EXHIBIT 2.1
-----------
TSI INTERNATIONAL SOFTWARE LTD.
NATCHEZ ACQUISITION CORP.
NOVERA SOFTWARE, INC.
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of September 30, 1999
TABLE OF CONTENTS
ARTICLE I. THE MERGER................................................ 1
1.1 The Merger..................................................... 1
1.2 Effects of the Merger.......................................... 1
1.3 Closing........................................................ 1
1.4 Approval by the Stockholders of Natchez........................ 2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES..... 2
2.1 Conversion of Natchez Stock.................................... 2
2.2 Escrow......................................................... 4
2.3 Assumption of Stock Options, Restricted Stock.................. 5
2.4 Dissenting Shares.............................................. 5
2.5 Surrender of Certificates...................................... 6
2.6 No Further Ownership Rights in Natchez Common Stock............ 8
2.6 No Fractional Shares........................................... 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF NATCHEZ............... 8
3.1 Organization, Standing and Power; Subsidiaries................. 9
3.2 Capital Structure.............................................. 10
3.3 Authority...................................................... 11
3.4 Compliance with Laws and Other Instruments; Non-Contravention.. 11
3.5 Technology and Intellectual Property Rights.................... 12
3.6 Financial Statements........................................... 14
3.7 Taxes.......................................................... 15
3.8 Absence of Certain Changes and Events.......................... 16
3.9 Leases in Effect; Real Property................................ 18
3.10 Personal Property.............................................. 18
3.11 Certain Transactions........................................... 18
3.12 Litigation and Other Proceedings............................... 19
3.13 No Defaults.................................................... 19
3.14 Major Contracts................................................ 19
3.15 Material Reductions............................................ 20
3.16 Insurance and Banking Facilities............................... 20
3.17 Employees...................................................... 20
3.18 Employee Benefit Plans......................................... 21
3.19 Certain Agreements............................................. 22
3.20 Guarantees and Suretyships..................................... 22
3.21 Brokers and Finders............................................ 22
3.22 Certain Payments............................................... 22
3.23 Environmental Matters.......................................... 23
3.24 Information Statement.......................................... 23
3.25 Year 2000...................................................... 23
3.26 Disclosure..................................................... 24
i
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB................................................................... 24
4.1 Organization and Qualification................................. 24
4.2 Capitalization................................................. 24
4.3 Authority Relative to this Agreement........................... 24
4.4 Non-Contravention.............................................. 25
4.5 Reports and Financial Statements............................... 25
4.6 Validity of Parent Merger Shares............................... 26
4.7 Consents and Approvals of Governmental Authorities............. 26
4.8 Absence of Certain Changes or Events........................... 26
4.9 Information Statement.......................................... 26
4.10 Disclosure..................................................... 26
ARTICLE V. COVENANTS OF NATCHEZ...................................... 27
5.1 Conduct of Business in Ordinary Course......................... 27
5.2 Dividends, Issuance of, or Changes in Securities............... 28
5.3 Governing Documents............................................ 28
5.4 No Acquisitions................................................ 28
5.5 No Dispositions................................................ 29
5.6 Indebtedness................................................... 29
5.7 Compensation................................................... 29
5.8 Claims......................................................... 29
5.9 Access to Properties and Records............................... 29
5.10 Breach of Representations and Warranties....................... 29
5.11 Consents....................................................... 29
5.12 Tax Returns.................................................... 29
5.13 Exclusivity; Acquisition Proposals............................. 30
5.14 Notice of Events............................................... 30
5.15 Employment Agreements.......................................... 30
5.16 Reasonable Best Efforts........................................ 30
5.17 Insurance...................................................... 30
5.18 Certain Tax Matters............................................ 30
ARTICLE VI. COVENANTS OF PARENT...................................... 31
6.1 Breach of Representations and Warranties....................... 31
6.2 Additional Information; Access................................. 31
6.3 Consents....................................................... 31
6.4 Reasonable Best Efforts........................................ 31
6.5 Nasdaq National Market Listing................................. 31
6.6 Notice of Events............................................... 31
6.7 Third Party Beneficiaries...................................... 32
6.8 Certain Tax Matters............................................ 32
ARTICLE VII. ADDITIONAL AGREEMENTS................................... 32
7.1 Voting Agreements.............................................. 32
7.2 Investment Agreements.......................................... 32
ii
7.3 Legal Conditions to the Merger................................. 32
7.4 Employee Benefits.............................................. 32
7.5 Expenses....................................................... 33
7.6 Additional Agreements.......................................... 33
7.7 Public Announcements........................................... 33
7.8 Confidentiality................................................ 33
ARTICLE VIII. CONDITIONS PRECEDENT................................... 34
8.1 Conditions to Each Party's Obligation to Effect the Merger..... 34
8.2 Conditions of Obligations of Parent and Merger Sub............. 34
8.3 Conditions of Obligation of Natchez............................ 36
ARTICLE IX. INDEMNIFICATION.......................................... 37
9.1 Indemnification Relating to Agreement.......................... 37
9.2 Third Party Claims............................................. 38
9.3 Tax Contests................................................... 38
9.4 Limitations.................................................... 39
9.5 Binding Effect................................................. 39
9.6 Time Limit..................................................... 39
9.7 Updating of Disclosure Schedule................................ 39
9.8 Sole Remedy.................................................... 40
ARTICLE X. REGISTRATION RIGHTS....................................... 40
10.1 Certain Definitions............................................ 40
10.2 Resale Holder Registration..................................... 40
10.3 Piggyback Registration......................................... 42
10.4 Suspension of Prospectus....................................... 43
10.5 Expenses....................................................... 43
10.6 Indemnification................................................ 44
10.7 Limitation on Assignment of Registration Rights................ 45
ARTICLE XI. TERMINATION.............................................. 46
11.1 Mutual Agreement............................................... 46
11.2 Termination by Parent.......................................... 46
11.3 Termination by Natchez......................................... 46
11.4 Outside Date................................................... 46
11.5 Effect of Termination.......................................... 47
ARTICLE XII. MISCELLANEOUS........................................... 47
12.1 Entire Agreement............................................... 47
12.2 Governing Law; Consent to Jurisdiction......................... 47
12.3 Notices........................................................ 47
12.4 Severability................................................... 48
12.5 Survival of Representations and Warranties..................... 48
12.6 Assignment..................................................... 49
12.7 Counterparts................................................... 49
12.8 Amendment...................................................... 49
iii
12.9 Extension, Waiver.............................................. 49
12.10 Interpretation................................................. 49
12.11 Knowledge...................................................... 49
12.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes.... 50
EXHIBITS
Exhibit 1.1 -- Merger Documents
Exhibit 2.2 -- Escrow Agreement
Exhibit 7.1 -- Voting Agreements
Exhibit 7.2 -- Investment Agreements
Schedule I -- List of Persons and Entities Executing Voting Agreements
iv
INDEX OF DEFINED TERMS
A
Acquisition Transaction.................. 31
Agreement................................ 1
Audited Balance Sheet Date............... 14
Audited Balance Sheets................... 14
B
Blue Sky................................. 27
Business Condition....................... 9
C
Certificates............................. 6
Charter Documents........................ 9
Closing.................................. 1
Closing Date............................. 1
Code..................................... 1
Commission............................... 25
Common Conversion Ratio.................. 3
Confidentiality Agreement................ 35
Consent.................................. 12
D
DGCL..................................... 1
Dissenting Shares........................ 6
E
Effective Time........................... 1
Employment Agreements.................... 31
Environmental Laws....................... 23
Environmental Liabilities................ 24
ERISA.................................... 22
Escrow Shares............................ 4
Exchange Act............................. 26
Exchange Agent........................... 6
F
Final Prospectus......................... 47
Financial Statements..................... 14
G
GAAP..................................... 14
Governmental Entity...................... 12
H
Hazardous Materials...................... 23
I
Indemnifiable Amounts.................... 40
Indemnified Party........................ 48
Indemnifying Party....................... 48
Information Statement.................... 24
Initial Shares........................... 4
Initial Shelf Registration Statement..... 43
Investment Agreements.................... 33
K
Knowledge................................ 53
L
Lease.................................... 18
Leases................................... 18
Liens.................................... 10
M
Material Adverse Effect.................. 9
Merger................................... 1
Merger Documents......................... 1
Merger Sub............................... 1
N
Natchez.................................. 1
Natchez Common Stock..................... 2
Natchez Disclosure Schedule.............. 8
Natchez Intellectual Property............ 12
Natchez Option........................... 10
Natchez Preferred Stock.................. 3
Natchez Stock............................ 3
Natchez Stock Plans...................... 10
Natchez Stockholders..................... 4
New Parent Stockholders.................. 33
O
Option................................... 5
Option Holder............................ 5
Options.................................. 5
Ordinary Course of Business.............. 17
P
Parent................................... 1
Parent Average Closing Price............. 4
Parent Common Stock...................... 2
Parent Merger Shares..................... 2
Person................................... 9
Plan..................................... 22
Prospects................................ 9
R
Recent 10-Q.............................. 25
Registrable Securities................... 43
Reports.................................. 26
Resale Holder............................ 42
S
Securities Act........................... 5, 18
Series A Conversion Ratio................ 3
Series A Preferred Stock................. 3
Series B Conversion Ratio................ 3
Series B Preferred Stock................. 3
Series C Conversion Ratio................ 3
Series C Preferred Stock................. 3
Subsequent Shelf Registration Statement.. 43
Subsidiary............................... 9
Surviving Corporation.................... 1
T
Tax...................................... 15
Tax Return............................... 15
Tax Returns.............................. 15
Taxes.................................... 15
Threshold Amount......................... 41
U
Unaudited Balance Sheet.................. 14
Unaudited Balance Sheet Date............. 14
Underwritten Sale........................ 45
V
Voting Agreements........................ 33
-2-
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 30, 1999 (this
"Agreement"), by and among TSI International Software Ltd., a Delaware
corporation ("Parent"); Natchez Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"); and Novera Software, Inc., a
Delaware corporation ("Natchez ").
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, Parent,
Merger Sub and Natchez agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
accordance with the Delaware General Corporation Law (the "DGCL"), Merger Sub
will be merged with and into Natchez (the "Merger"). A Certificate of Merger
and any other required documents (collectively, the "Merger Documents"),
substantially in the form attached as Exhibit 1.1, will be duly prepared,
executed and acknowledged by Natchez and Merger Sub and thereafter delivered to
the Secretary of State of Delaware for filing in accordance with the DGCL
contemporaneously with the Closing (as defined in Section 1.3). The Merger will
become effective at such time as the Merger Documents have been filed with the
Secretary of State of Delaware (the "Effective Time"). Following the Merger,
Natchez will continue as the surviving corporation of the Merger (the "Surviving
Corporation") under the laws of the State of Delaware, and the separate
corporate existence of Merger Sub will cease.
1.2 Effects of the Merger. At and after the Effective Time, (i) the Merger
will have all of the effects provided by the Certificate of Merger and
applicable law, (ii) the Certificate of Incorporation of Natchez will be amended
in the form attached as Appendix A to Exhibit 1.1 until duly further amended,
(iii) the bylaws of Merger Sub will be the bylaws of the Surviving Corporation
until duly amended, (iv) the directors of Merger Sub will be the directors of
the Surviving Corporation, to hold office in accordance with the bylaws of the
Surviving Corporation, (v) the officers of Merger Sub will be the officers of
the Surviving Corporation, to hold office in accordance with the bylaws of the
Surviving Corporation and (vi) the issued and outstanding certificates for the
capital stock of Merger Sub will be the issued and outstanding certificates
initially representing all of the issued capital stock of the Surviving
Corporation. The Merger is intended to be a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"), and this Agreement is intended to constitute a "plan of reorganization"
within the meaning of the regulations promulgated under Section 368 of the Code.
1.3 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") will take place on the date of this Agreement or as soon as
practicable (but no more than three (3) business days) after satisfaction or
waiver of the last to be fulfilled of the conditions set forth in Article VIII
that by their terms are not to occur at the Closing (the "Closing Date"), but in
no event later than October 31, 1999, at the offices of Testa, Hurwitz &
Thibeault, LLP, 125 High Street,
Boston, Massachusetts, unless another date or place is agreed to in writing by
Parent and Natchez. If all of conditions set forth in Article VIII hereof are
determined to be satisfied (or duly waived) at the Closing, concurrently with
the Closing the parties hereto will cause the Merger to be consummated by the
filing of the Merger Documents with the Secretary of State of Delaware. The
Closing will be deemed to have concluded at the Effective Time.
1.4 Approval by the Stockholders of Natchez. Natchez will take all action
necessary in accordance with applicable law, its Charter Documents (as defined
below) and any agreements to which it is a party to solicit the approval of this
Agreement, the Merger and all of the transactions contemplated hereby by all
stockholders of Natchez by means of a written consent of stockholders in
accordance with the DGCL, or if it is unable to obtain such written consent, by
a duly convened meeting of stockholders. Natchez will use its reasonable best
efforts to obtain such stockholder approval. Natchez represents and warrants
that its Board of Directors has duly (i) approved the Merger in accordance with
the DGCL and (ii) resolved to recommend to the stockholders of Natchez that they
approve this Agreement, the Merger and all of the transactions contemplated
hereby.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 Conversion of Natchez Stock. The maximum number of shares of common
stock, $.01 par value per share, of Parent ("Parent Common Stock") to be issued
(including Parent Common Stock to be reserved for issuance upon exercise of
Options (as defined herein) to be assumed by Parent) in exchange for the
acquisition by Parent of all outstanding shares of Natchez Stock (as defined
herein) shall be 2,159,132 shares (appropriately adjusted to reflect the effect
of any stock split, stock dividend, reorganization, recapitalization or the like
with respect to the Parent Common Stock occurring after the date of this
Agreement and prior to the Effective Time) (the "Parent Merger Shares"). No
adjustment shall be made in the number of shares of Parent Common Stock issued
in the Merger as a result of any cash proceeds received by Natchez from the date
of this Agreement to the Closing Date pursuant to the exercise of Options to
acquire Natchez Stock. Subject to the terms and conditions of the Merger and
without any action on the part of the Merger Sub, Natchez or the holder of any
shares of Natchez Stock, the holder of any Options to acquire or receive shares
of Natchez Stock, the following shall occur:
(a) Conversion of Natchez Common Stock. Each share of common stock,
$.01 par value per share, of Natchez ("Natchez Common Stock") issued and
outstanding immediately prior to the Effective Time (other than any shares of
Natchez Common Stock owned beneficially by Parent or Merger Sub, Dissenting
Shares (as defined in Section 2.4 hereof) and Natchez Common Stock held in
Natchez's treasury) shall be converted into and represent the right to receive
(subject to the provisions of Section 2.2 hereof) such number of shares of
common stock, $.01 par value per share, of Parent ("Parent Common Stock") as is
equal to the product of (A) one share of Natchez Common Stock multiplied by (b)
the Common Conversion Ratio (as defined in Section 2.1(c)), upon surrender of
the certificate representing such share of Natchez Common Stock.
- 2 -
(b) Conversion of Natchez Preferred Stock.
(i) Series A Preferred Stock. Each share of Natchez's Series A
Convertible Preferred Stock, $.01 par value per share (the "Series A Preferred
Stock") issued and outstanding immediately prior to the Effective Time (other
than any shares of Series A Preferred Stock owned beneficially owned by Parent
or Merger Sub, Dissenting Shares and any shares of Series A Preferred Stock held
in Natchez's treasury) shall be converted into and represent the right to
receive (subject to the provisions of Section 2.2 hereof) such number of shares
of Parent Common Stock as is equal to the product of (A) one share of Series A
Preferred Stock multiplied by (B) the Series A Conversion Ratio (as defined in
Section 2.1(c) hereof), upon surrender of the certificate representing such
share of Series A Preferred Stock.
(ii) Series B Preferred Stock. Each share of Natchez's Series B
Convertible Preferred Stock, $.01 par value per share (the "Series B Preferred
Stock") issued and outstanding immediately prior to the Effective Time (other
than any shares of Series B Preferred Stock owned beneficially owned by Parent
or Merger Sub, Dissenting Shares and any shares of Series B Preferred Stock held
in Natchez's treasury) shall be converted into and represent the right to
receive (subject to the provisions of Section 2.2 hereof) such number of shares
of Parent Common Stock as is equal to the product of (A) one share of Series B
Preferred Stock multiplied by (B) the Series B Conversion Ratio (as defined in
Section 2.1(c) hereof), upon surrender of the certificate representing such
share of Series B Preferred Stock.
(iii) Series C Preferred Stock. Each share of Natchez's Series C
Convertible Preferred Stock, $.01 par value per share (the "Series C Preferred
Stock," and together with the Series A Preferred Stock and the Series B
Preferred Stock, the "Natchez Preferred Stock"; and, together with the Natchez
Common Stock, the "Natchez Stock") issued and outstanding immediately prior to
the Effective Time (other than any shares of Series C Preferred Stock owned
beneficially owned by Parent or Merger Sub, Dissenting Shares and any shares of
Series C Preferred Stock held in Natchez's treasury) shall be converted into and
represent the right to receive (subject to the provisions of Section 2.2 hereof)
such number of shares of Parent Common Stock as is equal to the product of (A)
one share of Series C Preferred Stock multiplied by (B) the Series C Conversion
Ratio (as defined in Section 2.1(c) hereof), upon surrender of the certificate
representing such share of Series C Preferred Stock.
(c) Certain Definitions. As used in this Agreement the following terms
shall have the following respective meanings:
(i) "Common Conversion Ratio" shall be equal to .204983.
(ii) "Series A Conversion Ratio" shall be equal to .204983.
(iii) "Series B Conversion Ratio" shall be equal to .204983.
(iv) "Series C Conversion Ratio" shall be equal to .204983.
(v) "Parent Average Closing Price" shall be equal to $24.5469.
(d) Subject to compliance with the requirements set forth in Section
2.5 hereof, stockholders of record of Natchez (the "Natchez Stockholders") shall
be entitled to receive
- 3 -
immediately 90% of the shares of Parent Common Stock into which their shares of
Natchez Stock were converted pursuant to this Section 2.1 (such number of shares
to be rounded to the nearest highest whole number) (the "Initial Shares"); the
remaining 10% of the shares of Parent Common Stock into which their shares of
Natchez Stock were converted pursuant to this Section 2.1 (none of which shares
of Parent Common Stock shall be unvested, subject to any right of repurchase,
risk of forfeiture or other condition in favor of the Surviving Corporation or
Parent) (the "Escrow Shares") shall be deposited in escrow pursuant to Section
2.2 hereof and shall be held and disposed of in accordance with the terms of the
Escrow Agreement (as defined in Section 2.2 hereof).
(e) Each share of Natchez Stock held in Natchez's treasury immediately
prior to the Effective Time and each share of Natchez Stock owned beneficially
by Parent or the Merger Sub shall be cancelled and retired without payment of
any consideration therefor.
(f) At the Effective Time, each share of common stock, $.01 par value,
of Merger Sub issued and outstanding immediately prior to the Effective Time
will, by virtue of the Merger and without any action on the part of the holder
hereof, be converted into one share of common stock, $.01 par value, of the
Surviving Corporation.
2.2 Escrow.
(a) At or as soon as practicable after the Effective Time, and
subject to and in accordance with the terms of the Escrow Agreement attached as
Exhibit 2.2 (the "Escrow Agreement"), Parent shall deliver to the Escrow Agent
(as defined in the Escrow Agreement) certificates (issued in the names of the
Natchez Stockholders or their nominees) representing the Escrow Shares, as
described in Section 2.1(d), for purposes of securing indemnification
obligations of the Natchez Stockholders set forth in this Agreement. The Escrow
Shares shall be held by the Escrow Agent pursuant and in accordance with the
terms of the Escrow Agreement. The Escrow Shares shall be held by the Escrow
Agent as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party. The Escrow
Shares shall be held and disbursed solely for the purposes and in accordance
with the terms of the Escrow Agreement. The delivery of the Escrow Shares will
be made on behalf of the holders of Natchez Stock in accordance with the
provisions hereof, with the same force and effect as if such shares had been
delivered by Parent directly to such holders and subsequently delivered by such
holders to the Escrow Agent. The adoption of this Agreement and the approval of
the Merger by the Natchez Stockholders shall constitute approval of the
indemnification provisions contained in Article IX hereof and of the terms and
provisions of the Escrow Agreement and all of the arrangements relating thereto,
including without limitation the placement of the Escrow Shares in escrow and
the appointment of the Indemnification Representative (as such term is defined
in the Escrow Agreement).
2.3 Assumption of Stock Options; Restricted Stock.
(a) At the Effective Time, Parent shall assume all outstanding
options (whether vested or unvested) to purchase Natchez Common Stock (each an
"Option" and collectively, the "Options") and each holder thereof (each an
"Option Holder") shall thereby be entitled to acquire, by virtue of the Merger
and without any action on the part of the Option Holder, on substantially the
same terms (including the dates and extent of exercisability) and subject to the
same conditions, including vesting, as were applicable under such Option at the
Effective Time (subject to any acceleration of vesting or
- 4 -
exercisability resulting from the consummation of the Merger), the number of
shares of Parent Common Stock determined by multiplying the number of shares of
Natchez Common Stock subject to such Option in accordance with its terms
immediately prior to the Effective Time by the Common Conversion Ratio (rounded
down to the nearest whole share), at an exercise or conversion price per share
of Parent Common Stock (rounded up to the nearest whole cent) determined by
dividing the exercise price per share of Natchez Common Stock of such Option
immediately prior to the Effective Time by the Common Conversion Ratio. It is
the intention of the parties that the Options assumed by Parent qualify
following the Effective Time as Incentive Stock Options as defined in Section
422 of the Code to the extent such Options qualified as Incentive Stock Options
immediately prior to the Effective Time.
(b) As soon as practicable after the Effective Time, Parent or the
Surviving Corporation shall deliver to the holders of Options assumed in
accordance with this Section 2.3 appropriate notices setting forth such holders'
rights pursuant to such Options, as amended by this Section 2.3, and the
agreements evidencing such Options shall continue in effect on the same terms
and conditions (subject to any acceleration of vesting or exercisability
resulting from the consummation of the Merger).
(c) The Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of the Options assumed in accordance with this Section 2.3. As
soon as practicable after the Effective Time and in any event within fourteen
(14) days thereof, the Parent will file a Registration Statement on Form S-8 (or
any successor form) under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to all shares of Parent Common Stock subject to
such Options that may be registered on a Form S-8.
(d) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder, all conditions, including vesting, as were
applicable with respect to shares of restricted stock issued to employees of
Natchez at the Effective Time, shall remain in effect on substantially the same
terms and conditions (subject to any acceleration of vesting resulting from the
consummation of the Merger).
2.4 Dissenting Shares.
(a) For purposes of this Agreement, "Dissenting Shares" means shares
of Natchez Stock held as of the Effective Time by a Natchez Stockholder who has
not voted such shares of Natchez Stock in favor of the adoption of this
Agreement and the Merger and with respect to which appraisal shall have been
duly demanded and perfected in accordance with Section 262 of the DGCL and not
effectively withdrawn or forfeited prior to the Effective Time.
Notwithstanding Section 2.1 hereof, Dissenting Shares shall not be converted
into or represent the right to receive shares of Parent Common Stock, unless
such Natchez Stockholder shall have forfeited his or her right to appraisal
under the DGCL or properly withdrawn his, her or its demand for appraisal. If
such Natchez Stockholder has so forfeited or withdrawn his, her or its right to
appraisal of Dissenting Shares, then (i) as of the occurrence of such event,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and represent the right to receive shares of Parent Common Stock
issuable in respect of such Natchez Stock pursuant to Section 2.1, and (ii)
promptly following the occurrence of such event, Parent shall deliver to such
Natchez Stockholder a certificate representing 90% of the shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.1 (which
shares
- 5 -
shall be considered Initial Shares for purposes of this Agreement) and shall
deliver to the Escrow Agent a certificate representing the remaining 10% of
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.1 (none of which Shares of Parent Common Stock shall be unvested
subject to any right of repurchase risk of forfeiture or other condition in
favor of the Surviving Corporation or Parent) (which shares shall be considered
Escrow Shares for all purposes of this Agreement).
(b) Natchez shall give Parent (i) prompt notice of any written
demands for appraisal of any Natchez Stock, withdrawals of such demands, and any
other instruments that relate to such demands received by Natchez and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. Natchez shall not, except with the prior written
consent of Parent, make any payment with respect to any demands for appraisal of
Natchez Stock or offer to settle or settle any such demands.
2.5 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate The Bank of New York to act as exchange agent (the "Exchange Agent")
in the Merger.
(b) Parent to Provide Parent Common Stock. At or promptly after the
Effective Time, Parent shall deliver to the Exchange Agent for exchange in
accordance with this Article II, (i) one or more certificates representing the
Initial Shares issuable pursuant to Section 2.1 in exchange for shares of
Natchez Stock outstanding at the Effective Time, provided, however, that, on
behalf of the Natchez Stockholders, and pursuant to Section 2.2 and the Escrow
Agreement, Parent shall deposit into an escrow account and deliver to the Escrow
Agent one or more certificates representing the Escrow Shares, and (ii) any cash
in respect of fractional shares as provided in Section 2.7.
(c) Exchange Procedures. At or promptly after the Effective Time,
the Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Natchez Stock whose shares were
converted into the right to receive shares of Parent Common Stock pursuant to
Section 2.1, (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 Exchange Agent, and shall be in
such form and have such other provisions as Parent may reasonably specify), (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock, and (iii) an
Investment Agreement (as defined herein) to be executed by such holder, if not
previously delivered to Parent by such holder. Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal and such
Investment Agreement, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parent Common Stock (less the number of Escrow Shares to be deposited
with the Escrow Agent on such holder's behalf pursuant to Section 2.2 and the
Escrow Agreement), plus cash, if any, in lieu of fractional shares in accordance
with Section 2.7, to which such holder is entitled pursuant to Section 2.7, and
the Certificate so surrendered shall forthwith be cancelled. Until so
surrendered, and subject to Section 2.4, each outstanding Certificate that,
prior to the Effective Time, represented shares of Natchez Stock will be deemed
from and after the Effective Time, for all
- 6 -
corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of Parent Common Stock into which such
shares of Natchez Stock shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 2.7.
(d) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Natchez Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Parent Common Stock and cash for fractional
shares, if any, as may be required pursuant to Section 2.7; provided, however,
that Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
(e) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby until the holder of record of such Certificate
shall surrender such Certificate. Subject to applicable law, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock.
(f) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 2.5, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to a holder of shares of Parent Common Stock or Natchez
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
2.6 No Further Ownership Rights in Natchez Common Stock. At the Effective
Time, each Holder of a Certificate shall cease to have any rights as a
Stockholder of Natchez except such rights, if any, as such Holder may have with
respect to Dissenting Shares. The Merger and its approval by the Natchez
Stockholders and the execution of this Agreement will be deemed, at the
Effective Time, to constitute full satisfaction and termination of all rights
and agreements pertaining to Natchez Stock pursuant to the DGCL, by contract or
otherwise. After the Effective Time, there will be no transfers on the stock
transfer books of Natchez of Natchez Stock. If, after the Effective Time,
Certificates are
- 7 -
presented to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in this Article II.
2.7 No Fractional Shares. No certificates or scrip for fractional shares of
Parent Common Stock will be issued, no Parent stock split or dividend will be
paid in respect of any fractional share interest, and no such fractional share
interest will entitle the owner thereof to vote or to any rights of or as a
stockholder of Parent. In lieu of such fractional shares, any holder of shares
of Natchez Stock who would otherwise be entitled to a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) will be paid the cash value of such
fraction, which will be equal to such fraction multiplied by the Parent Average
Closing Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NATCHEZ
Natchez represents and warrants to Parent and Merger Sub that the statements
contained in this Article III are true and correct except as set forth in the
Disclosure Schedule of Natchez dated the date hereof and delivered herewith to
Parent (the "Natchez Disclosure Schedule"). The Natchez Disclosure Schedule
shall be arranged in section and paragraphs corresponding to the numbered and
lettered sections and paragraphs contained in this Article III, and the
disclosures in any paragraphs of the Natchez Disclosure Schedule shall also
qualify other sections or paragraphs in this Article III only to the extent it
is clear from a reading of the disclosure that such disclosure is applicable to
such other sections or paragraphs.
3.1 Organization, Standing and Power; Subsidiaries.
(a) Natchez is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which a failure to so
qualify would have a Material Adverse Effect (as defined herein) on the Business
Condition (as hereinafter defined) of Natchez.
As used in this Agreement, "Material Adverse Effect" with respect to
any Person (as defined herein) shall not include (i) any change arising out of
conditions affecting the economy or industry of such Person in general which
does not affect such Person in a materially disproportionate manner relative to
other participants in the economy or such industry, respectively, or (ii) any
change or occurrence resulting from the announcement or pendency of this
Agreement or the transactions contemplated hereby.
As used in this Agreement, "Business Condition" with respect to any
Person (as defined below) means the business, financial condition, results of
operations, assets (including intangible assets) or prospects (as defined below)
of such Person or Persons including its Subsidiaries taken as a whole. In this
Agreement, a "Subsidiary" of any Person means a corporation, partnership,
limited liability company, joint venture or other entity of which such Person
directly or indirectly owns or controls a majority of the equity interests or
voting securities or other interests that are sufficient to
- 8 -
elect a majority of the Board of Directors or other managers of such
corporation, partnership, limited liability company, joint venture or other
entity, and "prospects" means events, conditions, facts or developments that are
known to Natchez and that in the reasonable course of events are expected to
have an effect on future operations of the business as presently conducted by
Natchez. References to Natchez in this Agreement shall be deemed to include all
Subsidiaries of Natchez, if any, unless the context specifically requires
otherwise. In this Agreement, "Person" means any natural person, corporation,
partnership, limited liability company, joint venture or other entity.
All Subsidiaries of Natchez and their jurisdiction of incorporation
are listed in Section 3.1 of the Natchez Disclosure Schedule. Natchez has
delivered to Parent complete and correct copies of the articles or certificate
of incorporation, bylaws and/or other primary charter and organizational
documents ("Charter Documents") of Natchez, in each case, as amended to the date
hereof. The minute books of Natchez, copies of which have been delivered to
Parent, contain correct records of all material proceedings and actions taken at
all meetings of, or effected by written consent of, the stockholders of Natchez
and its Board of Directors. Section 3.1 of the Natchez Disclosure Schedule
contains a complete and correct list of the officers and directors of Natchez.
(b) Except for the Subsidiaries listed in Section 3.1 of the Natchez
Disclosure Schedule, Natchez does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or have direct or indirect
equity or ownership interest in any partnership, limited liability company,
joint venture or other entity. All of the outstanding shares of capital stock of
each Subsidiary of Natchez are owned beneficially and of record by Natchez, one
of its other Subsidiaries, or any combination thereof, in each case free and
clear of any security interests, liens, charges, restrictions, claims,
encumbrances or assessments of any nature whatsoever except for statutory liens,
liens for Taxes or similar liens arising in the ordinary course of business and
not yet due ("Liens"); and there are no outstanding subscriptions, warrants,
options, convertible securities, or other rights (contingent or other) pursuant
to which any of the Subsidiaries is or may become obligated to issue any shares
of its capital stock to any Person other than Natchez or one of the other
Subsidiaries.
3.2 Capital Structure.
(a) The authorized capital stock of Natchez consists of (i)
11,500,000 shares of Natchez Common Stock, of which 2,207,012 shares are issued
and outstanding as of the date of this Agreement and no shares are issued and
held as treasury shares by Natchez, (ii) 2,300,000 shares of Series A Preferred
Stock, all of which are issued and outstanding, (iii) 1,641,616 shares of Series
B Preferred Stock, all of which are issued and outstanding and (iv) 2,785,000
shares of Series C Stock, of which 2,583,529 are issued and outstanding.
Section 3.2 of the Natchez Disclosure Schedule sets forth a complete and
accurate list of all Natchez Stockholders, indicating the number of shares and
class or series of Natchez Stock held by each Natchez Stockholder and (for
Natchez Stock other than Natchez Common Stock) the number of shares of Natchez
Common Stock (if any) into which such Natchez Stock is convertible. Section 3.2
of the Natchez Disclosure Schedule also sets forth (i) all stock option plans
and other stock or equity-related plans of Natchez (the "Natchez Stock Plans"),
and (ii) all outstanding Options, including any other options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character (each, a "Natchez Option")
to which Natchez is a party or by which Natchez may be bound obligating Natchez
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Natchez, or obligating Natchez to grant, extend,
or enter into any such option, warrant, call, conversion
- 9 -
right, conversion payment, commitment, agreement, contract, understanding,
restriction, arrangement or right, indicating the following information with
respect to each Natchez Option: (A) the holder of such Natchez Option, (B) the
particular Natchez Stock Plan, if any, pursuant to which such Natchez Option was
granted, (C) the number of shares and class or series of Natchez Stock into
which such Natchez Option is exercisable and (for Natchez Stock other than
Natchez Common Stock) the number of shares of Natchez Common Stock (if any) into
which such Natchez Stock is convertible, (D) the exercise price, date of grant,
vesting schedule and expiration date for such Natchez Option, and (E) any terms
regarding the acceleration of vesting of such Natchez Option.
(b) All issued and outstanding shares of Natchez Stock are, and any
shares of Natchez Stock issued upon exercise of any Natchez Options will be,
validly issued, fully paid, nonassessable and not subject to any preemptive
rights (other than those which have been duly waived), or, except as set forth
in Section 3.2 of the Natchez Disclosure Schedule, to any agreement to which
Natchez is a party or by which Natchez may be bound. Natchez does not have
outstanding any bonds, debentures, notes or other indebtedness the holders of
which (i) have the right to vote (or are convertible or exercisable into
securities having the right to vote) with holders of shares of Natchez Common
Stock on any matter or (ii) are or will become entitled to receive any payment
as a result of the execution of this Agreement or the completion of the
transactions contemplated hereby. Other than the Natchez Stock and the Natchez
Options listed in the Natchez Disclosure Schedule, there are no outstanding (i)
securities of Natchez convertible into or exchangeable for capital stock of or
other ownership interests in Natchez, (ii) options, warrants or other rights
(including preemptive rights) to acquire from Natchez , and other obligations of
Natchez to issue, capital stock of or other ownership interests in, or
securities convertible into or exchangeable for capital stock of or other
ownership interests in, Natchez, and (iii) obligations of Natchez to purchase,
redeem or otherwise acquire any shares of capital stock of Natchez. Except as
set forth on Section 3.2 of the Natchez Disclosure Schedule, there are no
agreements, voting trusts, proxies or understandings with respect to voting or
registration under the Securities Act of any Natchez Stock to which Natchez is a
party or, to the knowledge of Natchez, to which any other Person is a party. No
stockholder of Natchez has initiated any claim against Natchez nor to the
knowledge of Natchez do any grounds exist for making any claim.
3.3 Authority. The execution, delivery and performance of this Agreement
and all other agreements contemplated hereby by Natchez have been duly
authorized by all necessary action of the Board of Directors of Natchez, and if
the Closing shall occur, shall have been duly authorized by all necessary action
of the stockholders of Natchez. Natchez has duly and validly executed and
delivered this Agreement and has, or prior to Closing, will have duly and
validly executed and delivered all other agreements contemplated hereby, and
each of this Agreement and such other agreements constitutes a valid, binding
and enforceable obligation of Natchez in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies.
3.4 Compliance with Laws and Other Instruments; Non-Contravention.
Natchez holds, and at all times has held, all licenses, permits and
authorizations from all Governmental Entities (as defined below) necessary for
the lawful conduct of its business pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all such Governmental Entities having
jurisdiction over it or any part of its operations, excepting, however, when
such failure to hold would not have a Material Adverse Effect on Natchez's
Business Condition. There are no violations or, to the knowledge of
- 10 -
Natchez, claimed violations of any such license, permit or authorization or any
such statute, law, ordinance, rule or regulation where such violations would
have a Material Adverse Effect on the Business Condition of Natchez. Assuming
the receipt of all Consents (as defined below) and except as in the aggregate
would not have a Material Adverse Effect on the Business Condition of Natchez,
neither the execution, delivery or performance of this Agreement and all other
agreements contemplated hereby by Natchez, nor the consummation of the Merger or
any other transaction described herein, does or will, after the giving of
notice, or the lapse of time, or otherwise, conflict with, result in a breach
of, or constitute a default under, the Charter Documents of Natchez or any
federal, foreign, state or local court or administrative order or process,
statute, law, ordinance, rule or regulation, or any contract, agreement or
commitment to which Natchez is a party, or under which Natchez is obligated, or
by which Natchez or any of the rights, properties or assets of Natchez are
subject or bound; result in the creation of any Lien upon, or otherwise
adversely affect, any of the rights, properties or assets of Natchez; terminate,
amend or modify, or give any party the right to terminate, amend, modify,
abandon or refuse to perform or comply with, any contract, agreement or
commitment to which Natchez is a party, or under which Natchez is obligated, or
by which Natchez or any of the rights, properties or assets of Natchez are
subject or bound; or accelerate, postpone or modify, or give any party the right
to accelerate, postpone or modify, the time within which, or the terms and
conditions under which, any liabilities, duties or obligations are to be
satisfied or performed, or any rights or benefits are to be received, under any
contract, agreement or commitment to which Natchez is a party, or under which
Natchez may be obligated, or by which Natchez or any of the rights, properties
or assets of Natchez are subject or bound. Section 3.4 of the Natchez Disclosure
Schedule sets forth each agreement, contract or other instrument binding upon
Natchez requiring a notice or consent (by its terms or as a result of any
conflict or other contravention required to be disclosed in the Natchez
Disclosure Schedule pursuant to the preceding provisions of this Section 3.4) as
a result of the execution, delivery or performance of this Agreement and all
other agreements contemplated hereby by Natchez or the consummation of the
Merger or any other transaction described herein (each such notice or consent, a
"Consent"). No consent, approval, order, or authorization of or registration,
declaration, or filing with or exemption (also a "Consent") by, any court,
administrative agency or commission or other governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity") is
required by or with respect to Natchez in connection with the execution,
delivery or performance of this Agreement and all other agreements contemplated
hereby by Natchez or the consummation of the Merger or any other transaction
described herein, except for the filing by Natchez and Merger Sub of the
appropriate Merger Documents with the Secretary of State of Delaware.
3.5 Technology and Intellectual Property Rights.
(a) For the purposes of this Agreement, "Natchez Intellectual
Property" consists of the following intellectual property:
(i) all patents, trademarks, trade names, service marks, trade
dress, copyrights and any renewal rights therefor, mask works, schematics,
software, firmware, technology, manufacturing processes, supplier lists,
customer lists, trade secrets, know-how, moral rights and applications and
registrations for any of the foregoing;
(ii) all documents, records and files relating to design, end user
documentation, manufacturing, quality control, sales, marketing or customer
support for all intellectual property described herein;
- 11 -
(iii) all other tangible or intangible proprietary information and
materials; and
(iv) all license and other rights in any third party product or any
third party intellectual property described in (i) through (iii) above;
that are owned or held by or on behalf of Natchez or that are being, and/or have
been, used, or are currently under development for use, in the business of
Natchez; provided, however, that Natchez Intellectual Property will not include
pre-packaged third party software that is generally available to the public for
purchase or use.
(b) Section 3.5 of the Natchez Disclosure Schedule lists: (i) all
patents, copyright registrations, mask works, registered trademarks, registered
service marks, any renewal rights for any of the foregoing, and any applications
and registrations for any of the foregoing, that are included in Natchez
Intellectual Property and owned by or on behalf of Natchez, including the
jurisdictions in which each such Natchez Intellectual Property right has been
issued or registered or in which any application for such issuance and
registration has been filed; (ii) all hardware products and tools, software
products and tools and services that are currently published, offered, or under
development by Natchez; and (iii) all licenses, sublicenses and other agreements
to which Natchez is a party and pursuant to which Natchez or any other person is
authorized to use any Natchez Intellectual Property or exercise any other right
with regard thereto, other than shrinkwrap licenses for object code licenses
granted by Natchez in the ordinary course of business for license fees of less
than $10,000 in any single instance.
(c) Natchez Intellectual Property consists solely of items and rights
that are either: (i) owned solely by Natchez; (ii) in the public domain; or
(iii) rightfully used and authorized for use by Natchez and its successors
pursuant to a valid license. All Natchez Intellectual Property that consists of
license or other rights to third party property is separately set forth in
Section 3.5 of the Natchez Disclosure Schedule. Natchez owns or has the right
to use all Natchez Intellectual Property necessary to carry out Natchez's
business.
(d) Natchez is not, nor as a result of the execution or delivery of
this Agreement and all other agreements contemplated hereby, or performance of
Natchez's obligations hereunder or the consummation of the Merger, will Natchez
be, in violation of any license, sublicense or other agreement relating to any
Natchez Intellectual Property to which Natchez is a party or otherwise bound.
Natchez is not obligated to provide any consideration (whether financial or
otherwise) to any third party, nor is any third party otherwise entitled to any
consideration, with respect to any exercise of rights by Natchez or Parent, as
successor to Natchez, in Natchez Intellectual Property.
(e) The use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service or process as used, provided, or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by Natchez does not
infringe any copyright, trade secret, trademark, service mark, trade name, firm
name, logo, trade dress, mask work, moral right, other intellectual property
right, right of privacy, or right in personal data of any Person, or any patent
issued prior to the date hereof. No claims (i) challenging the validity,
effectiveness, or ownership by Natchez of any Natchez Intellectual Property, or
(ii) to the effect that the use, reproduction,
- 12 -
modification, manufacturing, distribution, licensing, sublicensing, sale, or any
other exercise of rights in any product, work, technology, service, or process
as used, provided or offered at any time, or as proposed for use, reproduction,
modification, distribution, licensing, sublicensing, sale, or any other exercise
of rights, by Natchez infringes or will infringe on any intellectual property or
other proprietary or personal right of any Person have been asserted to Natchez
or, to the knowledge of Natchez (as defined below), are threatened by any Person
nor are there any valid grounds for any bona fide claim of any such kind. There
are no legal or governmental proceedings, including interference,
re-examination, reissue, opposition, nullity, or cancellation proceedings
pending that relate to any Natchez Intellectual Property, other than review of
pending applications for patent and trademarks, and Natchez is not aware of any
information indicating that such proceedings are threatened or contemplated by
any Governmental Entity or any other Person. To the knowledge of Natchez, all
granted or issued patents and mask works and all registered trademarks and
copyright registrations owned by Natchez are valid, enforceable and subsisting.
To the knowledge of Natchez, there is no unauthorized use, infringement, or
misappropriation of any Natchez Intellectual Property by any third party,
employee or former employee.
(f) Section 3.5 of the Natchez Disclosure Schedule separately lists
all parties (other than employees) who have created any portion of, or otherwise
have any rights in or to, Natchez Intellectual Property. Natchez has secured
from all parties who have created any portion of, or otherwise have any rights
in or to, Natchez Intellectual Property valid and enforceable written
assignments of any such work or other rights to Natchez and has provided true
and complete copies of such assignments to Parent.
(g) Natchez has obtained written agreements from all employees and
from third parties with whom Natchez, to its knowledge, has shared confidential
proprietary information (i) of Natchez or (ii) received from others that Natchez
is obligated to treat as confidential and to obtain the written agreement of
employees and others to keep confidential, which agreements require such
employees and third parties to keep such information confidential in accordance
with the terms thereof. Natchez has made available a copy of the form of such
written agreement with employees, as executed, to Parent together with copies of
all non-standard agreements with employees.
3.6 Financial Statements.
(a) Natchez has delivered to Parent an unaudited balance sheet (the
"Unaudited Balance Sheet") as of August 31, 1999 (the "Unaudited Balance Sheet
Date") and audited balance sheets (the "Audited Balance Sheets") as of December
31, 1998 (the "Audited Balance Sheet Date") and December 31, 1997, unaudited
statements of income and cash flows for the eight-month period ended August 31,
1999 and audited statements of income and cash flows for its fiscal years ended
December 31, 1998 and December 31, 1997 (all of such balance sheets and
statements of income and cash flows are collectively referred to as the
"Financial Statements"). The Financial Statements: (i) are in accordance with
the books and records of Natchez; (ii) present fairly, in all material respects,
the financial position of Natchez as of the date indicated and the results of
its operations and cash flows for such periods; and (iii) have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to year-end
adjustments, which will not be material either individually or in the
aggregate). As of the Unaudited Balance Sheet Date, there were no material
liabilities, claims or obligations of any nature, whether accrued, absolute,
contingent,
- 13 -
anticipated or otherwise, whether due or to become due, that are not shown or
provided for either in the Unaudited Balance Sheet or Section 3.6 of the Natchez
Disclosure Schedule, and since the Unaudited Balance Sheet Date, Natchez has
incurred no liabilities, claims or obligations of any nature, whether accrued,
absolute, contingent, anticipated or otherwise, other than in either case in the
ordinary course of business and except for (x) liabilities incurred by Natchez
not required by GAAP to be reflected thereon or (y) liabilities incurred in
connection with the preparation and execution of this Agreement and the
consummation of the transactions contemplated herein (which liabilities are
estimated and have been disclosed on Section 3.6 of the Natchez Disclosure
Schedule).
(b) All of the accounts, notes and other receivables which are
reflected in the Unaudited Balance Sheet were acquired in the ordinary course of
business; and, except to the extent reserved against in the Unaudited Balance
Sheet, all of the accounts, notes and other receivables which are reflected
therein have been collected in full, or are good and collectible, in the
ordinary course of business; and all of the accounts, notes and other
receivables which have been acquired by Natchez since the Unaudited Balance
Sheet Date were acquired in the ordinary course of business and have been
collected in full, or are good and collectible, subject to an appropriate
reserve determined in a manner consistent with past practices of Natchez, in the
ordinary course of business. No accounts, notes or other receivables are
contingent upon the performance by Natchez of any obligation or contract. No
Person has any Lien on any of such receivables and no agreement for deduction or
discount has been made with respect thereto.
3.7 Taxes.
(a) The term "Taxes" as used herein means all federal, state, local
and foreign income taxes, alternative or add-on minimum taxes, estimated, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital, profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs duties and other taxes,
governmental fees and other like assessments and charges of any kind whatsoever,
together with all interest, penalties, additions to tax and additional amounts
with respect thereto, and the term "Tax" means any one of the foregoing Taxes.
The term "Tax Returns" as used herein means all returns, declarations, reports,
claims for refund, information statements and other documents relating to Taxes,
including all schedules and attachments thereto, and including all amendments
thereof, and the term "Tax Return" means any one of the foregoing Tax Returns.
(b) Natchez has timely filed all Tax Returns required to be filed and
has timely paid all Taxes owed (whether or not shown as due on such Tax
Returns), including, without limitation, all Taxes which Natchez is obligated to
withhold for amounts owing to employees, creditors and third parties. All Tax
Returns filed by Natchez were complete and correct in all material respects, and
such Tax Returns correctly reflected the material facts regarding the income,
business, assets, operations, activities, status and other matters of Natchez
and any other information required to be shown thereon. None of the Tax Returns
filed by Natchez or Taxes payable by Natchez have been the subject of an audit,
action, suit, proceeding, claim, examination, deficiency or assessment by any
Governmental Entity, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the knowledge
of Natchez, threatened. Natchez is not currently the beneficiary of any
extension of time within which to file any Tax Return, and Natchez has not
waived any statute of limitation with respect to any Tax or agreed to any
extension of time with respect to a Tax
- 14 -
assessment or deficiency. None of the Tax Returns filed by Natchez contains a
disclosure statement under former Section 6661 of the Code or Section 6662 of
the Code (or any similar provision of state, local or foreign Tax law). Natchez
is not a party to any Tax sharing agreement or similar arrangement. Natchez has
never been a member of a group filing a consolidated federal income Tax Return
or a consolidated, combined or other affiliated group for state, local or other
Tax purposes (other than a group the common parent of which was Natchez), and
Natchez does not have any liability for the Taxes of any Person (other than
Natchez) under Treasury Regulation Section 1.1502-6 (or any corresponding
provision of state, local or foreign Tax law), as a transferee or successor, by
contract, or otherwise.
(c) Natchez is not a party to any agreement, contract, arrangement or
plan that has resulted or would result, separately or in the aggregate, in the
payment of (i) any "excess parachute payments" within the meaning of Section
280G of the Code (without regard to the exceptions set forth in Sections
280G(b)(4) and 280G(b)(5) of the Code) or (ii) any amount for which a deduction
would be disallowed or deferred under Section 162 or Section 404 of the Code.
Natchez has not agreed to make any adjustment under Section 481(a) of the Code
(or any corresponding provision of state, local or foreign law) by reason of a
change in accounting method or otherwise, and Natchez will not be required to
make any such adjustment as a result of the transactions set forth in this
Agreement. Natchez does not have and has not had a permanent establishment in
any foreign country, as defined in any applicable Tax treaty or convention
between the United States and such foreign country. None of the assets of
Natchez is property which is required to be treated as being owned by any other
Person pursuant to the so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the Code. None of the assets of Natchez directly or
indirectly secures any debt, the interest on which is tax exempt under Section
103(a) of the Code. None of the assets of Natchez is "tax-exempt use property"
within the meaning of Section 168(h) of the Code. No claim has ever been made
by any Governmental Entity in a jurisdiction where Natchez does not file Tax
Returns that it is or may be subject to Tax in that jurisdiction. Natchez has
not taken any action that would have the effect of deferring any material
liability for Taxes of Natchez from any taxable period ending at or before the
Effective Time to any taxable period thereafter. Natchez has never filed a
consent pursuant to Section 341(f) of the Code (or any corresponding provision
of state, local or foreign law), relating to collapsible corporations, or agreed
to have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign law) apply to the disposition of any asset owned by it. No
power of attorney has been granted by Natchez, and is currently in force, with
respect to any matter relating to Taxes. Natchez has not participated in an
international boycott as defined in Section 999 of the Code. Except as set
forth in Section 3.7 of the Natchez Disclosure Schedule, none of the shares of
outstanding capital stock of Natchez are subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code.
(d) There are no liens for Taxes (other than for Taxes not yet due
and payable) upon the assets of Natchez. The unpaid Taxes of Natchez did not,
as of the Unaudited Balance Sheet Date, exceed the reserve for actual Taxes (as
opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) as shown on the Unaudited Balance
Sheet, and will not exceed such reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Natchez in filing their Tax Returns (taking into account any Taxes incurred as a
result of the transactions contemplated by this Agreement). Natchez has not
incurred and will not incur any liability for Taxes subsequent to the Unaudited
Balance Sheet Date through the Closing Date except in the ordinary course of
business. Natchez is not a party to any joint venture,
- 15 -
partnership, limited liability company or other arrangement or contract which
could be treated as a partnership for federal income tax purposes.
3.8 Absence of Certain Changes and Events. From the Unaudited Balance
Sheet Date, there has not been:
(a) Any transaction involving more than $25,000 entered into by
Natchez other than in the ordinary course of business; or, without limiting the
foregoing, any loss of or damage to any of the properties of Natchez due to fire
or other casualty or other loss, whether or not insured, amounting to more than
$25,000 in the aggregate;
(b) Any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Natchez, or
any repurchase, redemption, retirement or other acquisition by Natchez of any
outstanding shares of capital stock, any Natchez Option, or other securities of,
or other equity or ownership interests in, Natchez;
(c) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Unaudited Balance Sheet and current liabilities
incurred since the Unaudited Balance Sheet Date in the ordinary course of
business and consistent with past practice ("Ordinary Course of Business");
(d) Any change in the Charter Documents of Natchez or any amendment
of any term of any outstanding security of Natchez;
(e) Any incurrence, assumption or guarantee by Natchez of any
indebtedness for borrowed money other than in the ordinary course of business
and in an aggregate amount exceeding $25,000;
(f) Any creation or assumption by Natchez of any Lien on any asset;
(g) Any making of any loan, advance or capital contributions to, or
investment in, any Person, except the making of travel advances in the ordinary
course of business;
(h) Any sale, lease, pledge, transfer or other disposition of any
material capital asset;
(i) Any (A) grant of any severance or termination pay to any
director, officer or employee of Natchez, (B) entering into of any employment,
severance, management, consulting, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of Natchez, (C) change in benefits payable under existing
severance or termination pay policies or employment, severance, management,
consulting or other similar agreements, (D) change in compensation, bonus or
other benefits payable to directors, officers or employees of Natchez or (E)
change in the payment or accrual policy with respect to any of the foregoing;
- 16 -
(j) Any labor dispute or any activity or proceeding by a labor union
or representative thereof to organize any employees of Natchez, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of Natchez;
(k) Any notes or accounts receivable or portions thereof written off
by Natchez as uncollectible in an aggregate amount exceeding $25,000;
(l) Any issuance or sale of any stock, bonds, phantom stock interest
or other securities of which Natchez is the issuer, or the grant, issuance or
change of any stock options, warrants, or other rights to purchase securities of
Natchez or phantom stock interest in Natchez;
(m) Any cancellation of any debts or claims or waiver of any rights
of substantial value in an aggregate amount exceeding $25,000;
(n) Any sale, assignment or transfer of any Natchez Intellectual
Property or other similar assets, including licenses therefor other than in the
ordinary course of business;
(o) Any capital expenditures, or commitment to make any capital
expenditures, for additions to property, plant or equipment in an aggregate
amount exceeding $25,000;
(p) Payment of any amounts to, or liability incurred to or in respect
of, or sale of any properties or assets (real, personal or mixed, tangible or
intangible) to, or any transaction or any agreement or arrangement with, any
corporation or business in which Natchez or any of its corporate officers or
directors, or any "affiliate" or "associate" (as such terms are defined in the
rules and regulations promulgated under the Securities Act of any such Person,
has any direct or indirect ownership interests, except for payments or
liabilities with respect to advances for all travel expenses to employees in the
ordinary course of business; or
(q) Any agreement undertaking or commitment to do any of the
foregoing.
3.9 Leases in Effect; Real Property. (a) All real property leases
and subleases as to which Natchez is a party and any amendments or modifications
thereof are listed in Section 3.9 of the Natchez Disclosure Schedule (each a
"Lease" and collectively, the "Leases") are valid, in full force and effect and
enforceable, and there are no existing defaults on the part of Natchez, and
Natchez has not received or given notice of default or claimed default with
respect to any Lease, nor is there any event that with notice or lapse of time,
or both, would constitute a default on the part of Natchez thereunder. Natchez
does not own any real property.
(b) To the knowledge of Natchez, the improvements located on the real
property leased by Natchez under the Leases listed in Section 3.9 of the Natchez
Disclosure Schedule are not the subject of any official complaint or notice of
violation of any applicable zoning ordinance or building code and there is no
use or occupancy restriction or condemnation proceeding pending or threatened
against Natchez.
3.10 Personal Property. Natchez has good and marketable title, free and
clear of all title defects and Liens (including, without limitation, leases,
chattel mortgages, conditional sale contracts, purchase money security
interests, collateral security arrangements and other title or interest-
retaining
- 17 -
agreements) to all inventory, receivables, furniture, machinery, equipment and
other personal property, tangible or otherwise, reflected on the Unaudited
Balance Sheet or used in Natchez's business, except as shown in the footnotes to
the Financial Statements or for acquisitions and dispositions since the
Unaudited Balance Sheet Date in the ordinary course of business. The Natchez
Disclosure Schedule lists (i) all computer equipment and (ii) all other personal
property, in each case having a depreciated book value of $10,000 or more, which
are used by Natchez in the conduct of its business, and all such equipment and
property, in the aggregate, is in good operating condition and repair,
reasonable wear and tear excepted.
3.11 Certain Transactions. Except for (a) relationships with Natchez as
an officer, director, or employee thereof (and compensation by Natchez in
consideration of such services) and (b) relationships with Natchez as
stockholders or option holders therein, none of the directors, officers, or
Natchez Stockholders, or any member of any of their families, is presently a
party to, or was a party to during the year preceding the date of this
Agreement, any transaction, or series of similar transactions, with Natchez, in
which the amount involved exceeds $60,000, including, without limitation, any
contract, agreement, or other arrangement (i) providing for the furnishing of
services to or by, (ii) providing for rental of real or personal property to or
from, or (iii) otherwise requiring payments to or from, any such Person or any
other Person in which any such Person has or had a 5%-or-more interest (as a
stockholder, partner, beneficiary, or otherwise) or is or was a director,
officer, employee, or trustee. None of Natchez's officers or directors has any
interest in any property, real or personal, tangible or intangible, including
inventions, copyrights, trademarks, or trade names, used in or pertaining to the
business of Natchez, or any supplier, distributor, or customer of Natchez,
except for the normal rights of a stockholder, and except for rights under
existing employee benefit plans.
3.12 Litigation and Other Proceedings. There is no action, suit, claim,
investigation or proceeding (or any basis therefor known to Natchez) pending
against or, to the knowledge of Natchez, threatened against Natchez or its
properties and assets before any court or arbitrator or any Governmental Entity.
Natchez is not subject to any order, writ, judgment, decree, or injunction that
has a Material Adverse Effect on Natchez's Business Condition.
3.13 No Defaults. Natchez is not, nor has Natchez received notice that it
would be with the passage of time, in default or violation of any term,
condition, or provision of (i) the Charter Documents; (ii) any judgment, decree,
or order applicable to Natchez; or (iii) any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease, license, or other
instrument to which Natchez is now a party or by which it or any of its
properties or assets may be bound, except for defaults and violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Business Condition of Natchez.
3.14 Major Contracts. Except as set forth in Section 3.14 of the Natchez
Disclosure Schedule, Natchez is not a party to or subject to:
(a) Any union contract, or any employment contract or arrangement
(other than "at-will" employment arrangements) providing for future
compensation, written or oral, with any officer, consultant, director, or
employee;
(b) Any plan or contract or arrangement, written or oral, providing
for bonuses, pensions, deferred compensation, retirement payments, profit-
sharing or the like;
- 18 -
(c) Any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, reseller or distribution agreement, volume
purchase agreement, corporate end user sales or service agreement, reproduction
or replication agreement or manufacturing agreement in which the amount involved
exceeds annually, or is expected to exceed in the aggregate over the life of the
contract, $25,000 or pursuant to which Natchez has granted or received
manufacturing rights, most favored nation pricing provisions, or exclusive
marketing, production, publishing or distribution rights related to any product,
group of products or territory;
(e) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise which individually is in
the amount of $25,000 or more;
(f) Any contract or agreement containing covenants purporting to
limit Natchez's freedom to compete in any line of business in any geographic
area; or
(g) Any contract or agreement, not elsewhere specifically disclosed
pursuant to this Agreement, involving the payment or receipt by Natchez of more
than $25,000 in the aggregate and where payment in full by Natchez or to Natchez
has not occurred as of the date hereof.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the Natchez Disclosure Schedule pursuant to this
Section 3.14 are valid and in full force and effect against Natchez and to the
knowledge of Natchez against each other party thereto and Natchez has not, nor,
to the knowledge of Natchez, has any other party thereto, breached any material
provisions of, or entered into default in any material respect under the terms
thereof. Since the Unaudited Balance Sheet Date, Natchez has not amended,
modified or terminated the terms of the contracts or agreements referred to in
this Section 3.14 unless such amendment, modification or termination was in the
ordinary course of business and Natchez has provided Parent with written
notification of such (including through the Natchez Disclosure Schedule).
3.15 Material Reductions. To Natchez's knowledge, none of the parties to
any of the contracts identified in the Natchez Disclosure Schedule pursuant to
Section 3.14 have terminated or expressed to Natchez an intent to terminate its
business with Natchez in the future.
3.16 Insurance and Banking Facilities. Section 3.16 of the Natchez
Disclosure Schedule contains a complete and correct list of (i) all contracts of
insurance of Natchez in force at the date of this Agreement (including name of
insurer, agent, annual premium, coverage, deductible amounts and expiration
date) and (ii) the names and locations of all banks in which Natchez has
accounts or safe deposit boxes, the designation of each such account and safe
deposit box, and the names of all persons authorized to draw on or have access
to each such account and safe deposit box. All premiums and other payments due
from Natchez with respect to any such contracts of insurance have been paid in
accordance with their terms, and Natchez does not know of any fact, act, or
failure to act which has or
- 19 -
might cause any such contract to be canceled or terminated. All known claims for
insurance have been presented.
3.17 Employees. The Natchez Disclosure Schedule sets forth a list of (a)
the names, titles, salaries and all other compensation of all salaried Natchez
employees (such term meaning permanent and temporary, full-time and part-time
employees) and (b) the wage rates for non-salaried Natchez employees (by
classification). Any persons engaged by Natchez as independent contractors,
rather than employees, have been properly classified as such and have been so
engaged in accordance with all applicable federal, foreign, state or local laws.
No employee has stated to any of David Power, Herbert Rush, Bart Hanlon or John
Keenan that such employee intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within six months after
the Closing Date. Hours worked by and payments made to employees of Natchez have
not been in violation of the Fair Labor Standards Act or any other applicable
federal, foreign, state or local laws dealing with such matters. Natchez is not
and never has been engaged in any dispute or litigation with an employee or
former employee regarding matters pertaining to intellectual property or
assignment of inventions. Natchez has never been and, to the knowledge of
Natchez, is not now subject to a union organizing effort. Natchez does not have
any written contract of employment or other employment, severance or similar
agreement with any of its employees or any established policy or practice
relating thereto, and all of its employees are employees-at-will. Natchez is
not a party to any pending, or to Natchez's knowledge, threatened, labor
dispute. Natchez has complied in all material respects with all applicable
federal, state and local laws, ordinances, rules and regulations and
requirements relating to the employment of labor, including but not limited to
the provisions thereof relating to wages, hours, collective bargaining and
ensuring equality of opportunity for employment and advancement of minorities
and women. There are no claims pending, or, to the knowledge of Natchez,
threatened to be brought, in any court or administrative agency by any former or
current Natchez employees for compensation, pending severance benefits, vacation
time, vacation pay or pension benefits, or any other claim threatened or pending
in any court or administrative agency from any current or former employee or any
other Person arising out of Natchez's status as employer, whether in the form of
claims for employment discrimination, harassment, unfair labor practices,
grievances, wrongful discharge, or otherwise.
3.18 Employee Benefit Plans. Each Plan (as defined below) covering
active, former, or retired employees of Natchez is listed in Section 3.18 of the
Natchez Disclosure Schedule. "Plan" means any employee benefit plan as defined
in Section 3(3) of ERISA (as defined below) and will also include any Code
Section125 flexible benefit plan or arrangement, employment, severance or
similar contract, arrangement or policy and each plan or arrangement providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation, profit-
sharing, bonuses, phantom stock, stock options, stock appreciation rights or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits. Natchez has provided to Parent a copy of each Plan, and where
applicable, any related trust agreement, annuity, or insurance contract, the
most recent IRS determination or opinion letter, copies of test results for the
Code Section 401(k) and 401(m) nondiscrimination requirements and the top heavy
test requirements for the last three years, and any material correspondence with
the Internal Revenue service or the Department of Labor. All annual reports
(Form 5500) required to be filed with the Internal Revenue Service have been
properly filed on a timely basis, and Natchez has provided copies of the three
most recently filed Forms 5500 for each applicable Plan. Any Plan intended to be
qualified under Section 401(a) of the
- 20 -
Code has been determined by the Internal Revenue Service to be so qualified or
has applied (or has time remaining in which to apply) to the Internal Revenue
Service for such a determination letter prior to the expiration of the requisite
period under applicable Treasury regulations or Internal Revenue Service
pronouncements in which to apply for such a determination letter and to make any
amendments necessary to obtain a favorable determination or has been established
under a standardized prototype plan for which an Internal Revenue Service
opinion letter has been obtained by the plan sponsor and is valid as to the
adopting employer. To the knowledge of Natchez, nothing has occurred which could
reasonably be expected to cause the loss of the tax-qualified status of any Plan
intended to qualify under Section 401(a) of the Code. No operational error has
occurred which would adversely affect the qualified status of the Plan. No Plan
is covered by Title IV of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 412 of the Code. No "prohibited transaction,"
as defined in ERISA Section 406 or Code Section 4975 has occurred with respect
to any Plan unless such a transaction was exempt from such rules. Each Plan has
been maintained and administered in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Plans. There are no pending or anticipated claims against or otherwise involving
any of the Plans and no suit, action, or other litigation (excluding claims for
benefits incurred in the ordinary course of Plan activities) has been brought
against or with respect to any Plan. All required contributions to any Plan have
been made. Neither Natchez nor any entity which is considered one employer with
Natchez under Section 414 of the Code or Section 4001 of ERISA has ever
maintained or contributed to or incurred or expects to incur liability with
respect to any Plan subject to Title IV of ERISA or any "multi-employer plan"
within the meaning of Section 4001(a)(3) of ERISA. There are no restrictions on
the rights of Natchez to amend or terminate any Plan without incurring any
liability thereunder other than for benefits accrued through the date of
amendment or termination and reasonable administrative expenses related thereto.
Natchez has not engaged in or is a successor or parent corporation to an entity
that has engaged in a transaction described in ERISA Section 4069. There have
been no amendments to, written interpretation of, or announcement (whether or
not written) by Natchez relating to, or change in employee participation or
coverage under, any Plan. Neither Natchez nor any of its ERISA affiliates have
any current or projected liability in respect of post-employment or post-
retirement welfare benefits for retired or former employees of Natchez other
than health care continuation benefits required to be provided under applicable
law. No tax under Section 4980B or 4980D of the Code has been incurred in
respect of any Plan that is a group health plan, as defined in Section
5000(b)(1) of the Code. Neither Natchez nor any Plan has received a distribution
of stock from a mutual insurance company that converted to stock form.
3.19 Certain Agreements. Except as contemplated by this Agreement,
neither the execution and delivery of this Agreement and all other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby will: (i) result in any payment by Natchez (including, without
limitation, severance, unemployment compensation, parachute payment, bonus or
otherwise) becoming due to any director, employee, or independent contractor of
Natchez under any Plan, agreement, or otherwise, (ii) increase any benefits
otherwise payable under any Plan or agreement or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
3.20 Guarantees and Suretyships. Natchez has no powers of attorney
outstanding, and Natchez has no material obligations or liabilities (absolute or
contingent) as guarantor, surety, cosigner, endorser, co-maker, indemnitor, or
otherwise respecting the obligations or liabilities of any Person.
- 21 -
3.21 Brokers and Finders. Except as set forth in Section 3.21 of the
Natchez Disclosure Schedule, Natchez has not retained any broker, finder, or
investment banker in connection with this Agreement or any of the transactions
contemplated by this Agreement, nor does or will Natchez owe any fee or other
amount to any broker, finder, or investment banker in connection with this
Agreement or the transactions contemplated by this Agreement. Attached to
Section 3.21 of the Natchez Disclosure Schedule are copies of any written
agreements and the summary of terms for any agreements, written or oral, with
respect to such fees.
3.22 Certain Payments. Neither Natchez, nor to the knowledge of Natchez,
any Person acting on behalf of Natchez has, directly or indirectly, on behalf of
or with respect to Natchez: (i) made an unreported political contribution, (ii)
made or received any payment which was not legal to make or receive, (iii)
engaged in any material transaction or made or received any material payment
which was not properly recorded on the books of Natchez, (iv) created or used
any "off-book" bank or cash account or "slush fund," or (v) engaged in any
conduct constituting a violation of the Foreign Corrupt Practices Act of 1977.
3.23 Environmental Matters. Natchez has complied in all material
respects with all federal, state and local laws (including, without limitation,
case law, rules, regulations, orders, judgments, decrees, permits, licenses and
governmental approvals) which are intended to protect the environment and/or
human health or safety (collectively, "Environmental Laws"). Natchez has not
handled, generated, used, stored, transported or disposed of any material,
substance or waste which is regulated by Environmental Laws ("Hazardous
Materials"), except for reasonable amounts of ordinary office and/or office-
cleaning supplies which have been used in material compliance with Environmental
Laws. To the knowledge of Natchez, there is not now, nor has there ever been,
any underground storage tank or asbestos on any real property owned, operated or
leased by Natchez. Natchez has not conducted, nor is it aware of, any
environmental investigations, studies, audits, tests, reviews or analyses, the
purpose of which was to discover, identify, or otherwise characterize the
condition of the soil, groundwater, air or the presence of Hazardous Materials
at any real property owned, operated or leased by Natchez. To the knowledge of
Natchez, there are no "Environmental Liabilities". For purposes of this
Agreement, "Environmental Liabilities" are any claims, demands, or liabilities
under Environmental Laws which (i) arise out of or in any way relate to
Natchez's operations or activities, or any real property at any time owned,
operated or leased by Natchez, or any stockholder's use or ownership thereof,
whether vested or unvested, contingent or fixed, actual or potential, and (ii)
arise from or relate to actions occurring (including any failure to act) or
conditions existing on or before the Closing Date.
3.24 Information Statement. The information regarding Natchez
(including, for purposes of this Section 3.24, information regarding Natchez's
officers, directors and stockholders) included in the information to be sent to
the stockholders of Natchez in connection with the consideration and approval of
the Merger and the other transactions contemplated by this Agreement (such
information statement as amended or supplemented is referred to herein as the
"Information Statement") will not, on the date the Information Statement (or any
amendment thereof or supplement thereto) is first mailed to the Natchez
Stockholders, at the time of the execution and delivery of any written consent
of the Natchez Stockholders or the time of any stockholders meeting of Natchez
to approve the Merger, and at the Effective Time, contain any statement
regarding Natchez that, at such time and in light of the circumstances under
which it will be made, is false or misleading in any material respect, or will
omit to state any material fact regarding Natchez necessary in order to make the
statements made therein
- 22 -
regarding Natchez not false or misleading in any material respect; or omit to
state any material fact regarding Natchez necessary to correct any statement
regarding Natchez in any earlier communication with respect to the solicitation
of the stockholders of Natchez that has become false or misleading in any
material respect. If at any time prior to the Effective Time any event relating
to Natchez should be discovered by Natchez which should be set forth in an
amendment or a supplement to the Information Statement, Natchez will promptly
inform Parent. Notwithstanding the foregoing, Natchez makes no representation or
warranty with respect to any information regarding Parent or Merger Sub which is
contained in any of the foregoing documents.
3.25 Year 2000. To the extent any of the hardware products and tools or
software products and tools that are currently published, offered or under
development by Natchez process, manipulate, provide, handle or otherwise use
date or date related data, all such hardware products and tools and software
products and tools are year 2000 compliant. In addition, any reprogramming
required to permit the proper functioning, in and following the year 2000, of
Natchez's computer systems and equipment containing embedded microchips material
to the conduct of Natchez's business, and the testing of all such systems and
equipment, as so reprogrammed, has been completed. The cost to Natchez of such
reprogramming and testing and the reasonably foreseeable consequences of year
2000 to Natchez (including, without limitation, reprogramming errors, products
or services provided by Natchez and the failure of others' systems or equipment)
will not have a Material Adverse Effect on Natchez's Business Condition. For
purposes of this Agreement, a product will not be deemed to be "year 2000
compliant" unless it is capable of correctly and accurately (i) processing,
manipulating, providing, handling or otherwise using date data within and
between the twentieth and twenty-first centuries and (ii) handling computer date
rollover on December 31, 1999 at midnight.
3.26 Disclosure. Neither the representations or warranties made by
Natchez in this Agreement, nor the Natchez Disclosure Schedule or any other
certificate executed and delivered by Natchez pursuant to this Agreement, when
taken together, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant
to Natchez as follows:
4.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction
in which a failure to so qualify would have a material adverse effect on the
Business Condition of Parent. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, is recently organized and has conducted no business activities,
other than as contemplated by this Agreement.
- 23 -
4.2 Capitalization. The authorized capital stock of Parent as of
June 30, 1999, is as set forth in the Quarterly Report on Form 10-Q of Parent,
as filed with the Securities and Exchange Commission (the "Commission") for the
quarter ended June 30, 1999 (the "Recent 10-Q"). All of the Parent Common Stock
is duly authorized, validly issued, fully paid and nonassessable.
4.3 Authority Relative to this Agreement. The execution, delivery
and performance of this Agreement and all other agreements contemplated hereby
by Parent and Merger Sub have been duly authorized by all necessary action of
the Boards of Directors and stockholders of Parent and Merger Sub. Certified
copies of the resolutions adopted by the Boards of Directors of Parent and
Merger Sub and Parent as sole stockholder of Merger Sub approving this
Agreement, all other agreements contemplated hereby and the Merger have been or
will be provided to Natchez. Each of Parent and Merger Sub has duly and validly
executed and delivered this Agreement and has, or prior to Closing, will have
duly and validly executed and delivered all other agreements contemplated hereby
to be executed by it, and each of this Agreement and such other agreements
constitutes a valid, binding and enforceable obligation of each of Parent and
Merger Sub in accordance with its terms.
4.4 Non-Contravention. Neither the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub, nor the consummation of the Merger or any other
transaction described herein, does or will, after the giving of notice, or the
lapse of time, or otherwise, conflict with, result in a breach of, or constitute
a default under, the Charter Documents of Parent or Merger Sub or any federal,
foreign, state or local court or administrative order or process, statute, law,
ordinance, rule or regulation, or any contract, agreement or commitment to which
Parent is a party, or under which Parent is obligated, or by which Parent or any
of the rights, properties or assets of Parent are subject or bound; result in
the creation of any Lien upon, or otherwise adversely affect, any of the rights,
properties or assets of Parent; terminate, amend or modify, or give any party
the right to terminate, amend, modify, abandon or refuse to perform or comply
with, any contract, agreement or commitment to which Parent is a party, or under
which Parent is obligated, or by which Parent or any of the rights, properties
or assets of Parent are subject or bound; or accelerate, postpone or modify, or
give any party the right to accelerate, postpone or modify, the time within
which, or the terms and conditions under which, any liabilities, duties or
obligations are to be satisfied or performed, or any rights or benefits are to
be received, under any contract, agreement or commitment to which Parent is a
party, or under which Parent may be obligated, or by which Parent or any of the
rights, properties or assets of Parent are subject or bound, other than any of
the foregoing which would not have, individually or in the aggregate, a material
adverse effect on Business Condition of Parent.
4.5 Reports and Financial Statements. Parent has previously
furnished to Natchez true and correct copies of its (i) Annual Report on Form
10-K for the period ended December 31, 1998, (ii) the Recent 10-Q, and (iii) all
other reports filed by it with the Commission under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") since January 1, 1999 (such reports,
together with any amendments or supplements thereto are collectively referred to
herein as, the "Reports"). As of their respective dates, the Reports complied
or will comply in all material respects with the then applicable published rules
and regulations of the Commission with respect thereto at the date of their
issuance and did not or will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of the date hereof, no additional filings or
amendments to previously filed Reports are required pursuant to such rules and
regulations. Each of
- 24 -
the audited consolidated financial statements and unaudited interim financial
statements included in the Reports has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly presents the
financial position of the entity or entities to which it relates as at its date
or the results of operations, stockholders' equity or cash flows of such entity
or entities (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to year-end
adjustments, which will not be material either individually or in the
aggregate).
4.6 Validity of Parent Merger Shares. The Parent Merger Shares to
be issued in the Merger will, when issued, be, validly issued, fully paid and
nonassessable; provided, however, that the Parent Merger Shares to be issued in
the Merger will be subject to restrictions on transfer under applicable federal
and state securities laws.
4.7 Consents and Approvals of Governmental Authorities. Assuming the
accuracy of the representations and warranties of Natchez and the Natchez
Stockholders contained in the Agreement and the other agreements contemplated
hereby, except for (a) the requirements of state securities (or "Blue Sky")
laws, (b) the filing and recording of the Merger Documents as provided by the
DGCL, (c) the filing of appropriate documents with the Nasdaq Stock Market and
(d) the filing of a Form D and a Form 8-K with the Commission, if applicable, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity is required to be made or obtained by Parent or
Merger Sub in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
4.8 Absence of Certain Changes or Events. Since the date of the
balance sheet included in the Recent 10-Q, there has not been any material
adverse change in the Business Condition of Parent.
4.9 Information Statement. The information regarding Parent
(including, for purposes of this Section 4.9, information regarding Parent's
officers, directors and stockholders) included in the Information Statement will
not, on the date the Information Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Natchez, at the time
of the execution and delivery of any written consent of the stockholders of
Natchez or the time of any stockholders meeting of Natchez to approve the
Merger, and at the Effective Time, contain any statement regarding Parent that,
at such time and in light of the circumstances under which it will be made, is
false or misleading in any material respect, or will omit to state any material
fact regarding Parent necessary in order to make the statements made therein
regarding Parent not false or misleading in any material respect; or omit to
state any material fact regarding Parent necessary to correct any statement
regarding Parent in any earlier communication with respect to the solicitation
of the stockholders of Parent that has become false or misleading in any
material respect. Notwithstanding the foregoing, Parent makes no representation
or warranty with respect to any information regarding Natchez which is contained
in any of the foregoing documents.
4.10 Disclosure. Neither the representations or warranties made by
Parent in this Agreement, nor the Parent Disclosure Schedule or any other
certificate executed and delivered by Parent pursuant to this Agreement, when
taken together and with knowledge of the contents of the Reports, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
- 25 -
ARTICLE V
COVENANTS OF NATCHEZ
As promptly as practicable after the execution of this Agreement, Natchez
shall submit the Information Statement in the form and substance acceptable to
Parent and provide notices with respect to dissenters' rights as may be required
by the DGCL to all stockholders of Natchez who have not already executed a
written consent of stockholders approving this Agreement, the Merger and the
transactions contemplated hereby. The Information Statement shall include all
information and documents relating to Natchez, its business or operations,
Parent, its business or operations, the terms of the Merger and this Agreement
as reasonably agreed by counsel to Parent and Natchez and intended to comply in
all material respects with Regulation D under the Securities Act, in form and
substance satisfactory to Parent and its counsel, to satisfy all requirements
applicable to Natchez of applicable state and federal securities laws, the DGCL
and the regulations thereunder. Anything to the contrary contained herein
notwithstanding, Natchez shall not include in the Information Statement any
information with respect to Parent or its affiliates or associates, the form and
content of which information shall not have been approved by Parent prior to
such inclusion.
In addition to the forgoing and in the event the Closing has not occurred
on the date of this Agreement, then during the period from the date of this
Agreement (except as otherwise indicated) and continuing until the earlier of
the termination of this Agreement or the Effective Time, Natchez agrees as
follows (except as expressly contemplated by this Agreement or otherwise
permitted with Parent's prior written consent):
5.1 Conduct of Business in Ordinary Course. Natchez will carry on its
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all reasonable
best efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers, consultants and employees and preserve its relationships with
customers, suppliers and distributors and others having business dealings with
it. Natchez shall cause its officers to confer at such times as Parent may
reasonably request with representatives of Parent to report operational matters
of a material nature and to report the general status of the ongoing operations
of the business of Natchez. The foregoing notwithstanding, Natchez will not
without the prior written consent of Parent:
(a) other than in the ordinary course of business consistent with
prior practice, enter into any material commitment or transaction, including but
not limited to any purchase of assets (other than raw materials, supplies or
cash equivalents) for a purchase price in excess of $25,000;
(b) hire or fire any employee (as to which Parent's consent will not
be unreasonably withheld), or grant any bonus, severance or termination pay to
any officer, director, independent contractor or employee of Natchez;
(c) enter into or amend any agreements pursuant to which any other
party is granted support, service, marketing or publishing rights, other than in
the ordinary course of business
- 26 -
consistent with prior practice, or is granted distribution rights of any type or
scope with respect to any products of Natchez;
(d) other than in the ordinary course of business consistent with
prior practice, enter into or terminate any contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments, or commitments, or amend or otherwise change in any material
respect the terms thereof in a manner adverse to Natchez;
(e) commence a lawsuit other than: (i) for the routine collection of
bills, (ii) in such cases where Natchez in good faith determines that failure to
commence suit would result in a material impairment of a valuable aspect of
Natchez's business provided that Natchez consults with Parent prior to filing
such suit, or (iii) for a breach of this Agreement or any agreement related
hereto;
(f) modify in any material respect existing discounts or other terms
and conditions with dealers, distributors and other resellers of Natchez's
products or services in a manner adverse to Natchez;
(g) accelerate the vesting or otherwise modify any Natchez Option,
restricted stock or other outstanding rights or other securities;
(h) agree in writing or otherwise to take any of the foregoing
actions; or
(i) other than in the ordinary course of business consistent with
prior practice, make any change any election in respect of Taxes, adopt or
change any method of accounting or accounting practice in respect of Taxes,
enter into any closing agreement, settle any claim in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes.
5.2 Dividends, Issuance of, or Changes in Securities. Natchez will not:
(i) declare or pay any dividends on or make other distributions to its
stockholders (whether in cash, shares or property), (ii) issue, deliver, sell,
or authorize, propose, or agree to, or commit to the issuance, delivery, or sale
of any shares of its capital stock of any class, any Company Voting Debt or any
securities convertible into its capital stock, any options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character obligating Natchez to
issue any such shares, Company Voting Debt or other convertible securities
except as any of the foregoing is required by outstanding Options; (iii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of Natchez, (iv) repurchase or otherwise acquire,
directly or indirectly, any shares of its capital stock or options or warrants
related thereto, or (v) propose any of the foregoing.
5.3 Governing Documents. Natchez will not amend its Charter Documents.
5.4 No Acquisitions. Natchez will not authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into a letter
of intent (whether or not binding), an agreement in principle or an agreement
with respect to any merger, consolidation or business combination (other than
the Merger), or any acquisition of assets or securities.
- 27 -
5.5 No Dispositions. Natchez will not sell, lease, license, transfer,
mortgage, encumber or otherwise dispose of any of its material assets or cancel,
release, or assign any material indebtedness or claim, except in the ordinary
course of business.
5.6 Indebtedness. Natchez will not incur any indebtedness for borrowed
money by way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise.
5.7 Compensation. Natchez will not adopt or amend, or modify in any
material respect, any Plan or pay any pension or retirement allowance not
required by any existing Plan. Natchez will not enter into or modify any
employment or severance contracts, increase the salaries, wage rates or fringe
benefits of its officers, directors or employees or pay bonuses or other
remuneration except for current salaries, severance and other remuneration for
which Natchez is obligated under arrangements existing prior to the date hereof
and which have been disclosed in the Natchez Disclosure Schedule.
5.8 Claims. Natchez will not settle any claim, action or proceeding, except
in the ordinary course of business consistent with prior practice.
5.9 Access to Properties and Records. Subject to contractual and other
obligations, Natchez will give Parent and its representatives full access, at a
place reasonably acceptable to Natchez, during reasonable business hours and
following reasonable notice but in such a manner as not unduly to disrupt the
business of Natchez, to its senior management, senior technical personnel,
premises, properties, contracts, commitments, books, records and affairs, and
will provide Parent with such financial, technical and operating data and other
information pertaining to its business as Parent may request. With Natchez's
prior consent, which will not be unreasonably withheld, Parent will be entitled
in conjunction with Natchez personnel to make appropriate inquiries of third
parties in the course of its investigation.
5.10 Breach of Representations and Warranties. In the event of, and
promptly after becoming aware of, the occurrence of or the pending or threatened
occurrence of any event that would cause or constitute a material breach or
inaccuracy of the representations and warranties set forth in Article III,
Natchez will give detailed notice thereof to Parent and will use its reasonable
best efforts to prevent or remedy promptly such breach or inaccuracy.
5.11 Consents. Natchez will promptly apply for or otherwise seek and use
reasonable best efforts to obtain, all Consents, and make all filings with
Governmental Entities, required with respect to the consummation of the Merger.
5.12 Tax Returns. Natchez will promptly provide or make available to Parent
copies of all tax returns, reports and information statements that have been
filed or are filed prior to the Closing Date.
5.13 Exclusivity; Acquisition Proposals. Unless and until this Agreement
will have been terminated by either party pursuant to Article X hereof, Natchez
will not (and will use its best efforts to ensure that none of its officers,
directors, agents, representatives or affiliates) take or cause or permit any
Person to take, directly or indirectly, any of the following actions with any
party other than Parent and its designees: (i) solicit, knowingly encourage,
initiate or participate in any negotiations, inquiries, or discussions with
respect to any offer or proposal to acquire all or any significant part of
Natchez's
- 28 -
business, assets or capital stock, whether by merger, consolidation, other
business combination, purchase of assets, tender or exchange offer or otherwise
(each of the foregoing, an "Acquisition Transaction"), (ii) disclose, in
connection with an Acquisition Transaction, any information not customarily
disclosed to any Person other than Parent or its representatives concerning
Natchez's business or properties or afford to any Person other than Parent or
its representatives access to its properties, books, or records, except in the
ordinary course of business and as required by law or pursuant to a governmental
request for information, (iii) enter into or execute any agreement relating to
an Acquisition Transaction, or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
offer or proposal relating to an Acquisition Transaction other than with respect
to the Merger. In the event that Natchez is contacted by any third party
expressing an interest in discussing an Acquisition Transaction, Natchez will
promptly notify Parent of such contact and the identity of the party so
contacting Natchez.
5.14 Notice of Events. Throughout the period between the date of this
Agreement and the Closing, Natchez will promptly advise and consult with Parent
regarding any and all material events and developments that would cause or
constitute a material breach or inaccuracy of the representations, warranties
and covenants of Natchez contained in this Agreement.
5.15 Employment Agreements. Natchez will use its reasonable best efforts
to cause each of David Power, Herbert Rush, Bart Hanlon and John Keenan to enter
into employment agreements (the "Employment Agreements") in the form and
substance acceptable to Parent.
5.16 Reasonable Best Efforts. Natchez will use its reasonable best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to Closing under this Agreement.
5.17 Insurance. Natchez will use its reasonable best efforts to maintain
in force at the Effective Time policies of insurance of the same character and
coverage as those described in the Natchez Disclosure Schedule, and Natchez will
promptly notify Parent in writing of any changes in such insurance coverage
occurring prior to the Effective Time.
5.18 Certain Tax Matters. Natchez shall not, either before or after the
consummation of the Merger, take any action that would prevent the Merger from
qualifying as a tax-free reorganization under Section 368(a).
- 29 -
ARTICLE VI
COVENANTS OF PARENT
In the event the Closing has not occurred on the date of this Agreement,
then during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Parent and Merger Sub agree (except as expressly
contemplated by this Agreement or with Natchez's prior written consent):
6.1 Breach of Representations and Warranties. Neither Parent nor Merger
Sub will take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Article IV or which would cause any
of such representations and warranties to be inaccurate in any material respect.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event which would cause or constitute
such a breach or inaccuracy, Parent will give detailed notice thereof to Natchez
and will use its reasonable best efforts to prevent or remedy promptly such
breach or inaccuracy.
6.2 Additional Information; Access. Parent will provide Natchez and its
stockholders with the information relating to Parent referred to in Section 4.5
and the information relating to Parent to be included in the Information
Statement. In addition, Parent will afford to Natchez and to its counsel and to
the persons expected to become stockholders of Parent pursuant to the Merger
access throughout the period prior to the Effective Time to its senior
management and all other information concerning Parent as Natchez or such
stockholder may reasonably request. Such stockholders will also be afforded the
opportunity to ask questions and to receive accurate and complete answers from
Parent concerning the terms and conditions of the Merger and the issuance of the
Parent Merger Shares pursuant thereto.
6.3 Consents. Parent will promptly apply for or otherwise seek, and use
its reasonable best efforts to obtain, all consents and approvals, and make
filings, required with respect to the consummation of the Merger.
6.4 Reasonable Best Efforts. Each of Parent and Merger Sub will use its
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
6.5 Nasdaq National Market Listing. Parent will use its reasonable best
efforts to cause the Parent Merger Shares to be authorized for trading on the
Nasdaq National Market as soon as practicable.
6.6 Notice of Events. Throughout the period between the date of this
Agreement and the Closing, Parent will promptly advise and consult with Natchez
regarding any and all material events and developments that would cause or
constitute a material breach or inaccuracy of the representations, warranties
and covenants of Parent and Merger Sub contained in this Agreement.
6.7 Third Party Beneficiaries. Sections 6.5 and 6.6 will survive the
consummation of the Merger, are intended to benefit the stockholders of Natchez
that receive Parent Merger Shares (the
- 30 -
"New Parent Stockholders"), will be binding on Parent and its successors and
assigns, and will be enforceable by the officers and directors of Natchez and
the New Parent Stockholders.
6.8 Certain Tax Matters. Parent shall not, either before or after the
consummation of the Merger, take any action that would prevent the Merger from
qualifying as a tax-free reorganization under Section 368(a) of the Code.
ARTICLE VII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Merger Sub and Natchez each agree to
take the following actions:
7.1 Voting Agreements. Simultaneously with the execution of this
Agreement, Natchez will cause the Voting Agreements in the form attached hereto
as Exhibit 7.1 (the "Voting Agreements"), to be executed by the persons and
entities listed in Schedule I attached hereto. The signatories of the Voting
Agreements represent greater than 90% of the outstanding voting securities of
Natchez.
7.2 Investment Agreements. All resales of Parent Common Shares by the New
Parent Stockholders will be subject to the restrictions imposed by the
investment agreements (the "Investment Agreements") in the form attached as
Exhibit 7.2, which will be entered into by each New Parent Stockholder and
Parent. Parent will be entitled to place the legends as referred to in the
form of Investment Agreement on each certificate evidencing any Parent Common
Shares to be received by New Parent Stockholders pursuant to the terms of this
Agreement and to issue appropriate stop transfer instructions to the transfer
agent for Parent Common Shares consistent with the terms of the Investment
Agreements.
7.3 Legal Conditions to the Merger. Each of Parent, Merger Sub and
Natchez will use all reasonable best efforts to take actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
the Merger. Each of Parent, Merger Sub and Natchez will use all reasonable best
efforts to take all actions to obtain (and to cooperate with the other parties
in obtaining) any consent required to be obtained or made by Natchez, Merger
Sub, or Parent in connection with the Merger, or the taking of any action
contemplated thereby or by this Agreement.
7.4 Employee Benefits. Nothing contained herein will be considered as
requiring Natchez or Parent to continue any specific plan or benefit, or to
confer upon any employee, beneficiary, dependent, legal representative or
collective bargaining agent of such employee any right or remedy of any nature
or kind whatsoever under or by reason of this Agreement, including without
limitation any right to employment or to continued employment for any specified
period, at any specified location or under any specified job category, except as
specifically provided for in an offer letter or other agreement of employment.
Employees of Natchez who continue in the employment of Natchez or Parent after
the Effective Time shall be eligible for the same employee benefits that are
made available to similarly situated Parent employees, and to the extent
permitted by applicable law and the terms of
- 31 -
Parent's existing benefit plans, will be given credit under such plans (other
than stock option plans) for time served as an employee of Natchez. It is
specifically understood that continued employment with Natchez or employment
with Parent is not offered or implied for any other employees of Natchez and any
continuation of employment with Natchez after the Closing will be at will except
as specifically provided otherwise in an offer letter or other agreement of
employment.
7.5 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby, including investment banking, legal and
accounting expenses, will be paid by the party incurring such expense; provided,
however, that Natchez will estimate and itemize any such investment banking,
legal and accounting expenses of Natchez prior to Closing and provide Parent
with a copy of such estimate at the Closing; and provided, further, that the
provisions of this Section 7.5 shall not be construed to relieve a party from
liability resulting from such party's breach of this Agreement.
7.6 Additional Agreements. In case at any time after the Effective Time
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
Natchez, the proper officers and directors of each corporation which is a party
to this Agreement will take all such necessary action. Without limiting the
foregoing, on or prior to the Closing Date, Natchez will deliver to Parent a
properly executed statement satisfying the requirements of Treasury Regulation
Sections 1.897-2(h) and 1.1445-2(c)(3) in a form reasonably acceptable to
Parent.
7.7 Public Announcements. Natchez will not disseminate any press release
or other announcement concerning this Agreement or the transactions contemplated
herein to any third party (except to the directors, officers and employees of
the parties to this Agreement whose direct involvement is necessary for the
consummation of the transactions contemplated under this Agreement, to the
attorneys, advisors and accountants of the parties hereto, or except as Parent
determines in good faith to be required by applicable law after consultation
with Natchez) without the prior written agreement of Parent. Parent will
consult with Natchez before disseminating any press release or other
announcement concerning this Agreement or the transactions contemplated herein.
7.8 Confidentiality. Natchez and Parent have entered into a
Confidentiality and Nondisclosure Agreement dated April 12, 1999 (the
"Confidentiality Agreement") concerning each party's obligations to protect the
confidential information of the other party. Natchez and Parent each hereby
affirm each of their obligations under such agreement. If this Agreement is
terminated in accordance with Article X hereof, Parent will, and will cause its
accountants, counsel and other representatives to deliver to Natchez all
documents and other material, and all copies thereof, obtained by Parent or on
its behalf from Natchez in connection with this Agreement, whether so obtained
before or after the execution hereof, and will not disclose any such information
or documents to any third parties or make any use of such. If this Agreement is
terminated in accordance with Article X hereof, Natchez will, and will cause its
accountants, counsel and other representatives to, deliver to Parent all
documents and other material, and all copies thereof, obtained by Natchez or on
its behalf or by a Stockholder from Parent in connection with this Agreement,
whether so obtained before or after the execution hereof, and will not disclose
any such information or documents to any third parties or make any use of such.
- 32 -
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Merger'. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) Governmental Approvals. Other than the filing of the Merger
Documents with the Secretary of State of Delaware, all statutory requirements
and all Consents of Governmental Entities legally required for the consummation
of the Merger and the transactions contemplated by this Agreement will have been
filed, occurred, or been obtained, other than such Consents for which the
failure to obtain would not have a material adverse effect on the consummation
of the Merger or the other transactions contemplated hereby or on the Business
Condition of Parent or Natchez.
(b) No Restraints. No statute, rule or regulation, and no final and
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or Governmental Entity of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
(c) Tax Opinions. Parent and Company shall each have received a
written opinion from their counsel, Testa, Hurwitz & Thibeault, LLP and Hale and
Dorr LLP, respectively, in form and substance reasonably satisfactory to them,
to the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code. The parties to this Agreement agree to
make reasonable representations as requested by such counsel for the purpose of
rendering such opinion.
8.2 Conditions of Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Parent and Merger Sub:
(a) Representations and Warranties of Natchez. The representations
and warranties of Natchez set forth in this Agreement will be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except (i) as otherwise
contemplated by this Agreement, (ii) as a result of actions taken or not taken
at the direction of or after consultation with and written concurrence of Parent
and (iii) for representations and warranties specifically limited to an earlier
date(s). Parent will have received a certificate signed by the chief executive
officer and the chief financial officer of Natchez to such effect on the Closing
Date.
(b) Performance of Obligations of Natchez. Natchez will have
performed in all material respects all agreements and covenants required to be
performed by it under this Agreement prior to the Closing Date except (i) as
otherwise contemplated or permitted by this Agreement and (ii) as a result of
actions taken or not taken at the direction of or after consultation with and
written concurrence of Parent, and Parent will have received a certificate
signed by the chief executive officer and the chief financial officer of Natchez
to such effect on the Closing Date.
- 33 -
(c) Investment Agreements. Parent will have received from
stockholders of Natchez constituting at least 93% of the outstanding shares of
Natchez Stock duly executed Investment Agreements.
(d) Employment Agreements. Each of the Employment Agreements shall
have been duly executed and delivered to Parent.
(e) [Intentionally Deleted].
(f) Escrow Agreement. Parent, the Indemnification Representative and
the Escrow Agent shall have entered into the Escrow Agreement.
(g) Legal Action. There will not be any written threats or pending
any action, proceeding or other application before any court or Governmental
Entity brought by any Person or Governmental Entity: (i) challenging or seeking
to restrain or prohibit the consummation of the transactions contemplated by
this Agreement, or seeking to obtain any material damages from Parent, Merger
Sub or Natchez as a result of such transactions; or (ii) seeking to prohibit or
impose any limitations on Parent's ownership or operation of all or any portion
of Natchez's business or assets, or to compel Parent to dispose of or hold
separate all or any portion of its or Natchez's business or assets as a result
of the transactions contemplated by the Agreement which if successful would have
a material adverse effect on Parent's ability to receive the anticipated
benefits of the Merger and the employment of the individuals executing the
Employment Agreements.
(h) Opinion of Counsel. Parent will have received an opinion dated as
of the Closing Date of Hale and Dorr LLP, counsel to Natchez, in a form
reasonably acceptable to Parent.
(i) Consents. Parent will have received duly executed copies of all
Consents specified in the Natchez Disclosure Schedule, and there will not be any
material Consents which have not been received and are required to be disclosed
in Natchez Disclosure Schedule which have not been so disclosed, in each case
except for such thereof as Parent and Natchez will have agreed in writing will
not be obtained.
(j) Termination of Rights and Certain Securities. Any registration
rights, rights of refusal, voting rights, rights to any liquidation preference
or redemption rights relating to any security of Natchez will have been
terminated or waived or satisfied as of the Closing.
(k) Stockholder Approvals. This Agreement and the Merger will have
been approved by stockholders of Natchez holding at least ninety-three percent
(93%) of the voting power of the outstanding shares of Natchez Stock.
(l) Securities Law Compliance. If Natchez issues or sells any shares
of its Capital Stock after the date hereof, (including, without limitation, in
connection with the exercise of options for the purchase of shares of Natchez
Common Stock), Parent will be satisfied, in its sole discretion, that the
approval of the Merger, this Agreement and all associated transactions by the
stockholders of Natchez and the issuance of Parent Merger Shares hereunder will
have been conducted in compliance with Regulation D under the Securities Act in
light of such additional issuances.
- 34 -
(m) [Intentionally Deleted].
(n) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of Natchez,
as required by the DGCL and Natchez's Charter Documents.
(o) No Material Adverse Change. There shall not have occurred any
Material Adverse Effect on the Business Condition of Natchez, it being
acknowledged that the matters disclosed in Section 8.2(o) of the Natchez
Disclosure Schedule shall not be deemed to be Material Adverse Effects on the
Business Condition of Natchez for this purpose.
(p) Tax Certificate. Natchez shall have delivered to Parent a
clearance certificate or similar document(s) which may be required by any tax
authority to relieve Parent of any obligation to withhold Taxes in connection
with the transactions set forth in this Agreement. Natchez shall have delivered
to Parent a properly executed statement satisfying the requirements of Treasury
Regulation Sections 1.897-2(h) and 1.1445-2(c)(3) in a form reasonably
acceptable to Parent.
8.3 Conditions of Obligation of Natchez. The obligation of Natchez to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by Natchez:
(a) Representations and Warranties of Parent and Merger Sub. The
representations and warranties of Parent and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and Natchez
will have received a certificate signed on behalf of Parent by a duly authorized
officer of Parent to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub will have performed in all material respects all agreements and
covenants required to be performed by them under this Agreement prior to the
Closing Date, and Natchez will have received a certificate signed on behalf of
Parent by officers of Parent to such effect.
(c) Opinion of Parent's Counsel. Natchez will have received an
opinion dated the Closing Date of Testa, Hurwitz & Thibeault, LLP, in a form
reasonably acceptable to Natchez.
(d) Stockholder Approval. This Agreement and the Merger will have
been approved and adopted by the requisite vote of the stockholders of Natchez,
as required by the DGCL and Natchez's Charter Documents.
(e) Escrow Agreement. Parent, the Indemnification Representative and
the Escrow Agent shall have entered into the Escrow Agreement.
(f) Legal Action. There will not be any written threats or pending
any action, proceeding or other application before any court or Governmental
Entity brought by any Person or Governmental Entity: (i) challenging or seeking
to restrain or prohibit the consummation of the transactions contemplated by
this Agreement, or seeking to obtain any material damages from Natchez as a
result of the transactions contemplated by this Agreement or (ii) restricting in
any way the receipt, ownership, or ability to dispose of the consideration to be
received by any stockholder of Natchez in
- 35 -
the transactions contemplated by this Agreement; provided, however, that Natchez
will automatically be deemed to waive this condition if Parent agrees to
indemnify, defend and hold any such named party harmless against any such
action.
(g) No Material Adverse Change. There shall not have occurred any
Material Adverse Effect on the Business Condition of Parent.
(h) Nasdaq National Market Listing. Parent shall have applied to the
Nasdaq National Market to have the Parent Merger Shares authorized for trading
on the Nasdaq National Market.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification Relating to Agreement. Subject to Sections 9.4 and
9.6, the stockholders of Natchez, by virtue of their approval of this Agreement
and the Merger in accordance with the applicable provisions of the DGCL, jointly
and severally with respect to all amounts held pursuant to the Escrow Agreement
and severally and not jointly with respect to amounts in excess thereof, hereby
agree to defend, indemnify and hold Parent harmless from and against, and to
reimburse Parent with respect to, any and all losses, damages, liabilities,
claims, judgments, settlements, fines, costs and expenses (including reasonable
attorneys' fees), determined as provided in Section 9.4 ("Indemnifiable
Amounts"), of every nature whatsoever incurred by Parent (which will be deemed
to include any of the foregoing incurred by the Surviving Corporation) by reason
of or arising out of or in connection with (i) any breach, or any claim
(including claims by parties other than Parent) that constitutes a breach, by
Natchez of any representation or warranty of Natchez contained in this Agreement
or in any certificate or other document delivered to Parent pursuant to this
Agreement, other than any breach or related claim taken or not taken at the
written direction of or after consultation with and written concurrence of
Parent or (ii) the failure, partial or total, of Natchez to perform any
agreement or covenant required by this Agreement to be performed by it other
than any breach or related claim taken or not taken at the written direction of
or after consultation with and written concurrence of Parent. The foregoing
obligations to indemnify Parent will be determined without regard to any right
to indemnification to which any Person may have in his or her capacity as an
officer, director, employee, agent or any other capacity of Natchez, and no
stockholder of Natchez will be entitled to any indemnification from Natchez or
the Surviving Corporation for amounts paid hereunder.
9.2 Third Party Claims. With respect to any claims or demands by third
parties as to which Parent may seek indemnification hereunder, other than claims
or demands covered by Section 9.3, whenever Parent will have received a written
notice that such a claim or demand has been asserted or threatened, Parent will
promptly notify the "Indemnification Representative" (as designated in the
Escrow Agreement) of such claim or demand and of the facts within Parent's
knowledge that relate thereto within a reasonable time after receiving such
written notice; provided, however, no delay on the part of Parent shall relieve
the stockholders of Natchez of any liability or obligation hereunder, except to
the extent that the defense of such claim or demand has been materially
prejudiced by Parent's
- 36 -
failure to give notice within a reasonable time after receiving notice thereof.
The Indemnification Representative will then have the right to defend, contest,
negotiate or settle any such claim or demand through counsel of his own
selection, reasonably satisfactory to Parent, and solely at the cost and expense
of the stockholders of Natchez, which costs and expenses will be payable out of
the property being held pursuant to the Escrow Agreement; provided, however, if
the Indemnification Representative exercises its right to defend, contest,
negotiate or settle any such claim or demand and there exists an actual conflict
of interest between the interests of the stockholders of Natchez and those of
the Parent with respect to such claim or demand, Parent may retain counsel
satisfactory to it and the reasonable fees and expenses of counsel to Parent
shall be considered Indemnifiable Amounts for purposes of this Agreement.
Notwithstanding the preceding sentence, the Indemnification Representative will
not settle, compromise, or offer to settle or compromise any such claim or
demand without the prior written consent of Parent, which consent will not be
unreasonably withheld. Without limiting Parent's rights to object for other
reasons, Parent may object to a settlement or compromise which includes any
provision which in its reasonable judgment may have an adverse impact on or
establish an adverse precedent for the Business Condition of Parent or any of
its Subsidiaries. If the Indemnification Representative gives notice to Parent
within twenty (20) calendar days after Parent has notified the Indemnification
Representative that any such claim or demand has been made in writing, that the
Indemnification Representative elects to have Parent defend, contest, negotiate,
or settle any such claim or demand, then Parent will have the right to contest
and/or settle any such claim or demand and seek indemnification pursuant to this
Article IX as to any Indemnifiable Amounts; provided, however, that Parent will
not settle, compromise, or offer to settle or compromise any such claim or
demand without the prior written consent (which may include a general or limited
consent) of the Indemnification Representative, which consent will not be
unreasonably withheld. If the Indemnification Representative fails to give
written notice to Parent of his intention to contest or settle any such claim or
demand within twenty (20) calendar days after Parent has notified the
Indemnification Representative that any such claim or demand has been made in
writing, or if any such notice is given but any such claim or demand is not
contested by the Indemnification Representative within a reasonable time
thereafter, Parent will have the right to contest and/or settle any such claim
or demand in its sole discretion and seek indemnification pursuant to this
Article IX as to any Indemnifiable Amounts.
9.3 Tax Contests. Notwithstanding any of the foregoing, Parent will have
the right to conduct any Tax audit or other Tax contest relating to the
Surviving Corporation. Parent will conduct any such Tax audit or other Tax
contest in good faith. With respect to any matters relating to such Tax audits
or other Tax contests as to which Parent may seek indemnification hereunder,
Parent shall consult with the Indemnification Representative and allow him to
comment before taking any position or making any written submission with any
Governmental Entity with regard to any indemnifiable matter.
9.4 Limitations. Notwithstanding any other provision in this Article IX,
(i) Parent will be entitled to indemnification only to the extent that the
aggregate Indemnifiable Amounts (which shall be determined for all purposes of
this Article IX disregarding any qualification in any representation or warranty
as to "materially" or "material") exceed Two Hundred Fifty Thousand Dollars
($250,000) (the "Threshold Amount"), provided that at such time as the amount to
which Parent is entitled to be indemnified exceeds the Threshold Amount, Parent
shall be entitled to be indemnified for Indemnifiable Amounts in excess of
$100,000 and (ii) the aggregate amount to which Parent will be entitled to be
indemnified under this Article IX shall not exceed the value of the Escrow
Shares, as
- 37 -
determined in accordance with the Escrow Agreement; provided, however, that the
limitation set forth in clause (ii) above shall not apply to any breach, or any
claim (including claims by parties other than Parent) that constitutes a breach,
by Natchez of any representation or warranty contained in Section 3.5 of this
Agreement of which Parent notifies the Indemnification Representative on or
before April 1, 2000, in which case the aggregate amount to which Parent will be
entitled to be indemnified pursuant to this Article IX will not exceed a dollar
amount equal to the aggregate number of Parent Merger Shares valued at the
Parent Average Closing Price, and the liability of any single stockholder of
Natchez for indemnification obligations for any such breach after the
termination of the Escrow Agreement shall be further limited to such
stockholder's pro rata share of any Indemnifiable Amounts based on the number of
Parent Merger Shares received by such stockholder relative to the aggregate
number of Parent Merger Shares; and provided further, however, that there will
be no limitation on the obligations of any person for Indemnifiable Amounts
arising out of criminal activity or fraud of such person. Any Indemnifiable
Amounts payable by a stockholder of Natchez pursuant to the preceding sentence
will be net of, and in addition to, the stockholder's portion of any portion of
the property held pursuant to the Escrow Agreement that is payable to Parent;
provided, however, that Parent will first seek reimbursement of any
Indemnifiable Amounts pursuant to the provisions of the Escrow Agreement, but
may seek indemnification hereunder with respect to any deficiency in any
Indemnifiable Amounts arising out of criminal activity or fraud not satisfied by
the property held pursuant to the Escrow Agreement after the termination of the
Escrow Agreement.
9.5 Binding Effect. The indemnification obligations contained in this
Article IX are an integral part of this Agreement and the Merger in the absence
of which Parent would not have entered into this Agreement.
9.6 Time Limit. The representations, warranties, covenants and agreements
of Natchez set forth in this Agreement will survive the Closing and the
consummation of the transactions contemplated by this Agreement, but any claims
with respect thereto may be made only on or before the first yearly anniversary
of the date of this Agreement; provided, however, that claims alleging fraud may
be made only on or before the third yearly anniversary of the Closing Date.
9.7 Updating of Disclosure Schedule. Natchez will have the right to
update the Natchez Disclosure Schedule from time to time prior to the Closing to
reflect changes to the Natchez Disclosure Schedule; provided that any changes to
the Natchez Disclosure Schedule will have no effect for purposes of determining
whether Parent's closing condition set forth in Section 8.2(a) has been
satisfied, but will have the effect of precluding any indemnity claim pursuant
to Article IX (or any reduction in the Threshold Amount) based on any such
changes which have been disclosed in all material respects.
9.8 Sole Remedy. Notwithstanding any other provision in this Agreement to
the contrary, the provisions of this Article IX and the provisions of the Escrow
Agreement will be the sole and exclusive remedy of (and corresponding liability
of any stockholder of Natchez, in such stockholder's capacity as such, to)
Parent, Merger Sub and the Surviving Corporation for any damage, claim, cause of
action or right of any nature arising out of or relating to this Agreement, the
certificates or other documents executed or delivered herewith, or the
transactions contemplated hereby; provided, however, that nothing in this
Agreement or the Escrow Agreement will be deemed to limit any right or remedy
for criminal activity or fraud.
- 38 -
ARTICLE X
REGISTRATION RIGHTS
10.1 Certain Definitions. As used in this Article X, the following terms
shall have the following respective meanings:
(a) "Resale Holder" means: (i) a stockholder of Natchez to whom shares
of Parent Common Stock are issued pursuant to this Agreement and the Merger, or
(ii) the Escrow Agent (as defined in the Escrow Agreement), or (iii) a
transferee to whom registration rights granted under this Article X are assigned
pursuant to Section 10.7 hereof.
(b) "Registrable Securities" means for any Resale Holder the number of
shares of Parent Common Stock issued to such Resale Holder pursuant to this
Agreement and the Merger, and for all Resale Holders the sum of the Registrable
Securities held by them; provided, however, that such shares of Parent Common
Stock held by a particular Resale Holder shall cease to be Registrable
Securities at such time as such Resale Holder is able to sell such shares
(including all Registrable Securities held by Affiliates of such Resale Holder,
as defined pursuant to Rule 144 of the Securities Act) in their entirety within
a single 90 day period under Rule 144 of the Securities Act.
10.2 Resale Holder Registration.
(a) Parent shall use its reasonable best efforts to cause the
Registrable Securities then held by each Resale Holder to be registered under
the Securities Act so as to permit the sale thereof as set forth in this Section
10.2. Parent shall prepare and file with the Commission as soon as practicable
after the Effective Time, but in any event within 90 days following the
Effective Time, a registration statement in such form as is then available under
the Securities Act covering fifty percent (50%) of the Registrable Securities of
all Resale Holders not previously sold pursuant to Section 10.3 hereof (the
"Initial Shelf Registration Statement"); provided, however, that the obligation
of Parent to use its reasonable best efforts to cause the registration of the
Registrable Securities to be sold pursuant to the Initial Shelf Registration
Statement shall not include any obligation of Parent to request acceleration of
such Initial Shelf Registration Statement prior to April 1, 2000; and provided,
further that each Resale Holder shall provide all such information and materials
and take all such action as may be required in order to permit Parent to comply
with all applicable requirements of the Securities Act and the Exchange Act and
to obtain any desired acceleration of the effective date of such Initial Shelf
Registration Statement, such provision of information and materials to be a
condition precedent to the obligations of Parent pursuant to this Article X to
register the Registrable Securities held by such Resale Holder. Parent shall
also prepare and file with the Commission within 120 days following the
Effective Time, a registration statement in such form as is then available under
the Securities Act (the "Subsequent Shelf Registration Statement") covering all
Registrable Securities of all Resale Holders not previously sold pursuant to
Section 10.3 hereof or previously registered pursuant to the Initial Shelf
Registration Statement; provided, however, that the obligation of the Parent to
use its reasonable best efforts to cause the registration of the Registrable
Securities to be sold pursuant to the Subsequent Shelf Registration Statement
shall not include any obligation of Parent to request acceleration of such
Subsequent Shelf Registration Statement prior to June 1, 2000; and provided,
further, that each Resale
- 39 -
Holder shall provide all such information and materials and take all such action
as may be required in order to permit Parent to comply with all applicable
requirements of the Securities Act and the Exchange Act and to obtain any
desired acceleration of the effective date of such Subsequent Shelf Registration
Statement, such provision of information and materials to be a condition
precedent to the obligations of Parent pursuant to this Article X to register
the Registrable Securities held by such Resale Holder. Upon the effectiveness of
the Subsequent Shelf Registration Statement, the Parent shall provide a combined
prospectus (within the meaning of Rule 429 of the Rules and Regulations under
the Securities Act) for the Initial Shelf Registration Statement and Subsequent
Shelf Registration Statement to the Resale Holders pursuant to Section 10.2(b).
The offerings made pursuant to such registrations shall not be underwritten.
(b) Parent shall (i) prepare and file with the Commission the
registration statements in accordance with Section 10.2 hereof with respect to
the Registrable Securities and shall use its reasonable best efforts to cause
such registration statements to become effective by April 1, 2000 for the
Initial Shelf Registration Statement and by June 1, 2000 for the Subsequent
Shelf Registration Statement and to keep such registration statements effective
until the sooner to occur of (A) the date on which all Registrable Securities
included within such registration statements have been sold or (B) the first
date following the first anniversary of the Effective Time as to which no
Registrable Securities exist as a result of the proviso to Section 10.1(b) or
(C) the second anniversary of the Effective Time; (ii) prepare and file with the
Commission such amendments to such registration statements and amendments or
supplements to the prospectuses used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities registered by such registration statements
(including such amendments as may be necessary to reflect different or
additional selling stockholders as a result of any distribution of Registrable
Securities by the Resale Holders to the beneficial owners of such Registrable
Securities); (iii) furnish to each Resale Holder such number of copies of any
prospectuses (including any preliminary prospectus and any amended, combined or
supplemented prospectus) in conformity with the requirements of the Securities
Act, and such other documents, as each Resale Holder may reasonably request in
order to effect the offering and sale of the Registrable Securities to be
offered and sold, but only while Parent shall be required under the provisions
hereof to cause the registration statements to remain effective; (iv) use its
reasonable best efforts to register or qualify the Registrable Securities
covered by such registration statements under the securities or blue sky laws of
such jurisdictions as each Resale Holder shall reasonably request (provided that
Parent shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such jurisdiction where it has not been qualified), and do any and all other
acts or things which may be necessary or advisable to enable each Resale Holder
to consummate the public sale or other disposition of such Registrable
Securities in such jurisdictions; (v) notify each Resale Holder, promptly after
it shall receive notice thereof, of the date and time the registration
statements and each post-effective amendment to such registration statements
become effective or a supplement to any prospectus forming a part of such
registration statements has been filed; and (vi) promptly reissue, or promptly
authorize and instruct its transfer agent to reissue, unlegended certificates at
the request of any Resale Holder thereof upon such Resale Holder's delivery of
original certificates representing Registrable Securities tendered for sale
pursuant to such effective registration statements, and to promptly respond to
broker's inquiries made of the Parent in connection with such sales, in each
case with a view to reasonably assisting the Resale Holder to complete such sale
during such period of effectiveness.
- 40 -
(c) Notwithstanding the foregoing obligation of Parent under this
Section 10.2, if Parent shall furnish to the Resale Holder or Resale Holders
requesting a registration statement pursuant to this Section 10.2 a certificate
signed by the President of Parent stating that in the good faith judgment of
Parent, it would be seriously detrimental to Parent and its stockholders for
such registration statement to be filed at such time and it is therefore
essential to defer the filing of such registration statement, Parent shall have
the right to defer such filing for a period of not more than 30 days beyond the
date specified under Section 10.2(a) above.
10.3 Piggyback Registration.
(a) Parent may determine to provide for the firmly underwritten sale
of Parent Common Stock for its own account and/or the account of other
stockholders, and in connection with such determination, shall file with the
Commission a registration statement to register such Common Stock (an
"Underwritten Sale"). In the event of such a determination, Parent will give to
each Resale Holder written notice thereof at least 15 days prior to the filing
of such registration statement, and will include in the Underwritten Sale (and
any related qualification under blue sky laws or other related compliance) all
the Registrable Securities specified by the Resale Holders in their written
request or requests to Parent, made within 10 days after receipt of such written
notice from Parent, subject, however, to the marketing and other limitations set
forth in Section 10.3(b) below; provided, however, that no Registrable
Securities shall be included in a registration statement filed with the
Commission if (i) the Registrable Securities have been sold in a registration
statement pursuant to Section 10.2 or (ii) the Parent reasonably determines that
the Underwritten Sale will not be completed (i.e., the registration statement is
not declared effective) within one year of the Effective Time. An Underwritten
Sale, including the form of underwriting agreement to be entered into by Parent,
the underwriter(s) and any selling stockholders, shall be on customary terms.
The underwriter(s) for an Underwritten Sale shall be selected by Parent in its
sole discretion.
(b) The right of any Resale Holder to registration pursuant to this
Section 10.3 shall be conditioned upon such Resale Holder's participation in the
Underwritten Sale and the inclusion of Registrable Securities in the
Underwritten Sale to the extent provided herein. All Resale Holders
distributing Registrable Securities through the Underwritten Sale shall
(together with Parent and the other holders distributing their securities
through the Underwritten Sale) enter into an underwriting agreement in customary
form with the managing underwriter. Notwithstanding any other provision of this
Section 10.3, if the Registrable Securities requested to be included in the
Underwritten Sale pursuant to this Section 10.3 exceeds twenty percent (20%) of
the total number of shares to be included in such registration, the Parent or
the managing underwriter, as the case may be, may limit the Registrable
Securities to be included in such registration and underwriting to twenty
percent (20%) of the total number of shares to be included in such registration
and underwriting, allocated among the Resale Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities requested to be
included by such Resale Holders in accordance with Section 10.3(a) above. To
facilitate the allocation of shares in accordance with the above provision,
Parent or the underwriters may round the number of shares allocated to any
Resale Holder to the nearest 100 shares. If any Resale Holder disapproves of
the terms of the Underwritten Sale, he or she may elect to withdraw therefrom by
written notice to Parent and the managing underwriter.
10.4 Suspension of Prospectus. Under any registration statement filed
pursuant to Section 10.2 hereof, Parent may restrict disposition of Registrable
Securities, and a Resale Holder will
- 41 -
not be able to dispose of such Registrable Securities, if Parent shall have
delivered a notice in writing to such Resale Holder stating that a delay in the
disposition of such Registrable Securities is necessary because Parent, in its
reasonable judgment, has determined in good faith that such sales would require
public disclosure by Parent of material nonpublic information that is not
included in such registration statement and that immediate disclosure of such
information would be seriously detrimental to Parent. In the event of the
delivery of the notice described above by Parent, Parent shall use its
reasonable best efforts to amend such registration statement and/or amend or
supplement the related prospectus if necessary and to take all other actions
necessary to allow the proposed sale to take place as promptly as possible,
subject, however, to the right of Parent to delay further sales of Registrable
Securities until the conditions or circumstances referred to in the notice have
ceased to exist or have been disclosed. Such right to delay sales of Registrable
Securities shall not exceed 75 days in the aggregate and no longer than 30 days
as to any single delay (any such period of delay herein referred to as a
"blackout period"); after the registration statement is declared effective, no
blackout period may be imposed during the 15-day period following the date of
effectiveness or the termination date of the last blackout period. In addition,
each Resale Holder who becomes an employee of Parent shall be subject to the
trading restrictions related to the release of quarterly results of operations
in the same manner as other employees of Parent.
10.5 Expenses. All of the out-of-pocket expenses incurred in connection
with any registration of Registrable Securities pursuant to this Article X,
including, without limitation, all Commission, Nasdaq National Market and blue
sky registration and filing fees, printing expenses, transfer agents' and
registrars' fees, and the reasonable fees and disbursements of Parent's outside
counsel and independent accountants shall be paid by Parent. Parent shall not
be responsible to pay any legal fees for any Resale Holder or any selling
expenses of any Resale Holder (including, without limitation, any broker's fees
or commissions, including underwriter commissions).
10.6 Indemnification. In the event of any offering registered pursuant to
this Article X:
(a) Parent will indemnify each Resale Holder, each of its officers,
directors and partners and such Resale Holder's legal counsel and independent
accountants, and each person controlling such Resale Holder within the meaning
of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Article X, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading, or any
violation by Parent of any rule or regulation promulgated under the Securities
Act, or state securities laws, or common law, applicable to Parent in connection
with any such registration, qualification or compliance, and will reimburse (and
advance the same to) each such Resale Holder, each of its officers, directors
and partners and such Resale Holder's legal counsel and independent accountants,
and each person controlling such Resale Holder, each such underwriter and each
person who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action,
- 42 -
provided that Parent will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based in any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to Parent in
an instrument duly executed by such Resale Holder or underwriter and stated to
be specifically for use therein; provided, however, that the foregoing is
subject to the condition that, insofar as it relates to any such untrue
statement, alleged untrue statement, omission or alleged omission made in a
preliminary prospectus on file with the Commission at the time the registration
statement becomes effective or the amended prospectus is filed with the
Commission pursuant to Rule 424(b) (the "Final Prospectus"), the provisions
hereof shall not inure to the benefit of any Resale Holder, if the Parent had
complied with its obligations under Section 10.2(b)(iii) with respect to such
Final Prospectus and a copy of the Final Prospectus was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act, and if the Final Prospectus would
have cured the defect giving rise to the loss, liability, claim or damage.
(b) Each Resale Holder will, if Registrable Securities held by such
Resale Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify Parent, each of its
directors and officers and its legal counsel and independent accountants, each
underwriter, if any, of Parent's securities covered by such a registration
statement, each person who controls Parent or such underwriter within the
meaning of Section 15 of the Securities Act, and each other such Resale Holder,
each of its officers and directors and each person controlling such Resale
Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse Parent, such Resale
Holders, such directors, officers, legal counsel, independent accountants,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to Parent by an instrument duly executed by such Resale Holder and
stated to be specifically for use therein; provided, however, that the
obligations of such Resale Holders hereunder shall be limited to an amount equal
to the net proceeds received by each such Resale Holder of Registrable
Securities actually sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 10.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Article X; provided that if the Indemnified Party has
claims against the Indemnifying Party or otherwise has claims or defenses
different from or in addition to those of the Indemnifying Party, the
Indemnified
- 43 -
Party may retain counsel of its own choice for all Resale Holders, and the
reasonable fees and expenses of such counsel shall be paid by the Indemnifying
Party. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the Indemnified Party of
a release from all liability in respect to such claim or litigation.
(d) The obligations of Parent and each Resale Holder under this
Section 10.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Article X and otherwise.
(e) Notwithstanding the foregoing, to the extent the provisions of
this Section 10.6 are inconsistent with or conflict with the terms of any
underwriting, indemnification, selling or similar agreement entered into by a
Resale Holder in connection with the offer and sale of Registrable Securities
pursuant to a registration effected pursuant to this Article X, the terms of
such agreement shall govern and shall supersede the provisions of this Article
X.
10.7 Limitation on Assignment of Registration Rights The rights to cause
Parent to register Registrable Securities pursuant to this Article X may not be
assigned by a Resale Holder unless such a transfer is to stockholders, partners
or retired partners, or members or retired members of a Resale Holder (including
spouses and ancestors, lineal descendants, and siblings of such stockholders,
partners, members or spouses who acquire Registrable Securities by right, will,
or intestate succession) and all such transferees or assignees agree in writing
to appoint a single representative as their attorney-in-fact for the purpose of
receiving any notices and exercising their rights under this Article X. Prior
to a permitted transfer of registration rights under this Article X, a Resale
Holder must furnish Parent with written notice of the name and address of such
transferee and the Registrable Securities with respect to which such
registration rights are being assigned and a copy of a duly executed written
instrument in form reasonably satisfactory to Parent by which such transferee
assumes all of the obligations and liabilities of its transferor hereunder and
agrees itself to be bound hereby. No transfer of registration rights under this
Article X shall be permitted if immediately following such transfer the
disposition of such Registrable Securities by the transferee is not restricted
under the Securities Act; provided that Parent shall have provided such
transferee with certificates representing such Registrable Securities free of
any transfer restrictions and Parent shall have instructed the transfer agent
for such Registrable Securities to remove any stop transfer or other
instructions.
ARTICLE XI
TERMINATION
In the event the Closing has not occurred on the date of this Agreement,
then Parent, Merger Sub and Natchez further agree as follows:
11.1 Mutual Agreement. This Agreement may be terminated at any time prior
to the Effective Time by the written consent of Parent and Natchez.
- 44 -
11.2 Termination by Parent. This Agreement may be terminated by Parent
(provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to Natchez, if there has been a material breach by Natchez of any
representation, warranty, covenant or agreement set forth in this Agreement or
other ancillary agreements, which breach would result in a failure to satisfy
the closing conditions contained in Section 8.2 and has not been cured within
five (5) business days following receipt by Natchez of notice of such breach.
11.3 Termination by Natchez. This Agreement may be terminated by Natchez
(provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to Parent, if there has been a material breach by Parent of any
representation, warranty, covenant or agreement set forth in the Agreement or
other ancillary agreements, which breach would result in a failure to satisfy
the closing conditions contained in Section 8.3 and has not been cured within
five (5) business days following receipt by Parent of notice of such breach,
11.4 Outside Date. This Agreement may be terminated by Parent alone or by
Natchez alone by means of written notice if the Effective Time does not occur on
or prior to October 31, 1999; provided, however, that the right to terminate
this Agreement pursuant to the preceding clause will not be available to any
party whose failure to fulfill any obligation under this Agreement has been a
significant cause of, or resulted in, the failure of the Effective Time to occur
on or before such date.
11.5 Effect of Termination. In the event of termination of this Agreement
by either Natchez or Parent as provided in this Article XI, this Agreement will
forthwith become void and have no effect, and there will be no liability or
obligation on the part of Parent, Natchez, Merger Sub or their respective
officers or directors, except that (i) the provisions of Sections 7.5, 7.7, 7.8
and 12.2 will survive any such termination and abandonment, and (ii) no party
will be released or relieved from any liability arising from the willful breach
by such party prior to termination of any of its representations, warranties,
covenants or agreements as set forth in this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Entire Agreement. Except for the Confidentiality Agreement, this
Agreement, including the exhibits, schedules and other agreements delivered
pursuant to this Agreement contain all of the terms and conditions agreed upon
by the parties relating to the subject matter of this Agreement and supersede
all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, whether oral or written, respecting that subject
matter.
12.2 Governing Law; Consent to Jurisdiction. The Merger will be governed
by the DGCL to the extent applicable, and all other aspects of this Agreement
will be governed by the internal laws of the Commonwealth of Massachusetts.
Legal proceedings relating to this Agreement, the agreements executed in
connection with this Agreement or the transactions contemplated hereby or
thereby that are commenced against Parent, Merger Sub or the Surviving
Corporation may be commenced only in the
- 45 -
state or federal courts in Boston, Massachusetts. Each of the parties hereby
consents to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. The foregoing provisions will not be construed to preclude
any party from bringing a counter-claim in any action or proceeding properly
commenced in accordance with the foregoing provisions. Process in any such
action or proceeding may be served on any party anywhere in the world.
Notwithstanding the foregoing, any dispute relating to a claim under the Escrow
Agreement will be resolved in accordance with the arbitration provisions of the
Escrow Agreement.
12.3 Notices. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement will
be in writing and will be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
If to Parent or Merger Sub
TSI International Software Ltd.
45 Danbury Road
Wilton, Connecticut 06897
Attention: President and Chief Executive Officer
Telephone No.: (203) 761-8600
Fax No.: (203) 762-7677
With copies to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
Attention: Lawrence S. Wittenberg, Esq.
Telephone No.: (617) 248-7000
Fax No.: (617) 248-7100
- 46 -
If to Natchez: Novera Software, Inc.
Burlington Office Centre
25 Corporate Drive
Burlington, Massachusetts 01803
Attention: President
Telephone No.: (781) 270-4422
Fax No.: (781) 270-0840
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Jay E. Bothwick, Esq.
Telephone No.: (617) 526-6526
Fax No.: (617) 526-5000
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 12.3.
12.4 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent.
12.5 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement, including the exhibits and schedules
delivered pursuant to this Agreement, will survive the Effective Time, but any
claims for breach thereof may only be made within any applicable time limits
specified herein or in the Escrow Agreement.
12.6 Assignment. No party to this Agreement may assign, by operation of
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of Natchez, Merger Sub
and Parent, which consent may be withheld in the absolute discretion of the
party asked to grant such consent; provided however, that Parent and Merger Sub
may assign their respective rights hereunder (i) to their respective affiliates
or (ii) in connection with any sale of Parent by means of a sale of all or
substantially all of Parent's assets or by means of a merger, consolidation,
recapitalization or reorganization of Parent in each case involving all or
substantially all of the capital stock or assets of Parent; provided that Parent
shall remain liable for its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Any
attempted assignment by Merger Sub or Parent, on the one hand, or by Natchez, on
the other hand, in violation of this Section 12.6 will be voidable and will
entitle Natchez or Parent, respectively, to terminate this Agreement at its
option.
12.7 Counterparts. This Agreement may be executed in two or more
partially or fully executed counterparts each of which will be deemed an
original and will bind the signatory, but all of which together will constitute
but one and the same instrument. The execution and delivery of a Signature Page
to Agreement and Plan of Reorganization in the form annexed to this Agreement,
including a facsimile copy of the actual signature, by any party hereto who will
have been furnished the final form of this Agreement will constitute the
execution and delivery of this Agreement by such party.
12.8 Amendment. This Agreement may not be amended except by an instrument
in writing executed by Natchez, Merger Sub and Parent; provided however, that no
such amendment which materially adversely affects the rights or obligations of
any Stockholder will be made without the written consent of such Stockholder.
- 47 -
12.9 Extension, Waiver. At any time prior to the Effective Time, any
party hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto to
the party extending such time, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party.
12.10 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
12.11 Knowledge. For purposes of this Agreement, the term "Knowledge"
(including any derivation thereof such as "know" or "knowing" and regardless of
whether such word starts with an initial capital) in reference to Natchez will
mean the actual knowledge of the directors and executive officers of Natchez.
12.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes. Any
and all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
the stockholder of Natchez with respect to which such Tax relates. At Parent's
discretion, the amount paid to any Person pursuant to this Agreement will be
reduced by the amount of Taxes payable by such Person pursuant to this Section
12.12. Any amounts so withheld will be promptly remitted to the appropriate
taxing authority.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]
- 48 -
IN WITNESS WHEREOF, Parent, Merger Sub and Natchez have executed this
Agreement as of the date first written above.
TSI INTERNATIONAL SOFTWARE LTD. NOVERA SOFTWARE, INC.
By: /s/ Constance F. Galley By: /s/ W. David Power
------------------------------------ -------------------------------
Name: Constance F. Galley Name: W. David Power
Title: President and Chief Executive Title: President
Officer
NATCHEZ ACQUISITION CORP.
By: /s/ Constance F. Galley
-----------------------------------
Name: Constance F. Galley
Title: President
- 49 -