AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COMMAND SYSTEMS, INC.,
ICICI INFOTECH INC.
and
ICICI ACQUISITION CORPORATION
January 26, 2001
Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January 26,
2001, by and among ICICI Infotech Inc., a Delaware corporation ("Parent"), ICICI
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser") and Command Systems, Inc., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Purchaser and the
Company have determined that it would be advisable and in the best interests of
their respective stockholders for Parent to acquire the Company on the terms and
conditions set forth herein;
WHEREAS, certain stockholders have executed and delivered to Parent and
Purchaser a Stock Tender Agreement, dated as of January 26, 2001 (the "Stock
Tender Agreement"), pursuant to which they have agreed to take certain actions
with respect to the Offer (as defined below);
WHEREAS, to effect the acquisition, it is proposed that Purchaser commence
a cash tender offer, as it may be amended from time to time as permitted under
this Agreement, to purchase all shares of common stock, par value $.01 per
share, of the Company (the "Company Common Stock") issued and outstanding upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to effect the acquisition, it is further proposed that following
consummation of the Offer, Purchaser will be merged with and into the Company;
and
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each share in the Offer and the Merger (as defined
below) is fair to the holders of such shares and has resolved to recommend that
the holders of such shares accept the Offer and adopt this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER AND MERGER
1.1 The Offer.
---------
(a) As promptly as practicable (but in no event later than eleven
(11) business days after the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) an offer
(the "Offer") to purchase for cash all shares of the issued and outstanding
Company Common Stock (the "Shares"), at a price per Share, based upon the
representations set forth in Section 3.2 hereof, of $5.00 net to the seller
in cash (such price per Share, or such higher price per Share as may be
paid in the Offer, being referred to herein as the "Offer Price"), subject
to there being validly tendered and not withdrawn prior to the expiration
of the Offer, that number of Shares which, together with the Shares
beneficially owned by Parent or Purchaser, represent at least 60% of the
Shares outstanding on a fully diluted basis (the "Minimum Condition") and
to the other conditions set forth in Annex A hereto. The initial expiration
date of the Offer shall be the twentieth business day from and after the
date the Offer is commenced as determined in accordance with Rule 14d-2(a)
under the Exchange Act (the "Initial Expiration Date"). Unless the Offer is
extended as provided herein, Purchaser shall, on the terms and subject to
the prior satisfaction or waiver (except that the Minimum Condition may not
be waived) of the conditions of the Offer, accept for payment and pay for
Shares tendered as soon as it is legally permitted to do so under
applicable law. The obligations of Purchaser to commence the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior
to the expiration of the Offer and not withdrawn shall be subject only to
the Minimum Condition and the other conditions set forth in Annex A hereto.
The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto.
(b) Without the prior written consent of the Company, neither Parent
nor Purchaser will (i) decrease the Offer Price, (ii) decrease the number
of Shares sought in the Offer, (iii) change the form of consideration
payable in the Offer, (iv) impose conditions to the Offer in addition to
the Minimum Condition and the other conditions set forth in Annex A, (v)
except as provided below or required by any rule, regulation,
interpretation or position of the United States Securities and Exchange
Commission ("SEC") applicable to the Offer, change the expiration date of
the Offer, or (vi) otherwise amend or change any term or condition of the
Offer in a manner adverse to the holders of the Shares. Notwithstanding
anything in this Agreement to the contrary, without the consent of the
Company, Purchaser shall have the right to extend the Offer beyond the
Initial Expiration Date (i) for an additional period of ten (10) days; (ii)
for periods of ten (10) days each if any conditions to the Offer have not
been satisfied or waived, subject to Section 7.1 hereof; (iii) for any
period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer or any period required by
applicable law; and (iv) if all of the conditions to the Offer are
satisfied or waived but the number of the shares of each class of Company
Common Stock validly tendered and not withdrawn is less than ninety percent
(90%) of the then outstanding number
2
of shares of Company Common Stock, for one additional period of not less
than three (3) nor more than twenty (20) Business Days, provided that
Purchaser shall accept and pay for all securities tendered, as soon as
reasonably practical, prior to the date of such extension, shall otherwise
meet the requirements of Rule 14d-11 under the Exchange Act in connection
with such extension and shall waive any condition to the consummation of
the Merger other than the conditions in Section 6.1(c) that may fail to be
satisfied during such extension.
(c) As soon as reasonably practicable on the date the Offer is
commenced, Parent and Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer (together with all
amendments and supplements thereto and including the exhibits thereto, the
"Schedule TO"). The Schedule TO will include or incorporate by reference
the Offer to Purchase and forms of the related letter of transmittal and
such other ancillary documents and instruments pursuant to which the Offer
will be made (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). Parent and Purchaser represent that the
Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent
or Purchaser with respect to information supplied by or on behalf of the
Company or its financial advisors or representatives in writing for
inclusion in the Offer Documents. The Company agrees to provide and to
cause its financial advisors and representatives to provide all information
necessary for inclusion in the Offer Documents. The information supplied by
the Company for inclusion in the Schedule TO and the Offer Documents shall
not, on the date filed with the SEC and on the date first published, sent
or given to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of
Parent and Purchaser further agrees to take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and Purchaser, on the one hand, and
the Company, on the other hand, agrees promptly to correct any information
provided by it, and to use commercially reasonable efforts to correct any
information provided on its behalf, for use in the Offer Documents if and
to the extent that it shall have become false and misleading in any
material respect and each of Parent and Purchaser further agrees to take
all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule TO and the Offer Documents before they
are filed with the SEC. In addition, Parent and Purchaser agree to provide
the Company and its counsel in writing with any comments or other
communications that Parent, Purchaser or their counsel may receive from
time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments or other communications, and
shall provide the Company and its counsel a reasonable opportunity to
comment on the proposed response of Parent and Purchaser to such comments.
3
1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors of the Company, at a meeting
duly called and held and by unanimous vote of those directors present at
such meeting, has (i) approved this Agreement and the transactions
contemplated hereby and thereby, including the Offer and the Merger
(collectively, the "Transactions"), (ii) determined that as of the date
hereof the Transactions are fair to and in the best interests of the
Company's stockholders and (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares
thereunder to Purchaser and approve and adopt this Agreement and the
Merger; provided, however, that such recommendation may be withdrawn as
provided in Section 5.2, modified or amended if, in the opinion of the
Board of Directors of the Company, after consultation with its legal
counsel, such recommendation would be inconsistent with its fiduciary
duties to the Company's stockholders under applicable law and Section 5.2
hereof. The Company hereby consents to the inclusion in the Offer Documents
of the recommendation of the Board of Directors of the Company described in
Section 1.2(a)(ii) above. The Company has been advised that all of its
directors and executive officers intend either to tender their Shares
pursuant to the Offer or to vote their Shares in favor of the Merger.
(b) As promptly as practicable following the commencement of
the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement Schedule 14D-9 (together with all
amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9") which shall, subject to the fiduciary duties of the
Company's directors under applicable law and to the provisions of this
Agreement, contain the recommendations referred to in Section 1.2(a)
hereof. The Company represents that the Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent
or given to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except that no representation is made by the Company with respect to
information supplied in writing by Parent or Purchaser for inclusion in the
Schedule 14D-9. The information supplied in writing by Parent or Purchaser
for inclusion in the Schedule 14D-9 shall not, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company further agrees to take all
steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Each of the Company, on the
one hand, and Parent and Purchaser, on the other hand, agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it shall have become false and misleading in any
material respect and the Company further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to
be disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its
4
counsel shall be given a reasonable opportunity to review and comment on the
initial Schedule 14D-9 before it is filed with the SEC. In addition, the Company
agrees to provide Parent, Purchaser and their counsel in writing with any
comments, or other communications that the Company or its counsel may receive
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments or other communications, and shall
provide Parent, Purchaser and their counsel a reasonable opportunity to comment
on the proposed response of the Company to such comments.
(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Parent and Purchaser mailing labels,
security position listings and any available listing or computer file(s)
containing the names and addresses of the record holders of the Shares as of a
recent date, and shall furnish Parent with such information and assistance as
Parent or its agents may reasonably request in communicating the Offer to the
holders of the Shares. Except for such steps as are necessary to disseminate the
Offer Documents, Parent and Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will upon
request of the Company deliver or cause to be delivered to the Company or
destroy all copies of such information then in its possession or the possession
of its agents or representatives.
1.3 Directors. (a) Promptly upon the purchase of and payment for
---------
Shares by Parent or any of its Subsidiaries (as defined in Section 8.10) which
represent at least a majority of the outstanding shares of Company Common Stock
(on a fully diluted basis), Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board of Directors (giving effect to the directors designated by Parent pursuant
to this sentence) multiplied by the percentage that the aggregate number of
Shares beneficially owned by Purchaser, Parent and any of their affiliates bears
to the total number of shares of Company Common Stock then outstanding. The
Company shall take all action necessary to cause Parent's designees to be
elected or appointed to the Company's Board of Directors and to secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees to be so elected to the Company's Board of Directors, and
shall cause Parent's designees to be so elected. At such times, the Company will
take all action necessary to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Company's
Board of Directors of (A) each committee of the Board of Directors and (B) each
board of directors (and committee thereof) of each of the Company's Subsidiaries
(as defined below), in each case to the extent permitted by the rules of the
Nasdaq Stock Market. Notwithstanding the foregoing, until the Effective Time (as
defined in Section 1.5 hereof), the Company shall retain as members of its Board
of Directors at least two (2) directors that are directors of the Company on the
date hereof (the "Company Designees"), and Parent and Purchaser shall not vote
their Shares of Company Common Stock or take any other action inconsistent with
this
5
provision; provided, that subsequent to the purchase of and payment for Shares
pursuant to the Offer, Parent shall always have its designees represent at least
a majority of the entire Board of Directors.
(b) The Company's obligations under Section 1.3(a) shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take, at its expense, all actions required pursuant to
such Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
Section 1.3(a), including mailing to stockholders the information required by
such Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees
to be elected to the Company's Board of Directors. Parent or Purchaser will
supply the Company any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors and prior to the
Effective Time, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder, any waiver of any condition or any
of the Company's rights hereunder, any other action by the Company hereunder or
any action that would adversely affect the rights of the stockholders of the
Company or the holders of Options (as defined in Section 2.1(d)) with respect to
the transactions contemplated hereby may be effected only by the action of a
majority of the Company Designees then in office, which action shall be deemed
to constitute the action of the full Board of Directors; provided, that if the
number of Company Designees shall be reduced below two for any reason
whatsoever, any remaining Company Designee shall be entitled to designate a
person to fill such vacancy who shall be deemed to be a Company Designee for
purposes of this Agreement or, if no Company Designee then remains, the other
directors shall designate two persons to fill such vacancies who shall not be
stockholders, affiliates or associates of Purchaser or Parent and such persons
shall be deemed to be Company Designees for purposes of this Agreement.
1.4 The Merger. Subject to the terms and conditions of this Agreement, at
----------
the Effective Time, the Company and Purchaser shall consummate a merger (the
"Merger") pursuant to which (a) Purchaser shall be merged with and into the
Company and the separate corporate existence of Purchaser shall thereupon cease,
(b) the Company shall be the successor or surviving corporation in the Merger
and shall continue to be governed by the laws of the State of Delaware and (c)
the separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue immediately after the Merger.
The corporation surviving the Merger is sometimes hereinafter referred to as the
"Surviving Corporation." The Merger shall have the effects set forth in the
General Corporation Law of the State of Delaware (the "DGCL").
1.5 Effective Time. Parent, Purchaser and the Company will cause a
--------------
Certificate of Merger (the "Certificate of Merger"), to be executed and filed on
the date of the Closing (as defined in Section 1.6) (or on such other date as
Parent and the Company may agree) with the Secretary of State of the State
of Delaware as provided in the DGCL. The Merger shall become effective at the
time at which the Certificate of Merger has been duly filed with the Secretary
of State of the State
6
of Delaware or at such time as is agreed upon by the parties and specified in
the Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
1.6 Closing. The closing of the Merger (the "Closing") shall take place
-------
(a) at the offices of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as soon as practicable following the satisfaction or waiver of
all of the conditions set forth in Article VI hereof or (b) at such other place,
time and date as Parent and the Company may agree.
1.7 Certificate of Incorporation of the Surviving Corporation. The
---------------------------------------------------------
certificate of incorporation of Purchaser, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided for by law and pursuant to such
certificate of incorporation.
1.8 By-Laws of the Surviving Corporation. The by-laws of Purchaser, as in
------------------------------------
effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Corporation until thereafter amended as provided by law, the
certificate of incorporation of the Surviving Corporation and such by-laws.
1.9 Directors and Officers of the Surviving Corporation. The directors
---------------------------------------------------
and officers of Purchaser at the Effective Time shall, from and after the
Effective Time, be the initial directors and officers, respectively, of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's certificate of incorporation and by-laws.
1.10 Stockholders' Meeting. (a) If required by applicable law in
---------------------
order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law;
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as practicable
following the acceptance for payment and purchase of Shares by Purchaser
pursuant to the Offer for the purpose of considering and taking action upon
this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and shall (x)
obtain and furnish the information required to be included by the SEC in the
Proxy Statement (as hereinafter defined), notify Purchaser of the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the preliminary proxy or information
statement or for additional information and will supply Purchaser with copies
of all correspondence between the Company or any of its representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to
the preliminary proxy or information statement or the Transactions and, after
consultation with Parent, to respond promptly to any
7
comments made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (the "Proxy
Statement") to be mailed to its stockholders and (y) obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(iii) subject to the fiduciary obligations of the Board of
Directors under applicable law as determined by the Board of Directors after
consultation with its legal counsel, include in the Proxy Statement the
recommendation of the Board of Directors that the stockholders of the Company
vote in favor of the approval of the Merger and the adoption of this
Agreement.
(b) Parent agrees that it will provide the Company with the
information concerning Parent and Purchaser required to be included in the Proxy
Statement and will vote, or cause to be voted, all of the Shares then owned by
it, Purchaser or any of their respective Subsidiaries and affiliates in favor of
the approval of the Merger and the adoption of this Agreement.
(c) If at any time prior to the Effective Time any event with
respect to the Company or any of its Subsidiaries should occur which is required
to be described in a supplement to the Proxy Statement, such event shall be so
described, and the Company shall promptly file such supplement with the SEC and,
as required by law, disseminate the same to the stockholders of the Company.
With respect to the information relating to the Company, the Proxy Statement
will comply as to form and substance in all material respects with the
requirements of the Exchange Act.
1.11 Merger Without Meeting of Stockholders. Notwithstanding Section 1.10
--------------------------------------
hereof, in the event that Parent, Purchaser or any other Subsidiary of Parent
shall acquire at least 90% of the Shares, pursuant to the Offer or otherwise,
the parties hereto agree to take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of the
---------------------------
Merger and without any action on the part of the holders of any shares of
Company Common Stock or common stock, par value $.01 per share, of Purchaser
("Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of
----------------------
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation and
shall continue to be held by Parent.
8
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
-----------------------------------------------------
of Company Common Stock that are owned by the Company as treasury stock and any
shares of Company Common Stock owned by Parent, Purchaser or any other wholly
owned Subsidiary of parent shall be cancelled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each share of Company Common Stock issued and
------------------
outstanding (other than Shares to be cancelled in accordance with Section 2.1(b)
hereof and other than Dissenting Shares (as defined in Section 2.2 below)),
shall be converted into the right to receive, in the manner provided in Section
2.3, the Offer Price, payable to the holder thereof, without interest (the
"Merger Consideration"). All such shares of Company Common Stock, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.3.
(d) Stock Options. As of the time the Purchaser initially accepts for
-------------
payment and pays for the Shares pursuant to Section 1.1 (the AInitial Payment
Time@), each outstanding stock option (an "Option" and, collectively, the
"Options") granted under the Command Systems, Inc. 1997 Employee, Director and
Consultant Stock Plan, as amended and restated, and those certain options set
forth on Schedule 2.1(d) hereto (collectively, the "Option Plans"), whether or
not then vested or exercisable, shall be cancelled and converted into the right
to receive from the Company an amount of cash equal to the product of (i) the
number of shares of Company Common Stock subject to each Option and (ii) the
excess, if any, of the Merger Consideration over the exercise price per share of
Company Common Stock of each Option (the aggregate amount being referred to
herein as the "Option Consideration"). Prior to the Initial Payment Time, the
Company shall take all steps necessary to give written notice to each holder of
an Option that all Options shall be canceled effective as of the Initial Payment
Time and the Company shall pay such holder, promptly following the Initial
Payment Time, the Option Consideration for all Options held by such holder. The
Company's Board of Directors or any committee thereof responsible for the
administration of the Option Plans shall take any and all action necessary to
effectuate the matters described in this Section 2.1(d) on or before the Initial
Payment Time. Schedule 3.2 sets forth the number of shares of Company Common
Stock reserved for issuance upon exercise of outstanding Options and sets forth
the exercise price for each such Option. Any amounts payable pursuant to this
Section 2.1(d) shall be subject to any required withholding of taxes and shall
be paid without interest.
2.2 Dissenting Shares. Notwithstanding anything in this Agreement to the
-----------------
contrary, Shares outstanding immediately prior to the Effective Time and held by
a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Section 262 of the DGCL, if such Section 262 provides for appraisal rights for
such Shares in the Merger ("Dissenting Shares"), shall not be converted into the
right to receive the Merger Consideration as provided in Section 2.1(c) and
instead such holder of Dissenting Shares
9
shall be entitled to receive payment of the appraised value of such Dissenting
Shares in accordance with the provisions of such Section 262 unless and until
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Merger Consideration, if any,
to which such holder is entitled, without interest or dividends thereon, upon
the surrender in the manner provided in Section 2.3 of the certificate(s) which
formerly represented Shares. The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Shares and, prior to the
Effective Time, Parent shall have the right to participate in all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
2.3 Exchange of Certificates.
------------------------
(a) Paying Agent. Parent shall designate a bank or trust company
------------
reasonably acceptable to the Company to act as agent for the holders of shares
of Company Common Stock in connection with the Merger (the "Paying Agent") to
receive the funds to which holders of shares of Company Common Stock shall
become entitled pursuant to Section 2.1(c) hereof. Parent shall take all steps
necessary to deposit or cause to be deposited with the Paying Agent such funds
as needed for timely payment hereunder in accordance with this Article II. Such
funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation. Parent and/or Surviving Corporation shall pay all charges
and expenses of the Paying Agent.
(b) Exchange Procedures. As soon as reasonably practicable after the
-------------------
Effective Time but in no event more than three (3) business days thereafter, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates"), whose shares
were converted pursuant to Section 2.1 hereof into the right to receive the
Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, the Paying Agent shall promptly pay the person
entitled thereto the Merger Consideration for each share of Company Common Stock
formerly represented by such Certificate and the Certificate (and the shares of
Company Common Stock represented thereby) so surrendered shall forthwith be
cancelled. No interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificates. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such payment shall
have paid any transfer and
10
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Certificate surrendered or shall
have established to the satisfaction of the Surviving Corporation and the Paying
Agent that such tax either has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.3, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.3.
(c) Transfer Books; No Further Ownership Rights in Company Common Stock.
-------------------------------------------------------------------
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of shares of
Company Common Stock on the records of the Company. From and after the Effective
Time, the holders of Certificates evidencing ownership of shares of Company
Common Stock outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided for
herein or by applicable law. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in this Article II.
(d) Termination of Fund Liability. At any time following one (1) year
-----------------------------
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Lost or Stolen Certificates. If any Certificate shall have been lost,
---------------------------
stolen, mislaid or destroyed, then, upon receipt of (i) an affidavit of that
fact from the holder claiming such Certificate to be lost, mislaid, stolen or
destroyed, (ii) such bond, security or indemnity, as Parent or the Paying Agent
may reasonably require, and (iii) any other documentation to evidence and effect
the bona fide exchange thereof, the Merger Consideration with respect to the
shares of Company Common Stock represented by such Certificate may be paid. Each
such lost, stolen, mislaid or destroyed Certificate with respect to which any
Merger Consideration shall be paid in accordance with the provisions of this
Section 2.3(e) shall forthwith be deemed surrendered and cancelled.
11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that:
3.1 Corporate Organization and Qualification. Each of the Company and its
----------------------------------------
Subsidiaries (as defined in Section 8.10) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except where the
failure to so qualify or be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect (as defined in Section 8.10) on the
Company. Each of the Company and its Subsidiaries has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to have such
power and authority would not have a Material Adverse Effect on the Company.
3.2 Capitalization. The authorized capital stock of the Company consists
--------------
of 25,000,000 shares of Company Common Stock and 4,999,800 shares of preferred
stock, par value, $.01 per share (the "Company Preferred Stock"). There are
outstanding: (a) 7,659,665 shares of Company Common Stock, (b) Options to
purchase an aggregate of 727,901 shares of Company Common Stock and (c) no
shares of Company Preferred Stock. All of the outstanding shares of Company
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Schedule 3.2 lists each Subsidiary of the Company, such
Subsidiary's authorized capital stock, such Subsidiary's outstanding capital
stock and the record and beneficial holders of the capital stock of such
Subsidiary. Except as set forth on Schedule 3.2, as of the date hereof all
outstanding shares of capital stock of the Company's Subsidiaries are directly
or indirectly owned by the Company free and clear of all liens, charges,
encumbrances, claims and options of any nature. Except as set forth on Schedule
3.2, there are not, as of the date hereof, any outstanding or authorized
options, warrants, calls, rights (including preemptive rights), commitments or
any other agreements of any character which the Company or any of its
Subsidiaries is a party to, or may be bound by, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of the Company or any of its
Subsidiaries. Except for the capital stock of its Subsidiaries and except as
otherwise set forth on Schedule 3.2, neither the Company nor any of its
Subsidiaries owns, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture or other entity.
3.3 Authority Relative to This Agreement. The Company has the requisite
------------------------------------
corporate power and authority to execute and deliver this Agreement and, subject
to approval of this Agreement by the holders of a majority of the outstanding
Company Common Stock in accordance with the DGCL, if required, to perform its
obligations hereunder and to consummate the transactions
12
contemplated hereby. This Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of the outstanding
Company Common Stock in accordance with the DGCL). This Agreement has been duly
and validly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of Parent and Purchaser, constitutes
the valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except that the enforcement hereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
3.4 Consents and Approvals; No Violation. Neither the execution and
------------------------------------
delivery of this Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective certificate of incorporation,
respective by-laws or comparable governing instruments of the Company or any of
its Subsidiaries, (b) require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
except (i) the Proxy Statement, if required, (ii) pursuant to the applicable
requirements of the Exchange Act, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities of
other states in which the Company or any of its Subsidiaries is authorized to do
business, all of which states are set forth on Schedule 3.4(b)(iv), (iv) as may
be required by any applicable state securities or "blue sky" laws or state
takeover laws or (v) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
(c) except as set forth on Schedule 3.4(c), result in a violation or breach of,
or constitute (with or without due notice or lapse or time or both) a default
(or give rise to any right of termination, cancellation or acceleration or lien
or other charge or encumbrance) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which the Company or any of its Subsidiaries is a party or by which any of
them or any of their respective assets may be bound (each, a "Contract" and
collectively, "Contracts"), except for such violations, breaches and defaults
(or rights of termination, cancellation or acceleration or liens or other
charges or encumbrances) as to which requisite waivers or consents have been
obtained or which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 3.4 are duly and timely obtained or made and the approval of this
Agreement by the Company's stockholders has been obtained, violate any order,
writ, injunction, decree, statute, rule or regulation in effect as of the date
of this Agreement and applicable to the Company or any of its Subsidiaries or
any of their respective assets, except for violations which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
13
3.5 SEC Reports; Financial Statements and Information.
--------------------------------------------------
(a) The Company has filed all reports required to be filed by it with
the SEC pursuant to the federal securities laws and the SEC rules and
regulations thereunder, all of which as of their respective dates complied in
form and substance in all material respects with applicable requirements of the
Exchange Act (collectively, the "Company SEC Reports"). Schedule 3.5 is a true,
accurate and complete copy of the unaudited consolidated balance sheet for the
Company as of December 31, 2000 and the unaudited consolidated statements of
operations and cash flows for the Company for the twelve months ended December
31, 2000 (the "December Financial Information"). None of the Company SEC
Reports, including, without limitation, any financial statements or schedules
included therein, as of their respective dates contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity and cash flows (including the
related notes thereto) of the Company included in the Company SEC Reports comply
in form and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods (except as
otherwise noted therein), and present fairly the financial position of the
Company as of their respective dates, and the consolidated results of its
operations and its cash flows for the periods presented therein (subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments). The December Financial Information has been prepared on a basis
consistent with prior periods (except as otherwise noted therein and except that
the December Financial Information does not contain footnotes), and present
fairly the financial position of the Company as of the date thereof, and the
consolidated results of its operations and its cash flows for the periods
presented therein (subject to normal year-end adjustments).
(c) Except as set forth in the Company SEC Reports or the December
Financial Information or as otherwise set forth on Schedule 3.5(c), and except
for liabilities and obligations incurred since the date of the December
Financial Information in the ordinary course of business consistent with past
practice, neither the Company nor any of its Subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its Subsidiaries or in the notes thereto.
3.6 Absence of Certain Changes or Events. Except as set forth on Schedule
------------------------------------
3.6 or as a consequence of, or as contemplated by, this Agreement, since
December 31, 2000 (a) the business of the Company has been carried on only in
the ordinary and usual course, and other than in the ordinary course of
business, there has not occurred any change (other than a change affecting the
Company's industry generally) which has resulted or would result, individually
or in the aggregate, in a Material Adverse Effect on the Company and (b) except
as specifically set forth in the Company
14
SEC Reports, the December Financial Information or otherwise specifically
disclosed in this Agreement or the Schedules hereto, neither the Company nor any
of its Subsidiaries has taken or omitted to take any action which would, had it
been taken subsequent to the date hereof, constitute a breach of any of the
clauses (i) through (xvii) of Section 5.l(b) of this Agreement.
3.7 Litigation. Except as disclosed in the Company SEC Reports or as set
----------
forth on Schedule 3.7, there is no, nor has there been since September 30, 2000
any, action, claim, suit, proceeding, audit or governmental investigation
pending or, to the knowledge of the Company, threatened against the Company or
its Subsidiaries, or to the knowledge of the Company against any member of the
Company's Board of Directors or any of the Company's officers in their capacity
as such, by or before any court, governmental or regulatory authority or by any
third party that, individually or in the aggregate, would have a Material
Adverse Effect on the Company or would prevent or substantially delay any of the
transactions contemplated by this Agreement or otherwise prevent the Company
from performing its obligations hereunder, and neither the Company nor any of
its Subsidiaries have knowledge of any fact or circumstance that the Company
believes, or reasonably should believe, would be likely to form the basis for
any such claim, suit, proceeding, audit or governmental investigation. Any and
all causes of action set forth in the consolidated complaint titled In Re
Command Systems, Inc. Securities Litigation, filed September 30, 1998 with the
United States District Court for the Southern District of New York (the "Class
Litigation"), have been settled pursuant to a definitive settlement agreement
dated May 20, 1999 (the "longer subject to appeal on September 10, 1999. The
Company has complied with, and performed all of its obligations under, the
Settlement Agreement. The Company has no further liability with respect to the
Class Litigation.
3.8 Taxes.
-----
(a) The Company and each of its Subsidiaries has filed (or have
obtained extensions to file) all Tax Returns (as defined below) which it has
been required to file, has paid all Taxes (as defined below) which have become
due and payable by it and has made adequate provision in reserves established in
its financial statements and accounts for all Taxes which have accrued but are
not yet due and payable, except where the failure to file Tax Returns, pay Taxes
or provide adequate reserves for Taxes would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of the assessment and collection of Taxes.
(c) None of the Company and its Subsidiaries is a party to any Tax
allocation or sharing agreement other than between or among themselves.
(d) None of the Company and its Subsidiaries has been a member of an
affiliated group filing a consolidated U.S. federal Tax Return other than tax
returns as to which the Company is the common parent.
15
(e) As of the date of this Agreement, there are no pending or, to the
knowledge of the Company, threatened in writing audits, examinations,
investigations or other proceedings with respect to Taxes relating to the
Company or any of its Subsidiaries which, if determined adversely to the Company
or such Subsidiary, would reasonably be expected to have a Material Adverse
Effect.
(f) Neither the Company nor any of its Subsidiaries is or was either
a "distributing corporation" or "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution qualifying for tax-free
treatment under Section 355 of the Code in the two years prior to the date of
this Agreement.
(g) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, business, transfer and
recording taxes, fees and charges, and any other taxes, assessment or similar
charges imposed by the IRS (as defined below) or any taxing authority (whether
domestic or foreign including any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States possession))
(a "Taxing Authority"), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest whether
paid or received, fines, penalties or additional amounts attributable to, or
imposed upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "Tax Return" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any Taxing Authority
or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
3.9 Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Schedule 3.9 sets forth a true and complete list of all
collective bargaining agreements, employment, consulting, severance, deferred
compensation, executive compensation plans, stock purchase, stock award and
stock option plans, restricted stock, bonus and incentive plans, both tax
qualified and non-qualified employee pension plans, employee profit sharing
plans, 401(k) savings plans, multiemployer plans, employee welfare plans, group
life insurance, hospitalization insurance and other similar plans or
arrangements (either written or oral but only to the extent an oral plan
provides material benefits) providing for benefits to any employees, consultants
or directors of the Company or any Subsidiaries of the Company (other than
workers', unemployment or similar compensation plans or programs). With respect
to the employee benefit plans, stock option plans, restricted stock award
programs and other programs and arrangements that are subject to ERISA (as
defined below) (other than workers', unemployment or similar compensation plans
or programs) which are maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of employees, consultants or directors of the
Company or any of its Subsidiaries (the
16
"Company Plans"), except as specifically set forth on Schedule 3.9: (i) each
Company Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has received a favorable
determination letter from the Internal Revenue Service (the "IRS") that it is so
qualified or has a remaining period of time under applicable Treasury
regulations or Internal Revenue Pronouncements in which to apply for such a
letter and make any amendments necessary to obtain a favorable determination as
to the qualified status of each such Company Plan and nothing has occurred since
the date of such letter that could reasonably be expected to result in the loss
of the qualified status of such Company Plan, (ii) each Company Plan has been
operated in compliance with its terms and the requirements of applicable law
except for non-compliance that would not have, individually or in the aggregate,
a Material Adverse Effect on the Company; (iii) neither the Company nor any of
its Subsidiaries has incurred any direct or indirect liability under, arising
out of or by operation of Title IV of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). No benefit plan that is a group health plan
provides or is required to provide post employment or post retirement medical or
health benefits to any current or former employee of the Company or any of its
Subsidiaries other than medical continuation requirements mandated by the Code
or other applicable law.
(b) The Company is not subject to any collective bargaining or other labor
union contracts, whether written or oral, express or implied, applicable to
persons employed by the Company or its Subsidiaries as of the date of this
Agreement. There is no pending or threatened in writing labor dispute, strike or
work stoppage against the Company or any of its Subsidiaries which may interfere
with the respective business activities of the Company or its Subsidiaries, nor
is the Company aware of any labor organization activity involving its employees.
The Company is not aware that any officer, key employee or consultant, or that
any group of key employees or consultants, has a present intention to terminate
their employment or consulting relationship with the Company, nor does the
Company have a present intention to terminate the employment or consulting
relationship of any of the foregoing. Except as set forth on Schedule 3.9, the
employment of each officer and employee of the Company is terminable at the will
of the Company. To the best of the Company's knowledge, the Company has complied
in all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.
(c) Except as contemplated by this Agreement or as disclosed on Schedules
3.6 and 3.9 or the Company's SEC Reports, the consummation of the transactions
contemplated by this Agreement will not give rise to an obligation on behalf of
the Company to make severance or change of control payments to any employees or
directors of the Company or its Subsidiaries, or increase benefits or accelerate
vesting or payments under any Company Plans.
(d) Except as disclosed in the Company's SEC Reports, no payments made to
any employees or directors of the Company or its Subsidiaries by the Company or
any Subsidiary as a result of the consummation of the transactions contemplated
by this Agreement would be non-deductible under Section 280G of the Code.
17
(e) Neither the Company nor any Subsidiary has taken any action or
failed to take any action which could reasonably be expected to result in the
imposition of an excise tax on the Company pursuant to Sections 4975, 4980B and
4999 of the Code that would have a Material Adverse Effect on the Company.
(f) There are no pending claims or proceedings relating to the
Company Plans other than routine claims for benefits by persons entitled to
benefits thereunder.
3.10 Environmental Laws and Regulations. (i) The Company and each of its
----------------------------------
Subsidiaries is, and has at all times been operated, in compliance with all
applicable federal, state and local laws and regulations relating to pollution
or protection of human health or the environment including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company; (ii) neither the Company nor any of its Subsidiaries (a) has received
written notice of any action, cause of action, claim, investigation, demand or
notice by any person or entity alleging liability under or non-compliance with
any Environmental Law (an "Environmental Claim") or (b) to the knowledge of the
Company is subject to any Environmental Claim; (iii) there has not been a
Release of Hazardous Materials by the Company or any of its Subsidiaries or any
predecessor in interest, or to the knowledge of the Company, by any other person
at any property currently or previously operated by the Company, any of its
Subsidiaries or predecessor in interest except where such Release would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company; (iv) to the knowledge of the Company, there has not been a Release of
Hazardous Materials at any disposal or treatment facility that received
Hazardous Materials generated by the Company, its Subsidiaries or a predecessor
in interest. For purposes of this Section, "Hazardous Materials" means (a) any
element, compound, or chemical that is defined, listed or otherwise classified
as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance,
extremely hazardous substance or chemical, hazardous waste, special waste, or
solid waste under Environmental Laws; (b) petroleum, petroleum-based or
petroleum-derived products; (c) polychlorinated biphenyls; (d) any substance
exhibiting a hazardous waste characteristic including but not limited to
corrosivity, ignitability, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) any asbestos-containing materials. The term
"Release" means any spilling, leaking, pumping, emitting, emptying, discharging,
injecting, escaping, leaching, migrating, dumping or disposing of Hazardous
Materials (including the abandonment or discarding of barrels, containers or
other receptacles containing Hazardous Materials) into the environment.
3.11 Intellectual Property; Technology. Schedule 3.11 lists all
---------------------------------
Intellectual Property owned or used by the Company or any of it Subsidiaries and
all current license agreements, whether written or oral, pursuant to which the
Company or any of its Subsidiaries licenses (or sublicenses) any of their
respective (or their respective licensed) Intellectual Property. Except as would
not have, individually or in the aggregate, a Material Adverse Effect on the
Company and except as disclosed in the Company SEC Reports or Schedule 3.11:
18
(a) the Company and each of its Subsidiaries owns, controls or is
perpetually licensed to use (in each case, free and clear of any liens or
restrictions), all Intellectual Property used in, or necessary for the conduct
of, its business as currently conducted or as currently planned to be conducted;
(b) the Company and its Subsidiaries are not infringing or otherwise
violating the Intellectual Property of any person and are acting in accordance
with any applicable license pursuant to which the Company or any Subsidiary
acquired the right to use any Intellectual Property and has a right-to-use the
technology which it is presently using in its current commercial products;
(c) no person has commenced a proceeding in any court or patent
office worldwide challenging or claiming the invalidity or unenforceability of,
or contesting the rights of the Company or any Subsidiary to, any Intellectual
Property owned or controlled by and/or licensed to the Company or its
Subsidiaries used in or necessary for the conduct of its business as currently
conducted;
(d) neither the Company nor any of its Subsidiaries has received any
written notice or otherwise has knowledge of any pending or threatened claim,
order or proceeding with respect to any Intellectual Property owned, controlled,
licensed or used by the Company or its Subsidiaries and no Intellectual Property
owned, controlled and/or licensed or used by the Company or its Subsidiaries is
being used or enforced in a manner that would reasonably be expected to result
in the abandonment, cancellation or unenforceability of such Intellectual
Property;
(e) neither the Company nor any of its Subsidiaries: (i) is a party
to any suit, action or proceeding which involves a claim of infringement of, or
breach of any license or agreement involving, any Intellectual Property of any
third party; or (ii) has brought any action, suit or proceeding against any
third party for infringement of, or breach of any license or agreement
involving, any of the Intellectual Property owned by or licensed to the Company
or its Subsidiaries;
(f) to the Company's knowledge, there are no unauthorized uses,
disclosures, infringements or misappropriation of any Intellectual Property
owned by, or licensed by or to, the Company or any Subsidiary;
(g) the Company and each of its Subsidiaries believes that it has
taken all reasonable and appropriate steps to protect and preserve the
confidentiality of all of the trade secrets and other non-public know-how and
proprietary information owned by, or licensed to, the Company or such
Subsidiary; and (8) For purpose s of this Agreement, "Intellectual Property"
shall mean
(h) For purposes of this Agreement, "Intellectual Property" shall
mean trademarks, service marks, brand names, certification marks, trade dress
and other indications of origin, software and the code language for such
software, technology, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or
19
application; inventions, discoveries and ideas, whether patentable or not, in
any jurisdiction; patents, applications for patents (including, without
limitation, design patents, utility patents, utility models and all divisions,
continuations, continuations in part and renewal applications), and any
renewals, re-examinations, extensions, confirmations or reissues thereof, and
inventors' certificates and invention disclosures in any jurisdiction; nonpublic
information, trade secrets, know-how and confidential or proprietary information
and rights in any jurisdiction to limit the use or disclosure thereof by any
person; writings and other works, whether copyrightable or not, in any
jurisdiction; and registrations or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
3.12 Real Property. Neither the Company nor any of its Subsidiaries owns
-------------
any real property. Each of the leases for real property to which the Company or
any of its Subsidiaries is a party (the "Leases") and all amendments,
modifications and/or extensions thereto are listed on Schedule 3.12 hereto. With
respect to the Leases, (i) the Leases are in full force and effect and are
binding and enforceable in accordance with their terms; (ii) all rental and
other charges payable pursuant to the terms and conditions of the Leases have
been paid; (iii) there are no charges, offsets or defenses against the
enforcement by the lessors thereunder of any agreement, covenant or condition on
the part of the Company or any of its Subsidiaries, as the case may be, to be
performed or observed pursuant to the terms of the Leases; (iv) there are no
material defaults by the Company or any of its Subsidiaries, as the case may be,
of any agreement, covenant or condition on the part of the Company or such
Subsidiary, as the case may be, to be performed or observed pursuant to the
terms of the Leases; (v) there are no actions or proceedings pending or to the
best of the Company's knowledge, threatened, by any party under the Leases; (vi)
except as set forth on Schedule 3.4(c) the consummation of the Offer and the
Merger will not constitute a prohibited transfer or assignment under any of the
Leases; and (vii) to the knowledge of the Company, there are no material
defaults by any of the respective lessors of any agreement, covenant or
condition on the part of the lessor to be performed or observed pursuant to the
terms of the Leases.
3.13 Compliance with Applicable Laws. Since January 1, 2000, neither the
--------------------------------
Company nor any of its Subsidiaries has violated or failed to comply with any
statute, law, regulation, rule, judgment, decree or order of any governmental
entity applicable to their respective businesses or operations, except for
violations and failures to comply that would not, individually or in the
aggregate, result in a Material Adverse Effect on the Company. The conduct of
the business of the Company and its Subsidiaries is in conformity with all
federal, state and local governmental and regulatory requirements applicable to
its business and operations, except where such nonconformities would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Company. The Company and its Subsidiaries have all permits, licenses and
franchises from governmental agencies required to conduct their businesses as
now being conducted, except for such permits, licenses and franchises the
absence of which would not, individually or in the aggregate, result in a
Material Adverse Effect on the Company.
3.14 Insurance. Schedule 3.14 identifies all insurance policies maintained
---------
by the Company and its Subsidiaries (other than policies maintained in
connection with any Company Plan). The
20
Company and its Subsidiaries have obtained and maintained in full force and
effect insurance with such insurance companies or associations in such amounts,
on such terms and covering such risks, including fire and other risks insured
against by extended coverage, as is reasonably prudent, in accordance with
industry practice and/or as required by applicable government law, rule or
regulation, and each has maintained in full force and effect public liability
insurance, insurance against claims for personal injury or death or property
damage occurring in connection with the activities of the Company or its
Subsidiaries or any properties owned, occupied or controlled by the Company or
its Subsidiaries, in such amount as reasonably deemed necessary by the Company
or its Subsidiaries.
3.15 Material Contracts. Schedule 3.15 sets forth a true, accurate and
------------------
complete list of all material Contracts to which the Company or any of its
Subsidiaries is a party, including without limitation: (a) any material Contract
covering compensation and related matters for the employment or service of any
officer, employee or consultant on a full-time, part-time, consulting or other
basis or contract relating to any loan from the Company or any of its
Subsidiaries to an officer, director or Affiliate; (b) any agreement or
indenture relating to any material indebtedness of the Company or any of its
Subsidiaries or the mortgage, pledge or other material lien or encumbrance on
any asset or group of assets of the Company and its Subsidiaries; (c) any
guarantee of any obligation (other than by the Company of its wholly-owned
Subsidiary's debts or a guarantee by a Subsidiary of the Company of the debts of
the Company or another of the Company's Subsidiaries); (d) any agreement under
which it has granted any individual or entity any registration rights
(including, without limitation, demand and piggyback registration rights); (e)
any agreement pursuant to which, during the last three years, it raised capital
or sold capital stock, securities convertible into or exchangeable for capital
stock or debt securities; (f) any agreement between it and its stockholders or
among its stockholders (of which the Company has knowledge) concerning corporate
governance or related matters; (g) any Contract or agreement prohibiting it from
freely engaging in any business or competing anywhere in the world; or (h) any
other agreement which is material to its operations and business prospects which
is material to the business of the Company and its Subsidiaries (taken together
as a whole) as presently conducted or proposed to be conducted. All Contracts to
which the Company or any of its Subsidiaries is a party, or by which any of
their respective assets are bound, are valid and binding, in full force and
effect and, to the Company's knowledge, enforceable against the parties thereto
in accordance with their respective terms, except where the failure to be so
valid and binding, in full force and effect or enforceable, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. Except
as set forth in Schedule 3.15, neither the Company nor any of its Subsidiaries
is in default under any Contract and no event has occurred, which after notice
or lapse of time, or both, would constitute a default, by the Company or any of
its Subsidiaries, or to the Company's knowledge, any other party, other than any
such defaults or events which, individually or in the aggregate, would not have
a Material Adverse Effect. To the knowledge of the Company, no party to any
Contract has any intent to terminate the same or not to perform its obligations
thereunder.
3.16 Approvals; Antitakeover Provisions. The Board of Directors of the
----------------------------------
Company has approved this Agreement and the Transactions for all purposes under
Section 203 of the DGCL and
21
the Company has heretofore furnished to Parent a true and correct copy of
resolutions duly adopted by the vote of such board on January 25, 2001 and such
resolutions are in full force and effect on the date hereof. Such action is the
only action necessary so that the restrictions on business combinations
contained in Section 203 of the DGCL will not apply with respect to or as a
result of the Merger Agreement or any of the transactions contemplated hereby.
3.17 Voting Requirements. The affirmative vote of the holders of a majority
-------------------
of the outstanding shares of Company Common Stock is the only vote of the
holders of any class of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement, unless the Merger
may be consummated in accordance with Section 253 of the DGCL, in which case no
such consent of the Company's stockholders is required.
3.18 Brokers and Finders. Except for Ladenburg, ▇▇▇▇▇▇▇▇ & Co., the Company
-------------------
has not employed any investment banker, broker, finder, advisor, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder's, advisory
or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby. The Company's fee arrangements with Ladenburg,
▇▇▇▇▇▇▇▇ & Co. have been disclosed to Parent.
3.19 Opinion of Financial Advisors. The Board of Directors has received the
-----------------------------
opinion of Ladenburg, ▇▇▇▇▇▇▇▇ & Co. to the effect that, as of the date of such
opinion, the $5.00 in cash per Share to be received by the holders of Shares in
the Offer and the Merger is fair from a financial point of view to such holders.
3.20 Information Supplied. None of the information supplied or to be
--------------------
supplied by the Company for inclusion or incorporation by reference in (i) the
Offer Documents, (ii) the Schedule 14D-9 or (iii) the information to be filed by
the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the Exchange Act (the "Information Statement") will, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event with
respect to the Company or its Subsidiaries should occur which is required to be
described in a supplement to (i) the Offer Documents, (ii) the Schedule 14D-9 or
(iii) the Information Statement, such event shall be so described, and such
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company and to Parent. The Schedule 14D-
9 and the Information Statement will comply in form and substance in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
3.21 Confidentiality Agreements. Except as set forth on Schedule 3.21, the
--------------------------
confidentiality agreements entered into with any other potential purchasers of
the Company or its Subsidiaries are
22
in substantially the same form as the Confidentiality Agreement (as defined in
Section 5.5) and all benefits under such agreements shall inure to the Company
as of the Effective Time.
3.22 Unlawful or Undisdisclosed Payments. With respect to the conduct of
-----------------------------------
the business of the Company and its Subsidiaries, none of the Company, its
Subsidiaries or anyone acting on behalf of the Company or any of its
Subsidiaries, has made any payments or otherwise provided any extraordinary
benefit, direct or indirect, to any customer, supplier, governmental agency or
otherwise, or to any employee or agent thereof, for the purpose of acquiring
purchase or sales relationships, or otherwise, that:
(a) may be unknown or undisclosed to the employers of any individuals
or entities who received any such payments;
(b) are or may be unlawful, in any respect; or
(c) are not fully disclosed as such on the books and records of the
Company and its Subsidiaries, as applicable.
3.23 Warranty; Claims.
----------------
(a) Attached as Schedule 3.23(a) is a description of all warranties
offered by the Company or any of its Subsidiaries to its customers at any time
since November 1999, and that remain outstanding as of the date hereof.
(b) No material warranty or product liability claims currently are
outstanding, no such claims have been asserted or threatened against the Company
or any of its Subsidiaries on account of any aspect of its business since
January 1, 1998, and there are no facts or circumstances known to the Company or
any of its Subsidiaries that would form the basis for any such claims.
3.24 Customers and Suppliers.
-----------------------
(a) Customer List. Schedule 3.24(a) contains an accurate and complete
-------------
list of the ten largest customer accounts of the Company in terms of revenue to
the Company (i) for the 1999 calendar year and (ii) for the ten months ended
October 31, 2000.
(b) Supplier List. Schedule 3.24(b) lists the five largest suppliers
-------------
of the Company in terms of purchases by the Company (i) for the 1999 calendar
year and (ii) for the ten months ended October 31, 2000.
(c) No Adverse Change. Except as set forth on Schedule 3.24(a), there
-----------------
has not been a material adverse change in the business relationship of the
Company with any of the customers or suppliers set forth in Schedules 3.24(a)
and 3.24(b) since November 1, 1999, nor has any such customer or supplier
provided the Company with any notice of any intention to terminate or alter its
23
relationship with, or materially reduce its purchases from or provision of
products or services to, the Company either before or after the Closing.
(d) Cessation of Customer or Supplier Relations. Since November 1,
-------------------------------------------
1999, no customer, or group of customers, which accounted for more than 5% of
the Company's 1999 revenue, nor any supplier, or group of suppliers, which
accounted for more than 5% of the aggregate annual value of supplies purchased
by the Company during 1999, have ceased doing business with the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER
Each of Parent and Purchaser represents and warrants jointly and severally
to the Company that:
4.1 Corporate Organization and Qualification. Each of Parent and Purchaser
----------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation. Each of Parent and
Purchaser is qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification, except where the failure to so
qualify or be in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on Parent.
4.2 Authority Relative to This Agreement. Each of Parent and Purchaser has
------------------------------------
the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement and the consummation by Parent
and Purchaser of the transactions contemplated hereby have been duly and validly
authorized by the respective Boards of Directors of Parent and Purchaser and by
Parent as the sole stockholder of Purchaser, and no other corporate proceedings
on the part of Parent and Purchaser are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Purchaser and, assuming
this Agreement constitutes the valid and binding agreement of the Company,
constitutes the valid and binding agreement of each of Parent and Purchaser,
enforceable against each of them in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. Neither the execution and
------------------------------------
delivery of this Agreement by Parent or Purchaser nor the consummation by Parent
or Purchaser of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the certificate of incorporation or the
by-laws, respectively, of Parent or Purchaser; (b) require any consent,
24
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) pursuant to the applicable
requirements of the Exchange Act, (ii) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities of
other states in which Parent or Purchaser is authorized to do business, (iii) as
may be required by any applicable state securities or "blue sky" laws or state
takeover laws or (iv) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications would not,
individually or in the aggregate, have a Material Adverse Effect on Parent; (c)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or liens or other charges or encumbrances) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract agreement
or other instrument, commitment or obligation to which Parent or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets may be bound, except for such violations, breaches and defaults (or
rights of termination, cancellation or acceleration or lien or other charge or
encumbrance) as to which requisite waivers or consents have been obtained or
which would not, individually or in the aggregate, have a Material Adverse
Effect on Parent; or (d) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.3 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or any of its Subsidiaries or
to any of their respective assets, except for violations which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
4.4 Sufficient Funds. Except as otherwise contemplated by this Agreement,
---------------
one of Parent or Purchaser has sufficient funds available (on hand or through
committed lines of credit) to purchase, in accordance with the terms hereof, all
of the Shares outstanding on a fully diluted basis and to pay all fees, expenses
and payments related to the Transactions for which Parent and Purchaser are
responsible.
4.5 Share Ownership. None of Parent and Purchaser nor any of their
---------------
respective "affiliates" or Associates (as such terms are defined in Rule 12b-2
under the Exchange Act) beneficially own any Shares.
4.6 Information in Proxy Statement and Schedule 14D-9. None of the
-------------------------------------------------
information supplied by Parent or Purchaser for inclusion or incorporation by
reference in the Proxy Statement or the Schedule 14D-9 will, at the date mailed
to stockholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent or any of its
Subsidiaries should occur which is required to be described in a supplement to
the Proxy Statement or the Schedule 14D-9, such event shall be so described, and
such supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company. With respect to information
relating to Parent or Purchaser, the Proxy Statement will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
25
4.7 Litigation. There is no suit, action or proceeding pending or, to the
----------
knowledge of Parent, overtly threatened in writing against or affecting Parent,
any Subsidiary of Parent or Purchaser that would prevent or substantially delay
any of the transactions contemplated by this Agreement or otherwise prevent
Parent or Purchaser from performing its obligations hereunder.
4.8 Brokers and Finders. Except for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and Associates,
-------------------
Inc., whose fees will be paid by Parent, Parent and Purchaser have not employed
any investment banker, broker, finder, advisor, consultant or intermediary in
connection with the transactions contemplated by this Agreement which would be
entitled to any investment banking, brokerage, finder's, advisory or similar fee
or commission in connection with this Agreement or the transactions contemplated
hereby.
ARTICLE 5
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Interim Operations of the Company.
---------------------------------
(a) Except as set forth on Schedule 5.1, during the period from the
------------
date of this Agreement to the Effective Time (unless Parent shall otherwise
agree in writing and except as otherwise contemplated by this Agreement), the
Company will conduct its operations according to its ordinary and usual course
of business consistent with past practice and will preserve intact its current
business organization, use its best efforts to keep available the services of
its current officers, employees and consultants and use its best efforts to
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that their goodwill and ongoing businesses shall be
unimpaired in any material respect at the Effective Time.
(b) Without limiting the generality of the foregoing clause (a), and
except as otherwise contemplated by this Agreement or as set forth on Schedule
5.1, the Company will not, and will not permit any of its Subsidiaries to, prior
to the Effective Time, without the prior written consent of Parent:
(i) except for the issuance of Shares upon the exercise of
Options outstanding on the date of this Agreement (other than exercise of
Options whereby payment of the exercise price is made in the form of a
note, which will not be accepted by the Company without the prior consent
of Parent, such consent not to be unreasonably withheld) or as set forth on
Schedule 3.2 and in accordance with their present terms, issue, sell,
grant, dispose of, pledge or otherwise encumber, or authorize or propose
the issuance, sale, disposition or pledge or other encumbrance of (A) any
additional shares of capital stock of any class (including the Shares), or
any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for any shares of capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or
26
evidencing the right to subscribe for, any shares of capital stock or (B)
any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding Shares;
(iii) split, combine, subdivide or reclassify any Shares or declare,
set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any Shares or otherwise
make any payments to stockholders in their capacity as such, other than
dividends by a direct or indirect wholly owned Subsidiary of the Company to
the Company or one of its other Subsidiaries,
(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its direct or indirect Subsidiaries
(other than the Merger),
(v) adopt any amendments to its certificate of incorporation or by-
laws or alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any direct or
indirect Subsidiary of the Company;
(vi) make any acquisition, by means of merger, consolidation or
otherwise, or disposition, of assets or securities (other than the Merger),
in each case other than in the ordinary course of business consistent with
past practice;
(vii) sell, lease, license, mortgage or otherwise encumber or subject
to any lien or otherwise dispose of any of its properties or assets, except
sales in the ordinary course of business consistent with past practice and
liens existing as of the date of this Agreement;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, or issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company
or any of its Subsidiaries, or (B) make any loans or advances, other than
to officers, employees and consultants, in the ordinary course of business
consistent with past practice, or any capital contributions to, or
investments in, any other person, other than the Company or any direct or
indirect wholly owned Subsidiary of the Company;
(ix) make or agree to make any new capital expenditure or
expenditures in excess of an aggregate of $300,000;
(x) make any material tax election or settle or compromise any
material tax liability;
27
(xi) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice in
accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements
(or the notes thereto) included in the Company SEC Reports, the December
Financial Information or incurred since December 31, 2000 in the ordinary
course of business consistent with past practice, or waive any benefits of,
or agree to modify in any respect, any confidentiality, standstill or
similar agreements to which the Company, or any of its Subsidiaries is a
party;
(xii) except in the ordinary course of business, modify, amend or
terminate any contract or agreement to which the Company or any of its
Subsidiaries is a party, or waive, release or assign any rights or claims;
(xiii) except as required to comply with applicable law, (A) adopt,
enter into, terminate or amend any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, employment, consulting, salary continuation,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or
former employee, officer or director of the Company or any of its
Subsidiaries (collectively, "Benefit Plans"), (B) increase in any manner
the compensation or fringe benefits of any director, officer, employee or
consultant (except for normal increases or bonuses to non-officers and non-
directors in the ordinary course of business consistent with past
practice), (C) pay any benefit not provided for under any Benefit Plan, (D)
except for options included in the representation set forth in Section 3.2,
grant any equity-based awards under any Benefit Plan (including the grant
of stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of existing
restrictions in any Benefit Plans or agreement or awards made thereunder),
(E) other than in the ordinary course of business consistent with past
practice, take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan or (F) alter the composition of the Board of
Directors (except as contemplated in Section 1.3 hereof) or change the
title of, hire, terminate the employment of, modify the job description or
duties of, or waive any material right under any employment or consulting
agreement with, any senior management, consultant or employee whose annual
compensation rate exceeds $60,000 (other than in the ordinary course of
business and consistent with past practice);
(xiv) (A) take, or agree or commit to take, any action that would
make any representation or warranty of the Company hereunder inaccurate at
the Effective Time (except for representations and warranties which speak
as of a particular date, which need be accurate only as of such date), (B)
omit, or agree or commit to omit, to take any action necessary to prevent
any such representation or warranty from being inaccurate in any material
respect at the Effective Time (except for representations and warranties
which speak
28
as of a particular date, which need be accurate only as of such date),
provided, however that the Company shall be permitted to take or omit to
take such action which can be cured, and in fact is cured, at or prior to
the Effective Time or (C) take, or agree or commit to take, any action that
would result in, or is reasonably likely to result in, any of the
conditions of the Merger set forth in Article VI not being satisfied except
that, with respect to the condition set forth in Section 6.1(a), such
action shall be permitted if it is consistent with the fiduciary duties of
the Company's Board of Directors to the Company's stockholders under
applicable law;
(xv) allow any insurance policy naming the Company or any of its
Subsidiaries as beneficiary or loss payee to be cancelled or terminated,
other than in the ordinary course;
(xvi) settle or compromise any pending or threatened litigation
involving the Company or any of its Subsidiaries; or
(xvii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
5.2 No Solicitation; Other Offers.
-----------------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, and shall use its best efforts to ensure that its officers,
directors or employees, or any investment bankers, consultants or other agents
retained by it or any of its Subsidiaries to not, solicit, initiate, encourage
the submission of any Acquisition Proposal or engage in discussions or
negotiations or furnish to any person any information with respect to an
Acquisition Proposal or knowingly facilitate any effort or attempt to make an
Acquisition Proposal. The Company will notify Parent within 48 hours of receipt
by the Company of any Acquisition Proposal or any request for nonpublic
information relating to the Company or any of its Subsidiaries by any person
who, to the knowledge of the Company, is making or considering making or who has
made, an Acquisition Proposal. The Company shall provide such notice orally and
in writing including the terms and conditions of any such Acquisition Proposal
or request. The Company shall, and shall cause its Subsidiaries and the
directors, employees and other agents of the Company and its Subsidiaries to,
cease immediately and cause to be terminated all activities, discussions and
negotiations, if any, with any persons conducted prior to the date hereof with
respect to any Acquisition Proposal and, to the extent within its power, to
recover or cause to be destroyed all information concerning the Company and its
Subsidiaries in the possession of such persons and their affiliates,
representatives and advisors. Nothing contained in this Agreement shall prevent
the Board of Directors of the Company from complying with Rule 14d-9 or Rule
14e-2 under the Exchange Act with respect to any Acquisition Proposal or making
any disclosure to the Company's stockholders if, in the good faith judgment of
the majority of the disinterested members of the Board of Directors of the
Company, failure to so disclose would be inconsistent with their fiduciary
duties and violative of applicable law.
29
(b) Notwithstanding the first sentence of Section 5.2(a), the Company
may negotiate or otherwise engage in substantive discussions with, and furnish
nonpublic information to, any person in response to an unsolicited Acquisition
Proposal by such person if (1) the Company has complied with the terms of this
Section 5.2, (2) a majority of the Board of Directors of the Company reasonably
determines in good faith that such Acquisition Proposal could reasonably be
expected to result in a Superior Proposal and, after consultation with outside
legal counsel, that the failure to take such action could reasonably be deemed
to constitute a breach of its fiduciary duties under applicable law, and (3)
such person executes a confidentiality agreement in substantially the form of
the Confidentiality Agreement (as defined below) (including the standstill
provisions).
(c) Except as permitted by the second sentence of this Section
5.2(c), neither the Board of Directors of the Company nor any committee thereof
shall (1) withdraw or modify, or publicly propose to withdraw or modify, in a
manner adverse to Parent, or take any action not explicitly permitted by this
Agreement that would be inconsistent with, its approval of the Offer and the
Merger, (2) approve or recommend, or publicly propose to approve or recommend,
any Acquisition Proposal or (3) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or similar agreement
related to any Acquisition Proposal. The Board of Directors of the Company shall
be permitted (1) not to recommend to its shareholders acceptance of the Offer
and/or approval and adoption of this Agreement and the Merger, (2) to withdraw,
or modify in a manner adverse to Parent, its recommendation to its shareholders
referred to in Section 1.2 hereof, (3) approve or recommend any Superior
Proposal or (4) terminate this Agreement and in connection therewith enter into
an agreement with respect to such Superior Proposal, but only if (x) the Company
has complied with the terms of this Section 5.2, (y) the Company has received an
unsolicited Acquisition Proposal which the Board of Directors determines in good
faith constitutes a Superior Proposal, and (z) the Board of Directors of the
Company determines in good faith, after consultation with outside legal counsel,
that the failure to take such action could reasonably be deemed to be
inconsistent with its fiduciary duties under applicable law.
(d) For purposes of this Agreement:
"Acquisition Proposal" means any offer or proposal for a merger,
reorganization, consolidation, share exchange, business combination,
or other similar transaction involving the Company or any of its
Subsidiaries or any proposal or offer to acquire, directly or
indirectly, securities representing more than 51% of the voting power
of the Company, or all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole, other than the Offer
and the Merger contemplated by this Agreement.
"Superior Proposal" means any bona fide written Acquisition
Proposal which (i) the Board of Directors of the Company determines in
good faith (after consultation with a financial advisor of nationally
recognized reputation and taking into account all the terms and
conditions of the Acquisition Proposal) is more favorable to the
30
Company's shareholders (in their capacities as shareholders) than the
Offer and Merger; and (ii) any conditions to such Acquisition Proposal
are reasonably capable of being satisfied promptly, including a
conclusion that financing for such Acquisition Proposal, to the extent
required, is then committed or is in the good faith judgment of the
Board of Directors of the Company, reasonably available to the person
making such Acquisition Proposal.
5.3 Certain Filings. The Company and Purchaser shall reasonably cooperate
---------------
with one another (a) in connection with the preparation of the Proxy Statement,
if needed, the Schedule TO, and the Schedule 14D-9, and (b) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency or official, or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (c) in seeking any such actions, consents, approvals, or
waivers or making any such filings, furnishing information required in
connection therewith or with the Proxy Statement, if needed, the Schedule TO and
the Schedule 14D-9 and seeking timely to obtain any such actions, consents,
approvals or waivers.
5.4 Satisfaction of Conditions; Receipt of Necessary Approvals. Subject to
----------------------------------------------------------
the terms and conditions herein provided, each of the parties hereto agrees to
(i) promptly effect all necessary registrations, submissions and filings,
including, but not limited to, submissions of information requested by
governmental authorities, which may be necessary or required in connection with
the consummation of the transactions contemplated by this Agreement, (ii) use
all reasonable efforts to secure federal antitrust clearance (including taking
steps to avoid or set aside any preliminary or permanent injunction or other
order of any federal or state court of competent jurisdiction or other
governmental authority), (iii) use its commercially reasonable efforts to defend
any lawsuit or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including, without limitation, seeking to have any stay or temporary
restraining order entered by any court or other governmental entity vacated or
reversed, (iv) use all reasonable efforts to take all other action and to do all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by, and to fully carry out
the purposes of, this Agreement and (v) use all reasonable efforts to obtain all
other necessary or appropriate waivers, consents and approvals (including but
not limited to such filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any foreign country in which
the Company or any of its Subsidiaries or Parent or any of its Subsidiaries
conducts any business or owns any assets) and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the requisite vote of the
stockholders of the Company. Parent represents and warrants to the Company that
Parent's affiliates have full power and authority to effect the transactions
contemplated by this Section 5.4. Notwithstanding the foregoing, the Company
agrees to use reasonable best efforts to obtain all necessary or appropriate
waivers, consents and approvals as may be required in connection with the
material Contracts of the Company or any of its Subsidiaries, including, but not
limited to, waivers, consents or approvals as may be required under
31
any Contract with any governmental authority. Purchaser agrees to cooperate and
use commercially reasonable efforts to assist the Company in obtaining any such
waivers, consents or approvals.
5.5 Access to Information. To the extent permitted by applicable law, upon
---------------------
reasonable notice, the Company shall (and shall cause each of its Subsidiaries
to) afford to the officers, employees, accountants, counsel, financing sources
and other representatives of Parent, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request. Parent will hold any such information which is
nonpublic in confidence in accordance with the provisions of the Confidentiality
Agreement between the Company and Parent, dated as of April 26, 2000 (the
"Confidentiality Agreement").
5.6 Publicity. The initial press release with respect to the execution of
---------
this Agreement shall be a joint press release acceptable to Parent and the
Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other transactions contemplated hereby without
prior consultation with the other party and without using reasonable efforts to
agree upon the text of any press release, except as may be required by law, the
rules and regulations of any national securities exchange or over the counter
market or by any listing agreement with a national securities exchange.
5.7 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
(a) From and after the consummation of the Offer, Parent shall, and
shall cause the Company (or, if after the Effective Time, the Surviving
Corporation) to, indemnify, defend and hold harmless any Corporate Agent (as
defined below) against all losses, claims, damages, liabilities, costs and
expenses (including attorney's fees and expenses), judgments, fines, losses, and
amounts paid in settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each a "Claim") to the extent that any
such Claim is based on, or arises out of, the fact that such person is or was a
director or officer of the Company or any of its Subsidiaries, and to the extent
that any such Claim pertains to any matter or fact arising out of any act or
omission prior to or at the Effective Time, regardless of whether such Claim is
asserted or claimed prior to, at or after the Effective Time, to the full extent
permitted under applicable law or the Company's certificate of incorporation,
by-laws or indemnification agreements in effect at the date hereof identified on
Schedule 5.7, or otherwise as permitted by contracts identified on Schedule 5.7,
including provisions relating to advancement of expenses incurred in the defense
of any action or suit. In the event of any such Claim, the Surviving Corporation
shall control the defense of such Claim with counsel selected by the Surviving
Corporation, with counsel reasonably acceptable to the Indemnified Party;
provided, however, that the Indemnified Party shall be permitted to participate
in the defense of such Claim through counsel reasonably acceptable to the
Surviving Corporation selected by the Indemnified
32
Party, at the Indemnified Party's expense. Notwithstanding the foregoing, if
there is any conflict between the Surviving Corporation and any Indemnified
Parties or there are additional defenses available to any Indemnified Parties,
the Indemnified Parties shall be permitted to participate in the defense of such
Claim with counsel reasonably acceptable to the Surviving Corporation selected
by the Indemnified Parties, and Purchaser shall cause the Surviving Corporation
to pay the reasonable fees and expenses of such counsel, as accrued and in
advance of the final disposition of such Claim to the fullest extent permitted
by applicable law; provided, however, that the Surviving Corporation shall not
be obligated to pay the reasonable fees and expenses of more than one counsel
for all Indemnified Parties in any single Claim except to the extent that, in
the opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such Claim. The
Surviving Corporation shall not be liable for any settlement effected without
its written consent, which consent shall not unreasonably be withheld. Without
limiting the foregoing, in the event any Indemnified Party becomes involved in
any capacity in any Claim, then from and after consummation of the Offer Parent
shall, or shall cause the Company (or the Surviving Corporation if after the
Effective Time) to, periodically advance to such Indemnified Party its legal and
other expenses (including the cost of any investigation and preparation incurred
in connection therewith), subject to the provision by such Indemnified Party of
an undertaking to reimburse the amounts so advanced in the event of a final non-
appealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled to be indemnified for such expenses.
(i) "Corporate Agent" shall mean any person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time (A) a director or officer of the Company or any of its
Subsidiaries, or (B) a director, officer, trustee, employee or agent of any
Other Enterprise, serving as such at the request of the Company or any of
its Subsidiaries, or the legal representatives of any such director,
officer, trustee, employee or agent.
(ii) "Indemnified Party" shall mean individually, and
"Indemnified Parties" shall mean collectively, the person or persons
entitled to be indemnified, defended and held harmless under this Section
5.7 or the legal representative of such person or persons.
(iii) "Other Enterprise" shall mean any domestic or foreign
corporation, other than the Company and its Subsidiaries, and any
partnership, joint venture, sole proprietorship, trust, or other enterprise
(including any employee benefit plan), whether or not for profit, served by
a Corporate Agent.
(b) Parent and the Company agree that all rights to indemnification
and all limitations on liability existing in favor of an Indemnified Party as
provided in the Company's certificate of incorporation and by-laws as in effect
as of the date hereof shall survive the Merger and shall continue in full force
and effect, without any amendment thereto, for a period of six years from the
Effective Time to the extent such rights are consistent with the DGCL; provided,
that in the event any claim or claims are asserted or made within such six year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims;
33
provided, further, that nothing in this Section 5.7 shall impair any rights or
obligations of any present or former directors or officers of the Company.
(c) Parent shall cause to be maintained in effect for the Indemnified
Parties for not less than six years after the Effective Time policies of
directors' and officers' liability insurance and fiduciary liability insurance
with respect to matters occurring at or prior to the Effective Time (including
without limitation, the transaction, contemplated by this Agreement) providing
substantially the same coverage and containing terms and conditions which are no
less advantageous, in any material respect, to those currently maintained by the
Company for the benefit of the Company's present or former directors or officers
covered by such insurance policies prior to the Effective Time; provided, that
Parent and the Surviving Corporation shall not be required to provide such
coverage to the extent such coverage requires an annual cost of greater than 1.5
times the most recent annual premium paid by the Company prior to the date
hereof (the "Cap"); and provided, further, that if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, Purchaser or the Surviving Corporation shall only be required to obtain as
much coverage as can be obtained by paying an annual premium equal to the Cap.
(d) In the event Parent or Purchaser or any of their successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purposes of this Section 5.7, proper provision shall be made
so that the successors and assigns of Parent and Purchaser assume the
obligations set forth in this Section 5.7 and none of the actions described in
clauses (i) or (ii) shall be taken until such provision is made.
(e) This Section 5.7 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
5.8 Employees; Continuation of Benefits.
-----------------------------------
(a) For at least one year from and after the Effective Time, Parent
shall provide or cause to be provided to the individuals who, immediately prior
to the Effective Time, are employed by the Company or any Subsidiary ("Company
Employees") compensation opportunities, in the aggregate to the Company
(consisting of base pay, commissions, bonus opportunities), and employee
benefits that are comparable, in the aggregate to the Company, to the
compensation and the benefits (exclusive of any such compensation and benefits
consisting of or based on any equity securities) provided under the Company
Plans by the Company and its Subsidiaries to Company Employees immediately prior
to the Effective Time in the ordinary course of business and not in
contemplation of the transactions contemplated by this Agreement. The preceding
sentence shall not preclude Parent or the Surviving Corporation or its
Subsidiaries at any time following the Effective Time from terminating the
employment of any Company Employee. Nothing contained herein shall be construed
to limit, the rights and obligations of the Company, any Subsidiary of the
Company and any current
34
or former employee or other personnel (and where applicable, the dependents and
beneficiaries of any such employees or other personnel) under each Company Plan,
or the ability to amend or terminate a Company Plan in accordance with its terms
and applicable law.
(d) Each Company Employee shall be given full credit for all service
with the Company and its Subsidiaries and their respective predecessors under
any plans or arrangements providing vacation, sick pay, severance, retirement,
pension or retiree welfare benefits maintained by Parent or the Surviving
Corporation or any of their respective affiliates in which such Company
Employees participate for all purposes (other than for benefit accrual purposes
under any defined benefit pension plan); provided, however, that any benefit
provided under such plans and arrangements maintained by Parent or the Surviving
Corporation or any of their respective affiliates in respect of any period of
service prior to the Effective Time may be reduced in amount by the benefit
accrued by such Company Employee under any similar Company Plan in respect of
the same period of service.
(c) Purchaser and Parent shall cause Company to honor and continue to
perform all obligations of Company and its Affiliates under all written
employment agreements in effect on the date hereof with any Company Employee
which relate to employment or compensation or benefits.
(d) In the event of any change in the welfare benefits provided to
Company Employees following the Effective Time that become effective in the plan
year that includes the Effective Time, Parent shall or shall cause the Surviving
Corporation to (1) waive all limitations as to pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Company Employees and their beneficiaries and
dependents under any such welfare benefits to the extent that such conditions,
exclusions or waiting periods would not apply in the absence of such change and
(2) credit each Company Employee and their beneficiaries and dependents with any
co-payments and deductibles paid prior to any such change in satisfying any
applicable deductible or out-of-pocket requirements after such change for the
relevant plan year.
(e) Company and Parent shall give each other such assistance as
either may reasonably require in order to ensure compliance prior to the
Effective Time with any applicable law relating to any transfer of Company
Employees to Parent, including, without limitation, any collective consultation,
information provision or other statutory obligations and requirements.
5.9 Notice of Breach. Through the Closing Date, each party shall promptly
----------------
notify the other in writing with particularity upon having knowledge of any
matter that may constitute a breach by such party of any representation,
warranty, agreement or covenant contained in this Agreement.
5.10 Audited Financial Statements. On or prior to February 9, 2001, the
----------------------------
Company shall deliver to Purchaser and Parent a true, accurate and complete copy
of the audited consolidated balance sheet for the Company as of December 31,
2000 and the audited consolidated statements of operations and cash flows for
the Company for the twelve months ended December 31, 2000 (the "2000 Audited
Financial Statements"), together with a certification by the Company that the
2000
35
Audited Financial Statements, including, without limitation, any financial
statements or schedules included therein, as of their respective dates (a) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) have been prepared in conformity with GAAP applied on a basis
consistent with prior periods (except as otherwise noted therein), and present
fairly the financial position of the Company as of their respective dates, and
the consolidated results of its operations and its cash flows for the periods
presented therein.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Each Party's Obligation to Effect Merger. The respective
------------------------------------------------------
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. If approval of the Merger by the
--------------------
stockholders of the Company is required by applicable law, this Agreement shall
have been duly approved by the stockholders of the Company entitled to vote with
respect thereto in accordance with applicable law and the certificate of
incorporation and by-laws of the Company; provided, that Parent and Purchaser
shall vote (or cause to be voted, if applicable) all shares of Company Common
Stock then owned or controlled by them, directly or indirectly, in favor of the
Merger.
(b) Injunction. There shall not be in effect any statute, rule,
----------
regulation, executive order, decree, ruling or injunction or other order of a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated, or making such
consummation unlawful, or otherwise materially limiting or restricting ownership
or the operation of the business of the Surviving Corporation; provided,
however, that, subject to the terms and provisions herein provided (including
but not limited to Section 5.4 of this Agreement), prior to invoking this
condition each party shall use its commercially reasonable efforts to have any
such decree, ruling, injunction or order vacated.
(c) Governmental Filings and Consents. Subject to the terms and
---------------------------------
provisions herein provided (including but not limited to Section 5.4 hereof),
all governmental consents, orders and approvals legally required for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and be in effect at the Effective Time, other than those consents,
orders or approvals which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or which would prohibit or materially
limit or restrict the consummation of the transactions contemplated herein or
the ownership or operation of the business of the Surviving Corporation.
36
(d) Offer. Purchaser or its permitted assignee shall have purchased
-----
all Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) by the mutual consent of Parent, Purchaser and the Company.
(b) by either the Company or Parent:
(i) if shares of Company Common Stock shall not have been
purchased pursuant to the Offer on or prior to three (3) months from the
execution of this Agreement; provided, however, that the passage of the
period referred to in the foregoing clause shall be tolled during the
period during which any party shall be subject to a non-final order,
decree, ruling or action restraining, enjoining or otherwise prohibiting
the purchase of shares of Company Common Stock pursuant to the Offer or the
consummation of the Merger, but not later than six (6) months from the
execution of this Agreement; provided, further, however, that the right to
terminate this Agreement under this Section 7.1 (b) (i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of Parent or
Purchaser, as the case may be, to purchase shares of Company Common Stock
pursuant to the Offer on or prior to such date; or
(ii) if any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or indirectly
has material assets or operations shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their respective reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) by the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, (A) the Board of Directors of the Company shall have
entered into or shall have publicly announced its intention to enter into
an agreement or an agreement in principle with respect to any Acquisition
Proposal that the Board of Directors determines, in good faith after
consultation with its financial advisors, is a Superior Proposal (as
defined in Section 5.2); provided, however, that the right to terminate
this Agreement pursuant to this
37
Section 7.1(c) shall not be available (I) if the Company has breached its
obligations under Section 5.2, or (II) if, prior to or concurrently with
any purported termination to this Section 7.1(c), the Company shall not
have paid any fee that may have been required to be paid pursuant to
Section 7.2, or (III) if the Company has not provided Parent and Purchaser
with three (3) business days prior written notice of its intention to so
terminate this Agreement; and (B) any representation or warranty made by
Parent or Purchaser in this Agreement shall not have been true and correct
in all material respects when made, or Parent or Purchaser shall have
failed to observe or perform in any material respect any of its material
obligations under this Agreement, provided, that prior to exercising such
right of termination, the Company shall give prompt written notice to
Parent of such misrepresentation or breach of warranty or failure to
observe or perform; provided, further, that the Company shall not have such
right of termination if the condition resulting in such misrepresentation
or breach of warranty or failure to observe or perform is cured (I) in the
event such notice is delivered on or prior to the fourth business day prior
to the then-scheduled expiration date of the Offer, not later than the
earlier of (x) such expiration date and (y) ten business days following
delivery of such notice and (II) in the event such notice is delivered on
or after the third business day prior to such expiration date, not later
than three business days following such delivery (it being agreed that in
such event the Offer shall be extended as necessary at least until the end
of such cure period); or
(ii) if Parent or Purchaser shall have terminated the Offer, or
the Offer shall have expired, without Parent or Purchaser, as the case may
be, purchasing any shares of Company Common Stock pursuant thereto;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(ii) if the Company is in material breach of this
Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to eleven (11) business days
following the date of the initial public announcement of the Offer or shall
have failed to pay for the Shares in accordance with the terms of the
Offer; provided, that the Company may not terminate this Agreement pursuant
to this Section 7.1(c)(iii) if the Company is in material breach of this
Agreement.
(d) by Parent or Purchaser:
(i) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, Purchaser, or any of their
affiliates shall have failed to commence the Offer on or prior to eleven
business days following the date of the initial public announcement of the
Offer; provided, that Parent may not terminate this Agreement pursuant to
this Section 7.1(d)(i) if Parent or Purchaser is in material breach of this
Agreement; or
(ii) prior to the purchase of shares of Company Common Stock
pursuant to the Offer, if (A)(I) the Board of Directors of the Company
shall have withdrawn, or
38
modified or changed in a manner adverse to Parent or Purchaser its approval
or recommendation of the Offer, this Agreement or the Merger or (II) shall
have recommended an Acquisition Proposal or shall have executed, or shall
have announced its intention to enter into, an agreement in principle or
definitive agreement relating to an Acquisition Proposal with a person or
entity other than Parent, Purchaser or their affiliates (or the Board of
Directors of the Company resolves to do any of the foregoing); (B) any
person or group (as defined in Section 13(d)(3) of the Exchange Act) (other
than Parent, Purchaser or any affiliate thereof or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or PHL
Global Holding Company) shall have become, after the date of this
Agreement, the beneficial owner (as defined in Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of the outstanding Shares, or (C) any
representation or warranty made by the Company in this Agreement shall not
have been true and correct when made and shall have resulted in, or is
reasonably likely to result in, a Material Adverse Effect on the Company,
or the Company shall have failed to observe or perform in any material
respect any of its material obligations under this Agreement; provided,
that prior to exercising such right of termination, Parent and Purchaser
shall give prompt written notice to the Company of such misrepresentation
or breach of warranty or failure to observe or perform; provided, further,
that Parent and Purchaser shall not have such right of termination if the
condition resulting in such misrepresentation or breach of warranty or
failure to observe or perform is cured (i) in the event such notice is
delivered on or prior to the fourth business day prior to the then-
scheduled expiration date of the Offer, not later than the earlier of (A)
such expiration date and (B) ten business days following delivery of such
notice and (ii) in the event such notice is delivered on or after the third
business day prior to such expiration date, not later than three business
days following such delivery (it being agreed that in such event the Offer
shall be extended as necessary at least until the end of such cure period).
7.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement as provided in Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, and there shall be no liability on the part of Parent, Purchaser or
the Company or their respective directors, officers, employees, representatives,
agents, advisors or stockholders, except that the agreements contained in
Sections 5.6, 8.1, 8.2, 8.3, 8.4, 8.6, 8,7, 8.8, 8.9, 8.16 and the last sentence
of Section 5.5 shall survive the termination hereof; provided, however, that if
this Agreement is terminated by the Board of Directors of the Company pursuant
to Section 7.1(c)(i)(A) hereof or by Parent or Purchaser pursuant to Section
7.1(d)(ii)(A)(I) or (II) hereof, then immediately following such termination,
the Company shall pay to Parent in full satisfaction of the obligations of the
Company under this Agreement a termination fee of $3,400,000, plus Parent's and
Purchaser's reasonable documented out-of-pocket fees and expenses, not to exceed
$950,000, incurred in connection with the due diligence investigation, the
Offer, the Merger, this Agreement and the consummation (or proposed
consummation) of the transactions contemplated hereby. Nothing contained in this
Section 7.2 shall relieve any party from liability for fraud or for willful
breach of this Agreement.
39
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1 Payment of Expenses and Other Payments. Whether or not the Merger
--------------------------------------
shall be consummated, each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
8.2 Survival of Representations and Warranties; Survival of
-------------------------------------------------------
Confidentiality Agreement. The representations and warranties made herein shall
-------------------------
not survive beyond the earlier of termination of this Agreement or the Effective
Time. This Section 8.2 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time. The
Confidentiality Agreement shall survive any termination of this Agreement, and
the provisions of such Confidentiality Agreement shall apply to all information
and material delivered by any party hereunder.
8.3 Modification or Amendment. Subject to the applicable provisions of the
-------------------------
DGCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of this Agreement by the stockholders of the Company, no amendment
shall be made which reduces or changes the consideration payable in the Merger
or adversely affects the rights of the Company's stockholders hereunder without
the approval of a majority of the stockholders of the Company.
8.4 Waiver of Conditions. Except as otherwise provided in this Agreement,
--------------------
any failure of any of the parties to comply with any obligation, covenant
agreement or condition herein may be waived by the party or parties entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
8.5 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.6 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
8.7 Notices. Any notice request, instruction or other document to be given
-------
hereunder, by any party to the other parties shall be in writing and delivered
personally or sent by overnight
40
courier, registered or certified mail, postage prepaid, or by facsimile
transmission (with a confirming copy sent by overnight courier), as follows:
(1) If to the Company, to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO
Command Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
(2) if to Parent or Purchaser, to
▇. ▇▇▇▇▇▇▇▇▇▇
ICICI Infotech Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopier)
or to such other persons or addresses as may be designated in writing (by like
notice) by the party to receive such notice.
41
8.8 Entire Agreement; Assignment. This Agreement and the Confidentiality
----------------------------
Agreement (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise without the prior written consent of the other parties,
except that Parent and/or Purchaser may assign all or any of its rights and
obligations hereunder to any affiliate of Purchaser provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform any such obligation. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective permitted successors and
assigns.
8.9 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article II hereof,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 5.7 shall inure to the benefit
of the Company Indemnified Parties and the Indemnified Parties and shall be
binding on all successors and assigns of Parent, Purchaser, the Company and the
Surviving Corporation and shall be enforceable by the Company Indemnified
Parties and the Indemnified Parties, as the case may be, after the Effective
Time.
8.10 Certain Definitions. As used herein:
-------------------
(a) "Material Adverse Effect" shall mean, with respect to any party,
any change, effect, event, occurrence or state of facts (or any development that
has had or is reasonably likely to have any change or effect) that is or is
reasonably likely to be materially adverse to the business, financial condition
or results of operations of such party and its Subsidiaries, taken as a whole,
or which would prevent or materially delay or materially impair the consummation
of the transactions contemplated hereby, provided, however, none of the
following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining
whether there has been a Material Adverse Effect: (i) any change in the market
price or trading volume of the capital stock of such Party after the date
hereof, (ii) changes, events or occurrences in the United States securities
markets which are not specific to such party, (iii) any adverse changes, events,
developments or effects (A) arising from or relating to general business or
economic conditions which are not specific to such party and its Subsidiaries,
or (B) affecting generally companies in the same business as such party and its
Subsidiaries, except to the extent that such changes, events or developments
have an adverse effect on such party and its Subsidiaries taken as a whole that
is materially greater than the adverse effect on comparable companies, (iv) any
failure by such party to meet internal forecasts or projections or published
revenue or earnings predictions for any period ending (or for which revenue or
earnings are released) on or after the date of this Agreement, and (v) any
adverse change, event, development or effect arising from or relating to any
change in U.S. generally accepted accounting principles.
42
(b) "Subsidiary" shall mean, when used with reference to any
entity, any corporation, partnership, limited liability company, association,
trust, organization, entity or group (as defined in the Exchange Act), a
majority of the outstanding voting securities of which are owned directly or
indirectly by such entity.
8.11 Obligation of Parent. Whenever this Agreement requires Purchaser
--------------------
to take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to cause Purchaser to take such action.
8.12 Joint and Several Liability. Parent and Purchaser hereby agree that
---------------------------
they will be jointly and severally liable for all covenants, agreements,
obligations and representations and warranties made by either of them in this
Agreement.
8.13 Validity. If any term, provision, covenant or restriction of this
--------
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party.
8.14 Interpretation. The words "hereof", "herein", and "herewith" and
--------------
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The words describing the singular number shall include the plural
and vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships and
vice versa. The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term"affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. No presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
8.15 Captions. The Article, Section and paragraph captions herein are for
--------
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
8.16 Specific Performance. Each of the parties hereto acknowledges and
--------------------
agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (a) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (b) shall be entitled in addition to any other remedy to which
they may be entitled
43
at law or in equity, to compel specific performance of this Agreement in any
action instituted in a court of competent jurisdiction.
8.17 Schedules. The Schedules to this Agreement shall be construed with
---------
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. No such disclosure shall be deemed to be an
admission or representation as to the materiality of the item so disclosed.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
COMMAND SYSTEMS, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:__________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
ICICI INFOTECH INC.
/s/ ▇. ▇▇▇▇▇▇▇▇▇▇
By:___________________________________
Name: ▇. ▇▇▇▇▇▇▇▇▇▇
Title: MD & CEO
ICICI ACQUISITION CORPORATION
/s/ ▇. ▇▇▇▇▇▇▇▇▇▇
By:___________________________________
Name: ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
The capitalized terms used in this Annex A but not otherwise defined herein
shall have the meanings ascribed to them in the Agreement and Plan of Merger
(the "Agreement") to which it is attached.
Notwithstanding any other provisions of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and (subject to any such rules
or regulations) may delay the acceptance of or the payment for, any tendered
Shares, and (except as provided in the Agreement or as provided for in the
conditions set forth below) amend or terminate the Offer if (i) the Minimum
Condition has not been satisfied, (ii) the Company shall have failed to deliver
to Purchaser copies of the 2000 Audited Financial Statements in accordance with,
and during the time period provided for in, Section 5.10 of the Agreement, or
(iii) at any time on or after the date hereof, and before the expiration of the
Offer any of the following conditions exist:
(a) there shall have been instituted or be pending any action, suit
or proceeding by or on behalf of any person or governmental entity that has a
reasonable likelihood of success (i) challenging or seeking to make illegal,
materially delay or otherwise, directly or indirectly prohibit or make
materially more costly the making of the Offer, the acceptance for payment of
any Company Common Stock by Parent or Purchaser, or the consummation of the
Merger or any other Transaction, or seeking to obtain material damages in
connection with any Transaction; (ii) seeking to prohibit or limit materially
the ownership or operation by Purchaser of all or any material portion of the
business or assets of the Company, or to compel Purchaser, to dispose of or hold
separate all or any material portion of the business or assets of Purchaser as a
result of the Transactions; (iii) seeking to impose or confirm limitations on
the ability of Purchaser or any of its Affiliates to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right to
vote any Shares acquired by Purchaser pursuant to the Offer or otherwise on all
matters properly presented to the Company=s stockholders, including, without
limitation, the approval and adoption of this Agreement and the Transactions
(iv) seeking to require divestiture by Parent or Purchaser of any Company Common
Stock; or (v) which is reasonably likely to have a Material Adverse Effect; or
(b) the Company shall have received a written threat of any action,
suit or proceeding from any governmental entity that has a reasonable likelihood
of success with respect to the items listed in paragraph (a); provided that the
existence of any such written threat shall permit Purchaser to delay accepting
for payment any paying for any tendered shares but shall not permit Purchaser to
amend or terminate the Offer except as otherwise provided in the Agreement; or
A-1
(c) there shall be in effect an injunction or other order, decree,
judgment or ruling by a governmental entity of competent jurisdiction or a law,
rule or regulation shall have been promulgated, or enacted by a governmental
entity of competent jurisdiction which in any such case, prevents or prohibits
the making or consummation of the Offer or the consummation of the Merger or
would make such consummation illegal which is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above; or
(d) there shall have occurred any change, condition, event or
development that results in a Material Adverse Effect; or
(e) the Agreement shall have been terminated in accordance with its
terms or any event shall have occurred which gives Parent or Purchaser the right
to terminate the Agreement or not consummate the Merger; or
(f) any representation or warranty of the Company contained in the
Agreement (disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar standard or
qualification), shall not be true in any respect that, individually or in the
aggregate (when taken together with all other representations and warranties
that are not true and correct), has had or would reasonably be likely to have a
Material Adverse Effect, as of the date of determination, as if made at and as
of such time (except to the extent that any such representation or warranty, by
its terms, is expressly limited to a specific date, in which case such
representation or warranty shall not be true and correct as of such date),
provided that such breaches are incapable of being cured or have not been cured
prior to the Initial Expiration Date (or such later date upon which the Offer
shall expire in accordance with Section 1.1(b) of the Agreement); or
(g) the Company shall have failed to perform or comply with in any
material respect, any of its material obligations, covenants or agreements
contained in the Agreement; provided, that such failures to perform are
incapable of being cured or have not been cured prior to the Initial Expiration
Date (or such later date upon which the Offer shall expire in accordance with
Section 1.1(b) of the Agreement); or
(h) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States (other than a shortening
of trading hours or any coordinated trading halt triggered solely as a result of
a specified increase or decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation (whether or not mandatory) by any
governmental entity on, or other event that materially and adversely affects,
the extension of credit by banks or other lending institutions, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or (v) in the case
of any of the foregoing existing at the time of the execution of the Agreement,
a material acceleration or worsening thereof; or
A-2
(i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of 30%
or more of the then outstanding Shares has been acquired by any person, other
than Purchaser or any of its Affiliates, and excluding for purposes of this
condition, the Shares covered by the Stock Tender Agreement; or
(j) the Board of Directors of the Company or any committee thereof,
(i) shall have withdrawn or modified in a manner adverse to Parent or Purchaser
(including by amendment of the Schedule 14D-9) its approval or recommendation of
the Offer, the Merger or the Agreement or (ii) shall have resolved to do any of
the foregoing;
(k) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder;
(l) the Company or any of its Subsidiaries (or the Board of
Directors, or any committee thereof) shall have approved, recommended,
authorized, or proposed any Acquisition Proposal, or has resolved to do any of
the foregoing; or
(m) there shall not continue to be in place in favor of Parent, the
commitment, pursuant to the Conditional Binder attached as Exhibit A to the
Agreement (the "Binder"), to insure claims and losses arising or occurring as a
result of any breach of the representations and warranties made by the Company
in Article III or Section 5.10 of the Agreement, subject only to (i) payment by
Parent of one-half of the applicable premium therefor (it being understood that
Parent and the Company shall each be responsible for 50% of such premium and
each hereby covenants to pay when due their respective premium payment
obligations), (ii) the delivery of the Closing Letter (as defined in the Binder)
pursuant to the Binder and (iii) to the various exclusions set forth therein;
which in the good faith judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, and provided that
Purchaser and Parent have performed all of their respective obligations, if any,
under the Agreement which relate to such condition, makes it inadvisable to
proceed with the Offer or the acceptance for payment of or payment for the
Company Common Stock.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Parent or Purchaser. The failure by
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock shall promptly be returned by the depositary to
the tendering stockholders.
A-3
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER AND MERGER
1.1 The Offer.................................................. 2
1.2 Company Actions............................................ 4
1.3 Directors.................................................. 5
1.4 The Merger................................................. 6
1.5 Effective Time............................................. 6
1.6 Closing.................................................... 7
1.7 Certificate of Incorporation of the Surviving Corporation.. 7
1.8 By-Laws of the Surviving Corporation....................... 7
1.9 Directors and Officers of the Surviving Corporation........ 7
1.10 Stockholders' Meeting...................................... 7
1.11 Merger Without Meeting of Stockholders..................... 8
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock................................ 8
2.2 Dissenting Shares.......................................... 9
2.3 Exchange of Certificates................................... 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
3.1 Corporate Organization and Qualification.................. 12
3.2 Capitalization............................................ 12
3.3 Authority Relative to This Agreement...................... 12
3.4 Consents and Approvals; No Violation...................... 13
3.5 SEC Reports; Financial Statements and Information......... 14
3.6 Absence of Certain Changes or Events...................... 14
3.7 Litigation................................................ 15
3.8 Taxes..................................................... 15
3.9 Employee Benefit Plans; Labor Matters..................... 16
3.10 Environmental Laws and Regulations........................ 18
3.11 Intellectual Property; Technology......................... 18
3.12 Real Property............................................. 20
3.13 Compliance with Applicable Laws........................... 20
-i-
3.14 Insurance................................................. 21
3.15 Material Contracts........................................ 21
3.16 Approvals; Antitakeover Provisions........................ 22
3.17 Voting Requirements....................................... 22
3.18 Brokers and Finders....................................... 22
3.19 Opinion of Financial Advisors............................. 22
3.20 Information Supplied...................................... 22
3.21 Confidentiality Agreements................................ 23
3.22 Unlawful or Undisdisclosed Payments....................... 23
3.23 Warranty; Claims.......................................... 23
3.24 Customers and Suppliers................................... 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER
4.1 Corporate Organization and Qualification.................. 24
4.2 Authority Relative to This Agreement...................... 24
4.3 Consents and Approvals; No Violation...................... 24
4.4 Sufficient Funds.......................................... 25
4.5 Share Ownership........................................... 25
4.6 Information in Proxy Statement and Schedule 14D-9......... 25
4.7 Litigation................................................ 26
4.8 Brokers and Finders....................................... 26
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Interim Operations of the Company......................... 26
5.2 No Solicitation; Other Offers............................. 29
5.3 Certain Filings........................................... 31
5.4 Satisfaction of Conditions; Receipt of Necessary
Approvals................................................. 31
5.5 Access to Information..................................... 32
5.6 Publicity................................................. 32
5.7 Directors' and Officers' Insurance and Indemnification.... 32
5.8 Employees; Continuation of Benefits....................... 34
5.9 Notice of Breach.......................................... 36
5.10 Audited Financial Statements.............................. 36
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Each Party's Obligation to Effect Merger.... 36
-ii-
ARTICLE VII
TERMINATION
7.1 Termination................................................ 37
7.2 Effect of Termination...................................... 39
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1 Payment of Expenses and Other Payments..................... 40
8.2 Survival of Representations and Warranties; Survival of
Confidentiality Agreement.................................. 40
8.3 Modification or Amendment.................................. 40
8.4 Waiver of Conditions....................................... 40
8.5 Counterparts............................................... 41
8.6 Governing Law.............................................. 41
8.7 Notices.................................................... 41
8.8 Entire Agreement; Assignment............................... 42
8.9 Parties in Interest........................................ 42
8.10 Certain Definitions........................................ 42
8.11 Obligation of Parent....................................... 43
8.12 Joint and Several Liability................................ 43
8.13 Validity................................................... 43
8.14 Interpretation............................................. 43
8.15 Captions................................................... 44
8.16 Specific Performance....................................... 44
8.17 Schedules.................................................. 44
-iii-
LIST OF SCHEDULES
-----------------
Schedule Description
-------- -----------
2.1(d) Non-Plan Options
3.2 Subsidiaries
3.4(b)(iv) Qualification
3.4(c) Violations
3.5 December Financial Information
3.5(c) Fees
3.6 Absence of Changes
3.7 Litigation
3.9 Employee Benefit Plans
3.11 Intellectual Property
3.12 Leases
3.14 Insurance
3.15 Material Contracts
3.21 Confidentiality Agreements
3.23 Warranty Claims
3.24(a) Customer List
3.24(b) Supplier List
5.1 Interim Operations
5.7 Directors' and Officers' Agreements
Exhibits
--------
A Conditional Binder
-iv-
