Sheet"),
(b) incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected on the 1997 Company Balance
Sheet, (c) incurred since June 30, 1997 in the ordinary course of business
consistent with past practice, (d) incurred in connection with this Agreement,
or (e) which would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 2.10 Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or any properties or
rights of the Company or any of its subsidiaries, before any federal, foreign,
state or provincial court, arbitrator or administrative, governmental or
regulatory authority or body that would reasonably be expected to have a Company
Material Adverse Effect.
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SECTION 2.11 Employee Benefit Plans, Employment Agreements.
(a) Section 2.11 (a) of the Company Disclosure Schedule lists as of the date
hereof all employee pension plans (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all material
employee welfare plans (as defined in Section 3(1) of ERISA), and all other
material bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
plans, programs or arrangements, written or otherwise, for the benefit of, or
relating to, any group of current or former employees of or consultants to the
Company, any trade or business (whether or not incorporated) which is a member
of a controlled group including the Company or which is under common control
with the Company (a "Company ERISA Affiliate") within the meaning of Section 414
of the Code, or any subsidiary of the Company, as well as each plan with respect
to which the Company or a Company ERISA Affiliate would incur liability under
Section 4069 (if such plan has been or were terminated) or Section 4212(c) of
ERISA (all such plans, practices and programs are referred to as the "Company
Employee Plans"). To the extent requested by Parent, there have been made
available to Parent copies of (i) each such written Company Employee Plan (other
than those referred to in Section 4(b)(4) of ERISA), (ii) the most recent annual
report on Form 5500 series, with accompanying schedules and attachments, filed
with respect to each Company Employee Plan required to make such a filing, and
(iii) the most recent actuarial valuation for each Company Employee Plan subject
to Title IV of ERISA. For purposes of this Section 2.11 (a), the term
"material," used with respect to any Company Employee Plan, shall mean that the
Company or a Company ERISA Affiliate has incurred or may reasonably be expected
to incur obligations in an annual amount exceeding $100,000 with respect to such
Company Employee Plan.
(b) (i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and none of the Company
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan, which could result in any material liability of the
Company or any of its subsidiaries; (iii) all Company Employee Plans are in
compliance in all material respects with the requirements prescribed by any and
all Laws (including ERISA and the Code), currently in effect with respect
thereto (including all applicable requirements for notification to participants
or the Department of Labor ("DOL"), Pension Benefit Guaranty Corporation (the
"PBGC"), Internal Revenue Service (the "IRS") or Secretary of the Treasury), and
the Company and each of its subsidiaries have performed all material obligations
required to be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any default or violation
by any other party to, any of the Company Employee Plans; (iv) 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 IRS, and nothing has occurred which may
reasonably be expected to impair such determination; (v) all contributions
required to be made to any Company
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Employee Plan pursuant to Section 412 of the Code, or the terms of the Company
Employee Plan or any collective bargaining agreement, have been made on or
before their due dates; (vi) with respect to each Company Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the 30 day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 of ERISA has occurred; and (vii) neither the Company nor any
Company ERISA Affiliate has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than liability for premium payments to
the PBGC arising in the ordinary course), except where the failure of any of the
foregoing subparagraphs (i) through (vii) to be true would not have a Company
Material Adverse Effect.
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a true and
complete list as of the date hereof of each current or former employee, officer
or director of the Company or any of its subsidiaries who holds (i) any option
to purchase Company Common Stock as of the date hereof, together with the number
of shares of Company Common Stock subject to such option, the option price of
such option (to the extent determined as of the date hereof), whether such
option is intended to qualify as an ISO, and the expiration date of such option;
(ii) any other right, directly or indirectly, to acquire Company Common Stock,
together with the number of shares of Company Common Stock subject to such
right. Section 2.11(c) of the Company Disclosure Schedule also sets forth the
total number of such ISOs, such nonqualified options and such other rights
outstanding on the date hereof. Upon the effectiveness of the Plan Recision, no
consent of any holder of Stock Options which has not been or will not be
obtained prior to the Effective Time is required to effect the conversion and
assumption of the Stock Options and the Company Stock Option Plans pursuant to
Section 1.6(c).
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth as of the
date hereof a true and complete list of: (i) all written employment agreements
with officers or employees of the Company or any of its subsidiaries that
provide for annual base salaries in excess of $120,000; (ii) all agreements with
consultants who are individuals obligating the Company or any of its
subsidiaries to make annual cash payments in an amount exceeding $120,000; and
(iii) all severance agreements, programs and policies of the Company or any of
its subsidiaries with or relating to its employees, in each case with
outstanding commitments exceeding $120,000, excluding programs and policies
required to be maintained by law.
SECTION 2.1 Labor Matters. (a) There are no claims or proceedings pending
or, to the knowledge of the Company or any of its subsidiaries, threatened,
between the Company or any of its subsidiaries and any of their respective
employees, asserting that the Company has committed an unfair labor practice
which claims or proceedings are currently having or would reasonably be expected
to have a Company Material Adverse Effect; (b) neither the Company nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or its
subsidiaries; and (c) neither the Company nor any of its subsidiaries has any
knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of the Company or
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any of its subsidiaries, which would reasonably be expected to have a Company
Material Adverse Effect.
SECTION 2.13 Title to Property. The Company has good and marketable title
to all of its properties and assets, free and clear of all Liens, except for
Liens for taxes not yet due and payable and such Liens or other imperfections of
title, if any, as do not materially detract from the value of or interfere with
the present use of the property affected thereby or which would not have a
Company Material Adverse Effect; and all leases pursuant to which the Company
leases from others real or personal property are, to the knowledge of the
Company, in good standing, valid and effective in accordance with their
respective terms, and there is not under any of such leases, any existing
material default or event of default (or event which with notice or lapse of
time, or both, would constitute a material default) by the Company, or, to the
knowledge of the Company, any other party thereto. Neither the Company nor any
of its subsidiaries owns any real property.
SECTION 2.14 Taxes.
(a) 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, value added, sales,
use, service, real or personal property, special assessments, capital stock,
license, payroll, withholding, employment, social security, workers'
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 Internal Revenue
Service (the "IRS") or any other federal, foreign, state or provincial taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(b) (i) The Company and its subsidiaries have filed all Tax Returns
required to be filed by them, (ii) the Company and its subsidiaries have paid
and discharged all Taxes due in connection with or with respect to the periods
or transactions covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
(to the extent that any such proceedings are required) and with respect to which
the Company is maintaining adequate reserves, and (iii) there are no other Taxes
that would be due if asserted by a taxing authority, except with respect to
which the Company is maintaining reserves to the extent currently required,
unless in the case of clauses (i), (ii) and (iii) above the failure to do so
would not reasonably be expected to have a Company Material Adverse Effect.
Except as does not involve or would not result in liability that would
reasonably be expected to have a Company Material Adverse Effect: (i) there are
no tax liens on any assets of the Company or any subsidiary thereof; and (ii)
neither the Company nor any of its subsidiaries has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment
-15-
of, any Tax. Neither the Company nor any of its subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under any circumstance could obligate it to make any payments that will not be
deductible under Code Section 280G. None of the Company and its subsidiaries (i)
has been a member of an affiliated group filing a consolidated federal income
Tax Return (other than a group the common parent of which was the Company) or
(ii) has any liability for the Taxes of any other person or entity (other than
the Company and its subsidiaries) under Treas. Reg. (S)1.1502-6 (or any similar
provision of state, local or foreign law), as transferee or successor, by
contract or otherwise. Neither the Company nor any subsidiary has consented at
any time under Section 341(f)(1) of the Code to have the provisions of Section
341(f)(2) of the Code apply to any disposition of the assets of the Company or
any subsidiary. The accruals and reserves for Taxes (including deferred taxes)
reflected in the 1997 Company Balance Sheet are in all material respects
adequate to cover all Taxes required to be accrued through the date thereof
(including interest and penalties, if any, thereon and Taxes being contested) in
accordance with generally accepted accounting principles.
(c) Neither the Company nor any of its subsidiaries is, or has been, a
United States real property holding corporation (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. To the best knowledge of the Company, neither the Company nor any
of its subsidiaries owns any property of a character, the indirect transfer of
which, pursuant to this Agreement, would give rise to any material documentary,
stamp or other transfer tax.
SECTION 2.15 Environmental Matters. Except in all cases as, in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect, the Company and each of its subsidiaries: (i) have
obtained all Approvals which are required to be obtained under all applicable
federal, state, foreign or local laws or any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by the Company or its subsidiaries or their respective
agents ("Environmental Laws"); (ii) are in compliance with all terms and
conditions of such required Approvals, and also are in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in applicable Environmental
Laws; (iii) have not received notice of any past or present violations of
Environmental Laws or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, against the Company or any of its subsidiaries based on or resulting
from the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste; and (iv) have
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taken all actions necessary under applicable Environmental Laws to register any
products or materials required to be registered by the Company or its
subsidiaries (or any of their respective agents) thereunder.
SECTION 2.16 Intellectual Property.
(a) The Company, directly or indirectly, owns, or is licensed or otherwise
possesses legally enforceable rights to use, all trademarks, trade names,
service marks, copyrights, and any applications therefor, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or material that are material to the business of the Company and its
subsidiaries, taken as a whole, as currently conducted (the "Company
Intellectual Property Rights"), except where the failure to do so would not have
a Company Material Adverse Effect.
(b) No claims have been asserted to the Company or any subsidiary in writing
or, to the knowledge of the Company, are threatened by any person nor are there
any valid grounds, to the knowledge of the Company, for any bona fide claims (i)
against the use by the Company or any of its subsidiaries of the Company
Intellectual Property Rights, or (ii) challenging the ownership by the Company
or any of its subsidiaries, or the validity or effectiveness of any of the
Company Intellectual Property Rights, except for such claims that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
SECTION 2.17 Immigration Compliance. (a) The Company is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules, directives and regulations relating to the employment authorization of
its employees (including, without limitation, the Immigration Reform and Control
Act of 1986, as amended and supplemented, and Section 212(n) and 274A of the
Immigration and Nationality Act, as amended and supplemented, and all
implementing regulations relating thereto), and, to the knowledge of the
Company, the Company has not employed nor is it currently employing any
unauthorized aliens (as such term is defined under 8 CFR 274a.1(a)).
(b) The Company has not received any notice from the Immigration and
Naturalization Service (the "INS") or the DOL of the disapproval or denial of
any visa petition pending before the INS or labor certification pending before
the DOL on behalf of any employee or prospective employee of the Company.
(c) Section 2.17(c) of the Company Disclosure Schedule contains a true,
complete and accurate list of all non-immigrant or immigrant visa petitions
pending before the INS and labor certifications pending before the DOL on behalf
of any of the employees or prospective employees of the Company.
(d) Since the approval of each of their respective visa petitions, there has
been no material change in the terms and conditions of employment of any
employees of the Company, provided
-17-
that it is acknowledged that certain employees from time to time unilaterally
breach the terms of their employment with the Company.
SECTION 2.18 Interested Party Transactions. Except for transactions described
in the Company SEC Reports, no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction pursuant to Item 404
of Regulation S-K promulgated by the SEC.
SECTION 2.19 Insurance. All material fire and casualty, general liability,
business interruption, product liability, professional liability and sprinkler
and water damage insurance policies maintained by the Company or any of its
subsidiaries are with reputable insurance carriers, provide adequate coverage
for all normal risks incident to the business of the Company and its
subsidiaries, taken as a whole, and their properties and assets, and are in
character and amount customary for persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such failures
to maintain insurance policies that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
SECTION 2.20 Pooling Matters. To the Company's knowledge, neither the
Company nor any of its affiliates has taken or agreed to take any action that
would affect the ability of Parent to account for the business combination to be
effected by the Merger as a pooling of interests under generally accepted
accounting principles and applicable SEC interpretations. Without limiting the
generality of the foregoing sentence, and except as set forth in Section 2.20 of
the Company Disclosure Schedule, since June 30, 1995 (i) the Company has not had
any treasury stock transactions and none are planned during the period between
the date hereof and the Closing Date, (ii) the Company has not adopted any new
or amended any existing stock option or stock purchase plans, (iii) the Company
has not disposed of any assets other than in the ordinary course of business,
and (iv) the Stockholder has not entered into any agreement that would restrict
voting rights with respect to the Parent Shares to be issued pursuant to this
Agreement. If requested, the President and/or the Chief Financial Officer of
the Company will execute any documentation on behalf of the Company reasonably
required by Parent's independent public accountants with respect to pooling of
interest accounting issues. The failure of this representation to be true and
correct, shall, if the Merger is not able to be accounted for as a pooling of
interests, constitute a breach of this Agreement by the Company for the purposes
of Section 7.1(d).
SECTION 2.21 Brokers. No broker, finder or investment banker (other than
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities and The Updata Group, Inc., the fees and
expenses of each of whom will be paid by the Company) 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 or its subsidiaries or affiliates. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities and Updata Group, Inc.
pursuant to which each such firm would be entitled to any payment relating to
the transactions contemplated hereunder.
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SECTION 2.22 Sections 3-601 et seq. and 3-701 of the MGCL Not Applicable.
The Board of Directors of the Company has taken all actions so that the
restrictions contained in Sections 3-601 et seq. and 7-301 et seq. of the MGCL
applicable to a "business combination" (as defined in Section 3-601) and
"control share acquisitions" (as defined in Section 3-701), respectively, will
not apply to the execution, delivery or performance of this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement.
SECTION 2.23 Change in Control Payments. Neither the Company nor any of its
subsidiaries have any plans, programs or agreements to which they are parties,
or to which they are subject, pursuant to which payments may be required or
acceleration of benefits may be required upon a change of control of the
Company.
SECTION 2.24 Expenses. Section 2.24 of the Company Disclosure Schedule
attached hereto sets forth a description of all of the estimated expenses of the
Company as of the date hereof which the Company expects to incur, or has
incurred, in connection with the transactions contemplated by this Agreement.
SECTION 2.25 Full Disclosure. No representation or warranty made by the
Company contained in this Agreement and no statement contained in any
certificate or schedule furnished or to be furnished by the Company to Parent or
Merger Sub in, or pursuant to the provisions of, this Agreement, including
without limitation the Company Disclosure Schedule, when considered with all
such representations, warranties and statements contains or shall contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in the light of the circumstances under which it was made, in
order to make statements herein or therein not misleading.
SECTION 2.26 No Existing Discussions. As of the date hereof, the Company is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal (as defined in Section 4.2).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant to
the Company and the Stockholder that, except as set forth in the written
disclosure schedule delivered on or prior to the date hereof by Parent to the
Company that is arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III (the "Parent Disclosure
Schedule"):
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws
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of the jurisdiction of its incorporation 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, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals would not reasonably be expected to have a Parent Material Adverse
Effect. Each of Parent and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not reasonably be expected to have a Parent Material
Adverse Effect. A true and complete list as of the date hereof of all of
Parent's subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by Parent or another subsidiary, is set forth in Section 3.1 of the Parent
Disclosure Schedule. Parent does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity, with respect
to which Parent has invested or is required to invest $500,000 or more,
excluding securities in any publicly traded company held for investment by
Parent and comprising less than five percent of the outstanding capital stock of
such company.
SECTION 3.2 Charter and By-Laws. Parent has heretofore furnished to the
Company a complete and correct copy of its Restated Articles of Organization and
By-Laws, as most recently restated and subsequently amended to the date hereof.
Such Restated Articles of Organization and By-Laws are in full force and effect
and neither Parent nor Merger Sub is in violation of any of the provisions of
its charter or By-Laws, except where the failure to be in full force and effect
or where such violation would not have a Parent Material Adverse Effect.
SECTION 3.3 Capitalization. As of September 27, 1997, the authorized
capital stock of Parent consisted of (i) 99,000,000 shares of Parent Common
Stock, of which 21,872,808 shares were issued and outstanding, all of which are
validly issued, fully paid and non-assessable, and no shares were held in
treasury, and (ii) 1,000,000 shares of preferred stock, $.10 par value per
share, none of which was issued and outstanding and none of which was held in
treasury. No material change in such capitalization has occurred between
September 27, 1997 and the date hereof, except for the issuance of Parent Common
Stock pursuant to Parent stock plans and in connection with acquisitions of
businesses. The Parent Common Stock to be issued to the holders of Company
Common Stock under the terms of this Agreement will be validly issued, fully
paid and non-assessable, free and clear of all Liens. All options, warrants or
other rights, agreements, arrangements or commitments of any character existing
on the date hereof to which Parent or a subsidiary or, to Parent's knowledge,
any other person is a party relating to the issued or unissued capital stock of
Parent or any of its subsidiaries or obligating Parent or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, Parent or any of its subsidiaries are described in Section 3.3 of
the Parent Disclosure Schedule. There are no obligations, contingent or
otherwise, of Parent or any of its subsidiaries to repurchase, redeem
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or otherwise acquire any shares of Parent Common Stock or the capital stock of
any subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any such subsidiary other than
guarantees of bank obligations of subsidiaries entered into in the ordinary
course of business. All of the outstanding shares of capital stock of each of
Parent's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by Parent or another subsidiary of
Parent, free and clear of all Liens.
SECTION 3.4 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 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 Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated thereby. As of the date of this Agreement, the Board of Directors
of Parent has determined that it is advisable and in the best interest of Parent
to enter into this Agreement and has unanimously approved this Agreement and the
transactions contemplated hereby. 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 of them
in accordance with its terms. The Merger, this Agreement and the transactions
contemplated thereby and hereby do not require the approval or consent of the
Parent's stockholders.
SECTION 3.5 No Conflict, Required Filings and Consents.
(a) 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 of the transactions contemplated hereby will not, (i)
conflict with or violate the Articles of Organization (or Certificate of
Incorporation) or By-Laws of Parent or Merger Sub, (ii) conflict with or violate
any Laws applicable to Parent or any of its subsidiaries or by which its or
their respective properties are bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or impair Parent's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Parent Lien on any of the
properties or assets of Parent or any of its subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its or
any of their respective properties are bound or affected, except in any such
case for any such conflicts, violations, breaches, defaults or other occurrences
that would not reasonably be expected to have a Parent Material Adverse Effect.
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(b) 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, require any consent, approval, authorization or permit of, or filing with
or notification to, any federal, foreign, state or provincial governmental or
regulatory authority, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, the Blue Sky Laws, the pre-merger notification
requirements of the HSR Act, and the filing and recordation of appropriate
merger or other documents as required by the DGCL and MGCL, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 3.6 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be filed
with the SEC and has heretofore delivered or made available to the Company, in
the form filed with the SEC, (i) its Annual Report on Form 10-K for the fiscal
year ended June 27, 1997 (ii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) since June 10, 1996, (iii)
all other reports or registration statements filed by Parent with the SEC, and
(iv) all amendments and supplements to all such reports and registration
statements filed by Parent with the SEC (collectively, the "Parent SEC
Reports"). The Parent SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC. Since September 29, 1997, which
is the date of the last Parent SEC Report, no event has occurred that,
individually or in the aggregate, has had or would reasonably be expected to
have a Parent Material Adverse Effect.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports has been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholders' equity 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 3.7 Pooling Matters. To the Parent's knowledge, neither Parent nor
any of its affiliates has taken or agreed to take any action that would affect
the ability of Parent to account for the business combination to be effected by
the Merger as a pooling of interests under generally accepted accounting
principles and applicable SEC interpretations. The failure of this
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representation to be true and correct, shall, if the Merger is not able to be
accounted for as a pooling of interests, constitute a breach of the Agreement by
Parent for the purposes of Section 7.1(d). If requested, the President and/or
the Chief Financial Officer of the Parent will execute any documentation on
behalf of the Parent reasonably required by Company's independent public
accountants with respect to pooling of interest accounting issues.
SECTION 3.8 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and except for this Agreement
and any other agreements or arrangements contemplated by this Agreement, Merger
Sub has not and will not have incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the Merger. Each of
the Company and the Stockholder covenants and agrees that, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, unless Parent shall
otherwise agree in writing, the Company shall, and the Stockholder shall cause
the Company to, conduct its business and shall cause the businesses of its
subsidiaries to be conducted in all material respects in the ordinary course of
business; and the Company shall, and the Stockholder shall cause the Company
to, use all reasonable commercial efforts to preserve substantially intact the
business organization of the Company and its subsidiaries taken as a whole, to
keep available the services of the present key officers, employees and
consultants of the Company and its subsidiaries taken as a whole and to preserve
the present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither the Company nor any of its
subsidiaries shall, and the Stockholder shall cause the Company not to, during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, directly or indirectly
do, or propose to do, any of the following without the prior written consent of
Parent:
(a) amend or otherwise change the Certificate of Incorporation or By-Laws
of the Company or any of its subsidiaries;
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(b) issue (except for the issuance of shares upon the exercise of any
outstanding stock options), sell, pledge, dispose of or encumber, or authorize
the issuance (except for the issuance of shares upon the exercise of any
outstanding stock options), sale, pledge, disposition or encumbrance of, any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, without limitation, any phantom
interest) in the Company or any of its subsidiaries.
(c) sell, pledge, dispose of or encumber any assets of the Company or any of
its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice and (ii) dispositions of
obsolete or worthless assets);
(d) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary
to purchase, repurchase, redeem or otherwise acquire, any of its securities or
any securities of its subsidiaries, including, without limitation, shares of
Company Common Stock or any option, warrant or right, directly or indirectly, to
acquire shares of Company Common Stock, including the Stock Options, except with
respect to Stock Options, to the extent the Company may be otherwise
contractually required, or enter into any agreement to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or assets)
any business or any corporation, partnership or other business organization or
division; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, except in each case in
the ordinary course of business consistent with past practice, or make any loans
or advances; (iii) enter into or amend any contract or agreement other than in
the ordinary course of business; (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess of $100,000 for
the Company and its subsidiaries taken as a whole; or (v) enter into or amend
any contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.1(e);
(f) (i) increase the compensation payable or to become payable to its
executive officers, directors or employees except in the ordinary course of
business consistent with past practice; (ii) grant any additional severance or
termination pay to, or enter into any new employment or severance agreements
with, any director, executive officer or current employee of the Company or its
subsidiaries; (iii) enter into any employment or severance agreement with any
new employees of the Company or its subsidiaries except in the ordinary course
of business consistent
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with past practice; or (iv) establish, adopt, enter into or amend any collective
bargaining, profit sharing, thrift, restricted stock, pension, retirement,
deferred compensation or severance plan, trust, fund or policy for the benefit
of current or former directors, officers or employees of the Company or any of
its subsidiaries, except, in each case, as may be required by law;
(g) except as required under generally accepted accounting principles, take
any action to change in any material respect the accounting policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts receivable)
of the Company or any subsidiary (except in the case of subsidiaries to conform
to the Company's policies and procedures);
(h) make any tax election inconsistent with past practice or settle or
compromise any federal, state, local or foreign tax liability or agree to an
extension of a statute of limitations, in each case which would be material to
the Company and its subsidiaries taken as a whole;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) material to
the Company and its subsidiaries taken as a whole, 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 contained in the Company SEC Reports filed prior to the date of this
Agreement or incurred in the ordinary course of business and consistent with
past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (i) above.
SECTION 4.2 No Solicitation.
(a) Neither the Company nor the Stockholder shall, directly or indirectly,
through any officer, director, employee, representative or agent of the Company
or any of its subsidiaries, (i) solicit, initiate or encourage the initiation of
any inquiries or proposals regarding any merger, sale of substantial assets,
sale of shares of capital stock or similar transactions involving the Company or
any subsidiaries of the Company other than the Merger (any of the foregoing
inquiries or proposals being referred to herein as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any nonpublic
information to any person relating to, any Acquisition Proposal or (iii) agree
to, approve or recommend any Acquisition Proposal.
(b) The Company shall immediately notify, both orally and in writing,
Parent after receipt of any Acquisition Proposal, or any modification of or
amendment to any Acquisition Proposal, or any request for nonpublic information
relating to the Company or any of its subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company or any subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is considering making, or
has made, an Acquisition Proposal.
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(c) The Company and the Stockholder shall ensure that the officers and
directors of the Company and its subsidiaries and any investment banker or other
advisor or representative retained by the Company or the Stockholder are aware
of the restrictions described in this Section 4.2.
SECTION 4.3 Conduct of Business by Parent 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, Parent covenants and agrees
that, unless the Company shall otherwise agree in writing, Parent shall conduct
its business, and cause the businesses of its subsidiaries to be conducted, in
the ordinary course, other than actions taken by Parent or its subsidiaries in
contemplation of the Merger, and shall not, without the prior written consent of
the Company, amend or otherwise change Parent's Restated Articles of
Organization or By-Laws, or take or agree in writing or otherwise to take any
action which, directly or indirectly, would make any of the representations or
warranties of Parent contained in this Agreement untrue or incorrect or prevent
Parent from performing or cause parent not to perform its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 HSR Act. As promptly as practicable after the date of the
execution of this Agreement, the Company, the Stockholder and Parent shall file
notifications under and in accordance with the HSR Act in connection with the
Merger and the transactions contemplated hereby and respond as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice for additional information or
documentation and respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters.
SECTION 5.2 Stockholder Approval. By his execution hereof, the Stockholder
hereby irrevocably acknowledges his approval of the Merger, this Agreement and
the transactions contemplated hereby.
SECTION 5.3 Access to Information; Confidentiality. Upon reasonable
notice, the Company and Parent shall each (and shall cause each of their
subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access, during the period to the
Effective Time, to all of its properties, books, contracts, commitments and
records and, during such prior period, the Company and Parent each shall (and
shall cause each of their subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request, and each shall make available to the other the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either Parent or
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the Company may reasonably request. Each party shall keep such information
confidential in accordance with the terms of the mutual non-disclosure letter,
dated October ___, 1997 (the "Confidentiality Letter"), between Parent and the
Company.
SECTION 5.4 Consents; Approvals. The Company, the Stockholder and Parent
shall each use all reasonable efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States and foreign governmental and regulatory rulings and approvals), and the
Company and Parent shall make all filings (including, without limitation, all
filings with United States and foreign 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, in each case as promptly as practicable. The
Company, Stockholder and Parent shall furnish promptly all information required
for any application or other filing to be made pursuant to the rules and
regulations of any United States or foreign governmental body in connection with
the transactions contemplated by this Agreement.
SECTION 5.5 Agreements with Respect to Affiliates. The Company shall
deliver to Parent a letter (the "Affiliate Letter") identifying all persons who
are, as of the date hereof, "affiliates" of the Company under the Securities
Act. The Company shall use its best efforts to cause each person who is
identified as an "affiliate" in the Affiliate Letter to deliver to Parent, prior
to the Effective Time, a written agreement (an "Affiliate Agreement") in
connection with restrictions on affiliates in respect of pooling of interests
accounting treatment in substantially the form attached hereto as Exhibit 5.5.
SECTION 5.6 Stockholder Agreement and Investment Letter. Stockholder shall
execute a Stockholder Agreement and Investment Letter in the form of Exhibit 5.6
concurrently with the execution of this Agreement.
SECTION 5.7 Notification of Certain Matters. The Company and the
Stockholder shall give prompt notice to Parent, and Parent shall give prompt
notice to the Company, of (i) the occurrence or nonoccurrence of any event known
to such party the occurrence or nonoccurrence of which would be likely to cause
any representation or warranty contained in this Agreement to become materially
untrue or inaccurate, or (ii) any failure of the Company, Stockholder, Parent or
Merger Sub, as the case may be, materially 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 provided further that failure to give such
notice shall not be treated as a breach of covenant for the purposes of Sections
6.2(a) or 6.3(a) unless the failure to give such notice results in material
prejudice to the other party.
SECTION 5.8 Further Action/Tax Treatment. 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
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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 otherwise to satisfy or cause to be satisfied all conditions
precedent to its obligations under this Agreement. 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. Each of Parent, Merger Sub, Company and the Stockholder
shall use its best efforts to cause the Merger to qualify, and will not (both
before and after consummation of the Merger) take any actions which to its
knowledge would reasonably be expected to prevent the Merger from qualifying, as
a reorganization under the provisions of Section 368 of the Code. Following the
Merger, Parent will cause the Surviving Corporation to continue the Company's
historic business or use a significant portion of the Company's historic
business assets in a business. Parent agrees, and agrees to cause the Surviving
Corporation , (i) to retain and maintain accounting and Tax records and
information relevant to determining the income Tax liability of the Company for
periods prior to the Effective Time until the expiration of the applicable
statue of limitations (giving effect to any extension thereof), and thereafter
not to dispose of such records without first offering them to the Stockholder,
and (ii) to allow the Stockholder or his agents to inspect, review and make
copies of such records, at Stockholder's's expense, as the Stockholder deems
necessary or appropriate from time to time, such activities to be conducted
during normal business hours.
SECTION 5.9 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 written 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 rules and
regulations of the Nasdaq National Market System, if it has used all reasonable
efforts to consult with the other party prior thereto.
SECTION 5.10 Pooling Accounting Treatment. Each of Parent, the Stockholder
and the Company agrees not to take any action that to its knowledge would
reasonably be expected to adversely affect the ability of Parent to treat the
Merger as a pooling of interests, and each of Parent and the Company agrees to
take reasonable efforts to seek to negate the impact of any past actions that to
its knowledge would reasonably be expected to adversely impact the ability of
Parent to treat the Merger as a pooling of interests. The taking by Parent or
the Company of any action prohibited by the previous sentence, or the failure of
Parent or the Company to take any action required by the previous sentence,
shall, if the Merger is not able to be accounted for as a pooling of interests,
constitute a breach of this Agreement by Parent or the Company, as the case may
be, for the purposes of Section 7.1(d).
SECTION 5.11 Board Representation. Parent will take such reasonable action
as is necessary to cause the Stockholder to be elected to serve as a Class III
director of Parent.
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SECTION 5.12 Listing of Parent Shares. Parent shall use its best efforts to
continue the quotation of the Parent Common Stock on the Nasdaq National Market
during the term of this Agreement. Parent shall use its best efforts to cause
the Parent Shares to be issued in the Merger to be approved for quotation, upon
official notice of issuance, on the Nasdaq National Market.
SECTION 5.13 Reorganization Transaction. Parent has no present plan or
intent to liquidate the Surviving Corporation or sell or transfer to a
subsidiary, or otherwise dispose of the historic business assets of the Company.
Neither Parent nor Surviving Corporation, as applicable, shall, pursuant to a
plan in effect on the date hereof, (i) discontinue the historic business of the
Company, (ii) transfer all or substantially all of the stock or assets of the
Surviving Corporation to an affiliate, or to any third party, (iii) cause
Surviving Corporation to merge or consolidate with or into any other entity, or
(iv) take any other action that would result in a treatment of Stockholder's
receipt of the Merger Consideration other than pursuant to Section 368(a)(2)(E)
of the Code.
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) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(b) 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, nor shall any proceeding brought
by any administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending;
and there shall not be any action taken, or any Law enacted, entered, enforced
or deemed applicable to the Merger, which makes the consummation of the Merger
illegal;
(c) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by any governmental authority
or administrative agency before any governmental authority, administrative
agency or court of competent jurisdiction, nor shall there be in effect any
judgment, decree or order of any governmental authority, administrative agency
or court of competent jurisdiction, in either case, seeking to prohibit or limit
Parent from exercising all material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation by Parent
or any of its subsidiaries of all or a material portion of the business or
assets of Parent or any of its
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subsidiaries, or seeking to compel Parent or any of its subsidiaries to dispose
of or hold separate all or any material portion of the business or assets of
Parent and its subsidiaries taken as a whole (including the Surviving
Corporation and its subsidiaries), as a result of the Merger or the transactions
contemplated by this Agreement; and
(d) Nasdaq. The Parent Shares to be issued in the Merger shall have been
approved, upon official notice of issuance, for quotation on the Nasdaq National
Market.
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 and the Stockholder contained in this Agreement shall be true and
correct in all respects at and as of the Effective Time as if made at and as of
such time, except for (i) those representations and warranties which address
matters only as of a particular date (which shall have been true and correct as
of such date, subject to clause (ii)), and (ii) where the failure of the
representations and warranties to be true and correct would not reasonably be
expected to have a Company Material Adverse Effect, with the same force and
effect as if made at and as of the Effective Time, and Parent and Merger Sub
shall have received a certificate to such effect signed on behalf of the Company
by the President and the Chief Financial Officer of the Company and by the
Stockholder;
(b) Agreements and Covenants. The Company and the Stockholder 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 or them at or
prior to the Effective Time, and Parent and Merger Sub shall have received a
certificate to such effect signed on behalf of the Company by the President and
the Chief Financial Officer of the Company and by the Stockholder;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Company for the due 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
consents, etc. would not reasonably be expected to have a Company Material
Adverse Effect;
(d) Opinions of Accountants. Parent shall have received from each of
Coopers & ▇▇▇▇▇▇▇ L.L.P. and Price Waterhouse LLP, independent accountants, an
opinion to the effect that the Merger, if consummated in accordance with the
provisions of this Agreement, will qualify for pooling of interests accounting
treatment in accordance with GAAP and the rules and regulations of the SEC;
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(e) Opinion of Counsel to Company. The Parent shall have received an
opinion of Piper & Marbury L.L.P., counsel to the Company and the Stockholder,
in substantially the form attached hereto as Exhibit 6.2(e);
(f) Affiliate Agreements. Parent shall have received from each person
who is identified in the Affiliate Letter as an "affiliate" of the Company, an
Affiliate Agreement, and such Affiliate Agreement shall be in full force and
effect, except for any Affiliate Agreements the failure to obtain or be in full
force and effect would not prevent the Merger from qualifying for pooling-of-
interests accounting treatment; and
(g) Noncompetition Agreement. Parent shall have received an executed copy
of the Noncompetition Agreement between the Company and the Stockholder in the
form of Exhibit 6.2(g) hereof.
SECTION 6.3 Additional Conditions to Obligation of the Company and the
Stockholder. The obligation of the Company and the Stockholder 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
in all respects on and as of the Effective Time, except for (i) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date, subject to clause
(ii)), and (ii) where the failure of the representations and warranties to be
true and correct would not reasonably be expected to have a Parent Material
Adverse Effect, 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 on behalf of Parent 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 on behalf of Parent by the President and the Chief Financial Officer of
Parent;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be 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 consents, etc. would not reasonably be expected to have
a Parent Material Adverse Effect;
(d) Opinion of Counsel to Parent. The Company shall have received an
opinion of Ropes & ▇▇▇▇, counsel to Parent, in substantially the form attached
hereto as Exhibit 6.3(d);
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(e) Opinions of Accountants. The Company shall have received the opinion
of Coopers & ▇▇▇▇▇▇▇ L.L.P. and a copy of the opinion of Price Waterhouse LLP
relating to the matters set forth in Section 6.2(d) above; and
(f) Registration Rights Agreement. The Parent shall have entered into a
Registration Rights Agreement with the Stockholder in substantially the form
attached hereto as Exhibit 6.3(f).
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by December 31, 1997 (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); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party who has not complied with its
obligations under Section 5.4 and such noncompliance materially contributed to
the issuance of any such order, decree or ruling or the taking of such action);
or
(d) by Parent or the Company, (i) if any representation or warranty of the
Company or Parent, as the case may be, set forth in this Agreement shall be
untrue when made or shall have become untrue, or (ii) upon a breach of any
covenant or agreement on the part of the Company or Parent, as the case may be,
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), as the case may be, would not be
satisfied (either (i) or (ii) above being a "Terminating Breach"), provided,
that, if such Terminating Breach is curable prior to December 31, 1997 by the
Company or Parent, as the case may be, through the exercise of its reasonable
best efforts and for so long as the Company or Parent, as the case may be,
continues to exercise such reasonable best efforts, neither Parent nor the
Company, respectively, may terminate this Agreement under this Section 7.1(d).
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
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on the part of any party hereto or any of its affiliates, directors, officers or
stockholders except (i) as set forth in Sections 7.3, 8.2, 8.3, 8.5, 8.12 and
8.14 hereof, and (ii) nothing herein shall relieve any party from liability for
any breach hereof prior to such termination.
SECTION 7.3 Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated.
ARTICLE VII
GENERAL PROVISIONS
SECTION 8.1 Director and Officer Indemnification and Insurance.
(a) The Certificate of Incorporation of the Company, which will be the
Certificate of Incorporation and By-Laws of the Surviving Corporation, contains
provisions with respect to indemnification, which provisions shall not be
amended, repealed or otherwise modified for a period of ten years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at or before the Effective Time were directors, officers,
employees or agents of the Company.
(b) The By-Laws of the Surviving Corporation shall contain provisions with
respect to indemnification similar in effect to the provisions currently set
forth in the By-Laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of ten years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who at or before the Effective Time were directors, officers, employees or
agents of the Company, unless such modification is required by law.
(c) The Company shall, to the fullest extent permitted under applicable
law or under the Company's Certificate of Incorporation or By-Laws and
regardless of whether the Merger becomes effective, indemnify and hold harmless,
and, after the Effective Time, Parent and the Surviving Corporation shall, to
the fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-Laws, indemnify and hold
harmless, each present and former director, officer or employee of the Company
or any of its subsidiaries (collectively, the "Indemnified Parties") against any
costs or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claims, action, suite, proceeding or investigation, whether civil, criminal,
administrative or investigative, (x) arising out of or pertaining to the
transactions contemplated by this Agreement or (y) otherwise with respect to any
acts or omissions occurring at or prior to the Effective Time, to the same
extent as provided in the Company's Certificate of Incorporation or By-Laws or
any applicable contract or agreement as in effect on the date hereof. In each
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time),
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(i) any counsel retained by the Indemnified Parties for any period after the
Effective Time shall be reasonably satisfactory to the Surviving Corporation,
(ii) after the Effective Time, Parent or the Surviving Corporation shall pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received, and (iii) Parent and the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that neither Parent nor the
Surviving Corporation shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld); and
provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such ten-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties.
(d) Parent and the Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
with the Company's directors and officers existing at or before the Effective
Time. For a period of four years after the Effective Time, Parent shall
maintain directors' and officers' liability insurance covering those persons who
are the Surviving Corporation's directors and officers on the same basis and to
the same extent as the Parent maintains directors' and officers' liability
insurance covering the directors and officers of its other subsidiaries.
(e) This Section 8.1 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
Parent and the Surviving Corporation and shall be enforceable by the Indemnified
Parties, their heirs and their representatives.
SECTION 8.2 Indemnification.
(a) Survival of Representations and Warranties.
------------------------------------------
(i) The representations and warranties of the Company, the
Stockholder the Parent and the Merger Sub made in this Agreement and in the
documents and certificates delivered in connection with the Closing shall
survive the Merger until that date which is twelve months from the Closing
Date (the "Indemnity Period") and 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.
(ii) No claim for indemnification under this Section 8.2 for breach of
a representation or warranty may be commenced after the Indemnity Period,
provided, however, that claims made within the applicable time period shall
survive to the extent of such claim until such claim is finally determined
and, if applicable, paid.
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(b) Indemnification of the Parent and Merger Sub. The Stockholder (in his
--------------------------------------------
capacity hereunder, and for purposes of Section 8.2(d) below, an "Indemnitor")
agrees to indemnify, defend, protect, and hold harmless each of Parent, Merger
Sub, the Surviving Corporation and each of their respective subsidiaries and
affiliates (each in its capacity as an indemnified party, an "Indemnitee") at
all times from and after the date of this Agreement from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such Indemnitee as a result of or incident to (i) any breach of any
representation or warranty of the Company and the Stockholder set forth herein
(or in any certificate or other document delivered in connection with the
Closing) as of the date made (as such representation or warranty would read if
all qualifications as to materiality were deleted from it) with respect to which
a claim for indemnification is brought by an Indemnitee within the applicable
survival period, if any, described in Section 8.2(a), and (ii) any breach or
nonfulfillment by the Company or the Stockholder, or any noncompliance by the
Company or the Stockholder with, any covenant, agreement, or obligation
contained herein (or in any certificate or other document delivered in
connection with the Closing).
(c) Indemnification of the Company and the Stockholder. The Parent and
--------------------------------------------------
the Merger Sub (each in its capacity hereunder, and for purposes of Section
8.2(d) below, an "Indemnitor") agree to indemnify, defend, protect, and hold
harmless each of the Company and the Stockholder and each of their respective
subsidiaries and affiliates (each in its capacity as an indemnified party, an
"Indemnitee") at all times from and after the date of this Agreement from and
against all Damages incurred by such Indemnitee as a result of or incident to
(i) any breach of any representation or warranty of the Parent and the Merger
Sub set forth herein (or in any certificate or other document delivered in
connection with the Closing) as of the date made (as such representation or
warranty would read if all qualifications as to materiality were deleted from
it) with respect to which a claim for indemnification is brought by an
Indemnitee within the applicable survival period, if any, described in Section
8.2(a), and (ii) any breach or nonfulfillment by the Parent or the Merger Sub,
or any noncompliance by the Parent or the Merger Sub with, any covenant,
agreement, or obligation contained herein (or in any certificate or other
document delivered in connection with the Closing).
(d) Third Person Claims. Promptly after an Indemnitee has received notice
-------------------
of or has knowledge of any claim by a person not a party to this Agreement
("Third Person") or the commencement of any action or proceeding by a Third
Person, the Indemnitee shall, give the Indemnitor written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
-------- -------
failure to give such notice will not effect the Indemnitees' right to
indemnification hereunder with respect to such claim, action or proceeding,
except to the extent that the Indemnitor has been actually prejudiced as a
result of such failure. If the Indemnitor notifies the Indemnitee within 30
days from the receipt of the foregoing notice that he wishes to defend against
the claim by the Third Person the Indemnitor shall have the right to assume and
control the defense of the claim by appropriate proceedings with counsel
reasonably acceptable
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to Indemnitee. The Indemnitee may participate in the defense, at its sole
expense of any such claim for which the Indemnitor shall have assumed the
defense pursuant to the preceding sentence, provided that counsel for the
Indemnitor shall act as lead counsel in all matters pertaining to the defense or
settlement of such claims, suit or proceedings; provided, however, that
-------- -------
Indemnitee shall control the defense of any claim or proceeding that in
Indemnitee's reasonable judgment could have a material and adverse effect on
Indemnitee's business apart from the payment of money damages. The Indemnitee
shall be entitled to indemnification for the reasonable fees and expenses of its
counsel for any period during which the Indemnitor has not assumed the defense
of any claim. Whether or not the Indemnitor shall have assumed the defense of
any claim, neither the Indemnitee nor the Indemnitor shall make any settlement
with respect to any such claim, suit or proceeding without the prior consent of
the other, which consent shall not be unreasonably withheld or delayed. It is
understood and agreed that in situations where failure to settle a claim
expeditiously could have an adverse effect on the party wishing to settle, the
failure of a party controlling the defense to act upon a request for consent to
such settlement within ten business days of receipt of notice thereof shall be
deemed to constitute consent to such settlement for purposes of this Section
8.2.
(e) Limitations on Indemnification. No Indemnified Party shall be
------------------------------
entitled to indemnification under this Section 8.2 for Damages relating to
breaches of representations and warranties set forth herein or in any
certificate or document delivered in connection herewith until the aggregate
amount of Damages incurred by such person or persons exceeds $100,000, in which
event such person or persons shall be entitled to indemnification only for the
amount of all Damages in excess of $100,000. Notwithstanding anything to the
contrary set forth herein, in the absence of fraud, an Indemnitor's
indemnification obligations hereunder shall not exceed ten percent (10%) of the
Merger Consideration.
(f) Method of Payment. All claims for indemnification by the Stockholder
-----------------
hereunder shall be payable only in shares of Parent Common Stock and for
purposes of determining the number of shares of Parent Common Stock to be
transferred to Buyer in respect of any such claim shall be valued at the Average
Closing Price.
(g) Exclusive Remedy. In the absence of fraud, the indemnification
----------------
provisions of this Section 8.2 shall be the sole and exclusive remedy for
breaches of this Agreement by the parties hereto.
SECTION 8.3 Survival, Etc.
(a) The agreements set forth in Sections 8.1 and 8.2 shall survive
independently and Article I and Section 5.8 shall survive the Effective Time
indefinitely and those set forth in Section 7.3 shall survive such termination
indefinitely.
(b) Except as otherwise provided in this Section 8.3, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of
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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.
(c) Any disclosure made with reference to one or more sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed only with respect to such section unless it is reasonably apparent
from a reading of such disclosure that it also applies to other sections in
which case it shall also be deemed disclosed with respect to such other
sections.
(d) Reference to a party's "knowledge" in this Agreement refers to the
actual knowledge of the directors and officers of that party who are required to
file reports under Section 16(a) of the Exchange Act.
SECTION 8.4 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 if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by facsimile transmission, with confirmation
received and a copy placed in the United States mail to the following addresses,
to the telecopy numbers specified below (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
The Registry, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to the Company:
The Hunter Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Piper & Marbury L.L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.5 Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliates" means any officer or director of a person or 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;
including, without limitation, any partnership or joint venture in which the
first mentioned person (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 5% or more;
(b) "beneficial owner" with respect to any shares of Company Common Stock
means a person who shall be deemed to be the beneficial owner of such shares (as
such term is defined in Rule 13d-3 of the Exchange Act);
(c) "business day" means any day other than a day on which banks in The
Commonwealth of Massachusetts are required or authorized to be closed;
(d) "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;
(e) "generally accepted accounting principles" shall mean United States
generally accepted accounting principles.
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(f) "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
(g) "subsidiary" or "subsidiaries" of the Company, Parent or any other
person means any corporation, partnership, joint venture or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% 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.
SECTION 8.6 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 the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.7 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, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 8.8 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 8.9 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
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
SECTION 8.10 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letters), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
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SECTION 8.11 Assignment; Guarantee of Merger Sub Obligations. This
Agreement shall not be assigned by operation of law or otherwise, except that
Merger Sub may assign all or any of its rights hereunder to any wholly owned
subsidiary of the Parent provided that no such assignment shall relieve the
assigning party of its obligations hereunder. Parent guarantees the full and
punctual performance by Merger Sub of all the obligations hereunder of Merger
Sub or any such assignees.
SECTION 8.12 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing 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, including, without limitation, by way of subrogation.
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Maryland
applicable to contracts executed and fully performed within the State of
Maryland.
SECTION 8.15 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.
[This space intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Stockholder
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
THE REGISTRY, INC.
By: /s/ G. ▇▇▇▇ ▇▇▇▇▇▇
_______________________________________
Name: G. ▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
GATHERER ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Secretary
THE HUNTER GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
STOCKHOLDER
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 1.5A - Directors
Schedule 1.5B - Officers
Exhibits
--------
Exhibit 5.5 Affiliate Agreement
Exhibit 5.6 Stockholder Agreement and Investment Letter
Exhibit 6.2(e) Piper & Marbury L.L.P. Opinion
Exhibit 6.2(g) Noncompetition Agreement
Exhibit 6.3(d) Ropes & ▇▇▇▇ Opinion
Exhibit 6.3(f) Registration Rights Agreement
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